QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
ork |
||
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
Page Number |
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4 | ||||
4 | ||||
32 | ||||
51 | ||||
52 | ||||
52 | ||||
52 | ||||
52 | ||||
53 | ||||
53 | ||||
53 | ||||
53 | ||||
54 |
• | 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. |
ITEM 1. |
FINANCIAL STATEMENTS |
June 30, 2021 |
December 31, 2020 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Securities owned, at fair value (including $ |
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Accounts receivable (including $ |
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Income taxes receivable |
— | |||||||
Prepaid expenses |
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Other current assets |
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Total current assets |
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Fixed assets, net |
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Indemnification receivable (Note 20) |
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Securities held-to-maturity |
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Deferred tax assets, net |
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Investments (Note 7) |
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Right of use assets – operating leases (Note 13) |
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Goodwill (Note 22) |
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Intangible assets (Note 22) |
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Other noncurrent assets |
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Total assets |
$ | $ | ||||||
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Liabilities and stockholders’ equity |
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Liabilities |
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Current liabilities: |
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Fund management and administration payable |
$ | $ | ||||||
Compensation and benefits payable |
||||||||
Deferred consideration – gold payments (Note 9) |
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Operating lease liabilities (Note 13) |
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Income taxes payable |
— | |||||||
Accounts payable and other liabilities |
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Total current liabilities |
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Convertible notes (Note 11) |
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Deferred consideration – gold payments (Note 9) |
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Operating lease liabilities (Note 13) |
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Other noncurrent liabilities (Note 20) |
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Total liabilities |
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Preferred stock – Series A Non-Voting Convertible, par value $(Note 12) |
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Contingencies (Note 14) |
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Stockholders’ equity |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Operating Revenues: |
||||||||||||||||
Advisory fees |
$ | $ | $ | $ | ||||||||||||
Other income |
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Total revenues |
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Operating Expenses: |
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Compensation and benefits |
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Fund management and administration |
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Marketing and advertising |
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Sales and business development |
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Contractual gold payments (Note 9) |
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Professional fees |
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Occupancy, communications and equipment |
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Depreciation and amortization |
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Third-party distribution fees |
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Acquisition and disposition-related costs |
— | — | ||||||||||||||
Other |
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Total operating expenses |
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Operating income |
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Other Income/(Expenses): |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Gain/(loss) on revaluation of deferred consideration – gold payments (Note 9) |
( |
) | ( |
) | ||||||||||||
Interest income |
||||||||||||||||
Impairments (Note 13 and 23) |
— | — | ( |
) | ( |
) | ||||||||||
Loss on extinguishment of debt (Note 10) |
— | ( |
) | — | ( |
) | ||||||||||
Other gains and losses, net |
( |
) | ( |
) | ||||||||||||
Income/(loss) before income taxes |
( |
) | ( |
) | ||||||||||||
Income tax expense/(benefit) |
( |
) | ( |
) | ||||||||||||
Net income/(loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Earnings/(loss) per share—basic |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Earnings/(loss) per share—diluted |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Weighted-average common shares—basic |
||||||||||||||||
Weighted-average common shares—diluted |
||||||||||||||||
Cash dividends declared per common share |
$ | $ | $ | $ | ||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net income/(loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Other comprehensive income/(loss) |
||||||||||||||||
Reclassification of foreign currency translation adjustment to other gains and losses, net, upon the sale of WisdomTree Asset Management Canada, Inc. (“WTAMC” or “Canadian ETF business”) (Note 23) |
— | — | — | ( |
) | |||||||||||
Foreign currency translation adjustment, net of income taxes |
( |
) | ||||||||||||||
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|
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|
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Other comprehensive income/(loss) |
( |
) | ||||||||||||||
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Comprehensive income/(loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
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|
|
|
|
|
|
For the Three Months Ended June 30, 2021 |
||||||||||||||||||||||||
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total |
||||||||||||||||||||
Shares Issued |
Par Value |
|||||||||||||||||||||||
Balance—April 1, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Restricted stock issued and vesting of restricted stock units, net |
( |
) | ( |
) | — | — | — | |||||||||||||||||
Shares repurchased |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||
Exercise of stock options, net |
— | — | ||||||||||||||||||||||
Stock-based compensation |
— |
— | — | — | ||||||||||||||||||||
Other comprehensive income |
— |
— | — | — | ||||||||||||||||||||
Dividends |
— |
— | — | — | ( |
) | ( |
) | ||||||||||||||||
Net income |
— |
— | — | — | ||||||||||||||||||||
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|
|||||||||||||
Balance—June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
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For the Three Months Ended June 30, 2020 |
||||||||||||||||||||||||
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total |
||||||||||||||||||||
Shares Issued |
Par Value |
|||||||||||||||||||||||
Balance—April 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Restricted stock issued and vesting of restricted stock units, net |
( |
) | — | — | — | |||||||||||||||||||
Shares repurchased |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||
Stock-based compensation |
— |
— | — | — | ||||||||||||||||||||
Allocation of equity component related to convertible notes, net of issuance costs of $ |
— |
— | — | — | ||||||||||||||||||||
Other comprehensive income |
— |
— | — | — | ||||||||||||||||||||
Dividends |
— |
— | ( |
) | — | — | ( |
) | ||||||||||||||||
Net loss |
— |
— | — | — | ( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2021 |
||||||||||||||||||||||||
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total |
||||||||||||||||||||
Shares Issued |
Par Value |
|||||||||||||||||||||||
Balance—January 1, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Reclassification of equity component related to convertible notes, net deferred taxes of $ 2020-06 (Note 11) |
— |
— | ( |
) | — | ( |
) | |||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—January 1, 2021 (as adjusted) |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Restricted stock issued and vesting of restricted stock units, net |
( |
) | — | — | — | |||||||||||||||||||
Shares repurchased |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||
Exercise of stock options, net |
— | — | ||||||||||||||||||||||
Stock-based compensation |
— |
— | — | — | ||||||||||||||||||||
Other comprehensive income |
— |
— | — | — | ||||||||||||||||||||
Dividends |
— |
— | — | — | ( |
) | ( |
) | ||||||||||||||||
Net income |
— |
— | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
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| |||||||||||||||||||||
For the Six Months Ended June 30, 2020 |
||||||||||||||||||||||||
Common Stock |
Additional Paid-In Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total |
||||||||||||||||||||
Shares Issued |
Par Value |
|||||||||||||||||||||||
Balance—January 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Restricted stock issued and vesting of restricted stock units, net |
( |
) | — | — | — | |||||||||||||||||||
Shares repurchased |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||
Exercise of stock options, net |
— | — | — | |||||||||||||||||||||
Stock-based compensation |
— |
— | — | — | ||||||||||||||||||||
Allocation of equity component related to convertible notes, net of issuance costs of $ |
— |
— | — | — | ||||||||||||||||||||
Other comprehensive loss |
— |
— | — | ( |
) | — | ( |
) | ||||||||||||||||
Dividends |
— |
— | ( |
) | — | — | ( |
) | ||||||||||||||||
Net loss |
— |
— | — | — | ( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net income/(loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating activities: |
||||||||
Advisory fees received in gold, other precious metals and cryptocurrencies |
( |
) | ( |
) | ||||
Contractual gold payments |
||||||||
Stock-based compensation |
||||||||
(Gain/)/loss on revaluation of deferred consideration – gold payments |
( |
) | ||||||
Deferred income taxes |
||||||||
Amortization of right of use asset |
||||||||
Amortization of issuance costs – convertible notes |
||||||||
Depreciation and amortization |
||||||||
Impairments |
||||||||
Gain on sale – Canadian ETF business |
— | ( |
) | |||||
Loss on extinguishment of debt |
— | |||||||
Amortization of issuance costs – former credit facility |
— | |||||||
Other |
( |
) | ( |
) | ||||
Changes in operating assets and liabilities: |
||||||||
Securities owned, at fair value |
( |
) | ||||||
Accounts receivable |
( |
) | ||||||
Prepaid expenses |
( |
) | ( |
) | ||||
Gold, other precious metals and cryptocurrencies |
||||||||
Other assets |
( |
) | ( |
) | ||||
Fund management and administration payable |
( |
) | ||||||
Compensation and benefits payable |
( |
) | ( |
) | ||||
Income taxes receivable/payable |
( |
) | ( |
) | ||||
Securities sold, but not yet purchased, at fair value |
— | ( |
) | |||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Accounts payable and other liabilities |
||||||||
|
|
|
|
|||||
Net cash (used in)/provided by operating activities |
( |
) | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchase of investments |
( |
) | — | |||||
Purchase of fixed assets |
( |
) | ( |
) | ||||
Proceeds from held-to-maturity |
||||||||
Proceeds from the sale of the Company’s financial interests in AdvisorEngine Inc. |
— | |||||||
Proceeds from sale of Canadian ETF business, net |
— | |||||||
|
|
|
|
|||||
Net cash (used in)/provided by investing activities |
( |
) | ||||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Shares repurchased |
( |
) | ( |
) | ||||
Dividends paid |
( |
) | ( |
) | ||||
Convertible notes issuance costs |
( |
) | ( |
) | ||||
Repayment of debt |
— | ( |
) | |||||
Proceeds from the issuance of convertible notes |
||||||||
Proceeds from exercise of stock options |
||||||||
|
|
|
|
|||||
Net cash provided by/(used in) financing activities |
( |
) | ||||||
|
|
|
|
|||||
Increase/(decrease) in cash flow due to changes in foreign exchange rate |
( |
) | ||||||
|
|
|
|
|||||
Increase/(decrease) in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents—beginning of year |
||||||||
|
|
|
|
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Cash and cash equivalents—end of period |
$ | $ | ||||||
|
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|
|
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Supplemental disclosure of cash flow information: |
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Cash paid for taxes |
$ | $ | ||||||
|
|
|
|
|||||
Cash paid for interest |
$ | $ | ||||||
|
|
|
|
• |
WisdomTree Asset Management, Inc. 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 |
• |
WisdomTree Multi Asset Management Limited non-consolidated third party, is a public limited company domiciled in Ireland. |
• |
WisdomTree Management Limited non-consolidated third party, is a public limited company domiciled in Ireland. |
• |
WisdomTree UK Limited |
• |
WisdomTree Europe Limited |
• |
WisdomTree Ireland Limited |
• |
WisdomTree Commodity Services, LLC |
Equipment | |
| ||
Furniture and fixtures | |
|
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. |
June 30, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Recurring fair value measurements: |
||||||||||||||||
Cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Securities owned, at fair value |
||||||||||||||||
ETFs |
— | — | ||||||||||||||
Pass-through GSEs |
— | |||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
Total |
$ | $ | $ | $ | — | |||||||||||
Non-recurring fair value measurements: |
||||||||||||||||
Securrency, Inc. – Series A convertible preferred stock (1) |
$ | $ | — | $ | — | $ | ||||||||||
Liabilities: |
||||||||||||||||
Recurring fair value measurements: |
||||||||||||||||
Deferred consideration (Note 9) |
$ | $ | — | $ | — | $ | ||||||||||
(1) | Fair value of $ (Note 7). |
December 31, 2020 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Recurring fair value measurements: |
||||||||||||||||
Cash equivalents |
$ | $ | $ |
— | $ |
|||||||||||
Securities owned, at fair value |
||||||||||||||||
ETFs |
— | — | ||||||||||||||
Pass-through GSEs |
— | — | ||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
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 9) |
$ | $ |
$ |
$ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-recurring fair value measurements: |
||||||||||||||||
Convertible notes (2) |
$ | $ |
— | $ | $ |
— | ||||||||||
|
|
|
|
|
|
|
|
(1) | The fair value of the AdvisorEngine financial interests of $ was determined on May 4, 2020, the date on which these financial interests were sold (Note 23). Thesys was written down to |
(2) | Fair value of $ determined for convertible notes raised on June 16, 2020 and August 13, 2020, respectively (Note 11). |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Deferred consideration (Note 9) |
||||||||||||||||
Beginning balance |
$ | $ | $ | $ | ||||||||||||
Net realized losses/(gains) (1) |
||||||||||||||||
Net unrealized losses/(gains) (2) |
( |
) | ( |
) | ||||||||||||
Settlements |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
(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. |
June 30, 2021 |
December 31, 2020 |
|||||||
Securities Owned |
||||||||
Trading securities |
$ | $ | ||||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Debt instruments: Pass-through GSEs (amortized cost) |
$ | $ | ||||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Cost/amortized cost |
$ | $ | ||||||
Gross unrealized gains |
||||||||
Gross unrealized losses |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Fair value |
$ | $ | ||||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Due within one year |
$ |
$ |
||||||
Due one year through five years |
||||||||
Due five years through ten years |
||||||||
Due over ten years |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
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Carrying Value |
Cost |
Carrying Value |
Cost |
|||||||||||||
Securrency, Inc. – Series A convertible preferred stock |
$ | $ | $ | $ | ||||||||||||
Securrency, Inc. – Series B convertible preferred stock |
— | — | ||||||||||||||
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|
|
|
|
|
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Subtotal – Securrency, Inc. |
$ | $ | $ | $ | ||||||||||||
Onramp Invest, LLC – Simple Agreement for Future Equity |
— | — | ||||||||||||||
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|
|
|
|
|
|
|
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$ | $ | $ | $ | |||||||||||||
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|
|
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|
|
|
|
Inputs |
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June 9, 2021 |
March 8, 2021 |
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Expected volatility |
% | % | ||||||
Time to exit (in years) |
June 30, 2021 |
December 31, 2020 |
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Equipment |
$ | $ | ||||||
Furniture and fixtures |
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Leasehold improvements |
||||||||
Less: accumulated depreciation and amortization |
( |
) | ( |
) | ||||
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|
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Total |
$ | $ | ||||||
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|
|
|
June 30, 2021 |
December 31, 2020 |
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