NOTE

FAIR VALUE OF ASSETS AND LIABILITIES

GAAP defines fair value as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date, and establishes a hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from sources independent of the Company. Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. The fair value hierarchy includes

three

levels based on the objectivity of the inputs as follows:

●

Level

- inputs are quoted prices in active markets as of the measurement date for identical assets and liabilities that the Company has the ability to access; this category includes exchange-traded mutual funds and equity securities;

●

Level

- inputs are inputs other than quoted prices included in Level

that are observable for the asset or liability, either directly or indirectly; Level

inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates or yield curves, that are observable at commonly quoted intervals; this category includes mortgage-backed securities, asset-backed securities, corporate debt securities, certificates of deposit, commercial paper, U.S. agency and municipal debt securities, U.S. Treasury securities, and derivative contracts; and

●

Level

- inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability; the measurements are highly subjective.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company values its investments at fair value at the end of each reporting period. See description of these investments in Note

above.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2019
Alluvial Fund, LP	$	—	$	—	$	—	$	10,072,358	$	10,072,358
Total investments	$	—	$	—	$	—	$	10,072,358	$	10,072,358

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2018
Alluvial Fund, LP	$	—	$	—	$	—	$	8,446,488	$	8,446,488
Huckleberry Real Estate Fund II, LLC		—		—		468,750		—		468,750
Total investments	$	—	$	—	$	468,750	$	8,446,488	$	8,915,238

(a)

Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have

not

been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

See below for a summary of activity related to the Company’s Level

investment, Huckleberry Real Estate Fund II, LLC, for the years ended

December 31, 2019

and

2018.

The realized gain noted below has been included as revenue under other operations on the consolidated statements of operations for the year ended

December 31, 2019.

	Year ended December 31, 2019			Year ended December 31, 2018
Huckleberry Real Estate Fund II, LLC
Beginning investment balance	$	468,750		$	750,000
Realized gain		212,631			—
Redemptions received		(681,381	)		(281,250	)
Ending investment balance	$	—		$	468,750

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company analyzes goodwill on an annual basis or more often if events or changes in circumstances indicate potential impairments. During the year ended

December 31, 2018,

an impairment adjustment of

$754,958

was recorded to goodwill held in the home services segment. As described further in Note

this adjustment was the result of a general underperformance of previously acquired HVAC and plumbing businesses. During the period ended

June 30, 2019,

an additional impairment of the remaining home services segment goodwill of

$1,024,591

was recognized and reported as a component of the loss on the divestiture of Specialty Contracting Group, LLC’s assets.

The Company values real estate held on the balance sheet on an annual basis or whenever events or changes in circumstances indicate an impairment

may

have occurred. During the year ended

December 31, 2019,

an impairment adjustment of

$126,827

was recorded on a commercial warehouse held for resale in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$964,743

was recorded to real estate held for resale through Mt Melrose, LLC in order to properly reflect market value for those properties held at the end of the year. This adjustment was the result of

properties being transitioned to “held for resale” from “held for investment” as part of a portfolio redirection intended to reduce high-interest debt. See Note

for more information.

During the year ended

December 31, 2019,

net impairment adjustments of

$26,170

were recorded on real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value at that time. During the year ended

December 31, 2018,

an impairment adjustment of

$64,038

was recorded to real estate held for resale through EDI Real Estate, LLC in order to properly reflect market value for those properties held during the year. This adjustment was primarily the result of a deteriorating building purchased by prior management in

1998.

As discussed in Note

January 2018,

Mt Melrose, LLC completed its

first

acquisition of

residential and other income-producing real properties for a total purchase price of

$3,956,389.

Additionally, in

June 2018,

Mt Melrose, LLC completed its

second

acquisition of

residential and other income-producing real properties for a total purchase price of

$5,174,722.

The total purchase price, along with transaction expenses, was allocated to the land and buildings acquired based on their relative fair values. The fair values of the land and buildings were determined using Level

inputs, namely comparable properties within the Lexington, Kentucky region.

As discussed in Note

the Company’s ongoing equity investment in Mt Melrose, LLC is carried at its implied cost under the alternative approach and will be assessed for impairment at each balance sheet date.