XML 21 R10.htm IDEA: XBRL DOCUMENT

INVESTMENTS

12 Months Ended

Jun. 30, 2023

NOTE 4 – INVESTMENTS

The following table summarizes the composition of our equity method investments with fair value option election and other equity securities at fair value as of June 30, 2023 and 2022:

	Fair Value		Fair Value
Asset Type	June 30, 2023		June 30, 2022
Non Traded Companies	$	7,388,484	$	11,517,226
GP Interests (Equity method investment with fair value option election)		8,716,500		18,333,000
LP Interest		-		330,000
LP Interests (Equity method investment with fair value option election)		6,043,996		27,363,840
Investment Trust		-		49,178
Total	$	22,148,980	$	57,593,244

Our above total investments at fair value are disclosed in two separate lines as investments and unconsolidated investments (non-securities) in the consolidated balance sheets as of June 30, 2023 and 2022.

The following table presents fair value measurements of our investments as of June 30, 2023 and 2022, according to the fair value hierarchy:

	As of June 30,2023
Asset Type	Total		Level I		Level II		Level III
Non Traded Companies	$	7,388,484	$	-	$	-	$	7,388,484
GP Interests		8,716,500		-		-		8,716,500
LP Interests		6,043,996		-		-		6,043,996
Total	$	22,148,980	$	-	$	-	$	22,148,980

	As of June 30,2022
Asset Type	Total		Level I		Level II		Level III
Non Traded Companies	$	11,517,226	$	-	$	-	$	11,517,226
GP Interests		18,333,000		-		-		18,333,000
LP Interests		27,693,840		-		-		27,693,840
Investment Trust		49,178		-		-		49,178
Total	$	57,593,244	$	-	$	-	$	57,593,244

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair value hierarchy) for the year ended June 30, 2023:

Balance at July 1, 2022	$	57,593,244
Purchases of investments		1,621,948
Transfers to Level I		(30,753	)
Transfer to Investments in Real Estate		(8,488,467	)
Proceeds from sales, net		(5,149,058	)
Return of capital distributions		(12,973,337	)
Written off contingent consideration		(57,875	)
Net realized gains		647,395
Net unrealized loss		(11,014,117	)
Ending balance at June 30, 2023	$	22,148,980

The transfer of $30,753 of investments from Level III to Level I category during the year ended June 30, 2023 resulted from one of our investments converting from a non-traded REIT to publicly traded REIT. Transfers are assumed to have occurred at the beginning of the year.

For the year ended June 30, 2023, changes in unrealized loss, net included in earnings relating to Level III investments still held at June 30, 2023 were $2,815,465.

Balance at July 1, 2021	$	70,340,043
Purchases of investments		21,789,690
Transfers to Level I		(230,160	)
Fair value adjustment on FSP Satellite Corp. units owned prior to consolidation (Note 1)		(3,106,018	)
Proceeds from sales, net		(33,218,158	)
Return of capital distributions		(11,807,238	)
Net realized gains		7,277,446
Net unrealized gains		6,547,639
Ending balance at June 30, 2022	$	57,593,244

The transfer of $230,160 of investments from Level III to Level I category during the year ended June 30, 2022 resulted from two of our investments converting from a non-traded REIT to publicly traded REIT. Transfers are assumed to have occurred at the beginning of the year.

For the year ended June 30, 2022, changes in unrealized gains, net included in earnings relating to Level III investments still held at June 30, 2022 were $8,698,216.

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2023:

Asset Type	Fair Value		Primary Valuation Techniques	Unobservable Inputs Used	Range	Weighted Average

Non Traded Companies	$	7,388,484	Market Activity	Secondary market industry publication

GP Interests		8,716,500	Direct Capitalization Method	Capitalization rate	6.3% - 6.5%		6.4%
				Discount rate	6.8% - 7.0%		7.0%

LP Interests		6,037,176	Discounted Cash Flow	Discount rate	0% - 9.0%		7.0%
LP Interests		6,820	Estimated Liquidation Value	Sponsor provided value	12.0%		12.0%

	$	22,148,980

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2022:

Asset Type

Fair Value

Primary Valuation

Techniques

Unobservable Inputs Used

Range

Weighted Average

Non Traded Companies

1,011,081

Estimated Liquidation Value

Sponsor provided value

Liquidity discount

25.0% - 75.0%

25.0%

Non Traded Companies

10,506,145

Market Activity

Secondary market industry publication

Contracted purchase of security

GP Interests

18,333,000

Market Activity

Contracted purchase price

LP Interests

21,550,730

Direct Capitalization Method

Capitalization rate

4.0% - 5.0%

4.2%

Liquidity discount

15.0%

LP Interests

5,806,290

Discounted Cash Flow

Discount rate

6.3% - 9.0%

8.6%

LP Interest

6,820

Estimated Liquidation Value

Sponsor provided value

Liquidity discount

12.0%

LP Interest

330,000

Market Activity

Secondary market industry publication

Investment Trust

49,178

Direct Capitalization Method

Capitalization rate

5.0%

Liquidity discount

15.0%

57,593,244

Summarized Financial Statements for Equity Method Investments (Fair Value Option)

Our investments in securities are generally in small and mid-sized companies in a variety of industries. In accordance with the Rule 8-03(b)(3) of Regulation S-X applicable for smaller reporting companies, we must determine which of our equity method investments measured at fair value under the Fair Value Option are considered “significant”, if any. Regulation S-X mandates the use of three different tests to determine if any of our investments are considered significant investments: the investment test, the asset test, and the income test. The rule requires summarized financial statements for any significant equity method investments in an annual and interim report if any of the three tests exceed 20%.

In addition to the SEC rules, ASC 323-10-50-3(c) requires summarized financial statements of our equity method investments, including those reported under the fair value option, if they are material individually or in aggregate. Our investment in Citrus Park Hotel Holdings, LLC were determined to be significant under the income test as of June 30, 2023. In addition, our equity method investments accounted under the fair value option were material in the aggregate as of June 30, 2023.

The summarized financial information of Citrus Park Hotel Holdings, LLC and aggregated summarized financial information of all equity method investees as of June 30, 2023 is as follows:

	Citrus Park Hotel Holdings, LLC		All Equity Method Investee Aggregated
Total Assets	$	12,099,426	$	92,234,499
Total Liabilities	$	1,647,262	$	74,860,139
Total Equities	$	10,452,164	$	17,374,360
Total Revenues	$	5,776,570	$	14,584,111
Total Expenses	$	4,843,377	$	14,262,874
Total Net Income	$	933,193	$	321,237

Unconsolidated Significant Subsidiaries

In accordance with SEC Rules 3-09 and 4-08(g) of Regulation S-X, we must determine which of our investments in securities are considered “significant subsidiaries”, if any. Regulation S-X mandates the use of three different tests to determine if any of our controlled investments are significant subsidiaries: the investment test, the asset test, and the income test. Rule 3-09 of Regulation S-X requires separate audited financial statements for any unconsolidated majority-owned subsidiary in an annual report if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information in an annual report if any of the three tests exceeds 10%.

As of June 30, 2023 and 2022, none of our investments in securities was considered an unconsolidated significant subsidiary under the SEC rules described above.