Note 1 - Restatement of Previously Issued Consolidated Financial Statements

12 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Error Correction [Text Block]

NOTE 1. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements as of June 30, 2022, and for the year then ended, have been restated to reflect corrections of misstatements related to our corporate investments in HIVE Blockchain Technologies, Ltd. ("HIVE"). In addition to the changes listed below, various footnotes reflect the effects of this restatement, including but not limited to, Note 4, Investments, Note 13, Income Taxes, Note 14, Earnings Per Share, Note 15, Accumulated Other Comprehensive Income (Loss), and Note 16, Financial Information by Business Segment.

An error was detected in the fair value calculations performed by a third party for the investment in HIVE common share purchase warrants and the investment in HIVE unsecured convertible debentures. Specifically, related to the common share purchase warrants, the valuation model was not appropriately adjusted after a share consolidation by the issuer in May 2022. As a result, the fair value of the common share purchase warrants was corrected at June 30, 2022. The effect was as follows:

	Year Ended
	and as of
(dollars in thousands, except per share data)	June 30, 2022
(Overstatement)/Understatement
Deferred tax asset	$	448
Investments in equity securities at fair value, non-current	$	(2,128	)
Total Shareholders’ Equity	$	(1,680	)
Investment Loss	$	2,128
Tax Expense	$	(448	)
Net Income	$	(1,680	)
Earnings Per Share	$	(0.12	)

The error related to the HIVE unsecured convertible debentures was related to an additional principal payment being included within the binomial lattice valuation model. As a result, the fair value of the HIVE unsecured convertible debentures was corrected at June 30, 2022. The effect was as follows:

	Year Ended
	and as of
(dollars in thousands)	June 30, 2022
(Overstatement)/Understatement
Deferred tax asset	$	172
Investments in available-for-sale debt securities at fair value	$	(824	)
Total Shareholders’ Equity	$	(652	)
Other Comprehensive Loss	$	652

The following tables set forth the impact of the restatement on the Company's annual consolidated financial statements as of and for the year ended June 30, 2022.

CONSOLIDATED BALANCE SHEET

	June 30, 2022
	As
	Previously			Restatement			As
(dollars in thousands)	Reported			Adjustments			Restated
Assets
Current Assets
Cash and cash equivalents	$	22,314		$	-		$	22,314
Restricted cash		1,000			-			1,000
Investments in securities at fair value		12,138			-			12,138
Accounts and other receivables		1,796			-			1,796
Tax receivable		384			-			384
Prepaid expenses		400			-			400
Total Current Assets		38,032			-			38,032
Net Property and Equipment		1,370			-			1,370
Other Assets
Deferred tax asset		252			620			872
Investments in equity securities at fair value, non-current		4,290			(2,128	)		2,162
Investments in available-for-sale debt securities at fair value		11,449			(824	)		10,625
Investments in held-to-maturity debt securities		1,000			-			1,000
Other investments		3,992			-			3,992
Equity method investments		-			-			-
Operating lease, right of use assets		-			-			-
Financing lease, right of use assets		93			-			93
Other assets, non-current		216			-			216
Total Other Assets		21,292			(2,332	)		18,960
Total Assets	$	60,694		$	(2,332	)	$	58,362
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	73		$	-		$	73
Accrued compensation and related costs		1,864			-			1,864
Dividends payable		337			-			337
Operating lease liability, short-term		-			-			-
Financing lease liability, short-term		27			-			27
Other accrued expenses		1,831			-			1,831
Taxes payable		-			-			-
Total Current Liabilities		4,132			-			4,132
Long-Term Liabilities
Deferred tax liability		-			-			-
Financing lease liability, long-term		66			-			66
Total Long-Term Liabilities		66			-			66
Total Liabilities		4,198			-			4,198
Commitments and Contingencies (Note 18)
Shareholders’ Equity
Common stock (class A) - $0.025 par value; nonvoting; 28,000,000 shares authorized; 13,866,999 and 13,866,913 shares issued at June 30, 2022, and June 30, 2021, respectively; 12,888,950 and 12,967,960 shares outstanding at June 30, 2022, and June 30, 2021, respectively		347			-			347
Common stock (class B) - $0.025 par value; nonvoting; 4,500,000 shares authorized; no shares issued		-			-			-
Convertible common stock (class C) - $0.025 par value; voting; 3,500,000 shares authorized; 2,068,549 and 2,068,635 shares issued and outstanding at June 30, 2022, and June 30, 2021, respectively		52			-			52
Additional paid-in-capital		16,438			-			16,438
Treasury stock, class A shares at cost; 978,049 shares and 898,953 shares at June 30, 2022, and June 30, 2021, respectively		(2,599	)		-			(2,599	)
Accumulated other comprehensive income, net of tax		4,276			(652	)		3,624
Retained earnings		37,982			(1,680	)		36,302
Total Shareholders’ Equity		56,496			(2,332	)		54,164
Total Liabilities and Shareholders’ Equity	$	60,694		$	(2,332	)	$	58,362

CONSOLIDATED STATEMENT OF OPERATIONS

	Year Ended June 30, 2022
	As
	Previously			Restatement			As
(dollars in thousands, except per share data)	Reported			Adjustments			Restated
Operating Revenues
Advisory fees	$	24,525		$	-		$	24,525
Administrative services fees		189			-			189
		24,714			-			24,714
Operating Expenses
Employee compensation and benefits		6,059			-			6,059
General and administrative		6,911			-			6,911
Advertising		405			-			405
Depreciation and amortization		226			-			226
		13,601			-			13,601
Operating Income		11,113			-			11,113
Other Income (Loss)
Investment income (loss)		(4,046	)		(2,128	)		(6,174	)
Income (loss) from equity method investments		(206	)		-			(206	)
Other income		235			-			235
		(4,017	)		(2,128	)		(6,145	)
Income Before Income Taxes		7,096			(2,128	)		4,968
Provision for Income Taxes
Tax expense		1,597			(448	)		1,149
Net Income		5,499			(1,680	)		3,819
Earnings Per Share
Basic Net Income per Share	$	0.37		$	(0.12	)	$	0.25
Diluted Net Income per Share	$	0.37		$	(0.12	)	$	0.25
Basic weighted average number of common shares outstanding		15,010,138						15,010,138
Diluted weighted average number of common shares outstanding		15,011,128						15,011,128

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended June 30, 2022
	As
	Previously			Restatement			As
(dollars in thousands)	Reported			Adjustments			Restated
Net Income	$	5,499		$	(1,680	)	$	3,819
Other Comprehensive Income (Loss), Net of Tax:
Unrealized gains (losses) on available-for-sale securities arising during period		(557	)		(652	)		(1,209	)
Less: reclassification adjustment for gains included in net income (Note 4)		(1,731	)		-			(1,731	)
Net change from available-for-sale securities, net of tax		(2,288	)		(652	)		(2,940	)
Foreign currency translation adjustment		(13	)		-			(13	)
Less: reclassification adjustment for foreign currency gains included in net income		(10	)		-			(10	)
Net change from foreign currency translations		(23	)		-			(23	)
Other Comprehensive Income (Loss)		(2,311	)		(652	)		(2,963	)
Comprehensive Income	$	3,188		$	(2,332	)	$	856

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

																		Accumulated
	Common				Common													Other
	Stock		Common		Stock			Common		Additional		Treasury						Comprehensive
	(class A)		Stock		(class C)			Stock		Paid-in		Stock			Treasury			Income			Retained
	Shares		(class A)		Shares			(class C)		Capital		Shares			Stock			(Loss)			Earnings			Total
(dollars in thousands)
	As Previously Reported:
Balance at June 30, 2021		13,866,913	$	347		2,068,635		$	52	$	15,677		898,953		$	(2,172	)	$	6,587		$	33,833		$	54,324
Purchases of shares of Common Stock (class A)		-		-		-			-		-		89,287			(452	)		-			-			(452	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-			-		28		(10,191	)		25			-			-			53
Conversion of shares of class C common stock for class A common stock		86		-		(86	)		-		-		-			-			-			-			-
Share-based compensation, net of tax		-		-		-			-		733		-			-			-			-			733
Dividends declared		-		-		-			-		-		-			-			-			(1,350	)		(1,350	)
Other comprehensive loss, net of tax		-		-		-			-		-		-			-			(2,311	)		-			(2,311	)
Net income		-		-		-			-		-		-			-			-			5,499			5,499
Balance at June 30, 2022		13,866,999	$	347		2,068,549		$	52	$	16,438		978,049		$	(2,599	)	$	4,276		$	37,982		$	56,496
	Restatement Adjustments:
Other comprehensive loss, net of tax		-		-		-			-		-		-			-			(652	)		-			(652	)
Net income		-		-		-			-		-		-			-			-			(1,680	)		(1,680	)
	As Restated:
Balance at June 30, 2021		13,866,913	$	347		2,068,635		$	52	$	15,677		898,953		$	(2,172	)	$	6,587		$	33,833		$	54,324
Purchases of shares of Common Stock (class A)		-		-		-			-		-		89,287			(452	)		-			-			(452	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-			-		28		(10,191	)		25			-			-			53
Conversion of shares of class C common stock for class A common stock		86		-		(86	)		-		-		-			-			-			-			-
Share-based compensation, net of tax		-		-		-			-		733		-			-			-			-			733
Dividends declared		-		-		-			-		-		-			-			-			(1,350	)		(1,350	)
Other comprehensive loss, net of tax		-		-		-			-		-		-			-			(2,963	)		-			(2,963	)
Net income		-		-		-			-		-		-			-			-			3,819			3,819
Balance at June 30, 2022		13,866,999	$	347		2,068,549		$	52	$	16,438		978,049		$	(2,599	)	$	3,624		$	36,302		$	54,164

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year Ended June 30, 2022
(dollars in thousands)	As
	Previously			Restatement			As
	Reported			Adjustments			Restated
Cash Flows from Operating Activities:
Net income	$	5,499		$	(1,680	)	$	3,819
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion		(419	)		-			(419	)
Net recognized loss on disposal of fixed assets		-			-			-
Net realized gains on securities		(4,039	)		-			(4,039	)
Unrealized losses (gains) on securities		9,786			2,128			11,914
Investment basis adjustment		5			-			5
Net loss (income) from equity method investment		206			-			206
Foreign currency transaction gain		(10	)		-			(10	)
Provision for deferred taxes		(2,443	)		(448	)		(2,891	)
Stock bonuses		-			-			-
Stock-based compensation expense		733			-			733
PPP loan forgiveness		-			-			-
Changes in operating assets and liabilities:
Accounts and other receivables		2,501			-			2,501
Prepaid expenses and other assets		(217	)		-			(217	)
Accounts payable and accrued expenses		(1,067	)		-			(1,067	)
Total adjustments		5,036			1,680			6,716
Net cash provided by operating activities		10,535			-			10,535
Cash Flows from Investing Activities:
Purchase of property and equipment		(220	)		-			(220	)
Purchase of equity securities at fair value, current		(6,000	)		-			(6,000	)
Purchase of equity securities at fair value, non-current		(123	)		-			(123	)
Purchase of other investments		(620	)		-			(620	)
Purchase of held-to-maturity debt securities		-			-			-
Purchase of available-for-sale debt securities at fair value		-			-			-
Proceeds from sale of equity method investment		85			-			85
Proceeds on sale of equity securities at fair value, non-current		2,850			-			2,850
Proceeds from principal paydowns of available-for-sale debt securities at fair value		3,000			-			3,000
Return of capital on other investments		9			-			9
Net cash provided by (used in) investing activities		(1,019	)		-			(1,019	)
Cash Flows from Financing Activities:
Issuance of common stock		53			-			53
Repurchases of common stock		(452	)		-			(452	)
Dividends paid		(1,239	)		-			(1,239	)
Net cash used in financing activities		(1,638	)		-			(1,638	)
Net increase in cash, cash equivalents, and restricted cash		7,878			-			7,878
Beginning cash, cash equivalents, and restricted cash		15,436			-			15,436
Ending cash, cash equivalents, and restricted cash	$	23,314		$	-		$	23,314
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Dividends declared but not paid	$	337		$	-		$	337
Fair value of assets acquired	$	228		$	-		$	228
Unsettled sales of non-current investments	$	-		$	-		$	-
Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes	$	4,142		$	-		$	4,142