Note 3 - Investment in Affiliate

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

3. Investment in Affiliate

The HC Series B Stock is not deemed to be in-substance common stock and is accounted for using the measurement alternative for equity investments with no readily determinable fair value. The HC Series B Stock will be reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments issued by HC Realty.

The following table summarizes the Company’s investment in HC Realty as of June 30, 2023, and December 31, 2022 (in thousands):

	Ownership %						Investment in Affiliate Balance				Gain (loss) recorded in the Statements of Operations (b)
											For the Three Months Ended June 30,					For the Six Months Ended June 30,
	June 30, 2023			December 31, 2022			June 30, 2023		December 31, 2022		2023		2022			2023			2022
HC Series B Stock (a)		22.49	%		26.8	%	$	10,250	$	10,250	$	-	$	-		$	-		$	-
HC Common Stock		3.56	%		7.1	%		473		600		77		(96	)		(44	)		(189	)
Total		26.05	%		33.9	%	$	10,723	$	10,850	$	77	$	(96	)	$	(44	)	$	(189	)

(a) Represents investments in shares of HC Series B Stock with a basis of $10.25 million. Each share of HC Series B Stock can be converted into one share of HC Common Stock at a conversion price equal to the lesser of $9.10 per share or the fair market value per share of HC Common Stock, subject to adjustment upon the occurrence of certain events.

(b) Gain (loss) from these investments is included in “Gain (loss) from affiliate” in the Unaudited Consolidated Statements of Operations. Since HC Realty is a REIT and not a taxable entity, the loss is not reported net of taxes.

The Company’s investment in HC Common Stock is accounted for under the equity method of accounting.