Note 2 - Ownership Interests and Advances

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Investments in and Advances to Affiliates, Schedule of Investments [Text Block]

2. Ownership Interests and Advances

The following summarizes the carrying value of the Company’s ownership interests and advances. 

	March 31, 2021		December 31, 2020
	(Unaudited - In thousands)
Equity Method:
Companies	$	27,541	$	27,550
Private equity funds		271		271
		27,812		27,821
Other Method:
Companies		32,833		19,683
Private equity funds		268		268
		33,101		19,951
Advances to companies		1,680		2,626
	$	62,593	$	50,398

During the quarter ended March 31, 2021, Zipnosis, Inc. was acquired by another entity.  The Company received $3.3 million in initial cash proceeds and $15.3 million in preferred equity in the acquiror in connection with this transaction.  This ownership interest represents a security that does not have a readily determinable fair value.  Due to the inherent uncertainty of determining the fair value of ownership interests that do not have a readily determinable fair value, this estimated value  may differ significantly from the value that would have been reported had a ready market for the security existed, and it is reasonably possible that the difference could be material.  The Company recognized a $17.0 million gain on the sale, which is included in Equity income (loss), net in the Consolidated Statements of Operations.  The fair value of the ownership interests received as a result of the acquisition was estimated based on evaluating several valuation methods available, including the value at which independent third parties have recently invested, the valuation of comparable public companies, and the present value of our expected outcomes.  Assumptions considered within these methods include determining which public companies are comparable, projecting forward revenues, selecting an appropriate valuation multiple,  discounts to apply for the lack of marketability or lack of comparability, other factors and the relative weight to apply to each valuation method available.  Due to the unobservable nature of some of these inputs, we have determined this estimate to be Level 3 fair value measurements.  Our ownership interest in the acquiror will be accounted for under the Other method, as such in subsequent periods it could be subject to observable price changes or impairment if our estimated fair value declines.  

During the quarter ended March 31, 2021, WebLinc, Inc. was acquired by another entity.  The Company received $3.2 million in initial cash proceeds and may receive additional amounts over the next 24 months based on certain transactional performance activities, which could be partially offset by indemnifiable claims.  The Company recognized a $0.5 million initial loss on the sale, which is included in Equity income (loss).  To the extent additional amounts are collected as contingencies are resolved, those amounts will be recorded as gain on the sale and included within Equity income (loss).  QuanticMind was acquired during the first quarter by another entity, however there were no resultant proceeds to the Company.  There was no resulting gain or loss due to this equity method ownership interest being impaired during the prior year.

During the quarter ended March 31, 2021, the Company's ownership interest in T-REX Group, Inc. was acquired for $3.0 million in cash, which was accounted for under the Other method.  The Company recognized a $0.7 million gain, which is included in Other income (loss), net.  Hoopla was also acquired during the first quarter by another entity, however there were no resultant proceeds to the Company.  There was no resulting gain or loss due to this Other method ownership interest being impaired during the prior year.

Summarized Financial Information

The following table summarizes the statement of operations data for the companies accounted for under the equity method for the three months ended March 31, 2021 and 2020, respectively. These results have been compiled from the respective companies' financial statements, reflect certain historical adjustments, and are reported on a one quarter lag basis. Results of operations of the companies are excluded for periods prior to their acquisition, subsequent to their disposition and subsequent to the discontinuation of equity method of accounting. Historical results are not adjusted when the Company exits, writes-off or discontinues the equity method of accounting. 

	Three Months Ended March 31,
	2021			2020
	(Unaudited - In thousands)
Results of Operations:
Revenue	$	40,168		$	47,414
Gross profit	$	28,228		$	29,506
Net loss	$	(23,021	)	$	(14,604	)