Investments

3 Months Ended

Mar. 31, 2021

7. Investments

The following table sets forth the Company’s investments:


	March 31, 2021				December 31, 2020
	Carrying Value		Cost		Carrying Value		Cost
Securrency, Inc. – Series A convertible preferred stock	$	8,349	$	8,112	$	8,112	$	8,112
Securrency, Inc. – Series B convertible preferred stock		5,500		5,500		—		—

Total	$	13,849	$	13,612	$	8,112	$	8,112

Securrency, Inc. – Preferred Stock

The Company owns approximately 25% (or 20% on a fully-diluted basis) of the capital stock of Securrency, Inc. (“Securrency”), a leading developer of institutional-grade blockchain-based financial and regulatory technology, issued as a result of strategic investments totaling $13,612. In consideration of such investments, the Company received 5,178,488 shares of Series A convertible preferred stock (“Series A Shares”) and 2,004,665 shares of Series B convertible preferred stock (“Series B Shares”). The Series B Shares contain a liquidation preference that is pari passu with shares of Series

B-1

convertible preferred stock (which is substantially the same as the Series B Shares except that it has l

mited voting rights) and senior to that of the holders of the Series A Shares, which is senior to the holders of common stock. Otherwise, the Series A Shares and Series B Shares have substantially the same

terms

, are convertible into common stock at the option of the Company and contain various rights and protections including a

non-cumulative

6.0% dividend, payable if and when declared by the board of directors of Securrency. In addition, the Series A Shares and Series B Shares (together with the Series

B-1

convertible preferred stock) are separately redeemable, with respect to all of the shares outstanding of the applicable series of preferred stock (

subject to certain regulatory restrictions of certain investors), for the original issue price thereof, plus all declared and unpaid dividends, upon approval by holders of at least

60%

of the Series A Shares (at any time on or after December 31, 2029) and

90%

of the Series B Shares (at any time on or after March 31, 2031).

The investment is accounted for under the measurement alternative prescribed within ASU

2016-01,

as it does not have a readily determinable fair value and is not considered to be

in-substance

common stock. The investment is assessed for impairment and similar observable transactions on a quarterly basis. On March 8, 2021, the Company recognized a gain of $237

on its Series A Shares, which was re-measured to fair value upon the issuance of Securrency’s Series B Shares. Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued. Fair value is allocated across the capital structure using the Black-Scholes option pricing model.

The table below presents the inputs used in backsolve valuation approach (classified as Level 3 in the fair value hierarchy):


Inputs (Initial Recognition – March 8, 2021)
Expected volatility	55	%
Time to exit (in years)	5

There was no impairment recognized during the three months ended March 31, 2020 based upon a qualitative assessment.