Note Receivable

6 Months Ended

Jun. 30, 2019

8. Notes Receivable

The following table sets forth the Company’s notes receivable:


	June 30, 2019		December 31, 2018
AdvisorEngine Inc. – Unsecured non-convertible note	$	29,935	$	28,722
AdvisorEngine Inc. – Unsecured convertible note		1,550		—

Total	$	31,485	$	28,722

During the three months ended June 30, 2019 and 2018, the Company recognized interest income of $628 and $421, respectively. During the six months ended June 30, 2019 and 2018, the Company recognized interest income of $1,223 and $840, respectively. Interest income included original issue discount

(“OID”)

amortization and accrued

paid-in-kind (“PIK”)

interest. The Company determined that an allowance for credit loss was not necessary at June 30, 2019 and December 31, 2018 as there have been no adverse events or circumstances since the notes were issued which may indicate that their carrying amounts may not be recoverable.

Unsecured Non-Convertible Note

The Company has an outstanding unsecured promissory note from AdvisorEngine Inc. (“AdvisorEngine”). All principal amounts under the note bear interest from the date such amounts are advanced until repaid at a rate of 5% per annum, provided that immediately upon the occurrence and during the continuance of an event of default (as defined), interest will be increased to 10% per annum. All accrued and unpaid interest is treated as PIK by capitalizing such amount and adding it to the principal amount of the original note. AdvisorEngine has the option to prepay the note, in whole or in part, at any time without premium or penalty. All borrowings under the promissory note mature on December 29, 2021.

The following is a summary of the outstanding unsecured non-convertible note receivable balance:


	June 30, 2019			December 31, 2018
Note receivable (face value)	$	30,000		$	30,000
Less: OID, unamortized		(2,167	)		(2,582	)
Plus: PIK interest		2,102			1,304

Total note receivable, net	$	29,935		$	28,722

The fair value of the note receivable (classified as Level 2 within the fair value hierarchy and determined using high yield credit spreads) was $29,703 and $27,618 at June 30, 2019 and December 31, 2018, respectively.

Unsecured Convertible Note

In April 2019, the Company participated in a private convertible note financing round of AdvisorEngine by advancing $1,540 in consideration for a convertible note, which was issued as part of a series of convertible notes pursuant to a Convertible Note Purchase Agreement entered into among AdvisorEngine, the Company and the other purchasers thereto. The convertible note bears interest at a rate of 3% per annum, with all or any unpaid portion being treated as PIK by capitalizing such amount and adding it to the principal amount outstanding, is unsecured, and matures on April 11, 2021. All principal (and, at the option of AdvisorEngine if not paid in cash, accrued interest) under the convertible note will automatically convert into a class or series of preferred stock substantially identical to that issued in a qualified financing (as defined), but at a price per share equal to 80% of the price per share sold in such transaction. In the event of a corporate transaction (as defined) the

convertible note would be repaid in cash from the proceeds of such transaction in the amount of 1.5 times the outstanding principal amount, plus any accrued and unpaid interest

. If neither a qualified financing nor a corporate transaction occurs prior to the maturity date, the

convertible note is repaid at a rate of 1.25 times the outstanding principal amount, plus accrued and unpaid interest

. The convertible note may not be prepaid by AdvisorEngine without the prior consent of the requisite holders (which includes the Company).

The following is a summary of the outstanding unsecured convertible note receivable balance:


	June 30, 2019
Note receivable (face value)	$	1,540
Plus: PIK interest		10

Total note receivable, net	$	1,550

The carrying value of the note receivable approximates fair value at June 30, 2019 due to its short-term nature.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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