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Variable Interest Entity

12 Months Ended

Jul. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity

Note 13—Variable Interest Entity

As of May 31, 2021, the Company entered into a Warrant Purchase Agreement with the shareholders of an entity (the variable interest entity, or “VIE”) that operates money transfer businesses. The purchase price of the warrant was cash of $0.8 million and a contingent payment of $0.1 million.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company has various management rights and protective provisions pursuant to the Warrant Purchase Agreement . Primarily as a result of the Warrant Purchase Agreement, the Company can obtain 90% of the ownership interests in the VIE. The Company determined that, effective May 31, 2021, it had the power to direct the activities of the VIE that most significantly impact its economic performance, and the Company has the obligation to absorb losses of and the right to receive benefits from the VIE that could potentially be significant to it. The Company therefore determined that it is the primary beneficiary of the VIE, and as a result, the Company consolidates the VIE. The Company does not currently own any interest in the VIE and thus the net income incurred by the VIE was attributed to noncontrolling interests in the accompanying statements of income.

The VIE’s net income and aggregate funding provided by the Company to finance the VIE’s operations were as follows:

 Schedule of Net Income (loss) and Aggregate Funding Provided by the Company to VIE to Finance Its Operations or Repaid

For the period from May 31, 2021 to July 31, 2021 (in thousands)
Net income of the VIE		$	54
Aggregate funding provided by the Company, net		$	(8	)

The VIE’s summarized consolidated balance sheet amounts are as follows:

 VIE’s Summarized Consolidated Balance Sheet

(in thousands)		May 31, 2021				July 31, 2021
ASSETS
Cash and cash equivalents		$	1,249			$	1,364
Restricted cash			2,087				3,848
Trade accounts receivable, net			80				91
Prepaid expenses			126				344
Other current assets			1,248				858
Property, plant, and equipment, net			637				637
Other intangibles, net			1,067				1,042
TOTAL ASSETS		$	6,494			$	8,184
LIABILITIES AND NONCONTROLLING INTERESTS
Trade accounts payable		$	22			$	312
Accrued expenses			43				26
Other current liabilities			3,136				4,491
Due to the Company			—				8
Accumulated other comprehensive loss			(7)				(7	)
Noncontrolling interests			3,300				3,354
TOTAL LIABILITIES AND NONCONTROLLING INTERESTS		$	6,494			$	8,184

The VIE’s assets may only be used to settle the VIE’s obligations and may not be used for other consolidated entities. The VIE’s liabilities are non-recourse to the general credit of the Company’s other consolidated entities.

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- References

No definition available.

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- Definition

The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-URI http://asc.fasb.org/topic&trid=2197479

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