XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Equity Investments | 12 Months Ended
--- | ---
Jul. 31, 2022
Investments, Debt and Equity Securities [Abstract] |
Equity Investments | Note 8—Equity Investments Equity investments consist of the following: Schedule of Equity Investments
July 31 (in thousands) |  | 2022 |  |  | 2021 |
Zedge, Inc. Class B common stock, 42,282 shares at July 31, 2022 and 2021 |  | $ | 117 |  |  | $ | 649 |
Rafael Holdings, Inc. Class B common stock, 290,214 and 246,565 shares at July 31, 2022 and 2021, respectively |  |  | 586 |  |  |  | 12,479 |
Rafael Holdings, Inc. restricted Class B common stock, nil and 43,649 shares at July 31, 2022 and 2021, respectively |  |  | — |  |  |  | 2,209 |
Other marketable equity securities |  |  | 4,089 |  |  |  | 3,630 |
Fixed income mutual funds |  |  | 12,299 |  |  |  | 23,467 |
Current equity investments |  | $ | 17,091 |  |  | $ | 42,434 |
Visa Inc. Series C Convertible Participating Preferred Stock (“Visa Series C Preferred”) |  | $ | 1,132 |  |  | $ | 2,465 |
Visa Inc. Series A Convertible Participating Preferred Stock (“Visa Series A Preferred”) |  |  | 1,230 |  |  |  | — |
Series B and Series C convertible preferred stock—equity method investment |  |  | 1,001 |  |  |  | 2,901 |
Hedge funds |  |  | 3,238 |  |  |  | 3,563 |
Other |  |  | 825 |  |  |  | 2,725 |
Noncurrent equity investments |  | $ | 7,426 |  |  | $ | 11,654 |
IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The Company received the shares of Zedge Inc. (“Zedge”) Class B common stock and 28,320 of the shares of Rafael Class B common stock set forth in the table above in connection with the lapsing of restrictions on Zedge and Rafael restricted stock held by certain of the Company’s employees and the Company’s payment of taxes on behalf of its employees related thereto. Howard S. Jonas is the Vice-Chairman of the Board of Directors of Zedge. On December 7, 2020, the Company purchased from Rafael 218,245 newly issued shares of Rafael’s Class B common stock and a warrant to purchase up to 43,649 shares of Rafael’s Class B common stock at an exercise price of $22.91 at any time on or after December 7, 2020 and on or prior to June 6, 2022. The aggregate purchase price of $5.0 million was allocated $4.6 million to the shares and $0.4 million to the warrant based on their relative purchase date fair values. The fair value of the warrant on the acquisition date was estimated using a Black-Scholes valuation model that represented a Level 3 measurement. The purchase price was based on a per share price of $22.91, which was the closing price of Rafael’s Class B common stock on the New York Stock Exchange on the trading day immediately preceding the purchase date. On March 15, 2021, the Company exercised the warrant in full and purchased 43,649 shares of Rafael’s Class B common stock for cash of $1.0 million. The aggregate 261,894 shares of Rafael’s Class B common stock were not available for sale, assignment, or transfer. These restrictions lapsed in June 2021 for 218,245 shares and September 2021 for 43,649 shares. In June 2016, upon the acquisition of Visa Europe Limited by Visa, Inc. (“Visa”), IDT Financial Services Limited received 1,830 shares of Visa Series C Preferred among other consideration. At July 31, 2020, each share of Visa Series C Preferred was convertible into 13.722 shares of Visa Class A common stock (the “Conversion Adjustment), subject to certain conditions, and will be convertible at the holder’s option beginning in June 2028. On September 24, 2020, in connection with Visa’s first mandatory release assessment, the Company received 125 shares of Visa Series A Preferred and the Conversion Adjustment for Visa Series C Preferred was reduced to 6.861. In June 2021, the 125 shares of Visa Series A Preferred were converted into 12,500 shares of Visa Class A common stock, which the Company sold for $2.9 million. On July 28, 2022, in connection with Visa’s second mandatory release assessment, the Company received 58 shares of Visa Series A Preferred and the Conversion Adjustment for Visa Series C Preferred was reduced to 3.645. In August 2022, the 58 shares of Visa Series A Preferred were converted into 5,800 shares of Visa Class A common stock, which the Company sold for $1.3 million. The changes in the carrying value of the Company’s equity investments without readily determinable fair values for which the Company elected the measurement alternative was as follows: Schedule of Carrying Value of Equity Investments
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Balance, beginning of period |  | $ | 2,743 |  |  | $ | 4,109 |  |  | $ | 3,919 |
Redemption for Visa mandatory release assessment |  |  | (1,230 | ) |  |  | (1,870 | ) |  |  | — |
Adjustment for observable transactions involving a similar investment from the same issuer |  |  | (103 | ) |  |  | 510 |  |  |  | 206 |
Upward adjustments |  |  | — |  |  |  | — |  |  |  | 3 |
Redemptions |  |  | (9 | ) |  |  | (6 | ) |  |  | (19 | )
Impairments |  |  | — |  |  |  | — |  |  |  | — |
BALANCE, END OF PERIOD |  | $ | 1,401 |  |  | $ | 2,743 |  |  | $ | 4,109 |
The Company decreased the carrying value of the shares of Visa Series C Preferred it held by $0.1 million in fiscal 2022, and the Company increased the carrying value of the shares of Visa Series C Preferred it held by $0.5 million and $0.2 million in fiscal 2021 and fiscal 2020, respectively, based on the fair value of Visa Class A common stock and a discount for lack of current marketability. IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Unrealized gains and losses for all equity investments measured at fair value included the following: Schedule of Unrealized (losses) Gains for All Equity Investments
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Net (losses) gains recognized during the period on equity investments |  | $ | (19,248 | ) |  | $ | 8,830 |  |  | $ | (336 | )
Less: net gains recognized during the period on equity investments redeemed during the period |  |  | 10 |  |  |  | 1,090 |  |  |  | — |
Unrealized (losses) gains recognized during the period on equity investments still held at the reporting date |  | $ | (19,258 | ) |  | $ | 7,740 |  |  | $ | (336 | )
The unrealized gains and losses for all equity investments measured at fair value in the table above included the following:
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Unrealized (losses) gains recognized during the period on equity investments: |  |  |  |  |  |  |  |  |  |  |  |
Rafael Class B common stock |  | $ | (14,101 | ) |  | $ | 8,291 |  |  | $ | (195 | )
Zedge Class B common stock |  | $ | (533 | ) |  | $ | 591 |  |  | $ | (9 | )
Unrealized (losses) gains recognized during the period on equity investments still held at the reporting date |  | $ | (19,258 | ) |  | $ | 7,740 |  |  | $ | (336 | )
Equity Method Investment On February 2, 2021, the Company paid $4.0 million to purchase shares of series B convertible preferred stock of a communications company (the equity method investee, or “EMI”), and on August 10, 2021, the Company paid $1.1 million to purchase shares of the EMI’s series C convertible preferred stock and additional shares of the EMI’s series B convertible preferred stock. The initial shares purchased represented 23.95% of the outstanding shares of the EMI on an as converted basis. The subsequent purchases increased the Company’s ownership to 26.57% on an as converted basis. The Company accounts for this investment using the equity method since the series B and series C convertible preferred stock are in-substance common stock, and the Company can exercise significant influence over the operating and financial policies of the EMI. The Company determined that on the dates of the acquisitions, there were differences of $3.4 million and $1.0 million between its investment in the EMI and its proportional interest in the equity of the EMI, which represented the share of the EMI’s customer list on the dates of the acquisitions attributed to the Company’s interest in the EMI. These basis differences are being amortized over the 6-year estimated life of the customer list. In the accompanying consolidated statements of income, the amortization of equity method basis difference is included in the equity in the net loss of investee, which is recorded in “Other (expense) income, net” (see Note 18). In fiscal 2022, the Company received three secured promissory notes from the EMI in exchange for loans of an aggregate of $2.5 million. The notes provide for interest on the principal amount at 15% per annum payable monthly. The notes are due and payable in February 2023. At July 31, 2022, the notes were included in “Other current assets” in the accompanying consolidated balance sheets. In September 2022, the Company received a secured promissory note from the EMI in exchange for a loan of $0.6 million. The note provides for interest on the principal amount at 15% per annum payable monthly. The note is due and payable on February 3, 2023. The following table summarizes the change in the balance of the Company’s equity method investment: Summary of Changes in Equity Method Investments
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |
Balance, beginning of period |  | $ | 2,901 |  |  | $ | — |
Purchase of convertible preferred stock |  |  | 1,051 |  |  |  | 4,000 |
Equity in the net loss of investee |  |  | (2,224 | ) |  |  | (816 | )
Amortization of equity method basis difference |  |  | (727 | ) |  |  | (283 | )
BALANCE, END OF PERIOD |  | $ | 1,001 |  |  | $ | 2,901 |
Summarized financial information of the EMI was as follows: Summary of Statements of Operations
July 31 (in thousands) |  | 2022 |  |  | 2021 |
Current assets |  | $ | 3,911 |  |  | $ | 1,467 |
Noncurrent assets |  | $ | 2,462 |  |  | $ | 2,549 |
Current liabilities |  | $ | (11,480 | ) |  | $ | (4,041 | )
Noncurrent liabilities |  | $ | — |  |  | $ | (50 | )
IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands) |  | Year ended July 31, 2022 |  |  | From the date of acquisition to July 31, 2021 |
REVENUES |  | $ | 7,889 |  |  | $ | 1,898 |
COSTS AND EXPENSES: |  |  |  |  |  |  |  |
Direct cost of revenues |  |  | 9,451 |  |  |  | 1,937 |
Selling, general and administrative |  |  | 5,834 |  |  |  | 3,388 |
TOTAL COSTS AND EXPENSES |  |  | 15,285 |  |  |  | 5,325 |
LOSS FROM OPERATIONS |  |  | (7,396 | ) |  |  | (3,427 | )
Other (expense) income, net |  |  | (342 | ) |  |  | 101 |
NET LOSS |  | $ | (7,738 | ) |  | $ | (3,326 | )

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for cash, cash equivalents, investments in debt and equity instruments (including cost and equity investees and related income statement amounts), equity and cost method investments, investments in joint ventures and any other investment. + References No definition available. + Details
Name: | us-gaap_InvestmentsInDebtAndEquityInstrumentsCashAndCashEquivalentsUnrealizedAndRealizedGainsLossesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration