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Note 8 - Investments, Including Investments Accounted for Using the Equity Method | 6 Months Ended
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Jun. 30, 2018
Notes to Financial Statements |
Investment [Text Block] |
NOTE 8 . | I NVESTMENTS , INCLUDING INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Short-term Investments Short-term investments consist of certificates of deposit having maturity dates of less than twelve months and are carried at cost, U.S. Treasury securities and a corporate bond that are held to maturity and mature in less than twelve months, and a convertible note receivable. The certificates of deposit are held to maturity and mature in the upcoming year. The U.S. Treasury notes, the corporate bond, and the certificates of deposit are held by UC&S. For the six months ended June 30, 2018, gains on redemptions of U.S. Treasury notes were $2,137.
|  | June 30, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Certificates of deposit |  | $ | 816,709 |  |  | $ | 746,219 |
U.S. Treasury notes and corporate bond |  |  | 4,039,422 |  |  |  | 809,184 |
Convertible note receivable |  |  | - |  |  |  | 103,896 |
Total |  | $ | 4,856,131 |  |  | $ | 1,659,299 |
Convertible Note Receivable On September 13, 2016, we purchased an unsecured convertible note receivable from Breezeway Homes, Inc. (“Breezeway”) for the principal sum of $100,000. The note bore interest at 3% per annum, with principal and accrued interest payable upon demand at the earlier of December 31, 2018 or the closing of Breezeway’s next equity financing. In January 2018, Breezeway completed a second round of equity financing, in which we agreed to tender our promissory note in exchange for preferred stock. At the time that the note receivable was tendered, principal, together with accrued interest, was $104,019. At December 31, 2017, the balance of the note plus accrued interest was $103,896. As part of the loan arrangement, the parties entered into a memorandum of understanding for the parties to work together on the sale of damage waiver insurance related products, which the parties may develop, to property managers, lessors, and renters for residential homes through Breezeway’s platform.
Note Receivable On April 27, 2018, we made a short-term loan to CB&T Holding Corporation (“CB&T”). In connection with the short-term loan, CB&T issued us a promissory note in the principal amount of $2,116,972, with an interest rate of 15% per annum, and reimbursed us for certain costs associated with the transaction. The loan was repaid on June 1, 2018 together with $29,990 in interest. U.S. Treasury Trading Securities and U.S. Treasury Securities Available for Sale Our security investments that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period included in earnings. Our trading securities consist of U.S. Treasury securities. Trading securities as of June 30, 2018 and December 31, 2017 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain |  |  | Value |
U.S. Treasury bills, June 30, 2018 |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Treasury bills, December 31, 2017 |  | $ | 82,968,614 |  |  | $ | 132,191 |  |  | $ | 83,100,805 |
We classify our investments in debt securities that we intend to hold for indefinite periods of time as “available for sale.” Our securities available for sale are carried at fair value in the balance sheet. Because we have elected the fair value option for these securities, unrealized holding gains and losses during the period are included in earnings. Interest income is recognized at the coupon rate. Securities available for sale as of June 30, 2018 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain |  |  | Value |
U.S. Treasury securities, June 30, 2018 |  | $ | 150,100,946 |  |  | $ | 245,494 |  |  | $ | 150,346,440 |
Long-term Investments Long-term investments consist of certificates of deposit having maturity dates in excess of twelve months, and U.S. Treasury securities. The certificates of deposit have maturity dates ranging from 2019 through 2021. We have the intent and the ability to hold the investments to maturity. Certificates of deposit and U.S. Treasury securities are stated at carrying value which approximates fair value and are held by UC&S. Long-term investments consist of the following:
|  | June 30, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
U.S. Treasury securities, held to maturity |  | $ | 2,083,624 |  |  | $ | 2,820,855 |
Certificates of deposit |  |  | 931,291 |  |  |  | 1,080,426 |
Preferred stock |  |  | 104,019 |  |  |  | - |
Non-voting common units of Dream Finders Holdings, LLC |  |  | 10,000,000 |  |  |  | 10,000,000 |
Voting common stock of CB&T Holding Corporation |  |  | 19,058,485 |  |  |  | - |
Total |  | $ | 32,177,419 |  |  | $ | 13,901,281 |
Cost Investment s On May 31, 2018, we invested $19,058,485 in voting common stock of CB&T, the privately held parent company of Crescent Bank & Trust. Our investment represents 14.99% of CB&T’s outstanding common stock. CB&T is a closely held corporation, whose majority ownership rests with one family. During late December 2017, we invested $10,000,000 in non-voting common units of Dream Finders Holdings, LLC, a national homebuilder. Excluding their non-convertible preferred equity, our investment represents an approximately 5% ownership stake in the company. During January 2018, we exchanged our convertible note receivable from Breezeway for 31,227 shares of preferred stock. The preferred stock is noncumulative and has a dividend rate of $.2665 per share, should dividends be declared. The preferred stock has one vote per share and is convertible into whole shares of common stock, determined according to the conversion formula contained in Breezeway’s amended and restated articles of incorporation. We reviewed our investments as of June 30, 2018 and December 31, 2017 and concluded that no impairment to the carrying value was required. Investment in Unconsolidated Affiliates We have various investments in equity method affiliates, whose businesses are in real estate and real estate services. Our interest in these affiliates ranges from 7.15% to 30%. Two of the investments in affiliates, Logic Real Estate Companies, LLC and TAG SW 1, LLC having a combined carrying amount of $417,287 on June 30, 2018, are managed by a member of our board of directors. During the six months ended June 30, 2018, TAG SW 1, LLC sold its remaining investments and realized a gain on the sale of its assets. The following table is a reconciliation of our investments in equity affiliates as presented in investments in unconsolidated affiliates on our consolidated balance sheets:
|  | June 30, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Beginning of period |  | $ | 952,128 |  |  | $ | 871,918 |
Additional investments in unconsolidated affiliates |  |  | - |  |  |  | 66,000 |
Distributions received |  |  | (382,443 | ) |  |  | (59,550 | )
Loss on investment in affiliate |  |  | (107,630 | ) |  |  | - |
Equity in income of unconsolidated affiliates |  |  | 385,091 |  |  |  | 73,760 |
End of period |  | $ | 847,146 |  |  | $ | 952,128 |
The loss on investment in affiliate is related to the wind-down of TAG SW 1, LLC and is included on our consolidated statements of operations in the caption “Loss on disposition of investments.”

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