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Note 9 - Fair Value
 6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 9.     FAIR VALUE

 

The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three broad levels:

 

Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.  

 

Level 2 — Inputs other than quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

 

Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions.

 

At June 30, 2023 and December 31, 2022, our financial instruments included cash, cash equivalents, receivables, marketable securities, investments, accounts payable, and long-term debt. The carrying value of cash, cash equivalents, receivables, and accounts payable approximates fair value due to the short-term nature of the instruments. The fair value of long-term debt is estimated using quoted prices for similar debt (level 2 in the fair value hierarchy). At  June 30, 2023, the estimated fair value of our long-term debt was $25,702,584 which is less than the carrying amount of $27,732,841.

 

Warrants

 

We previously determined that the Public Warrants issued in connection with Yellowstone's initial public offering in October 2020 were subject to treatment as a liability. Prior to the deconsolidation of Yellowstone which occurred on January 25, 2022, we marked the Public Warrants to market based upon their observable trading price with changes in fair value recognized in the statement of operations. Our re-measurement of the Public Warrants from January 1, 2022 to January 25, 2022 resulted in a gain of $1,837,211, which is included within "Remeasurement of warrant liability" within our Consolidated Statements of Operations. 

 

Following the business combination between Yellowstone Acquisition Company and SHG which occurred on January 25, 2022, we no longer eliminate our investment in the Private Placement Warrants.  Our Private Placement warrants related to Sky Harbour are considered level 2 and measured at fair value using observable inputs for similar assets in an active market. Our re-measurement of the Private Placement Warrants from January 1, 2023 to  June 30, 2023, and  January 25, 2022 to June 30, 2022, resulted in a gain of $861,527 and a loss of $771,978, respectively, which are included within Other investment income within our Consolidated Statements of Operations. 

 

24th Street Asset Management: Fund I & Fund II Special Purpose Entities

 

We report fund investments on our consolidated balance sheets at their estimated fair value, with gains (losses) resulting from changes in fair value reflected within ‘Other investment income’ in the accompanying consolidated statements of operations. Each of the 24th Street Funds' investments in special purpose entities invested in real estate are categorized in Level 3 of the fair value hierarchy. The primary asset held by each special purpose entity is real estate property, for which management obtains third-party appraisals. As of June 30, 2023, the aggregate fair value of the 24th Street Funds' investments in special purpose entities was approximately $46,000,000.  A comparable sales approach was used to value the underlying real estate property, which included observable market transactions. 

 

Marketable Equity Securities

 

On an investment life-to-date basis, we have realized net gains on the sale of equity securities within the marketable equity portfolio held at Boston Omaha of approximately $84,000,000.  These amounts exclude any realized gains on equity securities held within the marketable equity portfolio managed by UCS.

 

Sky Harbour Group Corporation Class A common stock

 

We account for our 22.95% equity interest in Sky Harbour, comprised of 13,118,474 shares of Class A common stock, under the equity method. If our investment in Sky Harbour's Class A common stock was accounted for at fair value based on its quoted market price as of  June 30, 2023, it would be valued at approximately $62,000,000.

 

Marketable Equity Securities, U.S. Treasury Trading Securities, and Corporate Bonds

 

Marketable equity securities and U.S. Treasury trading securities are reported at fair values. Substantially all of the fair value is determined using observed prices of publicly traded securities, level 1 in the fair value hierarchy.

 

  

Total Carrying Amount in Consolidated Balance Sheet June 30, 2023

  

Quoted Prices in Active Markets for Identical Assets

  

Realized Gains and (Losses)

  

Total Changes in Fair Values Included in Current Period Earnings (Loss)

 
                 

Marketable equity securities and U.S. Treasury trading securities

 $71,529,707  $71,529,707  $497,231  $1,181,956