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Transactions with Tigress and Hedge Connection | 12 Months Ended
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Dec. 31, 2022
Transactions with Tigress and Hedge Connection [Abstract] |
Transactions with Tigress and Hedge Connection | 3. Transactions with Tigress and Hedge Connection Tigress Initial Transaction On November 16, 2021, the Company entered into an agreement with Tigress, a Delaware limited liability company, and a disabled and woman-owned financial services firm. As part of the agreement, (i) Tigress transferred to the Company limited liability company membership interests representing 24% of the outstanding membership interests in Tigress; and (ii) the Company transferred to Tigress limited liability company membership interests representing 24% of the outstanding membership interests of RISE and 1,449,525 shares of the Company’s common stock. The Company’s common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Reorganization Agreement On October 18, 2022, the Company entered into a Reorganization Agreement (“Reorganization Agreement”) with Tigress whereby the Company exchanged 7% of the outstanding membership interests in Tigress for all of Tigress’ ownership interest in RISE. As of the date of this Report, the Company is currently evaluating the terms upon which it will transfer its remaining ownership of Tigress to Gloria E. Gebbia pursuant to the Reorganization Agreement. The net loss as a result of this transaction was $92,000, which is in the line item “Loss on sale of equity method investment in related parties” in the statements of operations. Impairment As a result of the transaction described above as well as the fact that Tigress and the financial services industry had been impacted by adverse market conditions resulting in a decline in Tigress’ performance and future projections, management concluded that a triggering event had occurred and evaluated if the investment in Tigress was other than temporarily impaired. Thus, the Company performed an impairment test as of October 18, 2022, and estimated the fair value of Tigress using the income and market approach. For the income approach, the Company utilized estimated discounted future cash flow expected to be generated by Tigress. For the market approach the Company utilized market multiples of revenue and earnings derived from comparable publicly-traded companies. Based upon the updated valuation, the Company recognized an impairment of $4,015,000 which is included in line item “Impairment of equity method investment in related party” in the statements of operations. Hedge Connection Initial Transaction On January 21, 2022, RISE entered into an agreement with Hedge Connection, a Florida corporation and a woman-owned fintech company founded by Ms. Vioni that provides capital introduction software solutions for the prime brokerage industry. Pursuant to the agreement, (i) Hedge Connection transferred to the Company common stock representing 20% of the outstanding post-closing issued and outstanding capitalization in Hedge Connection for a consideration of $600,000, to be paid in three installments over 180 days, as well as approximately 3.33% of the issued and outstanding membership interests of RISE; (ii) the Company acquired an option from Ms. Vioni to acquire 100% of the remaining interest in Hedge Connection at fair value market at the time of the option exercise, provided such valuation of Hedge Connection is not less than $5 million; (iii) the Company acquired a technology license agreement from Hedge Connection to use its capital introduction software, Fintroz, for an annual license fee of $250,000; (iv) Ms. Vioni provided the Company with the right to appoint one director to the Board of Directors of Hedge Connection; and (v) Ms. Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction, a division of RISE. Termination Agreement On October 18, 2022, the Company entered into a Termination Agreement (“Termination Agreement”) with Hedge Connection and Ms. Vioni. Pursuant to the Termination Agreement, the parties terminated the Purchase Agreement, dated January 21, 2022. Under the terms of the Termination Agreement, the Company re-conveyed to Hedge Connection, Hedge Connection common stock representing 20% of Hedge Connection and the related option from Ms. Vioni to acquire 100% of Ms. Vioni’s remaining interest in Hedge Connection in exchange for 3.17% of RISE and the cancellation of the Company’s obligation to repay the remaining $250,000 of its note payable to Hedge Connection. The Termination Agreement also terminates the Hedge Connection technology license agreement. Pursuant to the Termination Agreement, the Company shall assign to Tigress prospective prime brokerage customers of the Company who were solicited by the Company from January 1, 2022 through the closing date of the Reorganization Agreement. In exchange, Tigress will split revenue with the Company on certain customers pursuant to the Reorganization Agreement. The revenue recorded from this agreement was immaterial for the year ended December 31, 2022. The net loss as a result of this transaction was $627,000, which is in the line item “Loss on sale of equity method investment in related parties” in the statements of operations. The components that resulted in the net loss of $627,000 were the writing off of the carrying value of the Company’s investment in Hedge Connection of $1,020,000, offset by the forgiveness of the notes payable to Hedge Connection of $250,000 as well as the net return of RISE treasury stock of $143,000.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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