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Commitments, Contingencies, and Other | 3 Months Ended
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Mar. 31, 2024
Commitments, Contingencies, and Other [Abstract] |
Commitments, Contingencies, and Other | 18. Commitments, Contingencies, and Other Legal and Regulatory Matters The Company is party to certain claims, suits and complaints arising in the ordinary course of business. As of March 31, 2024, the Company does not expect that these claims, suits and complaints will have a material impact on its results of operations or financial position. Overnight Financing As of both March 31, 2024 and December 31, 2023, MSCO had an available line of credit for short term overnight demand borrowing with BMO Harris Bank (“BMO Harris”) of up to $25 million. MSCO had $4,800,000 and $0 of outstanding loan balance as of March 31, 2024 and December 31, 2023, respectively, which is in the line item “Bank loans” on the statements of financial condition. As of those dates, there were no commitment fees or other restrictions on this line of credit. The Company utilizes customer or firm securities as a pledge for short-term borrowing needs. There was $2,000 and $0 in interest expense for this line of credit for the three months ended March 31, 2024 and 2023, respectively. There were no fees related to this line of credit for the three months ended March 31, 2024 and 2023. At the Market Offering On May 27, 2022, the Company entered into a Capital on DemandTM Sales Agreement (the “Sales Agreement”) with JonesTrading as agent, pursuant to which the Company may offer and sell, from time to time through JonesTrading, shares of the Company’s common stock having an aggregate offering amount of up to $9.6 million under the Company’s shelf registration statement on Form S-3. The Company is not obligated to make any sales of shares under the Sales Agreement. The Company agreed to pay JonesTrading a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of shares. The Company or JonesTrading may suspend or terminate the offering upon notice to the other party and subject to other conditions. Whether the Company sells securities under the Sales Agreement will depend on a number of factors, including the market conditions at that time, the Company’s cash position at that time and the availability and terms of alternative sources of capital. For the three months ended March 31, 2024 and 2023, the Company did not sell any shares pursuant to this Sales Agreement. Since the Company filed its 2023 Form 10-K after its scheduled due date, the Company no longer satisfies the eligibility requirement for use of registration statements on Form S-3, which requires that the Company file in a timely manner all reports required to be filed during the prior twelve calendar months. As a result, the Company has suspended use of its registration statement on Form S-3 and is not able to access the At the Market program as of the date of this Report. NFS Contract Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of the arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. If the Company chooses to exit this agreement before the end of the contract term, the Company is under the obligation to pay an early termination fee upon occurrence pursuant to the table below:
Date of Termination |  | Early Termination Fee |
Prior to August 1, 2024 |  | $ | 4,500,000 |
Prior to August 1, 2025 |  | $ | 3,250,000 |
For the three months ended March 31, 2024 and 2023, there has been no expense recognized for any early termination fees. The Company believes that it is unlikely it will have to make material payments related to early termination fees and has not recorded any contingent liability in the financial statements related to this arrangement. Technology Vendor In 2023, the Company entered into agreements with technology vendors for certain development projects related to its Retail Platform. As of March 31, 2024, the Company incurred approximately $1.8 million out of the $3.3 million total budget for these vendors. General Contingencies The Company’s general contingencies are included in Note 21 – Commitments, Contingencies, and Other in the Company’s 2023 Form 10-K. Other than the below, there have been no material updates to the Company’s general contingencies during the three months ended March 31, 2024. The Company is self-insured with respect to employee health claims. As part of this plan, the Company recognized expenses of $394,000 and $180,000 for the three months ended March 31, 2024 and 2023, respectively. The Company had an accrual of $77,000 as of March 31, 2024, which represents the estimate of future expense to be recognized for claims incurred during the period. The Company believes that its present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that the Company will not incur liabilities in excess of recorded reserves or in excess of its insurance limits.

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