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Note 1 - Restatement of Previously Issued Consolidated Financial Statements | 12 Months Ended
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Jun. 30, 2022
Notes to Financial Statements |
Error Correction [Text Block] | NOTE 1. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements as of June 30, 2022, and for the year then ended, have been restated to reflect corrections of misstatements related to our corporate investments in HIVE Blockchain Technologies, Ltd. ("HIVE"). In addition to the changes listed below, various footnotes reflect the effects of this restatement, including but not limited to, Note 4, Investments, Note 13, Income Taxes, Note 14, Earnings Per Share, Note 15, Accumulated Other Comprehensive Income (Loss), and Note 16, Financial Information by Business Segment. An error was detected in the fair value calculations performed by a third party for the investment in HIVE common share purchase warrants and the investment in HIVE unsecured convertible debentures. Specifically, related to the common share purchase warrants, the valuation model was not appropriately adjusted after a share consolidation by the issuer in May 2022. As a result, the fair value of the common share purchase warrants was corrected at June 30, 2022. The effect was as follows:
|  | Year Ended |
|  | and as of |
(dollars in thousands, except per share data) |  | June 30, 2022 |
(Overstatement)/Understatement |  |  |  |
Deferred tax asset |  | $ | 448 |
Investments in equity securities at fair value, non-current |  | $ | (2,128 | )
Total Shareholders’ Equity |  | $ | (1,680 | )
Investment Loss |  | $ | 2,128 |
Tax Expense |  | $ | (448 | )
Net Income |  | $ | (1,680 | )
Earnings Per Share |  | $ | (0.12 | )
The error related to the HIVE unsecured convertible debentures was related to an additional principal payment being included within the binomial lattice valuation model. As a result, the fair value of the HIVE unsecured convertible debentures was corrected at June 30, 2022. The effect was as follows:
|  | Year Ended |
|  | and as of |
(dollars in thousands) |  | June 30, 2022 |
(Overstatement)/Understatement |  |  |  |
Deferred tax asset |  | $ | 172 |
Investments in available-for-sale debt securities at fair value |  | $ | (824 | )
Total Shareholders’ Equity |  | $ | (652 | )
Other Comprehensive Loss |  | $ | 652 |
The following tables set forth the impact of the restatement on the Company's annual consolidated financial statements as of and for the year ended June 30, 2022. CONSOLIDATED BALANCE SHEET
|  | June 30, 2022 |
|  | As |  |  |  |  |  |  |  |  |
|  | Previously |  |  | Restatement |  |  | As |
(dollars in thousands) |  | Reported |  |  | Adjustments |  |  | Restated |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22,314 |  |  | $ | - |  |  | $ | 22,314 |
Restricted cash |  |  | 1,000 |  |  |  | - |  |  |  | 1,000 |
Investments in securities at fair value |  |  | 12,138 |  |  |  | - |  |  |  | 12,138 |
Accounts and other receivables |  |  | 1,796 |  |  |  | - |  |  |  | 1,796 |
Tax receivable |  |  | 384 |  |  |  | - |  |  |  | 384 |
Prepaid expenses |  |  | 400 |  |  |  | - |  |  |  | 400 |
Total Current Assets |  |  | 38,032 |  |  |  | - |  |  |  | 38,032 |
Net Property and Equipment |  |  | 1,370 |  |  |  | - |  |  |  | 1,370 |
Other Assets |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax asset |  |  | 252 |  |  |  | 620 |  |  |  | 872 |
Investments in equity securities at fair value, non-current |  |  | 4,290 |  |  |  | (2,128 | ) |  |  | 2,162 |
Investments in available-for-sale debt securities at fair value |  |  | 11,449 |  |  |  | (824 | ) |  |  | 10,625 |
Investments in held-to-maturity debt securities |  |  | 1,000 |  |  |  | - |  |  |  | 1,000 |
Other investments |  |  | 3,992 |  |  |  | - |  |  |  | 3,992 |
Equity method investments |  |  | - |  |  |  | - |  |  |  | - |
Operating lease, right of use assets |  |  | - |  |  |  | - |  |  |  | - |
Financing lease, right of use assets |  |  | 93 |  |  |  | - |  |  |  | 93 |
Other assets, non-current |  |  | 216 |  |  |  | - |  |  |  | 216 |
Total Other Assets |  |  | 21,292 |  |  |  | (2,332 | ) |  |  | 18,960 |
Total Assets |  | $ | 60,694 |  |  | $ | (2,332 | ) |  | $ | 58,362 |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 73 |  |  | $ | - |  |  | $ | 73 |
Accrued compensation and related costs |  |  | 1,864 |  |  |  | - |  |  |  | 1,864 |
Dividends payable |  |  | 337 |  |  |  | - |  |  |  | 337 |
Operating lease liability, short-term |  |  | - |  |  |  | - |  |  |  | - |
Financing lease liability, short-term |  |  | 27 |  |  |  | - |  |  |  | 27 |
Other accrued expenses |  |  | 1,831 |  |  |  | - |  |  |  | 1,831 |
Taxes payable |  |  | - |  |  |  | - |  |  |  | - |
Total Current Liabilities |  |  | 4,132 |  |  |  | - |  |  |  | 4,132 |
Long-Term Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax liability |  |  | - |  |  |  | - |  |  |  | - |
Financing lease liability, long-term |  |  | 66 |  |  |  | - |  |  |  | 66 |
Total Long-Term Liabilities |  |  | 66 |  |  |  | - |  |  |  | 66 |
Total Liabilities |  |  | 4,198 |  |  |  | - |  |  |  | 4,198 |
Commitments and Contingencies (Note 18) |  |  |  |  |  |  |  |  |  |  |  |
Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Common stock (class A) - $0.025 par value; nonvoting; 28,000,000 shares authorized; 13,866,999 and 13,866,913 shares issued at June 30, 2022, and June 30, 2021, respectively; 12,888,950 and 12,967,960 shares outstanding at June 30, 2022, and June 30, 2021, respectively |  |  | 347 |  |  |  | - |  |  |  | 347 |
Common stock (class B) - $0.025 par value; nonvoting; 4,500,000 shares authorized; no shares issued |  |  | - |  |  |  | - |  |  |  | - |
Convertible common stock (class C) - $0.025 par value; voting; 3,500,000 shares authorized; 2,068,549 and 2,068,635 shares issued and outstanding at June 30, 2022, and June 30, 2021, respectively |  |  | 52 |  |  |  | - |  |  |  | 52 |
Additional paid-in-capital |  |  | 16,438 |  |  |  | - |  |  |  | 16,438 |
Treasury stock, class A shares at cost; 978,049 shares and 898,953 shares at June 30, 2022, and June 30, 2021, respectively |  |  | (2,599 | ) |  |  | - |  |  |  | (2,599 | )
Accumulated other comprehensive income, net of tax |  |  | 4,276 |  |  |  | (652 | ) |  |  | 3,624 |
Retained earnings |  |  | 37,982 |  |  |  | (1,680 | ) |  |  | 36,302 |
Total Shareholders’ Equity |  |  | 56,496 |  |  |  | (2,332 | ) |  |  | 54,164 |
Total Liabilities and Shareholders’ Equity |  | $ | 60,694 |  |  | $ | (2,332 | ) |  | $ | 58,362 |
CONSOLIDATED STATEMENT OF OPERATIONS
|  | Year Ended June 30, 2022 |
|  | As |  |  |  |  |  |  |  |  |
|  | Previously |  |  | Restatement |  |  | As |
(dollars in thousands, except per share data) |  | Reported |  |  | Adjustments |  |  | Restated |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |
Advisory fees |  | $ | 24,525 |  |  | $ | - |  |  | $ | 24,525 |
Administrative services fees |  |  | 189 |  |  |  | - |  |  |  | 189 |
|  |  | 24,714 |  |  |  | - |  |  |  | 24,714 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |
Employee compensation and benefits |  |  | 6,059 |  |  |  | - |  |  |  | 6,059 |
General and administrative |  |  | 6,911 |  |  |  | - |  |  |  | 6,911 |
Advertising |  |  | 405 |  |  |  | - |  |  |  | 405 |
Depreciation and amortization |  |  | 226 |  |  |  | - |  |  |  | 226 |
|  |  | 13,601 |  |  |  | - |  |  |  | 13,601 |
Operating Income |  |  | 11,113 |  |  |  | - |  |  |  | 11,113 |
Other Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |
Investment income (loss) |  |  | (4,046 | ) |  |  | (2,128 | ) |  |  | (6,174 | )
Income (loss) from equity method investments |  |  | (206 | ) |  |  | - |  |  |  | (206 | )
Other income |  |  | 235 |  |  |  | - |  |  |  | 235 |
|  |  | (4,017 | ) |  |  | (2,128 | ) |  |  | (6,145 | )
Income Before Income Taxes |  |  | 7,096 |  |  |  | (2,128 | ) |  |  | 4,968 |
Provision for Income Taxes |  |  |  |  |  |  |  |  |  |  |  |
Tax expense |  |  | 1,597 |  |  |  | (448 | ) |  |  | 1,149 |
Net Income |  |  | 5,499 |  |  |  | (1,680 | ) |  |  | 3,819 |
Earnings Per Share |  |  |  |  |  |  |  |  |  |  |  |
Basic Net Income per Share |  | $ | 0.37 |  |  | $ | (0.12 | ) |  | $ | 0.25 |
Diluted Net Income per Share |  | $ | 0.37 |  |  | $ | (0.12 | ) |  | $ | 0.25 |
Basic weighted average number of common shares outstanding |  |  | 15,010,138 |  |  |  |  |  |  |  | 15,010,138 |
Diluted weighted average number of common shares outstanding |  |  | 15,011,128 |  |  |  |  |  |  |  | 15,011,128 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
|  | Year Ended June 30, 2022 |
|  | As |  |  |  |  |  |  |  |  |
|  | Previously |  |  | Restatement |  |  | As |
(dollars in thousands) |  | Reported |  |  | Adjustments |  |  | Restated |
Net Income |  | $ | 5,499 |  |  | $ | (1,680 | ) |  | $ | 3,819 |
Other Comprehensive Income (Loss), Net of Tax: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) on available-for-sale securities arising during period |  |  | (557 | ) |  |  | (652 | ) |  |  | (1,209 | )
Less: reclassification adjustment for gains included in net income (Note 4) |  |  | (1,731 | ) |  |  | - |  |  |  | (1,731 | )
Net change from available-for-sale securities, net of tax |  |  | (2,288 | ) |  |  | (652 | ) |  |  | (2,940 | )
Foreign currency translation adjustment |  |  | (13 | ) |  |  | - |  |  |  | (13 | )
Less: reclassification adjustment for foreign currency gains included in net income |  |  | (10 | ) |  |  | - |  |  |  | (10 | )
Net change from foreign currency translations |  |  | (23 | ) |  |  | - |  |  |  | (23 | )
Other Comprehensive Income (Loss) |  |  | (2,311 | ) |  |  | (652 | ) |  |  | (2,963 | )
Comprehensive Income |  | $ | 3,188 |  |  | $ | (2,332 | ) |  | $ | 856 |
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |
|  | Common |  |  |  |  |  |  | Common |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Other |  |  |  |  |  |  |  |  |
|  | Stock |  |  | Common |  |  | Stock |  |  | Common |  |  | Additional |  |  | Treasury |  |  |  |  |  |  | Comprehensive |  |  |  |  |  |  |  |  |
|  | (class A) |  |  | Stock |  |  | (class C) |  |  | Stock |  |  | Paid-in |  |  | Stock |  |  | Treasury |  |  | Income |  |  | Retained |  |  |  |  |
|  | Shares |  |  | (class A) |  |  | Shares |  |  | (class C) |  |  | Capital |  |  | Shares |  |  | Stock |  |  | (Loss) |  |  | Earnings |  |  | Total |
(dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | As Previously Reported: |
Balance at June 30, 2021 |  |  | 13,866,913 |  |  | $ | 347 |  |  |  | 2,068,635 |  |  | $ | 52 |  |  | $ | 15,677 |  |  |  | 898,953 |  |  | $ | (2,172 | ) |  | $ | 6,587 |  |  | $ | 33,833 |  |  | $ | 54,324 |
Purchases of shares of Common Stock (class A) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 89,287 |  |  |  | (452 | ) |  |  | - |  |  |  | - |  |  |  | (452 | )
Issuance of stock under ESPP of shares of Common Stock (class A) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28 |  |  |  | (10,191 | ) |  |  | 25 |  |  |  | - |  |  |  | - |  |  |  | 53 |
Conversion of shares of class C common stock for class A common stock |  |  | 86 |  |  |  | - |  |  |  | (86 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Share-based compensation, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 733 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 733 |
Dividends declared |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,350 | ) |  |  | (1,350 | )
Other comprehensive loss, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,311 | ) |  |  | - |  |  |  | (2,311 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,499 |  |  |  | 5,499 |
Balance at June 30, 2022 |  |  | 13,866,999 |  |  | $ | 347 |  |  |  | 2,068,549 |  |  | $ | 52 |  |  | $ | 16,438 |  |  |  | 978,049 |  |  | $ | (2,599 | ) |  | $ | 4,276 |  |  | $ | 37,982 |  |  | $ | 56,496 |
|  | Restatement Adjustments: |
Other comprehensive loss, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (652 | ) |  |  | - |  |  |  | (652 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,680 | ) |  |  | (1,680 | )
|  | As Restated: |
Balance at June 30, 2021 |  |  | 13,866,913 |  |  | $ | 347 |  |  |  | 2,068,635 |  |  | $ | 52 |  |  | $ | 15,677 |  |  |  | 898,953 |  |  | $ | (2,172 | ) |  | $ | 6,587 |  |  | $ | 33,833 |  |  | $ | 54,324 |
Purchases of shares of Common Stock (class A) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 89,287 |  |  |  | (452 | ) |  |  | - |  |  |  | - |  |  |  | (452 | )
Issuance of stock under ESPP of shares of Common Stock (class A) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28 |  |  |  | (10,191 | ) |  |  | 25 |  |  |  | - |  |  |  | - |  |  |  | 53 |
Conversion of shares of class C common stock for class A common stock |  |  | 86 |  |  |  | - |  |  |  | (86 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Share-based compensation, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 733 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 733 |
Dividends declared |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,350 | ) |  |  | (1,350 | )
Other comprehensive loss, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,963 | ) |  |  | - |  |  |  | (2,963 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,819 |  |  |  | 3,819 |
Balance at June 30, 2022 |  |  | 13,866,999 |  |  | $ | 347 |  |  |  | 2,068,549 |  |  | $ | 52 |  |  | $ | 16,438 |  |  |  | 978,049 |  |  | $ | (2,599 | ) |  | $ | 3,624 |  |  | $ | 36,302 |  |  | $ | 54,164 |
CONSOLIDATED STATEMENT OF CASH FLOWS
|  | Year Ended June 30, 2022 |
(dollars in thousands) |  | As |  |  |  |  |  |  |  |  |
|  | Previously |  |  | Restatement |  |  | As |
|  | Reported |  |  | Adjustments |  |  | Restated |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 5,499 |  |  | $ | (1,680 | ) |  | $ | 3,819 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation, amortization and accretion |  |  | (419 | ) |  |  | - |  |  |  | (419 | )
Net recognized loss on disposal of fixed assets |  |  | - |  |  |  | - |  |  |  | - |
Net realized gains on securities |  |  | (4,039 | ) |  |  | - |  |  |  | (4,039 | )
Unrealized losses (gains) on securities |  |  | 9,786 |  |  |  | 2,128 |  |  |  | 11,914 |
Investment basis adjustment |  |  | 5 |  |  |  | - |  |  |  | 5 |
Net loss (income) from equity method investment |  |  | 206 |  |  |  | - |  |  |  | 206 |
Foreign currency transaction gain |  |  | (10 | ) |  |  | - |  |  |  | (10 | )
Provision for deferred taxes |  |  | (2,443 | ) |  |  | (448 | ) |  |  | (2,891 | )
Stock bonuses |  |  | - |  |  |  | - |  |  |  | - |
Stock-based compensation expense |  |  | 733 |  |  |  | - |  |  |  | 733 |
PPP loan forgiveness |  |  | - |  |  |  | - |  |  |  | - |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Accounts and other receivables |  |  | 2,501 |  |  |  | - |  |  |  | 2,501 |
Prepaid expenses and other assets |  |  | (217 | ) |  |  | - |  |  |  | (217 | )
Accounts payable and accrued expenses |  |  | (1,067 | ) |  |  | - |  |  |  | (1,067 | )
Total adjustments |  |  | 5,036 |  |  |  | 1,680 |  |  |  | 6,716 |
Net cash provided by operating activities |  |  | 10,535 |  |  |  | - |  |  |  | 10,535 |
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | (220 | ) |  |  | - |  |  |  | (220 | )
Purchase of equity securities at fair value, current |  |  | (6,000 | ) |  |  | - |  |  |  | (6,000 | )
Purchase of equity securities at fair value, non-current |  |  | (123 | ) |  |  | - |  |  |  | (123 | )
Purchase of other investments |  |  | (620 | ) |  |  | - |  |  |  | (620 | )
Purchase of held-to-maturity debt securities |  |  | - |  |  |  | - |  |  |  | - |
Purchase of available-for-sale debt securities at fair value |  |  | - |  |  |  | - |  |  |  | - |
Proceeds from sale of equity method investment |  |  | 85 |  |  |  | - |  |  |  | 85 |
Proceeds on sale of equity securities at fair value, non-current |  |  | 2,850 |  |  |  | - |  |  |  | 2,850 |
Proceeds from principal paydowns of available-for-sale debt securities at fair value |  |  | 3,000 |  |  |  | - |  |  |  | 3,000 |
Return of capital on other investments |  |  | 9 |  |  |  | - |  |  |  | 9 |
Net cash provided by (used in) investing activities |  |  | (1,019 | ) |  |  | - |  |  |  | (1,019 | )
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Issuance of common stock |  |  | 53 |  |  |  | - |  |  |  | 53 |
Repurchases of common stock |  |  | (452 | ) |  |  | - |  |  |  | (452 | )
Dividends paid |  |  | (1,239 | ) |  |  | - |  |  |  | (1,239 | )
Net cash used in financing activities |  |  | (1,638 | ) |  |  | - |  |  |  | (1,638 | )
Net increase in cash, cash equivalents, and restricted cash |  |  | 7,878 |  |  |  | - |  |  |  | 7,878 |
Beginning cash, cash equivalents, and restricted cash |  |  | 15,436 |  |  |  | - |  |  |  | 15,436 |
Ending cash, cash equivalents, and restricted cash |  | $ | 23,314 |  |  | $ | - |  |  | $ | 23,314 |
Supplemental Disclosures of Non-Cash Investing and Financing Activities |  |  |  |  |  |  |  |  |  |  |  |
Dividends declared but not paid |  | $ | 337 |  |  | $ | - |  |  | $ | 337 |
Fair value of assets acquired |  | $ | 228 |  |  | $ | - |  |  | $ | 228 |
Unsettled sales of non-current investments |  | $ | - |  |  | $ | - |  |  | $ | - |
Supplemental Disclosures of Cash Flow Information |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for income taxes |  | $ | 4,142 |  |  | $ | - |  |  | $ | 4,142 |

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