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Note 4 - Insurance SPAC Investments and Other Significant Events | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Insurance Investments and Other Significant Events [Text Block] | 4. INSURANCE SPAC INVESTMENTS AND OTHER SIGNIFICANT EVENTS Insurance SPAC Investments Insurance Acquisition Corporation (the “Insurance SPAC”) ﻿ The Operating LLC is the manager of Insurance Acquisition Sponsor, LLC (“IAS”) and Dioptra Advisors, LLC (“Dioptra,” and, together with IAS, the “Insurance SPAC Sponsor Entities”). The Insurance SPAC Sponsor Entities were sponsors of Insurance Acquisition Corp. ("Insurance SPAC"), a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. On June 29, 2020, Insurance SPAC entered into an Agreement and Plan of Merger (the “Insurance SPAC Merger Agreement”) with IAC Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Insurance SPAC (“Insurance SPAC Merger Sub”), and Shift Technologies, Inc., a Delaware corporation (“Shift”). On October 13, 2020, Insurance SPAC Merger Sub was merged (the "Insurance SPAC Merger") with and into Shift. In connection with the Insurance SPAC Merger, the Insurance SPAC changed its name from "Insurance Acquisition Corp." to "Shift Technologies, Inc." and, on October 15, 2020, the Insurance SPAC's NASDAQ trading symbol changed from "INSU" to "SFT." The Insurance SPAC Merger was approved by the Insurance SPAC's stockholders at a special meeting of stockholders held on October 13, 2020. Upon the closing of the Insurance SPAC Merger, the Insurance SPAC Sponsor Entities held 375,000 shares of Shift's Class A Common Stock, par value $0.0001 per share (“SFT Class A Common Stock”), and 187,500 warrants (“SFT Warrants”) to purchase an equal number of shares of SFT Class A Common Stock for $11.50 per share (such SFT Class A Common Stock and SFT Warrants, collectively, the “Placement Securities”) as a result of the 375,000 placement units which the Insurance SPAC Sponsor Entities had purchased in a private placement that occurred simultaneously with the Insurance SPAC's initial public offering on March 22, 2019. Further, upon the closing of the Insurance SPAC Merger, the Insurance SPAC Sponsor Entities collectively held an additional 4,497,525 shares of SFT Class A Common Stock as a result of its previous purchase of founder shares of the Insurance SPAC. In general, when founders shares and placement shares are discussed as a group, the Company refers to them as Sponsor Shares. Of the 375,000 placement units, 122,665 were allocable to the Operating LLC. Of the 4,497,525 founders Shares, 2,019,721 were allocable to the Operating LLC. As of the closing of the Insurance SPAC Merger, the Company continued to consolidate the Insurance SPAC Sponsor Entities. Prior to the closing, the Company treated the consolidated Insurance SPAC Sponsor Entities' investment in the Insurance SPAC as an equity method investment. Effective upon the closing of the Insurance SPAC Merger:
| 1. | The Company determined the fair value of the Sponsor Shares held by the Insurance SPAC Sponsor Entities.
| 2. | The Company reclassified the equity method investment to other investments, at fair value and recorded principal transactions and other income for the difference between the fair value of the Sponsor Shares held by the Insurance SPAC Sponsor Entities and the equity method investment balance immediately prior to the closing of the Insurance SPAC Merger.
| 3. | The Company then recorded non-controlling interest expense or compensation expense related to the Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities. If the non-controlling interest holder was an employee, the Company recorded the expense as equity-based compensation expense. Otherwise, the expense was recorded as non-controlling interest expense.
Subsequent to the closing of the Insurance SPAC Merger, any change in the fair value of the shares held by the Insurance SPAC Sponsor Entities has been recorded as a component of principal transactions and other income. The Company concurrently records a corresponding non-controlling interest entry related to the Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities. No adjustment is made to the equity-based compensation expense recorded as of the closing of the Shift merger. Rather, all post-merger changes in value related to Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities are recorded as non-controlling interest expense. In December 2020, the Insurance SPAC Sponsor Entities distributed a portion of the Sponsor Shares held to the Operating LLC or other wholly owned subsidiaries of the Operating LLC, and the non-controlling interest holders, in a partial liquidating distribution of the Insurance SPAC Sponsor Entities. For the Sponsor Shares the Company holds outside of the Insurance SPAC Sponsor Entities, the Company records principal transactions and other income for any change in their value. In this case, there is no corresponding non-controlling interest income or expense. The Company expects the Insurance SPAC Sponsor Entities to distribute all of their holdings of Sponsor Shares and fully liquidate the Insurance SPAC Sponsor Entities in the first quarter of 2021. Concurrently with the closing of the Insurance SPAC Merger, a subsidiary of the Operating LLC, INSU Pipe Sponsor LLC, purchased 600,000 shares of SFT Class A Common Stock at a purchase price per share of $10.00 pursuant to a subscription agreement that such subsidiary executed at the time of the execution of the Insurance SPAC Merger Agreement. The Company's interest in INSU Pipe Sponsor LLC entitled it to an allocation of 350,000 shares of SFT Class A Common Stock. During 2020, the Company consolidated INSU Pipe Sponsor LLC and recorded principal transactions and other income for the full 600,000 shares and then non-controlling interest expense or income for the 250,000 shares not owned by it. In December 2020, SFT Class A Common Stock were registered for sale and INSU Pipe Sponsor LLC distributed the shares to the non-controlling interest holders resulting in INSU Pipe Sponsor LLC being 100% owned by the Operating LLC. INSU Pipe Sponsor LLC was dissolved in the first quarter of 2021, and the Company's 350,000 shares were transferred to the Operating LLC. The following table details the income statement impact of Insurance SPAC to the Company's operating results during 2020:
|  | Year Ended December 31, 2020 |
|  | Insurance SPAC Sponsor Entities |  |  | INSU Pipe Sponsor, LLC |  |  | Operating LLC |  |  | Total |
Principal transactions and other income |  | $ | 41,035 |  |  | $ | (842 | ) |  | $ | 426 |  |  | $ | 40,619 |
Equity-based compensation |  |  | (11,700 | ) |  |  | - |  |  |  | - |  |  |  | (11,700 | )
Other operating |  |  | (2 | ) |  |  | - |  |  |  | - |  |  |  | (2 | )
Income / (loss) from equity method affiliates |  |  | (3,138 | ) |  |  | - |  |  |  | - |  |  |  | (3,138 | )
Net income / (loss) |  |  | 26,195 |  |  |  | (842 | ) |  |  | 426 |  |  |  | 25,779 |
Less: Net (loss) income attributable to the non-controlling interest - Operating LLC |  |  | (9,328 | ) |  |  | 410 |  |  |  | - |  |  |  | (8,918 | )
Net income / (loss) - Operating LLC |  |  | 16,867 |  |  |  | (432 | ) |  |  | 426 |  |  |  | 16,861 |
Less: Net income / (loss) attributable to the convertible non-controlling interest |  |  | 12,205 |  |  |  | (313 | ) |  |  | 308 |  |  |  | 12,200 |
Net income / (loss) attributable to Cohen & Company Inc. |  | $ | 4,662 |  |  | $ | (119 | ) |  | $ | 118 |  |  | $ | 4,661 |
As of December 31, 2020, the Operating LLC's total investment in Shift of $36,395 is included as a component of other investments, at fair value in the consolidated balance sheet. Offsetting this is $1,337 included as other investments sold, not yet purchased and $16,686 of non-controlling interest in the consolidated balance sheet related to shares of Shift held in consolidated entities that are distributable to the non-controlling interest holders. Therefore, the Operating LLC's share of the consolidated investment in Shift as of December 31, 2020 was $18,372. INSU Acquisition Corp II ("Insurance SPAC II") The Operating LLC, is the manager of Insurance Acquisition Sponsor II, LLC (“IAS II”) and Dioptra Advisors II, LLC (“Dioptra II” and, together with IAS II, the “Insurance SPAC II Sponsor Entities”). The Insurance SPAC II Sponsor Entities are sponsors of INSU Acquisition Corp. II (“Insurance SPAC II”), a blank check company that sought to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (each a “Insurance SPAC II Business Combination”). On November 24, 2020, Insurance SPAC II entered into an Agreement and Plan of Merger (the “Insurance SPAC II Merger Agreement”) with INSU II Merger Sub Corp., a Delaware corporation and direct wholly owned subsidiary of Insurance SPAC II (“Insurance SPAC II Merger Sub”), and MetroMile, Inc., a Delaware corporation (currently named MetroMile Operating Company)(“MetroMile”). The Insurance SPAC II Merger Agreement provides for, among other things, the acquisition of MetroMile by Insurance SPAC II pursuant to the proposed merger of Insurance SPAC II Merger Sub with and into MetroMile with MetroMile continuing as the surviving entity and a direct wholly owned subsidiary of Insurance SPAC II (the “Insurance SPAC II Merger”). On February 9, 2021, the Insurance SPAC II Merger was consummated and Insurance SPAC II changed its name to MetroMile. Upon completion of the Insurance SPAC II Merger, the Insurance SPAC II Sponsor Entities received a total of 6,669,667 founder shares and 452,500 placement units. Each placement unit consists of one share of Insurance SPAC II Common Stock and one - third of one warrant (the “Insurance SPAC II Warrant”). Each whole Insurance SPAC II Warrant entitles the holder to purchase one share of Insurance SPAC II Common Stock for $11.50 per share. Of the 6,669,667 founders shares, (i) 1,569,333 founder shares are freely transferable and saleable at the closing as of the Insurance SPAC II Merger, (ii) 2,550,167 founder shares will become transferable and saleable at such time as MetroMile's stock price is greater than $15.00 per share for any period of 20 trading days out of 30 consecutive trading days; (iii) 2,550,167 founder shares will become transferable and saleable at such time as MetroMile's stock price is greater than $17.00 per share for any period of 20 trading days out of 30 consecutive trading days. The Company currently consolidates the Insurance SPAC II Sponsor Entities and prior to the Insurance SPAC II Merger treated its investment in the Insurance SPAC II as an equity method investment. Effective upon the closing of the Insurance SPAC II Merger on February 9, 2021, the Company reclassified its equity method investment in the Insurance SPAC II to other investments, at fair value and adopted fair value accounting for the investment in MetroMile, resulting in an amount of principal transaction revenue derived from the (i) the Sponsor Shares retained by the Insurance SPAC II Sponsor Entities described in the previous paragraph; (ii) the trading share price of MetroMile Common Stock and the MetroMile Warrants; and (iii) fair value discounts related to the share sale restrictions on the Sponsor Shares. Upon recognition of the principal transaction revenue described above, the Company recorded non-controlling interest expense or compensation expense related to the amount of Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC II Sponsor Entities. If the non-controlling interest holder is an employee of the Company, the expense is recorded as compensation. Otherwise, the expense is non-controlling interest expense. Of the Sponsor Shares retained by the Insurance SPAC II Sponsor Entities, the amount to be allocable to the Operating LLC is (i) 765,833 founder shares that are transferable and saleable at the closing of the Insurance SPAC II Merger, (ii) 1,244,479 founder shares that will become transferable and saleable at such time as MetroMile's stock price is greater than $15.00 per share for any period of 20 trading days out of 30 consecutive trading days; (iii) 1,244,479 founder shares that will become transferable and saleable at such time as MetroMile's stock price is greater than $17.00 per share for any period of 20 trading days out of 30 consecutive trading days. As of December 31, 2020, the Company had a total equity method investment in Insurance SPAC II of $4,064 which was included as a component of investment in equity method affiliates in the Company's consolidated balance sheet. Offsetting this amount was non-controlling interest of $4,295 which was included as a component of non-controlling interest in the Company's consolidated balance sheet. Therefore, the net carrying value of the Company's investment in Insurance SPAC II was $( 231 ) as of December 31, 2020. INSU Acquisition Corp III ("Insurance SPAC III") The Operating LLC, is the manager of Insurance Acquisition Sponsor III, LLC (“IAS III”) and Dioptra Advisors III, LLC (together with IAS III, the “Insurance SPAC III Sponsor Entities”). On December 22, 2020, INSU Acquisition Corp III completed the sale of 25,000,000 units (the “Insurance SPAC III Units”) in its initial public offering which included 3,200,000 units issued pursuant to the underwriters' over-allotment option. Each Insurance SPAC III Unit consists of one share of Class A common stock, par value $0.0001 per share (“Insurance SPAC III Common Stock”), and one - third of one warrant (each, an “Insurance SPAC III Warrant”), where each whole Insurance SPAC III Warrant entitles the holder to purchase one share of Insurance SPAC III Common Stock for $11.50 per share. The Insurance SPAC III Units were sold in the IPO at an offering price of $10.00 per Unit, for gross proceeds of $250,000 (before underwriting discounts and commissions and offering expenses). Pursuant to the underwriting agreement in the IPO, Insurance SPAC III granted the underwriters in the IPO (the “Insurance SPAC III Underwriters”) a 45 -day option to purchase up to 3,270,000 additional Insurance SPAC III Units solely to cover over-allotments, if any; and on December 21, 2020, the Insurance SPAC III Underwriters notified the Company that they were partially exercising the over-allotment option for 3,200,000 units and waiving the remainder of the over-allotment option. Immediately following the completion of the IPO, there were an aggregate of 34,100,000 shares of Insurance SPAC III Common Stock issued and outstanding. If the Insurance SPAC III fails to consummate a business combination within the first 24 months following the IPO, its corporate existence will cease except for the purposes of winding up its affairs and liquidating its assets. The Insurance SPAC III Sponsor Entities purchased an aggregate of 575,000 of the placement units in a private placement that occurred simultaneously with the IPO for an aggregate of $5,750 or $10.00 per placement unit. Each placement unit consists of one share of Insurance SPAC III Common Stock and one - third of one warrant (the “Insurance SPAC III Placement Warrant”). The Insurance SPAC III placement units are identical to the Insurance SPAC III Units sold in the IPO except (i) the shares of Insurance SPAC III Common Stock issued as part of the placement units and the Insurance SPAC III Warrants will not be redeemable by Insurance SPAC, III (ii) the Insurance SPAC III Warrants may be exercised by the holders on a cashless basis, and (iii) the shares of Insurance SPAC III Common Stock issued as part of the placement units, together with Insurance SPAC III Warrants, are entitled to certain registration rights. Subject to certain limited exceptions, the placement units (including the underlying Insurance SPAC III Warrants and Insurance SPAC III Common Stock and the shares of Insurance SPAC III Common Stock issuable upon exercise of Insurance SPAC III Warrants) will not be transferable, assignable or salable until 30 days after the completion of the Insurance SPAC III's initial business combination. A total of $250,000 of the net proceeds from the private placement and the IPO (including approximately $10,600 of the deferred underwriting commission from the IPO) were placed in a trust account. Except for the withdrawal of interest to pay taxes (or dissolution expenses if a business combination is not consummated), none of the funds held in the trust account will be released until the earlier of (i) the completion of Insurance SPAC III's initial business combination, (ii) in connection with a stockholder vote to amend Insurance SPAC III's amended and restated certificate of incorporation (A) to modify the substance or timing of the Insurance SPAC III's obligation to redeem 100% of its public shares if it does not complete an initial business combination within 24 months from the completion of the IPO or (B) with respect to any other provision relating to stockholders' rights or pre-initial business combination activity or (iii) the redemption of all of the Insurance SPAC III's public shares issued in the IPO if Insurance SPAC III is unable to consummate an initial business combination within 24 months from the completion of the IPO. If Insurance SPAC III does not complete a business combination within the first 24 months following the IPO, the placement units will expire worthless. The Insurance SPAC III Sponsor Entities collectively hold 8,525,000 founder shares. Subject to certain limited exceptions, the founder shares will not be transferable or salable except (a) with respect to 25% of such shares, until consummation of a business combination, and (b) with respect to additional 25% tranches of such shares, when the closing price of Insurance SPAC III Common Stock exceeds $12.00, $13.50 and $17.00, respectively, for 20 out of any 30 consecutive trading days following the consummation of a business combination. Certain non-controlling interests in the Insurance SPAC III Sponsor Entities, including executive and key employees of the Operating LLC, purchased membership interests in the Insurance SPAC III Sponsor Entities and, in addition to having an interest in the Insurance SPAC III's placement units discussed above, have an interest in Insurance SPAC III's founder shares through such membership interests in the Insurance SPAC III Sponsor Entities. The number of the Insurance SPAC III's founders shares in which such non-controlling interests in the Insurance SPAC III Sponsor Entities, including such executives and key employees of the Operating LLC, have an interest in through the Insurance SPAC III Sponsor Entities will not be finally and definitively determined until consummation of a business combination. The number of the Insurance SPAC III's founder shares currently allocated to the Operating LLC is 4,467,500, but such number of founder shares will also not be finally and definitively determined until the consummation of a business combination. The Operating LLC loaned to Insurance SPAC III approximately $71 to cover IPO expenses, which was repaid in full at the closing of the IPO. Insurance Acquisition Sponsor III and its affiliates, including the Operating LLC, have also committed to loan Insurance SPAC III up to an additional $810 to cover operating and acquisition related expenses following the IPO. These loans will bear no interest and, if the Insurance SPAC III consummates a business combination in the required time frame, the loans are to be repaid from the funds held in Insurance SPAC III's trust account. If Insurance SPAC III does not consummate a business combination in the required time frame, no funds from Insurance SPAC III's trust account can be used to repay the loans. As of December 31, 2020, the Company had a total equity method investment in Insurance SPAC III of $5,741 which was included as a component of investment in equity method affiliates in the Company's consolidated balance sheet. Partially offsetting this amount was non-controlling interest of $5,416 which was included as a component of non-controlling interest in the Company's consolidated balance sheet. Therefore, the net carrying value of our investment in Insurance SPAC III was $325 as of December 31, 2020. Other Recent Events COVID- 19 / Impairment of Goodwill In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID- 19 ) as a pandemic, which continues to spread throughout the United States and worldwide. The spread of COVID- 19 has caused significant volatility in domestic and international markets. There is on-going uncertainty around the breadth and duration of business disruptions related to COVID- 19, as well as its impact on the U.S. and international economies. While the Company cannot fully assess the impact COVID- 19 will have on all of its operations at this time, there are certain impacts that the Company has identified:
| ● | The unprecedented volatility of the financial markets experienced since March 2020, has caused the Company to operate JVB at a lower level of leverage than prior to the pandemic. Specifically, JVB has reduced the size of its GCF repo operations and the volume of its TBA trading. The Company determined that at its pre-pandemic levels in these businesses, it was exposed to a higher level of counterparty credit risk and was experiencing too much volatility in its available liquidity to conservatively meet capital requirements and margin calls in these businesses. The Company expects JVB to operate at lower volumes in both these businesses for an indefinite period of time, which could unfavorably impact the operating profitability of JVB.
| ● | The financial market volatility, as well as the reduction in volumes in the GCF repo and TBA businesses, that resulted from COVID- 19 required the Company to reassess the goodwill it had recorded related to JVB under the guidance of ASC 350. The Company determined that the fair value of JVB was less than the carrying value (including the goodwill). As a result, the Company recorded an impairment loss of $7,883 for the year ended December 31, 2020. See note 13.
| ● | JVB's mortgage group's operations are centered on serving the financial needs of mortgage originators and institutions that invest in mortgage backed securities. Prolonged high unemployment could eventually impact mortgage originations and demand for and supply of mortgage backed securities, which may have a significant unfavorable impact on the revenue earned by JVB's mortgage group.
In 2021, medical professionals developed COVID- 19 vaccines and governments began to distribute them globally, which is expected to reduce virus spread and further aid economic recovery. Despite the broad improvements, the Company will likely be impacted by the pandemic in other ways which the Company cannot reliably determine. The Company will continue to monitor market conditions and respond accordingly. ﻿The Company applied for and received a $2,166 loan under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The Company carefully considered the eligibility requirements for PPP loans as well as supplemental guidance regarding the PPP beyond the applicable statute issued from time to time by government agencies and certain government officials. The Company was eligible for a PPP loan because it had fewer than 100 employees. Further, although the Company is a publicly traded company and is listed on the NYSE American stock exchange, the Company's market capitalization is small relative to many other publicly traded companies, and the Company believed that it did not have access to the public capital markets at the time we applied for the and received a loan under the PPP. In part due to the PPP loan, the Company does not anticipate any significant workforce reduction or reductions in compensation levels in the near future. However, the Company will continue to carefully monitor revenue levels to assess whether compensatory or other cost-cutting measures might be necessary. On September 23, 2020, the Company applied for forgiveness of the PPP loan. As of the date of this report, the Company has not heard back regarding forgiveness of the PPP loan. See note 20. The 2020 Senior Notes On January 31, 2020, the Operating LLC entered into a note purchase agreement with JKD Capital Partners I LTD, a New York corporation (“JKD Investor”), and RN Capital Solutions LLC, a Delaware limited liability company (“RNCS”). The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company's board of directors, and his spouse. Pursuant to the note purchase agreement, JKD Investor and RNCS each purchased a senior promissory note in the principal amount of $2,250 (for an aggregate investment of $4,500 ). The senior promissory notes bear interest at a fixed rate of 12% per annum and mature on January 31, 2022. On February 3, 2020, pursuant to the note purchase agreement, the Operating LLC used the proceeds received from the issuance of the senior promissory notes to the JKD Investor and RNCS to repay in full all amounts outstanding under the senior promissory note, dated September 25, 2019, issued by the Company to Pensco Trust Company, Custodian fbo Edward E. Cohen IRA in the principal amount of $4,386 (the “Cohen IRA Note”). The Cohen IRA Note was included as a portion of the 2019 Senior Notes outstanding as of December 31, 2019. The Cohen IRA Note was fully paid and extinguished on February 3, 2020. Subsequent to this repayment, $2,400 of the 2019 Senior Notes remain outstanding and are held by EBC. On September 25, 2020, the Company amended and restated the 2019 Senior Notes to extend the maturity date of the remaining $2,400 to September 25, 2021. See note 20. DGC Trust/CBF Redeemable Financial Instrument On September 29, 2017, the Operating LLC entered into an investment agreement with CBF (the “CBF Investment Agreement”) and with the DGC Family Fintech Trust (the “DGC Trust”), a trust established by Daniel G. Cohen (the “DGC Trust Investment Agreement”), pursuant to which CBF and the DGC Trust agreed to invest $8,000 and $2,000, respectively, into the Operating LLC. As of September 25, 2020, the Company had outstanding investment balances of $6,500 and $2,000 related to the CBF Investment Agreement and the DGC Trust Investment Agreement, respectively. On September 25, 2020, the Operating LLC and CBF entered into Amendment No. 3 to Investment Agreement, which amended the CBF Investment Agreement (i) to extend the date thereunder pursuant to which the Company or CBF could cause a redemption of the Investment Balance from September 27, 2020 to January 1, 2021, and (ii) to state that no such redemption by the Company could be in violation of any loan agreement to which the Company was then a party. On September 30, 2020, the Company redeemed the DGC Trust Investment Agreement in full by making payment of $2,000 to the DGC Trust. On October 9, 2020 and effective October 15, 2020, the Operating LLC entered into Amendment No. 4 to Investment Agreement, which further amended the CBF Investment Agreement to, among other things, (A) decrease the “Investment Amount” under the CBF Investment Agreement from $6,500 to $4,000 in exchange for a one -time payment of $2,500 from the Operating LLC to CBF; and (B) provide that the term “Investment Return” (as defined in the CBF Investment Agreement) will mean an annual return equal to, (i) for any twelve -month period following September 29, 2020 (each, an “Annual Period”) in which the revenue of the business of JVB (“Revenue of the Business”), is greater than zero, the greater of 20% of the Investment Amount or 9.4% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business is zero or less than zero, 3.75% of the Investment Amount. Prior to the Investment Agreement Amendment, the term “Investment Return” under the CBF Investment Agreement was defined as (A) with respect to any Annual Period in which the Revenue of the Business was greater than zero, the greater of 20% of the Investment Amount or 15.2% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business was zero or less than zero, 3.75% of the Investment Amount. The Company made the $2,500 payment to CBF on October 15, 2020. Furthermore, subsequent to December 31, 2020, the Company gave notice to CBF that it intends to redeem the remaining $4,000 investment on or around March 31, 2021. See note 19. ViaNova Capital Group LLC In 2018, the Company formed a wholly-owned subsidiary, ViaNova Capital Group LLC (“ViaNova”), for the purpose of building a residential transition loan (“RTL”) business. RTLs are small balance commercial loans that are secured by first lien mortgages used by professional investors and real estate developers to finance the purchase and rehabilitation of residential properties. On November 20, 2018, ViaNova entered into a Warehousing Credit and Security Agreement with LegacyTexas Bank (the “LegacyTexas Credit Facility”) with an effective date of November 16, 2018. The LegacyTexas Credit Facility was amended on May 4, 2019 and again on September 25, 2019 and October 28, 2019. The LegacyTexas Credit Facility supported the buying, aggregating, and distributing of RTLs performed by the business of ViaNova. On March 19, 2020, ViaNova received a notice of default from LegacyTexas Bank regarding the LegacyTexas Credit Facility, stating that ViaNova's unrestricted cash balance was less than the amount required. Also, on March 19, 2020, ViaNova received notice from LegacyTexas Bank that it had suspended funding all “alternative” loans for all of their clients, including the RTL loans that are the subject of the LegacyTexas Credit Facility. Since March 19, 2020, ViaNova has repaid all outstanding indebtedness under the LegacyTexas Credit Facility and stopped acquiring new RTLs. On August 22, 2020, the Company sold its investment in ViaNova to the former managing director of ViaNova in exchange for the managing director's assumption of all of ViaNova's liabilities and a potential earn out of up to $500. In conjunction with the sale, the Company transferred one RTL representing a par value of $2,300 and a fair value of $2,243 from ViaNova to JVB with a maturity date of January 1, 2021. The RTL was included in other investments, at fair value in the consolidated balance sheets as of December 31, 2020. The RTL was repaid in full in 2021. CCFEL ﻿ In June 2018, in response to the uncertainty surrounding Brexit, the Company formed a new subsidiary, CCFEL in Ireland, for the purpose of seeking to become regulated to perform asset management and capital markets activities in Ireland and the European Union. In April 2019, CCFEL received authorization from the CBI under the European Union (Markets in Financial Instruments) Regulations 2017 to provide investment services in respect of certain financial instruments including transferable securities, money-market instruments, units in collective investment undertakings and various option, futures, swaps, forward rate agreements, and other derivative contracts (“Financial Instruments”). The services for which CCFEL received authorization include the receipt and transmission of orders in relation to Financial Instruments, the execution of orders on behalf of clients, portfolio management, investment advice and investment research, and financial analysis. In addition, CCFEL applied for approval of a French branch, which approval was granted by the CBI and the branch was authorized by the French regulators in April 2019. Following authorization of the French branch of CCFEL, various contracts originally entered into by CCFL were novated to the French branch of CCFEL. The novation of contracts was completed on July 1, 2019. ﻿ ﻿ Investment in CK Capital Partners B.V. and AOI In December 2019, the Company acquired a 45% interest in CK Capital Partners B.V. (“CK Capital”), a private company incorporated in the Netherlands. CK Capital provides asset and investment advisory services relating to real estate holdings. The Company purchased this interest for $18 (of which $17 was purchased from an entity controlled by the Company's chairman, Daniel G. Cohen). In addition, the Company also acquired a 10% interest in Amersfoot Office Investment I Cooperatief U. A. (“AOI”), a real estate holding company, for $1 and subsequently invested $558 in AOI during 2019. The investments in AOI and CK Capital Partners are included as equity method investments on the consolidated balance sheets. See notes 12 and 31. Securities Purchase Agreement – Purchase of IMXI shares On December 30, 2019, the Company entered into a securities purchase agreement (the “SPA”) with Daniel G. Cohen, the Company's chairman, and the “DGC Trust. In connection with the SPA, the Company purchased 662,361 shares of International Money Express, Inc. (“IMXI”), an unrelated publicly traded company, in the aggregate from Mr. Cohen and the DGC Trust. Of the 662,361 shares, 134,317 shares were unrestricted and 528,044 were subject to sale restrictions. Of the restricted shares, 264,021 of the restricted shares become freely tradeable once IMXI's share price equals or exceeds $15.00 per share for 20 out of 30 consecutive trading days or upon a change of control of IMXI. The remaining 264,023 of restricted shares become freely tradeable once IMXI's share price equals or exceed $17.00 per share for 20 out of 30 consecutive trading days or upon a change of control of IMXI. IMXI's share price closed at $11.89 on December 30, 2019. In exchange for the IMXI shares, the Operating LLC issued 22,429,541 units of membership interests to Mr. Cohen and the DGC Trust. These units of membership interests represent an equity interest in the Operating LLC. The units of membership interests are redeemable and, if redeemed, Cohen & Company Inc. can determine to have the Operating LLC pay cash in exchange for the units or Cohen & Company Inc. may instead issue additional Common Shares on a 1 for 10 basis in exchange for the units. Therefore, the units may be convertible into 2,242,954 Common Shares. The Company obtained a third -party valuation of the IMXI shares and determined the value of these shares upon closing of the SPA was $7,779. The Company recorded this transaction as an increase in other investments, at fair value of $7,779 and an increase in non-controlling interest of $7,779 in its consolidated financial statements. In connection with the SPA, Cohen & Company Inc. issued 22,429,541 series F preferred shares to Mr. Cohen and the DGC Trust. These preferred shares are non-economic voting only shares and are entitled to vote on matters on a 1 for 10 basis (i.e. the total votes represented by the series F preferred shares are 2,242,954 ). The series F preferred shares do not participate in earnings or dividends. Immediately prior to the effectiveness of the SPA, Cohen & Company Inc. owned 67.8% of the outstanding units of membership interests of the Operating LLC. Immediately subsequent to the effectiveness of the SPA, Cohen & Company Inc. owned 28.75% of the outstanding units of membership interests of the Operating LLC. As part of the SPA, Mr. Cohen and the DGC Trust agreed to grant to Cohen & Company Inc. a proxy to vote, at any meeting, the number of the units of membership interests owned by Mr. Cohen and the DGC Trust so that Cohen & Company Inc. would have 51.00% of the total votes eligible to vote at such meeting (the “SPA Proxy”). The actual units that are subject to this proxy are determined at any meeting of the Operating LLC that a vote is held as follows: First, the total number of units of membership interests entitled to vote is determined. Second, the total number of units entitled to vote is multiplied by 51% and the total units of membership interests held by Cohen & Company Inc. is subtracted from this amount. The result represents the total number of units of membership interests owned by Mr. Cohen and the DGC Trust that will be subject to the SPA Proxy and that Cohen & Company Inc. will be entitled to vote. The amount of units subject to the proxy is allocated between Mr. Cohen and DGC Trust on a pro rata allocation. Therefore, subsequent to the SPA and taking into account the SPA Proxy, Cohen & Company Inc. owned 28.75% of the economic interests of the Operating LLC and controls 51.00% of the voting interests of the Operating LLC. Because Cohen & Company Inc. continues to maintain voting control of the Operating LLC, Cohen & Company Inc. will continue to consolidate the Operating LLC in its consolidated financial statements. However, earnings shall be allocated to Cohen & Company Inc. and the other members of the Operating LLC based on their respective economic interests. Accordingly, the non-controlling interest percentage reflected in the consolidated statement of operations will change from 32.22% immediately prior to the effectiveness of the SPA to 71.25% immediately subsequent to the effectiveness of the SPA. See notes 3, 21, and 31. ﻿

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