The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this annual report on Form 10-K. See "Consolidated Financial Statements." IntroductionConcierge Technologies, Inc. ("Concierge") or the ("Company") conducts business through its wholly-owned operating subsidiaries operating in theU.S. ,New Zealand andCanada . The operations of the Company's wholly-owned subsidiaries are more particularly described herein but are summarized as follows:
?
member of two investment services limited liability company subsidiaries that
manages, operates or is an investment advisor to exchange traded funds
organized as limited partnerships or investment trusts that issue shares that
trade on the
?
manufactures and distributes
?Brigadier Security Systems (2000) Ltd. ("Brigadier"), a Canadian based company, sells and installs commercial and residential alarm monitoring systems. ?Kahnalytics, Inc. dba/Original Sprout ("Original Sprout"), aU.S. based company, is engaged in the wholesale distribution of hair and skin care products under the brand name Original Sprout on a global scale.
?
Concierge to explore opportunities in the financial technology ("Fintech")
space, still in development stage as of
during the coming fiscal year. Because the Company conducts its businesses through its wholly-owned operating subsidiaries, the risks related to our wholly-owned subsidiaries are also risks that impact the Company's financial condition and results of operations. See, "Note 2. Summary of Significant Accounting Policies / Major Customers and Suppliers - Concentration of Credit Risk" in the consolidated financial statements for more information. The emergence of a novel coronavirus on a global scale, known as COVID-19, during the current year has had a nominal impact on our operations which varied from company to company. Overall, the effects of dealing with COVID-19 realized through social isolation, stay-at-home orders, shuttering of non-essential businesses and similar initiatives took effect on our areas of operation at such a late date in the fiscal year that the consolidated revenues were not significantly impacted. The financial risk to future operations is largely unknown, (refer to Part I, Item 1A, for further details.) Critical Accounting Policies
A summary of our significant accounting policies is described in detail in Note 2 to our Consolidated Financial Statements.
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Plan of Operation for the Next Twelve Months
Our plan of operation for the next twelve months is to apply necessary resources, which may include experienced personnel, cash, or synergistic acquisitions made with cash, equity or debt, into growing each of our business units to their potential. Original Sprout is in the initial stages of transitioning from a largely boutique offering to a more mainstream product and as such we anticipate measurable growth in revenues for the coming years. Additionally, we are expecting moderate growth in Brigadier through focused management initiatives and consolidation within the security industry coupled with expanded product offerings. Similarly, we expectGourmet Foods to be operating more efficiently under current management and continue to increase market share through additional product offerings and channels to market, including operation of its newly acquired subsidiary,Printstock Products Ltd. , inNew Zealand (see Note 16 - Subsequent Events). Wainwright will continue to develop innovative and new fund products to grow its portfolio. In addition to our long-term mission that is an acquisition strategy based upon identifying and acquiring profitable, mature, companies of a diverse nature and with in-place management that produces increased revenue streams, the Company is also focused upon building expertise and developing Fintech opportunities in the financial services sector. In a more general sense, the Company is characterizing its business in three categories; 1) financial services, 2) other operating units, and 3) corporate. The corporate category includes the expenses incurred for maintaining our public reporting status and management as well as the expenditures towards developing newly formed ventures such as Marygold. The purpose is to isolate the cyclical nature of the financial services business from our other industry segments. As revenues from financial services fluctuate over time due to varying performance of the commodities markets, our other operations are expected to be stable and sustainable by comparison. By these initiatives we seek to:
? continue to gain market share for our wholly-owned subsidiaries' areas of
operation,
? increase our gross revenues and realize net operating profits,
? lower our operating costs by unburdening certain selling expenses to third
party distributors,
? have sufficient cash reserves to pay down accrued expenses and losses,
? attract parties who have an interest in selling their privately held companies
to us,
? achieve efficiencies in accounting and reporting through adoption of standards
used by all subsidiaries on a consistent basis,
? strategically pursue additional company acquisitions, and
? explore opportunities as may present themselves in the Fintech space,
including the launch of a mobile app by Marygold during the coming fiscal
year. Results of Operations
Concierge and Subsidiaries
For the Year Ended
Financial Summary The table below summarizes each of Concierges subsidiaries into one of two categories. The Wainwright business is included in the Financial Services columns and all other subsidiaries, including Gourmet, Brigadier, and Original Sprout in the Other Operating Units columns. Corporate expenses are included in the Concierge Corporate columns, including the losses in the development stage of Marygold. ($'s in thousands) Financial Services Other Operating Units
Concierge Corporate Consolidated 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change $('000)% $('000)% $('000)% $('000)% Revenue$ 15,459 $ 15,021 $ 438
3 %
- - -$ 26,749 $ 26,949 $ (200 ) (1 )% % of total revenue 58 % 56 % - 2 % 42 % 44 % - (2 )% - - - - $ - $ - - - Cost of revenue - - - -$ 6,483 $ 6,936 $ (453 ) (7 )% - - - -$ 6,483 $ 6,936 $ (453 ) (7 )% Gross profit$ 15,459 $ 15,021 $ 438
3 %
- - -$ 20,266 $ 20,013 $ 253 1 % Operating expenses$ 12,769 $ 14,095 $ (1,326
) (9 )%
69 % 73 % (4 )% 22 % 21 % 1 % 1 % 8 % 6 % 2 % 2 % - - - - Income (loss) from operations$ 2,690 $ 926 $ 1,764
190 %
$ 179 $ (148 ) $ 327
221 %
269 %
16
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Table of Contents Revenue and Operating Income Consolidated revenue for the year endedJune 30, 2020 was$26.7 million representing a$0.2 million decrease from the prior year revenue of$26.9 million . While net revenues overall remained relatively unchanged, there were significant differences in the fourth quarter revenues of Wainwright and Brigadier. While Wainwright's revenues in the fourth quarter exceeded prior year comparison revenues due to the effects of historical price drops in global oil prices on AUM, Brigadier had corresponding lower revenues due to the lockdowns imposed by the COVID-19 response. Concierge produced an operating income for the year endedJune 30, 2020 of$1.9 million as compared to$0.8 million for the year endedJune 30, 2019 . This represents an increase in operating income of$1.2 million for the year endedJune 30, 2020 when compared to the year endedJune 30, 2019 or approximately 154%. The increase in operating income was primarily attributable to higher fund management revenue from Wainwright due to higher AUM. Other Income (Expenses) Other income (expense) for the years endedJune 30, 2020 and 2019 were$0.4 million and($0.1) million , respectively, resulting in a net income before income tax of$2.3 million and$0.6 million , respectively. After giving consideration to currency translation gain of$31 thousand our comprehensive income for the year endedJune 30, 2020 was$1.8 million as compared to the year endedJune 30, 2019 where there was a currency translation loss of$45 thousand resulted in comprehensive income of$0.2 million . Comprehensive gain and loss are comprised of fluctuations in foreign currency exchange rates and effects in the valuation of our holdings inNew Zealand andCanada . Income Tax Provision for income tax for the years endedJune 30, 2020 and 2019 are$0.6 million and$0.3 million , respectively, primarily attributable to ourUnited States operations through our Wainwright subsidiary. The Company files income taxes as a combined group and records most income taxes at the Concierge level. Income tax expense recorded at the Concierge level totaled$0.4 million for the year endedJune 30, 2020 , while a tax benefit of$15 thousand was recorded for the year endedJune 30, 2019 . Net Income Overall, the net income between the year endedJune 30, 2020 as compared to the year endedJune 30, 2019 increased by approximately$1.5 million or approximately 577% to approximately$1.8 million . The increase in profits for the year endedJune 30, 2020 was primarily attributable to higher fund management revenue from Wainwright due to a higher amount of AUM.Wainwright Holdings Wainwright was founded as a holding company inMarch 2004 as aDelaware corporation with one subsidiary,Ameristock Corporation , which was an investment adviser toAmeristock Mutual Fund, Inc. , a registered 1940 Act large cap value equity fund. InJanuary 2010 ,Ameristock Corporation was spun off as a standalone company. InMay 2005 , USCF was formed as a single member limited liability company in the state ofDelaware . InJune 2013 , USCF Advisers was formed as aDelaware limited liability company and inJuly 2014 , was registered as an investment adviser under the Investment Advisers Act of 1940, as amended. InNovember 2013 , the Advisers board of managers formed USCF ETF Trust ("ETF Trust ") and inJuly 2016 , theUSCF Mutual Funds Trust ("Mutual Funds Trust " and together with "ETF Trust " the "Trusts") both as open-end management investment companies registered under the Investment Company Act of 1940, as amended ("the 1940 Act"). The Trusts are authorized to have multiple segregated series or portfolios. Wainwright owns all of the issued and outstanding limited liability company membership interests of its subsidiaries, USCF and USCF Advisers, each aDelaware limited liability company and are affiliated companies. USCF serves as the general partner ("General Partner") for various limited partnerships ("LP") and sponsor ("Sponsor") as noted below. USCF and USCF Advisers are subject to federal, state and local laws and regulations generally applicable to the investment services industry. USCF is a commodity pool operator ("CPO") subject to regulation by theCommodity Futures Trading Commission (the "CFTC") and theNational Futures Association (the "NFA") under the Commodities Exchange Act ("CEA"). USCF Advisers is an investment adviser registered under the Investment Advisers Act of 1940, as amended and has registered as a CPO under the CEA. Exchange traded products ("ETPs") issued or sponsored by USCF are required to be registered with theSecurities and Exchange Commission (the "SEC") in accordance with the Securities Act of 1933. Wainwright is the holding company for USCF and USCF Advisers, which collectively operate ten exchange traded products ("ETPs") and exchange traded funds ("ETFs") listed on theNYSE Arca Inc. ("NYSE Arca") with a total of approximately$6 billion in assets under management ("AUM") as ofJune 30, 2020 . Wainwright, together with its subsidiaries USCF and USCF Advisers, are collectively referred to as "Wainwright" hereafter. 17
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USCF is currently the General Partner of the following Securities Act of
1933 commodity based funds and Sponsor ("Sponsor") of the United States
Commodity Index Funds Trust ("
USCF as
inMay 2005
United States Natural Gas Fund, LP Organized as a
inNovember 2006
inApril 2007
United States 12 Month Oil Fund, LP Organized as a
inJune 2007
inJune 2007
United States Brent Oil Fund, LP Organized as a
inSeptember 2009
USCF as fund Sponsor - each a series within the USCIF Trust
United States Commodity Index Funds A series trust formed in
2009
United States Commodity Index Fund A commodity pool formed in
made publicAugust 2010
made publicNovember 2011 USCF as fund Sponsor - each a series within theUSCF Funds Trust :USCF Funds Trust ("USCF Funds A series trust formed inDelaware March 2016 Trust")United States 3XOil Fund ("USOU") A commodity pool formed inMay 2017 and made publicJuly 2017 ; Liquidated December
18,
2019United States 3XShort Oil Fund A commodity pool formed inMay 2017 and made ("USOD") publicJuly 2017 ; LiquidatedDecember 18, 2019 USCF Advisers serves as the investment adviser to the fund(s) listed below within the Trusts and has overall responsibility for the general management and administration for the Trusts. Pursuant to the current Investment Advisory Agreements, USCF Advisers provides an investment program for the Trusts' fund(s) and manages the investment of the assets. Advisers as fund manager for each series within the USCF ETF Trust and theUSCF Mutual Funds Trust : USCF ETF Trust ("ETF Trust ") Organized as aDelaware statutory trust inNovember 2013 USCF SummerHaven SHPEI Index Fund Fund launchedNovember 30, 2017 ("BUY")USCF SummerHaven SHPEN Index Fund Fund launchedNovember 30, 2017 ; Liquidated ("BUYN")May 6, 2020
USCF SummerHaven Dynamic Commodity Fund launched
All USCF funds and the Trusts' funds are collectively referred to as the "Funds" hereafter.
Wainwright's revenue and expenses are primarily driven by the amount of AUM. Wainwright earns monthly management and advisory fees based on agreements with each Fund as determined by the contractual basis point management fee structure in each agreement multiplied by the average AUM over the given period. Many of the company's expenses are dependent upon the amount of AUM. These variable expenses include Fund administration, custody, accounting, transfer agency, marketing and distribution, and sub-adviser fees and are primarily determined by multiplying contractual fee rates by AUM. Total Operating Expenses are grouped into the following financial statement line items: General and Administrative, Marketing, Operations and Salaries and Compensation. 18
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For the Year Ended
Revenue Average AUM for the year endedJune 30, 2020 was at$3.0 billion , as compared to approximately$2.7 billion from the year endedJune 30, 2019 primarily due to an increase inUSO , BNO and USL AUM. As a result, the revenues from management and advisory fees increased by approximately$0.4 million , or 3%, to$15.4 million for the year endedJune 30, 2020 as compared to the year endedJune 30, 2019 where revenues from management and advisory fees totaled$15.0 million . Expenses Wainwright's total operating expenses for year endedJune 30, 2020 decreased by$1.3 million to$12.8 million , or approximately 9%, from$14.1 million for the year endedJune 30, 2019 . Variable expenses, as described above, decreased by$1.2 million over the respective twelve-month period due to due to lower AUM for the first three quarters of the fiscal year which reduced variable marketing and distribution expenses, sub-advisory fees and other variable costs. General and Administrative expenses increased$0.3 million to$2.4 million for the year endedJune 30, 2020 from$2.1 million for the year endedJune 30, 2019 due to increases in expense waiver and legal and professional expenses. Total marketing expenses decreased$0.3 million to$2.1 million for the year endedJune 30, 2020 as compared to the prior year period due to a decrease of in advertising and marketing conferences. Other Operating expenses decreased by$0.3 million primarily due to lower license fees. Employee Salaries and Compensation expenses were approximately$4.9 million and$4.8 million , an increase of$0.1 million , for the years endedJune 30, 2020 andJune 30, 2019 , respectively, due to accrued bonuses and small increases in annual compensation. Income Income before income taxes for the year endedJune 30, 2020 increased$2.1 million to$2.9 million from$0.8 million for year endedJune 30, 2019 due to$0.4 million increase in revenue as a result of higher AUM, in addition to a$1.4 million reduction in operating expenses along with a decrease of$0.3 million in other expenses.Gourmet Foods, Ltd. Gourmet Foods Limited ("Gourmet Foods "), was organized in its current form in 2005 (previously known asPats Pantry Ltd ). Pats Pantry was founded in 1966 to produce and sell wholesale bakery products, meat pies and patisserie cakes and slices, inNew Zealand .Gourmet Foods , located in Tauranga,New Zealand , sells substantially all of its goods to supermarkets and service station chains with stores located throughoutNew Zealand .Gourmet Foods also has a large number of smaller independent lunch bars, cafes and corner dairies among the customer list, however they comprise a relatively insignificant dollar volume in comparison to the primary accounts of large distributors and retailers.Gourmet Foods operates exclusively inNew Zealand and thus theNew Zealand dollar is its functional currency. In order to consolidate Concierge's reporting currency, the US dollar, with that ofGourmet Foods , Concierge records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830-30. The translation ofNew Zealand currency intoU.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from foreign currency translations are included in foreign currency translation (loss) gain on the Consolidated Statements of Comprehensive Income as well as accumulated other comprehensive (loss) income found on the Consolidated Balance Sheets.
For the Year Ended
Revenue Net revenues for the year endedJune 30, 2020 were$4.7 million with cost of goods sold of$3.2 million resulting in a gross profit of$1.5 million as compared to the year endedJune 30, 2019 where net revenues were$4.7 million ; cost of goods sold were$3.3 million ; and gross profit was$1.4 million . Expenses General, administrative and selling expenses, including wages and marketing, for the years endedJune 30, 2020 and 2019 were$1.1 million and$1 million producing operating income of$0.4 million and$0.4 million , respectively, or approximately 8% net operating profit for 2020, 9% for 2019. The depreciation expense and other income (expense) totaled approximately$38 thousand for the year endedJune 30, 2020 as compared to$0.4 million for the year endedJune 30, 2019 . Income Income for the year endedJune 30, 2020 , after depreciation expense of$0.2 million and other income of$0.2 million , resulted in approximately$0.4 million before income tax provision of approximately$28 thousand resulted in a net income of approximately$0.3 million as compared to a net loss of$13 thousand for the year endedJune 30, 2019 . Contributing to the net income was a tax-free government wage subsidy of approximately NZ$0.2 million (US$0.1 million ) in support of the COVID-19 lockdowns imposed on employees. Overall, net profit margins for the comparative periods are consistent and differences are attributed to depreciation expense, varying income tax provisions and the fluctuation of currency exchange rates with theNew Zealand dollar. 19
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Brigadier Security Systems (2000) Ltd. ("Brigadier") was founded in 1985 and through internal growth and acquisitions the core business of Brigadier began in 1998. Today Brigadier is the largestSecurTek Monitoring Solutions Inc dealer inSaskatchewan . With offices in both major urban areas ofRegina (dbaElite Security Systems (2005) Ltd.) andSaskatoon . SecurTek is owned by SaskTel which isSaskatchewan's leading Information and Communications Technology (ICT) provider with approximately 1.35 million customer connections acrossCanada . Brigadier is also a certified integrator for Avigilon Access Control and Video, Bosch Intrusion, Gallagher Access Control, Honeywell Access Control and Intrusion, Kantech Corporate Access Control and the largest independent security contractor in the province. Brigadier provides comprehensive security solutions including access control, IP video systems, ULC certified fire alarms, and intrusion alarms to home and business owners as well as government offices, schools and public buildings. Brigadier typically sells hardware to customers and brokers a 24/7 monitoring of their premises. The contract for monitoring the premises is typically supported by SecurTek, who pays Brigadier a monthly maintenance and support fee for each contract remaining in effect. Brigadier operates exclusively inCanada and thus the Canadian dollar is its functional currency. In order to consolidate Concierge's reporting currency, theU.S. dollar, with that of Brigadier, Concierge records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830-30. The translation of Canadian currency intoU.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from foreign currency translations are included in foreign currency translation (loss) gain on the Consolidated Statements of Comprehensive Income as well as accumulated other comprehensive (loss) income found on the Consolidated Balance Sheets.
For the Year Ended
Revenue Net revenues for the year endedJune 30, 2020 were$2.7 million with cost of goods sold recorded as approximately$1.2 million , resulting in a gross profit of approximately$1.5 million with a gross margin of approximately 56% as compared to the year endedJune 30, 2019 where net revenues were approximately$3.6 million with cost of goods sold of$1.6 million and a gross profit of$1.9 million , or approximately 54%. Expenses General, administrative and selling expenses for the year endedJune 30, 2020 were$1.2 million producing an operating profit of$0.3 million or approximately 12% as compared to the year endedJune 30, 2019 where operating profits were$0.6 million , or approximately 15%, with general, administrative and selling expenses of$1.4 million . Income Other expense comprised of depreciation, income tax, interest income, other income, and gain on sale of assets totaled approximately$12 thousand for the year endedJune 30, 2020 resulting in income after income taxes of approximately$0.3 million as compared to income after income taxes of approximately$0.4 million for the year endedJune 30, 2019 where other expense totaled$145 thousand . Contributing to the net income were wage subsidies in the amount of approximately$0.1 million received by Brigadier from theCanada government. Original Sprout Kahnalytics was founded in 2015 and adopted the dba/Original Sprout inDecember 2017 . Original Sprout formulates and packages various hair and skin care products that are 100% vegan, tested safe and non-toxic, and marketed globally through distribution networks to salons, resorts, grocery stores, health food stores, e-tail sites and on the company's website. The company operates from warehouse and sales offices located inSan Clemente, CA , USA.
For the Year Ended
Revenue Net revenues for the year endedJune 30, 2020 were$3.9 million with cost of goods sold recorded as approximately$2.1 million resulting in a gross profit of approximately$1.8 million and a gross margin of approximately 46% compared to the year endedJune 30, 2019 were net revenues totaled$3.6 million with cost of goods sold recorded as approximately$2 million resulting in a gross profit of approximately$1.6 million and a gross margin of approximately 46%. 20
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Table of Contents Expenses General, administrative and selling expenses for the years endedJune 30, 2020 and 2019 were approximately$1.2 million and$0.9 million , respectively, resulting in an operating income of approximately$0.5 million and$0.7 million or approximately 13% and 20%, respectively. Income
After consideration given to income tax provision, other income, and
depreciation expense, the net income for the years ended
Liquidity and Capital Resources
Concierge is a holding company that conducts its operations through its subsidiaries. At its holding-company level, its liquidity needs relate to operational expense, the funding of additional business acquisitions and new investment opportunities. Our operating subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of equipment and services, operating costs and expenses, and income taxes.
As of
During the past five fiscal years combined, Concierge has invested approximately$7 million in cash towards purchasing and assimilatingGourmet Foods ,Brigadier Security Systems and the Original Sprout assets into theConcierge Technologies group of companies as well as the acquisition through a stock-for-stock exchange of Wainwright, which provides a significant revenue stream and value. We have also invested approximately$0.5 million in the development of Fintech applications through our newly organized subsidiary, Marygold. Despite these cash investments, our working capital position remains strong at$14 million and our position has strengthened year-to-year. Management forecasts Wainwright,Gourmet Foods , Brigadier and Original Sprout to all produce a profit during the coming fiscal year and the realization of those profits by Concierge is not expected to be significantly impacted by foreign currency fluctuations against theU.S. dollar during the period. While Concierge intends to maintain and improve its revenue stream from wholly owned subsidiaries, Concierge continues to pursue acquisitions of other profitable companies which meet its target profile, including recently acquiredPrintstock Products Ltd. inNew Zealand . Provided Concierge's subsidiaries continue to operate as they are presently, and are projected to operate, Concierge has sufficient capital to pay its general and administrative expenses for the coming fiscal year and to adequately pursue its long term business objectives. In relation to the adoption of ASC 842 (see Note 2), the Company recognized$1,150,916 of operating lease liabilities onJuly 1, 2019 . The total amount due under these obligations was$770,457 and$0 as ofJune 30, 2020 andJune 30, 2019 , respectively. The obligations will amortize over the passage of time through the recognition of periodic rent expense. See Note 14 for further analysis of this obligation. As ofJune 30, 2020 , we had$1 million of related-party and third-party indebtedness on a consolidated basis as compared to$0.7 million as ofJune 30, 2019 . Concierge, without inclusion of its subsidiary companies, as ofJune 30, 2020 andJune 30, 2019 , had$0.6 million of indebtedness. We are not required to make interest payments on our notes until the maturity date.
Current related party notes payable consist of the following:
June 30, 2020
3,500 3,500
Notes payable to shareholder, interest rate of 4%,
unsecured and payable on
250,000 250,000
Notes payable to shareholder, interest rate of 4%,
unsecured and payable on
350,000 350,000$ 603,500 $ 603,500 As ofJune 30, 2020 , Brigadier had an outstanding principal balance of CD$507,732 (approx.US$373,041 translated as ofJune 30, 2020 ) related to the purchase of itsSaskatoon office land and building. The Consolidated Balance Sheet as ofJune 30, 2020 reflect the amount of the principal balance which is due within twelve months as a current liability ofUS$13,196 and a long term liability ofUS$359,845 . As ofJune 30, 2019 , the loan liability consisted of principal balances outstanding for vehicle purchases. The principal amounts under the loans which were due within twelve months were recorded in short term liabilities asUS$26,241 , and after twelve months asUS$61,057 . These loans were paid in full as ofJune 30, 2020 , whereas there was no liability for the loan related to the property purchase as ofJune 30, 2019 . For further details, see Note 11 to our Financial Statements. 21
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Table of Contents Investments Wainwright, from time to time, provides initial investments in the creation of ETP funds that Wainwright manages. Wainwright classifies these investments as current assets as these investments are generally sold within one year from the balance sheet date. As ofJune 30, 2020 Wainwright did not hold any initial investment positions. These investments, as applicable, are described further in Note 7 to our Financial Statements. Dividends Our strategy on dividends is to declare and pay dividends only from retained earnings and only when our Board of Directors deems it prudent and in the best interests of the company to declare and pay dividends. We have paid no dividends and we do not expect to pay any dividends over the next fiscal year.
Off-Balance Sheet Arrangements
At
? An obligation under a guarantee contract,
? A retained or contingent interest in assets transferred to the unconsolidated
entity or similar arrangement that serves as credit, liquidity or market risk
support to such entity for such assets,
? An obligation, including a contingent obligation, arising out of a variable
interest in an unconsolidated entity that is held by, and material to, us
where such entity provides financing, liquidity, market risk or credit risk
support to, or engages in leasing, hedging, or research and development
services with us.
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