UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~September~~March 3031, ~~2021~~2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ENTERPRISE DIVERSIFIED, INC.

(Exact Name of Registrant as Specified in Its Charter)

Commission file number 000-27763

Nevada	88-0397234
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1806 Summit Avenue, Suite 300, Richmond, VA	23230
(Address of Principal Executive Offices)	(Zip Code)

(434) 336-7737

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	Not applicable	Not applicable

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the issuer’s Common Stock, $0.125 par value, as of ~~November~~May 1011, ~~2021~~2022 is 2,647,383.

Table of Contents

Table of Contents

	Page No.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
PART I
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	3
Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	3
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	4
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020	5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021	5
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	6
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	6
Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2521
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3029
Item 4. Controls and Procedures	3029
PART II
Item 1. Legal Proceedings	3130
Item 1A. Risk Factors	3130
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3130
Item 3. Defaults Upon Senior Securities	3130
Item 4. Mine Safety Disclosures	3130
Item 5. Other Information	3130
Item 6. Exhibits	3130
Signatures	3231

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including, without limitation, Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties which may affect the Company’s business and prospects, including changes in economic and market conditions, acceptance of the Company’s products, maintenance of strategic alliances, and other factors discussed elsewhere in this Form 10-Q, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ENTERPRISE DIVERSIFIED, INC.

And Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2021 (unaudited)			December 31, 2020
	March 31, 2022 (unaudited)			December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	915,~~316~~020,~~890~~160		$	~~341~~13,~~007~~487,482
Accounts receivable, net		~~302~~39,~~548~~454			~~144~~351,~~791~~405
Investment redemption receivable		52,~~579~~053,~~679~~587			—3,734,465
Other current assets		3415,~~126~~387			446,~~530~~417
Current assets - held for resale		—			231
Total current assets		17,128,588			17,579,769
Total current assets		15,233,243			530,559
Long-term Assets
Real estate - held for investment, net		27,334			241,876
Property and equipment, net		8,650			9,661
Property and equipment, net		10,673			13,707
Notes receivable		50,000			50,000
Goodwill, net		212,445			212,445
Note receivable		169,105			210,879
Real estate - held for investment, net		—			26,911
Long-term investments		3,765,834			13,574,462
Other assets		60,049			61,972
Other assets		64,250			73,252
Total long-term assets		331,144			360,989
Total long-term assets		4,249,641			14,326,621
Total assets	$	17,459,732		$	17,940,758
Total assets	$	19,482,884		$	14,857,180
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	6716,~~585~~366		$	6511,~~524~~474
Accrued compensation		~~268~~37,~~227~~759			~~281~~337,~~904~~759
Accrued expenses		~~197~~834,~~379~~636			24308,~~159~~039
Deferred revenue		~~198~~191,~~199~~501			~~192~~171,~~088~~194
Income taxes payable		~~360~~6,~~000~~532			—6,532
Notes payable, current		—			5,609
Total current liabilities		1,086,794			834,998
Total current liabilities		1,091,390			569,284
Total liabilities		1,086,794			834,998
Long-term Liabilities
Notes payable, net of current portion		—			244,485
Total long-term liabilities		—			244,485
Total liabilities		1,091,390			813,769
Stockholders’ Equity
Preferred stock, $0.001 par value, 30,000,000 shares authorized; none issued		—			—
Common stock, $0.125 par value, 10,000,000 and 2,800,000 shares authorized; 2,647,383 and 2,602,240 shares issued and outstanding		330,922			325,280
Common stock, $0.125 par value, 10,000,000 shares authorized; 2,647,383 shares issued and outstanding		330,922			330,922
Additional paid-in capital		27,673,692			27,~~439~~673,~~334~~692
Accumulated deficit		(911,~~613~~631,~~120~~676	)		(1310,~~721~~898,~~203~~854	)
Total stockholders’ equity		1816,~~391~~372,~~494~~938			1417,~~043~~105,~~411~~760
Total liabilities and stockholders’ equity	$	1917,~~482~~459,~~884~~732		$	1417,~~857~~940,~~180~~758

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended						~~For the nine months ended~~
	September 30						September 30
	March 31
	2021			2020			2021			2020
	2022			2021
Revenues - asset management	$	~~806~~38,~~314~~495		$	12,~~607~~193,~~150~~854		$	~~4,556,173~~		$	~~1,130,815~~
Revenues - real estate		1,800			169,~~129~~736			~~347,260~~			~~219,772~~
Revenues - internet operations		~~218~~216,~~097~~680			~~242~~232,~~237~~266			~~674,282~~			~~741,011~~
Total revenues		1256,~~026,211~~975			12,~~865~~435,~~516~~856			~~5,577,715~~			~~2,091,598~~
Cost of revenues - real estate		~~466~~445			127,~~157~~644			~~244,319~~			~~151,480~~
Cost of revenues - internet operations		6171,~~863~~194			8571,~~412~~963			~~203,855~~			~~251,829~~
Total cost of revenues		6271,~~329~~639			9779,~~569~~607			~~448,174~~			~~403,309~~
Gross profit - asset management		~~806~~38,~~314~~495			12,~~607~~193,~~150~~854			~~4,556,173~~			~~1,130,815~~
Gross profit - real estate		1,~~334~~355			32,~~972~~092			~~102,941~~			~~68,292~~
Gross profit - internet operations		~~156~~145,~~234~~486			~~156~~160,~~825~~303			~~470,427~~			~~489,182~~
Total gross profit		~~963~~185,~~882~~336			12,~~767~~356,~~947~~249			~~5,129,541~~			~~1,688,289~~
Selling, general, and administrative expenses
Insurance		2119,~~905~~787			116,~~737~~603			~~41,445~~			~~40,560~~
Professional fees		~~396~~744,~~430~~853			~~122~~143,~~102~~505			~~696,643~~			~~466,351~~
Salaries and wages		~~197~~156,~~428~~847			~~164~~182,~~733~~954			~~572,487~~			~~492,329~~
Travel and meals		~~889~~12,046			~~121~~351			~~5,975~~			~~3,256~~
Other operating expenses		4350,~~847~~713			4244,~~019~~577			~~144,817~~			~~147,016~~
Total selling, general and administrative expenses		~~660~~984,~~499~~246			~~340~~377,~~712~~990			~~1,461,367~~			~~1,149,512~~
Income from operations		303,383			1,427,235			3,668,174			538,777
Income (loss) from operations		(798,910	)		1,978,259
Gain on sale of noncontrolling interest in subsidiary		—			—			778,872			—
Gain on sale of real estate		43,140			—
Interest expense		~~(332~~—	)		(54,~~771~~795	)		~~(7,277~~	)		~~(19,787~~	)
Other income (expense), net		34,178			7,632			28,314			26,498
Other income, net		22,948			5,185
Total other income		33,846			1,861			799,909			6,711
Total other income (loss)		66,088			390
Income from continuing operations before income taxes		337,229			1,429,096			4,468,083			545,488
Income (loss) from operations before income taxes		(732,822	)		1,978,649
Income tax benefit (expense)		(360,000	)		—			(360,000	)		—
Income tax expense		—			—
Income (loss) from continuing operations		(22,771	)		1,429,096			4,108,083			545,488
Net income (loss)	$	(732,822	)	$	1,978,649
Income from discontinued operations, net of taxes		—			1,857			—			15,762
Net income (loss) per share, basic and diluted		(0.28	)		0.75
Net income (loss)	$	(22,771	)	$	1,430,953		$	4,108,083		$	561,250
Weighted average number of shares, basic		2,647,383			2,630,831
Net income (loss) per share, basic and diluted		(0.01	)		0.55			1.55			0.22
Weighted average number of shares, diluted		2,647,383			2,631,499
Net income (loss) per share from continuing operations, basic and diluted		(0.01	)		0.55			1.55			0.21
Net income per share from discontinued operations, basic and diluted		0.00			0.00			0.00			0.01
Weighted average number of shares, basic		2,647,383			2,602,240			2,641,926			2,596,541
Weighted average number of shares, diluted		2,647,383			2,602,908			2,642,369			2,597,136

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
					Additional					Total
Balance December 31, 2020		2,602,240	$	325,280	$	27,439,334	$	(13,721,203	)	$	14,043,411
	Common				Paid-in		Accumulated			Stockholders’
Net income (loss)		—		—		—		1,978,649			1,978,649
	Stock		Amount		Capital		Deficit			Equity
Stock issuance		45,143		5,642		234,358		—			240,000
Balance December 31, 2021		2,647,383	$	330,922	$	27,673,692	$	(10,898,854	)	$	17,105,760
Balance March 31, 2021		2,647,383		330,922		27,673,692		(11,742,554	)		16,262,060
Net loss		—		—		—		(732,822	)		(732,822	)
Net income (loss)		—		—		—		2,152,205			2,152,205
Balance March 31, 2022		2,647,383	$	330,922	$	27,673,692	$	(11,631,676	)	$	16,372,938
Balance June 30, 2021		2,647,383		330,922		27,673,692		(9,590,349	)		18,414,265
Net income (loss)		—		—		—		(22,771	)		(22,771	)
Balance September 30, 2021		2,647,383	$	330,922	$	27,673,692	$	(9,613,120	)	$	18,391,494

	Common Stock		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
					Additional					Total
Balance December 31, 2019		2,566,646	$	320,831	$	27,313,734	$	(17,000,607	)	$	10,633,958
	Common				Paid-in		Accumulated			Stockholders’
Net income (loss)		—		—		—		(1,971,168	)		(1,971,168	)
	Stock		Amount		Capital		Deficit			Equity
Stock issuance		35,594		4,449		125,600		—			130,049
Balance December 31, 2020		2,602,240	$	325,280	$	27,439,334	$	(13,721,203	)	$	14,043,411
Balance March 31, 2020		2,602,240		325,280		27,439,334		(18,971,775	)		8,792,839
Net income		—		—		—		1,978,649			1,978,649
Net income (loss)		—		—		—		1,101,465			1,101,465
Stock issuance		45,143		5,642		234,358		—			240,000
Balance June 30, 2020		2,602,240		325,280		27,439,334		(17,870,310	)		9,894,304
Balance March 31, 2021		2,647,383	$	330,922	$	27,673,692	$	(11,742,554	)	$	16,262,060
Net income (loss)		—		—		—		1,430,953			1,430,953
Balance September 30, 2020		2,602,240	$	325,280	$	27,439,334	$	(16,439,357	)	$	11,325,257

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021

	2021			2020
	2022			2021
Cash flows from (used in) from operating activities:
Cash flows from operating activities:
Net income from continuing operations	$	4,108,083		$	545,488
Net income (loss) from operations	$	(732,822	)	$	1,978,649
Adjustments to reconcile net income to net cash flows from (used in) operating activities:
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Unrealized (gains) losses on long-term investments		(4,166,015	)		(992,789	)
Unrealized gains on long-term investments		—			(2,053,384	)
Gain on sale of noncontrolling interest in subsidiary		(778,872	)		—
Accrued stock compensation expense		—			37,500
Gain on sale of real estate		(~~120~~43,~~787~~140	)		~~(73,165~~—	)
Depreciation and amortization		15,365			16,424
Bad debt expense		6,832			89
Bad debt (recoveries) expense		(8	)		322
Depreciation and amortization		3,332			3,563
Accrued stock compensation expense		237,500			112,500
Accrued interest income on notes receivable		—			(4,650	)
Accrued interest income on notes receivable		(14,105	)		(11,797	)
Other		720			231
Other		231			—
(Increase) decrease in:
Accounts receivable, net		(157,749	)		2,743
Investment redemption receivable		1,680,208			—
Other current assets		10,873			12,555
Accounts receivable, net		305,119			14,547
Other current assets		(8,970	)		4,772
Increase (decrease) in:
Accounts payable		(54,~~221~~892	)		(944,~~361~~790	)
Accrued expenses		~~162~~226,~~043~~597			(534,~~300~~240	)
Income taxes payable		360,000			—
Deferred revenue		20,307			6,760
Deferred revenue		6,111			8,538
Net cash flows from operating activities		1,463,075			17,527
Net cash flows from (used in) continuing operations		(342,551	)		(478,842	)
Cash flows from (used in) investing activities:
Net cash flows from discontinued operations		—			16,084
Proceeds from sale of real estate		69,603			—
Net cash flows from (used in) operating activities		(342,551	)		(462,758	)
Purchases of investments		—			(62,978	)
Cash flows from investing activities:
Net cash flows from (used in) investing activities		69,603			(62,978	)
Proceeds from sale of investments		8,458,895			—
Cash flows used in financing activities:
Purchases of investments		(72,367	)		(16,587	)
Principal payments on note payable		—			(2,789	)
Proceeds from sale of subsidiary		850,000			—
Net cash flows used in financing activities		—			(2,789	)
Proceeds from sale of real estate		332,000			172,000
Net increase (decrease) in cash		1,532,678			(48,240	)
Improvements to real estate held for investment		—			(10,969	)
Cash and cash equivalents at beginning of the period		13,487,482			341,007
Net cash flows from continuing operations		9,568,528			144,444
Cash and cash equivalents at end of the period	$	15,020,160		$	292,767
Net cash flows from discontinued operations		—			—
Net cash flows from investing activities		9,568,528			144,444
Cash flows from financing activities:
Principal payments on note payable		(250,094	)		(136,449	)
Proceeds from notes payable		—			125,102
Net cash flows (used in) from continuing operations		(250,094	)		(11,347	)
Net cash flows (used in) from discontinued operations		—			—
Net cash flows (used in) financing activities		(250,094	)		(11,347	)
Net increase (decrease) in cash		8,975,883			(329,661	)
Cash and cash equivalents at beginning of the period		341,007			666,810
Cash and cash equivalents at end of the period	$	9,316,890		$	337,149

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021

	2021		2020
	2022		2021
Non-cash and other supplemental information:
Transfer of real estate held for investment to held for resale	$	211,213	$	177,826
Consulting services received in lieu of cash receipts	$	12,750	$	12,750
Distribution receivable	$	5,579,679	$	—
Issuance of common stock per equity compensation plan	$	—	$	240,000
Transfer of real estate held for resale to held for investment	$	—	$	43,992
Transfer of real estate held for investment to held for resale	$	—	$	169,181
Issuance of common stock per equity compensation plan	$	240,000	$	130,049
Accrued interest receivable converted to common stock	$	—	$	45,410
Accrued interest receivable converted to Triad Guaranty, Inc. stock	$	45,410	$	—
Cash paid for interest	$	—	$	4,795
Continuing operations cash paid for interest	$	7,277	$	19,787

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ENTERPRISE DIVERSIFIED, INC.

and Subsidiaries

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Lines of Business

Enterprise Diversified, Inc. (formerly White Dove Systems, Inc., Interfoods Consolidated, Inc., and then Sitestar Corporation) was incorporated in Nevada on December 17, 1992. On June 1, 2018, the Company amended its Articles of Incorporation to change the name of the Company to “Enterprise Diversified, Inc.” Unless the context otherwise requires, and when used in this Report, the “Company,” “ENDI,” “we,” “our,” or “us” refers to Enterprise Diversified, Inc. and its subsidiaries.

During the three- ~~and nine-~~month ~~periods~~ period ended ~~September~~March 3031, ~~2021~~2022, the Company operated through four reportable segments: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations. Other Operations include corporate operations and nonrecurring or one-time strategic funding or similar activity that is not considered to be one of our primary lines of business. During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations. However, for the three- and nine-month periods ended September 30, 2021, and for all prior periods presented, Home Services Operations are reported as discontinued operations. The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

Asset Management Operations

The Company operates its asset management operations business through its wholly -owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), ~~Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”)~~ and Willow Oak ~~Asset~~Capital Management ~~Fund Management Services~~, LLC ~~(“Willow Oak FMS”)~~.

~~In 2016, the Company made a seed investment, through~~ Willow Oak, tois ~~assist~~an inasset ~~the~~management ~~launch~~platform ~~of Alluvial~~focused ~~Fund, LP, a private investment fund that was launched~~ on ~~January~~ 1,growing ~~2017, by an unaffiliated sponsor~~ and ~~general~~enhancing ~~partner,~~the ~~Alluvial~~alternative ~~Capital~~investment ~~Management, LLC~~landscape. ~~The Company had determined that~~ Willow Oak’s ~~support~~seeks ofpartnerships ~~Alluvial~~with ~~Capital~~alternative ~~Management, LLC, and its direct~~ investment managers in ~~Alluvial~~the ~~Fund,~~early ~~were~~stages ~~both~~of ~~beneficial~~growth ~~and~~in ~~necessary~~order ~~undertakings~~to inbuild ~~conjunction~~a ~~with~~network ~~establishing~~of anunique ~~asset~~investment ~~management~~opportunities ~~operations~~for ~~business~~investors and ~~gaining~~scalable, ~~credibility~~professional ~~within~~operations ~~that~~for ~~industry~~managers. ~~As a special limited partner,~~ Willow Oak ~~earns~~offers aaffiliated ~~share~~managers ofstrategic ~~management~~consulting, ~~and~~operational ~~performance~~support, ~~fees~~and ~~earned.~~growth ~~On May~~opportunities ~~31,~~through ~~2021,~~minority ~~however,~~partnerships ~~Willow~~and ~~Oak~~other ~~initiated~~bespoke ~~a liquidating~~relationships. ~~distribution~~Affiliations ofto ~~its~~date ~~investment~~include fund inreinvestments, ~~Alluvial~~fund ~~Fund~~launching, ~~which~~investor ~~such~~relations, ~~withdrawal~~and ~~will~~fund bemanagement ~~fulfilled~~administrative bysupport. ~~the~~The ~~general~~Company ~~partner~~intends ~~according~~ to aactively ~~mutually~~expand ~~agreed~~its ~~upon cash distribution schedule. During the quarter ended September 30, 2021,~~ Willow Oak ~~initiated~~platform ~~its~~with ~~second~~additional ~~aggregate~~offerings ~~cash~~that ~~distribution totaling~~enhance ~~$5,579,679 in~~the ~~respect~~value of ~~such withdrawal. This brings~~ the ~~total distribution amount to $14,038,574 for the nine-month period ended September 30, 2021. As of September 30, 2021,~~ Willow Oak ~~holds~~platform ~~a remaining~~to ~~direct~~managers ~~investment in Alluvial Fund. Investment gains~~ and ~~losses~~funds ~~are~~across ~~reported as revenue on~~ the ~~accompanying~~investing ~~unaudited condensed consolidated statements of operations~~community.

In ~~furtherance~~2016, ~~of establishing~~ the ~~asset~~Company ~~management~~made ~~operations~~a seed ~~business~~investment, through Willow Oak, ~~signed~~to aassist ~~fee~~in ~~share~~the ~~agreement~~launch ~~in June~~of ~~2017 with~~Alluvial ~~Coolidge~~Fund, ~~Capital Management~~LP, ~~LLC~~a ~~(“Coolidge”),~~private ~~whose~~investment ~~sole~~fund ~~member~~that iswas ~~Keith~~launched D.on January ~~Smith~~1, 2017, by an ~~ENDI~~unaffiliated ~~director~~sponsor and general partner, Alluvial Capital Management, LLC. ~~Willow~~The ~~Oak~~Company ishad ~~the~~determined ~~sole~~that ~~member~~ Willow Oak’s support of ~~Bonhoeffer~~Alluvial Capital Management, LLC, ~~the~~and ~~general~~its ~~partner~~direct toinvestment ~~Bonhoeffer~~in Alluvial Fund, ~~LP,~~were aboth ~~private~~beneficial ~~investment~~and ~~partnership~~necessary ~~launched~~undertakings byin conjunction with establishing an asset management operations business and gaining credibility within that industry. As a special limited partner, Willow Oak earned a share of management and ~~managed~~performance byfees ~~Coolidge~~earned. ~~Under~~On May ~~their~~31, ~~agreement~~2021, ~~concerning~~however, ~~Bonhoeffer~~Willow Oak initiated a series of liquidating distributions of its investment in Alluvial Fund according to a mutually agreed upon cash distribution schedule with the general partner. On December 31, LP2021, Willow Oak ~~paid all~~initiated ~~start-up~~its ~~expenses~~third and ~~pays~~final ~~agreed-upon~~liquidating ~~operating~~cash ~~expenses~~distribution ~~that~~in ~~are~~respect ~~not~~of ~~partnership~~such ~~expenses~~schedule, ~~Coolidge~~and isduring ~~responsible~~the ~~for~~three-month ~~all~~period ~~investment~~ended March ~~management~~31, ~~and~~2022, ~~Willow~~the ~~Oak~~Company ~~receives~~received ~~50%~~a corresponding partial cash distribution of ~~all~~$1,680,208. ~~performance~~As of December 31, 2021, and ~~management~~subsequently ~~fees~~as ~~earned. Additionally~~of March 31, 2022, Willow Oak ~~FMS~~no ~~earns~~longer holds any remaining investment in Alluvial Fund. In accordance with the partnership terms of Alluvial Fund, however, a ~~direct~~portion ~~fee~~of ~~from~~Willow Oak’s capital account was retained by the ~~private~~general ~~limited~~partner ~~partnership~~until the fund’s activities for the ~~administrative~~year ended December 31, ~~compliance~~2021, ~~and~~were finalized ~~tax~~through ~~and~~an independent audit. ~~liaison~~The ~~services~~retained amount was not actively invested and was not subject to investment gains or losses. The retained amount is represented by the investment redemption receivable amount on the accompanying consolidated balance sheets; however it has ~~renders~~been fully collected subsequent to the three-month period ended March 31, 2022. Investment gains and losses for activity during the prior periods presented are reported as revenue on the accompanying unaudited consolidated statements of operations.

OnIn ~~November 1~~August 2020, ~~2018,~~ Willow Oak ~~entered~~created ~~into~~two awholly-owned ~~fund~~entities, ~~management~~Willow ~~services~~Oak ~~agreement~~Asset ~~with~~Management ~~Arquitos~~Affiliate ~~Investment~~Management ~~Manager~~Services, ~~LP,~~LLC ~~which~~(“Willow isOak ~~managed~~AMS”) byand ~~our~~Willow ~~Board~~Oak ~~chairman~~Asset ~~and~~Management ~~principal~~Fund ~~executive~~Management ~~officer~~Services, ~~Steven~~LLC L.(“Willow ~~Kiel~~Oak FMS”), to ~~provide~~support ~~Arquitos~~the ~~with~~ Willow Oak’s ~~Fund~~platform ~~Management~~and ~~Services~~partnership ~~(“FMS”)~~model ~~consisting~~in ofperpetuity. ~~the~~Willow ~~following~~Oak ~~services:~~AMS ~~strategic~~earns ~~planning,~~gross ~~investor~~revenue ~~relations,~~shares ~~marketing,~~commensurate ~~operations,~~with ~~compliance~~ownership ~~and~~stakes ~~legal~~in ~~coordination,~~investment ~~accounting~~management ~~and~~firms ~~bookkeeping,~~in ~~annual~~exchange ~~audit~~for ~~and~~the ~~tax~~provision ~~coordination,~~of benefits of affiliation and ~~liaison~~ongoing tofund ~~third-party~~management ~~service~~services ~~providers~~(“FMS”). ~~On November~~Willow 1,Oak ~~2020,~~FMS ~~this~~earns ~~agreement~~a ~~was~~direct ~~renewed~~fee ~~with~~from ~~revised~~affiliated ~~terms~~limited ~~that~~partnerships ~~include~~for anrendering ~~exchange~~administrative, ofcompliance ~~services~~program ~~between~~management, ~~Willow Oak~~ and ~~Arquitos.~~tax ~~Willow Oak earns monthly~~ and ~~annual~~audit ~~fees~~liaison ~~as consideration for these~~ services.

On October 1, 2019, Willow Oak partnered with Geoff Gannon and Andrew Kuhn to form Focused Compounding Capital Management, LLC (“Focused Compounding”). This joint venture, of which Willow Oak Capital Management is a 10% beneficial owner, manages capital through separately managed accounts and a private investment fund launched January 1, 2020. Willow Oak provides ongoing FMS and operational support in addition to having covered all one-time expenses associated with the launch of Focused Compounding Fund, LP. As consideration for the arrangement, Willow Oak Capital Management is entitled to 10% of gross management and performance fees earned by Focused Compounding. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance, and tax and audit liaison services it renders.

On September 29, 2020, Willow Oak, through Willow Oak AMS, executed a strategic relationship agreement with SVN Capital, LLC to become a 20% beneficial owner of the firm in exchange for the provision of certain ongoing FMS and operational services offered through Willow Oak FMS. As a beneficial owner of SVN Capital, LLC, Willow Oak is entitled to 20% of gross management and performance fees earned by the firm. Additionally, Willow Oak FMS earns a direct fee from SVN Capital Fund, LP, a private investment fund launched by the firm’s managing member, for the administrative, compliance, and tax and audit liaison services it renders.

Real Estate Operations

As has been previously reported, in December 2017, ENDI created aNew ~~wholly owned subsidiary named~~ Mt Melrose, ~~LLC,~~ a ~~Delaware~~wholly-owned ~~limited~~subsidiary ~~liability~~at ~~company~~that ~~(“New Mt Melrose”)~~time, to acquire a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into in December 2017 with athe ~~like-named~~ seller, ~~Mt. Melrose, LLC (“~~Old Mt. Melrose~~”), a Kentucky limited liability company owned by Jeff Moore, then an ENDI director~~. During January and June 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed two bundled acquisitions from Old Mt. Melrose of residential and other income-producing real properties located in Lexington, Kentucky. As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose to ~~an unaffiliated third-party purchaser,~~ Woodmont ~~Lexington~~, ~~LLC~~which ~~(“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and~~ agreed to assume full responsibility for the management and operation of New Mt Melrose and its real estate portfolio. As a result of no longer having a controlling financial interest, the Company deconsolidated the operations of New Mt Melrose as of June 27, 2019. As was previously reported in the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2021, on May 17, 2021, the Company entered into an agreement with Woodmont that terminated and effected a sale to Woodmont of the Company’s remaining membership interests in New Mt Melrose in conjunction with a cash payment to the Company. As of the ~~prior~~quarterly period ended June 30, 2021, and for all subsequent reporting periods, the Company does not hold any remaining interests in the New Mt Melrose entity. See Notes 4 3 and 118 for more information.

As has been previously reported, in July 2017, ENDI created a wholly -owned real estate subsidiary named EDI Real Estate, LLC , to hold ENDI’s legacy portfolio of real estate. AsDuring the ~~of September~~three-month ~~30,~~period ~~2021,~~ended March ~~through EDI Real Estate~~31, ~~LLC~~2022, ~~ENDI~~the ~~owns~~Company asold ~~legacy~~the sole ~~real~~residential ~~estate~~property ~~investment~~remaining ~~portfolio~~in ~~that~~the ~~includes~~portfolio. As a ~~single-family~~result ~~home~~of ~~managed~~this bysale, athe ~~third-party~~Company ~~property~~no ~~management~~longer ~~company and~~maintains ~~various~~any ~~lots~~residential ofrental ~~vacant~~properties ~~land~~or rental leases. ~~Our~~ ~~real~~As ~~estate~~of March ~~portfolio~~31, ~~under~~2022, through EDI Real Estate, LLC, isENDI ~~primarily~~owns two vacant lots located in Roanoke, Virginia, comprising the entirety of the Company’s remaining real estate portfolio.

Internet Operations

The Company operates its internet operations segment through Sitestar.net, a wholly -owned subsidiary that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, and various ancillary services. Sitestar.net provides services to customers in the United States and Canada.

Other Operations

Other operations include nonrecurring or one-time strategic funding or similar activity and other corporate operations that are not considered to be one of the Company’s primary lines of business. Below are the main recent activities comprising other operations. Additional investment activity that is not specifically mentioned below is included in the accompanying consolidated financial statements.

Financing Arrangement Regarding Triad Guaranty, Inc.

In August 2017, the Company entered into an agreement with several independent third parties to provide debtor-in-possession financing to an unaffiliated third party, Triad Guaranty, Inc., through Triad DIP Investors, LLC. The Company initially contributed $100,000. Triad Guaranty, Inc. exited bankruptcy in April 2018, and the Company subsequently entered into an amended and restated promissory note. As part of the amended and restated promissory note, the Company provided an additional contribution in the amount of $55,000 in May 2018. The terms of the promissory note provided for interest in the amount of 10% annually and the issuance of warrants in Triad Guaranty, Inc. equal to 2.5% of the company. On December 31, 2020, the Company accepted a revision of terms to the original promissory note, which includes, among other things, an extension of the loan maturity date to December 31, 2022, an increase of interest to the amount of 12% annually, and a provision to settle all currently accrued interest through the issuance of Triad Guaranty, Inc. common shares. In line with the revision of note terms, during the three-month period ended March 31, 2021, the Company was issued 454,097 shares of Triad Guaranty, Inc. in lieu of interest accrued on the note receivable as of December 31, 2020.

On December 27, 2021, the Company completed the purchase of a comparable investment consisting of (i) another Triad Guaranty Inc. promissory note in the original principal sum of $155,000, having the same terms as the December 31, 2020, financing agreement, along with (ii) 393,750 common shares of Triad Guaranty, Inc., for $25,000 from a related party. The value of this purchase is reflective of the implied collectability of the promissory note and the relative illiquidity of Triad Guaranty, Inc. stock. The Company determined that the December 27, 2021, transaction represents an active market transaction of similar assets to the Company’s existing Triad Guaranty, Inc. assets. As a result, the Company recorded a total $189,515 impairment on December 31, 2021, to its existing Triad Guaranty, Inc. promissory note and common stock to reflect the market value implied by the December 27, 2021, transaction. As of December 31, 2021, and subsequently as of March 31, 2022, the Company holds its interests in both promissory notes at $50,000 under notes receivable on the accompanying consolidated balance sheets and has attributed no value to its 847,847 aggregate shares of Triad Guaranty, Inc. common stock. See Note 4 for more information.

Corporate Operations

Corporate operations include any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Discontinued Operations - Home Services Operations

Prior to May 24, 2019, the Company operated a home services operations segment through its former subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company had organized and launched this subsidiary in June 2016, initially with an unaffiliated third party. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

As has been previously reported, on May 24, 2019, the Company completed a divestiture of the home services operations to Rooter Hero. See Note 3 for more information.

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and those entities in which it otherwise has a controlling financial interest, including: Willow Oak Asset Management, LLC, Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC, Willow Oak Asset Management Fund Management Services, LLC, Bonhoeffer Capital Management, LLC, Sitestar.net, Inc., and EDI Real Estate, LLC.

All intercompany accounts and transactions have been eliminated in consolidation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The December 31, ~~2020~~2021, consolidated balance sheet included herein was derived from audited consolidated financial statements as of that date. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously filed in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021. In the opinion of management, the unaudited interim consolidated financial statements reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of ~~September~~March 3031, ~~2021~~2022, and the results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2021,~~2022 and ~~2020~~2021.

Use of Estimates

In accordance with GAAP, the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates and judgments, including, among other items, those related to fair value of investments, revenue recognition, accrued expenses, financing operations, fair value of goodwill, fixed asset lives and impairment, lease right-of-use assets and impairment, deferred tax assets, liabilities and valuation allowance, other assets, the present value of lease liabilities, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. These accounting policies are described at relevant sections in the notes to the consolidated financial statements.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash, cash equivalents, accounts receivable, and notes receivable. The Company places its cash with high-quality financial institutions and, at times, may exceed the FDIC and CDIC insurance limit. The Company extends credit based on an evaluation of customers’ financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid instruments purchased with a maturity of three months or less.

Investments

The Company ~~holds~~can hold various investments through its asset management operations and real estate operations segments. Additionally, investments may be held and reported under the Company’s “other” segment. Assets held through these segments do not have a readily determinable value as these investments are either not publicly traded, do not have published sales records, or do not routinely make current financial information available. Investments held through the asset management operations segment are remeasured to fair value on a recurring basis. Investments held under the real estate operations and other operations segments are remeasured when additional valuation inputs become observable. See Note 5 4 for more information.

During the nine-month period ended September 30, 2021, and as of December 31, 2020, the Company also held its remaining equity investment in Mt Melrose, LLC through its real estate operations segment. The Company determined that its remaining equity investment did not have a readily determinable fair value, and the Company accounted for the investment at cost, less any impairment, as adjusted for changes resulting from observable price changes. As mentioned previously, on May 17, 2021, however, the Company entered into an agreement with Woodmont that terminated and effected a sale to Woodmont of the Company’s remaining membership interests in New Mt Melrose in conjunction with a cash payment to the Company. As of the prior period ended June 30, 2021, the Company does not hold any remaining interests in the New Mt Melrose entity.

Accounts Receivable

The Company’s ~~asset~~grants ~~management~~credit ~~operations~~in ~~segment~~the ~~records~~form ~~receivable~~of ~~amounts~~unsecured ~~for~~accounts ~~fee~~receivable ~~shares~~to ~~and~~its ~~fund~~customers. ~~management~~The ~~services~~estimate ~~revenue~~of ~~earned~~the onallowance afor ~~monthly~~doubtful ~~basis.~~accounts, ~~Performance~~which ~~fee~~is ~~shares~~the ~~crystalize~~recorded ~~and~~allowance ~~are~~for ~~collected~~doubtful onaccounts ~~an annual basis while management fee shares crystalize~~ and ~~are~~bad ~~collected~~debt ~~on either a monthly or quarterly basis as dictated by the respective partnership agreement. For these reasons~~expense, ~~performance~~is ~~fee~~based ~~shares are designated as contract assets until they crystalize annually~~ on ~~December~~ ~~31.~~management’s Asassessment of ~~December~~ ~~31,~~current ~~all~~economic ~~performance~~conditions ~~fees are fully collectible~~ and ~~are~~historical nocollection ~~longer~~experience ~~classified~~with aseach ~~contract assets~~customer. ~~Fund~~Specific ~~management~~customer ~~services~~ receivables are ~~billed~~considered ~~monthly~~past indue ~~line~~when ~~with~~they ~~ongoing~~are ~~performance.~~outstanding ~~The~~beyond ~~Company~~their ~~historically~~contractual ~~has~~terms ~~had no collection issues with fee share~~ and ~~fund~~are ~~management~~written ~~receivables,~~off ~~and~~from the ~~overall~~allowance ~~possibility~~ for ~~non-collection~~doubtful isaccounts ~~extremely~~when ~~low.~~an ~~For~~account ~~these~~or ~~reasons,~~invoice ~~management~~is ~~has~~individually determined ~~that it is not necessary~~ to ~~record~~be ~~an allowance against these receivables~~uncollectible. ~~A breakout of contract assets as of September 30, 2021 is noted below:~~

	September 30, 2021
Accrued contract assets per Willow Oak fee share arrangements	$	265,819
Operating accounts receivable, net of allowance		36,729
Total accounts receivable, net	$	302,548

The Company’s asset management operations segment records receivable amounts for management fee shares and fund management services revenue earned on a monthly basis. Management fee shares and fund management services fees are calculated and collected on either a monthly or quarterly basis as dictated by the respective partnership agreement. The Company historically has had no collection issues with management fee shares and fund management receivables and the overall possibility for non-collection is extremely low. For these reasons, management has determined that it is not necessary to record an allowance against these receivables.

The Company’s ~~also grants~~asset ~~credit~~management inoperations ~~the~~segment ~~form~~also ofrecords ~~unsecured accounts~~ receivable toamounts ~~its~~for ~~customers.~~performance ~~The~~fee ~~estimate~~shares ofearned ~~the~~on ~~allowance~~an ~~for~~annual ~~doubtful~~basis. ~~accounts,~~Performance ~~which~~fee isshares ~~the~~are ~~recorded~~dependent ~~allowance~~upon ~~for~~exceeding ~~doubtful~~specified ~~accounts~~relative ~~and~~or ~~bad~~absolute ~~debt~~investment ~~expense~~return thresholds, iswhich ~~based~~vary onby ~~management’s~~affiliate ~~assessment~~relationship, ~~of current economic conditions~~ and ~~historical~~typically ~~collection~~include ~~experience~~annual ~~with~~measurement ~~each customer~~periods. The ~~Specific~~Company ~~customer~~historically ~~receivables~~has ~~are~~had ~~considered~~no ~~past~~collection ~~due~~issues ~~when~~with ~~they~~performance ~~are~~fee ~~outstanding~~shares and ~~beyond~~the ~~their~~overall ~~contractual~~possibility ~~terms~~for ~~and~~non-collection ~~are~~is ~~written~~extremely ~~off~~low. ~~from~~For ~~the~~these ~~allowance~~reasons, ~~for~~management ~~doubtful~~has ~~accounts~~determined ~~when~~that anit ~~account~~is ornot ~~invoice~~necessary isto ~~individually~~record ~~determined~~an allowance toagainst bethese ~~uncollectible~~receivables.

10 Real estate operations segment rental accounts were typically paid by tenants via cash or check no later than the fifth of the month. Any accounts collected after the fifth were charged either a flat-rate late fee or a daily-rate late fee based upon the lease agreement. If payments were not provided in a timely manner, then the amount due was designated as an account receivable. If accounts remained uncollected, then standard operating procedures were followed to commence a notice process for the tenant to either pay the amount due or vacate the property. Accounts receivable from rental revenue were generally considered unrecoverable after 90 days unless the Company reasonably believed that recovery was probable. These procedures typically resulted in low amounts of past due receivables.

Real estate operations segment rental accounts are typically paid by tenants via cash or check no later than the fifth of the month. Any accounts collected after the fifth are charged either a flat-rate late fee or a daily-rate late fee based upon the lease agreement. If payments are not provided in a timely manner, then the amount due is designated as an account receivable. If accounts remain uncollected, then standard operating procedures are followed to commence a notice process for the tenant to either pay the amount due or vacate the property. Accounts receivable from rental revenue are generally considered unrecoverable after 90 days unless the Company reasonably believes that recovery is probable. These procedures typically result in low amounts of past due receivables.

The internet operations segment attempts to reduce the risk of non-collection by including a late-payment fee and a manual-processing-payment fee to customer accounts. Receivables more than 90 days past due are no longer included in accounts receivable and are turned over to a collection agency. Accounts receivable more than 30 days are considered past due.

As of ~~September~~March 3031, ~~2021~~2022, and December 31, ~~2020~~2021, allowances offsetting gross accounts receivable on the accompanying condensed consolidated balance sheets totaled $~~423~~2,388 and $~~421~~474, respectively. For the quarterly periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021, bad debt expenses ~~from continuing operations~~ totaled $~~59 and $58~~6, ~~respectively. For the nine-month periods ended September 30, 2021, and 2020, bad debt~~832 ~~expenses (recoveries) from continuing operations totaled ($8)~~ and $~~322~~89, respectively.

Notes Receivable

The Company does not routinely issue notes receivable in the ordinary course of business, but when a business opportunity arises, a subsidiary may issue a note if it appears to be favorable to the Company. Notes receivable are recorded at their principal amount and interest is accrued quarterly based on the applicable interest rate. The Company makes an assessment of the ultimate collectability of each note receivable on an annual basis based upon the financial condition of the borrower.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred, while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. Depreciation is computed using the straight-line method based on the estimated useful lives for each of the following asset classifications:

Furniture and fixtures (in years)			5
Equipment (in years)			7
Building improvements (in years)			15
Buildings (in years)			27.5

The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Property and equipment to be disposed are reported at the lower of carrying amount or fair value of the asset less cost to sell.

Goodwill and Other Intangible Assets

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method of accounting. The Company tests its goodwill annually as of December 31, or more often if events and circumstances indicate that those assets might not be recoverable.

Impairment testing of goodwill is required at the reporting-unit level (operating segment or one level below operating segment). The impairment test involves calculating the impairment of goodwill based solely on the excess of the carrying value of the reporting unit over the fair value of the reporting unit. Prior to performing the impairment test, the Company may make a qualitative assessment of the likelihood of goodwill impairment to determine whether a detailed quantitative analysis is required. The Company estimates the fair value of its reporting units using discounted expected future cash flows.

No impairment adjustments were recorded during the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021.

Intangible assets (other than goodwill) consist of domain names attributed to the internet operations segment. The Company owns ~~225~~236 domain names, of which ~~105~~108 are available for sale. These domains are valued at historical cost. When management determines that material intangible assets are acquired in conjunction with the purchase of a business, the Company determines the fair values of the identifiable intangible assets by taking into account internal and external appraisals. Intangible assets determined to have definite lives are amortized over their estimated useful lives. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, then the Company uses estimated future undiscounted cash flows of the related intangible asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.

No impairment adjustments were recorded during the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021.

Amortization expense on domain names used for internet operations during the three-month period ended March 31, 2022 totaled $1,924. There was no comparable amortization expense on domain names for the three-month period ended March 31, 2021.

Real Estate

Real estate properties held for resale are carried at the lower of cost or fair value. All costs directly related to the improvement and carrying of real estate are capitalized, including renovations and property taxes, to the extent the capitalized costs of the property do not exceed the estimated fair value of the property. If the cost of the real estate exceeds the estimated fair value, then the excess is charged to expense. Fair value is estimated based on comparable sales in the geographic area in which the real estate is located. Fair value is evaluated annually by management or when events or changes in circumstances indicate the carrying value of the real estate may not be recoverable.

No impairment adjustments were recorded during the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021.

Real estate properties held for investment are carried at the cost basis plus additional costs where the cost extended the life of or added value to the property. Otherwise, the cost is expensed as incurred. Properties categorized as real estate held for investment are not expected by management to be sold in the next 12 months. This determination is periodically reviewed by management.

During the three- ~~and nine-~~month ~~periods~~ period ended ~~September~~March 3031, 2021, $~~0 and $211~~169,~~213, respectively,~~ 181 of real estate held for investment was transferred to real estate held for resale. ~~During~~No ~~the~~improvements ~~three-~~were ~~and~~made ~~nine-month~~to ~~periods ended September 30, 2020, $133,909 and $177,826 of~~ real estate held for investment ~~was~~or ~~transferred to real estate~~ held for resale. ~~Additionally,~~ during the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2020~~2022, $0 and $43,992, respectively, of real estate held for resale was transferred to real estate held for investment. No improvements were made to existing real estate held for investment during the three- and nine-month periods ended September 30, 2021. ~~Improvements of $0 and $10,969, respectively, were made to real estate then held for investment during the three- and nine-month periods ended September 30, 2020.~~

Accrued Compensation

Accrued compensation represents performance-based incentives that have not yet been paid. Additional compensation can be paid in the form of cash or via the issuance of Company stock. Compensation structures for employees are a pre-approved part of a formal employment agreement or arrangement. ~~Stock-based compensation,~~ Compensation issued as part of the Company’s 2020 Equity Incentive Plan, is reserved for board members and members of senior management. The compensation accrual amount is based on the final value of Company stock that has been approved to be issued by the Governance, Compensation, and Nomination Committee of the Board of Directors. These compensation amounts are accrued when earned and able to be estimated and are paid or issued annually after financial records are finalized.

Other Accrued Expenses

Other accrued expenses represent incurred but not-yet-paid expenses from payroll accruals, professional fees, and other accrued taxes.

Leases

The Company records right-of-use ~~(ROU)~~ assets and lease liabilities arising from both financing and operating leases that contain terms extending longer than one year. The Company does not recognize ~~ROU~~right-of-use assets or lease liabilities for short-term leases (those with original terms of 12 months or less). In making our determinations, the Company combines lease and non-lease elements of our leases.

Revenue Recognition

Asset Management Operations and Other Investment Revenue

~~The~~Management ~~Company earns revenue from investments and through various~~ fee ~~share~~shares and ~~service~~fund ~~agreements,~~management ~~including~~services ~~realized and unrealized gains and losses, which may result in negative period or quarterly revenues. Management~~ fees are earned ~~are~~ and recorded on a monthly basis and are included in revenue on the accompanying unaudited ~~condensed~~ consolidated statements of operations. Performance ~~fees~~fee ~~earned~~shares are ~~accrued~~dependent ~~monthly~~upon exceeding specified relative or absolute investment return thresholds, ~~paid~~which ~~out~~vary ~~annually~~by affiliate relationship, and ~~are~~typically ~~also~~include ~~included~~annual inmeasurement ~~revenue~~periods. onPerformance ~~the~~fee ~~accompanying~~shares ~~unaudited~~are ~~condensed~~recognized ~~consolidated~~only ~~statements~~when ofit ~~operations.~~is ~~Fund~~determined ~~management~~that ~~service~~there ~~fees~~is ~~are~~no ~~billed, paid,~~longer ~~and~~potential ~~recorded according~~for tosignificant areversal, ~~monthly~~such ~~schedule.~~as ~~Long-term~~when ~~investments~~a ~~are~~fund’s ~~marked~~performance toexceeds ~~market~~a contractual threshold at the end of ~~each~~a ~~reporting~~specified measurement period. ~~Realized~~Consequently, ~~and~~a ~~unrealized~~portion ~~gains~~of ~~and~~the ~~losses~~performance ~~are~~fee shares recognized may asbe ~~revenue~~partially inor ~~the~~wholly ~~period~~related ofto ~~adjustment~~services performed in prior periods.

~~Management~~Long-term ~~notes~~investments ~~that~~are ~~the~~marked ~~structure~~to ofmarket ~~these~~at ~~arrangements~~the ~~leaves~~end aof ~~very~~each ~~low~~reporting ~~possibility for nonperformance~~period. ~~While~~Realized ~~the~~and ~~amount~~unrealized ofgains ~~revenue~~and ~~varies~~losses ~~from~~are ~~month~~recognized toin ~~month,~~the ~~collectability~~period isof ~~very high~~adjustment. ~~Accrued~~During periods ~~monthly~~prior ~~performance~~to ~~fee~~the ~~shares~~Company’s ~~are~~final ~~designated~~liquidating aswithdrawal ~~contract~~from ~~assets~~Alluvial ~~until~~Fund ~~they crystalize annually~~ on December 31., ~~As of December 31~~2021, ~~all~~the ~~performance~~Company ~~fees~~earned revenue ~~are~~from ~~fully~~investments, ~~collectible~~including realized and ~~are~~unrealized nogains ~~longer~~and ~~classified~~losses, aswhich may ~~contract~~have ~~assets.~~resulted Noin ~~contract~~negative ~~liabilities~~revenues ~~are~~for ~~recognized~~a orgiven ~~incurred~~period.

~~Additionally,~~Management ~~the~~notes ~~Company~~that ~~earns~~the ~~revenue~~structure ~~from~~of ~~direct~~these ~~participation~~arrangements inleaves ~~various~~a ~~private~~very ~~investment~~low ~~funds,~~possibility ~~primarily~~for ~~the Alluvial Fund~~nonperformance. ~~This~~While ~~results in~~ the ~~realized~~amount ~~and~~of ~~unrealized~~revenue ~~gains~~can ~~and~~vary ~~losses~~from ~~within~~month ato ~~fund~~month, ~~such~~collectability asis ~~the~~very ~~Alluvial~~high. ~~Fund~~No ~~being~~contract ~~recognized~~assets ~~as revenue,~~ or aliabilities ~~decrease~~are inrecognized ~~revenue,~~or ~~on the accompanying unaudited condensed consolidated statements of operations~~incurred.

A summary of revenue earned through ~~the~~ asset management operations ~~segment~~ for the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021 is included below:

	For the three months ended					For the nine months ended
Asset Management Operations Revenue	Quarterly Period Ended March 31, 2022			Quarterly Period Ended March 31, 2021
Asset Management Operations Revenue	September 30, 2021			September 30, 2020		September 30, 2021		September 30, 2020
Unrealized gains on investment activity	$	—		$	2,054,471
Realized and unrealized gains (losses) on investment activity	$	829,579		$	1,545,239	$	4,167,650	$	989,609
Performance fee revenue		—			99,579
Management and performance fee revenue		(44,539	)		37,858		325,815		69,153
Management fee revenue		16,745			19,264
Fund management services revenue		21,~~274~~750			2420,~~053~~540		~~62,708~~		~~72,053~~
Total revenue	$	~~806~~38,~~314~~495		$	12,~~607~~193,~~150~~854	$	~~4,556,173~~	$	~~1,130,815~~

Real Estate Revenue

~~The~~Prior ~~Company~~to ~~earns~~the sale of its sole remaining residential rental property during the three-month period ended March 31, 2022, the Company earned real estate revenue through rental agreements on real estate held for investment, as well as through the sale of real estate held for resale.

Rental revenue from real estate held for investment is was recognized when it iswas earned, generally on the last day of each month or at another regular period agreed upon by the Company and the tenant. Tenants generally ~~provide~~provided a security deposit at the time of possession. This deposit is was held separately from revenue and only applied to revenue when rental payment comparable to the security deposit amount is was not provided in a timely manner and was considered unlikely to be recovered. Otherwise, the security deposit is was returned in a timely manner after the property is was surrendered back to the Company. Management ~~has~~ had concluded that the nature of the performance obligation is was cyclical and predictable with a very low possibility for nonperformance. No contract assets or liabilities ~~are~~ were recognized or incurred.

Revenue from real estate held for resale is was recognized upon closing of the sale (transfer of control), as all conditions for full revenue recognition ~~have~~were ~~been~~ met at that time. All costs associated with the property sold ~~are~~were removed from the consolidated balance sheets and were charged to cost of revenue at that time.

Internet Revenue

The Company sells internet and email services under annual and monthly contracts. Under the annual contracts, the subscriber pays a one-time annual fee, which is recognized as revenue ratably over the life of the contract. Under the monthly contracts, the subscriber is billed monthly and revenue is recognized for the period to which the service relates. Domain name registration revenue is recognized at the point of registration. Sales of hardware are recognized as revenue upon delivery and acceptance of the product by the customer. Sales are adjusted for any returns or allowances. Management has concluded that the nature of the performance obligation is cyclical with a very low possibility for nonperformance. Contract liabilities (deferred revenue) ~~were~~are recognized in the amount of collections received in advance of services to be performed. No contract assets are recognized or incurred.

The Company generates revenue in its internet operations segment from consumer and business-grade internet access, wholesale managed modem services for downstream ISPs, web hosting, third-party software as a reseller, and various ancillary services in the United States and Canada. Services include narrow-band (dial-up and ISDN) and broadband services (DSL, fiber-optic, and wireless), web hosting, and additional related services to consumers and businesses. Customers may also subscribe to web hosting plans to include email access and storage. Internet revenue is affected by the changing composition of revenue sources. In some years, this shift can be significant.

Deferred Revenue

Deferred revenue represents collections from customers in advance of internet services to be performed. Revenue is recognized in the period service is provided. Total deferred revenue ~~from continuing operations~~ increased from $~~192~~171,~~088~~194 at December 31, ~~2020~~2021, to $~~198~~191,~~199~~501 at ~~September~~March 3031, ~~2021~~2022. During the three-month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021, $1598,~~412~~632 and $21119,~~733~~312, respectively, of revenue ~~from continuing operations~~ was recognized from prior-year contract liabilities (deferred revenue). ~~During the nine-month periods ended September 30, 2021, and 2020, $173,292 and $193,408, respectively, of revenue from continuing operations was recognized from prior-year contract liabilities.~~

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment, inclusive of the recent tax reform act. The most recent three tax years, fiscal years ended December 31, ~~2020~~2021, December 31, ~~2019~~2020, and December 31, ~~2018~~2019, are open to potential IRS examination.

During the three- ~~and nine-~~month periods ended ~~September~~March 3031, 2022 and 2021, the Company ~~reported~~did ~~income~~not ~~tax~~report ~~expenses of $360,000. No comparable~~ any income tax expenses. ~~were~~The ~~reported~~current ~~during~~and ~~the~~prior year three- ~~and nine-~~month periods ~~ended September~~did ~~30,~~not ~~2020.~~produce ~~The~~positive ~~current~~taxable ~~year~~ income ~~tax expenses are primarily attributable to the current period distribution activities~~ ~~related to the Company’s investment in Alluvial Fund. The current period income tax expense amounts were calculated~~ after applying historical net operating loss carryforwards, which are subject to certain limitations.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive. In periods of net income, diluted earnings per share is computed using the more dilutive of the “two-class method” or the “treasury method.” Dilutive earnings per share under the “two-class method” is calculated by dividing net income available to common stockholders as adjusted for the participating securities, by the weighted-average number of shares outstanding plus the dilutive impact of all other potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives. Dilutive earnings per share under the “treasury method” ~~are~~ is calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the dilutive impact of all potentially dilutive common shares, consisting primarily of common shares underlying common stock equity incentives.

There were no potentially dilutive shares for the three-month period ended ~~September~~March 3031, ~~2021~~2022. The number of potentially dilutive shares for the ~~nine~~three-month period ended ~~September~~March 3031, 2021 ~~and the three- and nine-month periods ended September 30~~, ~~2020,~~ consisting of common shares underlying common stock equity incentives, was 668. ~~These~~None of the potentially dilutive ~~shares~~securities ~~were~~had ~~reversed~~a dilutive impact during the ~~current~~ three-month period asended March ~~certain~~31, ~~vesting requirements were not met and the shares are no longer available to be issued under the Company’s common stock equity incentive plan. None~~2021 ~~of the potentially dilutive securities had a dilutive impact~~ after rounding was applied.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses” (Topic 326). The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate should now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates, and prepayments. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. In November 2019, the FASB issued further guidance on expected recoveries for purchased financial assets with credit deterioration, and transition refiled for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company currently expects that the adoption of this guidance may change the way we assess the collectability of our receivables and recoverability of other financial instruments. The Company will adopt this guidance as of January 1, 2023. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 805). This update provided that an acquirer no longer records deferred revenue of the acquiree based on its acquisition date fair value. Rather, the acquirer accounts for contract assets and liabilities in accordance with ASC 606 as if it had originated the contract (i.e., continue to account for such assets and liabilities as has historically been done by the acquiree in accordance with ASC 606). This new guidance is required to be adopted by public entities in years beginning after December 15, 2022 on a prospective basis. Early adoption is permitted. The Company has adopted this guidance as of December 31, 2021. The adoption of this guidance did not have a material impact on our consolidated financial statements.

The Company does not believe that any other recently issued effective standards, or standards issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.

NOTE 3. HISTORICAL ~~HOME~~SALE ~~SERVICES~~OF ~~SUBSIDIARY~~REMAINING ~~ASSET~~INTEREST ~~SALE~~IN REAL ESTATE SUBSIDIARY

On May 24, 2019, as has been previously reported, the Company completed a divestiture of its Home Services Operations, via its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC), to an unaffiliated third-party purchaser, Rooter Hero Plumbing, Inc. (“Rooter Hero”). In the transaction, all of Specialty Contracting Group’s personal property and customer lists and records were conveyed to Rooter Hero, excluding stock inventory and other current assets. As part of the transaction, Rooter Hero assumed Specialty Contracting Group’s obligations under lease and/or loan agreements for all outstanding vehicles and equipment, as well as the obligations to service all of the subsidiary’s then-remaining customer accounts going forward. No cash consideration was exchanged in the transaction. Rather, as consideration for the transaction, Rooter Hero agreed to pay monthly royalties for the sixty (60) months following the closing calculated on the basis of any revenue actually received from the customer accounts transferred (7.5% of any monthly revenue generated from qualified sales during the first year, and 5% of any such monthly revenue during years two through five; in each case subject to reduction for pre-approved warranty-related costs concerning select customers).

The operations of Specialty Contracting Group, LLC had been considered a component of, and the divestiture reflected a strategic shift in, the Company’s business. As such, Specialty Contracting Group, LLC’s historical operations have been classified as discontinued operations in the Company’s financial statements. The loss from discontinued operations has been determined using a loss recovery approach, as the collection of future royalties is uncertain and a reasonable estimate could not be made. This approach requires that the contingent consideration, the future royalties to be received, be valued at the lesser of the amount of the “probable,” defined as a greater than 50% likelihood, future proceeds or the carrying value of the disposed assets. Due to the unpredictability of the contingent consideration, and management’s inherent lack of control over the buyer’s operations, management determined it would not be reasonable to attempt to value the contingent consideration. This resulted in assigning the contingent consideration a current valuation of zero. As and to the extent any royalties are deemed probable, they will be subsequently recognized as a “recovery from discontinued operations” on the statements of operations and will offset, or recover, the initial loss recorded. During the three- and nine-month periods ended September 30, 2021, there were no material royalties or other activity from discontinued operations. Comparatively, during the three- and nine-month periods ended September 30, 2020, an offsetting $1,887 and $18,143, respectively, of royalties on discontinued operations were recognized within the reported $1,857 and $15,762 of recoveries from discontinued operations, respectively.

As of December 31, 2020, discontinued assets reported on the face of the accompanying condensed consolidated balance sheets totaled $231. No discontinued liabilities were reported as of December 31, 2020. This compares to September 30, 2021, when no discontinued assets or discontinued liabilities are reported on the face of the accompanying condensed consolidated balance sheets.

A reconciliation of discontinued operations as reported on the accompanying unaudited condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2021, and 2020, is as follows:

	For the three months ended				For the nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Revenues	$	—	$	—	$	—	$	—
Cost of revenues		—		—		—		—
Gross profit		—		—		—		—
Selling, general, and administrative expenses		—		30		—		2,381
Recoveries from sale of subsidiary		—		1,887		—		18,143
Other income (expense), net		—		—		—		—
Income (loss) reported as discontinued operations	$	—	$	1,857	$	—	$	15,762

NOTE 4. HISTORICAL SALE OF CONTROLLING INTEREST IN REAL ESTATE SUBSIDIARY

Historical Transaction

As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to an unaffiliated third-party purchaser, Woodmont Lexington, LLC, a Delaware limited liability company (“Woodmont”). As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. The Company retained a 35% membership interest in Mt Melrose.

InHowever, ~~connection~~as ~~with~~has ~~this transaction~~been previously reported, ~~the~~on May ~~Company~~17, ~~and~~2021, ~~Woodmont~~the ~~also~~Company entered into aan ~~certain~~agreement ~~Amended~~with ~~and~~Woodmont ~~Restated~~that ~~Limited~~terminated ~~Liability~~and ~~Company~~effected ~~Agreement~~a ofsale Mtto ~~Melrose,~~Woodmont ~~LLC~~of (the ~~“A&R~~Company’s ~~LLC~~remaining ~~Agreement”). The~~membership ~~A&R~~interests ~~LLC~~in ~~Agreement~~Mt ~~sets~~Melrose, ~~forth~~LLC ~~the~~in ~~general~~conjunction ~~terms~~with ~~and~~an ~~conditions~~$850,000 ~~governing~~cash ~~the~~payment ~~arrangements~~to ~~between~~ the ~~two~~Company. ~~members~~Accordingly, ~~including~~ as ~~to any distributions~~ of ~~cash to~~ the ~~members. The~~quarterly ~~A&R~~period ~~LLC~~ended June ~~Agreement~~30, ~~provides~~2021, ~~that the business~~ and ~~affairs~~subsequently as of December Mt31, ~~Melrose~~2021, ~~will~~the beCompany ~~managed~~does ~~exclusively~~not byhold ~~one~~any orremaining ~~more~~interests ~~managers;~~in ~~and~~Mt ~~Woodmont~~Melrose, ~~was designated~~LLC. asDuring the ~~sole~~quarterly ~~manager. In~~period ~~addition~~ended June 30, 2021, the Company ~~expressly~~recognized ~~agreed to~~ a ~~three-year~~gain ~~“standstill”~~of ~~arrangement~~$778,872 on ~~during which time~~ the May ~~Company~~17, ~~will~~2021, ~~not~~sale, inwhich ~~any~~was included ~~way~~as ~~participate,~~a ~~directly~~separate orline ~~indirectly,~~item inon the ~~management~~unaudited orcondensed ~~control~~consolidated statements of Mtoperations ~~Melrose;~~for ~~and~~the ~~with~~quarterly ~~respect~~period toended June ~~any~~30, ~~matters~~2021. ~~requiring~~This again ~~vote~~was representative of the ~~members,~~difference between the Company’s ~~will~~carrying ~~vote~~value ~~with~~of ~~(i.e.,~~its ~~the~~Mt ~~same~~Melrose ~~as)~~equity ~~Woodmont.~~investment, ~~This~~various ~~arrangement~~other ~~was~~intercompany ~~intended~~reimbursements, toand ~~allow~~ the ~~Company~~final tosale ~~maintain~~price ~~a passive~~represented ~~management~~by ~~structure, while still owning a significant portion of~~ the May ~~partnership~~17, 2021 transaction.

While the operations of Mt Melrose, LLC were considered a component of the Company’s business, the June 27, 2019, sale did not represent a major strategic shift in the Company’s business. While we deconsolidated the operations of Mt Melrose, LLC on June 27, 2019, as a result of no longer having a controlling financial interest, Mt Melrose, LLC’s historical operations continued to be reflected as “continuing operations” in the Company’s financial statements. That is, all activity prior to the deconsolidation event was included on our consolidated statements of operations for given prior reporting periods in continuing operations, and under the real estate segment. As of June 27, 2019, all previously consolidated assets and liabilities of Mt Melrose, LLC were removed from our consolidated balance sheets, and the Company’s membership interest in Mt Melrose then became accounted for as an investment in the equity of Mt Melrose, LLC in the Company’s reported financial statements. 14

~~Accounting~~NOTE ~~for~~4. ~~Then-Remaining~~FAIR MtVALUE ~~Melrose~~OF ~~Investment~~ASSETS AND LIABILITIES

The Company adopted ASU 2016-01 effective January 1, 2018. ASU 2016-01 generally requires entities to measure equity investments at fair value and recognize any changes in fair value in net income. However, entities are able to elect a measurement alternative for equity investments that do not have a “readily determinable fair value.” The Company determined that its equity investment in Mt Melrose did not have a readily determinable fair value at the time of deconsolidation. The Company’s inability to “exercise significant influence” due to previously reported contractual agreements, also supported the use of the measurement alternative. Under this alternative, the Company had measured the Mt Melrose investment at its implied fair value and assessed it for impairment at each reporting date.

Using the $100,000 transaction price for a 65% interest in Mt Melrose, LLC on June 27, 2019, the implied value of the Company’s retained 35% equity interest at the time of the transaction was $53,846. This amount has been included under the long-term investment amount on the accompanying consolidated balance sheets as of the end of given prior reporting periods, including as of March 31, 2021, and December 31, 2020.

However, as mentioned previously, on May 17, 2021, the Company entered into an agreement with Woodmont that terminated and effected a sale to Woodmont of the Company’s remaining membership interests in Mt Melrose, LLC in conjunction with an $850,000 cash payment to the Company. Accordingly, as of the prior period ended June 30, 2021, the Company does not hold any remaining interests in Mt Melrose, LLC. During the prior period ended June 30, 2021, the Company recognized a gain of $778,872 on the May 17, 2021, sale, which is included as a separate line item on the accompanying unaudited condensed consolidated statements of operations for the nine-month period ended September 30, 2021. This gain is representative of the difference between the Company’s most recent carrying value of its Mt Melrose equity investment, various other intercompany reimbursements, and the final sale price represented by the May 17, 2021, transaction.

NOTE 5. INVESTMENTS

Certain assets held through the Company, Willow Oak Asset Management, LLC, or EDI Real Estate, LLC, do not have a readily determinable value, as these investments are not publicly traded, nor do they have published sales records. The investment in Alluvial Fund, LP is measured using net asset value (NAV) as the practical expedient and is exempt from the fair value hierarchy (see Note 6). The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and allocated based on total fund contributions. The Company’s investment in Alluvial Fund is remeasured to fair value on a recurring basis and realized and unrealized gains and losses are recognized as revenue in the period of adjustment. Due to the nature of the Mt Melrose, LLC investment (subsequent to the Company’s transfer, relinquishment of control, and subsequent sale (see Note 4)), the investment was measured at cost basis, as fair value was not determinable until additional inputs and measurements became available. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment at cost basis, as fair value is not determinable until additional inputs and measurements become available.

	Cost Basis		Unrealized Gain		Carrying Value
September 30, 2021
Alluvial Fund, LP (at fair value)	$	1,431,139	$	2,289,285	$	3,720,424
Triad Guaranty, Inc. stock (at cost)		45,410		—		45,410
Total	$	1,476,549	$	2,289,285	$	3,765,834

	Cost Basis		Unrealized Gain		Carrying Value
December 31, 2020
Alluvial Fund, LP (at fair value)	$	7,064,758	$	6,455,858	$	13,520,616
Mt Melrose, LLC (at cost)		53,846		—		53,846
Total	$	7,118,604	$	6,455,858	$	13,574,462

Alluvial Fund is a private investment fund that focuses on investing in what it believes are deeply mispriced securities in the United States and abroad. Alluvial Fund focuses on small companies, thinly traded issues, and special situations, seeking to identify value that its management believes the market has yet to recognize. During the three- and nine-month periods ended September 30, 2021, the Company withdrew $5,579,679 and $14,038,574, respectively, from the Alluvial Fund. The Company did not withdraw any funds from the Alluvial Fund during the three- and nine-month periods ended September 30, 2020. For the three- and nine-month periods ended September 30, 2021, the Company also reinvested certain management and performance fees earned through the Alluvial Fund. The total amounts of these reinvested fees were $3,354 and $72,367, respectively. For the three- and nine-month periods ended September 30, 2020, the total amounts of these reinvested fees were $4,304 and $16,587, respectively.

NOTE 6. FAIR VALUE OF ASSETS AND LIABILITIES

GAAP defines fair value as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date, and establishes a hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on market pricing data obtained from sources independent of the Company. Unobservable inputs reflect management’s judgment about the assumptions market participants would use in pricing the asset or liability. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows:

	●	Level 1 - inputs are quoted prices in active markets as of the measurement date for identical assets and liabilities that the Company has the ability to access; this category includes exchange-traded mutual funds and equity securities;

	●	Level 2 - inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates or yield curves, that are observable at commonly quoted intervals; this category includes mortgage-backed securities, asset-backed securities, corporate debt securities, certificates of deposit, commercial paper, U.S. agency and municipal debt securities, U.S. Treasury securities, and derivative contracts; and

	●	Level 3 - inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability; the measurements are highly subjective.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company ~~values its~~does ~~investments~~ not hold any assets or liabilities measured at fair value aton ~~the~~a ~~end~~recurring basis as of ~~each~~the ~~reporting~~quarterly period. ~~See~~ended March ~~description~~31, 2022, or as of ~~these~~the ~~investments~~year inended December ~~Note~~31, ~~5 above~~2021.

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
September 30, 2021
Alluvial Fund, LP	$	—	$	—	$	—	$	3,720,424	$	3,720,424
Total investments	$	—	$	—	$	—	$	3,720,424	$	3,720,424

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

	(Level 1)		(Level 2)		(Level 3)		(Excluded) (a)		Total at Fair Value
December 31, 2020
Alluvial Fund, LP	$	—	$	—	$	—	$	13,520,616	$	13,520,616
Total investments	$	—	$	—	$	—	$	13,520,616	$	13,520,616

The Company analyzes goodwill on an annual basis or more often if events or changes in circumstances indicate potential impairments. No impairments were recorded during the three-month periods ended March 31, 2022, and 2021.

~~(a)~~The ~~Certain~~Company ~~investments~~values ~~that~~real ~~are~~estate ~~measured~~held aton ~~fair~~the ~~value~~balance ~~using~~sheet ~~the~~on ~~NAV~~an ~~per~~annual ~~share~~basis (or ~~its~~whenever ~~equivalent)~~events asor achanges ~~practical~~in ~~expedient~~circumstances ~~have~~indicate ~~not~~an ~~been~~impairment may ~~classified~~have ~~in the fair value hierarchy~~occurred. ~~The~~No ~~fair~~impairments were ~~value~~recorded ~~amounts~~during ~~presented in this table are intended to permit reconciliation of~~ the ~~fair~~three-month ~~value~~periods ~~hierarchy~~ended March to31, ~~the~~2022, ~~amounts~~and ~~presented in the consolidated balance sheets~~2021.

~~Assets~~As ~~and~~discussed ~~Liabilities~~previously, ~~Measured~~the Company holds common stock in Triad Guaranty, Inc. This stock was received in accordance with the December 31, 2020 revisions to the original promissory note, which included Triad stock to be issued in lieu of accrued interest. The Company historically measured its investment in the stock at ~~Fair~~its ~~Value~~cost basis, which was equal to the amount of accrued interest on the promissory note as of December 31, 2020. On December 27, 2021, the Company purchased additional Triad Guaranty, Inc. common stock along with another promissory note from a ~~Nonrecurring~~related ~~Basis~~party. Due to the illiquid nature of Triad Guaranty, Inc. stock, as well as the lack of available financial information for the entity, on December 31, 2021, the Company impaired the full historical value, $45,410, of its investment in Triad Guaranty, Inc. stock. Additionally, on December 31, 2021, the Company recorded an impairment of $144,105 on its historical promissory note from Triad Guaranty, Inc. due to concerns regarding its ultimate collectability. The total impairment recorded on the Triad Guaranty, Inc. stock and promissory note was $189,515. As of December 31, 2021, and subsequently as of March 31, 2022, the Company holds its interests in both promissory notes at $50,000 under notes receivable on the accompanying consolidated balance sheets and has attributed no value to its aggregate shares of Triad Guaranty, Inc. common stock.

The Company analyzes goodwill on an annual basis or more often if events or changes in circumstances indicate potential impairments. No impairments were recorded during the three- and nine-month periods ended September 30, 2021, and 2020. 15

~~The~~NOTE ~~Company values real estate held on the balance sheet on an annual basis or whenever events or changes in circumstances indicate an impairment may have occurred~~5. NoPROPERTY ~~impairments were~~AND ~~recorded during the three- and nine-month periods ended September 30, 2021, and 2020.~~EQUIPMENT

AsThe ~~discussed in Note 4, the Company’s previous equity investment in Mt Melrose, LLC was carried at its implied~~ cost ~~under~~of ~~the~~property ~~alternative approach~~ and ~~was assessed~~equipment ~~for impairment~~ at ~~each balance sheet date.~~ March No31, ~~impairments~~2022, ~~were recorded during the three-~~and ~~nine-month periods ended~~ ~~September~~December 3031, 2021, ~~and~~consisted ~~2020.~~of the following:

As discussed previously, the Company holds stock in Triad Guaranty, Inc. This stock was received in accordance with the December 31, 2020, revisions to the original promissory note, which included Triad stock to be issued in lieu of accrued interest. Due to the illiquid nature of Triad Guaranty, Inc. stock and the lack of available current financial information for the entity, the Company has measured its investment in the stock at cost basis. The Company’s cost basis in the stock is equal to the amount of accrued interest on the promissory note as of December 31, 2020. The Company will assess its investment in Triad for impairment at each balance sheet date or when additional inputs and measurements become available. No impairments were recorded during the three- and nine-month periods ended September 30, 2021.

	*March 31, 2022*			*December 31, 2021*
Computers and equipment	$	17,330		$	17,330
Furniture and fixtures		10,850			10,850
		28,180			28,180
Less accumulated depreciation		(19,530	)		(18,519	)
Property and equipment, net	$	8,650		$	9,661

17 Depreciation expense was $1,012 for both three-month periods ended March 31, 2022 and 2021.

~~NOTE 7. PROPERTY AND EQUIPMENT~~ 16

~~The~~NOTE ~~cost~~6. ofREAL ~~property and equipment at September 30, 2021, and December 31, 2020, consisted of the following:~~ESTATE

	September 30, 2021			December 31, 2020
Computers and equipment	$	17,330		$	17,330
Furniture and fixtures		10,850			10,850
		28,180			28,180
Less accumulated depreciation		(17,507	)		(14,473	)
Property and equipment, net	$	10,673		$	13,707

Depreciation expense from continuing operations was $1,012, for the three-month periods ended September 30, 2021, and 2020, and $3,034, for the nine-month periods ended September 30, 2021, and 2020.

NOTE 8. REAL ESTATE

EDI Real Estate, LLC

Through EDI Real Estate, as of ~~September~~March 3031, ~~2021~~2022, and December 31, ~~2020~~2021, the Company identified the following units as held for resale or held for investment as noted below:

EDI Real Estate	~~September~~March 3031, ~~2021~~2022		December 31, ~~2020~~2021
Units occupied or available for rent		10		41
Vacant lots held for investment		32		32
Total units held for investment		42		73
Units held for resale		—		—
Vacant lots held for resale		—		—
Total units held for resale		—		—

~~Units~~As ~~held~~of March ~~for~~31, ~~investment~~2022, ~~consist~~the oftwo ~~single-family~~vacant ~~residential~~lots ~~rental~~located ~~units~~in Roanoke, Virginia are not assigned a value on the accompanying consolidated balance sheets, as the lots hold limited value due to their rural location and lack of utility and access.

The ~~lease~~unit held infor ~~effect~~investment as of ~~September~~December 3031, 2021, ~~is based on a~~consisted ~~month-to-month provision as the initial annual term~~ of ~~the~~a ~~lease~~single-family ~~has~~residential ~~been~~rental ~~completed~~unit. AnThis ~~outside~~ property ~~management~~was ~~company~~sold ~~manages~~during ~~this rental property on behalf of~~ the ~~Company. There are no reportable future anticipated rental revenues as a result of the month~~three-~~to-~~month ~~provision~~period onended March ~~the~~31, ~~remaining existing lease~~2022.

EDI Real Estate	September 30, 2021			December 31, 2020
Total real estate held for investment	$	43,846		$	303,158
Accumulated depreciation		(16,512	)		(61,282	)
Real estate held for investment, net	$	27,334		$	241,876

The lease in effect as of December 31, 2021, was based on a month-to-month provision as the initial annual term of the lease had been completed. An outside property management company managed this rental property on behalf of the Company. As this property was sold during the three-month period ended March 31, 2022, there are no reportable future anticipated rental revenues.

For the three- and nine-month periods ended September 30, 2021, depreciation expense on the EDI Real Estate portfolio of properties was $397 and $3,329, respectively. This compares to the three- and nine-month periods ended September 30, 2020, when depreciation expense on the EDI Real Estate portfolio of properties was $4,431 and $12,861, respectively.

EDI Real Estate	*March 31, 2022*		*December 31, 2021*
Total real estate held for investment	$	—	$	43,821
Accumulated depreciation		—		(16,910	)
Real estate held for investment, net	$	—	$	26,911

~~There~~For ~~were no properties sold during~~ the three-month periods ended ~~September~~March 3031, ~~2021,~~2022 and ~~2020.~~2021, ~~Three properties~~depreciation ~~were~~expense ~~sold~~on ~~during~~ the ~~nine-month~~EDI ~~period~~Real ~~ended September~~Estate ~~30,~~portfolio ~~2021. Total gross proceeds for the sale~~ of ~~the three~~ properties was $~~332,000~~398 and ~~net proceeds totaled~~ $752,~~395. This compares to their carrying value of $211~~377,~~213,~~ ~~which resulted in a net gain of $120,787 for the period~~respectively. During the nine-month period ended September 30, 2020, two properties held for resale were sold for gross proceeds of $172,000. Net proceeds totaled $34,749. This compares to their carrying value of $98,835, which resulted in a total gain of $73,165 for the period. No properties were purchased during the three- and nine-month periods ended September 30, 2021, and 2020 for the EDI Real Estate portfolio.

NoEDI ~~impairment~~Real ~~adjustments~~Estate’s sole remaining residential property was sold during the three-month period ended March 31, 2022. Gross proceeds for the sale of the property were ~~recorded~~$75,000 and net proceeds totaled $69,603. This compares to the property’s carrying value of $26,463, which resulted in a gain of $43,140 on the ~~EDI~~sale. There ~~Real~~were ~~Estate~~no ~~portfolio~~properties sold during the three-month ~~and~~period ended March ~~nine~~31, 2021. No properties were purchased during the three-month periods ended ~~September~~March 3031, ~~2021,~~ 2022 and ~~2020~~ 2021.

19 No impairment adjustments were recorded on the EDI Real Estate portfolio during the three-month periods ended March 31, 2022, and 2021.

~~NOTE 9. NOTES PAYABLE~~ 17

~~Notes~~NOTE ~~payable~~7. ~~at September~~SEGMENT ~~30, 2021, and December 31, 2020, consist of the following:~~INFORMATION

	Interest Rates		Average Term	September 30, 2021		December 31, 2020
Interest-bearing amount due on promissory note through EDI Real Estate, LLC		5.60%	15 years	$	—	$	154,094
Interest-bearing amount due on real estate held for investment through EDI Real Estate, LLC		6.00%	5 years		—		96,000
Less current portion					—		(5,609	)
Long-term portion				$	—	$	244,485

During the three-month period ended March 31, 2022, the Company operated through four business segments with separate management and reporting infrastructures that offer different products and services. The four business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations.

During the quarterly period ended September 30, 2018, EDI Real Estate, LLC, as a borrower, issued a promissory note secured by certain properties held for investment. This note carries an annual interest rate of 5.6% and fully matures on September 1, 2033, with early payoff permitted. The interest rate on this note is subject to change once each five-year period based on an index rate plus a margin of 2.750 percentage points. The index rate is calculated as a monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of five years. During the quarterly period ended September 30, 2021, the remaining loan balance was paid in full and no future payments are required.

During the quarterly period ended September 30, 2017, EDI Real Estate, LLC, as a borrower, issued a promissory note secured by a property held for investment. This note carries an annual interest rate of 6%, accrues interest quarterly, and is due September 15, 2022, with early payoff permitted. During the prior quarterly period ended June 30, 2021, the balance of this note was paid in full in conjunction with the sale of the property.

NOTE 10. SEGMENT INFORMATION

During the three- and nine-month periods ended September 30, 2021, the Company operated through four business segments with separate management and reporting infrastructures that offer different products and services. The four business segments are as follows: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations.

During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations. However, as mentioned in Note 3, the Company completed a divestiture of its home services operations on May 24, 2019. As a result, as of the three- and nine-month periods ended September 30, 2021, and for all prior periods presented, the Company’s former home services operations segment has been reported as discontinued operations.

The asset management operations segment includes revenues and expenses derived from various joint ventures, service offerings, and initiatives undertaken in the asset management industry.

The real estate operations segment includes (i) ~~our~~revenue ~~equity~~and inexpenses Mtrelated ~~Melrose, LLC, prior~~ to the ~~sale~~management of ~~the~~legacy ~~Company’s remaining membership interests on May 17, 2021, which managed~~ properties held for investment and held for resale through EDI Real Estate located in ~~Lexington~~Roanoke, ~~Kentucky~~Virginia, and (ii) ~~revenue~~our ~~and~~equity ~~expenses~~in ~~related~~Mt Melrose, LLC, prior to the ~~management~~sale of ~~legacy~~the Company’s remaining membership interests on May 17, 2021, which managed properties held for investment and held for resale ~~through EDI Real Estate~~ located in ~~Roanoke~~Lexington, ~~Virginia~~Kentucky.

The internet operations segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services. Our internet segment includes revenue generated by operations in both the United States and Canada. For the three-month periods ended ~~September~~March 3031, ~~2021,~~ 2022 and ~~2020~~2021, the internet operations segment generated revenue of $~~207~~205,~~678~~877 and $~~230~~220,~~714~~ 280 in the United States and revenue of $10,~~419~~803 and $11,~~523 in Canada, respectively. This compares to the nine-month periods ended September 30, 2021, and 2020, where the internet segment generated revenue of $640,470~~986 ~~and $703,335~~ in ~~the United States and revenue of $33,812 and $37,676 in~~ Canada, respectively. All assets reported under the internet operations segment for the quarterly periods ended ~~September~~March 3031, ~~2021,~~2022 and ~~December~~ 312021, ~~2020,~~ are located within the United States.

The other operations segment includes revenue and expenses from nonrecurring or one-time strategic funding or similar activity and any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables for the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021~~2022, and ~~2020~~2021.

Three Months Ended September 30, 2021	Asset Management			Real Estate			Internet		Other			Discontinued Operations - Home Services			Consolidated
Quarterly Period Ended March 31, 2022	Asset Management			Real Estate			Internet		Other			Consolidated
Revenues	$	~~806~~38,~~314~~495		$	1,800		$	~~218~~216,~~097~~680	$	—		$	—256,975		$	~~1,026,211~~
Cost of revenue		—			~~466~~445			6171,~~863~~194		—			—71,639			~~62,329~~
Operating expenses		~~113~~119,~~158~~417			~~15,202~~209			5449,~~905~~844		~~477~~814,~~234~~776			—984,246			~~660,499~~
Other income (expense)		—(173	)		~~(332~~43,390	)		191,~~930~~408		1421,~~248~~463			—66,088			~~33,846~~
Income tax benefit (expense)		—			—			—		(360,000	)		—			(360,000	)
Income (loss) from operations		(81,095	)		44,536			97,050		(793,313	)		(732,822	)
Income (loss) from continuing operations, net of taxes		693,156			(14,200	)		121,259		(822,986	)		—			(22,771	)
Goodwill		—			—			212,445		—			212,445
Income from discontinued operations, net of taxes		—			—			—		—			—			—
Identifiable assets	$	2,422,054		$	19,738		$	431,742	$	14,586,198		$	17,459,732
Goodwill		—			—			212,445		—			—			212,445
Identifiable assets	$	9,681,756		$	43,558		$	425,155	$	9,332,415		$	—		$	19,482,884

Nine Months Ended September 30, 2021	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Quarterly Period Ended March 31, 2021	Asset Management		Real Estate			Internet		Other			Consolidated
Revenues	$	42,~~556~~193,~~173~~854	$	~~347~~9,~~260~~736		$	~~674~~232,~~282~~266	$	—		$	—2,435,856	$	~~5,577,715~~
Cost of revenue		—		~~244~~7,~~319~~644			~~203~~71,~~855~~963		—			—79,607		~~448,174~~
Operating expenses		~~343~~117,~~808~~711		396,~~936~~485			~~151~~46,~~791~~541		~~925~~207,~~832~~253			—377,990		~~1,461,367~~
Other income (expense)		—		~~755~~(4,~~345~~795	)		~~20,651~~361		234,~~913~~824			—390		~~799,909~~
Income tax benefit (expense)		—		—			—		(360,000	)		—		(360,000	)
Income (loss) from operations		2,076,143		(9,188	)		114,123		(202,429	)		1,978,649
Income (loss) from continuing operations, net of taxes		4,212,365		818,350			339,287		(1,261,919	)		—		4,108,083
Goodwill		—		—			212,445		—			212,445
Income from discontinued operations, net of taxes		—		—			—		—			—		—
Identifiable assets	$	15,820,688	$	312,819		$	433,317	$	339,926		$	16,906,750
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	9,681,756	$	43,558		$	425,155	$	9,332,415		$	—	$	19,482,884

2118

Three Months Ended September 30, 2020	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	1,607,150	$	16,129		$	242,237	$	—		$	—	$	1,865,516
Cost of revenue		—		12,157			85,412		—			—		97,569
Operating expenses		120,368		5,940			49,239		165,165			—		340,712
Other income (expense)		—		(5,456	)		777		6,540			—		1,861
Income (loss) from continuing operations, net of taxes		1,486,782		(7,424	)		108,363		(158,625	)		—		1,429,096
Income from discontinued operations, net of taxes		—		—			—		—			1,857		1,857
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	11,170,904	$	452,357		$	470,667	$	331,834		$	261	$	12,426,023

NOTE 8. COMMITMENTS AND CONTINGENCIES

Nine Months Ended September 30, 2020	Asset Management		Real Estate			Internet		Other			Discontinued Operations - Home Services		Consolidated
Revenues	$	1,130,815	$	219,772		$	741,011	$	—		$	—	$	2,091,598
Cost of revenue		—		151,480			251,829		—			—		403,309
Operating expenses		323,351		23,651			143,521		658,989			—		1,149,512
Other income (expense)		2,283		(13,454	)		3,900		13,982			—		6,711
Income (loss) from continuing operations, net of taxes		809,747		31,187			349,561		(645,007	)		—		545,488
Income from discontinued operations, net of taxes		—		—			—		—			15,762		15,762
Goodwill		—		—			212,445		—			—		212,445
Identifiable assets	$	11,170,904	$	452,357		$	470,667	$	331,834		$	261	$	12,426,023

NOTE 11. COMMITMENTS AND CONTINGENCIES

Leases

As of ~~September~~March 3031, ~~2021~~2022, and December 31, ~~2020~~2021, the Company has no long-term leases that require right-of-use assets or lease liabilities to be recognized.

The previous lease for office space for Willow Oak Asset Management, LLC expired on September 30, 2020, and has been renewed on a month-to-month basis beginning on October 1, 2020. ~~The~~ ~~previous lease for warehouse space for corporate matters was a short-term lease, under 12 months, and expired in February 2020.~~ In accordance with ongoing accounting policy elections, the Company does not recognize right-of-use ~~(ROU)~~ assets or lease liabilities for short-term or month-to-month leases. Total rental expenses attributed to ~~these~~this short-term ~~leases~~ lease for ~~the~~ both three- ~~and nine-~~month periods ended ~~September~~March 3031, 2022 and 2021, were $5,250 ~~and $15,750, respectively~~. ~~This compares to total rental expenses attributed to these short-term leases for the three- and nine-month periods ended September 30, 2020, of $0 and $13,434, respectively.~~

There ~~were~~are no other operating lease costs ~~from continuing operations~~ for the three- ~~and nine-~~month periods ended ~~September~~March 3031, ~~2021.~~2022 ~~This compares to total operating lease costs from continuing operations for the three-~~ and ~~nine-month periods ended September 30, 2020, of $15,149 and $59,492, respectively~~2021.

As the Company has no remaining leases classified as operating leases or financing leases as of the periods ended ~~September~~March 3031, ~~2021,~~ 2022 and December 31, ~~2020~~2021, there are no future liabilities or maturities of lease obligations recognized on the accompanying consolidated balance sheets.

Other Commitments

Agreement and Plan of Merger with CrossingBridge Advisors, LLC, et al

As has been previously reported, on December 29, 2021, the Company, along with CrossingBridge Advisors LLC, a Delaware limited liability company (“CBA”), and Cohanzick Management, LLC, a Delaware limited liability company (the “CBA Member”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company has agreed to become, subject to stockholder approval and the parties’ satisfaction of various closing conditions, a wholly-owned subsidiary of ENDI Corp., a new parent entity that is a Delaware corporation (the “New Parent”), through a series of mergers (the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). Upon closing of the Business Combination, all of the outstanding shares of the Company’s capital stock will be exchanged for and converted into the right to receive shares of New Parent, which will become the Company’s sole stockholder. In order to effect the Mergers and the Business Combination, New Parent will form two merger subsidiaries. Upon the closing of the Merger Agreement, the first merger subsidiary will merge with and into the Company (the “First Merger”), with the Company as the surviving entity. Upon consummation of the First Merger, the Company will become a direct, wholly-owned subsidiary of New Parent. Concurrently with the First Merger, and as part of the same overall transaction, the second merger subsidiary will merge with and into CBA (the “Second Merger”), with CBA as the surviving entity. Upon consummation of the Second Merger, CBA will also become a direct, wholly-owned subsidiary of New Parent.

Litigation & Legal Proceedings

Enterprise Diversified, Inc. (f/k/a Sitestar Corporation) v. Frank Erhartic, Jr.

As has been previously reported, on April 12, 2016, the Company filed a civil action complaint against Frank Erhartic, Jr. (the “Former Erhartic CEO”), the Company’s former CEO and director (prior to December 14, 2015) and currently an owner of record or beneficially of more than 5% of the Company’s Common Stock, alleging, among other things, that the Former Erhartic CEO engaged in, and caused the Company to engage in to its detriment, a series of unauthorized and wrongful related- party transactions, including causing the Company to borrow certain amounts from the Former Erhartic CEO’s mother unnecessarily and at a commercially unreasonable rate of interest, converting certain funds of the Company for personal rent payments to the Former Erhartic CEO, commingling in land trusts certain real properties owned by the Company and real properties owned by the Former Erhartic CEO, causing the Company to pay certain amounts to the Former Erhartic CEO for lease payments under an unauthorized lease as to a storage facility owned by the Former Erhartic CEO, causing the Company to pay rent on its corporate headquarters owned by the Former Erhartic CEO’s ex-wife in amounts commercially unreasonable and excessive, and to make real estate tax payments thereon for the personal benefit of the Former Erhartic CEO, converting to the Former Erhartic CEO and/or absconding with five motor vehicles owned by the Company, causing the Company to pay real property and personal property taxes on numerous properties owned personally by the Former Erhartic CEO, causing the Company to pay personal credit card debt of the Former Erhartic CEO, causing the Company to significantly overpay the Former Erhartic CEO’s health and dental insurance for the benefit of the Former Erhartic CEO, and causing the Company to pay the Former Erhartic CEO’s personal automobile insurance. The Company is seeking, among other relief available, monetary damages in excess of $350,000. This litigation matter is currently pending in the Circuit Court for the City of Lynchburg (Lynchburg, Virginia), and is currently set for trial in November 2022. During the quarterly period ended March 31, 2022, the parties have engaged in settlement discussions respecting the case. Unless this matter is earlier settled by an agreement between the parties, the Company intends to move forward with a trial of the case to conclusion.

Other: Mt Melrose-related Proceedings

As has been previously reported, various disputes had arisen between the Company and Woodmont Lexington, LLC (“Woodmont”), the entity to whom the Company previously sold, on June 27, 2019, 65% of the Company’s membership interest in Mt Melrose, LLC (“Mt Melrose”).

As has been previously reported, these disputes had resulted in certain litigation between the parties commenced by the Company on November 20, 2019, in the Delaware Court of Chancery, Enterprise Diversified, Inc. v. Woodmont Lexington, LLC, et al., C.A. No. 2019-0928-JTL (Del. Ch.) ~~(the “Delaware Action”)~~, as well as certain litigation between the parties previously pending in the Circuit Court in Fayette County, Kentucky, Mt Melrose II, LLC, et al. v. Enterprise Diversified, Inc., C.A. No. 19-CI-4304 (Ky. Fayette Cir. Ct.). As also has been previously reported, commencing in March 2021, the Company and Woodmont agreed to engage in voluntary mediation concerning their various disputes through the Delaware Court of Chancery.

As outcome to the parties’ mediation, on May 17, 2021, the Company, on the one hand, and Woodmont and Mt Melrose, on the other hand, entered into a confidential settlement agreement and mutual general release, pursuant to which the parties have amicably settled all of their disputes and the previously reported related litigation between them. Pursuant to such settlement, all rights and obligations of the Company to Woodmont and/or Mt Melrose, and of Woodmont and/or Mt Melrose to the Company, set forth in the membership interest purchase agreement between the Company and Woodmont and the Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC by and among the Company and Woodmont dated June 27, 2019, and all amendments of those agreements, have been terminated and are of no further force or effect, effective as of May 17, 2021. As consideration for such termination and the Company’s sale to Woodmont of all of the Company’s membership interests in Mt Melrose, the Company received $850,000 in cash proceeds during the ~~prior~~quarterly period ended June 30, 2021. ~~Under the terms of the parties' settlement, no other information or details will be disclosed.~~

2319

NOTE 129. STOCKHOLDERS’ EQUITY

Classes of Shares

As of ~~September~~March 3031, ~~2021~~2022, the Company’s Articles of Incorporation, as amended, authorize an aggregate of 40,000,000 shares of capital stock of the Company, consisting of 30,000,000 authorized shares of serial preferred stock, par value of $0.001 per share, and 10,000,000 authorized shares of common stock, par value of $0.125 per share.

Preferred Stock

Preferred stock, any series, shall have the powers, preferences, rights, qualifications, limitations, and restrictions as from time to time fixed by the Company’s Board of Directors in its sole discretion. As of ~~September~~March 3031, ~~2021~~2022, the Company has not issued any shares of its preferred stock ~~(including, without limitation, its Series A Preferred Stock)~~.

As previously reported in the Company’s Current Report on Form 8-K filed with the SEC on July 29, 2020, the Company ~~has~~ adopted a certain stockholder rights agreement styled as the Tax Benefit Preservation Plan, dated as of July 24, 2020, by and between the Company and Colonial Stock Transfer Company, Inc., as rights agent. The Tax Benefit Preservation Plan was adopted as a means designed to safeguard against inadvertent diminution or limitation of the Company’s ~~valuable~~ tax assets. As previously reported, pursuant to the Tax Benefit Preservation Plan, as of July 24, 2020, the Company ~~has~~also designated a series of its preferred stock as the Series A Preferred Stock, consisting of 250,000 shares so designated.

However, subsequent to the quarterly period ended March 31, 2022, as reported in the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2022, the Company executed an Amendment to the Tax Benefit Preservation Plan on April 1, 2022. The Amendment was entered into pursuant to the determination by the Company’s Board of Directors to amend the Tax Benefit Preservation Plan to accelerate the expiration of the rights thereunder to the close of business on April 5, 2022, thereby effectively terminating the Tax Benefit Preservation Plan as of such time. In connection with such Amendment, the Company also cancelled its designation of the preferred stock previously designated as the Series A Preferred Stock; and, accordingly, the 250,000 unissued shares of preferred stock previously designated as Series A Preferred Stock have been withdrawn and returned to the status of authorized but unissued shares of preferred stock, without designation.

Common Stock

As of ~~September~~March 3031, ~~2021~~2022, 2,647,383 shares of the Company’s common stock were issued and outstanding.

As previously reported in the Company’s Current Report on Form 8-K Amendment No. 1 filed with the SEC on July 8, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State on June 16, 2021, increasing the number of shares of common stock, par value of $0.125 per share, which the Company shall have the authority to issue from 2,800,000 shares of common stock to 10,000,000 shares of common stock.

NOTE 1310. SUBSEQUENT EVENTS

~~Management~~Subsequent ~~has~~to ~~evaluated~~the ~~all~~quarterly ~~subsequent~~period ~~events from~~ended ~~September~~March 3031, ~~2021~~2022, ~~through~~as reported in the ~~date~~Company’s Current Report on Form 8-K filed with the ~~unaudited~~SEC ~~condensed~~on April ~~consolidated~~6, ~~financial~~2022, ~~statements~~the ~~were~~Company ~~issued~~executed an Amendment to the Tax Benefit Preservation Plan on April 1, 2022. The ~~Management~~Amendment ~~has~~was ~~concluded~~entered ~~that~~into nopursuant ~~subsequent~~to ~~events~~the ~~have~~determination ~~occurred~~by ~~that~~the ~~would~~Company’s ~~require~~Board ~~recognition~~of orDirectors ~~disclosure~~to inamend the ~~consolidated~~Tax ~~financial~~Benefit ~~statements~~Preservation Plan to accelerate the expiration of the rights thereunder to the close of business on April 5, 2022, thereby effectively terminating the Tax Benefit Preservation Plan as of such time. See Note 9 for more information.

24 On April 5, 2022, the Company received the full remaining investment redemption receivable amount from Alluvial Fund, LP. Accordingly, as of April 5, 2022, there is no remaining investment redemption receivable amount due to the Company.

Management has evaluated all other subsequent events from March 31, 2022, through May 13, 2022, the date the consolidated financial statements were issued. Management concluded that no additional subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section is intended to provide readers of our financial statements information regarding our financial condition, results of operations, and items that management views as important. The following discussion and analysis should be read in conjunction with the Company’s ~~unaudited condensed~~ consolidated financial statements and related footnotes for the ~~three- and nine-month periods~~ quarterly period ended ~~September~~March 3031, ~~2021~~2022. The discussion of results, causes, and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future. Additionally, it should be noted that a uniform comparative analysis cannot be performed for all segments, as a segment’s limited financial history or ~~recent~~ restructuring results in less comparable financial performance.

Overview

During the ~~three-month~~quarterly period ended ~~September~~March 3031, ~~2021~~2022, Enterprise Diversified, Inc. (“ENDI,” the “Company,” or “we”) operated through four reportable segments:

●

Asset Management Operations - this segment includes revenue and expenses derived from our various joint ventures, service offerings, and initiatives undertaken in the asset management industry;

● Real Estate Operations - this segment includes (i) ~~prior~~revenue toand ~~its~~expenses ~~sale~~related onto ~~May~~the ~~17,~~management ~~2021,~~of ~~our~~legacy ~~equity in Mt Melrose, LLC, which manages~~ properties held for investment and held for resale through EDI Real Estate located in ~~Lexington~~Roanoke, ~~Kentucky~~Virginia, and (ii) ~~revenue~~prior ~~and~~to ~~expenses~~its ~~related~~sale toon ~~the~~May ~~management~~17, of2021, ~~legacy~~our equity in Mt Melrose, LLC, which managed properties held for investment and held for resale ~~through EDI Real Estate~~ located in ~~Roanoke~~Lexington, ~~Virginia~~Kentucky;

●

Internet Operations - this segment includes revenue and expenses related to our sale of internet access, hosting, storage, and other ancillary services; and

●

Other Operations - this segment includes any revenue and expenses from nonrecurring or one-time strategic funding or similar activity that is not considered to be one of our primary lines of business, and any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations, comprised of former subsidiary Specialty Contracting Group, LLC’s operation of HVAC and plumbing companies in Arizona. However, for the three- and nine-month periods ended September 30, 2021, and for all prior periods presented, Home Services Operations are reported as discontinued operations.

The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

Asset Management Operations

In 2016, the Company made a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on January 1, 2017, by an unaffiliated sponsor and general partner, Alluvial Capital Management, LLC. The Company had determined that Willow Oak’s support of Alluvial Capital Management, LLC and its direct investment in Alluvial Fund were both beneficial and necessary undertakings in conjunction with establishing an asset management operations business and gaining credibility within that industry. As a special limited partner, Willow Oak ~~earns~~ earned a share of management and performance fees earned. On May 31, 2021, however, Willow Oak initiated a series of liquidating ~~distribution~~distributions of its investment in Alluvial Fund, ~~which such withdrawal will be fulfilled by the general partner~~ according to a mutually agreed upon cash distribution schedule. ~~During~~with the ~~quarter~~general ~~ended~~partner. ~~September~~On 30December 31, 2021, Willow Oak initiated its ~~second~~third ~~aggregate~~and final liquidating cash distribution ~~totaling~~ ~~$5,579,679~~ in respect of such ~~withdrawal.~~schedule, ~~This~~and ~~brings~~during the ~~total~~three-month ~~distribution~~period ~~amount~~ended toMarch ~~$14~~31,~~038~~ 2022,~~574~~ ~~for~~ the ~~nine-month~~Company ~~period~~received ~~ended~~a ~~September~~corresponding partial ~~30,~~cash ~~2021~~distribution of $1,680,208. As of ~~September~~December 3031, 2021, and subsequently as of March 31, 2022, Willow Oak no longer holds a any remaining ~~direct~~ investment in Alluvial Fund. In accordance with the partnership terms of Alluvial Fund, however, a portion of Willow Oak’s capital account was retained by the general partner until the fund’s activities for the year ended December 31, 2021, were finalized through an independent audit. The retained amount was not actively invested and was not subject to investment gains or losses. The retained amount is represented by the investment redemption receivable amount on the accompanying consolidated balance sheets; however it has been fully collected subsequent to the three-month period ended March 31, 2022. Investment gains and losses for activity during the prior periods presented are reported as revenue on the accompanying unaudited ~~condensed~~ consolidated statements of operations.

In furtherance of establishing the asset management operations business, Willow Oak signed a fee share agreement in June 2017, with Coolidge Capital Management, LLC (“Coolidge”), whose sole member is Keith D. Smith, an ENDI director. Willow Oak is the sole member of Bonhoeffer Capital Management, LLC, the general partner to Bonhoeffer Fund, LP, a private investment partnership launched by Willow Oak and managed by Coolidge. Under their agreement concerning Bonhoeffer Fund, LP, Willow Oak paid all start-up expenses and pays agreed-upon operating expenses that are not partnership expenses, Coolidge is responsible for all investment management, and Willow Oak receives 50% of all performance and management fees earned. Additionally, Willow Oak FMS earns a direct fee from the private limited partnership for the administrative, compliance program management, and tax and audit liaison services it renders.

On November 1, 2018, Willow Oak Asset Management, LLC entered into a fund management services agreement with Arquitos Investment Manager, LP, Arquitos ~~which~~Capital isManagement, LLC, and Arquitos Capital Offshore Master, Ltd. (collectively “Arquitos”), which are managed by our Board chairman and principal executive officer, Steven L. Kiel, to provide Arquitos with Willow Oak’s Fund Management Services (“FMS”) consisting of the following services: strategic planning, investor relations, marketing, operations, compliance program management and legal coordination, accounting and bookkeeping, annual audit and tax coordination, and liaison to third-party service providers. Willow Oak earns monthly and annual fees as consideration for these services. On November 1, 2020, this arrangement was renewed with revised terms that include an exchange of services between Willow Oak and Arquitos. Steven Kiel, through Arquitos, has been contracted to perform ongoing consulting services for the benefit of Willow Oak in the following areas: strategic development, marketing, networking and fundraising. Willow Oak continues to provide ongoing FMS services, and continues to earn monthly and annual fees as consideration for these services.

On September 29, 2020, Willow Oak, through Willow Oak AMS, executed a strategic relationship agreement with SVN Capital, LLC towhereby ~~become~~Willow aOak ~~20%~~would ~~beneficial~~receive ~~owner~~certain ofeconomic ~~the~~and ~~firm~~other rights in exchange for the provision of certain ongoing FMS and operational services offered through Willow Oak FMS. AsPursuant ato ~~beneficial owner~~these ofeconomic ~~SVN Capital~~rights, ~~LLC,~~ Willow Oak is entitled to 20% of gross management and performance fees earned by the firm. Additionally, Willow Oak FMS earns a direct fee from SVN Capital Fund, LP, a private investment fund launched by the firm’s managing member, for the administrative, compliance program management, and tax and audit liaison services it renders.

25 21

Real Estate Operations

As has been previously reported, in December 2017, ENDI created New Mt Melrose, a wholly -owned subsidiary at that time, to acquire a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into in December 2017 with the seller, Old Mt. Melrose. During January and June 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed two bundled acquisitions from Old Mt. Melrose of residential and other income-producing real properties located in Lexington, Kentucky. As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in New Mt Melrose to Woodmont, which agreed to assume full responsibility for the management and operation of New Mt Melrose and its real estate portfolio. As a result of no longer having a controlling financial interest, the Company deconsolidated the operations of New Mt Melrose as of June 27, 2019. As was previously reported in the Company’s Current Report on Form 8-K filed with the SEC on May 20, 2021, on May 17, 2021, the Company entered into an agreement with Woodmont that terminated and effected a sale to Woodmont of the Company’s remaining membership interests in New Mt Melrose in conjunction with a cash payment to the Company. As of the ~~prior~~quarterly period ended June 30, 2021, and subsequently the year ended December 31, 2021, the Company does not hold any remaining interests in the New Mt Melrose entity. See Notes 4 3 and 118 for more information.

As has been previously reported, in July 2017, ENDI created a wholly -owned real estate subsidiary named EDI Real Estate, LLC, to hold ENDI’s legacy portfolio of real estate. ~~As of~~During ~~September~~the ~~30,~~three-month ~~2021,~~period ~~through~~ended ~~EDI~~March ~~Real Estate~~31, ~~LLC~~2022, ~~ENDI~~the ~~owns~~Company asold ~~legacy~~the ~~real~~sole ~~estate investment portfolio that includes one~~ residential property ~~and vacant~~ ~~land.~~remaining ~~Our~~in ~~real~~the ~~estate~~ portfolio. ~~under~~As ~~EDI~~a ~~Real~~result ~~Estate~~of this sale, ~~LLC~~the isCompany ~~primarily~~no ~~located~~longer inmaintains ~~Roanoke,~~any ~~Virginia.~~residential ~~The~~rental ~~portfolio~~properties ~~includes~~or anrental ~~occupied~~leases. ~~single-family~~As ~~home~~of ~~that~~March is31, ~~managed~~2022, bythrough aEDI ~~third-party~~Real ~~property~~Estate, ~~management~~LLC, ~~company.~~ENDI ~~The~~owns ~~lease in~~two ~~effect~~vacant aslots oflocated ~~September 30~~in Roanoke, ~~2021~~Virginia, iscomprising ~~based on a month-to-month provision as~~ the ~~initial~~entirety ~~annual term~~ of the ~~lease~~Company’s ~~has~~remaining ~~been~~real ~~completed~~estate portfolio.

State and municipal laws and regulations govern the real estate industry in general and do not vary significantly throughout our real estate holding areas. State laws, including the Virginia Residential Landlord and Tenant Act, in addition to local ordinances, govern our rental properties and also do not vary significantly throughout our real estate holding areas.

Internet Operations

The Company operates its internet operations segment through Sitestar.net, a wholly -owned subsidiary. Sitestar.net is an Internet Service Provider (ISP) that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, and various ancillary services. We provide services to customers in the United States and Canada. This segment markets and sells narrow-band (dial-up and ISDN) and broadband services (DSL, fiber-optic, and wireless), as well as web hosting and related services to consumers and businesses.

Our primary competitors include regional and national cable and telecommunications companies that have substantially greater market presence, brand-name recognition, and financial resources compared to Sitestar.net. Secondary competitors include local and regional ISPs.

The residential broadband internet access market is dominated by cable and telecommunications companies. These companies offer internet connectivity through the use of cable modems, Digital Subscriber Line (DSL) programs, and fiber. These competitors have extensive scale and significantly more resources than Sitestar.net. Competitors often offer incentives for customers to purchase internet access by offering discounts for bundled service offerings (i.e., phone, television, and Internet). While we are a reseller of broadband services including DSL and fiber services, our profit margin is heavily influenced by these competitive forces.

There are currently laws and regulations directly applicable to access or commerce on the internet, covering issues such as user privacy, freedom of expression, pricing, characteristics and quality of products and services, taxation, advertising, intellectual property rights, information security, and the convergence of traditional telecommunications services with Internet communications. We may be positively or negatively affected by the repeal, modification, or adoption of various laws and regulations. These changes may occur at the international, federal, state, and local levels, and may cover a wide range of issues.

As of ~~September~~March 3031, ~~2021~~2022, the focus of our internet operations segment is to generate cash flow, work to make our costs variable, and reinvest in our operations when an acceptable return is available. We did not make significant reinvestments into the internet operations segment during the ~~three-month~~quarterly period ended ~~September~~March 3031, ~~2021~~2022.

Management routinely endeavors to identify the market value for domain names owned by the Company in order to assess potential income opportunities. Management evaluates these domain names for third-party sales potential, as well as for other marketing opportunities that could generate new revenue from current customers who utilize the domains.

Other Operations

Other operations include nonrecurring or one-time strategic funding or similar activity and other corporate operations that are not considered to be one of the Company’s primary lines of business. Below are the main recent activities comprising other operations.

Financing Arrangement Regarding Triad Guaranty, Inc.

On December 27, 2021, the Company completed the purchase of a comparable investment consisting of (i) another Triad Guaranty, Inc. promissory note in the original principal sum of $155,000, having the same terms as the December 31, 2020, financing agreement, along with (ii) 393,750 common shares of Triad Guaranty, Inc., for $25,000 from a related party. The value of this purchase is reflective of the implied collectability of the promissory note and the relative illiquidity of Triad Guaranty, Inc. stock. The Company determined that the December 27, 2021, transaction represents an active market transaction of similar assets to the Company’s existing Triad Guaranty, Inc. assets. As a result, the Company recorded a total $189,515 impairment on December 31, 2021, to its existing Triad Guaranty, Inc. promissory note and common stock to reflect the market value implied by the December 27, 2021, transaction. As of December 31, 2021, and subsequently as of March 31, 2022, the Company holds its interests in both promissory notes at $50,000 under notes receivable on the accompanying consolidated balance sheets and has attributed no value to its 847,847 aggregate shares of Triad Guaranty, Inc. common stock. See Note 4 for more information.

Corporate Operations

~~Discontinued Operations - Home Services Operations~~ 22

Prior to May 24, 2019, the Company operated its home services operations segment through its subsidiary, Specialty Contracting Group, LLC (formerly known as HVAC Value Fund, LLC). The Company had organized and launched this subsidiary in June 2016, initially with an unaffiliated third party. Specialty Contracting Group was focused on the management of HVAC and plumbing companies in Arizona.

As has been previously reported, on May 24, 2019, the Company completed its divestiture of the home services operations to Rooter Hero. See Note 3 for more information.

Summary of Financial Performance

Common stockholders’ equity ~~increased~~ decreased from $1417,~~043~~105,~~411~~ 760 at December 31, ~~2020~~2021, to $1816,~~391~~372,~~494~~938 at ~~September~~March 3031, ~~2021~~2022. This change was attributable to $497,~~212,365~~050 of net income in the ~~asset~~internet ~~management~~ operations segment, and $~~818~~44,~~350~~ 536 of net income in the real estate operations segment, and ~~$339,287 of net income in the internet operations segment, and~~ was ~~partially~~ offset by a net loss of $181,~~261,919~~ 095 in ~~other~~the ~~segments.~~asset ~~There~~management ~~was no reportable income attributed to discontinued~~ operations ~~for~~segment ~~the~~and a ~~nine-month~~net ~~period~~loss of ~~ended~~$793,313 ~~September~~in ~~30,~~other ~~2021~~segments. Corporate expenses for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2021~~2022, included in the net loss from other operations, totaled $~~925~~814,~~832~~776. Total comprehensive net ~~income~~loss for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2021~~2022, equaled $4732,~~108,083~~822.

Balance Sheet Analysis

This section provides an overview of changes in our assets, liabilities, and equity and should be read together with our accompanying ~~unaudited~~ consolidated financial statements, including the accompanying notes to the financial statements. The table below provides a balance sheet summary for the periods presented and is designed to provide an overview of the balance sheet changes from quarter to quarter.

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

ASSETS

Cash and equivalents

915,~~316~~020,~~890~~160

913,~~399~~487,~~112~~482

~~292~~9,~~767~~316,890

~~341~~9,~~007~~399,112

~~337~~292,~~149~~767

Accounts receivables, net

~~302~~39,~~548~~454

~~369~~351,~~893~~405

~~130~~302,~~155~~548

~~144~~369,~~791~~893

49130,~~824~~155

Investment redemption receivable

52,~~579~~053,~~679~~587

—3,734,465

—5,579,679

—

Investments, at fair value

~~3,765,834~~—

~~8,512,439~~—

153,~~736~~765,~~234~~834

138,~~574~~512,~~462~~439

1115,~~135~~736,~~580~~234

Real estate, total

~~27,334~~—

2726,~~732~~911

~~239~~27,~~500~~334

~~241~~27,~~876~~732

~~378~~239,~~698~~500

Goodwill and other assets

~~490~~346,~~599~~531

~~493~~340,~~618~~495

~~508~~490,~~094~~599

~~555~~493,~~044~~618

~~524~~508,~~772~~094

Total assets

1917,~~482~~459,~~884~~732

1817,~~802~~940,~~794~~758

1619,~~906~~482,~~750~~884

1418,~~857~~802,~~180~~794

1216,~~426~~906,~~023~~750

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable

6716,~~585~~366

4811,~~920~~474

6067,~~734~~585

6548,~~524~~920

6360,~~573~~734

Accrued expenses

~~465~~872,~~606~~395

~~117~~645,~~103~~798

~~137~~465,~~803~~606

~~306~~117,~~063~~103

~~176~~137,~~904~~803

Income taxes payable

~~360~~6,~~000~~532

—6,532

—360,000

—

Deferred revenue

~~198~~191,~~199~~501

~~198~~171,~~045~~194

198,~~848~~199

~~192~~198,~~088~~045

~~213~~198,~~498~~848

Notes payable and other liabilities

—

~~24,461~~—

~~247,305~~—

~~250~~24,~~094~~461

~~646~~247,~~791~~305

Total liabilities

1,~~091~~086,~~390~~794

~~388~~834,~~529~~998

~~644~~1,~~690~~091,390

~~813~~388,~~769~~529

1644,~~100,766~~690

Total stockholders’ equity

1816,~~391~~372,~~494~~938

1817,~~414~~105,~~265~~760

1618,~~262~~391,~~060~~494

1418,~~043~~414,~~411~~265

1116,~~325~~262,~~257~~060

Total liabilities and stockholders’ equity

1917,~~482~~459,~~884~~732

1817,~~802~~940,~~794~~758

1619,~~906~~482,~~750~~884

1418,~~857~~802,~~180~~794

1216,~~426~~906,~~023~~750

Results of Operations

Asset Management Operations

The Company operates its asset management operations business through its wholly owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”), Willow Oak Capital Management, LLC, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”), and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”). These subsidiaries were formed on October 10, 2016, May 24, 2018, and August 21, 2020, respectively. During the segment’s first year of operations, Willow Oak entered into three fee share agreements with multiple private investment partnerships and made an additional investment through another partnership arrangement. During the year ended December 31, 2018, two partnerships were formed, multiple fee share agreements were entered into, and a new service offering, Fund Management Services, was launched. During the year ended December 31, 2019, one joint venture was formed in which Willow Oak Capital Management is a non-managing beneficial owner. During the year ended December 31, 2020, we assisted in the launch of a private investment fund, and two wholly -owned entities, Willow Oak AMS and Willow Oak FMS, were formed to advance strategic relationships with external investment firms. Additionally, Willow Oak formalized a strategic relationship with an investment firm, becoming a non-managing beneficial owner in exchange for the provision of certain ongoing FMS and operational services.

AsDuring ofthe ~~September~~three-month 30period ended March 31, ~~2021~~2022, ~~Willow~~the ~~Oak~~asset ~~holds~~management operations segment produced $38,495 aof ~~remaining~~revenue. ~~direct~~There ~~investment~~were inno ~~the~~costs ~~Alluvial~~of ~~Fund~~revenue, operating LPexpenses totaled $119,417, and other expenses were $173. The ~~realized~~net loss ~~and~~for ~~unrealized~~the ~~investment~~three-month ~~gains~~period ~~and~~ended ~~losses~~March ~~are~~31, ~~reported~~2022, astotaled ~~revenue~~$81,095. onThis compares to the ~~accompanying~~three-month ~~unaudited~~period ~~condensed~~ended ~~consolidated~~March ~~statements~~31, of2021, when the asset management operations. ~~This~~segment ~~treatment~~produced ~~can~~$2,193,854 of ~~result~~revenue, inthere ~~reporting~~were ~~negative~~no costs of revenue, ~~figures~~and operating expenses totaled $117,711. Total net income for a ~~given~~the three-month period ended March 31, 2021, was $2,076,143.

~~Willow~~The ~~Oak~~decrease in ~~continues~~revenue for the three-month period ended March 31, 2022, is primarily due to ~~earn~~the ~~revenue~~absence ~~through~~of ~~fee~~returns ~~share~~from ~~arrangements~~the Company’s historical Alluvial Fund investment. As mentioned previously, as ~~well~~of asDecember ~~through~~31, ~~fund~~2021, ~~management~~the ~~services~~Company no longer holds a direct interest in Alluvial Fund. Operating expenses remained comparable quarter over quarter.

~~During~~On December 31, 2021, Willow Oak initiated its third and final liquidating cash distribution from Alluvial Fund, and during the three-month period ended ~~September~~March 3031, ~~2021~~2022, the ~~asset~~Company ~~management~~received ~~operations~~a ~~segment~~corresponding partial ~~produced~~cash distribution of $~~806~~1,~~314~~680,208. In accordance with the partnership terms of ~~revenue.~~Alluvial ~~Cost~~Fund, a portion of ~~revenue~~Willow Oak’s capital account was retained $0by ~~and~~the ~~operating~~general ~~expenses~~partner ~~totaled~~until ~~$113,158.~~the ~~Net income~~ fund’s activities for the ~~three-month~~year ~~period~~ ended ~~September~~December 3031, 2021, ~~totaled~~were ~~$693,156~~finalized through an independent audit. ~~This~~As ~~compares~~of toDecember ~~the~~31, ~~three-month~~2021, ~~period~~and ~~ended~~subsequently ~~September~~as 30of March 31, ~~2020~~2022, ~~when~~Willow ~~the~~Oak ~~asset~~no ~~management~~longer ~~operations~~holds ~~segment~~any ~~produced~~remaining ~~$1,607,150~~investment ofin ~~revenue,~~Alluvial ~~cost~~Fund. ofThe ~~revenue~~retained amount was not ~~$0,~~actively invested and ~~operating~~was not ~~expenses~~subject ~~totaled~~to ~~$120,368~~investment gains or losses. ~~Total~~The ~~net~~retained ~~income~~amount ~~for~~is represented by the investment redemption receivable amount on the accompanying consolidated balance sheets; however it has been fully collected subsequent to the three-month period ended ~~September~~March 3031, ~~2020~~2022. Investment gains and losses for activity during the prior periods presented are reported as revenue on the accompanying unaudited consolidated statements of operations. As of March 31, ~~was~~2022 and $1December 31,~~486~~ 2021,~~782~~ the asset management operations segment does not hold any short or long-term investments. Willow Oak continues to earn revenue through its remaining fee share arrangements, as well as through fund management services.

The ~~decrease in~~tables ~~revenue~~below ~~for~~provide ~~the~~a ~~three-month~~summary ~~period~~of ~~ended~~income ~~September~~statement ~~30,~~amounts ~~2021,~~over istime. ~~primarily~~These ~~due~~figures toare ~~decreased returns~~specific ~~through~~to the ~~Company’s~~asset ~~Alluvial~~management ~~Fund~~operations ~~investment~~segment and aare ~~decrease in~~presented ~~performance~~for ~~fee share revenues from~~ the ~~affiliate~~three-month ~~management~~periods ~~services~~designated ~~relationships~~below. ~~The slight decrease in operating expenses is primarily due to an decrease in legal and rent expenses.~~

As of September 30, 2021, the fair value of long-term investments held through the asset management operations segment totaled $3,720,424. This compares to the fair value of long-term investments held at December 31, 2020, which totaled $13,520,616. The decrease in investments is attributable to a first withdrawal of $8,458,895 made during the prior three-month period ended June 30, 2021 and a second withdrawal of $5,579,679 initiated during the current three-month period ended September 30, 2021, partially offset by positive Alluvial Fund performance during the nine-month period ended September 30, 2021. Management notes that, while short-term market volatility can have a significant effect on reported revenue for a given period, the Company’s overall investment strategy is ultra-long-term focused.

Asset Management Operations Revenue	Quarterly Period Ended March 31, 2022		Quarterly Period Ended March 31, 2021
Unrealized gains on investment activity	$	—	$	2,054,471
Performance fee revenue		—		99,579
Management fee revenue		16,745		19,264
Fund management services revenue		21,750		20,540
Total revenue	$	38,495	$	2,193,854

The tables below provide a summary of income statement amounts over time. These figures are specific to the asset management operations segment and are presented for the three- and nine-month periods designated below. 23

	For the three months ended					For the nine months ended
Asset Management Operations Revenue	September 30, 2021			September 30, 2020		September 30, 2021		September 30, 2020
Realized and unrealized gains (losses) on investment activity	$	829,579		$	1,545,239	$	4,167,650	$	989,609
Management and performance fee revenue		(44,539	)		37,858		325,815		69,153
Fund management services revenue		21,274			24,053		62,708		72,053
Total revenue	$	806,314		$	1,607,150	$	4,556,173	$	1,130,815

Real Estate Operations

For the three-month period ended ~~September~~March 3031, ~~2021~~2022, the real estate operations segment generated revenue of $1,800 and cost of revenues of $~~466~~445, all of which is attributed to rental activities. Operating expenses for the three-month period ended ~~September~~March 3031, ~~2021~~2022, were $~~15,202~~209. Other ~~expenses~~income totaled $~~332~~43,390 and ~~the total~~ net ~~loss~~income for the three-month period ended ~~September~~March 3031, ~~2021~~2022, totaled $1444,~~200~~536. Other ~~expenses~~income for the three-month period ended ~~September~~March 3031, ~~2021~~2022, ~~are interest-related expenses~~is primarily attributable to the sale of the sole remaining residential property, which resulted in a gain of $43,140. This compares to the three-month period ended ~~September~~March 3031, ~~2020~~2021, when the real estate operations segment generated revenue of $169,~~129~~ 736 and cost of revenue of $127,~~157~~644, all of which was also related to rental activities. Operating expenses for the three-month period ended ~~September~~March 3031, ~~2020~~2021, were $56,~~940~~485, other expenses totaled $54,~~456~~795, and the total reported net loss was $79,~~424~~188. Other expenses incurred during the three-month period ended ~~September~~March 3031, ~~2020~~2021, were primarily interest-related expenses. The current period decreases in revenue ~~and~~, cost of revenue, and operating expenses are due to the ~~diminishing~~ diminished rental real estate portfolio. The increase in operating expenses is primarily due to the write-off of the remaining debt issuance costs associated with the interest-bearing note payable that was paid off during the current quarter.

EDI Real Estate Operations

As of ~~September~~March 3031, ~~2021~~2022, and December 31, ~~2020~~2021, the EDI Real Estate portfolio of properties included the following units:

EDI Real Estate	~~September~~March 3031, ~~2021~~2022		December 31, ~~2020~~2021
Units occupied or available for rent		10		41
Vacant lots held for investment		32		32
Total units held for investment		42		73
Units held for resale		—		—
Vacant lots held for resale		—		—
Total units held for resale		—		—

The ~~lease~~unit inheld ~~effect~~for investment as of ~~September~~December 3031, 2021, ~~is based on a~~consisted ~~month-to-month provision as the initial annual term~~ of ~~the~~a ~~lease~~single-family ~~has~~residential ~~been~~rental ~~completed~~unit. AnThis ~~outside~~ property ~~management~~was ~~company~~sold ~~manages~~during ~~this~~the ~~rental property~~three-month onperiod ~~behalf~~ended ofMarch ~~the~~31, ~~Company~~2022.

EDI Real Estate	September 30, 2021			December 31, 2020
Total real estate held for investment	$	43,846		$	303,158
Accumulated depreciation		(16,512	)		(61,282	)
Real estate held for investment, net	$	27,334		$	241,876

The lease in effect as of December 31, 2021, was based on a month-to-month provision as the initial annual term of the lease had been completed. An outside property management company managed this rental property on behalf of the Company. As this property was sold during the three-month period ended March 31, 2022, there are no reportable future anticipated rental revenues.

For the three-month period ended September 30, 2021, depreciation expense on the EDI Real Estate portfolio of properties was $397. This compares to the three-month period ended September 30, 2020, when depreciation expense on the EDI Real Estate portfolio of properties was $4,431.

EDI Real Estate	March 31, 2022		December 31, 2021
Total real estate held for investment	$	—	$	43,821
Accumulated depreciation		—		(16,910	)
Real estate held for investment, net	$	—	$	26,911

~~There~~For ~~were no properties sold during~~ the three-month periods ended ~~September~~March 3031, ~~2021~~2022 and ~~2020.~~2021, Nodepreciation ~~properties~~expense ~~were~~on ~~purchased~~the ~~during~~EDI ~~the~~Real ~~three-month~~Estate ~~periods~~portfolio ~~ended~~of ~~September~~properties ~~30,~~was ~~2021~~$398 and ~~2020 for~~ ~~the~~$2,377, ~~EDI Real Estate portfolio~~respectively.

EDI Real Estate’s sold remaining residential property was sold during the three-month period ended March 31, 2022. Gross proceeds for the sale of the property were $75,000 and net proceeds totaled $69,603. This compares to the property’s carrying value of $26,463, which resulted in a gain of $43,140 on the sale. There were no properties sold during the three-month period ~~impairment~~ended ~~adjustments~~March ~~recorded~~31, 2021. No properties were purchased during the three-month periods ended ~~September~~March 3031, ~~2021,~~ 2022 and ~~2020~~ 2021.

No impairment adjustments were recorded on the EDI Real Estate portfolio during the three-month periods ended March 31, 2022, and 2021.

Mt Melrose Operations

For the ~~periods~~quarterly period ended ~~September~~March 3031, 2021, ~~and December 31, 2020,~~ prior to the sale of the remaining membership interests on May 17, 2021, the Company’s remaining investment in Mt Melrose was carried on our condensed consolidated balance sheets for $53,846. This carrying value was reflective of the mechanics of the June 27, 2019 transaction, as the Company could not obtain current appraisals for each individual property at that time. By way of the Mt Melrose transaction, the Company was able to significantly reduce direct and overhead expenses, improve net cash flows, and fully deconsolidate approximately $6.4 million of debt. Additionally, the Company was afforded the opportunity to refocus growth opportunities to its asset management operations segment. These circumstances, rather than the cash consideration received, are what strategically prompted the majority sale of the Mt Melrose entity. Additional debt restructurings and sales of previously inactive real estate properties allowed the portfolio to continue its redirection, which management believes provided long-term returns greater than its carrying value. Management’s belief was substantiated as the Company recognized a gain of $778,872 during the ~~prior three-month~~ quarterly period ended June 30, 2021 ~~and current nine-month period ended September 30~~, ~~2021,~~ on the sale of its then-remaining membership interests in the Mt Melrose entity. ~~This gain is recognized on the accompanying unaudited condensed consolidated statements of operations as a gain on sale of noncontrolling interest in subsidiary.~~ As of the prior period ended June 30, 2021, the Company no longer holds any interest in the Mt Melrose entity. No comparable activity existed for the ~~three-month~~quarterly period ended ~~September~~March 3031, ~~2020~~2022. See Notes 4 3 and 118 for more information.

Internet Operations

Revenue attributed to the internet operations segment during the three-month period ended ~~September~~March 3031, ~~2021,~~ 2022 totaled $~~218~~216,~~097~~680, and cost of revenue totaled $6171,~~863~~194. Operating expenses for the segment totaled $5449,~~905~~844 for the three-month period ended ~~September~~March 3031, ~~2021~~2022, and other income totaled $191,~~930~~408. Total net income for the internet operations segment was $~~121~~97,~~259~~050 for the three-month period ended ~~September~~March 3031, ~~2021~~2022. This compares to the three-month period ended ~~September~~March 3031, ~~2020~~2021, when revenue totaled $~~242~~232,~~237~~266, cost of revenues totaled $8571,~~412~~963, operating expenses were $4946,~~239~~541, other income was $~~777~~361, and net income was $~~108~~114,~~363~~123. Other income for the segment during the current three-month period is primarily a result of the sale of a domain name. Other income for the segment during the three-month period ended September 30, 2020, is the result of refundable sales tax credits and credit card rewards.

As of ~~September~~March 3031, ~~2021~~2022, we have a total of 6,~~932~~962 customer accounts across the U.S. and Canada. This compares to the three-month period ended ~~September~~March 3031, ~~2020~~2021, when we had a total of 76,~~119~~895 customer accounts. Even through the internet operations segment has seen an increase in total customer accounts, total comparative revenue has slightly decreased due to the segment’s evolving sales mix. AsThe sales ofmix ~~September~~for 30the internet operations segment has shifted from higher revenue, ~~2021~~lower margin products to lower revenue, higher margin products. During the three-month period ending March 31, 2022, approximately 5149% of our revenue is driven by internet access services, with the remaining 4951% being earned though web hosting, email, and other web-based storage services. This compares to the three-month period ending March 31, 2021, when approximately 60% of our revenue was driven by internet access services, with the remaining 40% being earned though web hosting, email, and other web-based storage services.

~~Approximately~~As of March 31, 2022, approximately 92% of our customer accounts are U.S.-based, while 8% are Canada-based. Revenue generated by our U.S. customers totaled $~~207~~205,~~678~~877, and revenue generated by our Canadian customers totaled $10,~~419~~803 during the three-month period ended ~~September~~March 3031, ~~2021~~2022. This compares to revenue generated by our U.S. customers of $~~230~~220,~~714~~280, and revenue generated by our Canadian customers of $11,~~523~~ 986 during the three-month period ended ~~September~~March 3031, ~~2020~~2021.

28 24

Other Operations

For the three-month period ended ~~September~~March 3031, ~~2021~~2022, the Company’s other operations segment did not produce any revenue or cost of ~~goods sold~~sales. Operating expenses totaled $~~477~~814,~~234~~776, and other income was $1421,~~248~~463 for the three-month period ended ~~September~~March 3031, ~~2021~~2022. Corporate operating expenses accounted for the full $~~477~~814,~~234~~776 of reported operating expenses for our other operations. ~~Income tax expenses of $360,000 were also accrued during the three-month period ended September 30, 2021~~segment. This resulted in a net loss of $~~822~~793,~~986~~ 313 for the three-month period ended ~~September~~March 3031, ~~2021~~2022. This compares to the three-month period ended ~~September~~March 3031, ~~2020~~2021, when the other operations segment again did not produce any revenue or cost of ~~goods sold~~sales, but did incur corporate operating expenses of $~~165~~207,~~165~~253, other income of $64,~~540~~824, and a net loss of $~~158~~202,~~625~~ 429 for the period. Corporate expenses are higher for the three-month period ended ~~September~~March 3031, ~~2021~~2022, primarily due to increased ~~director fees and~~ corporate legal expenses~~. The~~ ~~increase~~associated ~~in income~~with ~~tax expenses for~~ the ~~three-month period ended September 30, 2021, is primarily attributable to the current period distribution activities related to the~~ Company’s ~~investment~~proposed inmerger ~~Alluvial Fund~~transaction.

~~Discontinued~~The ~~Operations~~Company did not recognize any income tax expense for the three-month ~~Home~~periods ~~Services~~ended March 31, 2022 and 2021, as the Company operated at a tax ~~Operations~~loss for those periods, and any deferred tax liabilities associated with unrealized gains in the Alluvial Fund investments for the three-month period ended March 31, 2021, were offset by deferred tax assets. The Company continues to provide a full valuation allowance against its net deferred tax assets, including net operating loss carryforwards, as of the three-month period ended March 31, 2022.

As noted previously, Specialty Contracting Group, LLC’s historical operations are now classified as “discontinued operations” in our consolidated financial statements, and all presented prior periods have also been reclassified to discontinued operations for comparability. For the three-month period ended September 30, 2021, there was no reportable net income from discontinued operations related to the home services operations segment. This compares to net income of $1,857 reported from discontinued operations related to the home services operations segment for the three-month period ended September 30, 2020. 25

Proposed Merger with CBA

As previously announced on December 29, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ENDI Corp., a Delaware corporation (“ENDI”), Zelda Merger Sub 1, Inc., a Delaware corporation (“First Merger Sub”), Zelda Merger Sub 2, LLC, a Delaware limited liability company (“Second Merger Sub”), CrossingBridge Advisors, LLC, a Delaware limited liability company (“CrossingBridge”), and Cohanzick Management, L.L.C., a Delaware limited liability company (“Cohanzick” and, together with the Company, ENDI, First Merger Sub, Second Merger Sub and CrossingBridge, the “Parties”).

Pursuant to the terms of the Merger Agreement, the Company will merge with First Merger Sub, a wholly-owned subsidiary of ENDI, with the Company being the surviving entity (the “First Merger”), and CrossingBridge will merge with Second Merger Sub, also a wholly-owned subsidiary of ENDI, with CrossingBridge being the surviving entity (the “Second Merger” and, together with the First Merger, the “Merger”). In connection with the Merger, each share of common stock of the Company will be converted into the right to receive one (1) share of Class A common stock, par value $0.0001 per share, of ENDI (the “Class A Common Shares”), and Cohanzick, as the sole member of CrossingBridge, will receive 2,400,000 Class A Common Shares and 1,800,000 shares of Class B common stock, par value $0.0001 per share, of ENDI (the “Class B Common Shares”, and together with the Class A Common Shares, the “Common Shares”), a Class W-1 Warrant to purchase 1,800,000 Class A Common Shares and a Class W-2 Warrant to purchase 250,000 Class A Common Shares. The Class A Common Shares and Class B Common Shares are identical other than the Class B Common Shares have the right to designate directors (as described below) and that the Class B Common Shares shall not be entitled to participate in dividends or other distributions with respect to the Class A Common Shares and shall not receive any assets of ENDI in the event of a liquidation. The warrant to purchase 1,800,000 Class A Common Shares and the warrant to purchase 250,000 Class A Common Shares to be issued to Cohanzick may be exercised in whole or in part at any time prior to the date that is five (5) years after the date of the Merger closing, at an exercise price of $8.00 per Class A Common Share subject to certain customary adjustments. Each of the warrants may also be exercised on a “cashless” basis at any time at the election of the holder and if not fully exercised prior to the expiration date of the warrant, shall be automatically exercised on a “cashless” basis. In addition, Cohanzick or its designee has agreed to purchase an aggregate of 100,000 Class A Common Shares, and shall have the right, but not the obligation, to purchase an additional 250,000 Class A Common Shares (collectively the “Additional Shares”), not later than five (5) business days following the consummation of the Merger at a price equal to the lesser of $8.00 or the 60 day volume weighted average price of Enterprise Diversified’s common shares as of the Merger closing date (the “Closing”), excluding the highest and lowest trading days. Certain of our officers, directors and employees shall have the right, but not the obligation, to purchase up to a further 55,000 Class A Common Shares on the same terms as the purchase of the Additional Shares. During the quarterly period ended March 31, 2022, ENDI incurred $585,226 of transaction costs directly associated with due diligence, public reporting, and legal advice associated with the Merger Agreement.

The Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement have been approved by our board of directors and by the board of managers of Cohanzick and remains subject to the approval of our stockholders. Holders of our common shares shall have dissenters’ rights as provided by Section 92A of the Nevada Revised Statutes. The Company and ENDI have filed a draft registration statement on Form S-4, including a prospectus registering the issuance of the ENDI Class A Common Shares, Class B Common Shares, Warrants and Class A Common Shares underlying the Warrants and draft proxy statement of the Company relating to the meeting of stockholders of the Company to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. Further, as discussed in more detail below, certain of the Company’s stockholders have entered into voting and support agreements pursuant to which such stockholders have agreed to vote their shares of capital stock of the Company in favor of the Merger.

The Merger Agreement contains customary representations and warranties of the Company, CrossingBridge, ENDI, Cohanzick and the merger subsidiaries, and certain of the parties to the Merger Agreement have agreed to customary covenants, including, among others, covenants relating to: (1) the conduct of their respective businesses during the interim period between the execution of the Merger Agreement and the consummation of the Merger; (2) the use of reasonable best efforts to obtain governmental and regulatory approvals; and (3) obligations of the Company to convene a meeting of its stockholders to approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Completion of the Merger is subject to various customary conditions, including, among others, (1) approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, by our stockholders, (2) the draft registration statement on Form S-4 being declared effective by the U.S. Securities and Exchange Commission (“SEC”), (3) the quotation of ENDI’s Class A Common Shares on the OTC Market, (4) the absence of any law, order or regulatory ruling prohibiting the consummation of the Merger and (5) the truth of each party’s representations and warranties, and the performance of each party’s covenants.

The Merger Agreement contains certain termination rights including upon: (1) the mutual written agreement of the Company and CrossingBridge to terminate the Merger Agreement, (2) the written notice of either the Company or CrossingBridge if the Merger has not closed by June 30, 2022, (3) a material breach of the Merger Agreement by us or CrossingBridge, which breach cannot be cured within thirty (30) days, (4) the failure to obtain any required regulatory or governmental approvals, (5) the failure to obtain the approval of the Company’s stockholders, or (6) the failure of our board of directors to make, or the withdrawal, amendment or qualification, in a manner adverse to CrossingBridge, of a recommendation in favor of the merger, or the failure of our board to include its recommendation in the proxy statement or the recommendation by the board of an alternative proposal or similar actions. In the event of the termination of the Merger Agreement pursuant to clause (6) of the preceding sentence, we shall pay a fee in the amount of $1,000,000 to CrossingBridge. In addition, pursuant to the Merger Agreement, we have agreed, subject to Closing, to reimburse CrossingBridge certain fees and expenses, the amount of which will be determined upon Closing.

Pursuant to the Merger Agreement, ENDI has agreed that at the Closing, it will enter into a registration rights agreement with certain stockholders of ENDI following the Closing that are deemed to be affiliates of ENDI immediately following the Closing, under which such stockholders’ Class A Common Shares, including the Class A Common Shares underlying any warrants issued in connection with the Merger, will be registered for resale under the Securities Act of 1933, as amended. In addition, ENDI has agreed that at the Closing, it will amend and restate its certificate of incorporation to provide for, among other things, the rights of the holders of the Class B Common Shares to designate certain members of ENDI’s board of directors.

The amended and restated certificate of incorporation of ENDI will provide that so long as the holders of Class B Common Shares and their affiliates own at least 25% of the outstanding Common Shares, the holders of Class B Common Shares shall have the right to designate 60% of the authorized number of directors on ENDI’s board of directors (rounded up or down to the nearest whole number as necessary in light of the actual number of members of the board of directors). So long as the holders of Class B Common Shares and their affiliates own at least 15% but less than 25% of the outstanding Common Shares, the holders of Class B Common Shares shall have the right to designate 40% of the authorized number of directors on ENDI’s board of directors (rounded up or down to the nearest whole number as necessary in light of the actual number of members of the board of directors). So long as the holders of Class B Common Shares and their affiliates own at least 5% but less than 15% of the outstanding Common Shares, the holders of Class B Common Shares shall have the right to designate one (1) director on ENDI’s board of directors. At the closing, the Class B Common Shares shall be entitled to designate 3 of the 5 members of ENDI’s board of directors.

ENDI has also agreed at the Closing, it will enter into a stockholder agreement and separate voting agreement with Cohanzick and certain stockholders of ENDI pursuant to which, among other provisions, from and after the date that the holders of Class B Common Shares are no longer entitled to elect at least one (1) director to ENDI’s board of directors pursuant to the amended and restated certificate of incorporation as described above, so long as David Sherman and his affiliates, who will collectively beneficially own approximately 61.3% of the issued and outstanding voting stock of ENDI immediately following the Merger (assuming the Additional Shares are not issued), beneficially own at least 25% of the outstanding Common Shares, will have the right to nominate up to 60% of the authorized number of directors on the ENDI board, and the stockholders named therein have agreed to vote in support of such director nominees. David Sherman is the controlling member of Cohanzick and together with his affiliates has an economic interest of approximately 87% of Cohanzick. The number of directors David Sherman and his affiliates are permitted to nominate to ENDI’s board of directors decreases to 40% if David Sherman and his affiliates cease to beneficially own less than 25% but at least 15% of the outstanding Common Shares. So long as David Sherman and his affiliates own at least 5% but less than 15% of the outstanding Common Shares, David Sherman and his affiliates shall have the right to nominate one (1) director.

The above description of the Merger Agreement and the transactions contemplated therein does not purport to be complete and is qualified in its entirety by reference to the content of the Merger Agreement, which was included as an Exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2022, as well as the information contained in, or incorporated by reference into, the Registration Statement and/or accompanying proxy and prospectus materials, as from time to time filed with the SEC.

Voting and Support Agreement

In connection with the Merger Agreement we and certain of our stockholders holding an aggregate of approximately 34% of the issued and outstanding voting capital stock of the Company have entered into a voting and support agreement (the “Support Agreement”) pursuant to which such stockholders of the Company have agreed to vote their shares of capital stock of the Company in favor of the Merger Agreement and the transactions contemplated thereby, including the Merger, and against any action, agreement, transaction or proposal that would result in a breach of any covenant or other provision of the Merger Agreement or that would reasonably be expected to result in the transactions contemplated by the Merger Agreement from not being completed. Pursuant to the Support Agreement, the stockholders party thereto have also agreed to waive their dissenters rights under Nevada law with respect to the Merger, not to solicit or support any corporate transaction that constitutes or could reasonably be expected to constitute, an alternative to the Merger, and not to sell, transfer, assign or otherwise take any action that would have the effect of preventing or disabling the stockholder from voting its shares of the Company in accordance with its obligations under the Support Agreement. The Support Agreement automatically terminates upon the termination of the Merger Agreement or upon the mutual agreement of the parties to the Support Agreement. The description of the Support Agreement is qualified in its entirety by reference to the content of the Support Agreement, which was included as an Exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2022.

Because of the material conditions to closing, including the approval of our stockholders of the Merger Agreement, we cannot assure you that the Merger will close as scheduled or at all, or on the terms described herein. If consummated, the Merger may result in significant changes to the business of the Company and the terms of an investment in shares of our common stock.

No Offer or Solicitation

This Quarterly Report on Form 10-Q is not intended to and shall not constitute a proxy statement or the solicitation of a proxy, consent or authorization with respect to any securities in respect of the Proposed Merger and shall not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote of approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Financial Condition, Liquidity, and Capital Resources

During the three-month period ended ~~September~~March 3031, ~~2021~~2022, Enterprise Diversified carried out its business strategy in four operating segments: Asset Management Operations, Real Estate Operations, Internet Operations, and Other Operations. Our primary focus is on generating cash flow so that we have the flexibility to pursue opportunities as they present themselves. We will only invest cash in ~~each~~a segment if we believe that the return on this invested capital is appropriate for the risk associated with the investment. This consideration is measured against all investment opportunities available to us and is not limited to these particular segments or the Company’s historical operations.

Cash and equivalents totaled $915,~~316~~020,~~890~~ 160 at the three-month period ended ~~September~~March 3031, ~~2021~~2022, compared to $~~341~~13,~~007~~487,482 at year-end December 31, ~~2020~~2021. Accounts receivable ~~increased~~decreased to $~~302~~39,~~548~~454 at asMarch ~~of September 30~~31, ~~2021~~2022, compared to $~~144~~351,~~791~~405 asat of December 31, ~~2020~~2021. ~~Real~~Investment ~~estate~~redemption ~~held~~receivable ~~for investment~~ decreased tofrom $273,~~334~~ 734,465 at ~~the~~year-end ~~period~~December ~~ended September 30~~31, 2021, ~~compared~~ to $~~241~~2,~~876~~053,587 at ~~year~~the three-~~end~~month ~~December~~period ended March 31, ~~2020~~2022. ~~Long-term~~Real ~~investments~~estate held asfor ofinvestment ~~September 30, 2021,~~ decreased to $30 at the three-month period ended March 31,~~765~~ 2022,~~834~~ compared to $1326,~~574,462~~911 asat ofyear-end December 31, ~~2020~~2021. Additionally, accrued compensation decreased from $~~281~~337,~~904~~759 at ~~the~~ year ~~ended~~ -end December 31, ~~2020~~2021, to $~~268~~37,~~227~~ 759 at the three-month period ended ~~September~~March 3031, ~~2021~~2022. Finally, ~~total~~accrued ~~notes~~expenses ~~payable decreased~~increased to $0834,636 at the three-month period ended ~~September~~March 3031, ~~2021~~2022, compared to $~~250~~308,~~094~~039 at year-end December 31, ~~2020~~2021. The increase in cash and equivalents and decrease in ~~long-term~~investment ~~investments~~redemption receivable are attributable to the Company’s withdrawals from Alluvial Fund, LP. The Company’s ~~increase~~decrease in accounts receivable are due to anthe ~~increase~~repayment inof ~~affiliate~~ fee shares earned through Willow Oak’s various fee share arrangements, some of which crystalize at the calendar year-end. The ~~decreases~~ decrease in real estate held for investment ~~and~~is ~~total notes payable are~~ due to the ~~opportunistic~~ ~~sales~~ sale of ~~certain~~the remaining EDI Real Estate rental ~~properties~~property ~~and~~as ~~simultaneous~~discussed ~~debt payoff of the attached property~~previously. The decrease in accrued compensation is due to the ~~issuance~~payment of ~~common~~year-end ~~stock~~bonus and director fees during the three-month period ended March 31, ~~2021,~~2022. ~~which~~The increase in accrued expenses is ~~then~~largely ~~offset~~attributed byto an increase in legal fees associated with the ~~accrual~~Company’s ofproposed ~~current~~merger ~~year~~transaction ~~director~~with ~~fees~~CBA. The Company does not expect to make significant reinvestments into property and equipment used in operating activities at this time.

The Company currently believes that our existing balances of cash, cash equivalents, and cash generated from operations will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months.

The aging of accounts receivable as of ~~September~~March 3031, ~~2021~~2022, and December 31, ~~2020~~2021 is as shown:

	September 30, 2021		December 31, 2020
	March 31, 2022		December 31, 2021
Current	$	3437,~~221~~788	$	~~142~~348,~~121~~745
30 – 60 days		~~1,632~~926		1,~~836~~545
60 + days		~~876~~740		~~834~~1,115
Accrued contract assets not yet due		265,819		—
Total	$	39,454	$	351,405
Total	$	302,548	$	144,791

We have no material capital expenditure requirements.

~~Contractual Obligations~~ 27

In 2016, the Company made a strategic determination to fund a seed investment, through Willow Oak, to assist in the launch of Alluvial Fund, LP, a private investment fund that was launched on January 1, 2017, by an unaffiliated sponsor and general partner, Alluvial Capital Management, LLC. The Company had determined that Willow Oak’s support of Alluvial Capital Management, LLC and its direct investment in Alluvial Fund were both beneficial and necessary undertakings in conjunction with establishing an asset management operations business and gaining credibility within that industry. As of September 30, 2021, Willow Oak continues to hold its remaining direct investment in Alluvial Fund. Investment gains and losses are reported as revenue on the accompanying unaudited condensed consolidated statements of operations. During the prior three-month period ended June 30, 2021 and during the current three-month period ended September 30, 2021, the Company made/initiated withdrawals from the Alluvial Fund in order to further strengthen the Company’s assertion that it is not subject to the application of the Investment Company Act of 1940, further discussed below.

As has been previously reported, on June 27, 2019, the Company sold 65% of its membership interest in Mt Melrose, LLC to Woodmont. Under the terms of the parties’ membership interest purchase agreement, the Company had agreed to indemnify Woodmont against certain losses actually incurred by Woodmont as a result of breaches of the Company’s representations and warranties made under the agreement. Also, in connection with the transaction, the Company and Woodmont had entered into a certain Amended and Restated Limited Liability Company Agreement of Mt Melrose, LLC, which had set forth the general terms and conditions governing the arrangements between the two members; and, in addition, the Company had expressly agreed to a three-year “standstill” arrangement, during which time the Company would not in any way participate, directly or indirectly, in the management or control of Mt Melrose. In line with the Company’s sale of its remaining membership interests in Mt Melrose to Woodmont effective May 17, 2021, however, all of such contractual obligations have been terminated, and are no longer in effect as of the prior quarter ended June 30, 2021.

Off-balance Sheet Arrangements

We are not a party to any material off-balance sheet arrangements as of September 30, 2021, nor at any time from January 1, 2021, through September 30, 2021.

Discussion Regarding COVID-19 Potential Impacts

Due to the continuing uncertainty surrounding the COVID-19 pandemic, ~~the~~management ~~Company~~ has ~~experienced,~~continued to regularly monitor and ~~continues~~assess toall ~~expect,~~Company ~~market~~operations ~~volatility~~for potential impacts of the COVID-19 pandemic, including as ~~primarily~~ ~~related to~~infectious ~~its~~variants ~~investment~~such inas ~~the~~Omicron ~~Alluvial~~have ~~Fund~~emerged. As ~~reported~~of inthe ~~prior~~quarterly ~~periods~~period ended March 31, ~~this~~2022, ~~volatility~~the ~~can~~Company ~~create~~has ~~periods~~not ~~when~~been forced to make significant operational changes as a result of the ~~asset~~pandemic. ~~management~~Management ~~operations~~does ~~segment~~not ~~produces~~anticipate ~~negative~~additional ~~revenue~~challenges ~~amounts~~in meeting existing obligations, nor do we expect significant customer or vendor interruptions. ~~Due~~However, the extent to which the ~~size~~continuing ofCOVID-19 ~~the~~pandemic ~~investment~~ultimately may impact our business, ~~these~~financial ~~negative~~condition, ~~revenue~~liquidity, ~~amounts~~and ~~can~~results ~~also~~of ~~have~~operations alikely ~~sizable~~will ~~impact~~continue to depend on future developments, which are highly uncertain and cannot be predicted, including the ~~Company’s~~scope ~~balance~~and ~~sheets~~duration atof athe ~~given~~continuing ~~point~~pandemic, inthe ~~time. The nature~~direct and indirect impact of ~~this~~the ~~investment~~continuing ~~has~~pandemic ~~inherent~~on ~~market~~our ~~risks~~employees, customers, and ~~short-term~~service ~~results~~providers, ~~can~~as bewell ~~unpredictable~~as the U.S. economy, and the actions taken by governmental authorities and other third parties in response to the continuing pandemic.

Management continues to monitor and assess all Company operations for additional potential impacts of the COVID-19 pandemic. As of the three-month period ended September 30, 2021, the Company has not been forced to make significant operational changes as a result of the pandemic. Management does not anticipate additional challenges in meeting existing obligations, nor do we expect significant customer or vendor interruptions. However, the extent to which the continuing COVID-19 pandemic ultimately may impact our business, financial condition, liquidity, and results of operations likely will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the continuing pandemic, the direct and indirect impact of the continuing pandemic on our employees, customers, and service providers, as well as the U.S. economy, and the actions taken by governmental authorities and other third parties in response to the continuing pandemic.

Discussion Regarding the Company’s Status Under the Investment Company Act of 1940

As discussed above, the Company, directly and through our controlled subsidiaries, currently is engaged primarily in asset management operations, real estate operations, and internet operations lines of business--–that is, in businesses other than that of investing, reinvesting, ~~owning, holding,~~ or trading in securities. We are not engaged primarily, nor do we propose to engage primarily, in the business of investing, reinvesting, or trading in securities; nor does the Company propose to operate any of its businesses in a manner that would cause the Company to be subject to regulation as an “investment company” under the ~~Investment Company Act of~~ 1940 ~~(the “1940~~ Act”).

InBeginning ~~prior~~during ~~reporting~~the ~~periods,~~quarterly ~~management~~period ~~had determined~~ended ~~that~~March ~~our~~31, ~~ownership~~2021, ofand ~~“investment~~continuing ~~securities”~~to ~~(as~~date, ~~defined in~~ the ~~1940 Act) exceeded 40% of the value of the~~ Company’s ~~total~~has ~~assets~~been ~~(exclusive~~conducting ofinformal ~~government~~discussions ~~securities~~ and ~~cash~~correspondence ~~items),~~with asmembers ~~measured~~of ~~under~~ the ~~1940~~staff ~~Act. As~~ of the ~~quarterly~~Securities ~~period~~and ~~ended~~Exchange ~~September~~Commission’s ~~30,~~(“SEC”) ~~2021,~~Division ~~however, management has determined that our ownership~~ of ~~“investment~~Investment ~~securities”~~Management ~~now~~regarding ~~falls~~a ~~below~~general ~~the~~inquiry ~~40% threshold established~~ by the ~~1940~~SEC ~~Act.~~as ~~This decrease is attributed~~ to the ~~completion of the~~ Company’s ~~second~~status ~~withdrawal~~under ~~from~~ the ~~Alluvial~~1940 ~~Fund~~Act, ~~LP,~~notably ~~which~~given ~~is in line with~~ the ~~distribution~~Company’s ~~schedule~~indirect ~~mentioned previously. Our ownership of “~~investment ~~securities” was largely comprised of our investment and limited partnership interests~~ in Alluvial Fund, LP~~. In this respect~~, aswhich ~~the~~has ~~composition~~been offully our assets had changed over recent time, including by virtue of our previous sale of membership interests in Mt Melrose, LLC and our previous divestiture of the former Home Services Operations segment, the impact of our long-standing Alluvial Fund investment to the composition of our total assets, as measured under the 1940 Act, had become more pronounced, albeit inadvertentlydivested.

~~Beginning during the quarterly period ended March 31~~Generally, ~~2021,~~under ~~and continuing, to date, on an ongoing monthly basis, representatives from the Securities and Exchange Commission~~ Section 3(~~“SEC”~~a)(1) ~~Division~~ of ~~Investment Management and~~ the ~~Company~~40 ~~have engaged in informal discussions and correspondence regarding a general inquiry by the SEC as to the Company’s current status under the 1940~~ Act, ~~namely as~~ a ~~result~~company ofis ~~the~~deemed ~~apparent~~to ~~quantitative~~be ~~significance~~an ~~of the Company’s assets that may constitute “~~investment ~~securities”~~company ~~in relation to the Company’s total assets, as noted above.~~ if:

As a result of such discussions and correspondence among the Company and the SEC, the Board of Directors of the Company reconfirmed, during the quarterly period ended March 31, 2021, that the Company has a bona fide intent to be engaged primarily in lines of business not constituting that of investing, reinvesting, or trading in securities, nor that of acquiring, owning, or holding “investment securities,” and the Board has resolved to explore certain strategic options so as to eliminate as soon as is reasonably possible any uncertainty in regard to the Company’s status under the 1940 Act. In this respect, the Company is in the process of developing and implementing a strategic operational plan setting forth specific potential steps designed to grow certain operational lines of business and effect changes to the composition of our assets in the near future. For example, on May 31, 2021, in order to further strengthen the Company’s assertion that it is not subject to the application of the 1940 Act, Willow Oak initiated a liquidating distribution of its investment in Alluvial Fund, which such withdrawal will be fulfilled by the general partner according to a mutually agreed-upon cash distribution schedule. Furthermore, in accordance with this schedule, a second withdrawal was initiated as of the current period ended September 30, 2021. There can be no assurances, of course, that we will be successful in our formulation and/or carrying out of any strategic operational plan.

●	it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or
●	it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets on an unconsolidated basis.

Historically, the Company has structured its various business lines to allow it to satisfy both tests under Section 3(a)(1). However, in 2019, as part of a strategic reallocation of its resources, the Company conducted divestitures of certain significant assets, resulting in its ownership of investment securities with a value exceeding 40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. Our ownership of “investment securities” was largely comprised of our investment and limited partnership interests in Alluvial Fund, LP. In this respect, as the composition of our assets had changed over time, including by virtue of our previous sale of membership interests in Mt Melrose, LLC and our previous divestiture of the former Home Services Operations segment, the impact of our long-standing Alluvial Fund investment to the composition of our total assets, as measured under the 1940 Act, had become more pronounced, albeit inadvertently. As a result, the Company sought to avoid the registration requirement under the 1940 Act by satisfying Section 3(b)(1), which provides that a company that would otherwise fit within the definition of investment company under Section 3(a)(1) will not be required to register under the 1940 Act if “it is primarily engaged, directly or through a wholly owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities”.

The Company’s ongoing informal discussions with the SEC have been conducted with the aim of strengthening the Company’s position under Section 3(a)(1) of the 1940 Act. As a result of such discussions and correspondence among the Company and the SEC, the Board of Directors of the Company reconfirmed, during the quarterly period ended March 31, 2021, that the Company has a bona fide intent to be engaged primarily in lines of business not constituting that of investing, reinvesting, or trading in securities, and the Board resolved to explore certain strategic options consistent with that intent.

As of the quarterly period ended September 30, 2021, and subsequently as of the quarterly period ended March 31, 2022, management determined that our ownership of “investment securities” has fallen below the 40% threshold in Section 3(a)(1)(C) the 1940 Act. This decrease was attributed to the completion of the Company’s withdrawals from the Alluvial Fund, LP, as previously discussed.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

This item is not required by smaller reporting companies.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our principal executive officer and principal financial officer, have evaluated the effectiveness of the design and operation of our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of ~~September~~March 3031, ~~2021~~2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Because of inherent limitations, any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objective. Based upon this evaluation, and based upon material weaknesses in our internal control over financial reporting identified as of the date of our most recent evaluation of internal controls over financial reporting, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of ~~September~~March 3031, ~~2021~~2022.

Changes in Our Internal Control over Financial Reporting

No change in the Company’'s internal control over financial reporting occurred during the ~~fiscal~~quarterly ~~quarter~~period ended ~~September~~March 3031, ~~2021~~2022, that has materially affected, or is reasonably likely to materially affect, the Company’'s internal control over financial reporting subsequent to the date of our most recent evaluation of the Company’'s internal control over financial reporting.

30 During the quarterly period ended March 31, 2022, the Company continued to uphold its established processes and controls surrounding its financial reporting, but did not make any significant modifications to its control environment. The Company continues to make efforts to reinforce its internal control environment by utilizing an external accounting firm during its financial closing process, engaging third-party consultants to review the accounting and related disclosures for transactions that management and the board of directors determine to be particularly complex, and maintaining strict document retention policies and procedures that allow for full visibility of all financial statements and schedules by all ENDI managers and the Executive Chairman.

In response to the identified material weaknesses in the most recent evaluation of internal controls over financial reporting, the Company is internally developing a phased approach that is intended to increase the effectiveness of the design and operation of the Company’s disclosure controls and procedures. In the first phase of the project, the Company expects to work with a third-party professional consultant to prepare formal documentation for its internal controls over financial reporting, which may include: an entity level controls assessment, an IT general controls assessment, and process area flowcharts where necessary. The Company will aim to complete this phase of the process by August 31, 2022. In phase two of this approach, the Company expects to use its control documentation to identify ineffectively designed and/or control gaps and work to remediate them. The Company will aim to complete phase two of the project by October 31, 2022, pending the successful completion of phase one. Finally, in phase three of the project, the Company expects to design a systematic monitoring plan to sufficiently test its new key controls over the course of future reporting periods. The Company will aim to complete phase three of the project by December 31, 2022, pending the successful completion of phase two. There is no guarantee the Company will be successful in completing this multi-phased approach.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Pursuant to Item 103 of Regulation S-K, as amended, the information required by this item is provided by cross-reference to the Company’s legal proceedings disclosure located under the Litigation & Legal Proceedings heading in Note 11 8 to the accompanying unaudited consolidated financial statements (see page 2319).

Item 1A.

Risk Factors

This item is not required for smaller reporting companies.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit		Description
3.1		Certificate of ~~Amendment~~Withdrawal toof Certificate of Designation of the ~~Articles~~Series A Preferred Stock of ~~Incorporation~~the Company (~~June~~April 165, ~~2021~~2022) (a)
4.1		Amendment to the Tax Preservation Plan between the Company and Colonial Stock Transfer Company, Inc., as Rights Agent (April 1, 2022) (b)
31.1		Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a)
31.2		Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a)
32		Certification Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Pursuant to Rule 405 of Regulation S-T, the following materials from Enterprise Diversified, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2021~~2022, formatted in Inline eXtensible Business Reporting Language (iXBRL) (b): (i) Consolidated Balance Sheets as of ~~September~~March 3031, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021; (ii) Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2021,~~2022 and ~~2020~~2021; (iii) Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2021,~~2022 and ~~2020~~2021; (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2021,~~2022 and ~~2020~~2021; (v) Notes to Unaudited Condensed Consolidated Financial Statements (c)
104		Cover page Interactive Data File (formatted as Inline XBRL and combined in Exhibit 101) (c)

(a) Filed as Exhibit 3.1 to Registrant’s Form 8-K ~~Amendment No. 1~~ filed with the Securities and Exchange Commission on ~~July~~April 86, ~~2021~~2022, and incorporated herein by reference.

(b) Filed ~~These~~as ~~interactive~~Exhibit ~~data~~4.1 ~~files~~to ~~shall~~Registrant’s ~~not~~Form be8-K ~~deemed~~ filed ~~for~~with ~~purposes of Section 11 or 12 of~~ the Securities ~~Act~~and ~~of 1933, as amended, or Section 18 of the Securities~~ Exchange ~~Act~~Commission ofon ~~1934~~April 6, ~~as amended~~2022, orand ~~otherwise~~incorporated ~~subject~~herein toby ~~liability under those sections~~reference.

31 (c) These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ENTERPRISE DIVERSIFIED, INC.
Date: November 12, 2021		/s/ Steven L. Kiel
Date: May 13, 2022		/s/ Steven L. Kiel
		Steven L. Kiel
		Executive Chairman
		(Principal Executive Officer)
Date: November 12, 2021		/s/ Alea A. Kleinhammer
Date: May 13, 2022		/s/ Alea A. Kleinhammer
		Alea A. Kleinhammer
		Chief Financial Officer
		(Principal Financial Officer)

32 31

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