What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-06 · 540 added, 602 removed, 1414 unchanged (45% of the section changed)

3 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

7 unchanged sentences

Investments in equity method affiliates

Deferred income taxes

Right-of-use asset - operating leases

3 unchanged sentences

Trading securities sold, not yet purchased

Other investments sold, not yet purchased

Securities sold under agreements to repurchase

Deferred income taxes

Lease liability - operating leases

15 unchanged sentences

(Dollars in Thousands, except share or per share information)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Asset management

40 unchanged sentences

Cohen & Company Inc.

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Preferred Stock

7 unchanged sentences

Acquisition / (surrender) of additional units of consolidated subsidiary, net

Equity-based compensation and vesting of shares

Equity-based compensation

Shares withheld for employee taxes

Purchase and retirement of Common Stock

Dividends/Distributions

Investment of non-controlling interest of sponsor entities

Distributions to non-controlling interest of sponsor entities

March 31, 2021

Other comprehensive income / (loss)

Equity-based compensation and vesting of shares

June 30, 2020

Other comprehensive income / (loss)

Acquisition / (surrender) of additional units of consolidated subsidiary, net

Equity-based compensation and vesting of shares

Purchase and retirement of Common Stock

Investment in non-controlling interest

September 30, 2020

Cohen & Company Inc.

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Preferred Stock

6 unchanged sentences

Other comprehensive income

Cumulative effect adjustment - adoption of ASU 2016-02

Acquisition / (surrender) of additional units of consolidated subsidiary, net

1 unchanged sentence

Shares withheld for employee taxes

Purchase and retirement of Common Stock

Investment in non-controlling interest

Dividends/Distributions

March 31, 2020

Other comprehensive income

Equity-based compensation and vesting of shares

Dividends/Distributions

June 30, 2019

Other comprehensive income

Equity-based compensation and vesting of shares

September 30, 2019

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

5 unchanged sentences

Change in unrealized (gain) loss on other investments, at fair value

Realized loss / (gain) on other investments, sold not yet purchased

Change in unrealized loss / (gain) on other investments, sold not yet purchased

(Income) / loss from equity method affiliates

17 unchanged sentences

Purchase of other investments, at fair value

Purchase of investments - other investments sold, not yet purchased, at fair value

Sales and returns of principal-other investments, at fair value

Sales and returns of principal - other investments sold, not yet purchased, at fair value

Investment in equity method affiliate

3 unchanged sentences

Proceeds from draws on revolving credit facility

Proceeds from PPP loan

Proceeds from non-convertible debt

Repayment of debt

Proceeds from redeemable financial instruments

Repayments of redeemable financial instruments

38 unchanged sentences

Effective January 1, 2010, the Company ceased to qualify as a REIT.

The Company is a financial services company specializing in fixed income markets.

As of September 30, 2020 , the Company had $2.65 billion in assets under management (“AUM”) of which 77.4% , or $2.05 billion, was in collateralized debt obligations (“CDOs”).

The Company is a financial services company specializing in fixed income markets and more recently, the SPAC markets.

As of March 31, 2021 , the Company had $2.41 billion in assets under management (“AUM”) of which 67.7% or $1.63 billion, was in collateralized debt obligations (“CDOs”).

The remaining portion of AUM is from a diversified mix of Investment Vehicles (as defined herein).

7 unchanged sentences

“JVB Holdings” refers to J.V.B.

Financial Holdings, LLC;

Financial Holdings, LP;

“JVB” refers to J.V.B.

Financial Group LLC, a broker-dealer subsidiary;

“CCFL” refers to Cohen & Company Financial Limited (formerly known as EuroDekania Management LTD), a subsidiary regulated by the Financial Conduct Authority (formerly known as Financial Services Authority) in the United Kingdom;

“CCFEL” refers to Cohen & Company Financial (Europe) Limited, a subsidiary regulated by the Central Bank of Ireland in Ireland.

and “EuroDekania” refers to EuroDekania (Cayman) Ltd., a Cayman Islands exempted company that was externally managed by CCFL.

The Company’s business is organized into the following three business segments.

8 unchanged sentences

The Company operates its capital markets activities primarily through its subsidiaries:

JVB in the United States, and CCFL and CCFEL in Europe.

JVB in the United States, and CCFEL in Europe.

Asset Management :

7 unchanged sentences

The Company’s Principal Investing business segment is comprised of investments that the Company holds related to its SPAC franchise and other investments the Company has made for the purpose of earning an investment return rather than investments made to support the Company’s trading, matched book repo, or other Capital Markets business segment activities.

These investments are included in the Company’s other investments, at fair value and investments in equity method affiliates in the Company’s consolidated balance sheets.

These investments are included in the Company’s other investments, at fair value;

other investments sold, not yet purchased;

and investments in equity method affiliates in the Company’s consolidated balance sheets.

The Company generates its revenue by business segment primarily through the following activities.

7 unchanged sentences

Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value.

Income and loss earned on equity method investments.

BASIS OF PRESENTATION

5 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The results for the nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results for the entire year or any subsequent interim period.

The results for the three months ended March 31, 2021 and 2020 are not necessarily indicative of the results for the entire year or any subsequent interim period.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 .

2 unchanged sentences

Adoption of New Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) .

Under the new guidance (subsequently updated with ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20, and ASU 2019-01), lessees will be required to recognize the following for all leases with the exception of short-term leases:

(i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Lessor accounting is largely unchanged.

The Company adopted the provisions of the new guidance effective January 1, 2019.

The Company recorded the following:

(a) a right of use asset of $8,416, (b) a lease commitment liability of $8,860, (c) a reduction in retained earnings from cumulative effect of adoption of $20, (d) an increase in other receivables of $18, and (e) a reduction in other liabilities of $406.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326):

12 unchanged sentences

The Company adopted the provisions of ASU 2017-04, effective January 1, 2020.

The Company recorded an impairment of goodwill for the nine months ended September 30, 2020 .

The Company recorded an impairment of goodwill for the three months ended March 31, 2020.

This impairment charge was not the result of the adoption of ASU 2017-04.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs, Premium Amortization on Purchased Callable Debt Securities (Sub-Topic 310-20 ).

The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium.

Specifically, the amendments require the premium to be amortized to the earliest call date.

The amendments do not require an accounting change for securities held at a discount;

the discount continues to be amortized to maturity.

The Company’s adoption of the provisions of ASU 2017-08, effective January 1, 2019 did not have an effect on the Company’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivative and Hedging – Targeted Improvements to Accounting for Hedging Activities (Topic 815 ).

The amendments in this ASU refine and expand hedge accounting for both financial and commodity risks and contain provisions to create more transparency and clarify how economic results are presented.

The Company’s adoption of the provisions of ASU 2017-12, effective January 1, 2019 did not have an effect on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220 ):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

The amendments in this ASU provide the option to reclassify stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings in each period in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Act (or portion thereof) is recorded.

The Company’s adoption of the provisions of ASU 2018-02, effective January 1, 2019 did not have an effect on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting .

The amendments in this ASU expand the scope of Topic 718, which previously only included share-based payments to employees, to include share-based payments issued to nonemployees for goods or services.

Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.

The Company’s adoption of the provisions of ASU 2018-07, effective January 1, 2019 did not have an effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

21 unchanged sentences

The Company’s adoption of the provisions of ASU 2019-08, effective January 1, 2021 did not have an effect on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides temporary optional guidance to ease the burden in accounting for reference rate reform by providing optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The ASU is intended to help stakeholders during the global market-wide reference rate transition period and will be in effect for a limited time through December 31, 2022.

The Company’s adoption of the provisions of ASU 2020-04, effective March 12, 2020 did not have an effect on the Company’s consolidated financial statements.

Recent Accounting Developments

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

2 unchanged sentences

It removes specific exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application.

This ASU is effective for fiscal years beginning after December 15, 2020 and interim period with those fiscal years The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements.

The Company’s adoption of the provisions of ASU 2019-12, effective January 1, 2020, did not have an effect on the Company’s consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 .

This ASU clarifies certain accounting certain topics impacted by Topic 321 Investments-Equity Securities.

This ASU clarifies certain accounting topics impacted by Topic 321 Investments-Equity Securities.

These topics include measuring equity securities using the measurement alternative, how the measurement alternative should be applied to equity method accounting, and certain forward contracts and purchased options which would be accounted for under the equity method of accounting upon settlement or exercise.

This ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements.

The Company’s adoption of the provisions of ASU 2020-01, effective January 1, 2020, did not have an effect on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 , Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The ASU is intended to help stakeholders during the global market-wide reference rate transition period and will be in effect for a limited time through December 31, 2022.

The Company’s adoption of the provisions of ASU 2020-04, effective March 12, 2020, did not have an effect on the Company’s consolidated financial statements.

Recent Accounting Developments

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

5 unchanged sentences

The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables — Nonrefundable Fees and Other Costs.

The ASU clarifies that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for cash reporting period.

This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within fiscal years beginning after December 15, 2022.

The Company is currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

In October 2020, the FASB issued 2020-10 Codification Improvements.

The ASU affects a wide variety of Topics in the Codification.

The ASU, among other things, contains amendments that improve consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section.

Many of the amendments arose because the FASB provided an option to give certain information either on the face of the financial statements or in the notes to financial statements and that option only was included in the Other Presentation Matters Section of the Codification.

The option to disclose information in the notes to financial statements should have been codified in the Disclosure Section as well as the Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial statements appears).

The amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022.

The Company is currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

Fair Value of Financial Instruments

16 unchanged sentences

In the case of investments in alternative investment funds, fair value is generally based on the reported net asset value of the underlying fund.

Other investments sold, not yet purchased :

These amounts are carried at fair value.

The fair value is based on quoted market prices of an active exchange, independent broker market quotations, or valuation models when quotations are not available.

Receivables under resale agreements :

12 unchanged sentences

However, a substantial portion of the debt was assumed in the AFN Merger and recorded at fair value as of that date.

As of September 30, 2020 and December 31, 2019 , the fair value of the Company’s debt was estimated to be $81,638 and $58,635 , respectively.

As of March 31, 2021 and December 31, 2020 , the fair value of the Company’s debt was estimated to be $68,170 and $62,496 , respectively.

The estimated fair value measurements of the debt are generally based on discounted cash flow models prepared by the Company’s management primarily using discount rates for similar instruments issued to companies with similar credit risks to the Company and are generally classified within level 3 of the value hierarchy.

7 unchanged sentences

OTHER RECENT BUSINESS TRANSACTIONS OR EVENTS

Insurance Acquisition Corporation ("Insurance SPAC")

The Operating LLC is the manager of Insurance Acquisition Sponsor, LLC (“IAS”) and Dioptra Advisors, LLC (“Dioptra,” and, together with IAS, the “Sponsor Entities”).

The Sponsor Entities were sponsors of Insurance Acquisition Corp.

("Insurance SPAC"), a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

On June 29, 2020, Insurance SPAC entered into an Agreement and Plan of Merger (the “Insurance SPAC Merger Agreement”) with IAC Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Insurance SPAC (“Insurance SPAC Merger Sub”), and Shift Technologies, Inc., a Delaware corporation (“Shift”).

On October 13, 2020, Insurance SPAC Merger Sub was merged (the "Insurance SPAC Merger") with and into Shift.

In connection with the Insurance SPAC Merger, the Insurance SPAC changed its name from "Insurance Acquisition Corp." to "Shift Technologies, Inc." and, on October 15, 2020, the Insurance SPAC's Nasdaq trading symbol changed from "INSU" to "SFT." The Insurance SPAC Merger was approved by the Insurance SPAC's stockholders at a special meeting of stockholders on October 13, 2020.

Upon the Closing, the Sponsor Entities held 375,000 shares of SFT’s Class A Common Stock, par value $0.0001 per share (“SFT Class A Common Stock”), and 187,500 warrants (“SFT Warrants”) to purchase an equal number of shares of SFT Class A Common Stock for $11.50 per share (such SFT Class A Common Stock and SFT Warrants, collectively, the “Placement Securities”) as a result of the 375,000 placement units which the Sponsor Entities had purchased in a private placement that occurred simultaneously with the Insurance SPAC’s initial public offering on March 22, 2019.

Further, upon the Closing, the Sponsor Entities collectively held an additional 4,497,525 shares of SFT Class A Common Stock as a result of its previous purchase of founder shares of the Insurance SPAC (collectively, the “Founder Shares,” and, together with the Placement Securities, the “Sponsor Shares”).

The Company currently consolidates the Sponsor Entities and previously treated its investment in the Insurance SPAC as an equity method investment.

Effective upon the Closing, the Company has reclassified its equity method investment in the Insurance SPAC to other investments, at fair value and has adopted fair value accounting for the investment in SFT, resulting in an amount of principal transaction revenue derived from the (i) the final amount of Sponsor Shares retained by the Sponsor Entities;

(ii) the trading share price of the SFT Class A Common Stock and the SFT Warrants;

and (iii) fair value discounts related to the share sale restrictions on the Sponsor Shares outlined below.

Upon recognition of the principal transaction revenue described above, the Company will record a non-controlling interest expense or compensation expense related to the amount of Sponsor Shares distributable to the non-controlling interest holders in the Sponsor Entities.

If the non-controlling interest holder is an employee of the Company, the expense will be recorded as compensation.

Otherwise, the expense will be non-controlling interest expense.

The Company currently expects that, upon the registration of the Sponsor Shares in accordance with the Amended and Restated Registration Rights Agreement described below, (a) of the Placement Securities, 252,335 shares of SFT Class A Common Stock and 126,500 SFT Warrants will be distributed to the non-controlling interest holders of the Sponsor Entities, and (b) of the Founder Shares, 2,477,803 shares of SFT Class A Common Stock will be distributed to the non-controlling interest holders of the Sponsor Entities.

Immediately following these distributions, the Company expects to retain (i) of the Placement Securities, 122,665 shares of SFT Class A Common Stock and 61,332 SFT Warrants, and (ii) of the Founder Shares, 2,019,721 shares of SFT Class A Common Stock.

Subject to certain limited exceptions, Placement Securities held by IAS will not be transferable or salable until 30 days following the Closing.

Of the Founder Shares held by the Sponsor Entities, (a) 20% are freely transferable and salable, and (b) subject to certain limited exception, the remaining shares will not be transferable or salable until the closing price of the SFT Class A Common Stock, for a period of 20 out of any 30 consecutive trading days following the Closing, (a) exceeds $12.00 with respect to 20% of such shares, (b) exceeds $13.50 with respect to an additional 20% of such shares, (c) exceeds $15.00 with respect to an additional 20% of such shares, and (d) exceeds $17.00 with respect to an additional 20% of such shares.

Concurrently with the Closing, a subsidiary of the Company purchased 600,000 shares of SFT Class A Common Stock at a purchase price per share of $10.00 pursuant to a subscription agreement that such subsidiary executed at the time of the execution of the Merger Agreement.

The Company’s subsidiary currently expects that, upon the registration of these 600,000 shares of SFT Class A Common Stock, the Company’s subsidiary will distribute 350,000 of such shares of SFT Class A Common Stock to its minority interest holders and distribute the remaining 250,000 of such shares of SFT Class A Common Stock to a wholly owned subsidiary of the Company.

At the Closing, the Sponsor Entities and SFT entered into a letter agreement (the “Sponsor Letter Agreement”), pursuant to which the Sponsor Entities will receive certain SFT board of directors observer rights.

Pursuant to the Sponsor Letter Agreement, for so long as the Sponsor Entities, the Operating LLC, or any of their respective affiliates (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) continue to hold shares representing at least two percent of the total voting power of shares entitled to vote in the election of directors of SFT issued and outstanding, the Sponsor Entities will have the right to designate an individual to attend and observe SFT’s board meetings.

In addition, at the Closing, the Sponsor Entities entered into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) with SFT, Cantor Fitzgerald & Co., and certain other initial stockholders of SFT, requiring SFT to, among other things, file a resale shelf registration statement on behalf of the stockholders promptly after the Closing.

The Amended and Restated Registration Rights Agreement will also provide certain demand rights and piggyback rights to the stockholders, subject to underwriter cutbacks and issuer blackout periods.

INSU Acquisition Corporation II ("Insurance SPAC II")

The Operating LLC, is the manager of Insurance Acquisition Sponsor II, LLC (“IAS II”) and Dioptra Advisors II, LLC (“Dioptra II” and, together with IAS II, the “Insurance SPAC II Sponsor Entities”).

The Insurance SPAC II Sponsor Entities are sponsors of INSU Acquisition Corp.

II (“Insurance SPAC II”), a blank check company that will seek to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (each a “Insurance SPAC II Business Combination”).

On September 8, 2020, Insurance SPAC II completed the sale of 23,000,000 units ("Insurance SPAC II Units") in its initial public offering ("IPO"), which includes 3,000,000 Insurance SPAC II Units issued pursuant to the underwriters’ over-allotment option.

Each Insurance SPAC II Unit consists of one share of Insurance SPAC II Class A common stock, par value $0.0001 per share (“ Insurance SPAC II Common Stock”), and one-third of one warrant (each, an “Insurance SPAC II Warrant”), where each whole Insurance SPAC II Warrant entitles the holder to purchase one share of Insurance SPAC II Common Stock for $11.50 per share.

The Insurance SPAC II Units were sold in the IPO at an offering price of $10.00 per Unit, for gross proceeds of $230,000 (before underwriting discounts and commissions and offering expenses).

Pursuant to the underwriting agreement in the IPO, Insurance SPAC II granted the underwriters in the IPO (the “Underwriters”) a 45-day option to purchase up to 3,000,000 additional Insurance SPAC II Units solely to cover over-allotments, if any;

and on September 4, 2020, the Underwriters notified Insurance SPAC II that they were exercising the over-allotment option in full.

Immediately following the completion of the IPO, there were an aggregate of 31,386,667 shares of Insurance SPAC II Common Stock issued and outstanding.

If Insurance SPAC II fails to consummate a Business Combination within the first 18 months following the IPO and is unable to obtain an extension, its corporate existence will cease except for the purposes of winding up its affairs and liquidating its assets.

The Company currently consolidates the Insurance SPAC II Sponsor Entities and treats the Insurance SPAC II Sponsor Entities' investment in the Insurance SPAC II as an equity method investment.

The Insurance SPAC II Sponsor Entities purchased 452,500 of the Insurance SPAC II placement units in a private placement that occurred simultaneously with the IPO for an aggregate of $4,525 or $10.00 per placement unit.

Cantor Fitzgerald & Co., the underwriter of the IPO, also purchased 87,500 of the Insurance SPAC II's placement units in the private placement for an aggregate of $875.

Each placement unit consists of one share of Insurance SPAC II Common Stock and one-third of one warrant (the “Insurance SPAC II Placement Warrant”).

The placement units are identical to the Insurance SPAC II Units sold in the IPO except (i) the shares of Insurance SPAC II Common Stock issued as part of the placement units and the Insurance SPAC II Placement Warrants will not be redeemable by Insurance SPAC II, (ii) the Insurance SPAC II Placement Warrants may be exercised by the holders on a cashless basis, (iii) the shares of Insurance SPAC II Common Stock issued as part of the placement units, together with the Insurance SPAC II Placement Warrants, are entitled to certain registration rights, and (iv) for so long as they are held by the IPO underwriter, the Insurance SPAC II placement units will not be exercisable more than five years following the effective date of the registration statement filed by Insurance SPAC II in connection with the IPO.

Subject to certain limited exceptions, the placement units (including the underlying Insurance SPAC II Placement Warrants and Insurance SPAC II Common Stock and the shares of Insurance SPAC II Common Stock issuable upon exercise of Insurance SPAC II Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the Insurance SPAC II Business Combination.

In addition, the Insurance SPAC II Sponsor Entities collectively hold 7,846,667 founder shares of the Insurance SPAC II.

Subject to certain limited exceptions, the founder shares will not be transferable or salable except (a) with respect to 20% of such shares, until consummation of a Business Combination, and (b) with respect to additional 20% tranches of such shares, when the closing price of the Common Stock exceeds $12.00, $13.50, $15.00 and $17.00, respectively, for 20 out of any 30 consecutive trading days following the consummation of the Insurance SPAC II Business Combination.

Certain executive and key employees of the Operating LLC purchased membership interests in Dioptra Advisors II, LLC and have an interest in the Insurance SPAC II’s founder shares through such membership interests.

The number of founders shares eventually retained by the Insurance SPAC II Sponsor Entities and in which such executives and key employees have an interest through the Insurance SPAC II Sponsor Entities will not be determined until the Insurance SPAC II Business Combination is complete.

A total of $230,000 of the net proceeds from the private placement and the IPO (including approximately $9,800 of the deferred underwriting commission from the IPO) were placed in a trust account.

Except for the withdrawal of interest to pay taxes (or dissolution expenses if the Insurance SPAC II Business Combination is not consummated), none of the funds held in the trust account will be released until the earlier of (i) the completion of the Insurance SPAC II's Business Combination, (ii) the redemption of Insurance SPAC II's public shares if it is unable to consummate an Insurance SPAC II's Business Combination within 18 months following the IPO, or (iii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend the Insurance SPAC II's amended and restated certificate of incorporation to modify the substance or timing of Insurance SPAC II's obligation to redeem 100% of its public shares if it does not complete an Insurance SPAC II Business Combination within 18 months following the IPO and is unable to obtain an extension.

If Insurance SPAC II does not complete a Business Combination within the first 18 months following the IPO, the placement units and founders shares will become worthless.

In connection with the IPO, IAS II has agreed to indemnify Insurance SPAC II for all claims by third parties for services rendered or products sold to Insurance SPAC II, or claims by any prospective target business with which Insurance SPAC II discusses entering into a transaction agreement, to the extent the claims reduce the amount of funds in the Insurance SPAC II trust account to less than $10.00 per share of Insurance SPAC II Common Stock, and in each case only if Insurance SPAC II fails to obtain waivers from such third parties or prospective target businesses of claims against the Insurance SPAC II trust account.

The Operating LLC loaned Insurance SPAC II approximately $75 to cover IPO expenses, which was repaid in full at the closing of the IPO.

IAS II and its affiliates, including the Operating LLC, have also committed to loan Insurance SPAC II up to an additional $750 to cover operating and acquisition related expenses following the IPO.

This loan will bear no interest and, if the Insurance SPAC II consummates a Business Combination in the required time frame, the loan is to be repaid from the funds held in the Insurance SPAC II trust account.

If Insurance SPAC II does not consummate a Business Combination in the required time frame, no funds from the Insurance SPAC II trust account can be used to repay the loan.

In connection with the closing of the IPO, the Operating LLC and the Insurance SPAC II entered into an Administrative Services Agreement, dated September 2, 2020, a copy of which was filed as Exhibit 10.6 to Insurance SPAC II’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2020, pursuant to which the Operating LLC and Insurance SPAC II agreed that, commencing on the date that Insurance SPAC II's securities are first listed on the Nasdaq Capital Market through the earlier of Insurance SPAC II’s consummation of a Business Combination and its liquidation, Insurance SPAC II will pay the Operating LLC $20 per month for certain office space, utilities, secretarial support and administrative services.

ViaNova Capital Group LLC

In 2018, the Company formed a wholly-owned subsidiary, ViaNova Capital Group LLC (“ViaNova”), for the purpose of building a residential transition loan (“RTL”) business.

RTLs are small balance commercial loans that are secured by first lien mortgages used by professional investors and real estate developers to finance the purchase and rehabilitation of residential properties.

On November 20, 2018, ViaNova entered into a Warehousing Credit and Security Agreement with LegacyTexas Bank (the “LegacyTexas Credit Facility”) with an effective date of November 16, 2018.

The LegacyTexas Credit Facility was amended on May 4, 2019 and again on September 25, 2019 and October 28, 2019.

The LegacyTexas Credit Facility supported the buying, aggregating, and distributing of RTLs performed by the business of ViaNova.

On March 19, 2020, ViaNova received a notice of default from LegacyTexas Bank regarding the LegacyTexas Credit Facility, stating that ViaNova’s unrestricted cash balance was less than the amount required.

Also, on March 19, 2020, ViaNova received notice from LegacyTexas Bank that it had suspended funding all “alternative” loans for all of their clients, including the RTL loans that are the subject of the LegacyTexas Credit Facility.

Since March 19, 2020, ViaNova has repaid all outstanding indebtedness under the LegacyTexas Credit Facility and stopped acquiring new RTLs.

On August 22, 2020, the Company sold its investment in ViaNova to the former managing director of ViaNova in exchange for the managing director's assumption of all of ViaNova's liabilities and a potential earn out of up to $500.

In conjunction with the sale, the Company transferred one RTL representing a par value of $2,300 and a fair value of $2,243 from ViaNova to JVB with a maturity date of January 1, 2021.

The RTL is included in other investments, at fair value in the consolidated balance sheets.

COVID 19 / Impairment of Goodwill

10 unchanged sentences

The Company determined that the fair value of JVB was less than the carrying value (including the goodwill).

As a result, the Company recorded an impairment loss of $7,883 in the nine months ended September 30, 2020 .

As a result, the Company recorded an impairment loss of $7,883 for the three months ended March 31, 2020.

JVB’s mortgage group’s operations are centered on serving the financial needs of mortgage originators and institutions that invest in mortgage backed securities.

Prolonged high unemployment could eventually impact mortgage originations and demand for and supply of mortgage backed securities, which may have a significant unfavorable impact on the revenue earned by JVB’s mortgage group.

The Company will likely be impacted by the pandemic in other ways which the Company cannot yet determine.

In 2021, medical professionals developed COVID-19 vaccines and governments began to distribute them globally, which is expected to reduce virus spread and further aid economic recovery.

Despite broad improvements in the global fight against the COVID-19 virus, the Company will likely be impacted by the pandemic in other ways which the Company cannot reliably determine.

The Company will continue to monitor market conditions and respond accordingly.

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The Company was eligible for a PPP loan because it has fewer than 100 employees.

Further, although the Company is public and listed on the NYSE American stock exchange, the Company’s market capitalization is small, and the Company believes that it does not have access to the public capital markets at this time.

Further, although the Company is public and listed on the NYSE American stock exchange, the Company’s market capitalization is small, and the Company believes that it did not have access to the public capital markets at the time.

In part due to the PPP loan, the Company does not anticipate any significant workforce reduction or reductions in compensation levels in the near future.

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On September 23, 2020, the Company applied for forgiveness of the PPP loan.

As of the date of this Quarterly Report on Form 10-Q, the Company had not received a notice of forgiveness with respect to the PPP loan.

The 2020 Senior Notes

On January 31, 2020, the Operating LLC entered into a note purchase agreement with JKD Capital Partners I LTD, a New York corporation (“JKD Investor”), and RN Capital Solutions LLC, a Delaware limited liability company (“RNCS”).

On January 31, 2020, the Operating LLC entered into a note purchase agreement with each of JKD Capital Partners I LTD, a New York corporation (“JKD Investor”), and RN Capital Solutions LLC, a Delaware limited liability company (“RNCS”).

The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company’s board of directors and his spouse.

Pursuant to the note purchase agreement, JKD Investor and RNCS each purchased a senior promissory note in the principal amount of $2,250 (for an aggregate investment of $4,500).

Pursuant to the note purchase agreements, JKD Investor and RNCS each purchased a senior promissory note in the principal amount of $2,250 (for an aggregate investment of $4,500).

The senior promissory notes bear interest at a fixed rate of 12% per annum and mature on January 31, 2022.

5 unchanged sentences

On September 25, 2020, the Company amended and restated the 2019 Senior Notes to extend the maturity date of the remaining $2,400 to September 25, 2021.

DGC Trust/CBF Redeemable Financial Instrument

On September 29, 2017, the Operating LLC entered into an investment agreement with CBF (the “CBF Investment Agreement”) and an investment agreement with the DGC Family Fintech Trust (the “DGC Trust”), a trust established by Daniel G.

Cohen (the “DGC Trust Investment Agreement”), pursuant to which CBF and the DGC Trust agreed to invest $8,000 and $2,000, respectively, into the Operating LLC.

As of September 25, 2020, the Company had outstanding investment balances of $6,500 and $2,000 related to the CBF Investment Agreement and the DGC Trust Investment Agreement, respectively.

On September 25, 2020, the Operating LLC and CBF entered into Amendment No.

3 to Investment Agreement, which amended the CBF Investment Agreement (i) to extend the date thereunder pursuant to which the Company or CBF could cause a redemption of the Investment Balance from September 27, 2020 to January 1, 2021, and (ii) to state that no such redemption by the Company could be in violation of any loan agreement to which the Company was then a party.

On September 30, 2020, the Company redeemed the DGC Trust Investment Agreement in full by making payment of $2,000 to the DGC Trust.

On October 9, 2020 and effective October 15, 2020, the Operating LLC entered into Amendment No.

4 to Investment Agreement, which further amended the CBF Investment Agreement to, among other things, (A) decrease the “Investment Amount” under the CBF Investment Agreement from $6,500 to $4,000 in exchange for a one-time payment of $2,500 from the Operating Company to CBF;

and (B) provide that the term “Investment Return” (as defined in the CBF Investment Agreement) will mean an annual return equal to, (i) for any twelve-month period following September 29, 2020 (each, an “Annual Period”) in which the revenue of the business of JVB (“Revenue of the Business”), is greater than zero, the greater of 20% of the Investment Amount or 9.4% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business is zero or less than zero, 3.75% of the Investment Amount.

Prior to the Investment Agreement Amendment, the term “Investment Return” under the CBF Investment Agreement was defined as (A) with respect to any Annual in which the Revenue of the Business was greater than zero, the greater of 20% of the Investment Amount or 15.2% of the Revenue of the Business, or (ii) for any Annual Period in which the Revenue of the Business was zero or less than zero, 3.75% of the Investment Amount.

The Company made the $2,500 payment to CBF on October 15, 2020.

See note 17 for details regarding the 2019 Notes.

Insurance SPAC

The Operating LLC is the manager of Insurance Acquisition Sponsor, LLC (“IAS”) and Dioptra Advisors, LLC (“Dioptra” and, together with IAS, the “Insurance SPAC Sponsor Entities”).

The Insurance SPAC Sponsor Entities were sponsors of Insurance Acquisition Corp.

On October 13, 2020, Insurance SPAC Merger Sub was merged (the “Insurance SPAC Merger”) with and into SFT.

In connection with the Insurance SPAC Merger, the Insurance SPAC changed its name from “Insurance Acquisition Corp.” to “Shift Technologies, Inc.” and, on October 15, 2020, the Insurance SPAC’s NASDAQ trading symbol changed from "INSU" to “SFT.” The Insurance SPAC Merger was approved by the Insurance SPAC’s stockholders at a special meeting of stockholders held on October 13, 2020.

Upon the closing of the Insurance SPAC Merger, the Insurance SPAC Sponsor Entities held 375,000 shares of SFT’s Class A Common Stock, par value $0.0001 per share (“SFT Class A Common Stock”), and 187,500 warrants (“SFT Warrants”) to purchase an equal number of shares of SFT Class A Common Stock for $11.50 per share (such SFT Class A Common Stock and SFT Warrants, collectively, the “Placement Securities”) as a result of the 375,000 placement units which the Insurance SPAC Sponsor Entities had purchased in a private placement that occurred simultaneously with the Insurance SPAC’s initial public offering on March 22, 2019.

Further, upon the closing of the Insurance SPAC Merger, the Insurance SPAC Sponsor Entities collectively held an additional 4,497,525 shares of SFT Class A Common Stock as a result of its previous purchase of founder shares of the Insurance SPAC.

In general, when founder shares and placement shares are discussed as a group, the Company refers to them as "Sponsor Shares".

Of the 375,000 placement units, 122,665 were allocable to the Operating LLC.

Of the 4,497,525 founder shares, 2,019,721 were allocable to the Operating LLC.

As of the closing of the Insurance SPAC Merger, the Company continued to consolidate the Insurance SPAC Sponsor Entities.

Prior to the closing, the Company treated the consolidated Insurance SPAC Sponsor Entities’ investment in the Insurance SPAC as an equity method investment.

Effective upon the closing of the Insurance SPAC Merger:

The Company determined the fair value of the Sponsor Shares held by the Insurance SPAC Sponsor Entities.

The Company reclassified the equity method investment to other investments, at fair value and recorded principal transactions and other income for the difference between the fair value of the Sponsor Shares held by the Insurance SPAC Sponsor Entities and the equity method investment balance immediately prior to the merger closing.

The Company then recorded non-controlling interest expense or compensation expense related to the Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities.

If the non-controlling interest holder was an employee of the Company, the Company recorded the expense as equity-based compensation expense.

Otherwise, the expense was recorded by the Company as non-controlling interest expense.

Subsequent to the closing of the Insurance SPAC Merger, any change in the fair value of the shares held by the Insurance SPAC Sponsor Entities has been recorded as a component of principal transactions and other income.

The Company concurrently records a corresponding non-controlling interest entry related to the Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities.

No adjustment is made to the equity-based compensation expense recorded as of the closing of the Insurance SPAC Merger.

Rather, all post-merger changes in value related to Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor Entities are recorded as non-controlling interest expense.

During the three months ended March 31, 2021, the Insurance SPAC Sponsor Entities distributed all the unrestricted and restricted shares held to its members including the Operating LLC.

The portion of such SFT shares that was distributed to members other than the Operating LLC were treated as an in-kind non-controlling interest distribution.

Subsequent to that distribution, the Company will continue to record any change in the fair value of the SFT shares held by the Operating LLC as a component of principal transactions and other income.

However, no offsetting entry to non-controlling interest is necessary subsequent to the non-controlling interest distribution.

Concurrently with the closing of the Insurance SPAC Merger, a subsidiary of the Operating LLC, INSU Pipe Sponsor, LLC, purchased 600,000 shares of SFT Class A Common Stock at a purchase price per share of $10.00 pursuant to a subscription agreement that such subsidiary executed at the time of the execution of the Insurance SPAC Merger Agreement.

The Company's interest in INSU Pipe Sponsor LLC entitled it to an allocation of 350,000 shares of SFT Class A Common Stock.

During 2020, the Company consolidated INSU Pipe Sponsor, LLC and recorded principal transactions and other income for the full 600,000 shares and then non-controlling interest expense or income for the 250,000 shares not owned by the Company.

In December 2020, the shares of SFT Class A Common Stock were registered for sale and INSU Pipe Sponsor, LLC distributed the shares to the non-controlling interest holders resulting in INSU Pipe Sponsor, LLC being 100% owned by the Operating LLC.

INSU Pipe Sponsor, LLC was dissolved in the first quarter of 2021, and the Company's 350,000 shares of SFT class A common stock were transferred to the Operating LLC or other wholly owned subsidiaries of the Operating LLC.

The following table details the impact of all the entries associated with the Insurance SPAC during the three months ended March 31, 2021.

This table excludes any tax impact.

For the Three Months Ended March 31, 2021

Insurance SPAC Sponsor Entities

Operating LLC

Principal transactions and other income

Equity-based compensation

Other operating

Income / (loss) from equity method affiliates

Net income / (loss)

Net (loss) income attributable to the non-controlling interest - Operating LLC

Net income / (loss) - Operating LLC

Net income / (loss) attributable to the convertible non-controlling interest

Net income / (loss) attributable to Cohen & Company Inc.

As of March 31, 2021, the Operating LLC's total investment in SFT was $15,578 which is included as a component of other investments, at fair value.

This fair value is broken out as follows:

Shares freely tradeable

Shares that will become freely tradeable at such time SFT's stock price is greater than $12.00 per share for any period of 20 trading days out of 30 consecutive trading days

Shares that will become freely tradeable at such time SFT's stock price is greater than $13.50 per share for any period of 20 trading days out of 30 consecutive trading days

Shares that will become freely tradeable at such time SFT's stock price is greater than $15.00 per share for any period of 20 trading days out of 30 consecutive trading days

Shares that will become freely tradeable at such time SFT's stock price is greater than $17.00 per share for any period of 20 trading days out of 30 consecutive trading days

SFT's closing shares price on March 31, 2021 was $8.32 per share.

INSU Acquisition Corp.

II ("Insurance SPAC II")

The Operating LLC is the manager of Insurance Acquisition Sponsor II, LLC (“IAS II”) and Dioptra Advisors II, LLC (“Dioptra II” and, together with IAS II, the “Insurance SPAC II Sponsor Entities”).

The Insurance SPAC II Sponsor Entities are sponsors of INSU Acquisition Corp.

II (“Insurance SPAC II”), a blank check company that sought to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (each a “Insurance SPAC II Business Combination”).

On November 24, 2020, Insurance SPAC II entered into an Agreement and Plan of Merger and Reorganization (the “Insurance SPAC II Merger Agreement”) with INSU II Merger Sub Corp., a Delaware corporation and direct wholly owned subsidiary of Insurance SPAC II (“Insurance SPAC II Merger Sub”), and MetroMile, Inc., a Delaware corporation (at the time, named MetroMile Operating Company) (“MetroMile”).

The Insurance SPAC II Merger Agreement provided for, among other things, the acquisition of MetroMile by Insurance SPAC II pursuant to the proposed merger of Insurance SPAC II Merger Sub with and into MetroMile with MetroMile continuing as the surviving entity and a direct wholly owned subsidiary of Insurance SPAC II (the “Insurance SPAC II Merger”).

On February 9, 2021, the Insurance SPAC II Merger was consummated and Insurance SPAC II changed its name to MetroMile.

Upon closing of the Insurance SPAC II Merger, the Insurance SPAC II Sponsor Entities received a total of 6,669,667 founder shares and 452,500 placement units.

Each placement unit consists of one share of Insurance SPAC II Common Stock and one-third of one warrant (the “Insurance SPAC II Warrant”).

Each whole Insurance SPAC II Warrant entitles the holder to purchase one share of Insurance SPAC II common stock for $11.50 per share.

Of the 6,669,667 founders shares, (i) 1,569,333 founder shares were freely transferable and saleable at the closing as of the Insurance SPAC II Merger, (ii) 2,550,167 founder shares will become freely transferable and saleable at such time as MetroMile's stock price is greater than $15.00 per share for any period of 20 trading days out of 30 consecutive trading days;

(iii) 2,550,167 founder shares will become freely transferable and saleable at such time as MetroMile's stock price is greater than $17.00 per share for any period of 20 trading days out of 30 consecutive trading days.

As of the closing of the Insurance SPAC II Merger, the Company continued to consolidate the Insurance SPAC II Sponsor Entities.

Prior to the closing, the Company treated the consolidated Insurance SPAC Sponsor Entities’ investment in the Insurance SPAC as an equity method investment.

Effective upon the closing of the Insurance SPAC Merger:

The Company determined the fair value of the Sponsor Shares held by the Insurance SPAC Sponsor Entities;

If the non-controlling interest holder was an employee, the Company recorded the expense as equity-based compensation expense.

Otherwise, the expense was recorded as non-controlling interest expense.

Subsequent to the closing of the Insurance SPAC II Merger through April 16, 2021, any change in the fair value of the shares held by the Insurance SPAC Sponsor Entities had been recorded as a component of principal transactions and other income.

No adjustment is made to the equity-based compensation expense recorded as of the closing of the Insurance SPAC Merger.

On April 16, 2021, the Insurance SPAC II Sponsor Entities distributed all the unrestricted and restricted MetroMile shares held to its members including the Operating LLC The portion of such MetroMile shares that was distributed to members other than the Operating LLC was treated as an in-kind non-controlling interest distribution.

Subsequent to that distribution, the Company will continue to record any change in the fair value of the MetroMile shares held by it as a component of principal transactions and other income.

However, no offsetting entry to non-controlling interest is necessary subsequent to the non-controlling interest distribution.

The following table details the impact of all the entries associated with the Insurance SPAC II during the three months ended March 31, 2021.

This table excludes any tax impact.

For the Three Months Ended March 31, 2021

Insurance SPAC II Sponsor Entities

Operating LLC

Principal transactions and other income

Equity-based compensation

Other operating

Income / (loss) from equity method affiliates

Net income / (loss)

Net (loss) income attributable to the non-controlling interest - Operating LLC

Net income / (loss) - Operating LLC

Net income / (loss) attributable to the convertible non-controlling interest

Net income / (loss) attributable to Cohen & Company Inc.

The Operating LLC's total investment in MetroMile of $72,914 as of March 31, 2021 is included as a component of other investments, at fair value in our consolidated balance sheet.

Offsetting this is $39,772 of non-controlling interest in our consolidated balance sheet related to shares of MetroMile held in consolidated entities that are distributable to the non-controlling interest holders.

Therefore, the Operating LLC's share of the consolidated investment in MetroMile as of March 31, 2021 was $33,142.

These values are broken out as follows:

Non-Controlling

Shares freely tradeable

Shares that will become freely tradeable at such time MetroMile's stock price is greater than $15.00 per share for any period of 20 trading days out of 30 consecutive trading days

Shares that will become freely tradeable at such time MetroMile's stock price is greater than $17.00 per share for any period of 20 trading days out of 30 consecutive trading days

MetroMile's closing share price on March 31, 2021 was $10.29 per share.

INSU Acquisition Corp III ("Insurance SPAC III")

The Operating LLC is the manager of Insurance Acquisition Sponsor III, LLC (“IAS III”) and Dioptra Advisors III, LLC (together with IAS III, the “Insurance SPAC III Sponsor Entities”).

The Insurance SPAC III Sponsor Entities are sponsors of INSU Acquisition Corp.

III ("Insurance SPAC III").

On December 22, 2020, Insurance SPAC III completed the sale of 25,000,000 units (the “Insurance SPAC III Units”) in its initial public offering which included 3,200,000 units issued pursuant to the underwriters’ over-allotment option.

Each Insurance SPAC III Unit consists of one share of Insurance SPAC III's Class A common stock, par value $0.0001 per share (“Insurance SPAC III Common Stock”), and one-third of one Insurance SPAC III warrant (each, an “Insurance SPAC III Warrant”), where each whole Insurance SPAC III Warrant entitles the holder to purchase one share of Insurance SPAC III Common Stock for $11.50 per share.

The Insurance SPAC III Units were sold in the IPO at an offering price of $10.00 per Unit, for gross proceeds of $250,000 (before underwriting discounts and commissions and offering expenses).

Pursuant to the underwriting agreement in the IPO, Insurance SPAC III granted the underwriters in the IPO (the “Insurance SPAC III Underwriters”) a 45-day option to purchase up to 3,270,000 additional Insurance SPAC III Units solely to cover over-allotments, if any;

and on December 21, 2020, the Insurance SPAC III Underwriters notified the Company that they were partially exercising the over-allotment option for 3,200,000 Insurance SPAC III Units and waiving the remainder of the over-allotment option.

Immediately following the completion of the IPO, there were an aggregate of 34,100,000 shares of Insurance SPAC III Common Stock issued and outstanding.

If the Insurance SPAC III fails to consummate a business combination within the first 24 months following the IPO, its corporate existence will cease except for the purposes of winding up its affairs and liquidating its assets.

The Insurance SPAC III Sponsor Entities purchased an aggregate of 575,000 of placement units in Insurance SPAC III in a private placement that occurred simultaneously with the IPO for an aggregate of $5,750, or $10.00 per placement unit.

Each placement unit consists of one share of Insurance SPAC III Common Stock and one-third of one warrant (the “Insurance SPAC III Placement Warrant”).

The Insurance SPAC III placement units are identical to the Insurance SPAC III Units sold in the IPO except (i) the shares of Insurance SPAC III Common Stock issued as part of the placement units and the Insurance SPAC III Warrants will not be redeemable by Insurance SPAC III, (ii) the Insurance SPAC III Warrants may be exercised by the holders on a cashless basis, and (iii) the shares of Insurance SPAC III Common Stock issued as part of the placement units, together with the Insurance SPAC III Warrants, are entitled to certain registration rights.

Subject to certain limited exceptions, the placement units (including the underlying Insurance SPAC III Warrants and Insurance SPAC III Common Stock and the shares of Insurance SPAC III Common Stock issuable upon exercise of the Insurance SPAC III Warrants) will not be transferable, assignable or salable until 30 days after the completion of the Insurance SPAC III’s initial business combination.

A total of $250,000 of the net proceeds from the private placement and the IPO (including approximately $10,600 of the deferred underwriting commission from the IPO) were placed in a trust account.

Except for the withdrawal of interest to pay taxes (or dissolution expenses if a business combination is not consummated), none of the funds held in the trust account will be released until the earlier of (i) the completion of Insurance SPAC III’s initial business combination, (ii) in connection with a stockholder vote to amend Insurance SPAC III’s amended and restated certificate of incorporation (A) to modify the substance or timing of Insurance SPAC III’s obligation to redeem 100% of its public shares if it does not complete an initial business combination within 24 months from the completion of the IPO or (B) with respect to any other provision relating to stockholders’ rights or preinitial business combination activity, or (iii) the redemption of all of Insurance SPAC III’s public shares issued in the IPO if the Insurance SPAC III is unable to consummate an initial business combination within 24 months from the completion of the IPO.

If Insurance SPAC III does not complete a business combination within the first 24 months following the IPO, the placement units will expire worthless.

The Insurance SPAC III Sponsor Entities collectively hold 8,525,000 founder shares in Insurance SPAC III.

Subject to certain limited exceptions, the founder shares will not be transferable or salable except (a) with respect to 25% of such shares, until consummation of a business combination, and (b) with respect to additional 25% tranches of such shares, when the closing price of Insurance SPAC III Common Stock exceeds $12.00, $13.50, and $17.00, respectively, for 20 out of any 30 consecutive trading days following the consummation of a business combination.

Certain non-controlling interests in the Insurance SPAC III Sponsor Entities, including executive and key employees of the Operating LLC, purchased membership interests in the Insurance SPAC III Sponsor Entities and, in addition to having an interest in Insurance SPAC III’s placement units discussed above, have an interest in Insurance SPAC III’s founder shares through such membership interests in the Insurance SPAC III Sponsor Entities.

The number of the Insurance SPAC III’s founders shares in which such non-controlling interests in the Insurance SPAC III Sponsor Entities, including such executives and key employees of the Operating LLC, have an interest in through the Insurance SPAC III Sponsor Entities will not be finally and definitively determined until consummation of a business combination.

The number of Insurance SPAC III’s founder shares currently allocated to the Operating LLC is 4,267,500, but such number of founder shares will also not be finally and definitively determined until the consummation of a business combination.

As of March 31, 2021, the Company had a total equity method investment in Insurance SPAC III of $5,288, which was included as a component of investment in equity method affiliates in our consolidated balance sheet.

Partially offsetting this amount was non-controlling interest of $5,195, which was included as a component of non-controlling interest in our consolidated balance sheet.

Therefore, the net carrying value of our investment in Insurance SPAC III was $93 as of March 31, 2021.

In April 2021, the SEC issued guidance regarding how SPACs account for the warrants they issue.

This guidance may result in Insurance SPAC III, as well as most SPACs restating their previously issued financial statements.

See Item 1a Risk Factors in this Quarterly Report on Form 10-Q.

Net trading consisted of the following in the periods presented.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Net realized gains (losses) - trading inventory

2 unchanged sentences

Interest income- trading inventory

Interest income - RTLs

Interest income-receivables under resale agreements

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Trading inventory includes investments classified as investments-trading as well as trading securities sold, not yet purchased.

During 2019, RTLs were accounted for at lower of cost or market and included as a component of other assets and the interest income related to those loans was shown separately in the table above.

Effective January 1, 2020, in connection with the adoption of ASC 326, the Company began accounting for RTLs at fair value and included them as a component of investments-trading.

Income earned on RTLs in included in interest income-trading inventory in the table above.

In conjunction with the sale of ViaNova , the Company retained one loan and transferred it to JVB.

This loan is now included in other investments, at fair value on the consolidated balance sheets;

subsequent income earned on this RTL is included in principal transactions and other income in the consolidated statement of operations.

Also, see note 10 for discussion of receivables under resale agreements and securities sold under agreements to repurchase.

5 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

6 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

Margin payable

Due to clearing agent

Unsettled regular way trades, net

Payables to brokers, dealers, and clearing agencies

2 unchanged sentences

The related amounts receivable and payable for unsettled securities transactions are recorded net in receivables from or payables to brokers, dealers, and clearing agencies on the Company’s consolidated balance sheets.

The balance at March 31, 2021 includes a $44,475 fail to deliver for a reverse repo transaction.

The transaction settled in April 2021.

Receivables from clearing agencies are primarily comprised of (i) cash received by the Company upon execution of short trades that is restricted from withdrawal by the clearing agent and (ii) cash deposited with the FICC to support the Company’s General Collateral Funding (“GCF”) matched book repo business.

2 unchanged sentences

See note 5 for interest expense incurred on margin payable.

Due to clearing agent represents amounts due to Bank of New York under the Company’s intra-day and overnight lending facility supporting the GCF matched repo business.

FINANCIAL INSTRUMENTS

3 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

12 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

government agency debt securities

Treasury securities

9 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

Gain / (Loss)

Equity securities

Restricted equity securities

Corporate bonds and redeemable preferred stock

Subordinated Notes

4 unchanged sentences

Equity securities

Restricted equity securities

Corporate bonds and redeemable preferred stock

Subordinated Notes

Residential loans

Other investments, at fair value

Other investments, sold not yet purchased

Other investments, sold not yet purchased consisted of the following.

OTHER INVESTMENTS SOLD, NOT YET PURCHASED

(Dollars in Thousands)

March 31, 2021

Carrying Value

Unrealized Gain / (Loss)

Equity securities

Other investments sold, not yet purchased

December 31, 2020

Carrying Value

Unrealized Gain / (Loss)

Equity securities

Other investments sold, not yet purchased

FAIR VALUE DISCLOSURES

8 unchanged sentences

All of the investments for which the Company has elected the fair value option are included as a component of other investments, at fair value in the consolidated balance sheets.

The Company recognized net gains (losses) related to changes in fair value of investments that are included as a component of other investments, at fair value during the three months ended September 30, 2020 and 2019 of $ 1,763 and $ 140 , respectively.

The Company recognized net gains (losses) related to changes in fair value of investments that are included as a component of other investments, at fair value during the nine months ended September 30, 2020 and 2019 of $ 1,308 and $ 879 , respectively.

The Company recognized net gains (losses) related to changes in fair value of investments that are included as a component of other investments, at fair value during the three months ended March 31, 2021 and 2020 of $ 79,189 and $ (2,695) , respectively.

The Company recognized net gains (losses) related to changes in fair value of investments that are included as a component of other investments, sold not yet purchased during the three months ended March 31, 2021 and 2020 of $ 62 and $0, respectively.

Fair Value Measurements

15 unchanged sentences

As a result, the unrealized gains and losses for assets and liabilities within the level 3 category presented in the tables below may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

The following tables present information about the Company’s assets and liabilities measured at fair value as of September 30, 2020 and December 31, 2019 and indicates the valuation hierarchy of the valuation techniques utilized by the Company to determine such fair value.

The following tables present information about the Company’s assets and liabilities measured at fair value as of March 31, 2021 and December 31, 2020 and indicates the valuation hierarchy of the valuation techniques utilized by the Company to determine such fair value.

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS

September 30, 2020

March 31, 2021

(Dollars in Thousands)

14 unchanged sentences

Equity securities

Restricted equity securities

Corporate bonds and redeemable preferred stock

Subordinated Notes

3 unchanged sentences

Trading securities sold, not yet purchased:

government agency debt securities

Treasury securities

3 unchanged sentences

Total trading securities sold, not yet purchased

Other investments, sold not yet purchased:

Equity securities

Total other investments sold, not yet purchased

As a practical expedient, the Company uses NAV per share (or its equivalent) to measure the fair value of its investments in the U.S.

21 unchanged sentences

Equity Securities

Restricted Equity Securities

Corporate bonds and redeemable preferred stock

Subordinated notes

Residential loans

5 unchanged sentences

Municipal bonds

Equity securities

Total trading securities sold, not yet purchased

Other investments, sold not yet purchased:

Equity securities

Total other investments sold, not yet purchased

(1) As a practical expedient, the Company uses NAV per share (or its equivalent) to measure the fair value of its investments in the U.S.

78 unchanged sentences

These are securities that are traded on a recognized liquid exchange and the Company classifies their fair value within level 1 of the valuation hierarchy.

The Company may own an option or warrant where the underlying security is publicly traded but the option or warrant is not.

In those cases, the Company may determine fair value using a Black-Scholes model and will generally classify their fair value within level 2 within the valuation hierarchy.

The Company may own an equity investment in a publicly traded company that is restricted as to resale.

In those cases, the Company may determine fair value by preparing a model.

The fair value will be classified within level 2 of the valuation hierarchy if the inputs to the model are observable.

Otherwise, it will be classified within level 3 of the valuation hierarchy.

The Company may own an equity interest in a private company.

In those cases, the Company may determine fair value by preparing a model.

The model may be either a market-based or income-based model, whichever is considered the most appropriate in each case.

The fair value will be classified within level 2 if the inputs to the model are observable.

Otherwise, it will be classified within level 3 of the valuation hierarchy.

Restricted Equity Securities :

Restricted equity securities are investments in publicly traded companies.

However, they are restricted for re-sale until either (a) the share price trades above a certain threshold for a certain period of time;

or (b) a certain period of time elapses or both.

The Company determines the fair value by utilizing a model that starts with the publicly traded share price but then applies a discount based on a monte carlo simulation.

The inputs to this model are observable so the Company classifies this within level 2 of the valuation hierarchy.

However, the Company is not allowed to sell these shares during the restriction period and there is no certainty as to when these hurdles will be met or if they will be met at all.

Foreign Currency Forward Contracts

18 unchanged sentences

LEVEL 3 ROLLFORWARD

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Beginning of period

7 unchanged sentences

Represents the change in unrealized gains and losses for the period included in earnings for assets held at the end of the reporting period.

The following tables provide the quantitative information about level 3 fair value measurements as of September 30, 2020 and December 31, 2019 .

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in Thousands)

September 30, 2020

Other investments, at fair value

Discounted Cash Flow Model

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

(Dollars in Thousands)

December 31, 2019

Other investments, at fair value

Discounted Cash Flow Model

16.9% - 19.2%

Duration-years

Sensitivity of Fair Value to Changes in Significant Unobservable Inputs

For recurring fair value measurements categorized within level 3 of the valuation hierarchy, the sensitivity of the fair value measurement to changes in significant unobservable inputs and interrelationships between those unobservable inputs (if any) are described below.

The Company uses a discounted cash flow model to determine the fair value of its investments in RTLs.

These loans are short term in nature (generally less than 18 months).

Changes in the yield or defaults will have the largest impact on the fair value calculation.

The higher the yield, the lower the fair value of the investment.

The higher the default rate, the lower the fair value of the investment.

The Company uses a discounted cash flow model to determine the fair value of its investments in CLOs.

Changes in the yield, duration, and default rate assumptions would impact the fair value determined.

The longer the duration, the lower the fair value of the investment.

The higher the yield, the lower the fair value of the investment.

The higher the default rate, the lower the fair value of the investment.

Investments in Certain Entities that Calculate NAV Per Share (or its Equivalent)

The following table presents additional information about investments in certain entities that calculate NAV per share (regardless of whether the “practical expedient” provisions of FASB ASC 820 have been applied), which are measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 .

FAIR VALUE MEASUREMENTS OF INVESTMENTS IN CERTAIN ENTITIES

1 unchanged sentence

(Dollars in Thousands)

September 30, 2020

March 31, 2021

Notice Period

44 unchanged sentences

The Company carries foreign currency forward contracts at fair value and includes them as a component of other investments, at fair value in the Company’s consolidated balance sheets.

As of September 30, 2020 and December 31, 2019 , the Company had no outstanding foreign currency forward contracts.

As of March 31, 2021 and December 31, 2020 , the Company had no outstanding foreign currency forward contracts.

TBAs and Other Forward Agency MBS Contracts

7 unchanged sentences

The Company carries the TBAs and other forward agency MBS contracts at fair value and includes them as a component of investments-trading or trading securities sold, not yet purchased in the Company’s consolidated balance sheets.

At September 30, 2020 , the Company had open TBA and other forward MBS purchase agreements in the notional amount of $1,836,000 and open TBA and other forward MBS sale agreements in the notional amount of $1,936,750 .

At March 31, 2021 , the Company had open TBA and other forward MBS purchase agreements in the notional amount of $ 1,851,250 and open TBA and other forward MBS sale agreements in the notional amount of $ 1,958,500 .

At December 31, 2020 , the Company had open TBA and other forward agency MBS purchase agreements in the notional amount of $1,706,834 and open TBA and other forward agency MBS sale agreements in the notional amount of $1,809,550.

3 unchanged sentences

The Company will record an unrealized gain or unrealized loss on the derivative for the difference between the fair value of the underlying financial instrument as of the reporting date and the agreed upon transaction price.

At September 30, 2020 , the Company had open forward purchase commitments of $11,045 and open forward sale commitments of $0 .

At March 31, 2021 , the Company had open forward purchase commitments of $0 and open forward sale commitments of $0.

At December 31, 2020 , the Company had open forward purchase commitments of $365 and open forward sale commitments of $0.

The following table presents the Company’s derivative financial instruments and the amount and location of the fair value (unrealized gain / (loss)) recognized in the consolidated balance sheets as of September 30, 2020 and December 31, 2019 .

DERIVATIVE FINANCIAL INSTRUMENTS-BALANCE SHEET INFORMATION

2 unchanged sentences

Balance Sheet Classification

September 30, 2020

March 31, 2021

December 31, 2020

14 unchanged sentences

Income Statement Classification

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Foreign currency forward contracts

Revenue-principal transactions and other income

Other extended settlement trades

Revenue-net trading

TBAs and other forward agency MBS

Revenue-net trading

Derivative Financial Instruments Not Designated as Hedging Instruments Under FASB ASC 815

Income Statement Classification

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Foreign currency forward contracts

28 unchanged sentences

(“FT Financial”) on April 25, 2018.

This line of credit arrangement was subsequently amended.

See note 26 for discussion of replacement credit agreement entered into in October 2020.

The FT Financial line of credit arrangement was subsequently amended.

In October 2020, the Company entered into a replacement credit agreement with Byline Bank.

Other Repo Transactions

5 unchanged sentences

Repo Information

At September 30, 2020 and December 31, 2019 , the Company held reverse repos of $6,055,291 and $7,500,002, respectively, and the fair value of collateral received under reverse repos was $6,237,942 and $7,769,693, respectively.

As of September 30, 2020 and December 31, 2019 , the reverse repo balance was comprised of receivables collateralized by securities with 34 and 41 counterparties, respectively.

At September 30, 2020 and December 31, 2019 , the Company held repos of $6,058,998 and $7,534,443, respectively, and the fair value of securities and cash pledged as collateral under repos was $6,001,643 and $7,561,978, respectively.

At March 31, 2021 and December 31, 2020 , the Company held reverse repos of $7,299,538 and $5,716,343, respectively, and the fair value of collateral received under reverse repos was $7,408,403 and $5,885,656, respectively.

As of March 31, 2021 and December 31, 2020 , the reverse repo balance was comprised of receivables collateralized by securities with 37 and 38 counterparties, respectively.

At March 31, 2021 and December 31, 2020 , the Company held repos of $7,289,275 and $5,713,212, respectively, and the fair value of securities and cash pledged as collateral under repos was $7,359,457 and $5,768,018, respectively.

These amounts include collateral for reverse repos that were re-pledged as collateral for repos.

2 unchanged sentences

The lending facility allows for BONY to advance funds to JVB in order to facilitate the settlement of GCF repo transactions.

The total committed amount at September 30, 2020 was $75,000.

The total committed amount at March 31, 2021 was $75,000.

The current termination date of this facility is October 15, 2021.

6 unchanged sentences

The base rate is the higher of the federal funds rate plus 0.50% or the prime rate in effect at that time.

For the nine months ended September 30, 2020 , the Company received no advances under the intraday lending facility.

During the year ended December 31, 2019 , advances of $32,818 were made under this facility.

This draw plus accrued interest of $2, or $32,820, was outstanding as of December 31, 2019 and was included as a component of payable to brokers, dealers, and clearing agencies in the statement of financial condition.

This amount was repaid in full in January 2020.

For the three months ended March 31, 2021 , and for the year ended December 31, 2020, the Company received no advances under the intraday lending facility.

Concentration

6 unchanged sentences

The Company conducts this business with a limited number of reverse repo counterparties.

As of September 30, 2020 and December 31, 2019 , the Company’s gestation reverse repos shown in the tables below represented balances from nine and seven counterparties, respectively.

As of March 31, 2021 and December 31, 2020 , the Company’s gestation reverse repos shown in the tables below represented balances from thirteen and eleven counterparties, respectively.

The Company also has a limited number of repo counterparties in the gestation repo business.

1 unchanged sentence

Therefore, the Company considers the gestation repo business to be concentrated on the demand side.

The total net revenue earned by the Company on its matched book repo business (both gestation repo and GCF repo) was $8,850 and $23,645 for the three and nine months ended September 30, 2020 , respectively.

The total net revenue earned by the Company on its matched book repo business (both gestation repo and GCF repo) was $2,566 and $6,202 for the three and nine months ended September 30, 2019 , respectively.

Effective June 1, 2019, the Company changed its accounting policy regarding the netting of reverse repo and repo transactions.

ASC 210 provides the option to present reverse repo and repo on a net basis if certain netting conditions are met.

Prior to this date, the Company utilized this option and presented repo and reverse repo on a net basis when these conditions were met.

As of June 1, 2019, the Company changed its policy to present all repo and reverse repo transactions on a gross basis even if the underlying netting conditions are met.

The Company believes that the newly adopted accounting principle is preferable in the circumstances because it provides consistency for the accounting of all repurchase and reverse repos, as well as more information on the face of the financial statements.

The amounts in the table below (including periods prior to June 1, 2019) are presented on a gross basis.

As of September 30, 2020 , the Company had outstanding reverse repos of $6,055,291 and repos of $6,058,998 .

The total net revenue earned by the Company on its matched book repo business (both gestation repo and GCF repo) was $11,281 and $6,868 for the three months ended March 31, 2021 and 2020, respectively.

The amounts in the table below are presented on a gross basis.

As of March 31, 2021 , the Company had outstanding reverse repos of $7,299,538 and repos of $7,289,275 .

Included in these amounts are outstanding reverse repos of $ 2,951,224 and repos of $ 1,340,216 where the FICC was the Company’s counterparty to the transaction and which were subject to a master netting arrangement.

5 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

Repurchase Agreements

35 unchanged sentences

See notes 8 and 24.

The following table summarizes the activity and earnings in the Company’s investment that is accounted for under the equity method.

The following table summarizes the activity and earnings in the Company’s investments that are accounted for under the equity method.

INVESTMENTS IN EQUITY METHOD AFFILIATES

(Dollars in Thousands)

Insurance SPAC

Insurance SPAC II

FTAC Olympus Acquisition Corp.

Insurance SPACS

SPAC Sponsor Entities

SPAC Series Funds

January 1, 2021

2 unchanged sentences

Earnings / (loss) realized

September 30, 2020

SUMMARIZED FINANCIAL RESULTS OF SIGNIFICANT EQUITY METHOD SUBSIDIARIES

(Dollars in Thousands)

Three Months Ended

Nine Months Ended

September 30,

Insurance SPAC:

Net income/(loss)

Net income/(loss) attributable to the investee

March 31, 2021

Insurance SPACS

SPAC Sponsor Entities

SPAC Series Funds

January 1, 2020

Investments / advances

Distributions / repayments

Earnings / (loss) realized

March 31, 2020

The Insurance SPACs represent the Company's consolidated subsidiaries equity method investments in various insurance SPACs.

The SPAC Sponsor Entities represent equity method investments in sponsor entities for SPACs that are not sponsored by the Company.

Amersfoot Office Investment I Cooperatief U.

(“AOI”) is a company based in the Netherlands that invests in real estate.

CK Capital Partners B.V.

(“CK Capital”) is a company based in the Netherlands that manages investments in real estate.

Each of the SPAC Series Funds (as defined in Item 2, in the “Business Environment” section under the title “The SPAC Market”) invests in the membership interests of an individual sponsor entity.

The Company manages these funds and serves as the general partner.

The Company invests in the SPAC Series Funds itself and also receives an allocation of the founder shares from each series fund that the Company invests in connection with its role as the general partner and manager.

Amounts paid by the Company in connection with receiving its allocation of founder shares are included in the table above along with the SPAC Series Funds.

As of March 31, 2021, the Company's equity method investments in SPAC Sponsor Entities and SPAC Series Funds entitle it to an allocation of approximately 5 million founder shares in total representing investments in 15 SPACs.

See note 4 for a discussion of the founders share allocations related to the Insurance SPACs.

Goodwill consisted of the following.

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

6 unchanged sentences

Under the guidance of FASB ASC 350, the Company determined that the fair value of JVB was less than the carrying value (including the goodwill).

As a result, the Company recognized an impairment loss of $7,883 in the nine months ended September 30, 2020 .

As a result, the Company recognized an impairment loss of $7,883 in the three months ended March 31, 2020.

The impairment loss is included in the consolidated statements of operations as impairment of goodwill and is reflected as a component of operating expense.

4 unchanged sentences

Treasury term interest rate, and an estimated spread to borrow on a secured basis.

The Company adopted the provisions of ASC 842 effective January 1, 2019.

At adoption, the Company elected to not restate prior periods and rather record a cumulative effect of accounting change effective January 1, 2019.

The Company recorded the following:

Rent expense is recognized on a straight-line basis over the lease term and is in included business development, occupancy, and equipment expense.

As of September 30, 2020 , all of the leases to which the Company was a party were operating leases.

As of March 31, 2021 , all of the leases to which the Company was a party were operating leases.

The weighted average remaining term of the leases was 7.8 years.

3 unchanged sentences

(Dollars in Thousands)

As of September 30, 2020

As of March 31, 2021

2021 - remaining

1 unchanged sentence

Lease obligation

During the nine months ended September 30, 2020 and 2019 , total cash payments of $1,187 and $1,153 , respectively, were recorded as a reduction in the operating lease obligation.

During the three months ended March 31, 2021 and 2020 , total cash payments of $383 and $403 , respectively, were recorded as a reduction in the operating lease obligation.

No cash payments were made to acquire right of use assets.

For the three and nine months ended September 30, 2020 rent expense, net of sublease income of $82 and $238 , was $371 and $1,134 , respectively.

For the three and nine months ended September 30, 2019 rent expense, net of sublease income of $73 and $202 , was $387 and $1,174 , respectively.

For the three months ended March 31, 2021 and 2020, rent expense, net of sublease income of $70 and $79 , was $370 and $378 respectively.

OTHER RECEIVABLES, OTHER ASSETS, ACCOUNTS PAYABLE AND OTHER LIABILITIES

2 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

17 unchanged sentences

Interest payable on securities sold, not yet purchased is included as a component of accounts payable and other liabilities in the table entitled Accounts Payable and Other Liabilities below.

Revenue share receivable represents the amount due to the Company for the Company’s share of revenue arrangements generated from various entities in which the Company receives a share of the entity’s revenue.

Revenue share receivable represents the amount due to the Company for the Company’s share of a revenue arrangement generated from an entity in which the Company receives a share of the entity’s revenue.

Other receivables represent other miscellaneous receivables that are of a short-term nature.

1 unchanged sentence

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

1 unchanged sentence

Prepaid expenses

Prepaid income taxes

Miscellaneous other assets

4 unchanged sentences

Deposits are amounts held by landlords or other parties which will be returned or offset upon satisfaction of a lease or other contractual arrangement.

During 2019, RTLs were accounted for at lower of cost or market and included as a component of other assets.

Effective January 1, 2020, in connection with the adoption of ASC 326, the Company began accounting for RTLs at fair value and including them as a component of investments-trading.

In conjunction with the sale of ViaNova, the remaining RTL was transferred to other investments at fair value.

See notes 4, 15, and 16 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019 for further discussion of the firm’s furniture, equipment, and leasehold improvements.

See notes 16 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of the firm’s furniture, equipment, and leasehold improvements.

Intangible assets represent the carrying value of the JVB broker-dealer license.

2 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

1 unchanged sentence

Redeemable financial instruments accrued interest

Accrued income tax

Accrued interest payable

4 unchanged sentences

Accounts payable and other liabilities

The redeemable financial instrument accrued interest represents accrued interest on the JKD Capital Partners I LTD and the DGC Trust/CBF redeemable financial instruments.

The redeemable financial instrument accrued interest represents accrued interest on the JKD Capital Partners I LTD redeemable financial instrument.

When the Company enters into a reverse repo, the Company obtains collateral in excess of the principal of the reverse repo.

9 unchanged sentences

The primary beneficiary is the entity that has both (a) the power to direct the matters that most significantly impact the VIE’s financial performance and (b) a significant variable interest in the VIE.

Consolidated VIEs

The Company determined it was the primary beneficiary of several VIEs and therefore, has consolidated them.

The following table provides certain information regarding the consolidated VIEs:

As of March 31, 2021

As of December 31, 2020

Cash and cash equivalents

Other investments, at fair value

Investment in equity method affiliates

Non-controlling interest

Investment in consolidated VIEs

The maximum potential loss the Company could incur related to the consolidated VIEs is the investment in consolidated VIEs shown in the table above plus certain obligations the Company has to fund additional working capital to the equity method investees of certain of the consolidated VIEs.

The total amount of working capital commitment was $810 and $1,560 as of March 31, 2021 and December 31, 2020, respectively.

The Company’s Principal Investing Portfolio

2 unchanged sentences

The maximum potential financial statement loss the Company would incur if the VIEs were to default on all their obligations would be the loss of the carrying value of these investments as well as any future investments the Company were to make.

As of September 30, 2020 , there were $1,567 of unfunded commitments to VIEs that the Company has invested in.

Other than its investment in these entities, the Company did not provide financial support to these VIEs during the three and nine months ended September 30, 2020 and 2019 and had no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at September 30, 2020 and December 31, 2019 .

As of March 31, 2021 , and December 31, 2020, there were $1,567 of unfunded commitments to VIEs that the Company has invested in.

Other than its investment in these entities, the Company did not provide financial support to these VIEs during the three months ended March 31, 2021 and 2020 and had no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at March 31, 2021 and December 31, 2020 .

See table below.

11 unchanged sentences

The following table presents the carrying amounts of the assets in the Company’s consolidated balance sheets related to the Company’s variable interests in identified VIEs with the exception of (i) the two trust VIEs that hold the Company’s junior subordinated notes (see note 17) and (ii) any security that represents an interest in a VIE that is included in investments-trading or securities sold, not yet purchased in the Company’s consolidated balance sheets.

The table below shows the Company’s maximum exposure to loss associated with these identified nonconsolidated VIEs in which it holds variable interests at September 30, 2020 and December 31, 2019 .

The table below shows the Company’s maximum exposure to loss associated with these identified nonconsolidated VIEs in which it holds variable interests at March 31, 2021 and December 31, 2020 .

CARRYING VALUE OF VARIABLE INTERESTS IN NON-CONSOLIDATED VARIABLE INTEREST ENTITIES

(Dollars in Thousands)

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

Other Investments, at fair value

Investments in equity method affiliates

Maximum exposure

3 unchanged sentences

(Dollars in Thousands)

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

1 unchanged sentence

DGC Trust/CBF

ViaNova Capital Group, LLC

JKD Capital Partners I LTD Amendment

38 unchanged sentences

The Company made the $2,500 payment to CBF on October 15, 2020.

ViaNova Capital Group LLC

On November 16, 2018, and effective as of November 19, 2018, the Operating LLC entered into an investment agreement (the “ViaNova Investment Agreement”) by and among Hancock Funding, LLC (“Hancock”), New Avenue Investments LLC (“New Avenue”), JVB, ViaNova, and the Operating LLC.

Pursuant to the ViaNova Investment Agreement, Hancock, New Avenue, the Operating LLC, and JVB agreed to invest $500, $250, $500, and $2,750, respectively, into ViaNova (collectively, the “ViaNova Investment”).

Pursuant to the ViaNova Investment Agreement, Hancock, the Operating LLC, and JVB invested their respective portions of the ViaNova Investment into ViaNova prior to the effective date of the ViaNova Investment Agreement.

In February 2019, New Avenue invested $220 of its portion of the ViaNova Investment (i.e., $250).

Hancock is owned by an employee of the Company.

New Avenue is owned by a former employee of the Company.

Pursuant to the ViaNova Investment Agreement, in consideration of the ViaNova Investment, once the Operating LLC was repaid $693 of funded operating costs from net revenue (as defined in the ViaNova Investment Agreement) generated directly by the activities of ViaNova’s RTL business, each party to the ViaNova Investment Agreement would be entitled to receive a quarterly payment equal to the net revenue (to the extent positive) generated directly by the activities of ViaNova’s RTL business during such quarter, multiplied by a fraction, the numerator of which is equal to such party’s portion of the ViaNova Investment and the denominator is equal to the entire ViaNova Investment.

During the first quarter of 2020, the Company ceased acquiring new RTLs and began an orderly wind down of its RTL business.

On August 22, 2020, the Company sold its investment in ViaNova and the remaining redeemable investment balances were paid by the Operating LLC to Hancock and New Avenue in accordance with the ViaNova Investment Agreement.

The Company made a $4,000 payment on March 30, 2021 to fully redeem the Investment Amount.

The Company had the following debt outstanding.

1 unchanged sentence

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

11 unchanged sentences

Less unamortized discount

FT Financial Credit Facility

LegacyTexas Credit Facility

FT Financial Bank N.A.

Credit Facility

On September 25, 2019, the Company amended the previously outstanding 2013 Convertible Notes, which were scheduled to mature on September 25, 2019.

18 unchanged sentences

The junior subordinated notes are recorded at a discount to par.

When factoring in the discount, the yield to maturity of the junior subordinated notes as of September 30, 2020 on a combined basis was 14.24% assuming the variable rate in effect on the last day of the reporting period remains in effect until maturity.

When factoring in the discount, the yield to maturity of the junior subordinated notes as of March 31, 2021 on a combined basis was 11.5% assuming the variable rate in effect on the last day of the reporting period remains in effect until maturity.

Represents the interest rate in effect as of the last day of the reporting period.

36 unchanged sentences

On September 23, 2020, the Company applied for forgiveness of the PPP Loan.

As of the date of this report, the Company had not received a notice of forgiveness.

The PPP Loan contains customary events of default relating to, among other things, payment defaults and breaches of representations, warranties, or covenants.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company.

On October 28, 2020 (the “Byline Effective Date”), the Company entered into a Loan Agreement (the “Byline Loan Agreement”) with Byline Bank, as lender (the “Lender”), by and among the Lender, the Company, as a guarantor, and the Company’s subsidiaries, the Operating LLC and J.V.B.

Financial Group Holdings, LP (“Holdings LP”), as guarantors, and JVB as borrower, and C&Co PrinceRidge Holdings, LP (“C&Co.”), pursuant to which the Lender agreed to make loans at JVB’s request from time to time in the aggregate amount of up to $7.5 million.

In addition, on the Effective Date, JVB and the Lender entered into a Revolving Note and Cash Subordination Agreement (the “Byline Revolving Note and Cash Subordination Agreement,” and, together with the Byline Loan Agreement, the “Byline Credit Facility”), pursuant to which, among other things, the Lender agreed to make loans at JVB’s request from time to time in the aggregate amount of up to $17.5 million.

The Byline Credit Facility replaced the previous outstanding facility with FT Bank (see the “FT Bank Credit Facility” below).

Loans (both principal and interest) made by the Lender to JVB under the Byline Loan Agreement and the Byline Revolving Note and Cash Subordination Agreement are scheduled to mature and become immediately due and payable in full on October 28, 2022.

In addition, loans may be made under the Byline Loan Agreement and the Byline Revolving Note and Cash Subordination Agreement until October 28, 2022 and October 28, 2021, respectively.

Loans under the Byline Credit Facility bear interest at a per annum rate equal to LIBOR plus 6.0%, provided that in no event can the interest rate be less than 7.0%.

JVB is required to pay on a quarterly basis an undrawn commitment fee at a per annum rate equal to 0.50% of the undrawn portion of the Lender’s $25 million commitment under the Byline Credit Facility.

JVB is also required to pay on each anniversary of the Byline Effective Date a commitment fee at a per annum rate equal to 0.50% of the Lender’s $25 million commitment under the Byline Credit Facility.

Pursuant to the terms of the Byline Credit Facility, JVB paid to the Lender a commitment fee of $250 on the Byline Effective Date.

Loans under the Byline Credit Facility must be used by JVB for working capital purposes and general liquidity of JVB.

JVB may request a reduction in the Lender’s $25,000 commitment in a minimum amount of $1 million and multiples of $500 thereafter upon not less than five days’ prior notice to the Lender.

The obligations of JVB under the Byline Credit Facility are guaranteed by the Company, the Operating LLC and Holdings LP, and are secured by a lien on all of Holdings LP’s property, including its 100% ownership interest in all of the outstanding membership interests of JVB.

Pursuant to the Byline Credit Facility, JVB and the guarantors thereunder provide customary representations and warranties for a transaction of this type.

The Byline Credit Facility also includes customary covenants for a transaction of this type, including covenants limiting the indebtedness that can be incurred by JVB and Holdings LP and restricting JVB’s ability to make certain loans and investments.

Additionally, JVB may not permit (i) JVB’s tangible net worth to be less than $80,000 at any time from October 29, 2020 through December 31, 2021, and $85,000 at any time thereafter;

and (ii) JVB’s excess net capital to be less than $40,000 at any time.

JVB and each guarantor under the Byline Credit Facility are also limited in their ability to repay certain of their existing outstanding indebtedness.

As of March 31, 2021, the Company was in compliance with all of the financial covenants.

The Byline Credit Facility contains customary events of default for a transaction of this type.

If an event of default under the Byline Credit Facility occurs and is continuing, then the Lender may declare and cause all or any part of the loans and all other liabilities outstanding under the Byline Credit Facility to become immediately due and payable.

As of March 31, 2021, the Company had not drawn on the Byline Credit Facility.

FT Bank Credit Facility

The credit facility with FT Bank had a total borrowing capacity of $25,000.

It was comprised of a revolving credit facility (the “2019 FT Revolver”) which had a total borrowing capacity of $17,500 and a line of credit (the “2018 FT LOC”), which had a total borrowing capacity of $7,500.

Both were to mature on April 10, 2021.

However, the 2019 FT Revolver did not allow for additional draws after April 10, 2020.

During March 2020, the Company drew the full amount of $17,500 under the 2019 FT Revolver and that amount remained outstanding until the Company cancelled both revolving lines of credit and fully repaid the $17,500 outstanding balance plus accrued interest on October 27, 2020.

The Company was in compliance with all covenants for all periods that the FT Revolver and FT LOC balances were outstanding.

LegacyTexas Bank

3 unchanged sentences

Also, on March 19, 2020, ViaNova received notice from LegacyTexas Bank that the Bank had suspended funding all “Alternative” loans for all of their clients, including the RTLs that are the subject of the LegacyTexas Credit Facility with LegacyTexas Bank.

Since March 19, 2020 ViaNova has repaid all outstanding indebtedness under the Agreement.

As of March 19, 2020 ViaNova had repaid all outstanding indebtedness under the Agreement.

See note 20 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of the Company’s other debt.

FT Bank Credit Facility

The credit facility with FT Bank has a total borrowing capacity of $25,000.

It is comprised of a revolving credit facility (the “2019 FT Revolver”) which has a total borrowing capacity of $17,500 and a line of credit (the “2018 FT LOC”), which has a total borrowing capacity of $7,500.

Both mature on April 10, 2021.

However, the 2019 FT Revolver does not allow for additional draws after April 10, 2020.

During March 2020, the Company drew the full amount of $17,500 under the 2019 FT Revolver and that amount remains outstanding to date.

If the Company were to repay the $17,500 currently outstanding, it would not be able to re-draw that amount again under the 2019 FT Revolver in the future.

Furthermore, JVB is subject to financial covenants including a minimum excess net capital covenant, a debt to tangible net worth covenant, and a minimum tangible net worth covenant.

The Company was in compliance with all covenants as of all periods presented.

See note 20 to Company’s 2019 audited financial statements included in its annual report on Form 10-K.

See note 26 for discussion of replacement credit agreement entered into in October 2020.

Interest Expense, net

1 unchanged sentence

(Dollars in Thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Junior subordinated notes

2 unchanged sentences

2013 Convertible Notes / 2019 Senior Notes

FT Financial Credit Facility

2018 FT LOC/2019 FT Revolver/Byline Credit Facility

Redeemable Financial Instrument - DGC Trust / CBF

1 unchanged sentence

Redeemable Financial Instrument - ViaNova Capital Group, LLC

Because the LegacyTexas Credit Facility was used to directly finance the purchase of securities and loans, the interest expense incurred on the Legacy Texas Credit Facility is included as a component of net trading revenue.

Stockholders’ Equity

Common Equity :

The following table reflects the activity for the nine months ended September 30, 2020 related to the number of shares of unrestricted Common Stock that the Company had issued.

The following table reflects the activity for the three months ended March 31, 2021 related to the number of shares of unrestricted Common Stock that the Company had issued.

December 31, 2020

2 unchanged sentences

Repurchase and retirement of Common Stock

September 30, 2020

March 31, 2021

Series E Voting Non-Convertible Preferred Stock :

1 unchanged sentence

For every ten shares of Series E Preferred Stock, the holders are entitled to one vote on any such matter.

Cohen, the Company’s chairman, is the sole holder of all 4,983,557 shares of Series E Preferred Stock issued and outstanding as of September 30, 2020 .

Cohen, the Company’s chairman, is the sole holder of all 4,983,557 shares of Series E Preferred Stock issued and outstanding as of March 31, 2021 .

For a more detailed description of these shares see note 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 .

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Each outstanding share of Series F Preferred Stock entitles the holder to one vote for every ten shares of Series F Preferred Stock on each matter submitted to the holders for their vote.

As of December 31, 2019 , there were 22,429,541 shares of Series F Preferred Stock issued and outstanding .

As of March 31, 2021 , there were 22,429,541 shares of Series F Preferred Stock issued and outstanding .

See Non-Controlling Interest/ - Securities Purchase Agreement – Purchase of IMXI shares below.

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Stockholder Rights Plan

On August 3, 2016, the Company adopted a Section 382 Rights Agreement (the “2016 Rights Agreement”) between the Company and Computershare, Inc.

The Company’s board of directors adopted the 2016 Rights Agreement in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its net operating loss and net capital loss carryforwards to reduce potential future federal income tax obligations.

This 2016 Rights Agreement expired in accordance with its terms on December 31, 2019 .

On March 10, 2020, the Company entered into a new Section 382 Rights Agreement (the “Rights Agreement”) with Computershare Inc., as rights agent (the “Rights Agent”).

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to surrender units to the Operating LLC when certain restricted shares are forfeited by the employee or repurchased by the Company.

During the nine months ended September 30, 2020 , Cohen & Company Inc.

During the three months ended March 31, 2021 , Cohen & Company Inc.

received and surrendered units of the Operating LLC.

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Units surrendered from retirement of Common Stock

The Company recognized a net decrease in additional paid in capital of $417 and a net increase in AOCI of $25 with an offsetting increase in non-controlling interest of $392 in connection with the acquisition and surrender of additional units of the Operating LLC.

The Company recognized a net increase in additional paid in capital of $926 and a net increase in AOCI of $4 with an offsetting decrease in non-controlling interest of $930 in connection with the acquisition and surrender of additional units of the Operating LLC.

The following schedule presents the effects of changes in Cohen & Company Inc.’s ownership interest in the Operating LLC on the equity attributable to Cohen & Company Inc.

for the nine months ended September 30, 2020 and 2019 .

Nine Months Ended

September 30, 2020

September 30, 2019

for the three months ended March 31, 2021 and 2020 .

Three Months Ended

March 31, 2021

March 31, 2020

Net income / (loss) attributable to Cohen & Company Inc.

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Repurchases of Shares and Retirement of Treasury Stock

On August 31, 2020 and March 19, 2018, the Company entered into letter agreements (the “2020 Letter Agreement” and the “2018 Letter Agreement,” respectively and, together, the "10b5-1 Plan").

The 2020 Letter Agreement was entered into with Piper Sandler & Co.

On December 21, 2020, August 31, 2020 and March 19, 2018, the Company entered into letter agreements (the “December 2020 Letter Agreement”, the "August 2020 Letter Agreement" and the “2018 Letter Agreement,” respectively and, together, the "10b5-1 Plan").

The December 2020 Letter Agreement and the August 2020 Letter Agreement were entered into with Piper Sandler & Co.

and the 2018 Letter Agreement was entered into with Sandler O'Neill & Partners, L.P.

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(the “Agent”)).

The 2020 Letter Agreement is in effect from August 31, 2020 until August 31, 2021.

The agreements authorized the Agent to use reasonable efforts to purchase, on the Company’s behalf, up to an aggregate maximum of $2,000 of Common Stock on any day that the NYSE American Stock Exchange was open for business.

The December 2020 Letter Agreement became effective December 23, 2020 and is in effect until December 31, 2021.

The August 2020 Letter Agreement was in effect from August 31, 2020 until August 31, 2021 or until an aggregate purchase price of $2,000 shares had been purchased, which occurred on November 19, 2020.

The 2018 Letter was in effect from March 19, 2018 until March 19, 2019.

Both agreements authorized the Agent to use its commercially reasonable efforts to purchase, on the Company’s behalf, up to an aggregate maximum of $2,000 of Common Stock on any day that the NYSE American Stock Exchange was open for business.

Pursuant to the 10b5-1 Plan, purchases of Common Stock may be made in public and private transactions and must comply with Rule 10b-18 under the Exchange Act.

The 10b5-1 Plan was designed to comply with Rule 10b5-1 under the Exchange Act.

During the three and nine months ended September 30, 2020 , the Company repurchased 42,600 shares in the open market pursuant to the 10b5-1 Plan for a total purchase price of $746.

During the three and nine months ended September 30, 2019 , the Company repurchased 0 and 7,890 shares, respectively, in the open market pursuant to the 10b5-1 Plan for a total purchase price of $0 and $65, respectively.

All of the repurchases noted above were completed using cash on hand.

During the three months ended March 31, 2021 , the Company repurchased 38,647 shares in the open market pursuant to the 10b5-1 Plan for a total purchase price of $662.

All of the purchases were completed using cash on hand.

During the three months ended March 31, 2020 , no shares were repurchased by the Company.

Equity Distribution Agreement

On December 1, 2020, the Company entered into an Equity Distribution Agreement (the “Equity Agreement”) with Northland Securities, Inc.

(trade name Northland Capital Markets), as sales agent (the “Sales Agent”), relating to the issuance and sale from time to time by the Company (the “ATM Program”), through the Sales Agent, of shares of the Company's Common Stock, having an aggregate offering price of up to $75,000 (collectively the “Shares”).

Sales of the Shares, if any, under the Equity Agreement will be made in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act as agreed with the Sales Agent.

In accordance with the applicable rules of the Securities and Exchange Commission (the “SEC”), the Company was permitted to sell an aggregate of up to $9,318 in Shares under the Equity Agreement, which represented one-third of the value of the Common Stock held by non-affiliates as of March 5, 2021.

The Equity Agreement includes customary representations, warranties and covenants by the Company and customary obligations of the parties and termination provisions.

The Company has agreed to indemnify the Sales Agent against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Sales Agent may be required to make with respect to any of those liabilities.

The Company will pay the Sales Agent for sales of its common stock a commission of 2.5% of the gross offering proceeds of the Shares sold through the Sales Agent pursuant to the Equity Agreement.

The offering of the Common Stock pursuant to the Equity Agreement will terminate upon the sale of all of the Shares pursuant to the Equity Agreement, unless sooner terminated in accordance with the terms and conditions of the Equity Agreement.

As of March 31, 2021 , no shares had been sold under the Equity Agreement.

Non-Controlling Interest

Securities Purchase Agreement – Purchase of IMXI shares

On December 30, 2019 (the “SPA Effective Date”), the Company entered into the SPA, pursuant to which Daniel G.

Cohen and the DGC Trust purchased (i) an aggregate of 22,429,541 newly issued units of membership interests in the Operating LLC (collectively, the “LLC Units”);

and (ii) 22,429,541 newly issued, Series F Preferred Stock.

In consideration for the issuance of the LLC Units and Series F Preferred Stock, Daniel G.

Cohen transferred to the Operating LLC 370,881 shares of common stock, par value $0.00001 per share (“IMXI Common Stock”), of International Money Express, Inc.

(formerly FinTech Acquisition Corp.

II) a Delaware corporation (“IMXI”), and the DGC Trust transferred to the Operating LLC an aggregate of 291,480 shares of IMXI common stock.

The aggregate number of IMXI shares transferred to the Operating LLC was 662,361, of which (a) 264,021 shares are subject to certain restrictions on transfer until the closing price per share of IMXI Common Stock (as reported by The Nasdaq Capital Market ("Nasdaq")) exceeds $15.00 for any 20 trading days within a consecutive 30 trading day period or immediately upon certain change of control events involving IMXI, as set forth in the letter agreement, dated January 19, 2017 (the “Letter Agreement”), by and among IMXI, Daniel G.

Cohen, the DGC Trust and the other parties named therein, and (b) 264,023 shares are subject to certain restrictions on transfer until the closing price per share of IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $17.00 for any 20 trading days within a consecutive 30 trading day period or immediately upon certain change of control events involving IMXI, as set forth in the Letter Agreement.

The Company engaged a third party valuation firm to value the 662,361 shares of IMXI common stock transferred to the Operating LLC.

The shares transferred by Daniel Cohen were valued at $4,351 and the shares transferred by the DGC Trust were valued at $3,428.

The Company accounted for this transaction by recording an increase of $7,779 in other investments, at fair value and a corresponding increase in the non-controlling interest.

The IMXI Common Stock is listed on the Nasdaq under the trading symbol “IMXI.” Prior to the merger of IMXI with and into a special purpose acquisition company in a transaction that resulted in the listing of IMXI on Nasdaq, Mr.

Cohen served as the chief executive officer and member of the board of directors of the special purpose acquisition company.

The SPA contains customary representations and warranties on the part of each of the Operating LLC, the Company, Daniel G.

Cohen, and the DGC Trust.

The Operating LLC, the Company, Daniel G.

Cohen, and the DGC Trust provide customary indemnifications thereunder.

Pursuant to the Amended and Restated Limited Liability Company Agreement of the Operating LLC, dated as of December 16, 2009, as amended (“LLC Agreement”), a holder of units of membership interests in the Operating Agreement, including the LLC Units, may cause the Operating LLC to redeem (each, a “Unit Redemption”) such units at any time for, at the Company’s option, (A) cash or (B) one share of Common Stock for every ten units of membership interests in the Operating LLC.

However, pursuant to the SPA, Daniel G.

Cohen and the DGC Trust agreed that, until the Company’s stockholders approve the Stockholder Proposal (as defined below), they will not cause a Unit Redemption with respect to any portion of the LLC Units if such Unit Redemption would result in the Company issuing a number of shares of Common Stock that, when aggregated with any shares of Common Stock previously issued in connection with any Unit Redemption of the LLC Units equals or exceeds 19.99% of the outstanding Common Stock as of the SPA Effective Date.

Pursuant to the SPA, Daniel G.

Cohen and the DGC Trust also agreed to not cause a Unit Redemption with respect to any portion of the Cohen LLC Units if the Company’s board of directors determines that the satisfaction of such Unit Redemption by the Company with shares of Common Stock would jeopardize or endanger the availability to the Company of its net operating loss and net capital loss carryforwards and certain other tax benefits under Section 382 of the Internal Revenue Code of 1986, as amended.

Pursuant to the SPA, at the 2020 annual meeting of the Company’s stockholders, the Company agreed to cause its stockholders to vote on proposals (collectively, the “Stockholder Proposal”) regarding the issuance of all shares of Common Stock issuable in connection with a redemption of the LLC Units for purposes of Section 713 of the NYSE American’s Company Guide.

Further, the Company’s board of directors must recommend to the Company’s stockholders that such stockholders approve the Stockholder Proposal and may not modify or withdraw such resolution.

The Stockholder Proposal was approved at the Company's 2020 annual meeting.

In addition, effective as of the SPA Effective Date, if the Company owns a number of units of membership interests in the Operating LLC representing less than a majority of the votes entitled to be cast at any meeting or any other circumstances upon which a vote, agreement, consent (including unanimous written consents) or other approval is sought from the holders of units of membership interests in the Operating LLC (each, a “Meeting”), then for so long as the Company owns a number of units of membership interests in the Operating LLC representing less than a majority of the votes entitled to be cast at any Meeting, Daniel G.

Cohen and the DGC Trust have agreed to grant a voting proxy to the Company pursuant to which the Company may vote at any Meeting the number of units of membership interests in the Operating LLC owned by Daniel G.

Cohen and the DGC Trust necessary to give the Company a majority of the votes at such Meeting.

On September 25, 2020, the SPA was amended to provide that the voting proxy shall be revoked in the event that Daniel G.

Cohen and/or his affiliates cease to beneficially own a majority of the voting securities of the Company.

ROLLFORWARD OF NON-CONTROLLING INTERESTS

(Dollars in Thousands)

Operating LLC

Insurance SPAC Sponsor Entities

Insurance SPAC II Sponsor Entities

Insurance SPAC III Sponsor Entities

SPAC Sponsor Series LLC

December 31, 2020

Non-controlling interest share of income / (loss)

Acquisition / (surrender) of additional units of consolidated subsidiary

Equity-based compensation

Shares withheld for employee taxes

Dividends/distributions

Contributions

Distributions

March 31, 2021

NET CAPITAL REQUIREMENTS

JVB is subject to the net capital provision of Rule 15c3-1 under the Exchange Act, which requires the maintenance of minimum net capital, as defined therein.

As of September 30, 2020 , JVB’s adjusted net capital was $71,092 which exceeded the minimum requirements by $70,842

As of March 31, 2021 , JVB's minimum required net capital was $250, and actual net capital was $72,342, which exceeded the minimum requirements by $72,092.

CCFEL, a subsidiary of the Company regulated by the Central Bank of Ireland (“CBI”), is subject to certain regulatory capital requirements in accordance with the Capital Requirements Regulation 575/2013 and applicable CBI requirements.

As of September 30, 2020 , the total minimum required net capital was $ 675 , and actual net capital in CCFEL was $ 1,156 , which exceeded the minimum requirements by $ 481 and was in compliance with the net liquid capital provisions.

CCFL, a subsidiary of the Company and an entity regulated by the FCA, is subject to the net liquid capital provision of the Financial Services and Markets Act 2000, GENPRU 2.140R to 2.1.57R, relating to financial prudence with regards to the European Investment Services Directive and the European Capital Adequacy Directive, which requires the maintenance of minimum liquid capital, as defined therein.

As of September 30, 2020 , the total minimum required net liquid capital was $ 178 , and net liquid capital in CCFL was $ 621 , which exceeded the minimum requirements by $ 443 and was in compliance with the net liquid capital provisions.

As of March 31, 2021 , the total minimum required net capital was $ 684 , and actual net capital in CCFEL was $ 1,975 , which exceeded the minimum requirements by $ 1,291 and CCFEL was in compliance with the net liquid capital provisions.

EARNINGS / (LOSS) PER COMMON SHARE

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(Dollars in Thousands, except share or per share information)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income / (loss) attributable to Cohen & Company Inc.

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Potentially diluted securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

Three Months Ended September 30, 2020

Nine Months Ended September 30,

Three Months Ended March 31,

2017 Convertible Note

2013 Convertible Notes

Restricted Common Stock

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On August 21, 2020, JVB and the other defendants filed a joint reply brief.

Oral argument on the appeal has been scheduled for November 13, 2020.

While the appeal is pending, discovery in the underlying case is proceeding.

The Company intends to defend the action vigorously.

In addition to the matter set forth above, the Company is a party to various routine legal proceedings and regulatory inquiries arising out of the ordinary course of the Company’s business.

Management believes that the results of these routine legal proceedings and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows.

On December 10, 2020, the Appellate Division of the Supreme Court, First Department reversed the Court’s decision and granted the defendants motion to dismiss.

On January 11, 2021, Visium filed with the Court of Appeals of New York State a Motion for Leave to Appeal the decision of the Appellate Division.

On January 22, 2021, the defendants filed a joint Opposition to Motion for Leave to Appeal.

On May 4, 2021, the Court of Appeals denied the Motion for Leave to Appeal.

In addition to the matters set forth above, the Company is a party to various routine legal proceedings, claims, and regulatory inquiries arising out of the ordinary course of the Company’s business.

Management believes that the results of these routine legal proceedings, claims, and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows.

However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows.

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Statement of Operations Information

Nine Months Ended September 30, 2020

Asset management

New issue and advisory

Principal transactions and other income

Total revenues

Salaries/Wages

Other Operating Expense

Impairment of goodwill

Total operating expenses

Operating income (loss)

Interest income (expense)

Income (loss) from equity method affiliates

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) attributable to the non-controlling interest

Net income (loss) attributable to Cohen & Company Inc.

Other statement of operations data

Depreciation and amortization (included in total operating expense)

SEGMENT INFORMATION

Statement of Operations Information

Nine Months Ended September 30, 2019

Asset management

New issue and advisory

Principal transactions and other income

Total revenues

Salaries/Wages

Other Operating Expense

Impairment of goodwill

Total operating expenses

Operating income (loss)

Interest (expense) income

Income (loss) from equity method affiliates

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) attributable to the non-controlling interest

Net income (loss) attributable to Cohen & Company Inc.

Other statement of operations data

Depreciation and amortization (included in total operating expense)

Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments).

Some of the items not allocated include:

(1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment;

(2) interest expense on debt;

and (3) income taxes.

Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the chief operating decision maker.

SEGMENT INFORMATION

Statement of Operations Information

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Asset management

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Statement of Operations Information

Three Months Ended September 30, 2019

Three Months Ended March 31, 2020

Asset management

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BALANCE SHEET DATA

As of September 30, 2020

As of March 31, 2021

(Dollars in Thousands)

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(Dollars in Thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Total Revenues:

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SUPPLEMENTAL CASH FLOW DISCLOSURE

Interest paid by the Company on its debt and redeemable financial instruments was $ 7,225 and $ 5,637 for the nine months ended September 30, 2020 and 2019 , respectively.

The Company paid income taxes of $ 195 and $ 30 for the nine months ended September 30, 2020 and 2019 , respectively.

The Company received income tax refunds of $ 12 and $ 48 for nine months ended September 30, 2020 and 2019 .

Interest paid by the Company on its debt and redeemable financial instruments was $1,585 and $2,060 for the three months ended March 31, 2021 and 2020 , respectively.

The Company paid income taxes of $102 and $4 for the three months ended March 31, 2021 and 2020 , respectively.

The Company received no income tax refunds for three months ended March 31, 2021 and 2020 .

respectively.

For the nine months ended September 30, 2020 , the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

For the three months ended March 31, 2021 , the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

The Company net surrendered units of membership interests in the Operating LLC.

The Company recognized a net decrease in additional paid-in capital of $ 417 , a net increase of $ 25 in AOCI, and an increase of $ 392 in non-controlling interest.

The investment return related to certain of the Company’s redeemable financial instruments was negative within certain quarterly periods.

According to the terms of those agreements, the redemption value of the instrument is reduced in those cases.

Accordingly, the Company recorded interest income and reduced the balance of redeemable financial instruments by $105.

In conjunction with the sale of ViaNova on August 22, 2020, the Company transferred one RTL with a fair value of $2,243 to JVB.

As a result, the Company recorded an increase in other investments at fair value and a corresponding decrease in other assets.

See notes 4 and 7.

For the nine months ended September 30, 2019 , the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

The Company recognized a net increase in additional paid-in capital of $926 , a net increase of $4 in AOCI, and an decrease of $930 in non-controlling interest.

The Company recorded a decrease of $2,103 in due from related party, a corresponding increase of $701 in other investments at fair value, and a corresponding decrease of $1,402 to non-controlling interest, all as a result of a $2,103 in-kind distribution of incremental LP interests, from the 2020 performance fee earned, to all the members of Vellar GP, including the Company.

The Company recorded a decrease of $3,958 in equity method affiliates and a $279 decrease in other investments, at fair value resulting from the completion of the Insurance SPAC II Merger.

The Company recorded a decrease in other investments at fair value of $20,119 resulting from an in-kind distribution relating to the Insurance SPAC Merger.

For the three months ended March 31, 2020 , the Company had the following significant non-cash transactions that are not reflected on the statement of cash flows:

The Company net surrendered units of membership interests in the Operating LLC.

The Company recognized a net increase in additional paid-in capital of $133, a net decrease of $14 in AOCI, and a decrease of $119 in non-controlling interest.

The Company recognized a net decrease in additional paid-in capital of $123, a net increase of $8 in AOCI, and a increase of $115 in non-controlling interest.

The investment return related to certain of the Company’s redeemable financial instruments was negative within certain quarterly periods.

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Accordingly, the Company recorded interest income and reduced the balance of redeemable financial instruments by $76.

On January 1, 2019, the Company recorded a right of use asset of $8,416 and a right of use liability of $8,860, a reduction in retained earnings from cumulative effect of adoption of $20, an increase in other receivables of $18, and a reduction in other liabilities of $406, resulting from the adoption of ASU 2016-02.

As part of the Company's matched book repo operations, the Company enters into reverse repos with counterparties whereby it lends money and receives securities as collateral.

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The Company is generally required to return any cash collateral the same business day that it receives substitute securities.

As of September 30, 2020 and December 31, 2019 , the Company had counterparty cash collateral of $125,294 and $9,524, respectively, which was included in both its cash and cash equivalents and other liability balances, respectively.

Accordingly, included in the Company's cash provided by operating activities of $ 115,288 during the nine months ended September 30, 2020 is an inflow of $115,770 as a result of this increase in cash collateral held.

The Company has no legal or contractual obligation to segregate this cash collateral held and therefore it is included as a component of its cash and cash equivalents in the Company's consolidated balance sheets.

However, it is not available for use in the Company's general operations as the Company must stand ready at all times to return the collateral held immediately once the reverse repo counterparty provides substitute liquid securities or the repo matures.

The following table shows the impact of changes in these collateral deposits had on our cash flows in each period presented:

For the Three Months Ended March 31,

Collateral deposit end of period

Collateral deposit beginning of period

Impact to cash flow from operations

RELATED PARTY TRANSACTIONS

The Company has identified the following related party transactions for the nine months ended September 30, 2020 and 2019 .

The Company has identified the following related party transactions for the three months ended March 31, 2021 and 2020 .

The transactions are listed by related party and, unless otherwise noted in the text of the description, the amounts are disclosed in the tables at the end of this section.

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the gain or loss realized, or commission earned) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

From time to time, the Company will enter into repos with TBBK as its counterparty.

As of September 30, 2020 and December 31, 2019 , the Company had no repos with TBBK.

For the three and nine months ended September 30, 2020 , and 2019 , the Company incurred no interest expense related to repos with TBBK as its counterparty.

From time to time, the Company will enter into repo agreements with TBBK as its counterparty.

As of March 31, 2021 and December 31, 2020 , the Company had no repo agreements with TBBK as counterparty.

For the three months ended March 31, 2021 , and 2020 , the Company incurred no interest expense related to repos with TBBK as its counterparty.

Cohen/Cohen Bros.

Financial, LLC (“CBF”)/ EBC 2013 Family Trust (“EBC”)

On December 30, 2019, Daniel G.

Cohen contributed 370,881 shares of IMXI common stock to the Operating LLC.

In exchange for these shares, the Operating LLC issued 12,549,273 newly issued units of membership interests in the Operating LLC and 12,549,273 shares of newly issued Series F Preferred Stock.

The Company included the value of the IMXI common stock in other investments, at fair value.

In connection with the IMXI share contribution, the Company paid $6 for legal fees on behalf of Daniel G.

Cohen, which is not included in the table at the end of this section.

In December 2019, the Company acquired a 45% interest in CK Capital Partners B.V.

(“CK Capital”).

The Company purchased this interest for $18 (of which $17 was from an entity controlled by Daniel G.

In addition, the Company also acquired a 10% interest in Amersfoot Office Investment I Cooperatief U.A.

(“AOI”), a real estate holding company, for $1 from entities controlled by Daniel G.

CK Capital is a private company incorporated in the Netherlands and provides asset and investment advisory services relating to real estate holdings.

CBF has been identified as a related party because (i) CBF is a non-controlling interest holder of the Company and (ii) CBF is wholly owned by Daniel G.

1 unchanged sentence

The Company incurred interest expense on this instrument, which is disclosed as part of interest expense incurred in the table at the end of this section.

In October 2020 and 2019, payments of $2,500 and $1,500, respectively, were made by the Company to CBF, which reduced the redeemable financial instrument balance to $4,000.

In March 2021 and October 2020, payments of $4,000 and $2,500, respectively, were made by the Company to CBF, which fully extinguished the redeemable financial instrument balance.

See notes 16 and 17.

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The Edward E.

On August 28, 2015, $4,386 in principal amount of the 2013 Convertible Notes originally issued to Mead Park Capital in September 2013 was purchased by the Edward E.

Cohen IRA of which Edward E.

On August 28, 2015, $4,386 in principal amount of the 2013 Convertible Notes originally issued to Mead Park Capital in September 2013 was purchased by Pensco Trust Company, Custodian fbo Edward E.

Cohen, of which Edward E.

Cohen is the benefactor.

2 unchanged sentences

See note 17 for a description of amendments related to the 2019 Senior Notes and 2013 Convertible Notes.

The Company incurred interest expense on this debt, which is disclosed as part of interest expense incurred in the tables at the end of this section.

The Company incurred interest expense on this debt, which is disclosed as part of interest expense incurred in the table at the end of this section.

$4,386 of the 2019 Senior Notes were fully repaid on February 3, 2020.

11 unchanged sentences

The Company considers DGC Trust a related party because it was established by Daniel G.

On December 30, 2019, the DGC Trust contributed 291,480 shares of IMXI common stock with a fair value of $3,428 to the Operating LLC.

In exchange for these shares, the Operating LLC issued to the DGC Trust 9,880,268 newly issued units of membership interests in the Operating LLC and the Company issued to the DGC Trust 9,880,268 shares of newly issued Series F Preferred Stock.

The Company included the value of the shares of IMXI common stock in other investments, at fair value.

In March 2017, the 2017 Convertible Note was issued to the DGC Trust.

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FinTech Masala, LLC

FinTech Masala, LLC is a related party because Betsy Cohen, the mother of Daniel G.

FinTech Masala, LLC (formerly Bezuco Capital, LLC) is a related party because Betsy Cohen, the mother of Daniel G.

Cohen, is a member of FinTech Masala, LLC.

Cohen is also a member of Fintech Masala, LLC.

The Company has engaged Betsy Cohen on behalf of FinTech Masala, LLC as a consultant to provide certain services related to the Insurance SPAC.

The Company agreed to pay a consultant fee of $1 per month, which commenced July 1, 2019 and shall continue until the earlier of (i) the date that is thirty days following the closing of the Insurance SPAC’s initial Business Combination and (ii) the date on which the Company or Betsy Cohen terminates the consulting agreement.

Betsy Cohen made a $2 investment in the Sponsor Entities in March 2019, which is included as a component of non-controlling interest in the consolidated balance sheet.

The Company engaged Betsy Cohen on behalf of FinTech Masala, LLC as a consultant to provide certain services related to the Insurance SPAC.

The Company agreed to pay a consultant fee of $1 per month, which commenced July 1, 2019 and continued through the Insurance SPAC Merger.

Betsy Cohen made a $2 investment in the Insurance SPAC Sponsor Entities in March 2019 which is included as a component of non-controlling interest in the consolidated balance sheet at December 31, 2020.

The expense incurred by the Company for the consulting services provided by FinTech Masala, LLC are included within professional fees and operating expense in the consolidated income statement and are disclosed in the table below.

The Company has a sublease agreement for certain office space with FinTech Masala, LLC (formerly Bezuco Capital, LLC).

The Company received payments under this agreement.

The payments are recorded as a reduction in rent expenses.

This sublease agreement commenced on August 1, 2018.

It has an annual term that auto-renews if not cancelled earlier.

It can be cancelled by either party upon 90 days’ notice.

The income earned on this sublease is included as a reduction in rent expense in the consolidated statements of income and are disclosed in the tables below.

The Company engaged Betsy Cohen on behalf of FinTech Masala, LLC as a consultant to provide certain services related to the Insurance SPAC II.

The Company agreed to pay a consultant fee of $1 per month, which commenced on October 1, 2020, and continued through February 2021.

Betsy Cohen made a $1 investment in the Insurance SPAC II Sponsor Entities which is included as a component of non-controlling interest in the consolidated balance sheet at December 31, 2020.

The expense incurred by the Company for the consulting services provided by FinTech Masala, LLC is included within professional fees and operating expense in the consolidated income statement and are disclosed in the table below.

The Company engaged Betsy Cohen on behalf of FinTech Masala, LLC as a consultant to provide certain services related to the Insurance SPAC III.

The Company agreed to pay a consultant fee of $1 per month, which commenced on December 1, 2020, and continues through (i) the date that is thirty days following the closing of the Insurance SPAC III ’s Initial Business Combination and (ii) the date on which the Company or Betsy Cohen terminates the consulting agreement.

Betsy Cohen made a $1 investment in the Insurance SPAC III Sponsor Entities which is included as a component of non-controlling interest in the consolidated balance sheets.

Investment Vehicle and Other

EuroDekania was considered a related party because it is an equity method investment of the Company.

The Company had an investment in and a management contract with EuroDekania.

Income earned or loss incurred on the investment is included as part of principal transactions and other income in the tables below.

Revenue earned on the management contract is included as part of asset management in the tables below.

EuroDekania liquidated in 2019.

Stoa USA, Inc.

is an equity method investment because Daniel Cohen is a director.

In March 2021, the Operating LLC made a $67k investment in Stoa USA, Inc.

This amount is not included in the table below.

CK Capital and AOI

CK Capital and AOI are related parties as they are equity method investments of the Company.

In December 2019, the Company acquired a 45% interest in CK Capital.

The Company purchased this interest for $18 (of which $17 was paid to an entity controlled by Daniel G.

In addition, in December 2019, the Company also acquired a 10% interest in AOI, a real estate holding company, for $1 from entities controlled by Daniel G.

Income earned, or loss incurred by the Company on the equity method investments in CK Capital and AOI is included in the tables below.

In accordance with the CK Capital shareholders agreement, the Company may receive fees for consulting services provided by the Company to CK Capital.

Any fees earned for such consulting services are included in principal transactions and other income in the table below.

Insurance SPAC

Prior to October 13, 2020, the date of the Insurance SPAC Merger, the Insurance SPAC was considered a related party as it was an equity method investment of the Company.

The Operating LLC was the manager of the Insurance SPAC Sponsor Entities and the Company consolidated the Insurance SPAC Sponsor Entities.

Prior to the Insurance SPAC Merger, the Company owned 26.5% of the equity in the Insurance SPAC.

Income earned or losses incurred on equity method investment in the Insurance SPAC is included in the tables below.

The Operating LLC and the Insurance SPAC entered into an administrative services agreement, dated March 19, 2019, pursuant to which the Operating LLC and the Insurance SPAC agreed that, commencing on the date that the Insurance SPAC’s securities were first listed on the NASDAQ Capital Market through the earlier of the Insurance SPAC’s consummation of a business combination and its liquidation, the Insurance SPAC would pay the Operating LLC $10 per month for certain office space, utilities, secretarial support, and administrative services.

Revenue earned by the Company from such administrative services agreement is included as part of principal transactions and other income in the tables below.

The Company also agreed to lend the Insurance SPAC $750 for operating and acquisition related expenses, of which $650 was actually borrowed by the Insurance SPAC from the Company.

On October 13, 2020 in connection with the Insurance SPAC Merger, the Insurance SPAC made a payment of $650 to the Company extinguishing this loan balance in full.

Insurance SPAC II

Prior to February 9, 2021, the date of the Insurance SPAC II Merger, Insurance SPAC II was considered a related party as it was an equity method investment of the Company.

The Operating LLC, was the manager of the Insurance SPAC II Sponsor Entities and the Company consolidated the Insurance SPAC II Sponsor Entities.

Prior to the Insurance SPAC II Merger, the Company owned 46.1% of the equity in Insurance SPAC II.

Income earned, or loss incurred on the equity method investment in Insurance SPAC II is included in the table below.

The Operating LLC and Insurance SPAC II entered into an administrative services agreement, dated September 2, 2020, pursuant to which the Operating LLC and Insurance SPAC II agreed that, commencing on the date that Insurance SPAC II’s securities were first listed on the NASDAQ Capital Market through the earlier of Insurance SPAC II’s consummation of a business combination and its liquidation, Insurance SPAC II would pay the Operating LLC $20 per month for certain office space, utilities, secretarial support, and administrative services.

Revenue earned by the Company from such administrative services agreement is included as part of principal transactions and other income in the tables below.

The Company also agreed to lend Insurance SPAC up to $750 for operating and acquisition related expenses;

no amounts were borrowed from the Company and the lending agreement is no longer in place effective with the Insurance SPAC II Merger.

Insurance SPAC III

Insurance SPAC III is a related party as it is an equity method investment of the Company.

The Operating LLC is the manager of the Insurance SPAC III Sponsor Entities and the Company consolidates the Insurance SPAC III Sponsor Entities.

As of March 31, 2020, the non-controlling interest invested $5,775 in Insurance SPAC III Sponsor Entities and owns 49.5% of the equity in Insurance SPAC III Sponsor Entities.

Income earned, or loss incurred on the equity method investment in Insurance SPAC III is included in the table below.

The Operating LLC and Insurance SPAC III entered into an administrative services agreement, dated December 17, 2020, pursuant to which the Operating LLC and Insurance SPAC III agreed that, commencing on the date that Insurance SPAC III’s securities were first listed on the NASDAQ Capital Market through the earlier of Insurance SPAC III’s consummation of a business combination and its liquidation, Insurance SPAC III would pay the Operating LLC $20 per month for certain office space, utilities, and shared personnel support as may be requested by Insurance SPAC III.

Revenue earned by the Company from the administrative services agreement is included as part of principal transactions and other income in the tables below.

The Company also agreed to lend Insurance SPAC III $810 for operating and acquisition related expenses as a sponsor of Insurance SPAC III;

no amounts have been borrowed as of March 31, 2021.

The SPAC Fund is considered a related party because it is an equity method investment of the Company.

2 unchanged sentences

Revenue earned on the management contract is included as part of asset management in the tables below.

As of September 30, 2020 , the Company owned 1.5% of the equity of the SPAC Fund.

As of March 31, 2021 , the Company owned 1.9% of the equity of the SPAC Fund.

Insurance JV is considered a related party because it is an equity method investment of the Company.

2 unchanged sentences

Income earned or loss incurred on the investment is included as part of principal transactions and other income in the tables below.

Revenue earned on the management contract is included as part of asset management and are shown in the tables below.

As of September 30, 2020 , the Company owned 4.66% of the equity of the U.S.

Revenue earned on the management contract is included as part of asset management and is shown in the tables below.

As of March 31, 2021 , the Company owned 4.85% of the equity of the U.S.

Insurance JV.

Insurance SPAC

The Insurance SPAC is a related party as it is an equity method investment of the Company.

The Operating LLC, is the manager of the Sponsor entities and the Company consolidates the Sponsor Entities..

As of September 30, 2020 , the Sponsor Entities owned 26.5% of the equity in the Insurance SPAC.

Income earned, or loss incurred on equity method investments is included in the tables below.

The Operating LLC and the Insurance SPAC entered into an administrative services agreement, dated March 19, 2019, pursuant to which the Operating LLC and the Insurance SPAC agreed that, commencing on the date that the Insurance SPAC’s securities were first listed on the Nasdaq Capital Market through the earlier of the Insurance SPAC’s consummation of a Business Combination and its liquidation, the Insurance SPAC will pay the Operating LLC $10 per month for certain office space, utilities, secretarial support, and administrative services.

Revenue earned by the Company from the administrative services agreement is included as part of principal transactions and other income in the tables below.

The Company agreed to lend the Insurance SPAC $750 for operating and acquisition related expenses.

As of September 30, 2020 , $650 had been lent by the Company to the Insurance SPAC which amount is included in due from related parties in the consolidated balance sheets.

On October 13, 2020 in connection with the Insurance SPAC Merger, the Insurance SPAC made a payment of $650 to the Company extinguishing the loan balance in full.

See notes 4, 11, and 25.

Insurance SPAC II

The Insurance SPAC II is a related party as it is an equity method investment of the Company.

The Operating LLC, is the manager of the Insurance SPAC II Sponsor entities and the Company consolidates the Insurance SPAC II Sponsor Entities.

As of September 30, 2020 , the non-controlling interest invested $4,550 in Insurance SPAC II Sponsor Entities and owns 45.5% of the equity in Insurance SPAC II Sponsor Entities.

Income earned, or loss incurred on the equity method investment is included in the tables below.

The Operating LLC and the Insurance SPAC II entered into an administrative services agreement, dated September 2, 2020, pursuant to which the Operating LLC and the Insurance SPAC agreed that, commencing on the date that the Insurance SPAC II’s securities were first listed on the Nasdaq Capital Market through the earlier of the Insurance SPAC II’s consummation of a Business Combination and its liquidation, the Insurance SPAC II will pay the Operating LLC $20 per month for certain office space, utilities, secretarial support, and administrative services.

Revenue earned by the Company from the administrative services agreement is included as part of principal transactions and other income in the tables below.

The Company agreed to lend the Insurance SPAC $750 for operating and acquisition related expenses.

As of September 30, 2020 , no amounts have been lent under this facility.

See notes 4 and 11.

SPAC Series Funds

The SPAC Series Funds are considered related parties because they are equity method investments of the Company.

From time to time, the Company many also invest directly in the same sponsor entity that a SPAC Series Fund invests in.

As of March 31, 2021, the Company owned 0.61% in SPAC Series Funds.

Income earned or loss incurred on the equity method investment in the SPAC Series Funds is included in the tables below.

Sponsor Entities of Other SPACs

1 unchanged sentence

The sponsor may be organized as a single legal entity or multiple entities under common control.

In either case, the entity or entities is referred in this section as the sponsor of the SPAC.

In either case, the entity or entities is referred to in this section as the sponsor of the SPAC.

The Company has had the following transactions with various sponsors of SPACs that are related parties and which the Company does not consolidate.

Fintech Acquisition Corp.

III ("FTAC III") was a SPAC.

The sponsor of FTAC III ("FTAC III Sponsor") is a related party because Daniel G.

Cohen is the manager of the FTAC III Sponsor.

In December 2018, the Operating LLC entered into an agreement with FTAC III Sponsor whereby the Company provided certain accounting and administrative services and in exchange the Company received 23,300 founders shares of FTAC III.

The revenue earned on this arrangement is disclosed in the tables below.

Fintech Acquisition Corp.

IV ("FTAC IV") is a SPAC.

The sponsor of Fintech Acquisition Corp.

II ("FTAC II Sponsor") is a related party because Daniel G.

Cohen is the manager of the entity.

In July 2018, the Operating LLC acquired publicly traded shares of FinTech Acquisition Corp.

II from an unrelated third party for a total purchase price of $2,513.

In connection with this purchase, the Operating LLC agreed with FinTech II Sponsor to not redeem these shares in advance of the merger between FinTech Acquisition Corp.

II and Intermex Holdings II, LLC.

In exchange for this agreement to not redeem these shares prior to the merger, as well as the outlay of capital to purchase the publicly traded shares of FinTech Acquisition Corp.

II, the Operating LLC received unregistered, restricted shares of common stock of FinTech Acquisition Corp.

II from FTAC II Sponsor.

In connection with the merger, FinTech Acquisition Corp.

II changed its name to International Money Express, Inc.

IV ("FTAC IV Sponsor") is a related party as it is an equity method investment of the Company.

The Company made a sponsor investment in FTAC IV Sponsor, receiving an initial allocation of 130,000 founders shares of Fintech Acquisition IV stock for $1.

In addition, on September 29, 2020, the Operating LLC entered into a letter agreement with FTAC IV Sponsor whereby the Operating LLC will provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC IV Sponsor for a period not longer than 24 months.

As consideration for these services, the Company received an allocation of an additional 30,000 founders shares of Fintech Acquisition IV stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services.

The revenue earned from these services is recorded in the table below.

Fintech Acquisition Corp.

V ("FTAC V") is a SPAC.

The sponsor of Fintech Acquisition Corp.

III ("FTAC III Sponsor") is considered a related party because Daniel G.

Cohen is the manager of the entity In December 2018, the Operating LLC entered into an agreement with FinTech Acquisition Corp.

III whereby the Company will provide certain accounting and administrative services and in exchange the Company received 23,000 founders shares of FTAC III.

The revenue earned on this arrangement is disclosed in the tables below.

The sponsor of Fintech Olympus Acquisition Corp.

V ("FTAC V Sponsor") is a related party as it is an equity method investment of the Company.

The Company made a sponsor investment in FTAC V Sponsor, receiving an initial allocation of 140,000 founder shares.

On December 14, 2020, the Operating LLC entered into a letter agreement with FTAC V Sponsor whereby the Operating LLC will provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC V Sponsor for a period not longer than 24 months.

As consideration for these services, the Company received an allocation of 35,000 founders shares of FTAC V stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services.

The revenue earned from these services is recorded in the table below.

FTAC Olympus Acquisition Corp ("FTAC Olympus") is a SPAC.

The sponsor of FTAC Olympus Acquisition Corp.

("FTAC Olympus Sponsor") is a related party as it is an equity method investment of the Company.

The Company made a sponsor investment in FTAC Olympus Sponsor, receiving an initial allocation of 600,000 founders shares of FTAC Olympus stock for $2.

In addition, on September 8, 2020, the Operating LLC entered into a letter agreement with FTAC Olympus whereby the Operating LLC will provide personnel to serve as the Chief Financial Officer as well as other accounting and administrative services to FTAC Olympus for a period not longer than 24 months.

In addition, on September 8, 2020, the Operating LLC entered into a letter agreement with FTAC Olympus Sponsor whereby the Operating LLC will provide personnel to serve as the chief financial officer as well as other accounting and administrative services to FTAC Olympus Sponsor for a period not longer than 24 months.

As consideration for these services, the Company received an allocation of an additional 30,000 founders shares of FTAC Olympus stock to the Operating LLC and recorded an equity method investment of $40 for the valuation of these services.

The revenue earned from these services is recorded in the table below.

CK Capital and AOI

CK Capital and AOI are related parties as they are equity method investments of the Company.

In December 2019, the Company acquired a 45% interest in CK Capital.

The Company purchased this interest for $18 (of which $17 was from an entity controlled by Daniel G.

In addition, the Company also acquired a 10% interest AOI, a real estate holding company, for $1 from entities controlled by Daniel G.

The following tables display the routine transactions recognized in the statements of operations from the identified related parties that are described above.

The following tables display the routine transactions recognized in the consolidated statements of operations from the identified related parties that are described above.

Three Months Ended

Nine Months Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

March 31, 2021

March 31, 2020

Asset management

SPAC Series Funds

Principal transactions and other income

Fintech III Sponsor

FTAC Olympus Sponsor

Insurance SPAC

Insurance SPAC II

Income (loss) from equity method affiliates

Insurance SPAC III

FTAC III Sponsor

FTAC Sponsor IV

FTAC Sponsor V

FTAC Olympus Sponsor

Insurance SPAC

Income (loss) from equity method affiliates

Insurance SPAC II

Insurance SPAC III

SPAC Sponsor Entities

SPAC Series Funds

Operating expense (income)

9 unchanged sentences

The Company matches 50% of employee contributions for all participants not to exceed 3% of their salary.

Contributions made on behalf of the Company were $ 48 and $ 230 for the three and nine months ended September 30, 2020 , respectively and $ 50 and $ 219 for the three and nine months ended September 30, 2019 , respectively.

Contributions made on behalf of the Company were $95 a nd $98 for the three months ended March 31, 2021 and 2020 respectively.

The Company leases office space from Zucker and Moore, LLC.

1 unchanged sentence

The lease agreement expired in June 2020 and was subsequently amended to extend for a period of one year through June 2021.

The Company recorded $24 of rent expense related to this office space for the three months ended September 30, 2020 and 2019 , respectively and $72 of rent expense for the nine months ended September 30, 2020 and 2019 , respectively.

The Company recorded $24 of rent expense related to this office space for the three months ended March 31, 2021 and 2020 , respectively.

DUE FROM / DUE TO RELATED PARTIES

8 unchanged sentences

(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

Employees & other

Insurance SPAC

Employee & other

Due from related parties

SUBSEQUENT EVENTS

New Line of Credit Agreement

On October 28, 2020 (the “Effective Date”), Cohen & Company Inc., a Maryland corporation (the “Company”) entered into a Loan Agreement (the “Loan Agreement”) with Byline Bank, as lender (the “Lender”), by and among the Lender, the Company, as a guarantor, and the Company’s subsidiaries, Cohen & Company, LLC (the “Operating LLC”) and J.V.B.

Financial Group Holdings, LP (“Holdings LP”), as guarantors, and J.V.B.

Financial Group, LLC, as borrower (the “Borrower”), and C&Co PrinceRidge Holdings, LP (“C&Co.”), pursuant to which the Lender agreed to make loans at the Borrower’s request from time to time in the aggregate amount of up to $7.5 million.

In addition, on the Effective Date, the Borrower and the Lender entered into a Revolving Note and Cash Subordination Agreement (the “Revolving Note and Cash Subordination Agreement,” and, together with the Loan Agreement, the “Credit Facility”), pursuant to which, among other things, the Lender agreed to make loans at the Borrower’s request from time to time in the aggregate amount of up to $17.5 million.

Loans (both principal and interest) made by the Lender to the Borrower under the Loan Agreement and Revolving Note and Cash Subordination Agreement are scheduled to mature and become immediately due and payable in full on October 28, 2022.

In addition, loans may be made under the Loan Agreement and the Revolving Note and Cash Subordination Agreement until October 28, 2022 and October 28, 2021, respectively.

Loans under the Credit Facility will bear interest at a per annum rate equal to LIBOR plus 6.0%, provided that in no event can the interest rate be less than 7.0%.

The Borrower is required to pay on a quarterly basis an undrawn commitment fee at a per annum rate equal to 0.50% of the undrawn portion of the Lender’s $25 million commitment under the Credit Facility.

The Borrower is also required to pay on each anniversary of the Effective Date a commitment fee at a per annum rate equal to 0.50% of the Lender’s $25 million commitment under the Credit Facility.

Pursuant to the terms of the Credit Facility, the Borrower paid to the Lender a commitment fee of $250,000 on the Effective Date.

Loans under the Credit Facility must be used by the Borrower for working capital purposes and general liquidity of the Borrower.

The Borrower may request a reduction in the Lender’s $25 million commitment in a minimum amount of $1 million and multiples of $500,000 thereafter upon not less than five days’ prior notice to the Lender.

The obligations of the Borrower under the Credit Facility are guaranteed by the Company, the Operating LLC and Holdings LP (collectively, the “Guarantors”), and are secured by a lien on all of Holdings LP’s property, including its 100% ownership interest in all of the outstanding membership interests of the Borrower.

Pursuant to the Credit Facility, the Borrower and the Guarantors provide customary representations and warranties for a transaction of this type.

The Credit Facility also includes customary covenants for a transaction of this type, including covenants limiting the indebtedness that can be incurred by the Borrower and Holdings LP and restricting the Borrower’s ability to make certain loans and investments.

Additionally, the Borrower may not permit (i) the Borrower’s tangible net worth to be less than $80 million at any time from October 29, 2020 through December 31, 2021, and $85 million at any time thereafter;

and (ii) the Borrower’s excess net capital to be less than $40 million at any time.

The Borrower and each Guarantor are also limited in their ability to repay certain of their existing outstanding indebtedness.

The Credit Facility contains customary events of default for a transaction of this type.

If an event of default under the Credit Facility occurs and is continuing, then the Lender may declare and cause all or any part of the Loans and all other liabilities outstanding under the Credit Facility to become immediately due and payable.

The foregoing description of the Credit Facility does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement and the Revolving Note and Cash Subordination Agreement, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.

The Credit Facility described above was entered into to replace (i) the Loan Agreement, by and among the Company, the Operating LLC and Holdings LP, as guarantors, and the Borrower, as borrower, C&Co, and Fifth Third Financial Bank, N.A.

(as successor to MB Financial Bank, N.A.), as lender, dated April 25, 2018, as amended (the “Original Loan Agreement”) and (ii) the Revolving Note and Cash Subordination Agreement, by and between the Borrower and Fifth Third Financial Bank, N.A.

(as successor to MB Financial Bank, N.A.), dated January 29, 2019 (the “Original Revolving Note and Cash Subordination Agreement,” and, together with the Original Loan Agreement, the “Original Credit Facility”).

Pursuant to the Original Credit Facility, Fifth Third Financial Bank had agreed to make loans at the Borrower’s request from time to time in the aggregate amount of up to $25 million.

In connection with the execution of the Credit Facility, on the Effective Date, the Original Loan Agreement and the Original Revolving Note and Cash Subordination Agreement were both terminated and the Borrower paid to Fifth Third Financial Bank, N.A.

all amounts outstanding under the Original Credit Facility as of the Effective Date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements