What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-06 · 345 added, 480 removed, 515 unchanged (62% of the section changed)

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We carry out our capital markets activities primarily through our subsidiaries:

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

JVB in the United States and CCFEL in Europe.

Asset Management:

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Our Asset Management business segment includes our fee-based asset management operations, which include on-going base and incentive management fees.

As of September 30, 2020 , we had approximately $2.65 billion in assets under management (“AUM”) of which 77.4% was in CDOs.

As of March 31, 2021 , we had approximately $2.41 billion in assets under management (“AUM”) of which 67.7% was in CDOs.

A substantial portion of our asset management revenue is earned from the management of CDOs.

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Our Principal Investing business segment is comprised of investments that we hold related to our SPAC franchise and other investments have made for the purpose of earning an investment return rather than investments to support our trading, matched book repo, or other Capital Markets business segment activities.

These investments are a component of our other investments, at fair value in our consolidated balance sheet.

These investments are a component of our other investments, at fair value, other investments sold, not yet purchased, and investments in equity method affiliates in our consolidated balance sheet.

We generate our revenue by business segment primarily through the following activities.

Capital Markets:

Our trading activities, which include execution and brokerage services, securities lending activities, riskless trading activities, as well as gains and losses (unrealized and realized) and income and expense earned on securities and derivatives classified as trading;

Net interest income on our matched book repo financing activities;

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Asset management fees for our on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities issued in the Investment Vehicle;

Incentive management fees earned based on the performance of the various Investment Vehicles.

Incentive management fees earned based on the performance of Investment Vehicles.

Principal Investing:

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

Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value and other investments sold, not yet purchased.

Income and loss earned on equity method investments.

Business Environment

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If these types of investments do not provide attractive returns to investors, the demand for such instruments will likely fall, thereby reducing our opportunity to earn new management fees or maintain existing management fees.

As of September 30, 2020 , 77.4% of our existing AUM were in CDOs.

As of March 31, 2021 , 67.7% of our existing AUM were in CDOs.

The creation of CDOs has depended upon a vibrant securitization market.

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See note 7 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

The SPAC Market

Beginning in 2018, we began sponsoring a series of SPACs.

Each sponsored SPAC either completed or seeks to complete a business combination with a company involved in the insurance market.

In addition, we invest in other SPACs at various stages of their business life cycle.

Beginning in 2019, these SPAC activities have become a significant portion of our Principal Investing business segment.

In August 2018, we invested in and became the general partner of a newly formed investment fund (the “SPAC Fund”), which was created for the purpose of investing in the equity interests of SPACs and SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties.

As a complement to the SPAC Fund, we established and became manager of two newly formed umbrella limited liability companies (the “SPAC Series Funds”) that issue a separate series of interest for each investment portfolio, which typically consists of investments in the sponsor entities of individual SPACs.

Generally, when a SPAC acquires or merges with a privately held target company, the target company winds up owning a majority of the resulting outstanding equity of the SPAC so the transaction is accounted for as a reverse merger.

Private companies utilize reverse mergers with SPACs as a method of going public as an alternative to a traditional IPO.

All of our business activity related to SPACs is highly sensitive to the volume of activity in the SPAC market.

Volumes could be negatively impacted if target companies no longer see SPACs as an attractive alternative thereby reducing the number of suitable potential business combination targets.

Also, investor demand for SPACs would be negatively impacted if the stock of SPACs that successfully complete a business combination underperform the market.

If volumes of SPAC activity decline, our results of operations will likely be significantly negatively impacted.

Margin Pressures in Fixed Income Brokerage Business

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

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

As a result, we recorded an impairment loss of $7,883 in 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.

We will likely be impacted by the pandemic in other ways which we 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, we will likely be impacted by the pandemic in other ways which we cannot reliably determine.

We will continue to monitor market conditions and respond accordingly.

In April 2020, the Company applied for and received a $2,166 loan under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

See recent events below.

See "Recent Events" below for additional information regarding this loan.

Recent Events

The 2020 Senior Notes

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

The material terms and conditions of the 2013 Convertible Notes remained substantially the same, except that (i) the maturity date changed from September 25, 2019 to September 25, 2020;

(ii) the conversion feature in the 2013 Convertible Notes was removed;

(iii) the interest rate changed from 8% per annum (9% in the event of certain events of default) to 12% per annum (13% in the event of certain events of default);

and (iv) the restrictions regarding prepayment was removed.

The post amendment notes are referred to herein as the “2019 Senior Notes” and the pre-amendment notes are referred to herein as the “2013 Convertible Notes.” On September 25, 2020, the 2019 Notes were amended again to extend the maturity date from September 25, 2020 until September 25, 2021.

All other material terms and conditions of the 2019 Convertible Notes remained substantially the same.

The 2020 Senior Notes

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

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

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

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

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

On February 3, 2020, pursuant to the note purchase agreement, the Operating LLC used the proceeds received from the issuance of the senior promissory notes to repay in full all amounts outstanding under the senior promissory note, dated September 25, 2019, issued by the Company to Pensco Trust Company, Custodian fbo Edward E.

On February 3, 2020, pursuant to the note purchase agreement, the Operating LLC used the proceeds received from the issuance of the senior promissory notes to the JKD Investor and RNCS to repay in full all amounts outstanding under the senior promissory note, dated September 25, 2019, issued by the Company to Pensco Trust Company, Custodian fbo Edward E.

Cohen IRA in the principal amount of $4,386 (the “Cohen IRA Note”).

The Cohen IRA Note is included as a portion of the 2019 Senior Notes outstanding as of December 31, 2019 .

The Cohen IRA Note was included as a portion of the 2019 Senior Notes (as defined below) outstanding as of December 31, 2019.

The Cohen IRA Note was fully paid and extinguished on February 3, 2020.

Subsequent to this repayment, $2,400 of the 2019 Senior Notes remain outstanding.

On September 25, 2020, the 2019 Senior Notes were amended to extend the maturity date of the remaining $2,400 was extended to September 25, 2021.

See note 17 to our financial statements included in this Quarterly Report on Form 10-Q.

In 2018, we formed a new subsidiary, ViaNova, for the purpose of building a RTL business.

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

ViaNova’s business plan includes buying, aggregating, and distributing these loans to produce superior risk-adjusted returns through the pursuit of opportunities overlooked by commercial banks.

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 the Bank had suspended funding all “Alternative” loans for all of their clients, including the RTL loans 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.

ViaNova stopped acquiring new RTLs and does not intend to acquire any new RTLs in the future.

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.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

Subsequent to this repayment, $2,400 of the 2019 Senior Notes remain outstanding and are held by EBC.

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

See note 17 to our financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the 2019 Senior Notes and the senior promissory notes issued to the JKD Investor and RNCS.

On March 27, 2020, the United States enacted the CARES Act.

The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19.

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We have carefully considered the eligibility requirements for PPP loans as well as supplemental guidance regarding the PPP beyond the applicable statute issued from time to time by government agencies and certain government officials.

We are eligible to receive a PPP loan because we have fewer than 100 employees.

Further, although we are public and listed on the NYSE American stock exchange, our market capitalization is small, and we believe that we did not have access to the public capital markets at that time.

We were eligible to receive a PPP loan because we have fewer than 100 employees.

Further, although we are a publicly traded company and are listed on the NYSE American stock exchange, our market capitalization is small relative to many other publicly traded companies, and we believed that we did not have access to the public capital markets at the time we applied for and received a loan under the PPP.

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

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

See note 17 to our financial statements included in this Quarterly Report on Form 10-Q.

As of the date of this report, we have not heard back regarding the forgiveness of the PPP loan.

See note 18 to our financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the loan we received under the PPP.

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.

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

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

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

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

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

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, 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”).

We currently consolidate the Sponsor Entities and previously treated our investment in the Insurance SPAC as an equity method investment.

Effective upon the Closing, we have reclassified our 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, we 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 us, the expense will be recorded as compensation.

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

We currently expect 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, we expect 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 us 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 minority interest holders and distribute the remaining 250,000 of such shares of SFT Class A Common Stock to a wholly owned subsidiary of us.

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.

Insurance SPAC II

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, we refer to them as "Sponsor Shares".

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

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

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

Prior to the closing, we 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:

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

We 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;

We 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 our employee, we recorded the expense as equity-based compensation expense.

Otherwise, the expense was recorded by us 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.

We concurrently record 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 us.

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

Subsequent to that distribution, we continue to record any change in the fair value of the SFT shares held by us 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.

Our interest in INSU Pipe Sponsor LLC entitled us to an allocation of 350,000 shares of SFT Class A Common Stock.

During 2020, we 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 us.

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 our 350,000 shares of SFT Class A common stock 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 is $15,578, which is included as a component of other investments, at fair value.

These values are 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

SFTs closing share price on March 31, 2021 was $8.32 per share.

See note 4 to our financial statements included in this Quarterly Report on Form 10-Q.

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 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”).

Insurance SPAC II completed the sale of 23,000,000 units ("Insurance SPAC II Units") in its 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's Class A common stock, par value $0.0001 per share (“Insurance SPAC II Common Stock”), and one-third of one warrant (each, a “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 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 Insurance SPAC II 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 the 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 the 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 the 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 an Insurance SPAC II 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 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.

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, we continued to consolidate the Insurance SPAC II Sponsor Entities.

Prior to the closing, we 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:

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

We 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, we 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 has been recorded as a component of principal transactions and other income.

We concurrently record a corresponding non-controlling interest entry related to the Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC Sponsor II Entities.

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, we continue to record any change in the fair value of the MetroMile shares held by us 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 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.

See note 4 to our financial statements included in this Quarterly Report on Form 10-K.

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 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 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 the Insurance SPAC II 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 the Insurance SPAC Ii Business Combination within 18 months following the IPO and is unable to obtain an extension.

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

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

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

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

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

If the SPAC does not consummate a Business Combination in the required time frame, no funds from the SPAC’s 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 the 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 the Insurance SPAC II's securities are first listed on the Nasdaq Capital Market through the earlier of the 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.

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.

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 Insurance SPAC III Sponsor Entities, including such executives and key employees of the Operating LLC, have an interest in through the Insurance SPAC III Sponsor Entities will not be finally and definitively determined until consummation of a business combination.

The number of the Insurance SPAC III’s founder shares currently allocated to the Operating LLC is 4,267,500, 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, we 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.

See note 4 to our financial statements included in this Quarterly Report on Form 10-Q.

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.

Consolidated Results of Operations

1 unchanged sentence

The period-to-period comparisons of financial results are not necessarily indicative of future results.

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

The following table sets forth information regarding our consolidated results of operations for the nine months ended September 30, 2020 and 2019 .

Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2021 and 2020 .

COHEN & COMPANY INC.

1 unchanged sentence

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Favorable / (Unfavorable)

20 unchanged sentences

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

Revenues increased by $30,169 , or 90% , to $63,745 from $33,576 for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 .

As discussed in more detail below, the change was comprised of (i) an increase in trading revenue of $29,651 ;

(ii) a decrease in asset management revenue of $827 ;

(iii) an increase in new issue revenue of $250 ;

and (iv) an increase in principal transactions and other revenue of $1,095 .

Net trading revenue increased by $29,651 , or 115% , to $55,524 for the nine months ended September 30, 2020 from $25,873 for the nine months ended September 30, 2019 .

Revenues increased by $84,906 or 478% to $102,676 for the three months ended March 31, 2021 from $17,770 for the three months ended March 31, 2020 .

As discussed in more detail below, the change was comprised of (i) an increase of $622 in net trading revenue;

(ii) an increase of $478 in asset management revenue;

(iii) an increase in new issue and advisory of $1,839 ;

and (iv) an increase of $81,967 in principal transactions and other income.

Net trading revenue increased by $622 or 3% , to $19,183 for the three months ended March 31, 2021 from $18,561 for the three months ended March 31, 2020 .

The following table shows the detail by group.

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Matched book repo

14 unchanged sentences

Asset Management

Assets Under Management

Our AUM equals the sum of:

(1) the gross assets included in CDOs that we have sponsored and manage;

Our AUM equals the sum of (1) the gross assets included in CDOs that we have sponsored and manage;

plus (2) the NAV of investment funds we manage;

1 unchanged sentence

Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers.

This definition of AUM is not necessarily identical to a definition of AUM that may be used in our management agreements.

ASSETS UNDER MANAGEMENT

(Dollars in Thousands)

As of September 30,

This definition of AUM is not necessarily identical to a definition of AUM that may be used within our investment agreements.

As of March 31,

As of December 31,

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(1) Other Investment Vehicles represent any investment vehicles that are not company sponsored CDOs.

In some cases, accounts we manage employ leverage.

(2) In some cases, accounts we manage may employ leverage.

In some cases, our fees are based on gross assets and in some cases on net assets.

AUM included herein is calculated using either the gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees.

Asset management fees decreased by $827 , or 14% , to $4,938 for the nine months ended September 30, 2020 from $5,765 for the nine months ended September 30, 2019 , as discussed in more detail below.

AUM included herein is calculated using either gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees.

Asset management fees increased by $478 , or 30% , to $2,093 for the three months ended March 31, 2021 from $1,615 for the three months ended March 31, 2020 , as discussed in more detail below.

The following table provides a more detailed comparison of the two periods.

1 unchanged sentence

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

A substantial portion of our asset management revenue is earned from the management of CDOs.

1 unchanged sentence

Our ability to complete securitizations in the future will depend upon, among other things, our asset origination capacity and success, our ability to arrange warehouse financing to originate assets, our willingness and capacity to fund required amounts to obtain warehouse financing and securitized financings, and the demand in the markets for such securitizations.

Asset management fees from company sponsored CDOs decreased by $581 to $2,606 for the nine months ended September 30, 2020 from $3,187 for the nine months ended September 30, 2019 .

Asset management fees from company sponsored CDOs decreased by $179 to $790 for the three months ended March 31, 2021 from $969 for the three months ended March 31, 2020 .

The following table summarizes the periods presented by asset class.

1 unchanged sentence

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

TruPS and insurance company debt - U.S.

2 unchanged sentences

The reduction in asset management fees for TruPS and insurance company debt – U.S.

was a result of average AUM declining due to principal repayments on the assets in these securitizations.

The reduction in asset management fees for TruPS and insurance company debt – Europe was mostly the result of changes in foreign exchange rates.

was a result of average AUM declining due to principal repayments on the assets in these securitizations as well as the termination of our management contract for Alesco Preferred Funding IX, without cause effective March 15, 2021.

The increase in asset management fees for TruPS and insurance company debt – Europe was a result of changes in foreign exchange rates.

Asset management fees for broadly syndicated loans – Europe consist of a single CLO.

During August 2019, this CLO liquidated.

The revenue earned in the nine months ended September 30, 2020 represented a final portion of a contingent successful liquidation fee earned and received by us.

No future revenue will be earned on this CLO.

Other asset management revenue decreased by $246 to $2,332 for the nine months ended September 30, 2020 from $2,578 for the nine months ended September 30, 2019 .

The decrease was primarily due to a reduction in performance fees earned on our managed accounts during the nine months ended September 30, 2020 as compared to the same period in 2019.

Other asset management revenue increased by $657 to $1,303 for the three months ended March 31, 2021 from $646 for the three months ended March 31, 2020 .

The increase was primarily due to an increase in AUM during the three months ended March 31, 2021 as compared to the same period in 2020.

Principal Transactions and Other Income

Principal transactions and other income increased by $1,095 , or 65% , to $2,783 for the nine months ended September 30, 2020 , as compared to $1,688 for the nine months ended September 30, 2019 .

Principal transactions and other income increased by $81,967 , or 3407% , to $79,561 for the three months ended March 31, 2021 , as compared to ($2,406) for the three months ended March 31, 2020 .

The following table summarizes principal transactions and other income by category.

1 unchanged sentence

(Dollars in Thousands)

Nine Months Ended September 30,

Currency hedges

Three Months Ended March 31,

Other SPAC equity

CLO investments

5 unchanged sentences

Principal Transactions

Principal transactions includes income earned or loss incurred on our investments classified as other investments, at fair value in our consolidated balance sheets.

See notes 7 and 8 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

EuroDekania was a company that invested in hybrid capital securities of European companies and we carried our investment at the reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the fund as well as distributions received.

Our investment in EuroDekania was denominated in Euros.

We sometimes hedged this exposure (as described in greater detail below).

EuroDekania sold its remaining investments and liquidated in 2019.

Our currency hedge consisted of a Euro forward agreement designed to hedge the currency risk primarily associated with our investment in EuroDekania.

For all investments discussed below, see note 8 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for information about how we determine the value of these instruments.

SFTis a publicly traded company.

The shares of SFT we hold are comprised of both unrestricted and restricted shares and are carried at fair value.

See note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of sale restrictions on these shares.

As of the beginning of 2021, we held most of our SFT shares in the Insurance SPAC Sponsor Entities, which were not wholly owned subsidiaries of the Operating LLC.

During the three months ended March 31, 2021, the Insurance SPAC Sponsor Entities distributed all shares of SFT it previously held to its members (which included the operating LLC).

As of March 31, 2021, all SFT shares held by us were held by the Operating LLC.

See non-controlling interest discussion below.

MetroMile is a publicly traded company.

The shares of MILE we hold are comprised of both unrestricted and restricted shares and are carried at fair value.

See note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of sale restrictions on these shares.

The MetroMile shares held by us are held by Insurance SPAC II Sponsor Entities which were not wholly owned subsidiaries of the Operating LLC.

See compensation and non-controlling interest discussions below.

Other SPAC equity represents equity investments in publicly traded SPACs carried at fair value.

The CLO investments represent investments in the most junior tranche of certain CLOs.

These investments were liquidated in June 2020.

See note 8 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for information about how we determine the value of these instruments.

These investments were carried at fair value.

These investments were fully liquidated in 2020.

IMXI represents unrestricted and restricted equity positions of International Money Express, Inc.

IMXI), a publicly traded company that resulted from the merger of Intermex Holdings, LLC and FinTech Acquisition Corp.

See note 18 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Insurance JV is a company that invests in USD denominated debt issued by small insurance and reinsurance companies and we carry our investment at its reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the fund as well as distributions received.

The SPAC Fund primarily invests in the equity of SPACs and we carry our investment at its reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the SPAC Fund as well as distributions received

Other principal investments primarily consists of realized and unrealized gains and losses from various other investments reported at fair value.

This investment is carried at fair value.

The SPAC Fund invests in the equity of SPACs.

We carry our investment in the fund at its reported NAV.

Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.

Other income / (loss) is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items.

The revenue share arrangements noted in the table above entitles us to either a percentage of revenue earned by IIFC The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments.

The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC.

The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments.

To date, we have earned $3,338.

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Operating Expenses

Operating expenses increased by $25,623 , or 76% , to $59,192 for the nine months ended September 30, 2020 from $33,569 for the nine months ended September 30, 2019 .

Operating expenses increased by $5,016 , or 18% , to $32,231 for the three months ended March 31, 2021 from $27,215 for the three months ended March 31, 2020 .

As discussed in more detail below, the change was comprised of (i) an increase of $12,513 in compensation and benefits;

3 unchanged sentences

(v) an increase of $1 of depreciation and amortization;

and (vi) an impairment of goodwill of $7,883 .

and (vi) a decrease of $7,883 due to an impairment charge recognized in the three months ended March 31, 2020.

Compensation and Benefits

Compensation and benefits increased by $16,610 , or 84% , to $36,423 for the nine months ended September 30, 2020 from $19,813 for the nine months ended September 30, 2019 .

Compensation and benefits increased by $12,513 , or 89% , to $26,647 for the three months ended March 31, 2021 from $14,134 for the three months ended March 31, 2020 .

COMPENSATION AND BENEFITS

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash compensation and benefits

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Cash compensation and benefits in the table above was primarily comprised of salary, incentive compensation, and benefits.

Cash compensation and benefits increased by $16,687 to $35,946 for the nine months ended September 30, 2020 from $19,259 for the nine months ended September 30, 2019 .

The increase was due to an increase in incentive compensation that is tied to revenue and operating profitability.

Our total headcount decreased from 90 at September 30, 2019 to 87 at September 30, 2020 .

Equity-based compensation decreased by $77 to $477 for the nine months ended September 30, 2020 from $554 for the nine months ended September 30, 2019 .

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment decreased by $439 , or 18% , to $2,037 for the nine months ended September 30, 2020 from $2,476 for the nine months ended September 30, 2019 .

This was comprised of a decrease in business development of $374 and a decrease of occupancy and equipment of $65.

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution increased by $638 , or 9% , to $7,370 for the nine months ended September 30, 2020 from $6,732 for the nine months ended September 30, 2019 .

The increase was comprised of an increase in subscriptions of $130 and an increase in clearing and execution costs of $508.

Clearing and execution costs increased primarily as a result of increased trading volumes.

Professional Fee and Other Operating Expenses

Professional fee and other operating expenses increased by $921 , or 21% , to $5,230 for the nine months ended September 30, 2020 from $4,309 for the nine months ended September 30, 2019 .

The increase was comprised of an increase in professional fees of $867 and an increase in other operating expense of $54.

Depreciation and Amortization

Depreciation and amortization increased by $10 , or 4% , to $249 for the nine months ended September 30, 2020 from $239 for the nine months ended September 30, 2019 .

Impairment of Goodwill

We determined the financial market volatility, as well as the reduction in volumes in the GCF repo and TBA businesses that resulted from COVID-19 was a triggering event that required us to reassess the goodwill we had recorded related to JVB under the guidance of ASC 350.

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

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

See note 12 in our financial statements included in this Quarterly Report on Form 10-Q.

Non-Operating Income and Expense

Interest Expense, net

Interest expense, net increased by $2,309 , to $7,638 for the nine months ended September 30, 2020 from $5,329 for the nine months ended September 30, 2019 .

INTEREST EXPENSE

(Dollars in Thousands)

Nine Months Ended September 30,

Junior subordinated notes

2020 Senior Notes

2013 Convertible Notes / 2019 Senior Notes

2017 Convertible Note

Redeemable Financial Instrument - DGC Trust / CBF

Redeemable Financial Instrument - JKD Capital Partners I LTD

Redeemable Financial Instrument - ViaNova Capital Group, LLC

See notes 16 and 17 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Income / (loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $2,346 to ($2,711) for the nine months ended September 30, 2020 from ($365) for the nine months ended September 30, 2019 .

See note 11 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Nine Months Ended September 30,

Insurance SPAC

Insurance SPAC II

FTAC Olympus Sponsor Entities

Income Tax Expense / (Benefit)

The income tax expense / (benefit) increased by $294 to income tax expense / (benefit) of ($623) for the nine months ended September 30, 2020 from ($917) for the nine months ended September 30, 2019 .

Excluding our goodwill impairment (which is non deductible for income tax purposes), our income before income tax increased for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 which resulted in an increase in income tax expense.

Net Income / (Loss) Attributable to the Non-controlling Interest

Net income / (loss) attributable to the non-controlling interest for the nine months ended September 30, 2020 and 2019 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.

In addition, net income / (loss) attributable to the non-controlling interest also included non-controlling interest related to entities that were consolidated by the Operating LLC but not wholly owned by us.

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Nine Months Ended September 30, 2020

Other Consolidated

Total Operating LLC

Net income / (loss) before tax

Income tax expense / (benefit)

Net income / (loss) after tax

Other consolidated subsidiary non-controlling interest

Net income / (loss) attributable to the Operating LLC

Average effective Operating LLC non-controlling interest % (1)

Operating LLC non-controlling interest

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Nine Months Ended September 30, 2019

Other Consolidated

Total Operating LLC

Net income / (loss) before tax

Income tax expense / (benefit)

Net income / (loss) after tax

Other consolidated subsidiary non-controlling interest

Net income / (loss) attributable to the Operating LLC

Average effective Operating LLC non-controlling interest % (1)

Operating LLC non-controlling interest

Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.

Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019

The following table sets forth information regarding our consolidated results of operations for the three months ended September 30, 2020 and 2019 .

COHEN & COMPANY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands)

Three Months Ended September 30,

Favorable / (Unfavorable)

Asset management

New issue and advisory

Principal transactions and other income

Total revenues

Operating expenses

Compensation and benefits

Business development, occupancy, equipment

Subscriptions, clearing, and execution

Professional fee and other operating

Depreciation and amortization

Total operating expenses

Operating income / (loss)

Non-operating income / (expense)

Interest expense, net

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.

Revenues increased by $10,589 or 94% to $21,856 for the three months ended September 30, 2020 from $11,267 for the three months ended September 30, 2019 .

As discussed in more detail below, the change was comprised of (i) an increase of $8,478 in net trading revenue;

(ii) a decrease of $387 in asset management revenue;

(iii) an increase in new issue and advisory of $250 ;

and (iv) an increase of $2,248 in principal transactions and other income.

Net trading revenue increased by $8,478 or 100% , to $16,957 for the three months ended September 30, 2020 from $8,479 for the three months ended September 30, 2019 .

The following table shows the detail by group.

(Dollars in Thousands)

Three Months Ended September 30,

Matched book repo

High yield corporate

Investment grade corporate

Wholesale and other

Our net trading revenue includes unrealized gains on our trading investments as of the applicable measurement date that may never be realized due to changes in market or other conditions not in our control.

This may adversely affect the ultimate value realized from these investments.

In addition, our net trading revenue also includes realized gains on certain proprietary trading positions.

Our ability to derive trading gains from such trading positions is subject to overall market conditions.

Due to volatility and uncertainty in the capital markets, the net trading revenue recognized may not be indicative of future results.

Furthermore, from time to time, some of the assets included in the investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy.

Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates.

See notes 7, 8, and 9 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold.

We consider our matched book repo business to be subject to significant concentration risk.

See note 10 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Asset Management

Asset management fees decreased by $387 , or 19% , to $1,631 for the three months ended September 30, 2020 from $2,018 for the three months ended September 30, 2019 , as discussed in more detail below.

The following table provides a more detailed comparison of the two periods.

ASSET MANAGEMENT

(Dollars in Thousands)

Three Months Ended September 30,

A substantial portion of our asset management revenue is earned from the management of CDOs.

As a result, our asset management revenue has declined from its historical highs as the assets of the CDOs decline due to maturities, repayments, auction call redemptions, and defaults.

Asset management fees from company sponsored CDOs decreased by $519 to $815 for the three months ended September 30, 2020 from $1,334 for the three months ended September 30, 2019 .

The following table summarizes the periods presented by asset class.

FEES EARNED BY ASSET CLASS

(Dollars in Thousands)

Three Months Ended September 30,

TruPS and insurance company debt - U.S.

TruPS and insurance company debt - Europe

Broadly syndicated loans - Europe

The reduction in asset management fees for TruPS and insurance company debt – U.S.

was a result of average AUM declining due to principal repayments on the assets in these securitizations.

The increase in asset management fees for TruPS and insurance company debt – Europe was a result of changes in foreign exchange rates.

Asset management fees for broadly syndicated loans – Europe consist of a single CLO.

During August 2019, this CLO liquidated.

No future revenue will be earned on this CLO.

Other asset management revenue increased by $132 to $816 for the three months ended September 30, 2020 from $684 for the three months ended September 30, 2019 .

The increase was primarily due to an increase in AUM during the three months ended September 30, 2020 as compared to the same period in 2019.

Principal Transactions and Other Income

Principal transactions and other income increased by $2,248 , or 432% , to $2,768 for the three months ended September 30, 2020 , as compared to $520 for the three months ended September 30, 2019 .

The following table summarizes principal transactions and other income by category.

PRINCIPAL TRANSACTIONS & OTHER INCOME

(Dollars in Thousands)

Three Months Ended September 30,

Currency hedges

CLO investments

Other principal investments

Total principal transactions

IIFC revenue share

All other income / (loss)

Total principal transactions and other income

Principal Transactions

Principal transactions includes income earned or loss incurred on our investments classified as other investments, at fair value in our consolidated balance sheets.

See notes 7 and 8 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

EuroDekania was a company that invested in hybrid capital securities of European companies and we carried our investment at the reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the fund as well as distributions received.

Our investment in EuroDekania was denominated in Euros.

We sometimes hedged this exposure (as described in greater detail below).

EuroDekania sold its remaining investments and liquidated in 2019.

Our currency hedge consisted of a Euro forward agreement designed to hedge the currency risk primarily associated with our investment in EuroDekania.

The CLO investments represent investments in the most junior tranche of certain CLOs.

These investments were liquidated in June 2020.

See note 8 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for information about how we determine the value of these instruments.

IMXI represents unrestricted and restricted equity positions of International Money Express, Inc.

IMXI), a publicly traded company that resulted from the merger of Intermex Holdings, LLC and FinTech Acquisition Corp.

Cash compensation and benefits decreased by $970 to $13,006 for the three months ended March 31, 2021 from $13,976 for the three months ended March 31, 2020 .

The decrease was due to a decrease in incentive compensation that is tied to revenue and operating profitability.

Our total headcount increased from 95 at March 31, 2020 to 98 at March 31, 2021 .

Equity-based compensation increased by $13,483 to $13,641 for the three months ended March 31, 2021, as compared to $158 for the three months ended March 31, 2020.

Of the $13,641 of equity compensation recognized in 2021, $13,068 was due to equity-based compensation related to the issuance of membership units of the Insurance SPAC II Sponsor Entities to employees of the Company.

This expense was recognized upon the completion of the merger between Insurance SPAC II and MetroMile on February 9, 2021.

No further equity-based compensation expense will be recognized related to membership units of the Insurance SPAC Sponsor II Entities in the future.

Following the business combination, going forward, the membership units of the Insurance SPAC II Sponsor Entities held by employees will be treated as part of the non-controlling interest.

The Insurance SPAC III Sponsor Entities have also issued membership units to employees of the Company.

If Insurance SPAC III successfully completes a business combination, the Company will also recognize significant equity compensation expense related to these issuances.

The amount of future equity-based compensation expense that will be recognized if this business combination is completed will be dependent upon the total number of founders shares ultimately allocable to employees and the value of the shares upon the completion of the business combination.

See note 4 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Insurance JV is a company that invests in USD denominated debt issued by small insurance and reinsurance companies and we carry our investment at its reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the fund as well as distributions received

The SPAC Fund primarily invests in the equity of SPACs and we carry our investment at its reported NAV.

Income recognized in each period is the result of changes in the underlying NAV of the SPAC Fund as well as distributions received.

Other principal investments primarily consists of realized and unrealized gains and losses from other investments reported at fair value.

Other income / (loss) is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items.

The revenue share arrangements noted in the table above entitles us to either a percentage of revenue earned by IIFC.

The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments.

To date, we have earned $3,052.

Also, in any particular year, the revenue share earned by us cannot exceed $2,000.

Operating Expenses

Operating expenses increased by $4,074 , or 35% , to $15,784 for the three months ended September 30, 2020 from $11,710 for the three months ended September 30, 2019 .

As discussed in more detail below, the change was comprised of (i) an increase of $3,948 in compensation and benefits;

(ii) a decrease of $129 in business development, occupancy, and equipment;

(iii) a decrease of $161 in subscriptions, clearing, and execution;

(iv) an increase of $411 of professional fee and other operating;

and (v) an increase of $5 of depreciation and amortization.

Compensation and Benefits

Compensation and benefits increased by $3,948 , or 56% , to $10,965 for the three months ended September 30, 2020 from $7,017 for the three months ended September 30, 2019 .

COMPENSATION AND BENEFITS

(Dollars in Thousands)

Three Months Ended September 30,

Cash compensation and benefits

Equity-based compensation

Cash compensation and benefits in the table above was primarily comprised of salary, incentive compensation, and benefits.

Cash compensation and benefits increased by $3,979 to $10,806 for the three months ended September 30, 2020 from $6,827 for the three months ended September 30, 2019 .

The increase was due to an increase in incentive compensation that is tied to revenue and operating profitability.

Our total headcount decreased from 90 at September 30, 2019 to 87 at September 30, 2020 .

Equity-based compensation decreased by $31 to $159 for the three months ended September 30, 2020 from $190 for the three months ended September 30, 2019 .

The remaining $573 of equity-based compensation recognized during the three months ended March 31, 2021 relates to restricted grants of the Company's Common Stock and Operating LLC units.

This amount was an increase of $415 as compared to $158 from the prior year.

This increase was due to a higher grant date fair value and a higher volume of issuances during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020.

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment decreased by $129 , or 17% , to $641 for the three months ended September 30, 2020 from $770 for the three months ended September 30, 2019 .

Business development, occupancy, and equipment decreased by $37 , or 5% , to $719 for the three months ended March 31, 2021 from $756 for the three months ended March 31, 2020 .

This decrease was comprised of a decrease in business development of $29 and a decrease in occupancy and equipment of $8.

Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution decreased by $161 , or 7% , to $2,242 for the three months ended September 30, 2020 from $2,403 for the three months ended September 30, 2019 .

The decrease was comprised of a decrease in clearing and execution costs of $169 partially offset by an increase in subscriptions of $8.

Subscriptions, clearing, and execution increased by $210 , or 8% , to $2,790 for the three months ended March 31, 2021 from $2,580 for the three months ended March 31, 2020 .

The increase was comprised of an increase in clearing and execution costs of $402 partially offset by a decrease in subscriptions of $192.

Professional Fee and Other Operating Expenses

Professional fee and other operating expenses increased by $411 , or 29% , to $1,851 for the three months ended September 30, 2020 from $1,440 for the three months ended September 30, 2019 .

The increase was comprised of an increase in professional fees of $391 and an increase in other operating expense of $20.

Professional fee and other operating expenses increased by $212 , or 12% , to $1,994 for the three months ended March 31, 2021 from $1,782 for the three months ended March 31, 2020 .

The increase was comprised of an increase in other operating expense of $222;

partially offset by a decrease in professional fees of $10.

Depreciation and Amortization

Depreciation and amortization increased by $5 , or 6% , to $85 for the three months ended September 30, 2020 from $80 for the three months ended September 30, 2019 .

Depreciation and amortization increased by $1 , or 1% , to $81 for the three months ended March 31, 2021 from $80 for the three months ended March 31, 2020 .

Non-Operating Income and Expense

Interest Expense, net

Interest expense, net increased by $416 , to $1,952 for the three months ended September 30, 2020 from $1,536 for the three months ended September 30, 2019 .

Interest expense, net decreased by $591 , to $2,014 for the three months ended March 31, 2021 from $2,605 for the three months ended March 31, 2020 .

INTEREST EXPENSE

(Dollars in Thousands)

Three Months Ended September 30,

Three Months Ended March 31,

Junior subordinated notes

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2017 Convertible Note

2018 FT LOC/2019 FT Revolver/Byline Credit Facility

Redeemable Financial Instrument - DGC Trust / CBF

3 unchanged sentences

Income / (loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $1,262 to ($1,371) for the three months ended September 30, 2020 from ($109) for the three months ended September 30, 2019 .

Income / (loss) from equity method affiliates decreased by $728 to ($835) for the three months ended March 31, 2021 from ($107) for the three months ended March 31, 2020 .

See note 11 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Three Months Ended September 30,

Insurance SPAC

Three Months Ended March 31,

Insurance SPAC I

Insurance SPAC II

FTAC Olympus Sponsor Entities

Insurance SPAC III

Other SPAC Sponsor Entities

Income Tax Expense / (Benefit)

The income tax expense / (benefit) decreased by $424 to income tax expense / (benefit) of ($594) for the three months ended September 30, 2020 from ($170) for the three months ended September 30, 2019 .

The reduction in expense (increase in benefit) is primarily due to a reduction in our state effective rate due to a change in our state apportionment recognized in 2020.

The income tax expense / (benefit) increased by $1,240 to income tax expense / (benefit) of $868 for the three months ended March 31, 2021 from ($372) for the three months ended March 31, 2020 .

The increase in expense is primarily due to foreign and local current taxes incurred as well as a reduction in our deferred tax asset related to our net operating loss carryforwards.

This reduction is a result of us expecting to utilize a portion of the loss carryforward in 2021.

Net Income / (Loss) Attributable to the Non-controlling Interest

Net income / (loss) attributable to the non-controlling interest for the three months ended September 30, 2020 and 2019 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.

Net income / (loss) attributable to the non-controlling interest for the three months ended March 31, 2021 and 2020 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Other Consolidated

8 unchanged sentences

SUMMARY CALCULATION OF NON-CONTROLLING INTEREST

For the Three Months Ended September 30, 2019

For the Three Months Ended March 31, 2020

Other Consolidated

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In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through a distribution or a loan.

CCFL is regulated by the Financial Conduct Authority (“FCA”) and CCFEL is regulated by the Central Bank of Ireland (the “CBI”) and each must maintain certain minimum levels of capital.

CCFEL is regulated by the Central Bank of Ireland (the “CBI”) and each must maintain certain minimum levels of capital.

See note 19 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

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Going forward, the board of directors will re-assess our capital resources and may or may not determine to reinstate the dividend based on that assessment.

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.

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

(which, following a merger with Piper Jaffray, became Piper Sandler & Co.

(the “Agent”)).

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

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.

On December 21, 2020 and August 31, 2020, the Company entered into letter agreements (the “December 2020 Letter Agreement”, and the "August 2020 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.

The agreements authorized the Agent to use reasonable efforts to purchase, on the Company’s behalf, up to an aggregate purchase price of $2,000 of Common Stock on any day that the NYSE 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 10, 2020.

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, we 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, we 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.

During the nine months ended September 30, 2020 :

We drew on the 2019 FT Revolver in the amount of $17,500 (this amount was repaid in October 2020)

We raised $4,500 in proceeds from issuance of the 2020 Senior Notes.

We received a PPP Loan of $2,166.

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

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

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

During the three months ended March 31, 2021 and 2020, we had the following other significant financing transactions.

See notes 16, 17, and 18 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2021 :

We repaid $4,000 of redeemable financial instruments.

We made $25,885 of non-controlling interest distributions of which $25,758 were non-cash distributions.

During the three months ended March 31, 2020 :

We drew $17,500 on the FT Revolver.

We raised $4,500 from the issuance of the 2020 Senior Notes.

We repaid $4,386 of the 2019 Senior Notes.

We repaid $4,777 of the LegacyTexas Credit Facility

We repaid $2,000 of the redeemable financial instrument with DGC Trust.

We repaid $421 of the ViaNova redeemable financial instruments.

We raised $4,550 by issuing equity of the Insurance SPAC II Sponsor Entities to third parties.

During the nine months ended September 30, 2019 :

We drew $2,159 of the LegacyTexas Credit Facility

We raised $1,268 of proceeds from redeemable financial instruments

We raised $2,550 by issuing equity of the Sponsor Entities to third parties.

We have seven primary uses for capital:

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(3) To fund investments .

We make principal investments to generate returns.

We make principal investments (including sponsor and other investments in SPACs) to generate returns.

We may need to raise additional debt or equity financing in order to ensure we have the capital necessary to take advantage of attractive investment opportunities.

4 unchanged sentences

(5) To fund potential dividends and distributions .

During the third quarter of 2010 and for each subsequent quarter through September 30, 2019 , the board of directors has declared a dividend.

During the third quarter of 2010 and for each subsequent quarter through March 31, 2020 , the board of directors has declared a dividend.

A pro rata distribution has been paid to the other members of the Operating LLC upon the payment of any dividends to stockholders of Cohen & Company Inc.

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If we are unable to raise sufficient capital on economically favorable terms, we may need to reduce the amount of capital invested for the uses described above, which may adversely impact earnings and our ability to pay future dividends, if any.

As of September 30, 2020 and December 31, 2019 , we maintained cash and cash equivalents of $ 129,266 and $ 8,304 , respectively.

As of March 31, 2021 and December 31, 2020 , we maintained cash and cash equivalents of $ 19,471 and $ 41,996 , respectively.

We generated cash from or used cash for the following activities.

1 unchanged sentence

(Dollars in Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flow from operating activities

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We believe our available cash and cash equivalents, as well as our investment in our trading portfolio and related borrowing capacity, will provide sufficient liquidity to meet the cash needs of our ongoing operations in the near term.

Nine Months Ended September 30, 2020

As of September 30, 2020 , our cash and cash equivalents were $ 129,266 , representing an increase of $ 120,962 from December 31, 2019 .

The increase was attributable to cash provided by operating activities of $ 115,288 , cash used in investing activities of $ 10,747 , cash provided by financing activities of $ 16,270 , and the increase in cash caused by the change in exchange rates of $ 151 .

Three Months Ended March 31, 2021

As of March 31, 2021 , our cash and cash equivalents were $ 19,471 , representing an decrease of $ 22,525 from December 31, 2020 .

The decrease was attributable to cash used in operating activities of $ 28,150 , cash provided by investing activities of $ 10,959 , cash used in financing activities of $ 5,145 , and the decrease in cash caused by the change in exchange rates of $ 189 .

The cash used in operating activities of $ 28,150 was comprised of (a) net cash outflows of $ 17,309 related to working capital fluctuations;

(b) net cash outflows of $ 10,700 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, receivables under resale agreements, securities sold under agreements to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, but not yet purchased;

and (c) net cash outflows from other earnings items of $ 141 (which represents net income or loss adjusted for the following non-cash operating items:

other income / (expense), realized and unrealized gains and losses and accretion of income on other investments, income from equity method affiliates, equity based compensation, depreciation and amortization, deferred taxes, and amortization of discount on debt).

The cash provided by investing activities of $ 10,959 was comprised of (a) $46,740 of sales and returns of principal of other investments, at fair value;

(b) $4,398 of sales and returns of principal on other investments sold, not yet purchased;

partially offset by (c) $35,279 of purchases of other investments, at fair value;

(d) $4,442 of purchase of other investments sold, not yet purchased, at fair value;

(e) $268 of investments in equity method affiliates;

and (f) $190 of purchases of furniture, equipment, and leasehold improvements.

The cash used in financing activities of $ 5,145 was comprised of (a) $4,000 of repayments of redeemable financial instruments;

(b) $361 in cash used to net settle equity awards;

(d) $138 of non-controlling interest distributions;

(e) $7 of dividends paid on vested Common Stock;

partially offset by $23 in proceeds from non-controlling interest contributions.

Three Months Ended March 31, 2020

As of March 31, 2020, our cash and cash equivalents were $85,454, representing an increase of $77,150 from December 31, 2019.

The increase was attributable to cash provided by operating activities of $64,470, cash provided by investing activities of $30, cash provided by financing activities of $12,721, and the decrease in cash caused by the change in exchange rates of $71.

The cash provided by operating activities of $64,470 was comprised of (a) net cash inflows of $100,315 related to working capital fluctuations;

(b) net cash outflows of $34,964 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, receivables under resale agreements, securities sold under agreements to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, but not yet purchased;

and (c) net cash inflows from other earnings items of $ 4,693 (which represents net income or loss adjusted for the following non-cash operating items:

and (c) net cash outflows from other earnings items of $881 (which represents net income or loss adjusted for the following non-cash operating items:

other income / (expense), realized and unrealized gains and losses and accretion of income on other investments, equity based compensation, depreciation and amortization, impairment of goodwill, and amortization of discount on debt).

The cash provided by investing activities of $30 was comprised of (a) $2,309 of cash received from sales and returns of principal from other investments, at fair value;

partially offset by (b) $119 of cash used to purchase other investments, at fair value;

and (d) $62 of cash used to purchase furniture and equipment.

The cash provided by financing activities of $12,721 was comprised of (a) $17,500 proceeds from the 2019 FT Revolver and (b) $4,500 in proceeds from issuance of the 2020 Senior Notes;

partially offset by (c) $9,163 of repayment of debt, (d) $54 of cash used to net settle equity awards, and (e) $62 in cash used to pay dividends on vested shares.

Note Regarding Collateral Deposits and Impact on Operating Cash Flow

As part of our matched book repo operations, we enter into reverse repos with counterparties whereby we lend money and receive securities as collateral.

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These amounts can be large and should be taken into account when analyzing our cash flow from operations.

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

Accordingly, included in our 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.

This is included in our net inflows or outflows from working capital fluctuations in the discussion of operating activities above.

We have no legal or contractual obligation to segregate this cash collateral held and therefore it is included as a component of our cash and cash equivalents in our consolidated balance sheets.

However, it is not available for use in our general operations as we 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 cash used in investing activities of $ 10,747 was comprised of (a) $18,519 of cash used to purchase other investments, at fair value, (b) $6,688 of cash used to invest in equity method affiliates, (c) $146 in cash used to purchase furniture, equipment, and leasehold improvements, partially offset by (d) $14,606 of cash provided by sales and returns of principal from other investments, at fair value.

The cash provided by financing activities of $ 16,270 was comprised of (a) $17,500 proceeds from the 2019 FT Revolver;

(b) $2,166 in proceeds from the PPP loan;

and (d) $4,550 in proceeds from non controlling interest investments;

partially offset by (e) $9,163 of repayment of debt, (f) $2,421 of repayments of redeemable financial instruments;

(g) $54 of cash used to net settle equity awards, (h) $746 of cash used to purchase and retire Common Stock, (i) $35 of non-controlling interest distributions;

and (j) $27 in cash used to pay dividends on vested shares.

Nine Months Ended September 30, 2019

As of September 30, 2019, our cash and cash equivalents were $14,130, representing an increase of $24 from December 31, 2018.

The increase was attributable to cash used by operating activities of $9,152, cash provided by investing activities of $4,254, cash provided by financing activities of $5,052, and the decrease in cash caused by the change in exchange rates of $130.

The cash used by operating activities of $9,152 was comprised of (a) net cash inflows of $2,014 related to working capital fluctuations;

(b) net cash outflows of $6,338 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, receivables under resale agreements, securities sold under agreements to repurchase, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, but not yet purchased;

and (c) net cash outflows from other earnings items of $4,828 (which represents net income or loss adjusted for the following non-cash operating items:

other income / (expense), realized and unrealized gains and losses and accretion of income on other investments, equity based compensation, depreciation and amortization, and amortization of discount on debt).

The cash provided by investing activities of $4,254 was comprised of (a) $9,291 of cash received from sales and returns of principal from other investments, at fair value;

partially offset by (b) $1,168 of cash used to purchase other investments, at fair value;

and (d) $94 of cash used to purchase furniture and equipment.

The cash provided by financing activities of $5,052 was comprised of (a) $1,268 in proceeds from redeemable financial instruments;

(b) $2,550 in proceeds from the issuance of non-controlling interests;

and (c) $2,159 in proceeds from draws on LegacyTexas Credit Facility;

partially offset by (d) $128 in cash used to net settle equity awards;

(e) $65 in cash used to purchase and retire Common Stock;

(f) $213 in cash used for non-controlling interest distributions, and (g) $519 in cash used to pay dividends.

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

Regulatory Capital Requirements

We have three subsidiaries that are licensed securities dealers:

JVB in the United States, CCFL in the United Kingdom, and CCFEL in Ireland.

We have two subsidiaries that are licensed securities dealers:

JVB in the United States and CCFEL in Ireland.

broker-dealer, JVB is subject to the Uniform Net Capital Rule in Rule 15c3-1 under the Exchange Act.

Our London-based subsidiary, CCFL, is subject to the regulatory supervision and requirements of the FCA and our Ireland-based subsidiary, CCFEL, is subject to the regulatory supervision and requirements of the CBI.

Our Ireland-based subsidiary, CCFEL, is subject to the regulatory supervision and requirements of the CBI.

The amount of net assets that these subsidiaries may distribute is subject to restrictions under these applicable net capital rules.

These subsidiaries have historically operated in excess of minimum net capital requirements.

Our minimum capital requirements at September 30, 2020 were as follows.

Our minimum capital requirements at March 31, 2021 were as follows.

MINIMUM NET CAPITAL REQUIREMENTS

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United States

We operate with more than the minimum regulatory capital requirement in our licensed broker-dealers and at September 30, 2020 , total net capital, or the equivalent as defined by the relevant statutory regulations, in our licensed broker-dealers totaled $72,869.

We operate with more than the minimum regulatory capital requirement in our licensed broker-dealers and at March 31, 2021 , total net capital, or the equivalent as defined by the relevant statutory regulations, in our licensed broker-dealers totaled $74,317.

See note 19 to our consolidated financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

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Restrictions of Distributions of Capital from JVB

As of September 30, 2020 , our total equity on a consolidated basis was $47,783.

As of March 31, 2021 , our total equity on a consolidated basis was $154,672.

However, the total equity of JVB was $102,841.

Therefore, all of our other subsidiaries and Cohen & Company, Inc.

on a stand-alone basis have an equity deficit of $54,769.

Furthermore, during the nine months ended September 30, 2020 , JVB generated income before income tax expense of $16,922 while our consolidated pre-tax net loss was $5,796 (including goodwill impairment of $7,883).

Therefore, all of our other subsidiaries and Cohen & Company, Inc.

on a stand-alone basis had a combined net loss before income tax expense / (benefit) of $22,718 (including goodwill impairment of $7,883 recorded outside of JVB) for the nine months ended September 30, 2020 .

We are dependent on taking distributions of income (and potentially returns of capital) from JVB to satisfy the cash needs as a result of the loss incurred outside of JVB or to satisfy other obligations that come due outside of JVB.

Of the $51,831 in equity outside of JVB, $44,977 represents non-redeemable non-controlling interests comprised mainly of the non-controlling interests of Insurance SPAC II Sponsor Entities and Insurance SPAC III Sponsor Entities which can not be utilized by the Operating LLC for other purposes.

From time to time, we may need to take distributions of income (and potentially returns of capital) from JVB to satisfy the cash needs as a result of the losses incurred outside of JVB or to satisfy other obligations that come due outside of JVB.

However, we are subject to significant limitations on our ability to make distributions from JVB.

These limitations include limitations imposed by FINRA under rule 15c3-1 (described immediately above) and limitations under our line of credit with FT Bank (see note 17 to our consolidated financial statements included in this Quarterly Report on Form 10-Q).

These limitations include limitations imposed by FINRA under rule 15c3-1 (described immediately above) and limitations under our line of credit with Byline Bank (see note 17 to our consolidated financial statements included in this Quarterly Report on Form 10-Q).

Furthermore, counterparties to JVB have their own internal counterparty credit requirements.

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Furthermore, a termination of our clearing arrangements would result in a significant disruption to our business and would have a significant negative impact on our dealings and relationship with our customers.

The following table presents our period end balance, average monthly balance, and maximum balance at any month end during the nine months ended September 30, 2020 and the twelve months ended December 31, 2019 for receivables under resale agreements and securities sold under agreements to repurchase.

For the Nine Months Ended September 30, 2020

The following table presents our period end balance, average monthly balance, and maximum balance at any month end during the three months ended March 31, 2021 and the twelve months ended December 31, 2020 for receivables under resale agreements and securities sold under agreements to repurchase.

For the Three Months Ended March 31, 2021

For the Twelve Months Ended December 31, 2020

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(Dollars in Thousands)

September 30, 2020

March 31, 2021

December 31, 2020

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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.

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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 11.50% 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.

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(Dollars in thousands)

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

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DGC Trust / CBF

ViaNova Capital Group LLC

Off-Balance Sheet Arrangements

Other than as described in note 9 (derivative financial instruments) and note 15 (variable interest entities) to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, there were no material off balance sheet arrangements as of September 30, 2020 .

Contractual Obligations

The table below summarizes our significant contractual obligations as of September 30, 2020 and the future periods in which such obligations are expected to be settled in cash.

The table below summarizes our significant contractual obligations as of March 31, 2021 and the future periods in which such obligations are expected to be settled in cash.

We assumed that the 2017 Convertible Note is not converted prior to maturity.

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CONTRACTUAL OBLIGATIONS

September 30, 2020

March 31, 2021

(Dollars in Thousands)

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Redeemable Financial Instrument - JKD Capital Partners 1 (3)

Redeemable Financial Instrument - CBF (3)

Other Operating Obligations (4)

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The interest on the junior subordinated notes related to Alesco Capital Trust I is variable.

The interest rate of 4.27% (based on a 90-day LIBOR rate in effect as of September 30, 2020 plus 4.00%) was used to compute the contractual interest payment in each period noted.

The interest rate of 4.21% (based on a 90-day LIBOR rate in effect as of March 31, 2021 plus 4.00%) was used to compute the contractual interest payment in each period noted.

The interest on the junior subordinated notes related to Sunset Financial Statutory Trust I is variable.

The interest rate of 4.37% (based on a 90-day LIBOR rate in effect as of September 30, 2020 plus 4.15%) was used to compute the contractual interest payment in each period noted.

The interest rate of 4.35% (based on a 90-day LIBOR rate in effect as of March 31, 2021 plus 4.15%) was used to compute the contractual interest payment in each period noted.

Represents redemption value of the redeemable financial instruments as of the reporting period.

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The following is a list of recent accounting pronouncements that we believe will have a continuing impact on our financial statements going forward.

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

Simplifying the Accounting for Income Taxes.

This ASU is intended to simplify accounting for income taxes.

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.

We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

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

Simplifying the Accounting for Income Taxes.

This ASU is intended to simplify accounting for income taxes.

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.

We are currently evaluating the new guidance to determine the impact it may have on its 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.

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.

We are currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements.

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):

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This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

We are 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.

We are 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.

We are currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.

Critical Accounting Policies and Estimates

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However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

During the three months ended September 30, 2020 , there were no material changes to matters discussed under the heading “Critical Accounting Policies and Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 .

Effective January 1, 2019, we adopted ASU No.

2016-02, Leases (Topic 842) .

Effective January 1, 2019, we 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.

See notes 3 and 13 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.

During the three months ended March 31, 2021 , there were no material changes to matters discussed under the heading “Critical Accounting Policies and Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 .

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 2. Management’s Discussion and Analysis