What changed in this filing

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Item 9A. Controls and Procedures

2021-02-19 compared with 2020-02-28 · 523 added, 583 removed, 934 unchanged (54% of the section changed)

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promulgated under the Exchange Act.

Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that, as of December 31, 2019, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the

Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with

authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

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Consolidated Financial Statements

The consolidated financial statements and report of independent registered public accounting firm required by this item are included beginning on page F-1.

The consolidated financial statements and reports of independent registered public accounting firm required by this item are included beginning on page F-1.

Financial Statement Schedules

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Description of the Matter

At December 31, 2019, the Company recorded a current deferred consideration liability of $13,953,000, a long term deferred consideration liability of $159,071,000 and a loss on the revaluation

of deferred consideration of $11,293,000.

At December 31, 2020, the Company recorded a current deferred consideration liability of $17,374,000 and a long-term deferred consideration liability of $212,763,000 and for the year ended December 31, 2020, the Company recorded a loss on the revaluation of deferred consideration of $56,821,000.

As more fully described in Notes 2, 5 and 12 to the consolidated financial statements, deferred consideration represents an obligation of the Company for fixed payments of physical gold bullion to a third party into perpetuity that is carried at fair value.

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Indefinite-lived intangible assets are impaired if their estimated fair values are less than their carrying values.

Company determined the fair value of its ETFS intangible assets using an income approach (discounted cash flow analysis) with significant unobservable inputs that included the weighted average cost of capital and projected revenue growth rates.

The Company determined the fair value of its ETFS intangible assets using an income approach (discounted cash flow analysis) with significant unobservable inputs that included the weighted average cost of capital and projected revenue growth rates.

Auditing the Company’s quantitative impairment assessment for its ETFS indefinite-lived intangible assets was complex due to the significant unobservable inputs required in determining fair value.

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For example, we agreed to our audit workpapers the ETFS cash flows which were used as a data point in the discounted cash flow analysis.

We compared the projected revenue growth rates to the Company’s historical results and those of other guideline public companies in the same industry.

We compared the projected revenue growth rates to the Company’s historical results and to those of other guideline public companies in the same industry.

In addition, we assessed the accuracy of the Company’s historical projections by comparing them to actual operating results.

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Cash and cash equivalents

Securities owned, at fair value

Accounts receivable

Income taxes receivable

Securities owned, at fair value (including $ 23,932 and $ 16,886 invested in WisdomTree ETFs at December 31, 2020 and 2019, respectively)

Accounts receivable (including $ 26,884 and $ 25,667 due from related parties at December 31, 2020 and 2019, respectively)

Prepaid expenses

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Total current liabilities

Convertible notes (Note 14)

Debt (Note 13)

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Operating lease liabilities (Note 16)

Deferred rent payable

Other noncurrent liabilities (Note 24)

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Convertible, par value $ 0.01 ;

shares authorized, issued and

outstanding (Note 14)

14.750 shares authorized, issued and outstanding;

redemption value of $ 72,667 and $ 71,630 at December 31, 2020 and 2019, respectively) (Note 15)

Contingencies (Note

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issued and outstanding:

at December 31, 2019 and December 31, 2018, respectively

148,716 and 155,264 at December 31, 2020 and 2019, respectively

Additional paid-in

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Third-party distribution fees

Acquisition and disposition-related costs (Note 3)

Total expenses

Acquisition and disposition-related costs

Total operating expenses

Operating income

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Impairments (Note 27)

Settlement gain (Note 10)

Other losses, net

Income before income taxes

Loss on extinguishment of debt (Note 13)

Other gains and losses, net

(Loss)/income before income taxes

Income tax expense

Net (loss)/income

(Loss)/earnings per share—basic (Note 22)

(Loss)/earnings per share—diluted (Note 22)

Weighted-average common shares—basic (Note 22)

Weighted-average common shares—diluted (Note 22)

(Loss)/earnings per share—basic

(Loss)/earnings per share—diluted

Weighted-average common shares—basic

Weighted-average common shares—diluted

Cash dividends declared per common share

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Net (loss)/income

Other comprehensive income/(loss)

Other comprehensive income

Reclassification of foreign currency translation adjustment to other gains and losses, net, upon the sale of WisdomTree Asset Management Canada, Inc.

(“WTAMC” or “Canadian ETF business”) (Note 3)

Reclassification of foreign currency translation adjustment to other gains and losses, net, upon the liquidation of WisdomTree Japan Inc.

Change in unrealized gains/(losses) on available-for-sale

debt securities, net of tax

Foreign currency translation adjustment

Reclassification of foreign currency translation adjustment to other losses, net, upon the liquidation of WisdomTree Japan Inc.

Foreign currency translation adjustment, net of income taxes

Other comprehensive income

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Balance—January 1, 2018

Common stock issued (Note 3)

Restricted stock issued and vesting of restricted stock units, net

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Stock-based compensation

Tax benefit from stock option exercised and vested restricted shares

Other comprehensive income

Balance—December 31, 2018

Common stock issued (Note 3)

Restricted stock issued and vesting of restricted stock units, net

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Stock-based compensation

Allocation of equity component related to convertible notes, net of issuance costs of $ 157 and deferred taxes of $ 1,239

Other comprehensive income

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Advisory fees received in gold and other precious metals

Loss/(gain) on revaluation of deferred consideration – gold payments

Contractual gold payments

Stock-based compensation

Loss/(gain) on revaluation of deferred consideration—gold payments

Amortization of right of use asset

Amortization of credit facility issuance costs

interest income (Note 9)

Depreciation and amortization

Gain on sale – Canadian ETF business

Loss on extinguishment of debt

Deferred income taxes

Settlement gain

Amortization of issuance costs – convertible notes

Amortization of issuance costs – former credit facility

Depreciation and amortization

interest income

Changes in operating assets and liabilities:

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Accounts receivable

Income taxes receivable/payable

Prepaid expenses

Gold and other precious metals

Acquisition payable

Fund management and administration payable

Compensation and benefits payable

Income taxes payable

Securities sold, but not yet purchased, at fair value

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Purchase of fixed assets

Purchase of investments (Note 10)

Funding of notes receivable (Note 9)

Proceeds from held-to-maturity

securities maturing or called prior to maturity

Purchase of securities held-to-maturity

Purchase of debt securities available-for-sale

Proceeds from the sale of the Company’s financial interests in AdvisorEngine Inc.

Proceeds from the sale of Canadian ETF business, net

Purchase of investments

Funding of notes receivable

Proceeds from sales and maturities of debt securities available-for-sale

Cash paid for acquisition, net of cash acquired (Note 3)

Cash paid—Acquisition of the right to manage Questrade’s ETFs (Note 2

Net cash used in investing activities

Year Ended December 31,

Cash paid for acquisition, net of cash acquired

Net cash provided by/(used in) investing activities

Cash flows from financing activities:

Dividends paid

Repayment of debt

Shares repurchased

Dividends paid

Convertible notes issuance costs

Proceeds from the issuance of convertible notes (Note 14)

Proceeds from exercise of stock options

Credit facility issuance costs

Preferred stock issuance costs

Proceeds from the issuance of debt (Note 3)

Proceeds from exercise of stock options

Proceeds from the issuance of debt

Net cash (used in)/provided by financing activities

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asset and lease liability of $ 19,827 and $ 24,817 , respectively, upon the implementation of Accounting Standards Update 2016-02,

See Note 15 for additional information.

In April 2018, the Company issued 14,750 shares of preferred stock and 15,250,000 shares of common stock to ETFS Capital in connection with the ETFS Acquisition which were collectively valued at $ 270,000 (See Note 3).

In addition, a wholly-owned subsidiary of the Company assumed a deferred consideration obligation which was valued at $ 172,746 on the acquisition date (See Note 12).

On June 20, 2017, the Company was issued newly authorized preferred stock of Thesys Group, Inc.

(“Thesys”) in connection with the resolution of a dispute related to the Company’s ownership stake in Thesys.

The fair value of the preferred stock on June 20, 2017 was $ 6,909 and has been subsequently reduced to $ 3,080 upon the recognition of an impairment during the year ended December 31, 2018 (See Note 10).

In addition, a wholly-owned subsidiary of the Company assumed a deferred consideration obligation which was valued at $ 172,746 on the acquisition date (Note 12).

During the year ended December 31, 2018, stock options that would have resulted in $ 508 of proceeds upon exercise were instead exercised on a cashless basis.

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WisdomTree Management Jersey Limited

formerly ETFS Management Company (Jersey) Limited, is a Jersey based management company providing management services to eight issuers (the “ManJer Issuers”) in respect of the ETPs issued and listed by the ManJer Issuers covering commodity, currency, cryptocurrency and leveraged-and-inverse

(“ManJer”) is a Jersey based management company providing management services to seven issuers (the “ManJer Issuers”) in respect of the ETPs issued and listed by the ManJer Issuers covering commodity, currency, cryptocurrency and leveraged-and-inverse

WisdomTree Multi Asset Management Limited

(“WTMAML”), formerly Boost Management Limited, is a Jersey based management company providing management services to WisdomTree Multi Asset Issuer PLC (“WMAI”) in respect of the ETPs issued by WMAI.

(“WTMAML”) is a Jersey based management company providing management services to WisdomTree Multi Asset Issuer PLC (“WMAI”) in respect of the ETPs issued by WMAI.

WMAI, a non-consolidated

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WisdomTree Management Limited

is an Ireland based management company providing management services to WisdomTree Issuer plc (“WTI”) in respect of the WisdomTree UCITS ETFs issued by WTI.

is an Ireland based management company providing management services to WisdomTree Issuer ICAV (“WTI”) in respect of the WisdomTree UCITS ETFs issued by WTI.

WTI, a non-consolidated

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WisdomTree Commodity Services, LLC

(“WTCS”) is a New York based company that serves as the managing owner and commodity pool operator of the WisdomTree Continuous Commodity Index Fund.

WTCS is registered with the Commodity Futures Trading Commission and is a member of the National Futures Association.

Acquisition of ETFS

On April 11, 2018 , the Company acquired the European exchange-traded commodity, currency and leveraged-and-inverse

business (“ETFS”) of ETFS Capital Limited (“ETFS Capital”, formerly known as ETF Securities Limited).

This acquisition is referred to throughout the consolidated financial statements as the ETFS Acquisition.

See Note 3 for additional information.

Sale of Canadian Subsidiary

On November 6

, 2019, the Company entered into a definitive agreement to sell all of the outstanding shares of it s wholly-ow n

Canadian subsidiary, WisdomTree Asset Management Canada, Inc.

(“WTAMC”), to CI Financial Corp.

On February 19, 2020, the Company completed the sale of WTAMC, with CI Financial paying CDN $ 5,000 (USD $ 3,800 ) in cash at closing, with total cash

consideration ranging from CDN $

13,000 (USD $

5,400 to USD $

9,900 ), depending on the achievement of certain AUM growth targets over the next

three years .

WTAMC is a Canada based investment fund manager registered with the Ontario Securities Commission providing fund management services to locally-listed WisdomTree Canadian ETFs.

WTAMC reported operating losses during the years ended December 31, 2019, 2018 and 2017 of $ 2,786 , $ 3,925 and $ 3,560 , respectively.

Restructuring of Distribution Strategy in Japan

In July 2018, the Company determined to restructure its distribution strategy in Japan and has expanded its existing relationship with Premia Partners Company Limited to manage distribution of the Company’s ETFs in Japan.

As a result, WisdomTree Japan Inc.

(“WTJ”) has ceased operations.

During the year ended December 31, 2019, WTJ was liquidated and the foreign currency translation adjustment of $ 397 previously recorded in accumulated other comprehensive income was recognized in other gains and losses, net in the Consolidated Statements of Operations.

WTJ reported operating losses during the years ended December 31, 2019, 2018 and 2017 of $ 550 , $ 4,520 and $ 4,553 , respectively.

(“WTCS”) is a New York based company that served as the managing owner and commodity pool operator of the WisdomTree Continuous Commodity Index Fund (“GCC”) until December 2020 when GCC was reorganized into the WisdomTree Enhanced Commodity Strategy Fund under WTT.

Sale of Canadian ETF Business

On February 19, 2020, the Company completed the sale of WTAMC to CI Financial Corp.

Significant Accounting Policies

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The usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest.

If the Company has a majority voting interest in a VOE, the entity is consolidated.

Company has a majority voting interest in a VOE, the entity is consolidated.

The Company has a controlling financial interest in a VIE when the Company has a variable interest that provides it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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Segment and Geographic Information

The Company operates as an ETP sponsor and asset manager providing investment advisory services globally.

These activities are reported in the Company’s U.S.

Business and International Business reportable

The International Business reportable segment includes the results of the Company’s European operations and Canadian operations.

The financial results of ETFS are included in the International Business reportable segment as of the acquisition date.

Effective January 1, 2020, the Company, through its subsidiaries in the U.S.

and Europe, conducts business as a single operating segment as an ETP sponsor and asset manager which is based upon the Company’s current organizational and management structure, as well as information used by the chief operating decision maker to allocate resources and other factors.

Previously, the Company’s financial results were reported in its U.S.

Business and International Business reportable segments.

Foreign Currency Translation

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Contractual Gold Payments

Contractual gold payments are measured and paid monthly based upon the average daily spot price of gold (See Note 12).

Contractual gold payments are measured and paid monthly based upon the average daily spot price of gold (Note 12).

Marketing and Advertising

Advertising costs, including media advertising and production costs, are expensed when incurred.

Marketing and advertising

costs, including media advertising and production costs, are expensed when incurred.

Depreciation and Amortization

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Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all equity awards based on estimated fair values.

Stock-based compensation is measured based on the

rant-date fair value of the award and is amortized over the relevant service period.

Stock-based compensation is measured based on the grant-date fair value of the award and is amortized over the relevant service period.

Forfeitures are recognized when they occur.

Third-Party Distribution Fees

The Company pays a percentage of its advisory fee revenues based on incremental growth in AUM, subject to caps or minimums, to marketing agents to sell WisdomTree ETFs and for including WisdomTree ETFs on third-party customer platforms.

The Company pays a percentage of its advisory fee revenues based on incremental growth in assets under management (“AUM”), subject to caps or minimums, to marketing agents to sell WisdomTree ETFs and for including WisdomTree ETFs on third-party customer platforms

and recognizes these expenses as incurred.

Cash and Cash Equivalents

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The Company maintains deposits with financial institutions in an amount that is in excess of federally insured limits.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable

Accounts receivable are customer and other obligations due under normal trade terms.

An allowance for doubtful accounts is not provided since, in the opinion of management, all accounts receivable recorded are deemed current and collectible.

The Company measures credit losses , if any,

by applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts to amounts outstanding using the aging method.

Impairment of Long-Lived Assets

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Notes Receivable

Notes receivable are accounted for on an amortized cost basis, net of original issue discount and impairments , if any

Notes receivable are accounted for on an amortized cost basis, including accrued interest and net of original issue discount and impairments, if any.

Interest income is accrued over the term of the notes using the effective interest method.

The Company performs a review for the impairment of the notes receivable on a quarterly basis and provides for an allowance for credit losses if all or a portion of the notes are determined to be uncollectible.

Notes receivable are placed on non-accrual

status when the Company is in receipt of information indicating collection of interest is doubtful.

Cash received on notes receivable placed on non-accrual

status is recognized on a cash basis as interest income if and when received.

Effective January 1, 2020, the Company performs a review for the impairment of the notes receivable and accrued interest on a quarterly basis using the current expected credit loss model and provides for an allowance for credit losses by applying an estimated loss rate to amounts outstanding at the balance sheet date.

Previously, credit losses were measured using an incurred loss approach.

Securities Owned and Securities Sold, but not yet Purchased (at fair value)

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Debt securities are classified based primarily on the Company’s intent to hold or sell the security.

Changes in the fair value of securities classified as trading are reported in other income in the period the change occurs.

Unrealized gains and losses of securities classified as available-for-sale

are included in other comprehensive income.

Once sold, amounts reclassified out of accumulated other comprehensive income and into earnings are determined using the specific identification method.

Available-for-sale

securities are assessed for impairment on a quarterly basis.

Changes in the fair value of debt securities classified as trading and AFS are reported in other income and other comprehensive income, respectively, in the period the change occurs.

Debt securities classified as AFS are assessed for impairment on a quarterly basis and an estimate for credit loss is provided when the fair value of the AFS debt security is below its amortized cost basis.

Credit-related impairments are recognized in earnings with a corresponding adjustment to the security’s amortized cost basis if the Company intends to sell the impaired AFS debt security or it is more likely than not the Company will be required to sell the security before recovering its amortized cost basis.

Other credit-related impairments are recognized as an allowance with a corresponding adjustment to earnings.

Impairments resulting from noncredit-related factors are recognized in other comprehensive income.

Amounts recorded in other comprehensive income are reclassified into earnings upon sale of the AFS debt security using the specific identification method.

Securities Held-to-Maturity

The Company accounts for certain of its investments as held-to-maturity

The Company accounts for certain of its securities as held-to-maturity

on a trade date basis, which are recorded at amortized cost.

For held-to-maturity

investments, the Company has the intent and ability to hold investments to maturity and it is not more-likely-than-not

that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity.

On a quarterly basis, the

Company reviews its portfolio of investments for impairment.

If a decline in fair value is deemed to be other-than-temporary, the security is written down to its fair value through earnings.

securities, the Company has the intent and ability to hold these securities to maturity and it is not more-likely-than-not

that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be maturity.

Held-to-maturity

securities are placed on non-accrual

status when the Company is in receipt of information indicating collection of interest is doubtful.

Cash received on held-to-maturity

securities placed on non-accrual

status is recognized on a cash basis as interest income if and when received.

Effective January 1, 2020, the Company reviews its portfolio of held-to-maturity

securities for impairment on a quarterly basis, recognizing an allowance, if any, by applying an estimated loss rate after consideration for the nature of collateral securing the financial asset as well as potential future changes in collateral values and historical loss information for financial assets secured with similar collateral.

Previously, these securities were evaluated for impairment on a quarterly basis and if a decline in fair value was deemed to be other-than-temporary, the securities were written down to their fair value through earnings.

Investments in pass-through government-sponsored enterprises (“GSEs”) are determined to have an estimated loss rate of zero due to an implicit U.S.

government guarantee.

The Company accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update (“ASU”) 2016-01,

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Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment.

Goodwill is the excess of the fair value of the purchase price over the fair values of the identifiable net assets at the acquisition date.

The Company tests its goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation,

if one were to occur, in accordance with ASU 2017-04,

Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment

The Company early adopted the revised guidance for the impairment tests performed after January 1, 2017.

Under the revised guidance, goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value.

Business Combinations

The Company accounts for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations,

which requires an allocation of the consideration we paid to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition.

The excess of the fair value of purchase price over the fair values of these identifiable assets, intangible assets and liabilities is recorded as goodwill.

Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date.

The Company tests goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation,

if one were to occur.

Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value.

If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill.

A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component.

For impairment testing purposes, goodwill has been allocated to the Company’s U.S.

Business reporting unit which is assessed annually for impairment on April 30 th

In addition, goodwill arising from the ETFS Acquisition (Note 3) has been allocated to the European Business reporting unit, included within the International Business reportable segment and is assessed annually for impairment on November 30 th

When performing its goodwill impairment test, the Company considers a qualitative assessment, when appropriate, and the market approach and its market capitalization when determining the fair value of its reporting units.

Goodwill is allocated to the Company’s U.S.

Business and European Business components.

Effective January 1, 2020, for impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics.

Previously, these components were tested separately for impairment when the

Company was operating as more than one operating segment.

Goodwill is assessed for impairment annually on November 30 th

When performing its goodwill impairment test, the Company considers a qualitative assessment, when appropriate, and a quantitative assessment using the market approach and its market capitalization when determining the fair value of the reporting unit.

Intangible Assets

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Deferred Consideration – Gold Payments

Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices and a selected discount rate (Note 12).

Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate (Note 12).

Changes in the fair value of this obligation are reported as (loss)/gain on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.

Debt is carried at amortized cost, net of debt issuance costs.

Interest expense is recognized using the effective interest method and includes amortization of debt issuance costs over the life of the debt.

Convertible Notes and Debt

Convertible notes and debt are carried at amortized cost, net of discounts and issuance costs.

The convertible notes are required to be separated into their liability and equity components by allocating the issuance proceeds to each of these components.

The liability component for convertible instruments that qualify for a derivative scope exception (applicable to the convertible notes) is allocated proceeds equal to the estimated fair value of similar debt instruments without the conversion option.

The difference between the gross proceeds received from the issuance of the convertible notes and the proceeds allocated to the liability component represents the residual amount that is recorded in additional paid-in

Interest expense is recognized using the effective interest method and includes amortization of discounts and debt issuance costs over the life of the debt.

Contingencies

The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business.

The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable.

Earnings per Share

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Net income available to common stockholders represents net income of the Company reduced by an allocation of earnings to participating securities.

The preferred stock issued in connection with the ETFS Acquisition (Note 14) and unvested share-based payment awards that contain non-forfeitable

The Series A non-voting

convertible preferred stock (Note 15) and unvested share-based payment awards that contain non-forfeitable

rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the two-class

Share-based payment awards that do not contain such rights are not deemed participating securities and are included in diluted shares outstanding (if dilutive).

Diluted EPS is calculated under the treasury stock and if-converted

method and the two-class

Diluted EPS is calculated under the treasury stock method and the two-class

The calculation that results in the lowest diluted EPS amount for the common stock is reported in the Company’s consolidated financial statements.

liabilities using the enacted tax rates in effect for the year in which differences are expected to reverse.

The treasury stock method includes the dilutive effect of potential common shares including unvested stock-based awards, the Series A non-voting

convertible preferred stock and the convertible notes, if any.

Potential common shares associated with the Series A non-voting

convertible preferred stock and the convertible notes are computed under the if-converted

Potential common shares associated with the conversion option embedded in the convertible notes are dilutive when the Company’s average stock price exceeds the conversion price.

The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which differences are expected to reverse.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not

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The Company records interest expense and penalties related to tax expenses as income tax expense.

The Global Intangible Low-Taxed

Income (“GILTI”) provisions of the Tax Reform Act requires the Company to include in its U.S.

income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes.

The Company accounts for the tax effects of these provisions in the period that is subject to such tax.

based taxes are recorded as part of other liabilities and other expenses.

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06,

Debt – Debt with Conversion and Other Options

(ASU 2020-06).

Under the ASU, the accounting for convertible instruments will be simplified by removing major separation models required under current GAAP.

Accordingly, more convertible instruments will be reported as a single liability or equity with no separate accounting for embedded conversion features.

Certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception will be removed and, as a result, more equity contracts will qualify for the scope exception.

The ASU will also simplify the diluted earnings-per-share

calculation in certain areas.

The ASU will be effective for years beginning after December 31, 2021, including interim periods within those fiscal years.

Early adoption is permitted for fiscal periods beginning after December 15, 2020 (including interim periods within the same fiscal year).

The adoption of this ASU will result in a reduction of interest expense recognized on the Company’s convertible notes (Note 14) of approximately $ 420 per quarter.

The Company expects to early adopt this ASU.

In December 2019, the FASB issued ASU 2019-12,

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The main objective of the standard is to reduce complexity in the accounting for income taxes by removing the following exceptions:

(1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income), (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date

(2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment;

(3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary;

and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date

loss exceeds the anticipated loss for the year.

The standard also simplifies the accounting for income taxes by enacting

the following:

The standard also simplifies the accounting for income taxes by enacting the following:

(a) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount as a non-income-based

requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered as a separate transaction, (c) specifying that an entity is not

allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements and (d) requiring that an entity reflect the enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

(b) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered as a separate transaction;

(c) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements;

and (d) requiring that an entity reflect the enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

is effective for years beginning after December 15, 2020, including the interim periods within those reporting periods.

Early adoption is permitted.

The Company has determined that this standard will not have a material impact on its financial statements and is currently evaluating whether to early adopt this standard.

In June 2016, the FASB issued ASU 2016-13,

The Company has determined that this standard will not have a material impact on its financial statements and has not early adopted this ASU.

Recently Adopted Accounting Pronouncements

On January 1, 2020, the Company adopted ASU 2016-13,

Financial Instruments-Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments

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The main objective of the standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

In issuing this standard, the FASB is responding to criticism that today’s guidance delays recognition of credit losses.

The standard will replace today’s “incurred loss” approach with an “expected loss” model.

The new model, referred to as the current expected credit loss (“CECL”) model, will apply to:

In issuing this standard, the FASB is responding to criticism that prior guidance delayed recognition of credit losses.

The standard replaced the prior guidance’s “incurred loss” approach with an “expected loss” model.

The new model, referred to as the current expected credit loss (“CECL”) model, applies to:

(1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance

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and other financial assets measured at fair value through other comprehensive income, and beneficial interests in securitized financial assets.

The CECL model does not apply to available-for-sale

debt securities.

For available-for-sale

debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities.

Accordingly, the new methodology will be utilized when assessing the Company’s financial instruments for impairment.

As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today.

ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.

also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.

is effective for years beginning after December 15, 2019, including interim periods within those fiscal years under a modified retrospective approach.

The Company has evaluated the impact of this standard which is applicable to its trade receivables and held-to-maturity

securities and has determined it will not have a material impact on its consolidated financial statements.

This standard will be adopted on January 1, 2020.

In August 2018, the FASB issued ASU 2018-13,

The CECL model does not apply to AFS debt securities.

For AFS debt securities with unrealized losses, entities measure credit losses in a manner similar to prior guidance, except that the credit losses are recognized as allowances rather than reductions in the amortized cost of the securities.

Accordingly, the new methodology is utilized when assessing the Company’s financial instruments for impairment.

As a result, entities recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time.

The ASU also simplified the accounting model for purchased credit-impaired debt securities and loans.

also expanded the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.

The adoption of this standard, which is applicable to the Company’s trade receivables, notes receivable and held-to-maturity

securities, did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2020, the Company adopted ASU 2018-13,

Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

(ASU 2018-13),

which modifies the disclosure requirements on fair value measurements, including removing the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels and (3) the valuation processes for Level 3 fair value measurements.

which modified the disclosure requirements on fair value measurements, including removing the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels and (3) the valuation processes for Level 3 fair value measurements.

also added new disclosures including the requirement to disclose (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2019 and early adoption is permitted.

This standard will only impact the disclosures pertaining to fair value measurements and will be adopted on January 1, 2020.

Business Combination

On April 11, 2018, the Company acquired from ETFS Capital its European exchange-traded commodity, currency and leveraged-and-inverse

business for a purchase price consisting of $ 253,000 in cash and a fixed number of shares of the Company’s capital stock, consisting of (i) 15,250,000 shares of common stock (the “Common Shares”) and (ii) 14,750 shares of Series A Non-Voting

This standard only impacted the disclosures pertaining to fair value measurements and were incorporated into the notes to the Company’s consolidated financial statements.

Acquisitions and Exit Activities

Acquisition of ETFS

On April 11, 2018, the Company acquired the European exchange-traded commodity, currency and leveraged-and-inverse

business (“ETFS”) of ETFS Capital Limited (“ETFS Capital”) for a purchase price consisting of $ 253,000 in cash and a fixed number of shares of the Company’s capital stock, consisting of (i) 15,250,000 shares of common stock (the “Common Shares”) and (ii) 14,750 shares of Series A Non-Voting

Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock.

ETFS Capital is subject to a standstill restriction and has registration rights with respect to the Common Shares and shares issuable upon conversion of the Preferred Shares.

Also on April 11, 2018 and in connection with the acquisition, the Company entered into a credit agreement, pursuant to which the lenders extended a $ 200,000 term loan (the “Term Loan”) and made available a $ 50,000 revolving credit facility (the “Revolver” and, together with the Term Loan, the “Credit Facility”) (Note 13).

Purchase Price Allocation

The ETFS Acquisition has been accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations,

which requires an allocation of the consideration paid by the Company to the identifiable assets and liabilities of ETFS based on the estimated fair values as of the closing date of the acquisition.

An allocation of the consideration transferred is presented below and includes the

Company’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed.

The following table summarizes the allocation of the purchase price as of the acquisition date:

Purchase price

Preferred Shares issued

Conversion ratio

Common stock equivalents

Common Shares issued

Total shares issued

WisdomTree stock price (1)

Equity portion of purchase price

Cash portion of purchase price

Term Loan (Note 13)

Purchase price

Deferred consideration (Note 12)

Allocation of consideration

Cash and cash equivalents

Receivables and other current assets

Intangible assets (2)

Other current liabilities

Fair value of net assets acquired

Goodwill resulting from the ETFS Acquisition (3)

The closing price of the Company’s common stock on April 10, 2018, the trading day prior to the closing date of the acquisition.

Represents purchase price allocated to customary advisory agreements.

The fair value of the intangible assets was determined using an income approach (discounted cash flow analysis) which relied upon significant unobservable inputs including a revenue growth multiple of 3 % to 4 % and a weighted average cost of capital of 11.6 %.

These intangible assets were determined to have an indefinite useful life and are not deductible for tax purposes.

A deferred tax liability associated with these intangible assets was not recognized as the intangibles arose in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.

Goodwill arising from the ETFS Acquisition represents the value of synergies created from combining the operations of ETFS and the Company.

The goodwill is not deductible for tax purposes as the transaction was structured as a stock acquisition occurring in the United Kingdom.

Acquisition and Disposition-Related Costs

During the year ended December 31, 2019, the Company incurred acquisition and disposition-related costs of $ 902 of which $ 608 were predominantly associated with the integration of ETFS and costs incurred in connection with the rationalization of the Company’s product offering in Europe following the ETFS Acquisition.

The remainder of such costs were associated with the Company’s agreement to sell WTAMC, which was completed o

February 19, 2020 (Note 1).

During the year ended December 31, 2018, the Company incurred acquisition and disposition-related costs associated with the ETFS Acquisition of $ 11,454 , which included professional advisor fees, severance and other compensation costs, a write-off

of the Company’s office lease and other integration costs.

During the year ended December 31, 2017, the Company incurred acquisition and disposition-related costs of $ 4,832 , which were primarily professional fees associated with the ETFS Acquisition, as well as professional fees associated with securing an option to purchase the remaining equity interests in AdvisorEngine Inc.

(“AdvisorEngine”).

This option has since expired.

Operating Results of ETFS

The Company also assumed an obligation to pay deferred consideration into perpetuity (Note 12).

This acquisition is referred to throughout the consolidated financial statements as the ETFS Acquisition.

The Company’s Consolidated Statements of Operations include the following operating results of ETFS since the acquisition date of April 11, 2018 through December 31, 2018:

Income before taxes:

$ 23,197 (including a gain on revaluation of deferred

consideration of $ 12,220 )

$ 23,197 (including a gain on revaluation of deferred consideration of $ 12,220 )

Supplemental Unaudited Pro Forma Financial Information

The following table presents unaudited pro forma financial information of the Company as if the ETFS Acquisition had been consummated on January 1, 2017.

The information was derived from the historical financial results of the Company and ETFS for all periods presented and was adjusted to give effect to pro forma events that are directly attributable to the acquisition, factually supportable and expected to have a continuing impact on the combined results following the acquisition.

Years Ended December 31,

Included within the pro forma financial information above is a loss on revaluation of deferred consideration of ($ 740 ) and ($ 2,380 ) for years ended December 31, 2018 and 2017, respectively.

Significant adjustments to the unaudited pro forma financial information above include the recognition of interest expense associated with the Credit Facility for the periods presented, eliminating acquisition-related costs directly attributable to the acquisition and adjusting consolidated income tax expense based upon the Company’s anticipated normalized consolidated effective tax rate.

Had the ETFS Acquisition been consummated on January 1, 2018, the Company’s revenues and net income for the year ended December 31, 2018 would have been $ 297,541 and $ 37,336 , respectively.

This information was derived from the historical financial results of the Company and ETFS and was adjusted to give effect to pro forma events that are directly attributable to the acquisition, factually supportable and expected to have a continuing impact on the combined results following the acquisition.

Significant adjustments to the unaudited pro forma financial information above include the recognition of interest expense arising from a borrowing to consummate the acquisition, eliminating acquisition-related costs directly attributable to the acquisition and adjusting consolidated income tax expense based upon the Company’s anticipated normalized consolidated effective tax rate.

The unaudited pro forma financial information above is not necessarily indicative of what the combined results of the Company would have been had the acquisition been completed as of January 1, 2018 and does not purport to project the future results of the combined company.

In addition, the unaudited pro forma financial information does not reflect any future planned cost savings initiatives following the completion of the acquisition.

In addition, the unaudited pro forma financial information does not reflect any cost savings initiatives following the completion of the acquisition.

Exit Activities

The following table summarizes operating losses recognized by the Company’s wholly-owned subsidiaries that have either been sold or liquidated during reporting periods covered by its consolidated financial statements:

Years Ended December 31,

WisdomTree Japan Inc.

WTJ also recognized an impairment expense of $ 572 in connection with the termination of its office lease during the year ended December 31, 2019.

Sale of Canadian ETF Business

On February 19, 2020, the Company completed the sale of all the outstanding shares of WTAMC to CI Financial Corp.

The Company received CDN $ 3,720 (USD $ 2,774 ) in cash at closing and will receive additional cash consideration of CDN $ 2,000 to $ 8,000 , depending on the achievement of certain AUM growth targets over the next three years .

During the year ended December 31, 2020, the Company recognized a $ 2,877 gain on sale which was recorded in other gains and losses, net on the Consolidated Statements of Operations and represents the difference between the minimum cash consideration payable to the Company and the carrying value of WTAMC’s net assets upon disposition.

Contingent payments, if any, are recognized by the Company when the contingency is resolved and the gain is realized.

Restructuring of Distribution Strategy in Japan

In July 2018, the Company determined to restructure its distribution strategy in Japan.

As a result, WTJ ceased operations and was liquidated in September 2019.

Acquisition and Disposition-Related Costs

During the years ended December 31, 2020, 2019 and 2018, the Company incurred acquisition and disposition-related costs of $ 416 , $ 902 and $ 11,454 , respectively, in connection with the sale of WTAMC and the ETFS Acquisition.

Cash and Cash Equivalents

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At December 31, 2020 and December 31, 2019, cash equivalents were approximately $ 660 and $ 317 , respectively.

ertain of the Company’s subsidiaries of its International Business segment are required to maintain a minimum level of regulato ry

, which was $ 12,312

and $ 11,005 at December 31, 2019 and December 31, 2018, respectively.

Certain of the Company’s international subsidiaries are required to maintain a minimum level of regulatory capital, which was $ 10,745 and $ 12,312 at December 31, 2020 and December 31, 2019, respectively.

These requirements are generally satisfied by cash on hand.

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The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date.

ASC 820, Fair Value Measurements

ASC 820, Fair Value Measurement

, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

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Instruments whose significant drivers are unobservable.

The availability

of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the

market, the determination of fair value requires more judgment.

The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3.

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Securities owned, at fair value

Pass-through GSEs

Corporate bonds

Non-recurring

fair value measurements:

AdvisorEngine—

Financial interests

AdvisorEngine Inc.

(“AdvisorEngine”) – Financial interests (1)

Thesys Group, Inc.

(“Thesys”) – Series Y Preferred Stock (1)

Recurring fair value measurements:

Deferred consideration (Note 12)

Securities sold, but not yet purchased

Non-recurring

fair value measurements:

Convertible notes (2)

The fair value of the AdvisorEngine financial interests of $ 9,592 was determined on May 4, 2020, the date in which these financial interests were sold (Note 8).

Thesys was written down to zero on September 30, 2020 (Note 10).

Fair value of $ 145,847 and $ 24,344 determined on June 16, 2020 and August 13, 2020, respectively (Note 14).

December 31, 2019

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fair value measurements:

Thesys—Series Y preferred stock (2)

AdvisorEngine Inc.

– Financial interests (1)

Recurring fair value measurements:

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Securities sold, but not yet purchased

Fair value determined on December 31, 201 9

Fair value determined on December 31, 2019 (Note 8).

Recurring Fair Value Measurements—Methodology

Cash Equivalents (Note 4)

Cash Equivalents

– These financial assets represent cash invested in highly liquid investments with original maturities of less than 90 days.

These investments are valued at par, which approximates fair value, and are considered Level 1.

Securities Owned/Sold but Not Yet Purchased (Note 6)

—Securities owned and sold, but not yet purchased are investments in ETFs.

These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy.

Securities Owned/Sold but Not Yet Purchased

– Securities owned and sold, but not yet purchased are investments in ETFs, pass-through GSEs and corporate bonds.

ETFs are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy.

Deferred Consideration

Deferred consideration represents the present value of an obligation to pay gold into perpetuity and was measured at December 31, 2019 using forward-looking gold prices ranging from $ 1,535 per ounce to $ 2,328 per ounce ($ 1,294 per ounce to $ 2,621 per ounce at December 31, 2018) which are extrapolated from the last observable price (beyond 2025), discounted

at a rate of 10 % and includes a perpetual growth rate of 1.5 %.

This obligation is classified as Level 3 as the discount rate, perpetual growth rate and extrapolated forward-looking gold prices are significant unobservable inputs.

An increase in forward-looking gold prices would result in an increase in deferred consideration, whereas an increase in the discount rate would reduce the fair value.

See Note 12 for additional information.

Pricing of pass-through GSEs and corporate bonds include consideration given to collateral characteristics and market assumptions related to yields, credit risk and prepayments and are therefore classified as Level 2 in the fair value hierarchy.

Deferred Consideration (Note 12)

– Deferred consideration represents the present value of an obligation to pay gold into perpetuity.

The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

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Net realized losses (1)

Net unrealized losses/(gains) (2)

Net unrealized losses

Ending balance

Recorded as contractual gold payments expense on the Company’s Consolidated Statements of Operations.

Recorded as (loss)/gain on revaluation of deferred consideration—gold payments on the Company’s Consolidated Statements of Operations.

Recorded as loss on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.

Securities Owned/Sold but Not Yet Purchased

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Trading securities

The Company had no available-for-sale

debt securities at

December 31, 2019 and December 31, 2018.

During the years

ended December 31, 2018 and 2017

, the Company received $ 64,498 and $ 91,095 ,

respectively,

of proceeds from the sale and maturity of available-for-sale

securities and recognized gross realized losses of $ 739 and $

1,132 , respectively

Trading losses for securities owned and securities sold, but not yet purchased still held

at December 31, 2020 and December 31, 2019 were $ 59 and $ 43 , respectively, which were recognized in other gains and losses, net, in the Consolidated Statements of Operations.

The Company had no AFS debt securities at December 31, 2020 and December 31, 2019.

During the year ended December 31, 2018, the Company received $ 64,498 of proceeds from the sale and maturity of available-for-sale securities and recognized gross realized losses of $ 739 .

Those losses were reclassified out of accumulated other comprehensive income and into the Consolidated Statements of Operations.

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The following table is a summary of the Company’s securities held-to-maturity:

Federal agency debt instruments (amortized cost)

Debt instruments:

Pass-through GSEs (amortized cost)

During the years ended December 31, 2020 and 2019, the Company received proceeds of $ 16,488 and $ 3,244 , respectively, from held-to-maturity

securities maturing or being called prior to maturity.

The following table summarizes unrealized gains, losses, and fair value (classified as Level 2 within the fair value hierarchy) of securities held-to-maturity:

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Gross unrealized losses

The Company assesses these securities for other-than-temporary impairment on a quarterly basis.

No securities were determined to be other-than-temporarily impaired during the years ended December 31, 2019 and 2018.

The Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases, which may be at maturity

An allowance for credit losses was not provided on the Company’s held-to-maturity

securities as all securities are investments in pass-through GSEs which are determined to have an estimated loss rate of zero due to an implicit U.S.

government guarantee.

In addition, no securities were determined to be other-than-temporarily impaired at December 31, 2019.

The following table sets forth the maturity profile of the securities held-to-maturity;

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Due over ten years

AdvisorEngine—Financial Interests

The following table sets forth the carrying value of the Company’s financial interests in AdvisorEngine:

AdvisorEngine Inc.

– Sale of Financial Interests

On May 4, 2020, the Company closed a transaction to exit its investment in AdvisorEngine .

The fair value of upfront consideration paid to the Company was $ 9,592 .

Consideration also includes contingent payments totaling up to $ 10,408 which will be payable only upon AdvisorEngine achieving certain revenue milestones during the first through fourth anniversaries of such exit.

The fair value of the contingent payments was determined to be insignificant at closing and was measured using a Monte-Carlo simulation whereby forecasted revenue assumed during the first, second, third and fourth years was simulated forward in a risk-neutral framework to determine whether the revenues would exceed the pre-defined

revenue targets.

The table below presents the range and weighted averages of significant unobservable inputs utilized in the Monte-Carlo simulation (classified as Level 3 in the fair value hierarchy):

Unobservable Inputs (Initial Recognition – May 4, 2020)

Forecasted revenue simulated forward as a percentage of the pre-defined

revenue targets

34 % - 71 % ( 47 % weighted average)

Revenue volatility

The weighted-average forecasted revenue simulated forward as a percentage of the pre-defined

revenue targets represents the arithmetic average of the percentages for each of the four years.

An increase in the forecasted revenue percentages and revenue volatility input would result in a higher fair value.

The contingent payments are subsequently remeasured when the contingency is resolved and the gain is realized.

Summarized below are the financial interests previously held:

December 31, 2020

Unsecured convertible note (Note 9)

December 31, 2019

Unsecured convertible note

Unsecured non-convertible

note (Note 9)

Preferred stock (Note 10)

The Company is currently pursuing an exit from its investment in AdvisorEngine.

While the process is not yet finalized, it is expected that consideration payable to the Company will include contingent payments that are payable only upon satisfaction of various operational and financial conditions.

During the year ended December 31, 2019, the Company recognized an impairment of $ 30,138 to reduce the carrying value of its financial interests in AdvisorEngine to fair value.

Fair value (classified as Level 3 in the fair value hierarchy) includes the value of consideration that is payable up front

, as well as the Company’s assess ment

of AdvisorEngine achieving the various operational and financial conditions .

Impairment was recognized on each respective financial interest based upon their liquidation prefer e

Subtotal—Notes receivable

Preferred stock

Net of an impairment of $ 30,138 at December 31, 2019, which was determined based upon that status of the sale negotiations at the time.

During the year ended December 31, 2020, the Company adjusted the carrying value of its financial interests by recording an impairment of $ 19,672 on its notes receivable and subsequently recognized a gain of $ 1,093 arising from an adjustment to the estimated fair value of consideration received .

These fair value adjustments recognized during the year ended December 31, 2020 were based upon the final sale terms as disclosed above.

The gain was included in other gains and losses, net on the Consolidated Statements of Operations.

Notes Receivable

The following table sets forth the carrying value of the Company’s notes receivable:

AdvisorEngine—Unsecured non-convertible

AdvisorEngine—Unsecured convertible notes

The Company recognized interest income of $ 2,498 and $ 1,974 , during the years ended December 31, 2019 and 2018, respectively.

Interest income included original issue discount (“OID”) amortization and accrued paid-in-kind

(“PIK”) interest.

Unsecured Non-Convertible

The Company has an outstanding unsecured promissory note from AdvisorEngine.

All principal amounts under the note bear interest from the date such amounts are advanced until repaid at a rate of 5 % per annum, provided that immediately upon the occurrence and during the continuance of an event of default (as defined), interest will be increased to 10 % per annum.

All accrued and unpaid interest is treated as PIK by capitalizing such amount and adding it to the principal amount of the original note.

AdvisorEngine has the option to prepay the note, in whole or in part, at any time without premium or penalty.

All borrowings under the promissory note mature on December 29, 2021 .

The following is a summary of the outstanding unsecured non-convertible

note receivable balance:

Note receivable (face value)

OID, unamortized

Total note receivable, net

Includes PIK interest which has been determined to be uncollectible.

Unsecured Convertible Notes

The Company participated in private convertible note financing rounds of AdvisorEngine by advancing $ 2,090 during the year ended December 31, 2019, in consideration for convertible notes, which were issued as part of a series of convertible notes pursuant to a Convertible Note Purchase Agreement entered into among AdvisorEngine, the Company and the other purchasers thereto.

The convertible notes bear interest at a rate of 3 % per annum (

with all or any unpaid portion being treated as PIK by capitalizing such amount and adding it to the principal amount outstanding )

, is unsecured, and matures on April 11, 2021.

All principal ,

at the option of AdvisorEngine if not paid in cash )

accrued interest under the convertible notes will automatically convert into a class or series of preferred stock substantially identical to that issued in a qualified financing (as defined therein), but at a price per share equal to 80% of the price per share sold in such transaction.

In the event of a corporate transaction (as defined therein) the convertible notes would be repaid in cash from the proceeds of such transaction in the amount of 1.5 times the outstanding principal amount, plus any accrued and unpaid interest .

If neither a qualified financing nor a corporate transaction occurs prior to the maturity date, the convertible notes are repaid at a rate of 1.25 times the outstanding principal amount, plus accrued and unpaid interest.

The convertible notes may not be prepaid by AdvisorEngine without the prior consent of the requisite holders (which includes the Company).

The following is a summary of the outstanding unsecured convertible notes receivable balance:

Notes receivable (face value)

Total notes receivable, net

On May 4, 2020, the Company closed a transaction to exit its investment in AdvisorEngine.

See Note 8 for additional information.

Accrued Interest

Effective January 1, 2020, notes receivable were placed on non-accrual

During the years ended December 31, 2020 and 2019, the Company recognized interest income of $ 0 and $ 2,498 , respectively.

The following table sets forth the Company’s investments:

AdvisorEngine—Preferred stock

Securrency, Inc.—Preferred stock

Securrency, Inc.

– Preferred stock

Thesys – Preferred stock

AdvisorEngine—Preferred Stock

The Company owns approximately 46 % (or 41 % on a fully-diluted basis) of AdvisorEngine, a digital wealth management platform, through strategic investments totaling $ 25,000 .

In consideration of its investment, the Company received 11,811,856 shares and 2,646,062 shares of Series A and Series A-1

convertible preferred stock, respectively.

The Series A and Series A-1

preferred shares have substantially the same terms, are convertible into common stock at the option of the Company and contain various rights and protections including a non-cumulative

6.0 % dividend, payable if and when declared by the board of directors, and a liquidation preference that is senior to all other holders of capital stock of AdvisorEngine.

The investment is accounted for under the measurement a lternative

prescribed within ASU

as it is not considered to be

in-substance common stock.

As previously disclosed in Note 8, the Company recognized an impairment of $ 25,000 on the AdvisorEngine preferred stock during the year ended December 31, 2019.

Securrency, Inc.—Preferred Stock

Securrency, Inc.

– Preferred Stock

On December 27, 2019, the Company made a $ 8,112 strategic investment in Securrency, Inc.

(“Securrency”), a leading developer of institutional-grade blockchain-based financial and regulatory technology.

In consideration of its investment, the Company received 5,178,488 shares of Series A convertible preferred stock representing approximately 25 % ownership of Securrency (or approxi

20 % on a fully diluted basis).

The shares of

preferred stock

are convertible into common stock at the option of the Company and contain various rights and protections including a non-cumulative

6.0 % dividend, payable if and when declared by the board of directors of Securrenc y

and a liquidation preference that is senior to the holders of

In consideration of its investment, the Company received 5,178,488 shares of Series A convertible preferred stock representing approximately 25 % ownership of Securrency (or approximately 20 % on a fully diluted basis).

The shares of Series A preferred stock are convertible into common stock at the option of the Company and contain various rights and protections including a non-cumulative

6.0 % dividend, payable if and when declared by the board of directors of Securrency, and a liquidation preference that is senior to the holders of common stock.

In addition, the Company has redemption rights which provide that, at any time on or after December 31, 2029, upon approval by holders of at least 60 % of the Series A preferred stock then outstanding, Securrency will be required to redeem all of the outstanding shares of Series A preferred stock for the original issue price thereof, plus all declared and unpaid dividends.

The investment is accounted for under the measurement alternative prescribed within ASU 2016-01,

as it does not have a readily determinable fair value and is not considered to be in-substance

common stock.

In addition, the Company has redemption rights which provide that, at any time on or after December 31, 2029

upon approval by holders of at least 60 % of the Series A preferred stock

then outstanding, Securrency will be required to redeem all of the outstanding shares of

Series A preferred stock

for the original issue price thereof

, plus all declared and unpaid dividends.

The investment is accounted for under the measurement

alternative prescribed within ASU 2016-01,

as it is not considered to be in-substance

common stock and is assessed for impairment and similar observable transaction s

on a quarterly basis.

No impairment existed at December 31, 2019.

Thesys—Preferred Stock

The investment is assessed for impairment and similar observable transactions on a quarterly basis.

There was no impairment recognized during the year ended December 31, 2020 based upon a qualitative assessment.

In addition, there were no observable price changes during the reporting period.

On June 20, 2017, the Company was issued 7,797,533 newly authorized shares of Series Y preferred stock (“Series Y Preferred”) of Thesys in connection with the resolution of a dispute related to the Company’s ownership stake in Thesys.

The Series Y Preferred represents current ownership of approximately 19 % of Thesys on a fully diluted basis (excluding certain reserved shares) In addition, the Company was issued a warrant to purchase 3,898,766 shares of Series Y Preferred.

The Series Y Preferred was recorded as a settlement gain on the Consolidated Statements of Operations, at its fair value of $ 6,909 during the year ended

December 31, 2017

The Series Y Preferred ranks pari passu

in priority with Thesys’s current preferred stockholders, has a liquidation preference of $ 0.231 per share, contains various rights and protections and is convertible into common stock at the option of the Company.

The warrant is exercisable for five years after closing, at varying exercise prices that increase over time and set at multiples of a pre-determined

Thesys valuation (or new valuation if Thesys completes a qualified financing, as defined, within two years).

If a claim is brought against Thesys or the Company relating to the settlement, the warrant will be exercisable for 100 % of the number of shares of Series Y Preferred issued to the Company at closing.

The Series Y Preferred represents current ownership of approximately 19 % of Thesys on a fully diluted basis .

The Series Y Preferred is accounted for under the measurement alternative prescribed within ASU 2016-01

as it is not considered to be in-substance

common stock and is assessed for impairment and similar observable transactions on a quarterly basis.

The Company quantitatively assessed its investment for impairment at December 31, 2018 as Thesys had underperformed financially when assessed against prior expectations.

The enterprise value of Thesys was determined using an income approach (discounted cash flow analyses) applied to its business lines.

This approach was predominantly based on unobservable inputs and therefore the valuation is classified as Level 3.

The table below presents the ranges and weighted averages of significant unobservable inputs used in this assessment at December 31, 2018:

Range (Weighted

Income Approach (1)

15.5 % ( 14.1 %)

The inputs selected varied, based upon the Thesys business line being valued.

An increase in the WACC would result in a lower enterprise value.

The quantitative assessment performed resulted in the recognition of an impairment of $ 3,829 during the year ended December 31, 2018.

No impairment existed at December 31, 2019 based upon a qualitative assessment.

The carrying value of the Series Y Preferred was $ 3,080 at December 31, 2019 and December 31, 2018.

The fair value of the warrant was determined to be insignificant.

The warrant is not accounted for as a derivative as it cannot be net settled and is not readily convertible to cash.

as it does not have a readily determinable fair value and is not considered to be in-substance

common stock.

The investment is assessed for impairment and similar observable transactions on a quarterly basis.

During the year ended December 31, 2020, the Company recognized an impairment of $ 3,080 on its Series Y Preferred as Thesys has underperformed financially when assessed against prior expectations.

The carrying value of the Series Y Preferred was $ 0 and $ 3,080 at December 31, 2020 and December 31, 2019, respectively.

Fixed Assets, net

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(a physically backed gold ETP issuer) if the Company fails to remit any amounts due.

The Company determined the present value of the deferred consideration of $ 173,024 and $ 161,540 at December 31, 2019 and December 31, 2018, respectively, using a d iscounted

flow model w hereby

forward-looking gold prices which were extrapolated from the last observable price (beyond 2025), discounted at a rate of 10.0 % and a perpetual growth rate of 1.5 %.

The Company determined the present value of the deferred consideration of $ 230,137 and $ 173,024 at December 31, 2020 and December 31, 2019 using the following assumptions:

Forward-looking gold price (low) – per ounce

Forward-looking gold price (high) – per ounce

Forward-looking gold price (weighted average) – per ounce

Discount rate

Perpetual growth rate

The forward-looking gold prices at December 31, 2020 were extrapolated from the last observable CMX exchange price (beyond 2026) and the weighted-average price per ounce was derived from the relative present values of the annual payment obligations.

The perpetual growth rate was determined based upon the increases in observable forward-looking gold prices through 2026.

This obligation is classified as Level 3 as the discount rate and extrapolated forward-looking gold prices are significant unobservable inputs.

An increase in forward-looking gold prices and the perpetual growth rate would result in an increase in deferred consideration, whereas an increase in the discount rate would reduce the fair value.

Current amounts payable were $ 17,374 and $ 13,953 and long-term amounts payable were $ 212,763 and $ 159,071 , respectively, at December 31, 2020 and December 31, 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company recognized the following in respect of deferred consideration:

Years Ended December 31,

Contractual Gold Payments

Contractual Gold Payments – gold ounces paid

(Loss)/gain on revaluation of deferred consideration—gold payments (2)

Represents payments during the period April 11, 2018 through December 31, 2018.

(Losses)/gains arise due to increases/(decreases) in the forward-looking price of gold and the magnitude of any gain or loss is highly correlated to the magnitude of the change in the forward-looking price of gold.

See Note 5 for a reconciliation of changes in the deferred consideration balances.

Loss on revaluation of deferred consideration – gold payments (1)

Losses arise due to increases in the forward-looking price of gold and the magnitude of any loss is highly correlated to the magnitude of the change in the forward-looking price of gold.

In addition, losses arise due to increases in the perpetual growth rate and a reduction in the discount rate used to compute the present value of the annual payment obligations.

Credit Facility

On April 11, 2018, the Company entered into the Credit Facility pursuant to which the lenders extended a $ 200,000 Term Loan and made available a $ 50,000 Revolver.

Interest on the Term Loan accrues at an annual rate equal to LIBOR, plus up to 2.00

% (commencing at LIBOR

, and interest on the Revolver accrues at an annual rate equal to LIBOR, plus up to 1.50

% (commencing at LIBOR , plus 1.25

, in each case, with the exact interest rate margin determined based on the Total Leverage Ratio (as defined below).

The Revolver is also subject to a facility fee equal to an annual rate of up to 0.50 % of the actual daily amount of the aggregate commitments (whether used or unused) under the Revolver, with the exact facility fee rate determined based on the Total Leverage Ratio.

The Credit Facility matures on April 11, 2021.

The Term Loan does not amortize and the entire principal balance is due in a single payment on the maturity date.

In connection with the Company’s capital management strategy, $ 21,000 of available capital was used during the year ended December 31, 2019 to begin to pay down the Company’s Term Loan.

The following table provides a summary of the Company’s outstanding borrowings under the Credit Facility:

The following table provides a summary of the Company’s outstanding borrowings under its credit facility:

December 31, 2020

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Amount borrowed

Amount repaid

Amounts repaid

Amounts outstanding

Unamortized issuance costs

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Effective interest rate

The available capacity under the Revolver is subject to compliance with the Total Leverage Ratio.

Includes amortization of issuance costs.

On June 16, 2020, the Company terminated its credit facility by repaying all amounts outstanding under its term loan and terminating the revolver.

A loss on extinguishment of debt of $ 2,387 was recognized which represented the write-off

of the remaining unamortized issuance costs.

Interest expense recognized on the credit facility during the years ended December 31, 2020 and 2019 was $ 4,086 and $ 11,240 , respectively.

Unamortized issuance costs related to the Revolver of $ 671 and $ 1,195 at December 31, 2019 and December 31, 2018, respectively, are included in other noncurrent assets on the Consolidated Balance Sheet.

The fair value of the Company’s debt (classified as Level 2 within the fair value hierarchy) was $ 176,986 and $ 196,126 at December 31, 2019 and December 31, 2018, respectively.

The credit agreement includes a financial covenant that requires that the Company maintain a Total Leverage Ratio (as defined below), calculated as of the last day of each fiscal quarter, equal to or less than the ratio set forth opposite such fiscal quarter:

Fiscal Quarter Ending

Total Leverage Ratio

December 31, 2019

March 31, 2020

June 30, 2020

September 30, 2020 and each subsequent fiscal quarter ending on or before the maturity date

Total Leverage Ratio means, as of the last day of any fiscal quarter, the ratio of Consolidated Total Debt of the Company and its restricted subsidiaries (as defined in the credit agreement) as of such date to Consolidated EBITDA of the Company and its restricted subsidiaries (as defined in the credit agreement) for the four consecutive fiscal quarters ended on such date.

The Company’s obligations under the Term Loan and Revolver are unconditionally guaranteed by the Company and certain of its subsidiaries and secured by substantially all of the present and future property and assets of the Company and such subsidiaries, in each case, subject to customary exceptions and exclusions.

The credit agreement contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the parties, including, among others, the provision of annual and quarterly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters.

The credit agreement contains customary negative covenants, including among others, restrictions on the incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, repurchasing equity interests of the Company, entering into affiliate transactions and asset sales.

The credit agreement also provides for a number of customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control and judgment defaults.

The Company is in compliance with its covenants under the credit agreement.

The fair value of the Company’s debt (classified as Level 2 within the fair value hierarchy) was $ 176,986 at December 31, 2019.

Convertible Notes

On August 13, 2020, the Company issued and sold $ 25,000 in aggregate principal amount of 4.25 % Convertible Senior Notes due 2023 (the “Additional Notes”) pursuant to an Indenture (the “Indenture”), dated June 16, 2020, between the Company and U.S.

Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The Additional Notes were issued at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, and constitute a further issuance of, and form a single series with, the Company’s outstanding 4.25 % Convertible Senior Notes due 2023 issued on June 16, 2020 in the aggregate principal amount of $ 150,000 (the “Existing Notes” and together with the Additional Notes, the “Convertible Notes”).

the issuance of the Additional Notes, the Company had $ 175,000 aggregate principal amount of Convertible Notes outstanding.

The Company used approximately $ 28,297 of the net proceeds from the issuance of the Convertible Notes to repurchase 7,487,335 shares of the Company’s common stock at an average price of $ 3.78 per share.

Key terms of the Convertible Notes are as follows:

Maturity date

2023 , unless earlier converted, repurchased or redeemed.

Interest rate of 4.25 %

Payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.

Conversion price of $5.92

Convertible at an initial conversion rate of 168.9189 shares of the Company’s common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $ 5.92 per share )

Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2023 only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price of the Company’s common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sales price of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon a notice of redemption delivered by the Company in accordance with the terms in the Indenture but only with respect to the Convertible Notes called (or deemed called) for redemption;

or (iv) upon the occurrence of specified corporate events.

On or after March 15, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances.

Cash settlement of principal amount

Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted.

At its election, the Company will also settle its conversion obligation in excess of the aggregate principal amount to the Convertible Notes being converted in either cash, shares of its common stock or a combination of cash and shares of its common stock.

Redemption price of $

The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55 th

scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.

No sinking fund is provided for the Convertible Notes.

Limited investor put rights

Holders of the Convertible Notes have the right to require the Company to repurchase for cash all or a portion of their notes at 100 % of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events.

Conversion rate increase in certain customary circumstances

In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the Indenture) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 270.2702 shares of the Company’s common stock per $ 1,000 principal amount of the Convertible Notes (the equivalent of 47,297,285 shares of the Company’s common stock), subject to adjustment.

Seniority and Security

The Convertible Notes are the Company’s senior unsecured obligations, but are subordinated in right of payment to the Company’s obligations to make certain redemption payments (if and when due) in respect of its Series A Non-Voting

Convertible Preferred Stock (Note 15).

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25 % in aggregate principal amount of the Convertible Notes outstanding may declare the entire principal amount of all the Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.

The following table provides a summary of the carrying value of the Convertible Notes at December 31, 2020:

Additional Notes

Existing Notes

Principal amount

Premium on Additional Notes

Gross proceeds

Unamortized discount and issuance costs

Carrying amount

Effective interest rate

The discount arose from the bifurcation of the conversion option.

The unamortized discount and issuance costs are

reported net of the unamortized premium on the Additional Notes.

Includes amortization of the discount arising from the bifurcation of the conversion option, amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes.

Convertible instruments are required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components.

The liability component for convertible instruments that qualify for a derivative scope exception (applicable to the Convertible Notes) is allocated proceeds equal to the estimated fair value of similar debt without the conversion option.

The difference between the gross proceeds received from the issuance of the Convertible Notes and the proceeds allocated to the liability component represents the residual amount that is recorded in additional paid-in

The discount arising from the recognition of this residual amount is amortized as interest expense over the life of the Convertible Notes.

The Company estimated the fair value of the liability component of the Convertible Notes to be $ 170,191 , which represents the present value of the future contractual payments, discounted using the Company’s estimated nonconvertible debt borrowing rate of 5.33 % (classified as level 2 in the fair value hierarchy) on the pricing date.

The excess of the gross proceeds received over the estimated fair value of the liability component totaling $ 5,059 ($ 906 and $ 4,153 for the Additional Notes and Existing Notes, respectively) was allocated to the conversion option (along with a proportional share of issuance costs totaling $ 157 ) and was recorded in additional paid-in

capital, net of deferred taxes.

Interest expense recognized during the year ended December 31, 2020 was $ 5,582 .

Interest payable of $ 342 at December 31, 2020 is included in accounts payable and other liabilities on the Consolidated Balance Sheets.

The fair value of the Convertible Notes (classified as Level 2 in the fair value hierarchy) was $ 198,968 at December 31, 2020.

The if-converted

value of the Convertible Notes did not exceed the principal amount at December 31, 2020.

Preferred Shares

On April 10, 2018, the Company filed a Certificate of Designations of Series A Non-Voting

Convertible Preferred Stock with the Secretary of State of the State of Delaware establishing the rights, preferences, privileges, qualifications, restrictions, and limitations relating to the Preferred Shares.

The Preferred Shares are intended to provide ETFS Capital with economic rights equivalent to the Company’s common stock on an as-converted

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As described in the Certificate of Designations, the Company will not issue, and ETFS Capital does not have the right to require the Company to issue, any shares of common stock upon conversion of the Preferred Shares, if, as a result of such conversion, ETFS Capital (together with certain attribution parties) would beneficially own more than 9.99% of the Company’s outstanding common stock immediately after giving effect to such conversion.

In connection with the completion of the ETFS Acquisition, the Company issued 14,750 Preferred Shares, which are convertible into an aggregate of 14,750,000 shares of common stock.

In connection with the completion of the ETFS Acquisition, the Company issued 14,750 shares of Series A Non-Voting

Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock.

The fair value of this consideration was $ 132,750 , based on the closing price of the Company’s common stock on April 10, 2018 of $ 9.00 per share, the trading day prior to the closing of the acquisition.

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Such redemption payment will be made in one payment no later than 10 business days following the last day of the Company’s first fiscal quarter that begins on a date following the date ETFS Capital exercises such redemption right.

The carrying amount of the Preferred Shares was not adjusted as it was not probable that the Preferred Shares would become redeemable.

The redemption value of the Preferred Shares was $ 72,667 and $ 71,630 at December 31, 2020 and December 31, 2019, respectively.

The carrying amount of the Preferred Shares was not adjusted

as it was not probable that the Preferred Shares would become redeemable.

The Company has entered into operating leases for its corporate headquarters and other office facilities, financial data terminals and equipment.

The Company has no finance leases.

Upon the adoption of ASC 842 on January 1, 2019, the Company recognized a right-of-use

asset and lease liability of $ 19,827 and $ 24,817 , respectively.

The right-of-use

asset was equal to the lease liability, less accrued lease payments and remaining unamortized lease incentives.

The following table provides additional information regarding the Company’s leases:

Years Ended December 31,

Operating lease cost

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Total lease cost

Years Ended December 31,

Other information:

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The Company’s lease of its headquarters, which expires on August 20, 2029, includes an option to extend for an additional five years.

Rent payable under the option is equal to the fair market rent of the premise as determined by the landlord approximately six months prior to the commencement of the extension term.

Rent payable under the option is equal to the fair market rent of the premises as determined by the landlord approximately six months prior to the commencement of the extension term.

The lease also includes a cancellation option which is effective on August 21, 2024 and requires notice to be provided to the landlord at least 12 months prior.

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Total future minimum lease payments (undiscounted)

The following table discloses the future minimum lease payments at December 31, 2018 (prior period) with respect to the Company’s operating lease liabilities, which is required as the Company elected to apply the new lease requirements at the effective date, rather than the beginning of the earliest comparative period presented:

2024 and thereafter

Total future minimum lease payments (undiscounted)

Contingencies

The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business.

The Company is not currently party to any litigation that is expected to have a material adverse impact on its business, financial position, results of operations or cash flows.

Variable Interest Entity

Closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP

In December 2020, WMAI, WTMAML, WTUK and WisdomTree Ireland Limited were served with a writ of summons to appear before the Court of Milan, Italy, and in January 2021, WTUK was served with a writ of summons to appear before the Court of Udine, Italy.

Investors had filed actions seeking approximately € 9,000 ($ 11,056 ), in the aggregate, resulting from the closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP (“3OIL”) in March 2020.

The product was dependent on the receipt of payments from a swap provider to satisfy payment obligations to the investors.

Due to an extreme adverse move in oil futures relative to the oil futures’ closing price, the swap contract underlying 3OIL was terminated by the swap provider, which resulted in the compulsory redemption of 3OIL, all in accordance with the prospectus.

The Company is currently assessing these claims and an accrual has not been made with respect to these matters at December 31, 2020.

Variable Interest Entities

VIEs are entities with any of the following characteristics:

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(ii) the equity holders, as a group, lack the characteristics of a controlling financial interest;

or (iii) the entity is structured with non-substantive

voting rights.

or (iii) the entity is structured with non-substantive voting rights.

Consolidation of a VIE is required for the party deemed to be the primary beneficiary, if any.

The primary beneficiary is the party who has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity.

The Company is not the primary beneficiary of any entities in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the

entities’ economic

The Company is not the primary beneficiary of any entities in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the entities’ economic performance.

Such power is conveyed through the entities’ boards of directors and the Company does not have control over the boards.

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Carrying Amount – Assets (Securrency)

Preferred stock

Preferred stock (Note 10)

Carrying Amount – Assets (AdvisorEngine)

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Preferred stock

Total carrying amount—Assets (AdvisorEngine)

Total carrying amount (Note 8)

Total carrying amount – Assets

Maximum exposure to loss

Net of an impairment of $ 30,138 in the aggregate (Note 8).

Revenues from Contracts with Customers

The following table presents the Company’s total revenues from contracts with customers:

Years Ended December 31,

Revenues from contracts with customers:

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In addition, there are no costs incurred to obtain or fulfill the contracts with customers, all of which are investment advisory agreements with related parties.

See Note 19 for further information including disaggregation of advisory fee revenue and amounts due from customers, all of which are derived from related parties.

Advisory fee revenues are also reported by segment as disclosed in Note 27.

Geographic Distribution of Revenue

The following table presents the Company’s total revenues geographically as determined by where the respective management companies reside:

Years Ended December 31,

Revenues from contracts with customers:

United States

Canada (Note 3)

Total operating revenues

Related Party Transactions

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Under these agreements, the Company has licensed to related parties the use of certain of its own indexes for the U.S.

and Canadian WisdomTree ETFs and WisdomTree UCITS ETFs.

WisdomTree ETFs and WisdomTree UCITS ETFs.

The Board of Trustees and Board of Directors (including certain officers of the Company) of the related parties are primarily responsible for overseeing the management and affairs of the entities for the benefit of their stakeholders and have contracted with the Company to provide for general management and administration services.

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In exchange, the Company receives fees based on a percentage of the ETPs’ average daily net assets.

The advisory agreements may be terminated by the related parties upon notice.

A majority of the independent members of the Board of Trustees are required to annually approve the advisory agreements of the U.S.

ETFs and these agreements may be terminated by the Board of Trustees upon notice.

The following table summarizes accounts receivable from related parties which are included as a component of accounts receivable on the Company’s Consolidated Balance Sheets:

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Receivable from WMAI and WTI

Receivable from WTAMC

Receivable from WTCS

Receivable from WTAMC (Note 3)

The allowance for credit losses on accounts receivable from related parties is insignificant when applying historical loss rates, adjusted for current conditions and supportable forecasts, to the amounts outstanding in the table above.

Amounts outstanding are all invoiced in arrears, are less than 30 days aged and are collected shortly after the applicable reporting period.

The following table summarizes revenues from advisory services provided to related parties:

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Advisory services provided to WMAI and WTI

Advisory services provided to WTAMC

Advisory services provided to WTCS

Advisory services provided to WTAMC

The Company also has investments in certain WisdomTree ETFs of approximately $ 23,932 and $ 16,886 at December 31, 2020 and December 31, 2019, respectively.

Gains and losses related to these ETFs during the years ended December 31, 2019, 2018 and 2017 were a gain of $ 40 , a loss of ($ 406 ) and a gain of $ 26 , respectively, from these investments which are recorded in other losses, net on the Consolidated Statements of Operations.

Amounts reported herein are exclusive of any offsetting economic hedging activities.

Gains and losses related to trading WisdomTree ETFs during the years ended December 31, 2020, 2019 and 2018 were a gain of $ 63 , a gain of $ 40 and a loss of ($ 406 ), respectively, from these investments which are recorded in other gains and losses, net on the Consolidated Statements of Operations.

Stock-Based Awards

plans since March 31, 2016 and inclusive of shares available under the prior plans as of March 31, 2016) in the form of stock options and other stock-based awards.

The Company also has issued from time to time stock-based awards outside a plan.

On June 20, 2016, the Company’s stockholders approved a new equity award plan under which the Company can issue up to 10,000,000 shares of common stock (less one share for every share granted under prior plans since March 31, 2016 and inclusive of shares available under the prior plans as of March 31, 2016) in the form of stock options and other stock-based awards.

The Company grants equity awards to employees and directors which include restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”) and stock options.

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Awards are valued based on the Company’s stock price on grant date and generally vest ratably over three years.

These awards cliff vest three years from grant date and contain a market condition whereby the number of PRSUs ultimately vesting is tied to how the Company’s total shareholder return (“TSR”) compares to a peer group of other publicly traded asset managers over the three-year period.

These awards cliff vest three years from the grant date and contain a market condition whereby the number of PRSUs ultimately vesting is tied to how the Company’s total shareholder return (“TSR”) compares to a peer group of other publicly traded asset managers over the three-year period.

A Monte Carlo simulation is used to value these awards.

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percentile, then 50 % of the target number of PRSUs granted will vest;

If the relative TSR is above the 25th percentile, then linear scaling is applied such that the percent of the target number of PRSUs vesting is 100 % at the 50th percentile and capped at 200 % of the target number of PRSUs granted for performance at the 100th percentile.

During the years ended December 31, 2019, 2018 and 2017, total stock-based compensation expense was $

14,717 , respectively, and the related tax benefit recognized on the Consolidated Statements of Operations was $

5,402 , respectively.

Stock-based compensation expense during the year ended December 31, 2017 included $

525 as a result of a modification to accelerate vesting of certain awards on December 29, 2017 made to

20 employees, which were originally scheduled to vest in January 2018.

• If the relative TSR is above the 25 th

percentile, then linear scaling is applied such that the percent of the target number of PRSUs vesting is 100 % at the 50 th

percentile and capped at 200 % of the target number of PRSUs granted for performance at the 100 th

During the years ended December 31, 2020, 2019 and 2018, total stock-based compensation expense was $ 11,706 , $ 11,590 and $ 13,255 , respectively, and the related tax benefit recognized on the Consolidated Statements of Operations was $ 2,739 , $ 2,791 and $ 3,015 , respectively.

The actual tax benefit realized for the tax deductions for share-based compensation was $ 833 , $ 1,649 and $ 2,364 during the years ended December 31, 2020, 2019 and 2018, respectively.

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Unrecognized Stock-

Weighted-Average

Vesting Period

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Forfeitures/expirations

Weighted-Average

Exercise Price

Outstanding at December 31, 2019

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Outstanding at December 31, 2020 (1)

Expire on dates ranging from January 28, 2020 to November 15, 2021 .

Expire on dates ranging from January 26, 2021

to November 15, 2021 .

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $ 168 , $ 301 and $ 4,218 , respectively.

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$ 7.01 – $ 7.30

At December 31, 2019, outstanding options for 485,536 shares (all of which were exercisable) had a remaining average contractual term of 0.9 years and an intrinsic value of $ 297 .

At December 31, 20 2

0, outstanding options for 305,000 shares (all of which were exercisable) had a remaining

weighted-average

contractual term of 0.3 years and an intrinsic value of $ 57 .

RSAs, RSUs and PRSUs

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(ii) valuation date stock prices;

(iii) historical stock price volatilities ranging from 22 % to 42 % (average 28 %);

(iv) correlation coefficients based upon the price data used to calculate the historical volatilities;

(v) a risk free interest rate of 2.56 %;

and (vi) an expected dividend yield of 0 %.

(iii) correlation coefficients based upon the price data used to calculate the historical volatilities;

and (iv) the following additional assumptions:

Historical stock price volatility (low)

Historical stock price volatility (high)

Historical stock price volatility (average)

Risk free interest rate

Expected dividend yield

Employee Benefit Plans

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method as this method results in the lowest diluted earnings per share amount for common stock.

During the year ended December 31, 2019, the Company excluded 152,085 common stock equivalents from its computation of diluted loss per share as the Company had reported a net loss for the period.

The Company excluded 7,886 and 5,025 common stock equivalents from its computation of diluted earnings per share for the years ended December 31, 2018 and 2017, respectively, as they were determined to be anti-dilutive.

The following table reconciles weighted average diluted shares as reported on the Company’s consolidated statements of operations for the years ended

December 31, 2019, 2018 and 2017 to the weighted average diluted shares used to calculate diluted (loss)/earnings per share as disclosed in the table above:

During the years ended December 31, 2020 and 2019, there were no dilutive common stock equivalents as the Company reported a net loss for the period.

Total antidilutive common stock equivalents were 7,886 during the year ended December 31, 2018.

The following table reconciles weighted average diluted shares as reported on the Company’s Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, which are determined pursuant to the treasury stock method, to the weighted average diluted shares used to calculate diluted (loss)/earnings per share as disclosed in the table above:

Years Ended December 31,

Reconciliation of Weighted Average Diluted Shares (in thousands)

Weighted average diluted shares as disclosed on the consolidated statements of operations

Weighted average diluted shares as disclosed on the Consolidated Statements of

Participating securities:

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Weighted average diluted shares used to calculate diluted (loss)/earnings per share as disclosed in the table above

Excludes participating securities and potentially dilutive common stock equivalents as the Company reported a net loss for the period.

Income before Income Tax Expense—Domestic and Foreign

and foreign components of income before income tax expense for the years ended December 31, 2019, 2018 and 2017 are as follows:

Excludes 15,122 and 15,002 participating securities for the years ended December 31, 2020 and 2019, respectively, as the Company reported a net loss for those periods.

Also excludes 6

potentially dilutive common stock equivalents for the years ended December 31, 2020 and 2019, respectively, as the Company reported a net loss for those periods (shares herein are reported in thousands).

(Loss)/Income before Income Tax Expense – Domestic and Foreign

and foreign components of (loss)/income before income tax expense for the years ended December 31, 2020, 2019 and 2018 are as follows:

Year Ended December 31,

Represents the pre-tax results of the Company’s U.S.

and foreign subsidiaries, not the results of the U.S.

and International Business segments which are separately disclosed in Note 27.

The segment results are prepared based upon the way management reviews performance.

Income Tax Expense/(Benefit) – By Jurisdiction

The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2019, 2018 and 2017 as determined in accordance with ASC 740, Income Taxes

, are as follows:

The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2020, 2019 and 2018 are as follows:

Years Ended December 31,

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Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate

A reconciliation of the statutory federal income tax expense

and the Company’s to tal

income tax expense

is as follows:

A reconciliation of the statutory federal income tax expense and the Company’s total income tax expense is as follows:

Years Ended December 31,

Federal income tax expense

federal statutory income tax

Loss/(gain) on revaluation of deferred consideration

Decrease in unrecognized tax benefits, net

Change in valuation allowance – Capital losses

Change in valuation allowance—Foreign

Decrease in unrecognized tax benefits

Change in valuation allowance – Foreign net operating losses (“NOLs”) and interest carryforwards

Foreign operations

Loss/(gain) on revaluation of deferred consideration

Non-deductible executive compensation

Stock-based compensation tax (windfalls)/shortfalls

Change in tax-related

indemnification assets, net

gain on sale – Canadian ETF business

Non-deductible

executive compensation

Blended state income tax rate, net of federal benefit

Non-deductible acquisition and disposition-related costs

Non-deductible

acquisition and disposition-related costs

Other differences, net

Income tax expense

The capital loss valuation allowance for the year ended December 31, 2019 is principally arising from the impairment recognized on the Company’s financial interests in AdvisorEngine (Note 8).

on revaluation is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary that is based in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.

The loss/(gain) on revaluation is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary that is based in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.

Income Tax Payments

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Deferred tax assets:

NOLs—International

Capital losses

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Accrued expenses

Interest carryforwards

NOLs – Foreign

Stock-based compensation

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Fixed assets and prepaid assets

Allocated equity component of convertible notes

Foreign currency translation adjustment

Unremitted earnings – International subsidiaries

Unrealized gains

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Deferred tax assets, net

Net Operating Losses and Capital Losses—U.S.

The Company’s tax

effected net operating losses (“NOLs”) at December 31, 2019 were $ 642 , which expire in 2024 .

Net Operating and Capital Losses – U.S.

The Company’s tax effected net operating losses (“NOLs”) at December 31, 2020 were $ 510 , which expire in 2024 .

The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change.

The Company’s tax effected capital losses at December 31, 2019 and December 31, 2018 were $ 8,226

and $ 794 , respectively.

The change in capital losses is principally arising from the impairment recognized on the Company’s financial interests in AdvisorEngine (Note 8

Net Operating Losses—International

Certain of the Company’s European subsidiaries and its Canadian subsidiary generated NOLs outside the U.S.

These tax effected NOLs were $ 9,336 and

$ 6,605 at December 31, 2019 and

2018, respectively.

Approximately $ 4,930 of these NOLs at December 31, 2019 expire between the years 2036 and 2039 .

The remainder is carried forward indefinitely.

The Company’s tax effected capital losses at December 31, 2020 and December 31, 2019 were $ 16,596 and $ 8,226 , respectively.

The change in capital losses is due to the impairment recognized on the Company’s financial interests in AdvisorEngine (Note 8) and a capital loss recognized upon sale of the Canadian ETF business.

Net Operating Losses and Interest Carryforwards – Foreign

Certain of the Company’s European subsidiaries generated NOLs and interest carryforwards outside the U.S.

These tax effected NOLs and interest carryforwards were $ 4,402 and $ 9,336 at December 31, 2020 and December 31, 2019, respectively.

All of these amounts are carried forward indefinitely.

The change in foreign NOLs includes a reduction of $4,930 due to the sale of the Company’s Canadian ETF business, which occurred on February 19, 2020 (Note 3).

Valuation Allowance

The Company’s valuation allowance has been established on its net capital losses, international net operating losses and outside basis differences as it is more-likely than not that these

deferred tax assets will not be realized.

During the year ended December 31, 2020, the Company reduced the valuation allowance on its deferred tax assets by $ 2,615 associated with interest carryforwards in the UK

The Company has determined that it is more likely than not that these interest carryforwards will be utilized as the Company extinguished its term loan on June 16, 2020 and is therefore no longer accumulating non-deductible

interest carryforwards in the UK .

The Company also generates profits in that jurisdiction and unused amounts are carried forward indefinitely.

The Company’s remaining valuation allowance has been established on its capital losses, international net operating losses and outside basis differences as it is more-likely-than-not

that these deferred tax assets will not be realized.

Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”)

On March 27, 2020, the CARES Act was enacted in response to the COVID-19

pandemic which included temporary changes to income and non-income

based tax laws including:

(i) the elimination of the 80 % of taxable income limitation by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 and 2020;

(ii) allowing NOLs originating in 2018, 2019 and 2020 to be carried back five years;

(iii) increasing the net interest expense deduction limit to 50 % of adjusted taxable income from 30 % for tax years beginning January 1, 2019 and 2020;

and (iv) other related provisions.

The CARES Act did not have a material impact on the Company’s consolidated financial statements.

Uncertain Tax Positions

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Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

In connection with the ETFS Acquisition, the Company accrued a liability of £ 22,118 ($ 31,317 ) for uncertain tax positions and £ 5,065 ($ 7,171 ) for interest and penalties at the acquisition date.

In connection with the ETFS Acquisition, the Company accrued a liability for uncertain tax positions and interest and penalties at the acquisition date.

The table below sets forth the aggregate changes in the balance of gross unrecognized tax benefits:

Balance on January 1, 2019

Accrued in connection with the ETFS Acquisition

Decrease - Lapse of statute of limitations

Foreign currency translation (1)

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ETFS Capital has also agreed to provide additional collateral by maintaining a minimum working capital balance up to a stipulated amount.

The decrease resulting from the lapsing of the statute of limitations of $ 4,309 , was recorded as an income tax benefit and an equal and offsetting amount to reduce the indemnification asset was recorded in other losses, net, during the year ended December 31, 2019.

The decreases resulting from the lapsing of the statute of limitations of $ 5,981 and $ 4,309 for the years ended December 31, 2020 and 2019, respectively, were recorded as income tax benefits and equal and offsetting amounts to reduce the indemnification assets were recorded in other gains and losses, net.

The gross unrecognized tax benefits and interest and penalties totaling $ 27,016 and $ 32,101 at December 31, 2020 and December 31, 2019, respectively, are included in other non-current

liabilities on the Consolidated Balance Sheet.

It is reasonably possible that the total amount of unrecognized tax benefits will decrease by $ 4,028 (including interest and penalties of $ 1,231

) in the next 12 months upon la p

sing of the statu te of limitations

At December 31, 2019 and 2018,

there were $ 32,101 and $34,876, respectively,

of unrecognized tax benefits (including interest and penalties) that, if recognized, would impact the effective tax rate.

liabilities on the Consolidated Balance Sheets.

It is reasonably possible that the total amount of unrecognized tax benefits will decrease by $ 5,055 (including interest and penalties of $ 1,539 ) in the next 12 months upon lapsing of the statute of limitations.

At December 31, 2020 there were $ 27,016 of unrecognized tax benefits (including interest and penalties) that, if recognized, would impact the effective tax rate.

The recognition of any unrecognized tax benefits would result in an equal and offsetting adjustment to the indemnification asset which would be recorded in income before taxes due to the indemnity for any potential claims.

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federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions.

The Company’s federal tax return and ManJer’s tax return (a Jersey-based subsidiary) for the year ended December 31, 2016 and the Company’s New York state tax returns for the years ended December 31, 2015 through 2018 are currently under review by the relevant tax authorities.

The Company’s federal tax return and ManJer’s tax return (a Jersey-based subsidiary) for the year ended December 31, 2016 is currently under review by the relevant tax authorities.

The Company is indemnified by ETFS Capital for any potential exposure associated with ManJer’s tax return under audit.

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Undistributed Earnings of Foreign Subsidiaries

Due to the imposition of the GILTI provisions, all unremitted earnings are no longer subject to U.S.

federal income tax;

however, there could be U.S.

state and/or foreign withholding taxes upon distribution of such unremitted earnings.

The Company recognizes deferred tax liabilities for withholding taxes that may become payable, where applicable, upon the distribution of earnings and profits from foreign subsidiaries unless considered permanent in duration.

As of December 31, 2019, the Company considers all undistributed foreign earnings and profits to be permanent in duration.

provides guidance that US companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested.

The Company’s assertion has changed such that earnings of foreign subsidiaries will be repatriated, resulting in the recognition of a deferred tax liability of $ 138 at December 31, 2020.

Shares Repurchased

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Included under this program are purchases to offset future equity grants made under the Company’s equity plans and purchases made in open market or privately negotiated transactions.

This authority may be exercised from time to time, subject to the terms of the credit agreement described below and regulatory considerations.

This authority may be exercised from time to time, subject to regulatory considerations.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities.

1 unchanged sentence

Shares repurchased under this program are returned to the status of authorized and unissued on the Company’s books and records.

As more fully disclosed in Note 3, the Company completed the ETFS Acquisition on April 11, 2018.

To partially finance the acquisition, the Company entered into a credit agreement which contains customary negative covenants, including, among others, a covenant which may restrict the Company’s ability to repurchase equity interests.

Share repurchases only are permitted to the extent the Total Leverage Ratio (as defined in the credit agreement) does not exceed 1.75 to 1.00 and no event of default (as defined in the credit agreement) has occurred and is continuing at the time the share repurchase is made.

However, the Company’s ability to purchase shares of its common stock withheld pursuant to the terms of equity awards granted to employees to satisfy tax withholding obligations is not restricted.

During the years ended December 31, 2020, 2019 and 2018, the Company repurchased 8,234,324 shares, 370,428 shares and 334,953 shares of its common stock, respectively, under this program for an aggregate cost of $ 31,197 , $ 2,341 and $ 2,885 , respectively.

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Goodwill and Intangible Assets

The table below sets forth goodwill by reporting unit.

Goodwill allocated to the U.S.

Business reporting unit is tested annually for impairment on April 30 th

Goodwill allocated to the European Business reporting unit is tested annually for impairment on November 30 th

Reporting Unit

The table below sets forth goodwill which is tested annually for impairment on November 30 th

Balance at January 1, 2020

Balance at December 31, 2020

The European Business is included in the Company’s International Business reportable segment.

Goodwill allocated to the U.S.

Business reporting unit and European Business reporting unit was tested for impairment on April 30, 2019 and November 30, 2019, respectively.

The impairment tests were performed using a market approach, whereby the market capitalization of the Company was allocated to each of these reporting units based upon their respective assets under management and net income.

Market capitalization was derived from the Company’s publicly traded stock price plus a reasonable control premium.

The fair value of the reporting units exceeded their carrying values and therefore no impairment was recognized.

The goodwill allocated to the European Business reporting unit is not deductible for tax purposes as the ETFS Acquisition was structured as a stock acquisition occurring in the United Kingdom.

The goodwill allocated to the U.S.

Business reporting unit is deductible for tax purposes.

Goodwill was tested for impairment on November 30, 2020.

The impairment test was performed using a market approach, whereby the market capitalization of the Company (a single reporting unit) was compared to its carrying value.

The market capitalization was derived from the Company’s publicly traded stock price plus a reasonable control premium.

The fair value of the reporting unit exceeded its carrying value and therefore no impairment was recognized.

Goodwill arising from the ETFS Acquisition of $ 84,057 is not deductible for tax purposes as the acquisition was structured as a stock acquisition occurring in the UK

The remainder of the goodwill is deductible for U.S.

tax purposes.

Intangible Assets (Indefinite-Lived)

The table below sets forth the Company’s intangible assets which are tested annually for impairment on November 30 th

(Questrade AUM)

Balance at January 1, 2020

Decreases (1)

Foreign currency translation

Balance at December 31, 2020

Derecognized upon the sale of the Company’s Canadian ETF business (Note 3)

In connection with the ETFS Acquisition which was completed on April 11, 2018 (Note 3), the Company identified intangible assets valued at $ 601,247 related to the right to manage AUM through customary advisory agreements.

1 unchanged sentence

The Company performed its indefinite-lived intangible asset impairment test related to its ETFS customary advisory agreements on November 30, 2020.

revenue growth rates ranging from 3 % to 9 % ( 3.4 % weighted average) and a weighted average cost of capital of 10.0 %.

Questrade ETFs

2017, the Company acquired eight Canadian-listed ETFs from Questrade, Inc.

(the “Questrade ETFs”).

The entire purchase price was allocated to the Company’s right to manage AUM in the form of advisory contracts.

These intangible assets are translated based on the end of period exchange rates from local currency to U.S.

Most of the Questrade ETFs were merged into the Company’s existing Canadian-listed ETFs.

The intangible assets (which are deductible for tax purposes) were determined to have an indefinite useful life.

The Company performed its indefinite-lived intangible asset impairment test related to its Questrade customary advisory agreements on November 30, 2019 using a quantitative approach.

This approach included consideration for the estimated transaction price to be received in connection with the Company’s sale of its Canadian subsidiary (Note 1).

The result of this approach identified no indicators of impairment.

The results of this analysis identified no indicators of impairment to be recognized based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including projected revenue growth rates ranging from 3 % to 11 % ( 3.5 % weighted average) and a weighted average cost of capital of 9.0 %.

The following table summarizes impairments recognized by the Company:

7 unchanged sentences

During the fourth quarter of 2018, the Company performed its indefinite-lived intangible asset impairment test related to its GCC customary advisory agreements using a quantitative approach.

The fair value of the intangible asset was derived from a discounted cash flow analysis which assumed projected revenue growth rates of 0 % to 5 %.

The fair value of the intangible asset was derived from a

discounted cash flow analysis which assumed projected revenue growth rates of 0 % to 5 %.

Consideration was also given to the historical performance of GCC against prior expectations.

8 unchanged sentences

The Company recorded an impairment expense of $ 572 in connection with the termination of its Japan office lease during the year ended December 31, 2019 and $ 326 on fixed assets of the Japan office during the year ended December 31, 2018 in connection with the closure of WTJ.

Segment Reporting

The Company operates as an ETP sponsor and asset manager providing investment advisory services globally.

These activities are reported in the Company’s U.S.

Business and International Business reportable segments.

Years Ended December 31,

Business Segment

Operating revenues

Advisory fees

Total operating revenues

Total operating expenses

Other income/(expenses)

Interest expense

Interest income

Settlement gain

Other gains and losses, net

Total other income/(expenses)

Total income before income taxes (U.S.

Business Segment)

International Business Segment

Operating revenues

Advisory fees

Total operating revenues

Total operating expenses

Other income/(expenses)

Interest expense

Interest income

(Loss)/gain on revaluation of deferred consideration—gold payments

Other losses, net

Total other income/(expenses)

Total (loss)/income before income taxes (International Business Segment)

Income/(loss) before income taxes

Business segment

International Business segment

Total income before income taxes

Assets are not reported by segment as such information is not utilized by the chief operating decision maker.

The financial results of ETFS are included in the International Business reportable segment as of April 11, 2018.

Supplemental Financial Information – Quarterly Results (Unaudited)

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Impairments (Note 27)

Loss on extinguishment of debt

Subsequent Events

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Investor Rights Agreement, dated April 11, 2018, between the Registrant and ETFS Capital (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 13, 2018).

Indenture, dated as of June 16, 2020, by and between the Registrant and U.S.

Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2020).

Form of Global Note, representing the Registrant’s 4.25% Convertible Senior Notes due 2023 (included as Exhibit A to the Indenture filed as Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2020).

Share Sale Agreement among the Registrant, WisdomTree International and ETFS Capital dated November 13, 2017 (incorporated by reference to Exhibit 4.6 of the Registrant’s Annual Report on Form 10-K filed with the SEC on March 1, 2018)

Waiver and Variation Agreement, dated April 11, 2018, by and among the Registrant, WisdomTree International and ETFS Capital (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 13, 2018)

Credit Agreement, dated April 11, 2018, by and among the Registrant, WisdomTree International, certain subsidiaries of the Company as guarantors, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent, collateral agent, L/C Issuer and lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 13, 2018)

Representative Form of Advisory Agreement between WisdomTree Asset Management, Inc.

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Appendix A to Employment Agreement between the Registrant and Jonathan Steinberg, dated December 22, 2016 (incorporated by reference to Exhibit 10.1(A) of the Registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2016)

Appendix A to Employment Agreement between the Registrant and Gregory Barton, dated December 22, 2016 (incorporated by reference to Exhibit 10.1(B) of the Registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2016)

Appendix A to Employment Agreement between the Registrant and Luciano Siracusano III, dated December 22, 2016 (incorporated by reference to Exhibit 10.1(C) of the Registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2016)

Appendix A to Employment Agreement between the Registrant and Amit Muni, dated December 22, 2016 (incorporated by reference to Exhibit 10.1(D) of the Registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2016)

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Jarrett Lilien, dated November 27, 2017 (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K filed with the SEC on March 1, 2018)

Amendment to Employment Agreement between the Registrant and Luciano Siracusano III, dated October 1, 2018 (incorporated by reference to Exhibit 10.20 of the Registrant’s Annual Report on Form 10-K filed with the SEC on March 1, 2019)

Amendment to Employment Agreement between the Registrant and Gregory Barton, dated February 1, 2019 (incorporated by reference to Exhibit 10.21 of Amendment No.

1 to the Registrant’s Annual Report on Form 10-K on Form 10-K/A filed with the SEC on April 30, 2019)

Form of Performance-Based Restricted Stock Unit Award Agreement for Executive Officers (incorporated by reference to Exhibit 10.22 of Amendment No.

Form of Performance-Based Restricted Stock Unit Award Agreement for Executive Officers applicable to grants prior to January 1, 2021 (incorporated by reference to Exhibit 10.22 of Amendment No.

1 to the Registrant’s Annual Report on Form 10-K on Form 10-K/A filed with the SEC on April 30, 2019)

Separation Agreement between the Registrant and David Abner, dated August 27, 2019 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K

filed with the SEC on August 29, 2019)

Professional Services Agreement between the Registrant and David Abner, effective August 1, 2019 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K

filed with the SEC on August 29, 2019)

Separation Agreement between the Registrant and David Abner, dated August 27, 2019 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on August 29, 2019)

Employment Agreement between the Registrant and Marci Frankenthaler, dated November 5, 2020 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020)

Subsidiaries of the Registrant (filed herewith)

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Certification pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

Financial Statements from the Annual Report on Form 10-K

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WISDOMTREE INVESTMENTS, INC.

/s/ Jonathan Steinberg

/s/ J ONATHAN S TEINBERG

Jonathan Steinberg

3 unchanged sentences

day of February, 2021.

/s/ Jonathan Steinberg

Jonathan Steinberg

/s/ J ONATHAN S TEINBERG

Chief Executive Officer and Director

Jonathan Steinberg

(Principal Executive Officer)

/s/ Amit Muni

/s/ A MIT M UNI

Chief Financial Officer

(Principal Financial Officer)

/s/ Bryan Edmiston

Bryan Edmiston

/s/ B RYAN E DMISTON

Chief Accounting Officer

Bryan Edmiston

(Principal Accounting Officer)

/s/ Frank Salerno

Frank Salerno

/s/ F RANK S ALERNO

Non-Executive

Chairman of the Board

/s/ Anthony Bossone

Frank Salerno

/s/ A NTHONY B OSSONE

Anthony Bossone

/s/ Susan Cosgrove

Smita Conjeevaram

/s/ S USAN C OSGROVE

Susan Cosgrove

/s/ Bruce Lavine

/s/ Win Neuger

/s/ B RUCE L AVINE

/s/ W IN N EUGER

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-K

Item 9A. Controls and Procedures