What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-06 · 291 added, 242 removed, 734 unchanged (42% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Securities owned, at fair value (including $ 23,626 and $ 23,932 invested in WisdomTree ETFs at March 31, 2021 and December 31, 2020, respectively)

Accounts receivable (including $ 27,258 and $ 26,884 due from related parties at March 31, 2021 and December 31, 2020, respectively)

Securities owned, at fair value (including $ 21,330 and $ 23,932 invested in WisdomTree ETFs at June 30, 2021 and December 31, 2020, respectively)

Accounts receivable (including $ 31,679 and $ 26,884 due from related parties at June 30, 2021 and December 31, 2020, respectively)

Income taxes receivable

28 unchanged sentences

14.750 shares authorized, issued and outstanding;

redemption value of $ 88,642 and $ 72,667 at March 31, 2021 and December 31, 2020, respectively) (Note 11)

Contingencies (Note

redemption value of $ 97,549 and $ 72,667 at June 30, 2021 and December 31, 2020, respectively) (Note 12)

Contingencies

Stockholders’ equity

4 unchanged sentences

issued and outstanding:

149,811 and 148,716 at March 31, 2021 and December 31, 2020, respectively

145,114 and 148,716 at June 30, 2021 and December 31, 2020, respectively

Additional paid-in

8 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating Revenues:

18 unchanged sentences

Interest income

Impairments (Notes 12 and 22)

Other losses, net

Impairments (Note 13 and 23)

Loss on extinguishment of debt (Note 10)

Other gains and losses, net

Income/(loss) before income taxes

Income tax benefit

Income tax expense/(benefit)

Net income/(loss)

Earnings/(loss) per share – basic (Note 18)

Earnings/(loss) per share – diluted (Note 18)

Weighted-average common shares – basic (Note 18)

Weighted-average common shares – diluted (Note 18)

Earnings/(loss) per share—basic

Earnings/(loss) per share—diluted

Weighted-average common shares—basic

Weighted-average common shares—diluted

Cash dividends declared per common share

4 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income/(loss)

Other comprehensive loss

Reclassification of foreign currency

translation adjustment to other losses, net, upon the sale of WisdomTree Asset Management Canada, Inc.

Other comprehensive income/(loss)

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 23)

Foreign currency translation adjustment, net of income taxes

Other comprehensive loss

Other comprehensive income/(loss)

Comprehensive income/(loss)

4 unchanged sentences

(In Thousands)

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

Comprehensive

Balance—April 1, 2021

Restricted stock issued and vesting of restricted stock units, net

Shares repurchased

Exercise of stock options, net

Stock-based compensation

Other comprehensive income

Balance—June 30, 2021

For the Three Months Ended June 30, 2020

Comprehensive

Balance—April 1, 2020

Restricted stock issued and vesting of restricted stock units, net

Shares repurchased

Stock-based compensation

Allocation of equity component related to convertible notes, net of issuance costs of $ 128 and deferred taxes of $ 1,017

Other comprehensive income

Balance—June 30, 2020

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

WisdomTree Investments, Inc.

and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(In Thousands)

For the Six Months Ended June 30, 2021

Comprehensive

Balance—January 1, 2021

Reclassification of equity component related to convertible notes, net of

deferred taxes of $ 1,022 , upon the implementation of ASU

Reclassification of equity component related to convertible notes, net deferred taxes of $ 1,022 , upon the implementation of Accounting Standards Update 2020-06

Balance—January 1, 2021 (as adjusted)

3 unchanged sentences

Stock-based compensation

Other comprehensive loss

Balance—March 31, 2021

For the Three Months Ended March 31, 2020

Other comprehensive income

Balance—June 30, 2021

For the Six Months Ended June 30, 2020

Comprehensive

4 unchanged sentences

Stock-based compensation

Allocation of equity component related to convertible notes, net of issuance costs of $ 128 and deferred taxes of $ 1,017

Other comprehensive loss

Balance—March 31, 2020

Balance—June 30, 2020

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

3 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income/(loss)

Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:

Advisory fees received in gold, other precious metals and bitcoin

Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating activities:

Advisory fees received in gold, other precious metals and cryptocurrencies

Contractual gold payments

Stock-based compensation

Deferred income taxes

(Gain/)/loss on revaluation of deferred consideration – gold payments

Deferred income taxes

Amortization of right of use asset

2 unchanged sentences

Gain on sale – Canadian ETF business

Loss on extinguishment of debt

Amortization of issuance costs – former credit facility

3 unchanged sentences

Prepaid expenses

Gold, other precious metals and bitcoin

Gold, other precious metals and cryptocurrencies

Fund management and administration payable

4 unchanged sentences

Accounts payable and other liabilities

Net cash provided by/(used in) operating activities

Net cash (used in)/provided by operating activities

Cash flows from investing activities:

3 unchanged sentences

securities maturing or called prior to maturity

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

Proceeds from sale of Canadian ETF business, net

1 unchanged sentence

Cash flows from financing activities:

Dividends paid

Shares repurchased

Dividends paid

Convertible notes issuance costs

Repayment of debt

Proceeds from the issuance of convertible notes

Proceeds from exercise of stock options

Net cash used in financing activities

Decrease in cash flow due to changes in foreign exchange rate

Decrease in cash and cash equivalents

Net cash provided by/(used in) financing activities

Increase/(decrease) in cash flow due to changes in foreign exchange rate

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents—beginning of year

3 unchanged sentences

Cash paid for interest

On January 1, 2021, the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $ 616 , increasing the carrying value of the convertible notes by $ 4,088 , reducing additional paid-in capital by

$ 3,682 and reducing deferred tax liabilities by $ 1,022 , upon the implementation of Accounting Standards Update (“ASU”) 2020-06,

Debt – Debt with Conversion and Other Options

On January 1, 2021, the Company reclassified the equity component related to the convertible notes, net of deferred taxes, reducing accumulated deficit by

$ 616 , increasing the carrying value of the convertible notes by $ 4,088 , reducing additional paid in capital by $ 3,682 and reducing deferred tax liabilities by

$ 1,022 , upon the implementation of Accounting Standards Update (“ASU”) 2020-06, Debt – Debt with Conversion and Other Options

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

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WisdomTree Investments, Inc., through its global subsidiaries (collectively, “WisdomTree” or the “Company”), is an exchange traded product (“ETP”) sponsor and asset manager headquartered in New York.

WisdomTree offers ETPs covering equity, commodity, fixed income, leveraged-and-inverse,

currency, cryptocurrency and alternative strategies.

WisdomTree offers ETPs covering equity, commodity, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies.

The Company has the following wholly-owned operating subsidiaries:

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WisdomTree Management Jersey Limited

(“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

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WisdomTree UK Limited

based company registered with the Financial Conduct Authority currently providing distribution and support services to ManJer, WTMAML and WML.

is a United Kingdom based company registered with the Financial Conduct Authority currently providing distribution and support services to ManJer, WTMAML and WML.

WisdomTree Europe Limited

based company which is the legacy distributor of the WMAI ETPs and WisdomTree UCITS ETFs.

is a United Kingdom based company which is the legacy distributor of the WMAI ETPs and WisdomTree UCITS ETFs.

These services are now provided directly by WTUK.

WisdomTree Europe Limited is no longer r e

gulated and does not provide any regulated services.

WisdomTree Europe Limited is no longer regulated and does not provide any regulated services.

WisdomTree Ireland Limited

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

Securities owned and securities sold, but not yet purchased are securities classified as either trading or available-for-sale (“AFS”).

Securities owned and securities sold, but not yet purchased are securities classified as either trading or available-for-sale

These securities are recorded on their trade date and are measured at fair value.

23 unchanged sentences

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,

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

Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities

62 unchanged sentences

Potential common shares associated with the Series A non-voting

convertible preferred stock and the convertible notes are co m

puted under the if-converted

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.

14 unchanged sentences

Recently Adopted Accounting Pronouncements

On January 1, 202 1

, the Company early adopted ASU 2020-06,

Debt – Debt with Conversion and Other Options

(ASU 2020-06)

under the modified retrospective approach.

On January 1, 2021, the Company early adopted ASU 2020-06, Debt – Debt with Conversion and Other Options

(ASU 2020-06) under the modified retrospective approach.

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

1 unchanged sentence

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

The ASU also simplifies the diluted earnings-per-share

calculation in certain areas.

Upon the adoption of this ASU,

the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $ 616 , increasing the carrying value of the convertible notes by $ 4,088 , reducing additional paid-in capital

by $ 3,682 and reducing deferred tax liabilities by $ 1,022 .

The ASU also simplifies the diluted earnings-per-share calculation in certain areas.

Upon the adoption of this ASU, the Company reclassified the equity component related to the convertible notes, net of deferred taxes, reducing accumulated deficit by

$ 616 , increasing the carrying value of the convertible notes by $ 4,088 , reducing additional paid-in

capital by $ 3,682 and reducing deferred tax liabilities by $ 1,022 .

These updates also reduced interest expense recognized on the Company’s convertible notes by approximately $ 420 per quarter (Note 11).

9 unchanged sentences

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 accoun t

for any incremental amount as a non-income-based

(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;

(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

(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;

1 unchanged sentence

The Company has determined that the adoption of this standard did not have a material impact on its financial statements.

Table of Content s

Cash and Cash Equivalents

Of the total cash and cash equivalents of $ 62,302 and $ 73,425 at March 31, 2021 and December 31, 2020, respectively, $ 59,919 and $ 70,911 were held at two financial institutions.

At March 31, 2021 and December 31, 2020, cash equivalents were approximately $ 502 and $ 660 , respectively.

Substantially all of the Company’s cash and cash equivalents was held at three financial institutions on June 30, 2021.

Cash equivalents were approximately

$ 81,536 and $ 660 at June 30, 2021 and December 31, 2020, respectively.

Certain of the Company’s international subsidiaries are required to maintain a minimum level of regulatory capital, which was

and $ 10,745 at March 31, 2021 and December 31, 2020, respectively.

$ 12,439 and $ 10,745 at June 30, 2021 and December 31, 2020, respectively.

These requirements are generally satisfied by cash on hand.

19 unchanged sentences

The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value.

During the three months ended March 31, 2021 and 2020 there were no transfers between Levels 2 and 3.

March 31, 2021

During the three and six months ended June 30, 2021 and 2020 there were no transfers between Levels 2 and 3.

June 30, 2021

Recurring fair value measurements:

3 unchanged sentences

Corporate bonds

Non-recurring

fair value measurements:

Non-recurring fair value measurements:

Securrency, Inc.

2 unchanged sentences

Deferred consideration (Note 9)

Fair value determined on March 8, 2021 (Note 7).

Fair value of $ 8,488 and $ 8,349 determined on June 9, 2021 and March 8, 2021, respectively (Note 7).

December 31, 2020

15 unchanged sentences

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 22).

Thesys was written down to zero on September 30, 2020.

Fair value of $ 145,847 and $ 24,344 determined on June 16, 2020 and August 13, 2020, respectively (Note 10).

The fair value of the AdvisorEngine financial interests of $ 9,592 was determined on May 4, 2020, the date on which these financial interests were sold (Note 23).

Thesys was written down to

zero on September 30, 2020.

Fair value of $ 145,847 and $ 24,344 determined for convertible notes raised on June 16, 2020 and August 13, 2020, respectively (Note 11).

Recurring Fair Value Measurements - Methodology

Cash Equivalents (Note 3) –

– These financial assets represent cash invested in highly liquid investments with ori g

inal maturities of less than 90 days.

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 classified as Level 1 in the fair value hierarchy.

2 unchanged sentences

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

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 9)

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

Pass-through GSE positions invested in through a fund structure with a quoted market price on an exchange are generally classified as Level 1.

nsideration (Note 9)

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

1 unchanged sentence

Three Months Ended

Six Months Ended

Deferred consideration (Note 9)

Beginning balance

Net realized losses (1)

Net unrealized (gains)/losses (2)

Ending balanc e

Net realized losses/(gains) (1)

Net unrealized losses/(gains) (2)

Ending balance

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

4 unchanged sentences

Trading securities

During the three months ended March 31, 2021 and 2020, the Company recognized trading losses of $ 561 and $ 196 ,

respectively on securities owned that were still held at the reporting dates.

The Company had no AFS debt securities at March 31, 2021 and December 31, 2020.

The Company recognized net trading gains and losses on securities

owned that were still held at the reporting dates of ($ 272 ) and $ 324 during the three months ended June 30, 2021 and 2020, respectively, and ($ 833 ) and $ 105 during the six months ended June 30, 2021 and 2020, respectively.

The Company had no AFS debt securities at June 30, 2021 and December 31, 2020.

Securities Held-to-Maturity

2 unchanged sentences

Pass-through GSEs (amortized cost)

During the three months ended March 31, 2021 and 2020, the Company received proceeds of $ 38 and $ 6,030 , respectively, from held-to-maturity

During the six months ended June 30, 2021 and 2020, the Company received proceeds of $ 77 and $ 16,365 , respectively, from held-to-maturity

securities maturing or being called prior to maturity.

13 unchanged sentences

The following table sets forth the Company’s investments:

March 31, 2021

June 30, 2021

December 31, 2020

3 unchanged sentences

– Series B convertible preferred stock

Subtotal – Securrency, Inc.

Onramp Invest, LLC – Simple Agreement for Future Equity

Securrency, Inc.

3 unchanged sentences

In consideration of such investments, the Company received 5,178,488 shares of Series A convertible preferred stock (“Series A Shares”) and 2,004,665 shares of Series B convertible preferred stock (“Series B Shares”).

The Series B Shares contain a liquidation preference that is pari passu with shares of Series B-1

convertible preferred stock (which is substantially the same as the Series B Shares except that it has l i

mited voting rights) and senior to that of the holders of the Series A Shares, which is senior to the holders of common stock.

Otherwise, the Series A Shares and Series B 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

The Series B Shares contain a liquidation preference that is pari passu with shares of Series B-1 convertible preferred stock (which are substantially the same as the Series B Shares except that they have limited voting rights) and senior to that of the holders of the Series A Shares, which are senior to the holders of common stock.

Otherwise, the Series A Shares and Series B 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 of Securrency.

In addition, the Series A Shares and Series B Shares (together with the Series B-1

60 % of the Series A Shares (at any time on or after December 31, 2029) and

of the Series B Shares (at any time on or after March 31, 2031).

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.

convertible preferred stock) are separately redeemable, with respect to all of the shares outstanding of the applicable series of preferred stock (subject to certain regulatory restrictions of certain investors), for the original issue price thereof, plus all declared and unpaid dividends, upon approval by holders of at least 60 % of the Series A Shares (at any time on or after December 31, 2029) and 90 % of the Series B Shares (at any time on or after March 31, 2031).

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

On March 8, 2021, the Company recognized a gain of $ 237 on its Series A Shares, which was re-measured to fair value upon the issuance of Securrency’s Series B Shares.

During the three and six months ended June 30, 2021, the Company recognized a gain of

$ 139 and $ 376 , respectively, on its Series A Shares, which were re-measured

to fair value upon the issuance of Securrency’s Series B Shares.

Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued.

1 unchanged sentence

The table below presents the inputs used in backsolve valuation approach (classified as Level 3 in the fair value hierarchy):

Inputs (Initial Recognition – March 8, 2021)

Expected volatility

Time to exit (in years)

There was no impairment recognized during the three months ended March 31, 2020 based upon a qualitative assessment.

There was no impairment recognized during the three and six months ended June 30, 2020 based upon a qualitative assessment.

Onramp Invest, LLC

In June 2021, the Company invested $ 250

in Onramp Invest, LLC (“Onramp”), a technology company that provides access to cryptoassets for registered investment advisers.

In consideration for its investment, the Company holds a Simple Agreement for Future Equity (“SAFE”) ,

which provides the Company with the right to be issued certain shares of Onramp’s preferred stock in connection with Onramp’s future equity financing for preferred stock, at a

20 % discount to the price per share issued in connection with such equity financing, subject to a pre-determined valuation cap.

The preferred stock is issuable upon the occurrence of such preferred equity financing, which would occur after Onramp’s conversion to a corporation.

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

There was no impairment recognized during the three and six months ended June 30, 2021 based upon a qualitative assessment.

Fixed Assets, net

4 unchanged sentences

Deferred Consideration

Deferred consideration represents an obligation the Company assumed in connection with its acquisition of the European exchange-traded commodity, currency and leveraged-and-inverse

business of ETFS Capital Limited (“ETFS Capital”) which occurred on April 11, 2018 (“ETFS Acquisition”).

The obligation is for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”).

Deferred consideration represents an obligation the Company assumed in connection with its acquisition of the European exchange-traded commodity, currency and leveraged and inverse business of ETFS Capital Limited (“ETFS Capital”) which occurred on April 11, 2018 (“ETFS Acquisition”).

The obligation is for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced

6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”).

The Contractual Gold Payments are paid from advisory fee income generated by any Company-sponsored financial product backed by physical gold and are subject to adjustment and reduction for declines in advisory fee income generated by such products, with any reduction remaining due and payable until paid in full.

2 unchanged sentences

(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 $ 227,146 and $ 230,137 at March 31, 2021 and December 31, 2020 using the following assumptions:

The Company determined the present value of the deferred consideration of $ 226,706 and $ 230,137 at June 30, 2021 and December 31, 2020 using the following assumptions:

Forward-looking gold price (low) – per ounce

3 unchanged sentences

Perpetual growth rate

The forward-looking gold prices at March 31, 2021 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 forward-looking gold prices at June 30, 2021 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 increase in observable forward-looking gold prices through 2027.

1 unchanged sentence

An increase in spot gold prices, 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 $ 15,637 and $ 17,374 and long-term amounts payable were $ 211,509 and $ 212,763 , respectively, at March 31, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2021 and 2020, the Company recognized the following in respect of deferred consideration:

Current amounts payable were $ 16,101 and $ 17,374 and long-term amounts payable were $ 210,605 and $ 212,763 , respectively, at June 30, 2021 and December 31, 2020, respectively.

During the three and six months ended June 30, 2021 and 2020, the Company recognized the following in respect of deferred consideration:

Three Months Ended

Six Months Ended

Contractual gold payments

3 unchanged sentences

Losses on revaluation of deferred consideration – gold payments result from an increase in spot gold prices, an increase in the forward-looking price of gold, an increase in the perpetual growth rate and a decrease in the discount rate used to compute the annual payment obligations.

Former Credit Facility

On June 16, 2020, the Company terminated its former credit facility by repaying $ 174,000 that was 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 former credit facility during the three and six months ended June 30, 2020 was $ 1,667 and $ 4,086 , respectively.

Convertible Notes

On June 16, 2020, the

Company issued and sold $ 150,000 in aggregate principal amount of 4.25 % Convertible Senior Notes due 2023

(the “Existing 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.

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”) 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 Existing Notes (the Additional Notes and together with the Existing Notes, the “Convertible Notes”).

After the issuance of the Additional Notes, the Company had

$ 175,000 aggregate principal amount of Convertible Notes outstanding.

On June 14, 2021, the Company issued and sold $ 150,000 in aggregate principal amount of 3.25 % Convertible Senior Notes due 2026 (the “2021 Notes”) pursuant to an indenture dated June 14, 2021, 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 (“Rule 144A”).

On June 16, 2020, the Company issued and sold $ 150,000 in aggregate principal amount of 4.25 % Convertible Senior Notes due 2023 (the “June 2020 Notes”) pursuant to an indenture dated June 16, 2020, between the Company and the Trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.

On August 13, 2020, the Company issued and sold $ 25,000 in aggregate principal amount of 4.25 % Convertible Senior Notes due 2023 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 June 2020 Notes (the “August 2020 Notes” and

together with the June 2020 Notes, the “2020 Notes”).

After the issuance of the 2021 Notes (and together with the 2020 Notes, the “Convertible Notes”), the Company had $ 325,000 aggregate principal amount of Convertible Notes outstanding.

Key terms of the Convertible Notes are as follows:

Maturity date

June 15, 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:

Maturity date (unless earlier converted, repurchased or redeemed)

June 15, 2026

June 15, 2023

Interest rate

Conversion price

Conversion rate

Redemption price

Interest rate

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

Conversion price

Convertible at an initial conversion rate of the Company’s common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price as disclosed in the table above).

Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2026 and March 15, 2023 in respect of the 2021 Notes and 2020 Notes, respectively, only under the following circumstances:

(i) 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 of

the Indenture but only with respect to the Convertible Notes called (or deemed called) for redemption;

(ii) during the f i ve business d a y period after any t e n consecutive trading d a y 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 of the indentures 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.

On or after March 15, 2026 and March 15, 2023 in respect of the 2021 Notes and 2020 Notes, respectively, 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 of

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 $7

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

At its election, the Company will also settle its conversion obligation in excess of the aggregate principal amount of 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:

The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2026 and June 20, 2023 in respect of the 2021 Notes and 2020 Notes, respectively, and on or prior to the

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.

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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.

In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the indentures) 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 144.9275 shares and 270.2702 shares of the Company’s common stock per $1,000 principal amount of the 2021 Notes and 2020 Notes, respectively (the equivalent of 69,036,410 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 11).

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 March 31, 2021 and December 31, 2020:

The 2021 Notes and 2020 Notes rank equal in right of payment, and 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 12).

The indentures contain 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 June 30, 2021 and December 31, 2020:

June 30, 2021

Principal amount

premium on Additional Notes

Gross proceeds

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Effective interest rate (2)

Unamortized discount was

reduced by $ 4,207 and unamortized issuance costs increased by $ 119 upon the early adoption of ASU 2020-06

Unamortized discount was reduced by $ 4,207 and unamortized issuance costs increased by $ 119 upon the early adoption of ASU 2020-06

on January 1, 2021.

The discount previously arose from the bifurcation of the conversion option which occurred prior to the adoption of ASU 2020-06.

The unamortized issuance costs are reported net of the unamortized premium on the Additional Notes.

Includes amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes.

The unamortized issuance costs are reported net of the unamortized premium.

Includes amortization of the issuance costs and premium.

The effective interest rate prior to January 1, 2021 also included amortization of the discount arising from the bifurcation of the conversion option.

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Previously, convertible instruments were required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components.

The discount arising from the recognition of the equity component was amortized as interest expense over the life of the Convertible Notes.

Interest expense on the convertible notes during the three months ended March 31, 2021 was $ 2,296 .

Interest expense during the three months ended March 31, 2020 of $ 2,419 was attributable to our former credit facility which was terminated on June 16, 2020.

Interest payable of $ 2,209 and $ 342 at March 31, 2021 and 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 $ 214,972 at March 31, 2021.

The discount arising from the recognition of the equity component was amortized as interest expense over the life of the 2020 Notes.

Interest expense on the Convertible Notes during the three and six months ended June 30, 2021 was

$ 2,567 and $ 4,863 , respectively.

Interest expense on the 2020 Notes during the three and six months ended June 30, 2020 was

Interest payable of $ 588 and $ 342 at June 30, 2021 and 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 $ 356,602 at June 30, 2021.

The if-converted

value of the Convertible Notes was $ 184,755 at March 31, 2021.

value of the 2020 Notes was $ 183,277 at June 30, 2021.

The if-converted

value of the 2021 Notes did not exceed the principal amount at June 30, 2021.

Preferred Shares

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(a) the number of shares of the Company’s common stock authorized by its certificate of incorporation is insufficient to permit the Company to convert all of the Preferred Shares requested by ETFS Capital to be converted;

or (b) ETFS Capital does not, upon completion of a change of control of the Company, receive the same amount per Preferred Share as it would have received had each outstanding Preferred Share been converted into common stock immediately prior

to the change of control.

However, the Company will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation the Company owes to any of its secured creditors or is otherwise prohibited by applicable law.

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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 redemption value of the Preferred Shares was $ 88,642 and $ 72,667 at March 31, 2021 and December 31, 2020, respectively.

The redemption value of the Preferred Shares was $97,549 and $72,667 at June 30, 2021 and December 31, 2020, respectively.

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

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

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Operating lease cost

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None of the Company’s leases include variable payments, residual value guarantees or any restrictions or covenants relating to the Company’s ability to pay dividends or incur additional financing obligations.

The Company’s lease of its headquarters, which expires in

August 2029, includes an option to extend for an additional five years.

The Company’s lease of its headquarters, which expires in August 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 premises as determined by the landlord approximately six months prior to the commencement of the extension term.

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asset and lease liability.

During the three months ended March 31, 2021, the Company recognized an impairment charge of $ 303 resulting from the derecognition of a right-of-use asset upon exiting its London office in February 2021, as well as costs incurred to restore the office space to its original condition.

The following table discloses future minimum lease payments at March 31, 2021 with respect to the Company’s operating lease liabilities:

During the six months ended June 30, 2021, the Company recognized an impairment charge of $ 303 resulting from the derecognition of a right-of-use

asset upon exiting its London office in February 2021, as well as costs incurred to restore the office space to its original condition.

The following table discloses future minimum lease payments at June 30, 2021 with respect to the Company’s operating lease liabilities:

Remainder of 2021

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Total future minimum lease payments (undiscounted)

The following table reconciles the future minimum lease payments at March 31, 2021 (disclosed above) to the operating lease liabilities recognized in the Company’s Consolidated Balance Sheet:

The following table reconciles the future minimum lease payments (disclosed above) at June 30, 2021 to the operating lease liabilities recognized in the Company’s Consolidated Balance Sheet:

Amounts recognized in the Company’s Consolidated Balance Sheet

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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 March 31, 2021 and December 31, 2020.

The Company is currently assessing these claims and an accrual has not been made with respect to these matters at June 30, 2021 and December 31, 2020.

Variable Interest Entities

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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 the entity in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the entity’s economic performance.

Such power is conveyed through the entity’s board of directors and the Company does not have control over the board.

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

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

The following table presents information about the Company’s variable interests in non-consolidated

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Preferred stock – Series B Shares

Subtotal - Securrency

Carrying Amount – Assets (Onramp)

Total (Note 7)

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Three Months Ended

Six Months Ended

Revenues from contracts with customers:

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Total operating revenues

The Company recognizes revenues from contracts with customers when the performance obligation is satisfied, which is when the promised goods or services are transferred to the customer.

A good or service is considered to be transferred when the customer obtains control, which is represented by the transfer of rights with regard to the good or service.

The Company recognizes revenues from contracts with customers when the performance obligation is satisfied, which is when the promised services are transferred to the customer.

A service is considered to be transferred when the customer obtains control, which is represented by the transfer of rights with regard to the service.

Transfer of control happens either over time or at a point in time.

When a performance obligation is satisfied over time, an entity is required to select a single method of measuring progress for each performance obligation that depicts the entity’s performance in transferring control of goods or services to the customer.

Substantially all the Company’s revenues from contracts with customers are derived primarily from investment advisory agreements with related parties (Note 17).

These advisory fees are recognized over time, are earned from the Company’s ETPs and are calculated based on a percentage of the ETPs’ average daily net assets.

There is no significant judgment in calculating amounts due which are invoiced monthly in arrears and are not subject to any potential reversal.

is no significant judgment in calculating amounts due which are invoiced monthly in arrears and are not subject to any potential reversal.

Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice.

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Three Months Ended

Six Months Ended

Revenues from contracts with customers:

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Related Party Transactions

The Company’s revenue s

are derived primarily from investment advisory agreements with related parties.

The Company’s revenues are derived primarily from investment advisory agreements with related parties.

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

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The Company is also responsible for certain expenses of the related parties, including the cost of transfer agency, custody, fund administration and accounting, legal, audit, and other non-distribution

services, excluding extraordinary expenses, taxes and certain other expenses, which is included in fund management and administration on the Company’s Consolidated Statements of Operations.

services, excluding extraordinary expenses, taxes and certain other expenses, which are included in fund management and administration on the Company’s Consolidated Statements of Operations.

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

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Three Months Ended

Six Months Ended

Advisory services provided to WTT

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Advisory services provided to WTCS

The Company also has investments in certain WisdomTree ETFs of approximately $ 23,626 and $ 23,932 at March 31, 2021 and December 31, 2020, respectively.

Losses related to trading WisdomTree ETFs during the three months ended March 31, 2021 and 2020 were $ 384 and $ 290 , respectively, which are recorded in other losses, net on the Consolidated Statements of Operations.

The Company also has investments in certain WisdomTree ETFs of approximately $ 21,330 and $ 23,932 at June 30, 2021 and December 31, 2020, respectively.

Net gains and losses related to trading WisdomTree ETFs during the three months ended June 30, 2021 and 2020 were

$ 167 and $ 298 , respectively, and during the six months ended June 30, 2021 and 2020 were

($ 217 ) and $ 8 , respectively, which are recorded in other gains and losses, net.

Stock-Based Awards

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Stock options:

Generally issued for terms of ten years and may vest after at least one year of service and have an exercise price equal to

Company’s stock price on the grant date.

The Company estimates the fair value of stock options (when granted) using the

Scholes option pricing model.

Generally issued for terms of ten years and may vest after at least one year of service and have an exercise price equal to the Company’s stock price on the grant date.

The Company estimates the fair value of stock options (when granted) using the Black-Scholes option pricing model.

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

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The number of PRSUs vesting ranges from 0 % to 200 % of the target number of PRSUs granted, as follows:

• If the relative TSR is below the 25th percentile, then 0 % of the target number of PRSUs granted will vest;

• If the relative TSR is at the 25th 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 85th percentile (or 100th percentile for grants made during 2019 and 2020).

Stock-based compensation expense during

the three months ended March 31, 2021 and 2020 was $ 3,143 and $ 3,239 , respectively.

• If the relative TSR is below the 25 th

percentile, then 0 % of the target number of PRSUs granted will vest;

• If the relative TSR is at the 25 th

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

• 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 85 th

percentile (or 100 th

percentile for grants made during 2019 and 2020).

• If the Company’s TSR is negative, the target number of PRSUs vesting is capped at 100

% regardless of the relative TSR percentile.

Stock-based compensation expense during the three months ended June 30, 2021 and 2020 was $ 2,121 and $ 2,920 , respectively, and during the six months ended June 30, 2021 and 2020 was $ 5,264 and $ 6,159 , respectively.

A summary of unrecognized stock-based compensation expense and average remaining vesting period is as follows:

March 31, 2021

Unrecognized Stock-

June 30, 2021

Vesting Period (Years)

Employees and directors

A summary of stock-based compensation award activity during the three months ended March 31, 2021 is as follows:

Balance at January 1, 2021

A summary of stock-based compensation award activity during the three months ended June 30, 2021 is as follows:

Balance at April 1, 2021

Exercised/vested

Balance at March 31, 2021

Represents the target number of PRSUs granted and outstanding.

The number of PRSUs that ultimately vest ranges from 0 % to 200 % of this amount.

A Monte-Carlo simulation was used to value these awards using the following assumptions for the Company and the peer group:

(i) beginning 90-day

average stock prices;

(ii) valuation date stock prices;

(iii) historical stock price volatilities ranging from 34 % to 57 % (average 44 %);

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

(v) a risk free interest rate of 0.17 %;

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

Balance at June 30, 2021

Earnings Per Share

The following tables set forth reconciliations of the basic and diluted earnings per share computations for the periods presented:

Three Months Ended March 31,

The following tables set forth reconciliations of the basic and diluted earnings/(loss) per share computations for the periods presented:

Three Months Ended

Six Months Ended

Basic Earnings/(Loss) per Share

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Basic earnings/(loss) per share

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Diluted Earnings/(Loss) per Share

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

During the three months ended March 31, 2020, there were no dilutive common stock equivalents as the Company reported a net loss for the period.

During the three and six months ended June 30, 2020, there were no dilutive common stock equivalents as the Company reported a net loss for the period.

Total antidilutive non-participating

common stock equivalents were 149 and 430 during the three months ended March 31, 2021 and 2020, respectively (shares herein are reported in thousands).

Potential common shares associated with the conversion option embedded in the Convertible Notes were excluded from the computation for the three months ended March 31, 2021 as the Company’s average stock price during the period was lower than the conversion price of $ 5.92 per share.

The following table reconciles weighted average diluted shares as reported on the Company’s Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, which are determined pursuant to the treasury stock method, to the weighted average diluted shares used to calculate diluted earnings/(loss) per share as disclosed in the table above:

Three Months Ended March 31,

common stock equivalents were 55 and 358 during the three months ended June 30, 2021 and 2020, respectively,

and 130 and 441 during the six months ended June 30, 2021 and 2020, respectively (shares herein are reported in thousands).

Potential common shares associated with the conversion option embedded in the Convertible Notes for the three and six months ended June 30, 2021 were 3,019 and 1,191 , respectively (shares herein are reported in thousands).

There were no potential common shares included in weighted average diluted shares for the three and six months ended June 30, 2020 as the Company’s average stock price during those respective periods was lower than the conversion price.

The following table reconciles weighted average diluted shares as reported on the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020, which are determined pursuant to the treasury stock method, to the weighted average diluted shares used to calculate diluted earnings/(loss) per share as disclosed in the table above:

Three Months Ended

Six Months Ended

Reconciliation of Weighted Average Diluted Shares (in thousands)

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Participating securities

Weighted average shares of common stock issuable upon conversion of the Preferred Shares (Note 11)

Weighted average shares of common stock issuable upon conversion of the Preferred

Shares (Note 12)

Potentially dilutive restricted stock awards

Weighted average diluted shares used to calculate diluted earnings/(loss) per share

as disclosed in the table abov e

Excludes 15,025 participating securities and 16 potentially dilutive non-participating

common stock equivalents for the three months ended March 31, 2020 as the Company reported a net loss for the period (shares herein are reported in thousands).

Effective Income Tax Rate – Three Months Ended March 31, 2021 and March 31, 2020

The Company’s effective income tax rate for the three months ended March 31, 2021 of negative 14.9 % resulted in an income tax benefit of $ 1,969 .

The Company’s effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to a $ 5,171 reduction in unrecognized tax benefits, a non-taxable

gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation awards.

The Company’s effective income tax rate for the three months ended March 31, 2020 of 21.5 % resulted in an income tax benefit of $ 2,371 .

The Company’s effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to a $ 5,981 reduction in unrecognized tax benefits, a $ 2,877 non-taxable

gain recognized upon the

sale of the Company’s Canadian ETF business and a lower tax rate on foreign earnings, partly offset by a valuation allowance on capital losses, tax shortfalls associated with the vesting and exercise of stock-based compensation and a non-deductible

as disclosed in the table above

Excludes 15,011 participating securities and zero potentially dilutive common stock equivalents for the three months ended June 30, 2020 and 14,991 participating securities and 8 potentially dilutive common stock equivalents for the six months ended June 30, 2020, as the Company reported a net loss for the period (shares herein are reported in thousands).

Effective Income Tax Rate – Three and Six Months Ended June 30, 2021

The Company’s effective income tax rate during the three months ended June 30, 2021 of 19.5 % resulted in income tax expense of $ 4,259 .

The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to a lower tax rate on foreign earnings.

The Company’s effective income tax rate for the six months ended June 30, 2021 of 6.5 % resulted in income tax expense of $ 2,290 .

The effective income tax rate differs from the federal statutory rate of 21 % primarily due to a $ 5,171 reduction in unrecognized tax benefits, a lower tax rate on foreign earnings and a non-taxable

gain on revaluation of deferred consideration.

These items were partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation and state and local taxes.

Effective Income Tax Rate – Three and Six Months Ended June 30, 2020

The Company’s effective income tax rate during the three months ended June 30, 2020 of 5.7 % resulted in an income tax benefit of $ 804 .

The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to a non-deductible

loss on revaluation of deferred consideration.

This loss was partly offset by a tax benefit of $ 2,842 recognized in connection with the release of a deferred tax asset valuation allowance on interest carryforwards arising from the Company’s debt previously held in the United Kingdom and a lower tax rate on foreign earnings.

The Company’s effective income tax rate for the six months ended June 30, 2020 of 12.7 % resulted in an income tax benefit of $ 3,175 .

The effective income tax rate differs from the federal statutory rate of 21 % primarily due to a valuation allowance on capital losses, a non-deductible

loss on revaluation of deferred consideration and tax shortfalls associated with the vesting and exercise of stock-based compensation awards.

These items were partly offset by a $ 5,981 reduction in unrecognized tax benefits, a $ 2,877 non-taxable

gain recognized upon sale of the Canadian ETF business in the first

quarter of 2020, a tax

benefit of $ 2,842 recognized in connection with the release of a deferred tax asset valuation allowance on interest carryforwards arising from the Company’s debt previously held in the United Kingdom and a lower tax rate on foreign earnings.

Deferred Tax Assets

A summary of the components of the Company’s deferred tax assets at March 31, 2021 and December 31, 2020 are as follows:

A summary of the components of the Company’s deferred tax assets at June 30, 2021 and December 31, 2020 are as follows:

Deferred tax assets:

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Operating lease liabilities

Interest carryforwards

Accrued expenses

NOLs – Foreign

Goodwill and intangible assets

Accrued expenses

Interest carryforwards

Stock-based compensation

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Net Operating and Capital Losses – U.S

The Company’s tax effected net operating losses (“NOLs”) at March 31, 2021 were $ 382 which expire in 2024 .

The Company’s tax effected net operating losses (“NOLs”) at June 30, 2021 were $ 382 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 were $ 16,596 at March 31, 2021 and December 31, 2020.

The Company’s tax effected capital losses were $ 16,596 at June 30, 2021 and December 31, 2020.

These capital losses expire between the years 2023 and 2025.

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One of the Company’s European subsidiary’s generated NOLs outside the U.S.

These tax effected NOLs, all of which are carried forward indefinitely, were

2,167 at March

2021 and December

2020 , respectively.

These tax effected NOLs, all of which are carried forward indefinitely, were $ 2,093 and $ 2,167 at June 30, 2021 and December 31, 2020, respectively.

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.

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.

Uncertain Tax Positions

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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 these gross unrecognized tax benefits during the three months ended March 31, 2021:

The table below sets forth the aggregate changes in the balance of these gross unrecognized tax benefits during the three and six months ended June 30, 2021:

Balance on January 1, 2021

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Balance at March 31, 2021

Recorded as an income tax benefit of $ 5,171 during the three months ended March 31, 2021, along with an equal and offsetting amount recorded in other losses, net, to recognize a reduction in the indemnification asset.

During the three months ended March 31, 2020, an income tax benefit of $ 5,981 was recorded along with an equal and offsetting amount in other losses, net.

Foreign currency translation (2)

Balance at June 30, 2021

Recorded as an income tax benefit of $ 5,171 during the six months ended June 30, 2021, along with an equal and offsetting amount recorded in other gains and losses, net, to recognize a reduction in the indemnification asset.

During the six months ended June 30, 2020, an income tax benefit of $ 5,981 was recorded along with an equal and offsetting amount in other gains and losses, net.

The gross unrecognized tax benefits were accrued in British pounds .

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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 gross unrecognized tax benefits and interest and penalties totaling $ 22,222 at March 31, 2021 are included in other non-current

The gross unrecognized tax benefits and interest and penalties totaling $ 22,427 at June 30, 2021 are included in other non-current

liabilities on the Consolidated Balance Sheets.

It is reasonably possible that the total amount of unrecognized tax benefits will decrease by $ 7,152 (including interest and penalties of $ 2,064 ) in the next 12 months upon lapsing of the statute of limitations.

At March 31, 2021, there were $ 22,222 of unrecognized tax benefits (including interest and penalties) that, if recognized, would impact the effective tax rate.

At June 30, 2021, there were $ 22,427 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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The Company is not currently under audit in any other income tax jurisdictions.

As of March 31, 2021, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2016.

As of June 30, 2021, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2016.

Undistributed Earnings of Foreign Subsidiaries

Income Taxes,

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

The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of

$ 97 and $ 138 at March 31, 2021 and December 31, 2020, respectively.

The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of $ 131 and $ 138 at June 30, 2021 and December 31, 2020, respectively.

Shares Repurchased

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

During the three months ended March 31, 2021 and March 31, 2020, the Company repurchased 489,763 shares and 385,399 shares of its common stock, respectively, under this program for an aggregate cost of $ 2,630 and $ 1,495 , respectively.

During the three and six months ended June 30, 2021, the Company repurchased 4,630,733 and 5,120,496 shares of its common stock, respectively, under this program for an aggregate cost of $ 31,876 and $ 34,506 , respectively.

During the three and six months ended June 30, 2020, the Company repurchased 6,738,313 and 7,123,712 shares of its common stock, respectively, under this program for an aggregate cost of $ 24,949 and $ 26,444 , respectively.

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

As of March 31, 2021, $ 49,561 remained under this program for future purchases.

As of June 30, 2021, $ 17,685 remained under this program for future repurchases.

Goodwill and Intangible Assets

1 unchanged sentence

Balance at January 1, 2021

Balance at March 31, 2021

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.

Balance at June 30, 2021

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 United Kingdom.

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

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Balance at January 1, 2021

Balance at March 31, 2021

Balance at June 30, 2021

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

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Consideration also included 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.

No value has been ascribed to these contingent payments at March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2020, the Company recognized an impairment of $ 19,672 to adjust the carrying value of its previously held financial interests in AdvisorEngine to fair value.

In the following quarter, the Company subsequently recognized a gain of $ 1,093 arising from an adjustment to the estimate fair value of consideration received.

No value has been ascribed to these contingent payments at June 30, 2021 and December 31, 2020.

During the six months ended June 30, 2020, the Company recognized an impairment of $ 19,672 to adjust the carrying value of its previously held financial interests in AdvisorEngine to fair value.

During the three and six months ended June 30, 2020, the Company subsequently recognized a gain of $ 868 arising from an adjustment to the estimate fair value of consideration received.

These fair value adjustments were based upon the final sale terms as disclosed above.

2 unchanged sentences

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.

The Company recorded CDN $ 2,000 in other receivables on the Consolidated Statements of Financial Condition at March 31, 2021 and December 31, 2020.

In connection with this sale, the Company recognized a gain of $ 2,877 during the three months ended March 31, 2020 which was recorded in other losses, net on the Consolidated Statements of Operations.

The Company recorded CDN $ 2,000 in other receivables on the Consolidated Statements of Financial Condition at June 30, 2021 and December 31, 2020.

In connection with this sale, the Company recognized a gain of $ 2,877 during the six months ended June 30, 2020 which was recorded in other gains and losses, net on the Consolidated Statements of Operations.

This gain represents the difference between the minimum cash consideration payable to the Company and the carrying value of WTAMC’s net assets upon disposition.

Subsequent Events

The Company evaluated subsequent events through the date of issuance of the accompanying financial statements.

The Company evaluated subsequent events through the date of issuance of the accompanying consolidated financial statements.

There were no events requiring disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements