doug-20230630

000187889712/312023Q2TRUE123,662163,85924,22722,16219,50712,8267,6477,5475,4044,98517,61313,680198,060225,05942,54441,717113,105117,7735,3456,21912,66912,93236,00438,91332,23032,23073,48973,6662,0551,6296,6336,483516,789550,40222,80822,3286,1745,45625,78322,1173,37118,2287,7118,22222,48013,60788,32789,9589,07714,467115,192120,50852,83754,706137306265,570279,9450.010.0110,000,00010,000,000——0.010.01250,000,000250,000,00084,416,02284,416,02280,881,02280,881,022844809271,678273,11122,6245,000249,898268,9201,3211,537251,219270,457516,789550,402202,036295,1098,7779,1993,1694,592213,982308,900156,102223,42221,23919,30618,89318,09132,29532,8306,0125,2932,0392,0791,210—23,8087,8791,105397353245475223,2309,2025,3902,91717,8406,28521622517,6246,5100.230.080.230.0880,881,022809273,1115,0001,537270,45717,62421617,8400.054,2214,2213,535,0003535—2,8232,82384,416,022844271,67822,6241,321251,21981,210,626812278,5006221,939281,8736,5102256,2850.054,0624,06225,0002,6522,65237537581,235,626812281,1523,0702,089287,12317,8406,2852,0392,0792,8232,652—105,390—454752735325,4004,8761,42855810,3613391001,16713,2571,2465,5685,86814,85718,0702,93377031,5756,780—100—602570127525552003,6278493,9821,815—3,1294,2214,062—375—184,2216,83439,77815,429171,382228,866131,604213,437SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Basis of Presentation:

Douglas Elliman Inc. (“Douglas Elliman” or the “Company”) is engaged in the real estate services and property technology investment business and is seeking to acquire or invest in additional real estate services and property technology, or PropTech, companies. The condensed consolidated financial statements of Douglas Elliman include the accounts of DER Holdings LLC and New Valley Ventures LLC (“New Valley Ventures”), directly and indirectly wholly owned subsidiaries of the Company. DER Holdings LLC owns Douglas Elliman Realty, LLC and Douglas Elliman of California, Inc., which are engaged in the residential real estate brokerage business with their subsidiaries. The operations of New Valley Ventures consist of minority investments in innovative and cutting-edge PropTech companies.

Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.

The unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) are to the FASB Accounting Standards Codification, also referred to as the “Codification” or “ASC.” These condensed consolidated financial statements should be read in conjunction with the combined consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.

In presenting the condensed consolidated financial statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates.

(b) Principles of Consolidation:

The condensed consolidated financial statements include the assets, liabilities, revenues, expenses and cash flows of DER Holdings LLC and New Valley Ventures as well as all other entities in which Douglas Elliman has a controlling financial interest. All intercompany balances and transactions have been eliminated in the condensed consolidated financial statements.

When evaluating an entity for consolidation, Douglas Elliman first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the entity is considered to be a VIE, Douglas Elliman determines whether it would be considered the entity’s primary beneficiary. Douglas Elliman consolidates those VIEs for which it has determined that it is the primary beneficiary. Douglas Elliman will consolidate an entity that is not deemed a VIE upon a determination that it has a controlling financial interest. For entities where Douglas Elliman does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity or cost method, as appropriate.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include impairment charges and valuation of intangible assets. Actual results could differ from those estimates.

(d) (Loss) Earnings Per Share (“EPS”):

The Company has restricted stock awards which will provide cash dividends at the same rate as paid on the common stock with respect to the shares underlying the restricted stock awards. These outstanding restricted stock awards represent participating securities under authoritative guidance. The participating securities holders do not participate in the Company’s net losses. The Company first paid dividends during the three months ended March 31, 2022 and most recently paid a dividend during the three months ended June 30, 2023.

As a result, in its calculation of basic EPS and diluted EPS for the three and six months ended June 30, 2022, the Company adjusted its net income for the effect of these participating securities. There were no outstanding participating securities during the three months ended June 30, 2023.


	Six Months Ended
	June 30,
		2023		2022
Net (loss) income attributed to Douglas Elliman Inc.		$	(17,624)	$	6,510
Income attributable to participating securities		(307)		(275)
Net (loss) income available to common stockholders attributed to Douglas Elliman Inc.		$	(17,931)	$	6,235

Basic EPS is computed by dividing net (loss) income available to common stockholders attributed to Douglas Elliman Inc. by the weighted-average number of shares outstanding, which will include vested restricted stock.

Basic and diluted EPS were calculated using the following shares of common stock for the periods presented below:


	Six Months Ended
	June 30,
		2023	2022
Weighted-average shares for basic EPS		78,279,772	77,666,210
Incremental shares related to non-vested restricted stock		—	54,416
Weighted-average shares for diluted EPS		78,279,772	77,720,626

(e) Reconciliation of Cash, Cash Equivalents and Restricted Cash:

Restricted cash amounts included in current assets and other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.

The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	123,662	$	163,859
Restricted cash and cash equivalents included in current assets	5,404		4,985
Restricted cash and cash equivalents included in other assets	2,538		2,538
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	131,604	$	171,382

(f) Related Party Transactions:

Agreements with Vector Group Ltd. (“Vector Group”) The Company paid Vector Group $1,050 and $1,050 under the Transition Services Agreement and $562 and $491 under the Aircraft Lease Agreement during the three and six months ended June 30, 2023 and 2022, respectively.

Real estate commissions. Real estate commissions include commissions of approximately $842 and $900 for the three and six months ended June 30, 2023 and 2022, respectively, from projects where the Company has been engaged by certain developers as the sole broker or the co-broker for several of the real estate development projects that Vector Group owns an interest in through its real estate venture investments.

(g) Investment and Other (Losses) Income:

Investment and other (losses) income consists of the following:


	Six Months Ended
	June 30,
		2023		2022
Net (losses) gains recognized on PropTech convertible trading debt securities		$	(352)	$	154
Net (losses) gains recognized on long-term investments at fair value		(102)		598

Investment and other (losses) income		$	(454)	$	752

(h) Restructuring:

Employee severance and benefits expensed for the three and six months ended June 30, 2023 relate entirely to the reduction in staff and are cash charges. All of the amounts expensed for the three and six months ended June 30, 2023 are included in Restructuring expense in the Company’s condensed consolidated statements of operations. The following table present the changes in the employee severance and benefits liability under the Real Estate Brokerage segment restructuring plan for the three and six months ended June 30, 2023:


	Employee Severance and Benefits
Severance liability balance at January 1, 2023	$	—
Severance expense	1,210
Severance payments	(223)
Severance liability at March 31, 2023	$	987

(i) Other Comprehensive Income:

The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the condensed consolidated financial statements.

(j) Subsequent Events:

The Company has evaluated subsequent events through November 9, 2023, the date the financial statements were issued.

(k) New Accounting Pronouncements:

Accounting Standards Updates (“ASUs”) to be adopted in 2023:

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires that an acquirer recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Updates (“ASUs”) adopted in 2023:

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

SEC Proposed Rule Changes

On March 21, 2022, the SEC proposed rule changes that would require registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rules would require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant's greenhouse gas emissions, which have become a commonly used metric to assess a registrant's exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant's audited financial statements. The Company is currently evaluating the impact of the proposed rule changes.

Basis of Presentation:

(b) Principles of Consolidation:

Estimates and Assumptions:The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include impairment charges and valuation of intangible assets. Actual results could differ from those estimates.(Loss) Earnings Per Share (“EPS”):The Company has restricted stock awards which will provide cash dividends at the same rate as paid on the common stock with respect to the shares underlying the restricted stock awards. These outstanding restricted stock awards represent participating securities under authoritative guidance. The participating securities holders do not participate in the Company’s net losses.


	Six Months Ended
	June 30,
		2023		2022
Net (loss) income attributed to Douglas Elliman Inc.		$	(17,624)	$	6,510
Income attributable to participating securities		(307)		(275)
Net (loss) income available to common stockholders attributed to Douglas Elliman Inc.		$	(17,931)	$	6,235

17,6246,51030730727527517,93117,9316,2356,235

Basic and diluted EPS were calculated using the following shares of common stock for the periods presented below:


	Six Months Ended
	June 30,
		2023	2022
Weighted-average shares for basic EPS		78,279,772	77,666,210
Incremental shares related to non-vested restricted stock		—	54,416
Weighted-average shares for diluted EPS		78,279,772	77,720,626

78,279,77277,666,210—54,41678,279,77277,720,626Reconciliation of Cash, Cash Equivalents and Restricted Cash:Restricted cash amounts included in current assets and other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.

The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	123,662	$	163,859
Restricted cash and cash equivalents included in current assets	5,404		4,985
Restricted cash and cash equivalents included in other assets	2,538		2,538
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	131,604	$	171,382

123,662163,8595,4044,9852,5382,538131,604171,3821,0501,050562491842900

Investment and other (losses) income consists of the following:


	Six Months Ended
	June 30,
		2023		2022
Net (losses) gains recognized on PropTech convertible trading debt securities		$	(352)	$	154
Net (losses) gains recognized on long-term investments at fair value		(102)		598

Investment and other (losses) income		$	(454)	$	752

352154102598454752Restructuring:Employee severance and benefits expensed for the three and six months ended June 30, 2023 relate entirely to the reduction in staff and are cash charges. All of the amounts expensed for the three and six months ended June 30, 2023 are included in Restructuring expense in the Company’s condensed consolidated statements of operations.The following table present the changes in the employee severance and benefits liability under the Real Estate Brokerage segment restructuring plan for the three and six months ended June 30, 2023:


	Employee Severance and Benefits
Severance liability balance at January 1, 2023	$	—
Severance expense	1,210
Severance payments	(223)
Severance liability at March 31, 2023	$	987

—1,210223987Other Comprehensive Income:The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the condensed consolidated financial statements.Subsequent Events:The Company has evaluated subsequent events through November 9, 2023, the date the financial statements were issued.New Accounting Pronouncements:

Accounting Standards Updates (“ASUs”) to be adopted in 2023:

Accounting Standards Updates (“ASUs”) adopted in 2023:

SEC Proposed Rule Changes

REVENUE RECOGNITION

Disaggregation of Revenue

In the following tables, revenue is disaggregated by major services line and primary geographical market:


	Six Months Ended June 30, 2023
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	57,798	$	33,105	$	54,454	$	37,899	$	183,256
Commission and other brokerage income - development marketing	7,763		619		10,060		338		18,780
Property management revenue	8,580		197		—		—		8,777
Escrow and title fees	399		210		—		2,560		3,169
Total revenue	$	74,540	$	34,131	$	64,514	$	40,797	$	213,982


	Six Months Ended June 30, 2022
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	92,388	$	50,079	$	80,824	$	51,884	$	275,175
Commission and other brokerage income - development marketing	11,369		—		8,216		349		19,934
Property management revenue	9,041		158		—		—		9,199
Escrow and title fees	717		271		—		3,604		4,592
Total revenue	$	113,515	$	50,508	$	89,040	$	55,837	$	308,900

Contract Balances

The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:


	June 30, 2023		December 31, 2022

Receivables, which are included in receivables	$	2,721	$	3,063
Contract assets, net, which are included in other current assets	4,184		4,453
Contract assets, net, which are in other assets	36,004		38,913
Payables, which are included in other current liabilities	2,044		2,291
Contract liabilities, which are in current liabilities	7,711		8,222
Contract liabilities, which are in other liabilities	52,837		54,706

The Company recognized revenue of $1,614 for the three and six months ended June 30, 2023, that were included in the contract liabilities balances at December 31, 2022. The Company recognized revenue of $8,069 for the three and six months ended June 30, 2022, that were included in the contract liabilities balances at December 31, 2021.

In the following tables, revenue is disaggregated by major services line and primary geographical market:


	Six Months Ended June 30, 2023
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	57,798	$	33,105	$	54,454	$	37,899	$	183,256
Commission and other brokerage income - development marketing	7,763		619		10,060		338		18,780
Property management revenue	8,580		197		—		—		8,777
Escrow and title fees	399		210		—		2,560		3,169
Total revenue	$	74,540	$	34,131	$	64,514	$	40,797	$	213,982


	Six Months Ended June 30, 2022
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	92,388	$	50,079	$	80,824	$	51,884	$	275,175
Commission and other brokerage income - development marketing	11,369		—		8,216		349		19,934
Property management revenue	9,041		158		—		—		9,199
Escrow and title fees	717		271		—		3,604		4,592
Total revenue	$	113,515	$	50,508	$	89,040	$	55,837	$	308,900

57,79833,10554,45437,899183,2567,76361910,06033818,7808,580197——8,777399210—2,5603,16974,54034,13164,51440,797213,98292,38850,07980,82451,884275,17511,369—8,21634919,9349,041158——9,199717271—3,6044,592113,51550,50889,04055,837308,900

The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:


	June 30, 2023		December 31, 2022

Receivables, which are included in receivables	$	2,721	$	3,063
Contract assets, net, which are included in other current assets	4,184		4,453
Contract assets, net, which are in other assets	36,004		38,913
Payables, which are included in other current liabilities	2,044		2,291
Contract liabilities, which are in current liabilities	7,711		8,222
Contract liabilities, which are in other liabilities	52,837		54,706

2,7213,0634,1844,45336,00438,9132,0442,2917,7118,22252,83754,7061,6148,069CURRENT EXPECTED CREDIT LOSSES

Real estate broker agent receivables: Douglas Elliman Realty is exposed to credit losses for various amounts due from real estate agents, which are included in Other current assets on the condensed consolidated balance sheets, net of an allowance for credit losses. The Company estimates its allowance for credit losses on receivables from agents based on an evaluation of aging, agent sales in pipeline, any security, specific exposures, historical experience of collections from the individual agents, and current and expected future market trends. The Company estimated that the credit losses for these receivables were $11,850 and $10,916 at June 30, 2023 and December 31, 2022, respectively.

The following table summarizes changes in the allowance for credit losses for the six months ended June 30, 2023:


	January 1, 2023		Current Period Provision			Write-offs		Recoveries		June 30, 2023
Allowance for credit losses:

Real estate broker agent receivables	$	10,916	$	1,428	(1)	$	494	$	—	$	11,850

_____________________________

(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.

The following table summarizes changes in the allowance for credit losses for the six months ended June 30, 2022:


	January 1, 2022		Current Period Provision			Write-offs		Recoveries		June 30, 2022
Allowance for credit losses:

Real estate broker agent receivables	$	8,607	$	558	(1)	$	332	$	—	$	8,833

_____________________________

11,85010,916

The following table summarizes changes in the allowance for credit losses for the six months ended June 30, 2023:


	January 1, 2023		Current Period Provision			Write-offs		Recoveries		June 30, 2023
Allowance for credit losses:

Real estate broker agent receivables	$	10,916	$	1,428	(1)	$	494	$	—	$	11,850

_____________________________

The following table summarizes changes in the allowance for credit losses for the six months ended June 30, 2022:


	January 1, 2022		Current Period Provision			Write-offs		Recoveries		June 30, 2022
Allowance for credit losses:

Real estate broker agent receivables	$	8,607	$	558	(1)	$	332	$	—	$	8,833

_____________________________

10,9161,428494—11,8508,607558332—8,833LEASES

Leases

The Company has operating leases for corporate and sales offices and equipment. The components of lease expense were as follows:


	Six Months Ended
	June 30,
		2023		2022
Operating lease cost		$	8,325	$	8,169
Short-term lease cost		278		257
Variable lease cost		1,078		985
Less: Sublease income		(153)		(121)
Total lease cost		$	9,528	$	9,290

Supplemental cash flow information related to leases was as follows:


	Six Months Ended
	June 30,
	2023		2022
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	8,524	$	9,196

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	732		6,984

Supplemental balance sheet information related to leases was as follows:



	June 30,		December 31,
	2023		2022
Weighted average remaining lease term:
Operating leases	6.90		7.03

Weighted average discount rate:
Operating leases	8.75	%	8.73	%

As of June 30, 2023, maturities of lease liabilities were as follows:


	Operating Leases
Period Ending December 31:
Remainder of 2023	$	25,989
2024	29,863
2025	25,096
2026	22,733
2027	19,912
2028	18,129
Thereafter	46,053
Total lease payments	187,775
Less imputed interest	(49,775)
Total	$	138,000

As of June 30, 2023, the Company had $217 in undiscounted lease payments relating to an operating lease for office space that has not yet commenced. The operating lease has a lease term of five years and is expected to commence during the third quarter of 2023.

The components of lease expense were as follows:


	Six Months Ended
	June 30,
		2023		2022
Operating lease cost		$	8,325	$	8,169
Short-term lease cost		278		257
Variable lease cost		1,078		985
Less: Sublease income		(153)		(121)
Total lease cost		$	9,528	$	9,290

Supplemental cash flow information related to leases was as follows:


	Six Months Ended
	June 30,
	2023		2022
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	8,524	$	9,196

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	732		6,984

8,3258,1692782571,0789851531219,5289,2908,5249,1967326,984

Supplemental balance sheet information related to leases was as follows:



	June 30,		December 31,
	2023		2022
Weighted average remaining lease term:
Operating leases	6.90		7.03

Weighted average discount rate:
Operating leases	8.75	%	8.73	%

6.907.038.758.73As of June 30, 2023, maturities of lease liabilities were as follows:


	Operating Leases
Period Ending December 31:
Remainder of 2023	$	25,989
2024	29,863
2025	25,096
2026	22,733
2027	19,912
2028	18,129
Thereafter	46,053
Total lease payments	187,775
Less imputed interest	(49,775)
Total	$	138,000

25,98929,86325,09622,73319,91218,12946,053187,77549,775138,000217five yearsLONG-TERM INVESTMENTS

Long-term investments consisted of the following:


	June 30, 2023		December 31, 2022
PropTech convertible trading debt securities	$	2,630	$	2,957
Long-term investment securities at fair value (1)	2,715		3,262
PropTech investments at cost	8,863		8,588
PropTech investments at equity method	497		—
Total investments	14,705		14,807
Less PropTech current convertible trading debt securities (2)	1,539		1,875
Less PropTech investments accounted for under the equity method	497		—
Total long-term investments	$	12,669	$	12,932

_____________________________

(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.

(2) These amounts are included in Other current assets on the condensed consolidated balance sheets.

Net realized and unrealized losses and gains recognized on long-term investment securities were as follows:


	Six Months Ended
	June 30,
		2023		2022

Net realized (losses) gains recognized on PropTech convertible trading debt securities		$	(352)	$	154
Net unrealized (losses) gains recognized on long-term investments at fair value		(102)		598
Net realized and unrealized (losses) gains recognized on long-term investment securities		$	(454)	$	752

(a) PropTech Convertible Trading Debt Securities:

These securities are classified as trading debt securities and are accounted for at fair value. The maturities of all convertible notes range from June 2023 to February 2025.

(b) Long-Term Investment Securities at Fair Value:

The following is a summary of unrealized (losses) gains recognized in net income on long-term investment securities at fair value during the three and six months ended June 30, 2023 and 2022, respectively:


	Six Months Ended
	June 30,
		2023		2022
Net unrealized (losses) gains recognized on long-term investment securities		$	(102)	$	598

The Company has unfunded commitments of $1,030 related to long-term investment securities at fair value as of June 30, 2023.

Equity securities without readily determinable fair values that do not qualify for the NAV practical expedient consisted of investments in various limited liability companies at June 30, 2023. During the six months ended June 30, 2023, New Valley Ventures invested $250 into one additional PropTech venture. The investment is classified as an equity security without a readily determinable fair value. The total carrying value of these investments was $8,863 as of June 30, 2023. No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified for the six months ended June 30, 2023.

Long-term investments consisted of the following:


	June 30, 2023		December 31, 2022
PropTech convertible trading debt securities	$	2,630	$	2,957
Long-term investment securities at fair value (1)	2,715		3,262
PropTech investments at cost	8,863		8,588
PropTech investments at equity method	497		—
Total investments	14,705		14,807
Less PropTech current convertible trading debt securities (2)	1,539		1,875
Less PropTech investments accounted for under the equity method	497		—
Total long-term investments	$	12,669	$	12,932

_____________________________

(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.

(2) These amounts are included in Other current assets on the condensed consolidated balance sheets.

Net realized and unrealized losses and gains recognized on long-term investment securities were as follows:


	Six Months Ended
	June 30,
		2023		2022

Net realized (losses) gains recognized on PropTech convertible trading debt securities		$	(352)	$	154
Net unrealized (losses) gains recognized on long-term investments at fair value		(102)		598
Net realized and unrealized (losses) gains recognized on long-term investment securities		$	(454)	$	752

2,6302,9572,7153,2628,8638,588497—14,70514,8071,5391,875497—12,66912,932352154102598454752


	Six Months Ended
	June 30,
		2023		2022
Net unrealized (losses) gains recognized on long-term investment securities		$	(102)	$	598

1025981,030250one8,863EQUITY METHOD INVESTMENTS

Equity method investments consisted of the following:


	June 30, 2023		December 31, 2022
Ancillary services ventures	$	2,055	$	1,629

At June 30, 2023, the Company’s ownership percentages in these investments ranged from 17.0% to 50.0%; therefore, the Company accounts for these investments under the equity method of accounting.

VIE Consideration:

The Company has determined that the Company is not the primary beneficiary of any of its equity method investments because it does not control the activities that most significantly impact the economic performance of each investment. The Company determined that the entities were VIEs but the Company was not the primary beneficiary. Therefore, the Company’s equity method investments have been accounted for under the equity method of accounting.

Maximum Exposure to Loss:

The Company’s maximum exposure to loss from its equity method investments consists of the net carrying value of the investments adjusted for any future capital commitments and/or guarantee arrangements. The maximum exposure to loss was $2,055 as of June 30, 2023.

Equity method investments consisted of the following:


	June 30, 2023		December 31, 2022
Ancillary services ventures	$	2,055	$	1,629

2,0551,62917.050.02,055CONTINGENCIES The Company is involved in litigation through the normal course of business. The majority of claims are covered by the Company’s insurance policies in excess of any applicable retention. Some claims may not be covered by the Company’s insurance policies. The Company believes that the resolution of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.INCOME TAXES

The Company’s income tax (benefit) expense consisted of the following:


	Six Months Ended
	June 30,
		2023		2022
(Loss) income before provision for income taxes		$	(23,230)	$	9,202
Income tax (benefit) expense using estimated annual effective income tax rate		(5,390)		2,917









Income tax (benefit) expense		$	(5,390)	$	2,917

The Company’s income tax (benefit) expense consisted of the following:


	Six Months Ended
	June 30,
		2023		2022
(Loss) income before provision for income taxes		$	(23,230)	$	9,202
Income tax (benefit) expense using estimated annual effective income tax rate		(5,390)		2,917









Income tax (benefit) expense		$	(5,390)	$	2,917

23,2309,2025,3902,9175,3902,917INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurements were as follows:


	Fair Value Measurements as of June 30, 2023
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	105,647	$	105,647	$	—	$	—
Certificates of deposit (2)	507		—		507		—
PropTech convertible trading debt securities	1,539		—		—		1,539
Long-term investments
PropTech convertible trading debt securities	1,091		—		—		1,091
Long-term investment securities at fair value (3)	2,715		—		—		—

Total long-term investments	3,806		—		—		1,091
Total assets	$	111,499	$	105,647	$	507	$	2,630

_____________________________

(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $5,404 that is included in current restricted cash and cash equivalents and $2,538 that is included in non-current restricted assets.

(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.

(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.


	Fair Value Measurements as of December 31, 2022
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	153,941	$	153,941	$	—	$	—
Certificates of deposit (2)	569		—		569		—
PropTech convertible trading debt securities	1,875		—		—		1,875
Long-term investments
PropTech convertible trading debt securities	1,082		—		—		1,082
Long-term investment securities at fair value (3)	3,262		—		—		—
Total long-term investments	4,344		—		—		1,082
Total assets	$	160,729	$	153,941	$	569	$	2,957

_____________________________

(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $4,985 that is included in current restricted assets and $2,538 that is included in non-current restricted assets.

(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.

(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution.

The fair values of the Level 3 PropTech convertible trading debt securities were derived using a discounted cash flow model utilizing a probability-weighted expected return method based on the probabilities of different potential outcomes for the convertible trading debt securities.

The long-term investments are based on NAV per share provided by the partnerships based on the indicated market value of the underlying assets or investment portfolio. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed above because they are measured at fair value using the NAV practical expedient.

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at June 30, 2023:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

June 30,
2023

Valuation Technique

Unobservable Input

Range (Actual)

PropTech convertible trading debt securities

2,630

Discounted cash flow

Interest rate

4% and 8%

Maturity

June 2023 - Feb 2025

Volatility

56.9% - 101.9%

Discount rate

33.62% - 190.38%

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2022:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

December 31,
2022

Valuation Technique

Unobservable Input

Range (Actual)

PropTech convertible trading debt securities

2,957

Discounted cash flow

Interest rate

4% and 8%

Maturity

Mar 2023 -Feb 2025

Volatility

60.7% - 103.3%

Discount rate

29.39% - 186.15%

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of June 30, 2023 and December 31, 2022, respectively.

The Company’s financial assets and liabilities subject to fair value measurements were as follows:


	Fair Value Measurements as of June 30, 2023
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	105,647	$	105,647	$	—	$	—
Certificates of deposit (2)	507		—		507		—
PropTech convertible trading debt securities	1,539		—		—		1,539
Long-term investments
PropTech convertible trading debt securities	1,091		—		—		1,091
Long-term investment securities at fair value (3)	2,715		—		—		—

Total long-term investments	3,806		—		—		1,091
Total assets	$	111,499	$	105,647	$	507	$	2,630

_____________________________

(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.

(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.


	Fair Value Measurements as of December 31, 2022
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (1)	$	153,941	$	153,941	$	—	$	—
Certificates of deposit (2)	569		—		569		—
PropTech convertible trading debt securities	1,875		—		—		1,875
Long-term investments
PropTech convertible trading debt securities	1,082		—		—		1,082
Long-term investment securities at fair value (3)	3,262		—		—		—
Total long-term investments	4,344		—		—		1,082
Total assets	$	160,729	$

SEC Form 10-Q/A filed by Douglas Elliman Inc. (Amendment)