(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||||||||||
☒ | Smaller Reporting Company | |||||||||||||
Emerging Growth Company |
September 30, 2023 | December 31, 2022 | |||||||||||||
(unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Loans held for sale, at fair value | $ | $ | ||||||||||||
Loans held for investment, at fair value | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Restricted cash | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Liabilities | ||||||||||||||
Accrued expenses and other liabilities | $ | $ | ||||||||||||
Lease liabilities | ||||||||||||||
Credit facilities | ||||||||||||||
Total liabilities | ||||||||||||||
Redeemable preferred stock: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Stockholders' deficit: | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive income | ||||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Total stockholder's deficit | ( | ( | ||||||||||||
Total liabilities and equity | $ | $ |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Loan interest income | $ | $ | $ | $ | ||||||||||||||||||||||
Loan fee income | ||||||||||||||||||||||||||
Servicing fee revenue | ||||||||||||||||||||||||||
Realized losses on loans held for sale, net | ( | ( | ||||||||||||||||||||||||
Total revenues | ( | |||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Salaries and employee benefits | ||||||||||||||||||||||||||
Legal fees | ||||||||||||||||||||||||||
Professional fees | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Servicing and asset management expense | ||||||||||||||||||||||||||
Acquisition charges | ||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||
Direct loan expense | ||||||||||||||||||||||||||
Loan sales and marketing expense | ||||||||||||||||||||||||||
Impairment of operating lease right-of-use assets | ||||||||||||||||||||||||||
Total expenses | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Change in fair value of loans | ( | ( | ||||||||||||||||||||||||
Realized losses on sale of held for investment loans, net | ( | ( | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total other expense | ( | ( | ( | ( | ||||||||||||||||||||||
Net loss before tax | ( | ( | ( | ( | ||||||||||||||||||||||
Income tax expense | ||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Gain of preferred stock transaction | ||||||||||||||||||||||||||
Numerator for earnings per share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Loss per share of common stock - Basic: | ||||||||||||||||||||||||||
Loss per basic common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average common stock outstanding | ||||||||||||||||||||||||||
Loss per share of common stock - Diluted: | ||||||||||||||||||||||||||
Loss per diluted common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average common stock outstanding |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||
Currency translation adjustments, net | ( | ( | ( | ( | ||||||||||||||||||||||
Total other comprehensive loss | ( | ( | ( | ( | ||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Treasury Stock | Total Stockholders' Deficit | |||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Adjustment for stock dividend | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Treasury shares repurchased | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
March 31, 2023 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Currency translation adjustments, net | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
June 30, 2023 | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Treasury shares repurchased | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||
Currency translation adjustments, net | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
September 30, 2023 | $ | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Treasury Stock | Total Stockholders' Deficit | |||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Currency translation adjustments, net | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Preferred stock conversion | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
March 31, 2022 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Currency translation adjustments, net | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Treasury shares repurchased | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Share-based compensation, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Currency translation adjustments, net | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
September 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ( |
Nine months ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Operating activities: | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Share-based compensation | ||||||||||||||
Amortization of operating lease right-of-use assets | ||||||||||||||
Change in fair value of loans | ( | |||||||||||||
Net realized loss on sale of loans held for investment | ||||||||||||||
Net realized loss on sale of held for sale loans | ||||||||||||||
Impairment of operating lease right-of-use asset | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Originations of held for sale loans | ( | ( | ||||||||||||
Additional fundings of held for sale loans | ( | ( | ||||||||||||
Proceeds from sales of held for sale loans | ||||||||||||||
Principal payments on held for sale loans | ||||||||||||||
Interest receivable | ||||||||||||||
Amortization of deferred financing fees | ||||||||||||||
Other assets and liabilities | ( | ( | ||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
Investing activities: | ||||||||||||||
Purchase of loans held for investment | ( | |||||||||||||
Additional fundings of loans held for investment | ( | ( | ||||||||||||
Proceeds from sales of loans held for investment | ||||||||||||||
Principal payments on loans held for investment | ||||||||||||||
Investment in property and equipment | ( | |||||||||||||
Net cash provided by (used in) investing activities | ( | |||||||||||||
Financing activities: | ||||||||||||||
Conversion of preferred stock | ( | |||||||||||||
Proceeds from borrowed funds | ||||||||||||||
Repayment of borrowed funds | ( | ( | ||||||||||||
Deferred financing fees | ( | |||||||||||||
Proceeds and payment of tax withholding stock options exercised, net | ||||||||||||||
Payment of tax withholdings on exercise of stock options | ( | |||||||||||||
Repurchase of common stock | ( | ( | ||||||||||||
Net cash (used in) provided by financing activities | ( | |||||||||||||
Net change in cash and cash equivalents | ( | ( | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | ||||||||||||
Consolidated cash, cash equivalents and restricted cash, beginning of period | ||||||||||||||
Consolidated cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||||||||
As of: | ||||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
Nine months ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Cash paid for interest | $ | $ | ||||||||||||
Income taxes paid | ||||||||||||||
Right-of-use lease assets recognized - operating leases | ||||||||||||||
Operating lease liabilities recognized | ||||||||||||||
Held for Sale | Held for Investment | |||||||||||||||||||||||||
September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Total loan commitments | $ | $ | $ | $ | ||||||||||||||||||||||
Less: construction holdbacks (1) | ( | ( | ( | ( | ||||||||||||||||||||||
Total principal outstanding | ||||||||||||||||||||||||||
Change in fair value of loans | ( | ( | ( | |||||||||||||||||||||||
Total loans at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Loans Held for Sale | Loans Held for Investment | ||||||||||||||||
Balance at | December 31, 2022 | $ | $ | ||||||||||||||
Originations | |||||||||||||||||
Proceeds from sales of loans (1) | ( | ( | |||||||||||||||
Additional fundings | |||||||||||||||||
Change in interest receivable | ( | ||||||||||||||||
Payoffs and repayments | ( | ( | |||||||||||||||
Fair value adjustment | |||||||||||||||||
Balance at | September 30, 2023 | $ | $ | ||||||||||||||
State | Commitment | Percent of Portfolio | |||||||||||||||
Florida | $ | % | |||||||||||||||
California | % | ||||||||||||||||
New Jersey | % | ||||||||||||||||
Washington | % | ||||||||||||||||
Connecticut | % | ||||||||||||||||
Kentucky | % | ||||||||||||||||
Arkansas | % | ||||||||||||||||
Arizona | % | ||||||||||||||||
Other | % | ||||||||||||||||
Total | $ | % | |||||||||||||||
Assets | Carrying | Fair Value Measurements Using | ||||||||||||||||||||||||
(In thousands) | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||
Loans held for sale | $ | $ | $ | $ | ||||||||||||||||||||||
Loans held for investment | ||||||||||||||||||||||||||
Total measured | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||
Loans held for sale | $ | $ | $ | $ | ||||||||||||||||||||||
Loans held for investment | ||||||||||||||||||||||||||
Total measured | $ | $ | $ | $ | ||||||||||||||||||||||
Operating Lease Liabilities | ||||||||
2023 (1) | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Total lease payments | ||||||||
Less: interest | ||||||||
Lease liabilities | $ |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Numerator | ||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Gain on preferred stock transaction | ||||||||||||||||||||||||||
Numerator for earnings per share - net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Denominator | ||||||||||||||||||||||||||
Weighted average common stock outstanding – basic | ||||||||||||||||||||||||||
Weighted average common stock outstanding – diluted | ||||||||||||||||||||||||||
Loss per basic common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Loss per diluted common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Denominator | ||||||||||||||||||||||||||
Restricted stock | ||||||||||||||||||||||||||
Preferred stock, if converted | ||||||||||||||||||||||||||
Nine months ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net cash used in operating activities | $ | (8,271) | $ | (20,450) | ||||||||||
Net cash provided by (used in) investing activities | 47,685 | (92,297) | ||||||||||||
Net cash (used in) provided by financing activities | (44,303) | 47,626 | ||||||||||||
Total cash flows | $ | (4,889) | $ | (65,121) | ||||||||||
Exhibit Number | Description | |||||||
Separation Agreement, dated as of December 21, 2012, between Altisource Asset Management Corporation and Altisource Portfolio Solutions S.A. (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the SEC on December 28, 2012). | ||||||||
Amended and Restated Articles of Incorporation of Altisource Asset Management Corporation (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed with the SEC on January 5, 2017). | ||||||||
Fifth Amended and Restated Bylaws of Altisource Asset Management Corporation. | ||||||||
Certificate of Designations establishing the Company’s Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 19, 2014). | ||||||||
Master Repurchase Agreement between Altisource Asset Management Corporation and Grapetree Lending LLC and NexBank, dated December 2, 2022 (portions redacted). | ||||||||
Description of Securities (incorporated by reference to Exhibit 4.1 of the Registrant's Annual Report on Form 10-K filed with the SEC on March 3, 2021). | ||||||||
10.1* | Flagstar Master Repurchase Agreement among Grapetree Lending LLC, as Seller, Altisource Asset Management Corporation, as Guarantor, Flagstar Bank FSB, as a Buyer and as Administrative Agent, dated August 1, 2022 | |||||||
10.2* | Flagstar Bank FSB Guaranty Agreement, Altisource Asset Management Corporation, Guarantor, Flagstar Bank FSB, Administrative Agent, dated August 1, 2022. | |||||||
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |||||||
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |||||||
32.1*† | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. | |||||||
32.2*† | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. | |||||||
101.INS* | Inline XBRL Instance Document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
Altisource Asset Management Corporation | ||||||||||||||
Date: | November 14, 2023 | By: | /s/ | Ricardo C. Byrd | ||||||||||
Ricardo C. Byrd | ||||||||||||||
Chairman of the Board | ||||||||||||||
Date: | November 14, 2023 | By: | /s/ | Richard G. Rodick | ||||||||||
Richard G. Rodick | ||||||||||||||
Chief Financial Officer | ||||||||||||||
Date: | November 14, 2023 | By: | /s/ | Ricardo C. Byrd | ||||||||||
Ricardo C. Byrd | ||||||||||||||
Chairman of the Board | ||||||||||||||
Date: | November 14, 2023 | By: | /s/ | Richard G. Rodick | ||||||||||
Richard G. Rodick | ||||||||||||||
Chief Financial Officer |
Date: | November 14, 2023 | By: | /s/ | Ricardo C. Byrd | ||||||||||
Ricardo C. Byrd | ||||||||||||||
Chairman of the Board |
Date: | November 14, 2023 | By: | /s/ | Richard G. Rodick | ||||||||||
Richard G. Rodick | ||||||||||||||
Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 250,000 | 250,000 |
Preferred stock, shares issued (in shares) | 144,212 | 144,212 |
Preferred stock, shares outstanding (in shares) | 144,212 | 144,212 |
Preferred stock, redemption value | $ 144,212 | $ 144,212 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, shares issued (in shares) | 4,664,235 | 3,432,294 |
Common stock, shares outstanding (in shares) | 2,919,083 | 1,783,862 |
Treasury stock, shares (in shares) | 1,745,152 | 1,648,432 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (13,470) | $ (3,986) | $ (20,272) | $ (11,815) |
Other comprehensive loss: | ||||
Currency translation adjustments, net | (7) | (10) | (6) | (29) |
Total other comprehensive loss | (7) | (10) | (6) | (29) |
Comprehensive loss | $ (13,477) | $ (3,996) | $ (20,278) | $ (11,844) |
Organization and Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Altisource Asset Management Corporation (“we,” “our,” “us,” “AAMC,” or the “Company”) was incorporated in the U.S. Virgin Islands (“USVI”) on March 15, 2012 (our “inception”), and commenced operations as an asset manager on December 21, 2012. During the first quarter of 2022, the Company created the Alternative Lending Group (“ALG”), a wholly-owned subsidiary of the Company, to generate alternative private credit loans through Direct to Borrower Lending, Wholesale Originations, and Correspondent Loan Acquisitions. The initial operations of ALG entail the following: •Build out a niche origination platform as well as a loan acquisition team; •Fund the originated or acquired alternative loans from a combination of Company equity and existing or future lines of credit; •Sell the originated and acquired alternative loans through forward commitment and repurchase contracts; •Leverage senior management’s expertise in this space; and •Utilize AAMC’s existing operations in India to drive controls and cost efficiencies. ALG’s primary sources of income are derived from mortgage banking activities generated through the origination and acquisition of loans, and their subsequent sale or securitization as well as net interest income from loans while held on the balance sheet. Basis of presentation and use of estimates The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All wholly owned subsidiaries are included, and all intercompany accounts and transactions have been eliminated. In management's opinion, the unaudited interim condensed consolidated financial statements contain all adjustments that are of a normal recurring nature and are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. The interim results are not necessarily indicative of results for a full year. We have omitted certain notes and other information from the interim condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q as permitted by SEC rules and regulations. These condensed consolidated financial statements should be read in conjunction with our annual consolidated financial statements included within our Annual Report on Form 10-K for the year ended December 31, 2022. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Loans held for sale or investment, carried at fair market value We originate and purchase alternative loans. These loans will either be classified as held for investment or held for sale depending upon the determination of management. We have elected to measure these alternative loans at fair value on a loan by loan basis. This option is available when we first recognize a financial asset. Subsequent changes in the fair value of these loans will be recorded in our Condensed Consolidated Statements of Operations in the period of the change. Purchased loans, also known as correspondent loans, can be bought with a net strip interest component in that the seller of the loan will receive an agreed upon percentage of the coupon interest generated from the sold loan. This strip component is reflected as service and asset management expense on the Condensed Consolidated Statements of Operations. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. Loans under contract for sale are valued at the agreed sales price. We estimate the fair values of the loans held for investment or sale based on available inputs from the marketplace. The market for the loans that we have or will invest in is generally illiquid. Establishing fair values for illiquid assets is inherently subjective and is often dependent upon our estimates and modeling assumptions. In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement for assets is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price. When the Company sells a loan, a gain or loss will be recognized at the time of the sale in net income for the difference between the fair value and the book value. The fair value is measured as the agreed upon selling price from the contractual agreement with the buyer. Interest for these loans is recognized as revenue based on the stated coupon when earned and deemed collectible or until a loan becomes more than 90 days past due, at which point the loan is placed on nonaccrual status and any accrued interest is reversed against interest income. When a seriously delinquent loan previously placed on nonaccrual status has been cured, meaning all delinquent principal and interest have been remitted by the borrower, the loan will be placed back on accrual status. Interest accrued as of period end is included within loans held for sale, at fair value or loans held for investment, at fair value in the Condensed Consolidated Balance Sheets as applicable. Redeemable Preferred stock Issuance of Series A Convertible Preferred Stock in 2014 Private Placement During the first quarter of 2014, we issued 250,000 shares of convertible preferred stock for $250.0 million to institutional investors. Under the Certificate of Designations of the Series A Shares (the “Certificate”), we have the option to redeem all Series A Shares from holders anytime between 15 and 30 days prior to a “Redemption Date.” Any such redemption, according to the Certificate, shall be “out of funds legally available therefor” and for “all, but not less than all,” of the outstanding Series A Preferred Shares held by such holder. The Certificate defines “Redemption Date” as “March 15, 2020 and each successive five-year anniversary of March 15, 2020.” The Certificate likewise provides that, with reference to these dates, each holder of our Series A Shares has the right to request that the Company redeem “all, but not less than all,” of the Series A Shares held by such holder payable out of “funds legally available therefor.” The Series A Shares are also redeemable on the “Mandatory Redemption Date,” defined in the Certificate as “March 15, 2044”, provided that any such redemption be “out of funds legally available” and for “all, but not less than all,” of the Series A Preferred Shares held by all holders. Under the Certificate, the cash price per share of any required redemption is $1,000. The holders of our Series A Shares are not entitled to receive dividends with respect to their Series A Shares. The Series A Shares are convertible into shares of our common stock at a conversion price of $1,250 per share (or an exchange rate of 0.8 shares of common stock for Series A Share), subject to certain anti-dilution adjustments. Upon certain change in control transactions or in the event of a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any payment or distribution is made to holders of junior shares, the holders of the Series A Shares will be entitled to receive an amount in cash per Series A Share equal to the greater of: i.$1,000 plus the aggregate amount of cash dividends paid on the number of shares of common stock into which such Series A Shares were convertible on each ex-dividend date for such dividends; and ii.The number of shares of common stock into which the Series A Shares are then convertible multiplied by the then current market price of the common stock. Because not all of these potential transactions are wholly within the control of the Company, the Series A Shares are classified as mezzanine equity. The Certificate confers no voting rights to holders, except with respect to matters that materially and adversely affect the voting powers, rights or preferences of the Series A Shares or as otherwise required by applicable law. With respect to the distribution of assets upon the liquidation, dissolution or winding up of the Company, the Series A Shares rank senior to our common stock and on parity with all other classes of preferred stock that may be issued by us in the future. The Series A Shares are recorded net of issuance costs, which were amortized on a straight-line basis through the first potential redemption date in March 2020. Current Litigation –Luxor (plaintiff) v. AAMC (defendant) On February 3, 2020, Luxor filed a complaint in the Supreme Court of the State of New York, County of New York, against AAMC for breach of contract, specific performance, unjust enrichment, and related damages and expenses. The complaint alleged that AAMC’s position that it will not redeem any of Luxor’s Series A Shares on the March 15, 2020 redemption date was a material breach of AAMC’s redemption obligations under the Certificate. Luxor sought an order requiring AAMC to redeem its Series A Shares, recovery of $144,212,000 in damages or, in the alternative, return of its initial purchase price of $150,000,000 for the Series A Shares, plus costs and expenses of the lawsuit. On May 25, 2020, Luxor’s complaint was amended to add Putnam Equity Spectrum Fund and Putnam Capital Spectrum Fund (collectively, “Putnam”), which also invested in the Series A Shares, as plaintiff. On February 23, 2021, in accordance with the terms of the Putnam Agreement described below, Putnam agreed to discontinue all claims against AAMC with prejudice related to the Series A shares. On December 1, 2022, the trial court denied summary judgment motions filed by Luxor and AAMC. AAMC and Luxor each appealed the trial court’s ruling to the Appellate Division - First Department, of the Supreme Court of the State of New York. On June 13, 2023, the appellate court issued its decision, unanimously finding in favor of AAMC that it did not breach any contractual obligation to redeem Luxor’s Series A Shares and directing the Clerk of the Court to enter judgment dismissing Luxor’s complaint. On July 19, 2023, Luxor filed a motion for leave to appeal in the Court of Appeals of the State of New York, and AAMC filed an opposition thereto on August 7, 2023. If Luxor were to be granted leave to continue its appeal to the Court of Appeals, and if the results of such an appeal were adverse to AAMC, our liquidity could be materially and adversely affected. –AAMC (plaintiff) v. Nathaniel Redleaf (defendant) On October 31, 2022, AAMC filed a complaint with demand for jury trial in the Superior Court of the Virgin Islands, Division of St. Croix, against Nathaniel Redleaf and as yet unnamed John Doe defendants, alleging breach of fiduciary duty to AAMC. Defendant Redleaf was a member of AAMC’s Board of Directors for five years, and the Company’s complaint alleges that he breached his fiduciary duty, by among other things, disclosing AAMC’s confidential information to Luxor and potentially other third parties. AAMC seeks a number of remedies, including compensatory damages and punitive damages and disgorgement of any benefit received by Luxor or defendant Redleaf as a result of such breaches. On January 4, 2023, the case was removed to the United States District Court of the Virgin Islands, Division of St. Croix. On February 28, 2023, defendant Redleaf filed a motion to dismiss the complaint. On May 15, 2023, the Court issued an order staying proceedings in this matter through November 16, 2023 pending a decision on defendant’s motion to dismiss. The Company intends to vigorously pursue its rights and remedies in the prosecution of this action. Settlement Activities In Respect of Series A Preferred Shares On February 17, 2021, the Company entered into a settlement agreement with Putnam (the“Putnam Agreement”). Pursuant to the Putnam Agreement: (i) AAMC and Putnam exchanged all of Putnam’s 81,800 Series A Shares for 288,283 shares of AAMC’s common stock, (ii) AAMC paid Putnam $1,636,000 within business days of the effective date and $1,227,000 on the one-year anniversary thereof, (iii) Putnam released AAMC from all claims related to the Series A Shares, (iv) Putnam entered into a voting rights agreement as more fully described in the Putnam Agreement, and (v) AAMC granted to Putnam a most favored nations provision with respect to future settlements of the Series A Shares. As a result of this settlement, we recognized a one-time gain directly to Additional paid-in capital of $71.9 million in the first quarter of 2021. On August 27, 2021, the Company entered into a settlement agreement (the “Wellington Agreement”) with certain funds managed by Wellington Management Company LLP (collectively, “Wellington”). Under the Wellington Agreement, the Company paid Wellington $2,093,000 in exchange for 18,200 Series A Shares ($18.2 million of liquidation preference) held by Wellington, and in return Wellington agreed to release AAMC from all claims related to the Series A Shares. As a result of this settlement, we recognized a one-time gain directly to Additional paid-in capital of $16.1 million gain in the third quarter of 2021. On January 6, 2022, the Company entered into a settlement agreement (the "Settlement Agreement") with two institutional investors. Under the Settlement Agreement, the Company paid the institutional investors approximately $665,000 in cash in exchange for 5,788 Series A shares ($5.79 million of liquidation preference) held by the institutional investors. As a result of this settlement, the Company recognized a one-time gain directly to Additional paid-in capital of approximately $5.1 million in the first quarter of 2022. On July 18, 2022, the Company entered into an agreement (the "Purchase Agreement") with Putnam Equity Spectrum Fund and Putnam Capital Spectrum Fund (collectively, “Putnam”) in which the Company repurchased 286,873 shares of common stock of the Company owned by Putnam (the "Putnam Shares"). The aggregate purchase price of the Putnam Shares was $2,868,730, or $10 per share. Pursuant to the Purchase Agreement, the Company and Putnam also agreed to terminate the most favored nation clause granted to Putnam in the Putnam Agreement. The Company and Putnam also agreed to terminate all of Putnam's shareholder voting obligations included in the Putnam Agreement. Recently issued accounting standards For a discussion of our recently issued accounting standards, please see “Note 1, “Organization and Basis of Presentation -Recently issued accounting standards” in our Annual Report on Form 10-K for the year ended December 31, 2022.
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Loans Held for Sale or Investment at Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Sale or Investment at Fair Value | Loans Held for Sale or Investment at Fair Value Our loan portfolio consists of business purpose loans secured by single family, multifamily and commercial real estate that were acquired from third party originators or issued by us. The composition of the loan portfolio by classification as of September 30, 2023 and December 31, 2022, is summarized in the table below ($ in thousands):
(1) Construction holdbacks include in process accounts such as payments, advances, interest reserve, accrued interest and other accounts. The loan portfolio consists of 44 loans at September 30, 2023, with a weighted average coupon of 9.7%, of which the Company receives a net yield of 9.1% after taking into account the strip interest to the sellers of the loans. The weighted average life of the portfolio is approximately seven months. Eight loans represent 66% of the total principal outstanding at September 30, 2023. There were eight loans on nonaccrual status or 90 days or more past due at September 30, 2023 with a carrying value of $4.2 million. The table below represents activity within the loan portfolio by classification for the period shown ($ in thousands):
(1) Includes net realized loss on sale of loans. The composition of the total loan commitment by state as of September 30, 2023 is summarized below ($ in thousands):
For financial reporting purposes of our alternative loans, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an "exit price" at the measurement date, or at the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an assets or liabilities that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs (e.g., our own data or assumptions) that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. The following table presents the assets that are reported at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, as well as the fair value of hierarchy of the valuation inputs used to measure fair value. We did not have any liabilities to report at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.
The estimated fair value for our business purpose loans is determined using discounted cash flow model (“DCF”) to estimate the net present value of the future cash flows expected from each loan. For performing loans, the DCF is based on the future expected cash flows of each loan in accordance with its contractual terms net of the strip component. Cash flows for performing loans with construction holdbacks incorporate the draws to complete the required improvements to the underlying property securing the loan. For nonaccrual loans, the estimated cash flows are based on the current fair value of the collateral of the loans, in which the Company will utilize a third-party appraisal to determine the fair value (Level 3). On a loan-by-loan basis, the weighted average discount rate range utilized for the DCF applied to the net yield to be received by the Company was 10.0% which is greater than the overall yield on the portfolio of 9.1%, resulting in the decrease in value of the portfolio at September 30, 2023. The determination of the discount rate was based on analysis of the current interest rates charged for business purpose loans in conjunction with the increase in rates for other underlying base rates such as the 10-year U.S. treasury bond and the 30 day Secured Overnight Financing Rate ("SOFR") (Level 3). We did not transfer any assets from one level to another level during the nine months ended September 30, 2023 and the year ended December 31, 2022.
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Borrowings |
9 Months Ended |
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Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings In December 2022, the Company entered into a $50.0 million Master Repurchase Agreement (the "NexBank Line") with NexBank, as the buyer. The Company uses the proceeds from the NexBank Line to fund the acquisition and origination of business purpose loans (the "Loans") secured by residential, multifamily and certain commercial properties. Each draw on the NexBank Line can be outstanding up to 180 days. NexBank has a security interest in the Loans subject to a transaction under the NexBank Line. The NexBank Line's maturity is 364 days from the execution date. The carrying value of the NexBank Line approximates its fair value as of September 30, 2023, due to its short-term nature and floating interest rate terms. The NexBank Line accrues interest at a rate equal to the greater of (a) the one-month Term SOFR rate plus a spread dependent on three and one-half percent (3.50%) or (b) four and one-quarter percent (4.25%). The average borrowing rate was 9.79% and weighted average remaining term for the outstanding loans is 265 days as of September 30, 2023. The NexBank Line’s outstanding balance is $9.6 million and is collateralized by $13.6 million in Loans at September 30, 2023. The NexBank Line provides for certain affirmative and negative covenants applicable to the Company and its subsidiaries. The Company is required to maintain financial covenants including specified levels of: 1) maximum debt-to-net worth ratio; 2) minimum current ratio; 3) minimum liquidity; 4) minimum net worth; and 5) minimum net income. The NexBank Line also contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and representations and warranties, cross defaults, bankruptcy or insolvency proceedings and other events of default which are customary for this type of transaction. The remedies for such events of default include the acceleration of the principal amount outstanding under the NexBank Line and the liquidation of Loans subject to a transaction. For the three months ended September 30, 2023, the Company did not meet the twelve-trailing months profitability requirements of the NexBank Line. On September 26, 2023, NexBank provided the Company with a 90-day waiver. The Company was otherwise in compliance with all covenants and there were no defaults as of September 30, 2023. In August 2022, the Company entered into a $50.0 million Master Repurchase Agreement (the “Flagstar Line”) with Flagstar Bank FSB (“Flagstar”), a federal savings bank, as a buyer and administrative agent. The Company used the proceeds from the Flagstar Line to fund the acquisition and origination of Loans secured by residential, multifamily and certain commercial properties. Each draw on the Flagstar Line could be outstanding up to 180 days. Flagstar had a security interest in the Loans subject to a transaction under the Flagstar Line and required the Company to maintain a restricted cash balance in a Flagstar deposit account. The Flagstar Line's maturity was 364 days from the execution date but was extended to July 31, 2024. The Flagstar Line accrued interest at a base one-Month Term SOFR rate plus a spread dependent upon the type of Loan subject to a transaction. Interest was payable at 90 days. The Company also incurred a fee on the unused portion of the $50.0 million if the average outstanding balance of the Flagstar Line was less than a threshold level of the total commitment. The Flagstar line was paid off and terminated on September 7, 2023.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We lease office space under operating leases in Christiansted, St. Croix, U.S. Virgin Islands, Tampa, Florida, and Bengaluru, India. As of September 30, 2023 and December 31, 2022, our weighted average remaining lease term, including applicable extensions, was 3.3 years and 3.8 years, respectively. We determine the discount rate for each lease to be either the discount rate stated in the lease agreement or our estimated rate that we would be charged to finance real estate assets. During the three and nine months ended September 30, 2023,we recognized rent expense of $123,000 and $369,000, related to long-term operating leases, respectfully. During the three and nine months ended September 30, 2022, we recognized rent expense of $92,500 and $190,500, related to long-term operating leases, respectively. We had no short-term rent expense during the three and nine months ended September 30, 2023 and 2022. We include rent expense as a component of general and administrative expenses in the Condensed Consolidated Statements of Operations. We had no finance leases during the three and nine months ended September 30, 2023 and 2022. The following table presents our future lease obligations under our operating leases as of September 30, 2023 ($ in thousands):
(1)Excludes the nine months ended September 30, 2023.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation, claims and assessments Information regarding reportable legal proceedings is contained in the “Commitments and Contingencies” note in the financial statements provided in our Annual Report on Form 10-K for the year ended December 31, 2022. We establish reserves for specific legal proceedings when we determine that the likelihood of an outcome is probable and the amount of loss can be reasonably estimated. We do not currently have any reserves for our legal proceedings. The following updates and restates the description of the previously reported matters: Litigation regarding Luxor Capital Group, LP and certain of its managed funds and accounts ("Luxor") Erbey Holding Corporation et al. v. Blackrock Management Inc., et al. On April 12, 2018, a partial stockholder derivative action was filed in the Superior Court of the Virgin Islands, Division of St. Croix under the caption Erbey Holding Corporation, et al. v. Blackrock Financial Management Inc., et al. The action was filed by Erbey Holding Corporation (“Erbey Holding”), John R. Erbey Family Limited Partnership (“JREFLP”), by its general partner Jupiter Capital, Inc., Salt Pond Holdings, LLC (“Salt Pond”), Munus, L.P. (“Munus”), Carisma Trust (“Carisma”), by its trustee, Venia, LLC, and Tribue Limited Partnership (collectively, the “Plaintiffs”) each on its own behalf and Salt Pond and Carisma derivatively on behalf of AAMC. The action was filed against Blackrock Financial Management, Inc., Blackrock Investment Management, LLC, Blackrock Investments, LLC, Blackrock Capital Management, Inc., Blackrock, Inc. (collectively, “Blackrock”), Pacific Investment Management Company LLC, PIMCO Investments LLC (collectively, “PIMCO”) and John and Jane Does 1-10 (collectively with Blackrock and PIMCO, the “Defendants”). The action alleges a conspiracy by Blackrock and PIMCO to harm Ocwen Financial Corporation (“Ocwen”) and AAMC and certain of their subsidiaries, affiliates and related companies and to extract enormous profits at the expense of Ocwen and AAMC by attempting to damage their operations, business relationships and reputations. The complaint alleges that Defendants’ conspiratorial activities, which included short-selling activities, were designed to destroy Ocwen and AAMC, and that the Plaintiffs (including AAMC) suffered significant injury, including but not limited to lost value of their stock and/or stock holdings. The action seeks, among other things, an award of monetary damages to AAMC, including treble damages under Section 605, Title IV of the Virgin Islands Code related to the Criminally Influenced and Corrupt Organizations Act, punitive damages and an award of attorney’s and other fees and expenses. Defendants have moved to dismiss the first amended verified complaint on various alleged grounds, including that the Court allegedly lacks personal jurisdiction over Defendants. Plaintiffs and AAMC have opposed Defendant’s motions and have also moved for leave to file a second amended verified complaint to include AAMC as a direct plaintiff, rather than as a derivative party. On March 27, 2019, the Court held oral argument on Defendants' motions to dismiss the first amended verified complaint and Plaintiffs' motion for leave to file the second amended verified complaint. The Court held additional oral argument on the pending motions on October 25, 2021. Plaintiffs have repeatedly requested the Court to decide the pending motions and issue a scheduling order permitting discovery to proceed. On October 11, 2022, the Court appointed a Staff Master to decide, or issue a recommended decision on, the pending motions, including the motion to dismiss for lack of personal jurisdiction. On February 1, 2023, Plaintiffs and AAMC filed a petition for mandamus with the United States Virgin Islands Supreme Court seeking an order directing the Superior Court to issue a decision on the personal jurisdiction issue and to permit discovery to proceed. On April 18, 2023, the Supreme Court issued an order dismissing the petition for mandamus, without prejudice, as moot. On April 6, 2023, Plaintiffs and AAMC filed a Second Amended Verified Complaint adding AAMC a direct plaintiff rather than a derivative party. On July 13, 2023, the Staff Master issued a Recommendation on the pending motions. The 132-page Recommendation recommends, among other things, that the presiding judge rule that the Court has personal jurisdiction over six of the seven named Defendants and that all of AAMC’s statutory and tort claims be permitted to proceed. The Parties’ responses to the Recommendation were filed on August 24, 2023. At this time, we are not able to predict the ultimate outcome of this matter, nor can we estimate the range of possible damages to be awarded to AAMC, if any. As such, we have not recorded a gain contingency for this matter at September 30, 2023 or December 31, 2022.
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Share-Based Payments |
9 Months Ended |
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Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Payments | Share-Based Payments On June 28, 2021, we granted 5,000 shares of restricted stock to management with a weighted average grant date fair value per share of $19.64. One-third of the shares of this grant vested on June 28, 2022 and one-third of the shares of this grant vested on June 28, 2023. The vesting of the additional 1,666 shares was forfeited due a separation agreement with the member of management. On September 20, 2021, we granted 3,000 shares of restricted stock to management with a weighted average grant date fair value per share of $24.83. One-third of the shares of this grant vested on September 20, 2022. The vesting of the additional 2,000 shares were accelerated to March 9, 2023 due to a separation agreement with the member of management. On May 12, 2022, we granted 22,500 shares of restricted stock to management with a weighted average grant date fair value per share of $9.89. One-third of the shares of this grant vested on May 12, 2023. The vesting of the additional 15,000 shares was forfeited due a separation agreement with the member of management. Our independent Directors each receive annual grants of restricted stock equal to $60,000 based on the market value of our common stock at the time of the annual stockholders' meeting. These shares of restricted stock vest and are issued after the next annual shareholders meeting, subject to each independent Director attending at least 75% of the Board and committee meetings. During 2022, we granted 8,571 shares of stock pursuant to our Equity Incentive Plans with a weighted average grant date fair value per share of $21.00. We reversed $0.1 million of compensation expense for the three months ended September 30, 2023 due to the forfeiture of restricted stock related to the departure of certain officers, and recorded $0.2 million of compensation expense related to our share-based compensation for the nine months ended September 30, 2023. We recorded $0.1 million and $0.2 million of compensation expense related to our share-based compensation for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, we had no unrecognized share-based compensation expense to be recognized. As of December 31, 2022, we had an aggregate of $0.3 million of total unrecognized share-based compensation cost to be recognized over a weighted average remaining estimated term of 1.1 years.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are domiciled in the USVI and are obligated to pay taxes to the USVI on our income. We applied for tax benefits from the USVI Economic Development Commission (“EDC”) and received our certificate of benefits (the “Certificate”), effective as of February 1, 2013. Pursuant to the Certificate, as long as we comply with its provisions, we will receive a 90% tax credit on our USVI-sourced income taxes until 2043. By letter dated April 13, 2023, the EDC approved an extension of the temporary full-time employment waiver (the “Waiver”) of the Company’s minimum employment requirements to five full-time USVI employees for the period from January 1, 2023 through June 30, 2023. The Company has applied for an extension of the waiver through December 31, 2023. At September 30, 2023, the Company met the minimum employment requirements required under the provisions of the Waiver. As of September 30, 2023 and December 31, 2022, we accrued no interest or penalties associated with any unrecognized tax benefits, nor did we recognize any interest expense or penalties during the nine months ended September 30, 2023 and 2022. The Company recorded tax expense of $28,000 on a book loss of $13.5 million in the third quarter of 2023. The material differences between the effective tax rate and the statutory tax rate are the EDC benefit discussed above and the fact that the USVI EDC is in a full valuation allowance position and incurred a current quarter loss.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the components of basic and diluted earnings (loss) per share (in thousands, except share and per share amounts):
On September 8, 2023, the Company’s Board of Directors approved a 70% stock dividend. Each stockholder of record on September 18, 2023 received a dividend of seven tenths additional share of common stock for each then-held share, with any fractional shares rounded up, to be distributed after close of trading on October 31, 2023. The Company’s common stock began trading on a stock-adjusted basis on November 1, 2023, which is the ex-dividend date of the effective date of the dividend. The par value of the Company’s common stock was not affected by the split and remained at $0.01 per share. The computations of basic and diluted EPS have been adjusted on a retrospective basis for all periods presented. The common stock and per-share data has been retroactively adjusted as well, as the ex-dividend date occurred before the interim financial statements were issued. We excluded the items presented below from the calculation of diluted earnings per share as they were antidilutive to loss per share for the period indicated ($ in thousands):
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Segment Information |
9 Months Ended |
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Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information ALG is our primary segment. The Company’s chief operating decision maker, its Chief Executive Officer, reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Management has evaluated the impact of all subsequent events through the issuance of these interim condensed consolidated financial statements and determined that there were no subsequent events requiring adjustment or disclosure in the financial statements, except for the following: •On October 6, 2023, the Company signed a non-exclusive patent and technology licensing agreement with System73 Limited (an entity controlled and managed by the majority owners of the Company’s common stock). The Company acquired a non-exclusive license for a set of patents which seek to improve the efficiency of electric vehicles. The patents, among additional items, seek to use multiple electric motors in electric machines to improve the efficiency beyond the standard single motor drive used currently in most of these vehicles. System73 has strategically aligned itself with two companies, Seabird Technologies and Purple Sector, to facilitate the creation of a prototype electric vehicle over the next 24 months. These two partners have extensive relationships with auto manufacturers and suppliers and are incentivized to generate revenues from these patents over the same 24-month period. ◦Upon the occurrence of each AAMC Common Stock Milestone, AAMC will issue to System73 the number of shares of AAMC Common Stock equal to ten percent of the AAMC Full-Diluted Shares. •The NexBank Line was paid off and terminated on November 7, 2023. •The Company continued to repurchase shares after the quarter ended, and repurchased 97,726 shares ($0.6 million) through November 10, 2023.
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Organization and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All wholly owned subsidiaries are included, and all intercompany accounts and transactions have been eliminated. |
Consolidation | In management's opinion, the unaudited interim condensed consolidated financial statements contain all adjustments that are of a normal recurring nature and are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. The interim results are not necessarily indicative of results for a full year. We have omitted certain notes and other information from the interim condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q as permitted by SEC rules and regulations. These condensed consolidated financial statements should be read in conjunction with our annual consolidated financial statements included within our Annual Report on Form 10-K for the year ended December 31, 2022. |
Use of estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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Loans held for sale or investment, carried at fair market value | Loans held for sale or investment, carried at fair market value We originate and purchase alternative loans. These loans will either be classified as held for investment or held for sale depending upon the determination of management. We have elected to measure these alternative loans at fair value on a loan by loan basis. This option is available when we first recognize a financial asset. Subsequent changes in the fair value of these loans will be recorded in our Condensed Consolidated Statements of Operations in the period of the change. Purchased loans, also known as correspondent loans, can be bought with a net strip interest component in that the seller of the loan will receive an agreed upon percentage of the coupon interest generated from the sold loan. This strip component is reflected as service and asset management expense on the Condensed Consolidated Statements of Operations. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. Loans under contract for sale are valued at the agreed sales price. We estimate the fair values of the loans held for investment or sale based on available inputs from the marketplace. The market for the loans that we have or will invest in is generally illiquid. Establishing fair values for illiquid assets is inherently subjective and is often dependent upon our estimates and modeling assumptions. In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement for assets is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price. When the Company sells a loan, a gain or loss will be recognized at the time of the sale in net income for the difference between the fair value and the book value. The fair value is measured as the agreed upon selling price from the contractual agreement with the buyer. Interest for these loans is recognized as revenue based on the stated coupon when earned and deemed collectible or until a loan becomes more than 90 days past due, at which point the loan is placed on nonaccrual status and any accrued interest is reversed against interest income. When a seriously delinquent loan previously placed on nonaccrual status has been cured, meaning all delinquent principal and interest have been remitted by the borrower, the loan will be placed back on accrual status. Interest accrued as of period end is included within loans held for sale, at fair value or loans held for investment, at fair value in the Condensed Consolidated Balance Sheets as applicable.
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Loans held for sale or investment, carried at fair market value | Loans held for sale or investment, carried at fair market value We originate and purchase alternative loans. These loans will either be classified as held for investment or held for sale depending upon the determination of management. We have elected to measure these alternative loans at fair value on a loan by loan basis. This option is available when we first recognize a financial asset. Subsequent changes in the fair value of these loans will be recorded in our Condensed Consolidated Statements of Operations in the period of the change. Purchased loans, also known as correspondent loans, can be bought with a net strip interest component in that the seller of the loan will receive an agreed upon percentage of the coupon interest generated from the sold loan. This strip component is reflected as service and asset management expense on the Condensed Consolidated Statements of Operations. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. Loans under contract for sale are valued at the agreed sales price. We estimate the fair values of the loans held for investment or sale based on available inputs from the marketplace. The market for the loans that we have or will invest in is generally illiquid. Establishing fair values for illiquid assets is inherently subjective and is often dependent upon our estimates and modeling assumptions. In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement for assets is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price. When the Company sells a loan, a gain or loss will be recognized at the time of the sale in net income for the difference between the fair value and the book value. The fair value is measured as the agreed upon selling price from the contractual agreement with the buyer. Interest for these loans is recognized as revenue based on the stated coupon when earned and deemed collectible or until a loan becomes more than 90 days past due, at which point the loan is placed on nonaccrual status and any accrued interest is reversed against interest income. When a seriously delinquent loan previously placed on nonaccrual status has been cured, meaning all delinquent principal and interest have been remitted by the borrower, the loan will be placed back on accrual status. Interest accrued as of period end is included within loans held for sale, at fair value or loans held for investment, at fair value in the Condensed Consolidated Balance Sheets as applicable.
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Recently issued accounting standards | Recently issued accounting standards For a discussion of our recently issued accounting standards, please see “Note 1, “Organization and Basis of Presentation -Recently issued accounting standards” in our Annual Report on Form 10-K for the year ended December 31, 2022.
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Loans Held for Sale or Investment at Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | The composition of the loan portfolio by classification as of September 30, 2023 and December 31, 2022, is summarized in the table below ($ in thousands):
(1) Construction holdbacks include in process accounts such as payments, advances, interest reserve, accrued interest and other accounts. The table below represents activity within the loan portfolio by classification for the period shown ($ in thousands):
(1) Includes net realized loss on sale of loans.
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Schedule of Composition of the Total Loan Commitment by State | The composition of the total loan commitment by state as of September 30, 2023 is summarized below ($ in thousands):
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Schedule of Fair Value on a Recurring Basis | The following table presents the assets that are reported at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, as well as the fair value of hierarchy of the valuation inputs used to measure fair value. We did not have any liabilities to report at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Lease Obligations Under our Operating Leases | The following table presents our future lease obligations under our operating leases as of September 30, 2023 ($ in thousands):
(1)Excludes the nine months ended September 30, 2023.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Diluted Earnings (Loss) Per Share | The following table sets forth the components of basic and diluted earnings (loss) per share (in thousands, except share and per share amounts):
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Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share | We excluded the items presented below from the calculation of diluted earnings per share as they were antidilutive to loss per share for the period indicated ($ in thousands):
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Loans Held for Sale or Investment at Fair Value - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loan commitments | $ 39,515 | |
Total loans at fair value | 28,097 | $ 83,143 |
Loans Held for Sale | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loan commitments | 9,708 | 15,080 |
Less: construction holdbacks | (4,335) | (3,350) |
Total principal outstanding | 5,373 | 11,730 |
Change in fair value of loans | 49 | (137) |
Total loans at fair value | 5,422 | 11,593 |
Loans Held for Investment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loan commitments | 29,807 | 98,157 |
Less: construction holdbacks | (1,478) | (13,188) |
Total principal outstanding | 28,329 | 84,969 |
Change in fair value of loans | (232) | (1,826) |
Total loans at fair value | $ 28,097 | $ 83,143 |
Loans Held for Sale or Investment at Fair Value - Additional Information (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
loan
|
Dec. 31, 2022
USD ($)
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|
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Number of loan portfolio | 44 | |
Weighted average coupon | 9.70% | |
Net yield | 9.10% | |
Weighted average life, terms | 7 months | |
Number of loan outstanding | 8 | |
Percentage of outstanding total principal amount | 66.00% | |
Number of loans on nonaccrual status or 90 days or more past due | 8 | |
Nonaccrual loans | $ | $ 4,200,000 | |
Valuation Technique, Discounted Cash Flow | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Net yield | 10.00% | |
Valuation Technique, Discounted Cash Flow | Portfolio Loans | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Net yield | 9.10% | |
Fair Value Measurements, Recurring | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Liabilities, fair value disclosure | $ | $ 0 | $ 0 |
Leases - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
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Leases [Abstract] | |||||
Weighted average remaining lease term | 3 years 3 months 18 days | 3 years 3 months 18 days | 3 years 9 months 18 days | ||
Rent expense- long term lease | $ 123,000 | $ 92,500 | $ 369,000 | $ 190,500 | |
Rent expense- short term lease | 0 | 0 | 0 | 0 | |
Finance lease, liability | $ 0 | $ 0 | $ 0 | $ 0 |
Leases - Schedule of Future Lease Obligations Under our Operating Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
2023 | $ 297 | |
2024 | 304 | |
2025 | 314 | |
2026 | 226 | |
2027 | 11 | |
Total lease payments | 1,152 | |
Less: interest | 121 | |
Lease liabilities | $ 1,031 | $ 1,323 |
Commitments and Contingencies (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Erbey Holding Corporation et al. v. Blackrock Management Inc., et al. | ||
Loss Contingencies [Line Items] | ||
Gain contingency | $ 0 | $ 0 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
employee
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
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Income Tax Disclosure [Abstract] | |||||
Income tax exemption, percentage | 90.00% | ||||
Minimum employee requirement | employee | 5 | ||||
Interest or penalties accrued | $ 0 | $ 0 | $ 0 | ||
Income tax expense | 28,000 | $ 146,000 | 79,000 | $ 158,000 | |
Net loss | $ 13,470,000 | $ 3,986,000 | $ 20,272,000 | $ 11,815,000 |
Earnings Per Share - Schedule of Components of Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Numerator | ||||
Net loss | $ (13,470) | $ (3,986) | $ (20,272) | $ (11,815) |
Gain on preferred stock transaction | 0 | 0 | 0 | 5,122 |
Numerator for earnings per share - net loss attributable to common stockholders | $ (13,470) | $ (3,986) | $ (20,272) | $ (6,693) |
Denominator | ||||
Weighted average common stock outstanding– basic (in shares) | 2,977,049 | 3,020,916 | 2,999,524 | 3,339,137 |
Weighted average common stock outstanding- diluted (in shares) | 2,977,049 | 3,020,916 | 2,999,524 | 3,339,137 |
Loss per share of common stock - Basic: | ||||
Loss per basic common share (in USD per share) | $ (4.52) | $ (1.32) | $ (6.76) | $ (2.00) |
Loss per share of common stock - Diluted: | ||||
Loss per diluted common share (in USD per share) | $ (4.52) | $ (1.32) | $ (6.76) | $ (2.00) |
Earnings Per Share - Narrative (Details) - $ / shares |
Sep. 08, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Earnings Per Share [Abstract] | |||
Common stock, dividend rate approved | 70.00% | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Earnings Per Share - Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Restricted stock | ||||
Denominator | ||||
Antidilutive shares excluded from computation of earnings per share (in shares) | 30,578 | 42,067 | 42,603 | 25,494 |
Preferred stock, if converted | ||||
Denominator | ||||
Antidilutive shares excluded from computation of earnings per share (in shares) | 196,128 | 196,128 | 196,128 | 196,274 |
Segment Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Subsequent Events (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Oct. 06, 2023 |
Nov. 10, 2023 |
Sep. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
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Subsequent Event [Line Items] | |||||
Treasury shares repurchased | $ 701 | $ 1,504 | $ 2,869 | ||
Subsequent event | |||||
Subsequent Event [Line Items] | |||||
Licensing agreement, proto-type creation, period | 24 months | ||||
Treasury shares repurchased (in shares) | 97,726 | ||||
Treasury shares repurchased | $ 600 |
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