Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 001-36063

Altisource Asset Management Corporation

(Exact name of registrant as specified in its charter)


U.S. Virgin Islands			66-0783125
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

5100 Tamarind Reef

Christiansted, U.S. Virgin Islands 00820

(Address of principal executive office)

(704) 275-9113

(Registrant’s telephone number, including area code)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	AAMC	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-Accelerated Filer

☒

Smaller Reporting Company

☒

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2023, 1,764,658 shares of our common stock were outstanding (excluding 1,678,803 shares held as treasury stock).

Altisource Asset Management Corporation

June 30, 2023

Table of Contents


Part I			1
Item 1. Financial statements (unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Comprehensive Income (Loss)			3
Condensed Consolidated Statements of Stockholders' Deficit			4
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management's discussion and analysis of financial condition and results of operations			19
Item 3. Quantitative and qualitative disclosures about market risk			23
Item 4. Controls and procedures			23
Part II			24
Item 1. Legal proceedings			24
Item 1A. Risk factors			24
Item 2. Unregistered sales of equity securities and use of proceeds			24
Item 3. Defaults upon senior securities			24
Item 4. Mine safety disclosures			24
Item 5. Other Information			24
Item 6. Exhibits			25
Signatures			26

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References in this report to “we,” “our,” “us,” “AAMC” or the “Company” refer to Altisource Asset Management Corporation and its consolidated subsidiaries, unless otherwise indicated.

Special note on forward-looking statements

Our disclosure and analysis in this Quarterly Report on Form 10-Q contain, and our officers, directors and authorized spokespersons may make, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “targets,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual business, operations, results or financial condition to differ significantly from those expressed in any forward-looking statement. Factors that may materially affect such forward-looking statements include, but are not limited to:

•Our ability to develop and implement new businesses or, to the extent such businesses are developed, our ability to make them successful or sustain the performance of any such businesses;

•Developments in the litigation regarding our redemption obligations under the Certificate of Designations of our Series A Convertible Preferred Stock (the “Series A Shares”), including our ability to obtain declaratory relief confirming that we were not obligated to redeem any of the Series A Shares on the March 15, 2020 redemption date if we do not have funds legally available to redeem all, but not less than all, of the Series A Shares requested to be redeemed on that redemption date;

•While the Company has no direct exposure to the recently failed banks due to the recent financial conditions of the banking system, if other banks or financial institutions enter receivership or become insolvent in the future, our ability, and the ability of our customers, clients and vendors, to access capital, may be threatened and could have a material adverse effect on our business and financial condition;

•Current inflationary economic and market conditions, including the current rising interest rate environment and developments in the credit market;

•Access to existing and new debt capital to continue to fund our origination and acquisition platforms;

•The ability of the Company to execute on its Action Plan (“The Plan”) submitted to the NYSE American, LLC (“NYSE”) to allow the Company to maintain its listing status on the NYSE; and

•The failure of our information technology systems, a breach thereto, and our ability to integrate and improve those systems at a pace fast enough to keep up with competitors and security threats.

While forward-looking statements reflect our good faith beliefs, assumptions, and expectations, they are not guarantees of future performance. Such forward-looking statements speak only as of their respective dates, and we assume no obligation to update them to reflect changes in underlying assumptions, new information or otherwise. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, please see Part II, Item 1A in this Quarterly Report on Form 10-Q and “Item 1A. Risk factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Available Information

Our website can be found at www.altisourceamc.com. We make available, free of charge through the investor information section of our website, access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act , as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission (“SEC”). We also make available, free of charge, access to the charters for our Audit Committee, Compensation Committee, and Governance and Nominating Committee, our Corporate Governance Standards, Policy Regarding Majority Voting, and our Code of Ethics governing our directors, officers, and employees. Within the time period required by the SEC and the NYSE, we will post on our website any amendment to the Code of Ethics (the “Code”) and any waiver applicable to any executive officer, director, or senior officer (as defined in the Code). In addition, our website includes information concerning purchases and sales of our equity securities by our executive officers and directors, as well as disclosure relating to certain non-GAAP financial measures (as defined in the SEC’s Regulation G) that we may make public orally,

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telephonically, by webcast, by broadcast, or by similar means from time to time. The information on our website is not part of this Form 10-Q. Additionally, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov.

Investor Relations can be contacted at Altisource Asset Management Corporation, 5100 Tamarind Reef, Christiansted, USVI 00820, Attn: Investor Relations, telephone 1-704-275-9113, email: IR@AltisourceAMC.com. We use our website (www.altisourceamc.com) and may use other social media channels, to disclose public information to investors, the media, and others.

Our officers may use social media channels such as Twitter, Instagram, and others to disclose public information. It is possible that certain information we or our officers post on our website and on social media could be deemed material, and we encourage investors, the media and others interested in the Company to review the business and financial information we or our officers post on our website and on the social media channels identified above. The information on our website and those social media channels is not incorporated by reference into this Form 10-Q.

iii

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Part I

Item 1. Financial statements (unaudited)

Altisource Asset Management Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)


	June 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Loans held for sale, at fair value	$	21,773	$	11,593
Loans held for investment, at fair value	51,773		83,143







Cash and cash equivalents	10,532		10,727
Restricted cash	4,002		2,047


Other assets	10,937		10,137
Total assets	$	99,017	$	117,647

LIABILITIES AND EQUITY
Liabilities


Accrued expenses and other liabilities	$	8,852	$	10,349

Lease liabilities	1,137		1,323
Credit facilities	42,992		51,653
Total liabilities	52,981		63,325

Commitments and contingencies (Note 5)

Redeemable preferred stock:
Preferred stock, $0.01 par value, 250,000 shares authorized as of June 30, 2023 and December 31, 2022. 144,212 shares issued and outstanding and $144,212 redemption value as of June 30, 2023 and December 31, 2022, respectively.	144,212		144,212

Stockholders' deficit:
Common stock, $0.01 par value, 5,000,000 authorized shares; 3,443,461 and 1,764,658 shares issued and outstanding, respectively, as of June 30, 2023 and 3,432,294 and 1,783,862 shares issued and outstanding, respectively, as of December 31, 2022.	34		34
Additional paid-in capital	149,264		149,010
Retained earnings	34,714		41,516
Accumulated other comprehensive income	21		20
Treasury stock, at cost, 1,678,803 shares as of June 30, 2023 and 1,648,432 shares as of December 31, 2022.	(282,209)		(280,470)
Total stockholder's deficit	(98,176)		(89,890)
Total liabilities and equity	$	99,017	$	117,647

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenues:
Loan interest income	$	1,610	$	524	$	3,646	$	524
Loan fee income	300		9		385		9

Realized gains on loans held for sale, net	10		—		20		—
Total revenues	1,920		533		4,051		533

Expenses:
Salaries and employee benefits	1,909		1,555		3,773		2,479
Legal fees	936		1,379		1,377		2,736
Professional fees	608		309		1,088		575
General and administrative	984		828		1,918		1,557
Servicing and asset management expense	228		181		411		181
Acquisition charges	—		89		—		513
Interest expense	872		—		1,954		—
Direct loan expense	189		—		452		—
Loan sales and marketing expense	382		—		791		—
Total expenses	6,108		4,341		11,764		8,041

Other income (expense):
Change in fair value of loans	390		(325)		1,239		(325)
Realized losses on sale of held for investment loans, net	—		—		(275)		—



Other	—		8		(2)		16
Total other income (expense)	390		(317)		962		(309)

Net loss from continuing operations before tax	(3,798)		(4,125)		(6,751)		(7,817)
Income tax expense	16		7		51		12
Net loss from continuing operations	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)









Net loss attributable to common stockholders	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Continuing operations earnings per share
Net loss from continuing operations	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Gain of preferred stock transaction	—		—		—		5,122
Numerator for earnings per share from continuing operations	$	(3,814)	$	(4,132)	$	(6,802)	$	(2,707)




Loss per share of common stock - Basic:
Loss per basic common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)


Weighted average common stock outstanding	1,765,233		2,063,078		1,771,184		2,059,872

Loss per share of common stock - Diluted:
Loss per diluted common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)


Weighted average common stock outstanding	1,765,233		2,063,078		1,771,184		2,059,872

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net loss	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Other comprehensive loss:
Currency translation adjustments, net	1		(13)		1		(19)




Total other comprehensive income (loss)	1		(13)		1		(19)

Comprehensive loss	$	(3,813)	$	(4,145)	$	(6,801)	$	(7,848)

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Stockholders' Deficit

(In thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Total Stockholders' Deficit
	Number of Shares	Amount
December 31, 2022	3,432,294	$	34	$	149,010	$	41,516	$	20	$	(280,470)	$	(89,890)

Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	2,000	—		—		—		—		—		—
Treasury shares repurchased	—	—		—		—		—		(1,504)		(1,504)

Share-based compensation, net of tax	—	—		160		—		—		—		160











Net loss	—	—		—		(2,988)		—		—		(2,988)
March 31, 2023	3,434,294	34		149,170		38,528		20		(281,974)		(94,222)

Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	9,167	—		—		—		—		(235)		(235)


Share-based compensation, net of tax	—	—		94		—		—		—		94

Currency translation adjustments, net	—	—		—		—		1		—		1









Net loss	—	—		—		(3,814)		—		—		(3,814)
June 30, 2023	3,443,461	$	34	$	149,264	$	34,714	$	21	$	(282,209)	$	(98,176)

See accompanying notes to condensed consolidated financial statements.

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	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Total Stockholders' Deficit
	Number of Shares	Amount
December 31, 2021	3,416,541	$	34	$	143,523	$	57,450	$	54	$	(277,589)	$	(76,528)

Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	5,850	—		25		—		—		—		25


Share-based compensation, net of tax	—	—		72		—		—		—		72

Currency translation adjustments, net	—	—		—		—		(6)		—		(6)


Preferred stock conversion	—	—		5,122		—		—		—		5,122






Net loss	—	—		—		(3,697)		—		—		(3,697)
March 31, 2022	3,422,391	34		148,742		53,753		48		(277,589)		(75,012)

Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	1,667	—		—		—		—		—		—


Share-based compensation, net of tax	—	—		79		—		—		—		79

Currency translation adjustments, net	—	—		—		—		(13)		—		(13)









Net loss	—	—		—		(4,132)		—		—		(4,132)
June 30, 2022	3,424,058	$	34	$	148,821	$	49,621	$	35	$	(277,589)	$	(79,078)

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six months ended June 30,
	2023		2022
Operating activities:
Net loss	$	(6,802)	$	(7,829)


Adjustments to reconcile net loss to net cash used in operating activities






Depreciation and amortization	128		145
Share-based compensation	254		151

Amortization of operating lease right-of-use assets	193		84



Change in fair value of loans	(1,239)		325
Net realized loss (gain) on sale of loans held for investment	275		—

Net realized (gain) loss on sale of held for sale loans	(20)		—
Changes in operating assets and liabilities:
Originations of held for sale loans	(10,592)		—
Additional fundings of held for sale loans	(3,379)		—
Proceeds from sales of held for sale loans	3,687		—
Principal payments on held for sale loans	491		—
Interest receivable	638		—
Amortization of deferred financing fees	63		—

Other assets and liabilities	(2,180)		(5,710)
Net cash used in operating activities	(18,483)		(12,834)
Investing activities:

Purchase of loans held for investment	—		(40,350)

Additional fundings of loans held for investment	(5,323)		—
Proceeds from sales of loans held for investment	6,346		—
Principal payments on loans held for investment	30,306		8,043








Investment in property and equipment	(690)		—


Net cash provided by (used in) investing activities	30,639		(32,307)
Financing activities:
Conversion of preferred stock	—		(1,893)

Proceeds from borrowed funds	51,611		—
Repayment of borrowed funds	(60,273)		—


Proceeds and payment of tax withholding stock options exercised, net	(235)		25



Repurchase of common stock	(1,504)		—












Net cash used in financing activities	(10,401)		(1,868)
Net change in cash and cash equivalents	1,755		(47,009)
Effect of exchange rate changes on cash and cash equivalents	5		(23)
Consolidated cash, cash equivalents and restricted cash, beginning of period	12,774		78,349
Consolidated cash, cash equivalents and restricted cash, end of period	$	14,534	$	31,317

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(Unaudited)

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets:


	As of:
	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	10,532	$	10,727
Restricted cash	4,002		2,047
Total cash, cash equivalents, and restricted cash	$	14,534	$	12,774


	Six months ended June 30,
	2023		2022
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,404	$	—
Income taxes paid	65		3,763

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Notes to Condensed Consolidated Financial Statements

June 30, 2023

(Unaudited)

1. 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.

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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.

See Note 2 for further discussion on fair value measurements.

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 of the Series A Shares on March 15, 2020 and on each successive five-year anniversary of March 15, 2020 thereafter. In connection with these same redemption dates, each holder of our Series A Shares has the right to give notice requesting us to redeem all of the Series A Shares held by such holder out of legally available funds. In accordance with the terms of the Certificate, if we have legally available funds to redeem all, but not less than all, of the Series A Shares requested to be redeemed on a redemption date, we will deliver to those holders who have requested redemption in accordance with the Certificate a notice of redemption. If we do not have legally available funds to redeem all, but not less than all, of the Series A Shares requested to be redeemed on a redemption date, we will not provide a notice of redemption. The redemption right will be exercisable in connection with each redemption date every five years until the mandatory redemption date in 2044. If we are required to redeem all of the holder’s Series A Shares, we are required to do so for cash at a price equal to $1,000 per share (the issuance price) out of funds legally available therefore. Due to the redemption provisions of the Series A Preferred Stock, we classify these shares as mezzanine equity, outside of permanent stockholders' equity.

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 of control transactions or upon the liquidation, dissolution or winding up of the Company, 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.

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.

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Between January 31, 2020 and February 3, 2020, we received purported notices from all of the holders of our Series A Shares requesting us to redeem an aggregate of $250.0 million liquidation preference of our Series A Shares on March 15, 2020. We did not have legally available funds to redeem all of the Series A Shares on March 15, 2020. As a result, we do not believe, under the terms of the Certificate, that we were obligated to redeem any of the Series A Shares under the Certificate.

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 alleges that AAMC’s position that it will not redeem any of Luxor’s Series A Shares on the March 15, 2020 redemption date is a material breach of AAMC’s redemption obligations under the Certificate. Luxor seeks an order requiring AAMC to redeem its Series A Shares, recovery of no less than $144,212,000 in damages, which is equal to the amount Luxor would receive if AAMC redeemed all of Luxor’s Series A Shares at the redemption price of $1,000 per share set forth in the Certificate, as well as payment of its costs and expenses in the lawsuit. In the alternative, Luxor seeks a return of its initial purchase price of $150,000,000 for the Series A Shares, as well as payment of its costs and expenses in 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 June 12, 2020, AAMC moved to dismiss the Amended Complaint in favor of AAMC’s first-filed declaratory judgment action in the U.S. Virgin Islands. On August 3, 2020, the court denied AAMC’s motion to dismiss. 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. Luxor and AAMC have completed discovery in the action. AAMC and Luxor each filed summary judgment motions on July 19, 2022 and replies to those motions on August 18, 2022 and September 15, 2022. On December 1, 2022, having heard oral arguments on the summary judgment motions, the court denied both parties’ motions.

AAMC and Luxor have filed an appeal and cross-appeal, respectively, from the trial court’s ruling in the Appellate Division - First Department, of the Supreme Court of the State of New York. By stipulation of the parties, the appeal and cross-appeal were perfected and briefed for the June 2023 term. On June 13, 2023, the First Department issued its decision in favor of AAMC that it did not breach any contractual obligation to redeem Luxor’s preferred shares and directed 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.

AAMC continues to pursue its strategic business initiatives despite this litigation. If Luxor were to prevail in its lawsuit, 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 alleging breach of fiduciary duty to AAMC. Mr. 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. AAMC seeks a number of remedies, including compensatory damages, disgorgement of any benefit received by Luxor or Mr. Redleaf as a result of such breaches.

On January 4, 2023, this action 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 April 25, 2023, the Magistrate Judge issued an order scheduling an initial conference for June 8, 2023. 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.

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Settlement Activities

On February 17, 2021, the Company entered into a settlement agreement dated as of February 17, 2021 (the “Putnam Agreement”) with Putnam. Pursuant to the Putnam Agreement, AAMC and Putnam exchanged all of Putnam’s 81,800 Series A Shares for 288,283 shares of AAMC’s common stock. Additionally, AAMC paid Putnam $1,636,000 within three business days of the effective date of the Putnam Agreement and $1,227,000 on the one-year anniversary of the effective date of the Putnam Agreement, and in return Putnam released AAMC from all claims related to the Series A Shares and enter into a voting rights agreement as more fully described in the Putnam Agreement. Finally, 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 thousand 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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2. 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 June 30, 2023 and December 31, 2022, is summarized in the table below ($ in thousands):


	Held for Sale				Held for Investment
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Total loan commitments	$	27,523	$	15,080	$	57,810	$	98,157
Less: construction holdbacks (1)	(5,901)		(3,350)		(5,162)		(13,188)
Total principal outstanding	21,622		11,730		52,648		84,969
Change in fair value of loans	151		(137)		(875)		(1,826)
Total loans at fair value	$	21,773	$	11,593	$	51,773	$	83,143

(1) Construction holdbacks include in process accounts such as payments, advances, interest reserve, accrued interest and other accounts.

The loan portfolio consists of 89 loans at June 30, 2023, with a weighted average coupon of 9.5%, of which the Company receives a net yield of 8.8% after taking into account the strip interest to the sellers of the loans. The weighted average life of the portfolio is approximately 17 months. 15 loans represent 64% of the total principal outstanding at June 30, 2023. There were six loans on nonaccrual status or 90 days or more past due at June 30, 2023 with a carrying value of $6.9 million.

The table below represents activity within the loan portfolio by classification for the period shown ($ in thousands):


		Loans Held for Sale		Loans Held for Investment
Balance at	December 31, 2022	$	11,593	$	83,143

Originations		10,592		—
Proceeds from sales of loans (1)		(3,667)		(6,621)
Additional fundings		3,379		5,323
Change in interest receivable		79		(717)
Payoffs and repayments		(491)		(30,306)
Fair value adjustment		288		951
Balance at	June 30, 2023	$	21,773	$	51,773

(1) Includes net realized loss on sale of loans.

The composition of the total loan commitment by state as of June 30, 2023 is summarized below ($ in thousands):




State	Commitment		Percent of Portfolio
Florida	$	36,287	42.5	%
California	11,218		13.1	%
New York	9,617		11.3	%
Washington	5,025		5.9	%
New Jersey	4,950		5.8	%
Illinois	4,357		5.1	%
Connecticut	2,917		3.4	%






Other	10,962		12.9	%
Total	$	85,333	100.0	%

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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 June 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 June 30, 2023 and December 31, 2022.



Assets	Carrying		Fair Value Measurements Using
(In thousands)	Value		Level 1		Level 2		Level 3
June 30, 2023
Loans held for sale	$	21,773	$	—	$	—	$	21,773
Loans held for investment	51,773		—		—		51,773
Total measured	$	73,546	$	—	$	—	$	73,546

December 31, 2022
Loans held for sale	$	11,593	$	—	$	—	$	11,593
Loans held for investment	83,143		—		—		83,143
Total measured	$	94,736	$	—	$	—	$	94,736

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 8.8%, resulting in the decrease in value of the portfolio at June 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 six months ended June 30, 2023 and the year ended December 31, 2022.

3. 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 June 30, 2023 due to its short-term nature and floating interest rate terms.

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The NexBank Line accrues interest at a equal to the greater of (a) the 1 month Term SOFR rate plus a spread dependent on three and on-half percent (3.50%) or (b) four and one-quarter (4.25%). The average borrowing rate was 8.25% and weighted average remaining term is 172 days as of June 30, 2023. The NexBank Line’s outstanding balance is $19.5 million and is collateralized by $24.2 million in Loans at June 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 June 30, 2023, the Company did not meet the twelve-trailing months profitability requirements of the NexBank Line. The Company has requested a compliance waiver from NexBank and is currently working with NexBank to receive the waiver. We are not aware of any reasons or circumstances that would prevent NexBank from electing to issue the waiver at this time; however, if a waiver is not granted, the Company could be required to repay the amount drawn on the line as of June 30, 2023 of $19.5 million with funds on hand or generated through the sale of loans held in the future. The Company was otherwise in compliance with all covenants and there were no defaults as of June 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 uses 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 can be outstanding up to 180 days. Flagstar has a security interest in the Loans subject to a transaction under the Flagstar Line and requires the Company to maintain restricted cash of $4.0 million in a Flagstar deposit account. The Line's maturity is 364 days from the execution date. Subsequent to June 30, 2023, the Line’s maturity date was extended to July 31, 2024. The carrying value of the Line approximates its fair value as of June 30, 2023 due to its short-term nature and floating interest rate terms.

The Flagstar Line accrues interest at a base 1-Month Term SOFR rate plus a spread dependent upon the type of Loan subject to a transaction. Interest is payable at 90 days. The Company also incurs a fee on the unused portion of the $50.0 million if the average outstanding balance of the Flagstar Line is less than a threshold level of the total commitment. The average borrowing rate for the Line was 8.33% and weighted average remaining term on the Line is 151 days as of June 30, 2023. Flagstar Line’s outstanding balance is $23.5 million and is collateralized by $35.3 million in Loans at June 30, 2023.

The Flagstar 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) quarter-end tangible net worth; 2) quarter-end liquidity; 3) a quarter-end ratio of total liabilities to tangible net worth; and 4) minimum profitability requirements in 2023. The 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 Line and the liquidation of Loans subject to a transaction. The Company was in compliance with all covenants and there were no defaults as of June 30, 2023.

4. Leases

We lease office space under operating leases in Christiansted, St. Croix, U.S. Virgin Islands, Tampa, Florida, and Bengaluru, India.

As of June 30, 2023 and December 31, 2022, our weighted average remaining lease term, including applicable extensions, was 3.4 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 six months ended June 30, 2023 we recognized rent expense of $122,000 and $246,000, related to long-term operating leases, respectfully. During the three and six months ended June 30, 2022, we recognized rent expense of $49,000 and $98,000, related to long-term operating leases, respectively. We had no short-term rent expense during the three and six months ended June 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 six months ended June 30, 2023 and 2022.

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The following table presents our future lease obligations under our operating leases as of June 30, 2023 ($ in thousands):


	Operating Lease Liabilities
2023 (1)	$	417
2024	307
2025	317
2026	227
2027	11

Total lease payments	1,279
Less: interest	142
Lease liabilities	$	1,137

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(1)Excludes the six months ended June 30, 2023.

5. 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")

Please refer to Note 1 – Section Series A Convertible Preferred Stock in 2014 Private Placement.

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.

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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 are due to be filed by 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 June 30, 2023 or December 31, 2022.

6. 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 remaining restricted stock units will vest in one installment on June 28, 2024 subject to forfeiture or acceleration.

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 remaining restricted stock units will vest in two equal annual installments in May 2024, and 2025 subject to forfeiture or acceleration.

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 recorded $0.09 million and $0.25 million of compensation expense related to our share-based compensation for the three and six months ended June 30, 2023, respectively. We recorded $0.08 million and $0.15 million of compensation expense related to our share-based compensation for the three and six months ended June 30, 2022, respectively. As of June 30, 2023 and December 31, 2022, we had an aggregate $0.1 million and $0.3 million, respectively, of total unrecognized share-based compensation cost to be recognized over a weighted average remaining estimated term of 1.3 years and 1.1 years, respectively.

7. 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.

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At June 30, 2023, the Company met the minimum employment requirements required under the provisions of the Waiver. The Company hired Jason Kopcak as President and Chief Operating Officer, now Chief Executive Officer, in May 2022, and he has relocated to the USVI.

As of June 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 six months ended June 30, 2023 and 2022.

The Company recorded tax expense of $16 thousand on a book loss of $4 million in the second 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.

8. 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):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Numerator

Net loss	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Gain on preferred stock transaction	—		—		—		5,122
Numerator for earnings per share - net loss attributable to common stockholders	$	(3,814)	$	(4,132)	$	(6,802)	$	(2,707)












Denominator
Weighted average common stock outstanding – basic	1,765,233		2,063,078		1,771,184		2,059,872



Weighted average common stock outstanding – diluted	1,765,233		2,063,078		1,771,184		2,059,872


Loss per basic common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)




Loss per diluted common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)

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):


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022



Denominator

Restricted stock	27,978	18,535	28,597	10,122
Preferred stock, if converted	115,370	115,370	115,370	115,498

9. Segment Information

ALG is our primary segment which we continue to grow in 2023. 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.

10. 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:

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•On July 27, 2023, the Company’s Board of Directors approved a two-for-one stock dividend to all stockholders of record on August 14, 2023 to be paid on September 13, 2023. The Company's common stock will begin trading on a stock split-adjusted basis on September 14, 2023, which is the ex-dividend date or effective date of the stock dividend. The computations of basic and diluted EPS will be adjusted on a retrospective basis for all periods presented in future periodic filings that occur subsequent to the effective date of the stock dividend.

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Item 2. Management's discussion and analysis of financial condition and results of operations

Our Business

Altisource Asset Management Corporation (“we,” “our,” “us,” “AAMC,” or the “Company”) was incorporated in the United States Virgin Islands (“USVI”) on March 15, 2012 (our "inception"), and we commenced operations as an asset manager on December 21, 2012.

During the first quarter of 2022, the Company created Alternative Lending Group (“ALG”) 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 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.

The type of product we expect to originate or acquire are alternative loans that offer opportunities for rapid growth and allow us to tap into under-served markets.

Currently, 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.

Following a full year of operating the new ALG business line, our board of directors recently began a process to assess whether this new business line was meeting the performance expectations of the board and our shareholders. This process is ongoing and has not been completed as of the date of this report. However, as part of this review, the board is evaluating a number of initiatives for the Company going forward to better position it to improve performance and aim to increase shareholder value, including, but not limited to, the following:

•To continue to operate and/or restructure the ALG platform with a revised strategic plan focused on mitigating risk, reducing costs, improving liquidity, and enhancing overall performance of the Company; and

•To identify and acquire one or more additional operating companies, that may or not be complementary to the ALG platform, with the goal of further enhancing shareholder value.

For a discussion of the risks associated with the Company's new business, see Item 1A - “Risk Factors” in Part II of this Quarterly Report on Form 10-Q.

Metrics Affecting our Consolidated Results

Our operating results are affected by various factors and market conditions, including the following:

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Revenues

Our revenues primarily consist of loan interest income and origination fees earned on our loans held for sale and investment, net realized gains or losses on loans held for sale, along with other ancillary fees earned from the loan portfolio.

Expenses

Our expenses consist primarily of salaries and employee benefits, legal and professional fees, general and administrative expenses, servicing and asset management expense, acquisition charges, operational interest expense, direct loan expense, and loan sales and marketing expense and other loan related expenses. Salaries and employee benefits include the base salaries, incentive bonuses, medical coverage, retirement benefits, non-cash share-based compensation and other benefits provided to our employees for their services. Legal and professional fees include services provided by third-party attorneys, accountants and other service providers of a professional nature. General and administrative expenses include costs related to the general operation and overall administration of our business as well as non-cash share-based compensation expense related to restricted stock awards to our Directors. Servicing and asset management expenses include loan commissions. Acquisition charges reflect professional fees incurred solely for the purpose of assisting the Company in the identification of target companies and the subsequent due diligence, valuation, and deal structuring services required to properly assess the viability of the target companies. Operational interest expense, direct loan expense, and loan sales and marketing expense are fees related to loans or the line of credit.

Other Income (Expense)

Other income (expense) primarily relates to income or expense recognized in the change of fair value of loans and net realized gains or losses on loans held for investment.

Results of Operations

The following sets forth discussion of our results of operations for the three and six months ended June 30, 2023 and 2022. Our results of operations for the periods presented are not indicative of our expected results in future periods.

Loan Interest Income

Loan interest income was $1.6 million and $3.6 million for three and six months ended June 30, 2023, respectively, compared to $0.5 million for the three and six months ended June 30, 2022.

Loan Fee Income

Loan fee income was $0.3 million and $0.4 million for the three and six months ended June 30, 2023, respectively, compared to $9,000 for the three and six months ended June 30, 2022.

Realized Gains on Loans Held for Sale, net

Realized gains on loans held for sale, net, were $10,000 and $20,000 for the three and six months ended June 30, 2023, respectively. No realized gains on loans held for sale was earned in three and six months ended June 30, 2022, as we had not developed said line of business at that time.

Salaries and Employee Benefits

Salaries and employee benefits were $1.9 million and $3.8 million during the three and six months ended June 30, 2023, respectively, compared to $1.6 million and $2.5 million during the three and six months ended June 30, 2022, respectively. The 2023 quarterly increase was primarily due addition of loan operations and ALG staff.

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Legal, Acquisition and Professional Fees

Legal fees were $0.9 million and $1.4 million during the three and six months ended June 30, 2023 compared to $1.4 million and $2.7 million during the three and six months ended June 30, 2022, respectively. The 2023 decrease was primarily due to higher legal and consulting fees related to the Luxor litigation and employment issues incurred in 2022. We incurred no acquisition costs in the three and six months ended June 30, 2023. We incurred $0.1 million and $0.5 million in acquisition costs in the three and six months ended June 30, 2022, respectively. Professional fees were $0.6 million and $1.1 million during the three and six months ended June 30, 2023, respectively, compared to $0.3 million and $0.6 million for the three and six months ended June 30, 2022, respectively.

General and Administrative Expenses

General and administrative expenses were $1.0 million and $1.9 million during the three and six months ended June 30, 2023, respectively, compared to $0.8 million and $1.6 million during the three and six months ended June 30, 2022, respectively.

Servicing and Asset Management Expense

Servicing and asset management expenses were $0.2 million and $0.4 million during the three and six months ended June 30, 2023, respectively, compared to $0.2 million for the three and six months ended June 30, 2022.

Interest Expense

Interest expenses were $0.9 million and $2.0 million during the three and six months ended June 30, 2023, respectively. Interest expense includes interest incurred on our margin account, line of credit and amortized commitment fees. No interest expense was recorded in three and six months ended June 30, 2022 as we had not developed the ALG line of business at that time and had no third-party debt outstanding during the six-month period then ended.

Direct Loan Expense

Direct loan expenses were $0.2 million and $0.5 million during the three and six months ended June 30, 2023, respectively. Direct loan expenses include loan broker fees, inspection fees, title search and other fees. No direct loan expense was recorded in three and six months ended June 30, 2022 as we had not developed the ALG line of business at that time.

Loan Sales and Marketing Expense

Loan sales and marketing expenses were $0.4 million and $0.8 million during the three and six months ended June 30, 2023, respectively. Loan sales and marketing expense include expenses related to the promotion and exposure to new business leads which may result in originations of loans. No loan sales and marketing expense was recorded in the three and six months ended June 30, 2022 as we had not developed the ALG line of business at that time.

Change in Fair Value of Loans

We recognized $0.4 million income and $1.2 million income for the change in fair value of loans three and six months ended June 30, 2023, respectively. We recognized $0.3 million expense in the three and six months ended June 30, 2022.

Realized Losses on Sale of Held for Investment Loans, net

We recognized no expense for the three months ended June 30, 2023 and and $0.3 million expense for the six months ended June 30, 2023 for realized losses on the sale of held for investment loans, net.. No income or expense was recognized in the three and six months ended June 30, 2022 as we had not developed the ALG line of business at that time.

Liquidity and Capital Resources

As of June 30, 2023, we had cash and cash equivalents of $10.5 million compared to $10.7 million as of December 31, 2022. The decrease in cash and cash equivalents was primarily due to principal payments on loans. As of June 30, 2023, we also had $4.0 million in restricted cash. We are developing new sources of income and capital through our strategic business plan. We believe these sources of liquidity are sufficient to enable us to meet anticipated short-term (one-year) liquidity requirements. Our ongoing cash expenditures consist of: salaries and employee benefits, legal and professional fees, lease obligations and other general and administrative expenses. Certain account balances exceed FDIC insurance coverage and, as a result, there is a

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concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. To mitigate this risk, we maintain our cash and cash equivalents at large national or international banking institutions.

As referred to in Note 1 in our condensed consolidated financial statements, the Company has settled with certain owners of its Series A Shares which has reduced the outstanding balance from $250 million to approximately $144 million. The remaining outstanding Series A Shares are owned by Luxor in which we are currently in litigation over various claims.

AAMC intends to continue to pursue its strategic business initiatives despite this litigation. See “Our Business.” If Luxor were to prevail in its lawsuit, we may need to cease or curtail our business initiatives and our liquidity could be materially and adversely affected. For more information on the legal proceedings with Luxor, see “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” in the Annual Report on Form 10-K for the year ended December 31, 2022.

Loans Held for Sale, at fair value

On June 30, 2023, our loans held for sale, at fair value, was $21.8 million. These loans primarily relate to loans originated by ALG and are included net of loan holdbacks, deferred fees, accrued interest, payments and advances in process, interest reserve in process and market valuation amounts.

Loans Held for Investment, at fair value

On June 30, 2023, our loans held for investment, at fair value, was $51.8 million. These loans primarily relate to business purpose bridge loans for the transitioning of real estate properties and are included net of loan holdbacks, accrued interest, in process and market valuation amounts.

Credit Facilities

As of June 30, 2023, our repurchase agreements totaled $43.0 million. See Note 3 for more detail.

Treasury Shares

At June 30, 2023, a total of $273.3 million in shares of our common stock had been repurchased under the authorization by our Board of Directors to repurchase up to $300.0 million in shares of our common stock. Repurchased shares are held as treasury stock and are available for general corporate purposes. As of June 30, 2023, we had an aggregate of $26.7 million remaining available for repurchases under our Board-approved repurchase plan.

Cash Flows

We report and analyze our cash flows based on operating activities, investing activities and financing activities. The following table sets forth our cash flows for the periods indicated ($ in thousands):


	Six months ended June 30,
	2023		2022
Net cash used in operating activities	$	(18,483)	$	(12,834)
Net cash provided by (used in) investing activities	30,639		(32,307)
Net cash used in financing activities	(10,401)		(1,868)
Total cash flows	$	1,755	$	(47,009)

Net cash used in operating activities for the six months ended June 30, 2023, consisted primarily of origination and additional fundings of loans held for sale, interest receivable, payment of ongoing salaries and benefits, annual incentive compensation, and general corporate expenses in excess of revenues offset by proceeds from sales and principal payments on held for sale loans. Net cash used in operating activities for the six months ended June 30, 2022, consisted primarily of payment of ongoing salaries and benefits, annual incentive compensation and general corporate expenses in excess of revenues.

Net cash provided by investing activities for the six months ended June 30, 2023, consisted primarily of the proceeds from sales and principal payments on loans held for investment, offset by additional fundings of loans held for investment. Net cash used in investing activities for the six months ended June 30, 2022, consisted primarily of the purchase of ALG loans.

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Net cash used in financing activities for the six months ended June 30, 2023, primarily relates to funds borrowed and repaid under the Company's line of credit, cash used in the repurchase of common stock. Net cash used in financing activities for the six months ended June 30, 2022, primarily relates to the conversion of preferred stock.

Off-balance Sheet Arrangements

We had no off-balance sheet arrangements as of June 30, 2023 or December 31, 2022.

Recent Accounting Pronouncements

See Item 1 - Financial statements (unaudited) - “Note 1. Organization and basis of presentation - Recently issued accounting standards.”

Critical Accounting Judgments

For a discussion of our critical accounting judgments, please see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Judgments” in our Annual Report on Form 10-K for the year ended December 31, 2022; and Footnotes 1 and 2 of the condensed consolidated interim financial statements.

Item 3. Quantitative and qualitative disclosures about market risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments.

Item 4. Controls and procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and to ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, management has determined that the Company's disclosure controls and procedures were effective as of June 30, 2023.

As the Company is a Smaller Reporting Company (“SRC”) under the SEC guidelines, management has determined that it will no longer receive an attestation opinion of its internal controls over financial reporting from its external auditor until the Company no longer qualifies as a SRC, upon reaching certain revenue thresholds. This decision was in conjunction with the creation of Company’s new business line and the extension of the 2012 Jumpstart Our Business Startups (“JOBS:) Act in March 2020.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

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Part II

Item 1. Legal proceedings

For a description of the Company’s legal proceedings, refer to Item 1 - Financial Statements (Unaudited) - Note 5, “Commitments and Contingencies” of the condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q.

Item 1A. Risk factors

Our risk factors reflected in our December 31, 2022 Form 10-K (filed on March 27, 2023) have not materially changed as our alternative lending business line risks were incorporated. For additional information regarding our risk factors, you should carefully consider the risk factors disclosed in “Item 1A. Risk factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered sales of equity securities and use of proceeds

None.

Item 3. Defaults upon senior securities

None.

Item 4. Mine safety disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit Number						Description
2.1						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).
3.1						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).
3.2						Fifth Amended and Restated Bylaws of Altisource Asset Management Corporation.
3.3						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).
3.4						Master Repurchase Agreement between Altisource Asset Management Corporation and Grapetree Lending LLC and NexBank, dated December 2, 2022 (portions redacted).
4.1						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).

__________

* Filed herewith.

† This Certification is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Altisource Asset Management Corporation

Date:

August 14, 2023

By:

/s/

Jason Kopcak

Chief Executive Officer

Date:

August 14, 2023

By:

/s/

Stephen Ramiro Krallman

Chief Financial Officer

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jason Kopcak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Altisource Asset Management Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

August 14, 2023

By:

/s/

Jason Kopcak

Chief Executive Officer

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen Ramiro Krallman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Altisource Asset Management Corporation;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the Registrant and have:

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

August 14, 2023

By:

/s/

Stephen Ramiro Krallman

Chief Financial Officer

Exhibit 32.1

Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of Altisource Asset Management Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q for the quarter ended June 30, 2023 (“Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date:

August 14, 2023

By:

/s/

Jason Kopcak

Chief Executive Officer

Exhibit 32.2

Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of Altisource Asset Management Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q for the quarter ended June 30, 2023 (“Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:

August 14, 2023

By:

/s/

Stephen Ramiro Krallman

Chief Financial Officer

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 07, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-36063
Entity Registrant Name	Altisource Asset Management Corporation
Entity Incorporation, State or Country Code	VI
Entity Tax Identification Number	66-0783125
Entity Address, Address Line One	5100 Tamarind Reef
Entity Address, City or Town	Christiansted
Entity Address, Country	VI
Entity Address, Postal Zip Code	00820
City Area Code	704
Local Phone Number	275-9113
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	AAMC
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		1,764,658
Entity Central Index Key	0001555074
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Loans held for sale, at fair value	$ 21,773	$ 11,593
Loans held for investment, at fair value	51,773	83,143
Cash and cash equivalents	10,532	10,727
Restricted cash	4,002	2,047
Other assets	10,937	10,137
Total assets	99,017	117,647
Liabilities
Accrued expenses and other liabilities	8,852	10,349
Lease liabilities	1,137	1,323
Credit facilities	42,992	51,653
Total liabilities	52,981	63,325
Commitments and contingencies (Note 5)
Redeemable preferred stock:
Preferred stock, $0.01 par value, 250,000 shares authorized as of June 30, 2023 and December 31, 2022. 144,212 shares issued and outstanding and $144,212 redemption value as of June 30, 2023 and December 31, 2022, respectively.	144,212	144,212
Stockholders' deficit:
Common stock, $0.01 par value, 5,000,000 authorized shares; 3,443,461 and 1,764,658 shares issued and outstanding, respectively, as of June 30, 2023 and 3,432,294 and 1,783,862 shares issued and outstanding, respectively, as of December 31, 2022.	34	34
Additional paid-in capital	149,264	149,010
Retained earnings	34,714	41,516
Accumulated other comprehensive income	21	20
Treasury stock, at cost, 1,678,803 shares as of June 30, 2023 and 1,648,432 shares as of December 31, 2022.	(282,209)	(280,470)
Total stockholder's deficit	(98,176)	(89,890)
Total liabilities and equity	$ 99,017	$ 117,647

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 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)	3,443,461	3,432,294
Common stock, shares outstanding (in shares)	1,764,658	1,783,862
Treasury stock, shares (in shares)	1,678,803	1,648,432

Condensed Consolidated Statements of Operations $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares
Revenues:
Loan interest income	$ 1,610	$ 524	$ 3,646	$ 524
Loan fee income	300	9	385	9
Realized gains on loans held for sale, net	10	0	20	0
Total revenues	1,920	533	4,051	533
Expenses:
Salaries and employee benefits	1,909	1,555	3,773	2,479
Legal fees	936	1,379	1,377	2,736
Professional fees	608	309	1,088	575
General and administrative	984	828	1,918	1,557
Servicing and asset management expense	228	181	411	181
Acquisition charges	0	89	0	513
Interest expense	872	0	1,954	0
Direct loan expense	189	0	452	0
Loan sales and marketing expense	382	0	791	0
Total expenses	6,108	4,341	11,764	8,041
Other income (expense):
Change in fair value of loans	390	(325)	1,239	(325)
Realized losses on sale of held for investment loans, net	0	0	(275)	0
Other	0	8	(2)	16
Total other income (expense)	390	(317)	962	(309)
Net loss from continuing operations before tax	(3,798)	(4,125)	(6,751)	(7,817)
Income tax expense	16	7	51	12
Net loss from continuing operations	(3,814)	(4,132)	(6,802)	(7,829)
Net loss attributable to common stockholders	(3,814)	(4,132)	(6,802)	(7,829)
Gain of preferred stock transaction	0	0	0	5,122
Numerator for earnings per share from continuing operations	$ (3,814)	$ (4,132)	$ (6,802)	$ (2,707)
Loss per share of common stock - Basic:
Loss per basic common share (in USD per share) \| (per share)	$ (2.16)	$ (2.00)	$ (3.84)	$ (1.31)
Weighted average common stock outstanding– basic (in shares) \| shares	1,765,233	2,063,078	1,771,184	2,059,872
Loss per share of common stock - Diluted:
Loss per diluted common share (in USD per share) \| (per share)	$ (2.16)	$ (2.00)	$ (3.84)	$ (1.31)
Weighted average common stock outstanding- diluted (in shares) \| shares	1,765,233	2,063,078	1,771,184	2,059,872

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (3,814)	$ (4,132)	$ (6,802)	$ (7,829)
Other comprehensive loss:
Currency translation adjustments, net	1	(13)	1	(19)
Total other comprehensive income (loss)	1	(13)	1	(19)
Comprehensive loss	$ (3,813)	$ (4,145)	$ (6,801)	$ (7,848)

Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2021		3,416,541
Beginning balance at Dec. 31, 2021	$ (76,528)	$ 34	$ 143,523	$ 57,450	$ 54	$ (277,589)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		5,850
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	25		25
Share-based compensation, net of tax	72		72
Currency translation adjustments, net	(6)				(6)
Preferred stock conversion	5,122		5,122
Net loss	(3,697)			(3,697)
Ending balance (in shares) at Mar. 31, 2022		3,422,391
Ending balance at Mar. 31, 2022	(75,012)	$ 34	148,742	53,753	48	(277,589)
Beginning balance (in shares) at Dec. 31, 2021		3,416,541
Beginning balance at Dec. 31, 2021	(76,528)	$ 34	143,523	57,450	54	(277,589)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Currency translation adjustments, net	(19)
Net loss	(7,829)
Ending balance (in shares) at Jun. 30, 2022		3,424,058
Ending balance at Jun. 30, 2022	(79,078)	$ 34	148,821	49,621	35	(277,589)
Beginning balance (in shares) at Mar. 31, 2022		3,422,391
Beginning balance at Mar. 31, 2022	(75,012)	$ 34	148,742	53,753	48	(277,589)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		1,667
Share-based compensation, net of tax	79		79
Currency translation adjustments, net	(13)				(13)
Net loss	(4,132)			(4,132)
Ending balance (in shares) at Jun. 30, 2022		3,424,058
Ending balance at Jun. 30, 2022	$ (79,078)	$ 34	148,821	49,621	35	(277,589)
Beginning balance (in shares) at Dec. 31, 2022	1,783,862	3,432,294
Beginning balance at Dec. 31, 2022	$ (89,890)	$ 34	149,010	41,516	20	(280,470)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		2,000
Treasury shares repurchased	(1,504)					(1,504)
Share-based compensation, net of tax	160		160
Net loss	(2,988)			(2,988)
Ending balance (in shares) at Mar. 31, 2023		3,434,294
Ending balance at Mar. 31, 2023	$ (94,222)	$ 34	149,170	38,528	20	(281,974)
Beginning balance (in shares) at Dec. 31, 2022	1,783,862	3,432,294
Beginning balance at Dec. 31, 2022	$ (89,890)	$ 34	149,010	41,516	20	(280,470)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Currency translation adjustments, net	1
Net loss	$ (6,802)
Ending balance (in shares) at Jun. 30, 2023	1,764,658	3,443,461
Ending balance at Jun. 30, 2023	$ (98,176)	$ 34	149,264	34,714	21	(282,209)
Beginning balance (in shares) at Mar. 31, 2023		3,434,294
Beginning balance at Mar. 31, 2023	(94,222)	$ 34	149,170	38,528	20	(281,974)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes (in shares)		9,167
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	(235)					(235)
Share-based compensation, net of tax	94		94
Currency translation adjustments, net	1				1
Net loss	$ (3,814)			(3,814)
Ending balance (in shares) at Jun. 30, 2023	1,764,658	3,443,461
Ending balance at Jun. 30, 2023	$ (98,176)	$ 34	$ 149,264	$ 34,714	$ 21	$ (282,209)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities:
Net loss	$ (6,802)	$ (7,829)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	128	145
Share-based compensation	254	151
Amortization of operating lease right-of-use assets	193	84
Change in fair value of loans	(1,239)	325
Net realized loss (gain) on sale of loans held for investment	275	0
Net realized (gain) loss on sale of held for sale loans	(20)	0
Changes in operating assets and liabilities:
Originations of held for sale loans	(10,592)	0
Additional fundings of held for sale loans	(3,379)	0
Proceeds from sales of held for sale loans	3,687	0
Principal payments on held for sale loans	491	0
Interest receivable	638	0
Amortization of deferred financing fees	63	0
Other assets and liabilities	(2,180)	(5,710)
Net cash used in operating activities	(18,483)	(12,834)
Investing activities:
Purchase of loans held for investment	0	(40,350)
Additional fundings of loans held for investment	(5,323)	0
Proceeds from sales of loans held for investment	6,346	0
Principal payments on loans held for investment	30,306	8,043
Investment in property and equipment	(690)	0
Net cash provided by (used in) investing activities	30,639	(32,307)
Financing activities:
Conversion of preferred stock	0	(1,893)
Proceeds from borrowed funds	51,611	0
Repayment of borrowed funds	(60,273)	0
Proceeds and payment of tax withholding stock options exercised, net	(235)	25
Repurchase of common stock	(1,504)	0
Net cash used in financing activities	(10,401)	(1,868)
Net change in cash and cash equivalents	1,755	(47,009)
Effect of exchange rate changes on cash and cash equivalents	5	(23)
Consolidated cash, cash equivalents and restricted cash, beginning of period	12,774	78,349
Consolidated cash, cash equivalents and restricted cash, end of period	14,534	31,317
Cash and cash equivalents	10,532
Restricted cash	4,002
Total cash, cash equivalents, and restricted cash	14,534	31,317
Supplemental disclosure of cash flow information:
Cash paid for interest	1,404	0
Income taxes paid	$ 65	$ 3,763

Organization and Basis of Presentation	6 Months Ended
Organization and Basis of Presentation	Jun. 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. See Note 2 for further discussion on fair value measurements. 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 of the Series A Shares on March 15, 2020 and on each successive five-year anniversary of March 15, 2020 thereafter. In connection with these same redemption dates, each holder of our Series A Shares has the right to give notice requesting us to redeem all of the Series A Shares held by such holder out of legally available funds. In accordance with the terms of the Certificate, if we have legally available funds to redeem all, but not less than all, of the Series A Shares requested to be redeemed on a redemption date, we will deliver to those holders who have requested redemption in accordance with the Certificate a notice of redemption. If we do not have legally available funds to redeem all, but not less than all, of the Series A Shares requested to be redeemed on a redemption date, we will not provide a notice of redemption. The redemption right will be exercisable in connection with each redemption date every five years until the mandatory redemption date in 2044. If we are required to redeem all of the holder’s Series A Shares, we are required to do so for cash at a price equal to $1,000 per share (the issuance price) out of funds legally available therefore. Due to the redemption provisions of the Series A Preferred Stock, we classify these shares as mezzanine equity, outside of permanent stockholders' equity. 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 of control transactions or upon the liquidation, dissolution or winding up of the Company, 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. 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. Between January 31, 2020 and February 3, 2020, we received purported notices from all of the holders of our Series A Shares requesting us to redeem an aggregate of $250.0 million liquidation preference of our Series A Shares on March 15, 2020. We did not have legally available funds to redeem all of the Series A Shares on March 15, 2020. As a result, we do not believe, under the terms of the Certificate, that we were obligated to redeem any of the Series A Shares under the Certificate. 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 alleges that AAMC’s position that it will not redeem any of Luxor’s Series A Shares on the March 15, 2020 redemption date is a material breach of AAMC’s redemption obligations under the Certificate. Luxor seeks an order requiring AAMC to redeem its Series A Shares, recovery of no less than $144,212,000 in damages, which is equal to the amount Luxor would receive if AAMC redeemed all of Luxor’s Series A Shares at the redemption price of $1,000 per share set forth in the Certificate, as well as payment of its costs and expenses in the lawsuit. In the alternative, Luxor seeks a return of its initial purchase price of $150,000,000 for the Series A Shares, as well as payment of its costs and expenses in 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 June 12, 2020, AAMC moved to dismiss the Amended Complaint in favor of AAMC’s first-filed declaratory judgment action in the U.S. Virgin Islands. On August 3, 2020, the court denied AAMC’s motion to dismiss. 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. Luxor and AAMC have completed discovery in the action. AAMC and Luxor each filed summary judgment motions on July 19, 2022 and replies to those motions on August 18, 2022 and September 15, 2022. On December 1, 2022, having heard oral arguments on the summary judgment motions, the court denied both parties’ motions. AAMC and Luxor have filed an appeal and cross-appeal, respectively, from the trial court’s ruling in the Appellate Division - First Department, of the Supreme Court of the State of New York. By stipulation of the parties, the appeal and cross-appeal were perfected and briefed for the June 2023 term. On June 13, 2023, the First Department issued its decision in favor of AAMC that it did not breach any contractual obligation to redeem Luxor’s preferred shares and directed 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. AAMC continues to pursue its strategic business initiatives despite this litigation. If Luxor were to prevail in its lawsuit, 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 alleging breach of fiduciary duty to AAMC. Mr. 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. AAMC seeks a number of remedies, including compensatory damages, disgorgement of any benefit received by Luxor or Mr. Redleaf as a result of such breaches. On January 4, 2023, this action 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 April 25, 2023, the Magistrate Judge issued an order scheduling an initial conference for June 8, 2023. 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. Settlement Activities On February 17, 2021, the Company entered into a settlement agreement dated as of February 17, 2021 (the “Putnam Agreement”) with Putnam. Pursuant to the Putnam Agreement, AAMC and Putnam exchanged all of Putnam’s 81,800 Series A Shares for 288,283 shares of AAMC’s common stock. Additionally, AAMC paid Putnam $1,636,000 within three business days of the effective date of the Putnam Agreement and $1,227,000 on the one-year anniversary of the effective date of the Putnam Agreement, and in return Putnam released AAMC from all claims related to the Series A Shares and enter into a voting rights agreement as more fully described in the Putnam Agreement. Finally, 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 thousand 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.

Loans Held for Sale or Investment at Fair Value

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Loans Held for Sale or Investment at Fair Value


	Held for Sale				Held for Investment
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Total loan commitments	$	27,523	$	15,080	$	57,810	$	98,157
Less: construction holdbacks (1)	(5,901)		(3,350)		(5,162)		(13,188)
Total principal outstanding	21,622		11,730		52,648		84,969
Change in fair value of loans	151		(137)		(875)		(1,826)
Total loans at fair value	$	21,773	$	11,593	$	51,773	$	83,143

(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):


		Loans Held for Sale		Loans Held for Investment
Balance at	December 31, 2022	$	11,593	$	83,143

Originations		10,592		—
Proceeds from sales of loans (1)		(3,667)		(6,621)
Additional fundings		3,379		5,323
Change in interest receivable		79		(717)
Payoffs and repayments		(491)		(30,306)
Fair value adjustment		288		951
Balance at	June 30, 2023	$	21,773	$	51,773

(1) Includes net realized loss on sale of loans.

The composition of the total loan commitment by state as of June 30, 2023 is summarized below ($ in thousands):




State	Commitment		Percent of Portfolio
Florida	$	36,287	42.5	%
California	11,218		13.1	%
New York	9,617		11.3	%
Washington	5,025		5.9	%
New Jersey	4,950		5.8	%
Illinois	4,357		5.1	%
Connecticut	2,917		3.4	%






Other	10,962		12.9	%
Total	$	85,333	100.0	%



Assets	Carrying		Fair Value Measurements Using
(In thousands)	Value		Level 1		Level 2		Level 3
June 30, 2023
Loans held for sale	$	21,773	$	—	$	—	$	21,773
Loans held for investment	51,773		—		—		51,773
Total measured	$	73,546	$	—	$	—	$	73,546

December 31, 2022
Loans held for sale	$	11,593	$	—	$	—	$	11,593
Loans held for investment	83,143		—		—		83,143
Total measured	$	94,736	$	—	$	—	$	94,736

We did not transfer any assets from one level to another level during the six months ended June 30, 2023 and the year ended December 31, 2022.

Borrowings	6 Months Ended
Borrowings	Jun. 30, 2023
Debt Disclosure [Abstract]
Borrowings	BorrowingsIn 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 June 30, 2023 due to its short-term nature and floating interest rate terms. The NexBank Line accrues interest at a equal to the greater of (a) the 1 month Term SOFR rate plus a spread dependent on three and on-half percent (3.50%) or (b) four and one-quarter (4.25%). The average borrowing rate was 8.25% and weighted average remaining term is 172 days as of June 30, 2023. The NexBank Line’s outstanding balance is $19.5 million and is collateralized by $24.2 million in Loans at June 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 June 30, 2023, the Company did not meet the twelve-trailing months profitability requirements of the NexBank Line. The Company has requested a compliance waiver from NexBank and is currently working with NexBank to receive the waiver. We are not aware of any reasons or circumstances that would prevent NexBank from electing to issue the waiver at this time; however, if a waiver is not granted, the Company could be required to repay the amount drawn on the line as of June 30, 2023 of $19.5 million with funds on hand or generated through the sale of loans held in the future. The Company was otherwise in compliance with all covenants and there were no defaults as of June 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 uses 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 can be outstanding up to 180 days. Flagstar has a security interest in the Loans subject to a transaction under the Flagstar Line and requires the Company to maintain restricted cash of $4.0 million in a Flagstar deposit account. The Line's maturity is 364 days from the execution date. Subsequent to June 30, 2023, the Line’s maturity date was extended to July 31, 2024. The carrying value of the Line approximates its fair value as of June 30, 2023 due to its short-term nature and floating interest rate terms. The Flagstar Line accrues interest at a base 1-Month Term SOFR rate plus a spread dependent upon the type of Loan subject to a transaction. Interest is payable at 90 days. The Company also incurs a fee on the unused portion of the $50.0 million if the average outstanding balance of the Flagstar Line is less than a threshold level of the total commitment. The average borrowing rate for the Line was 8.33% and weighted average remaining term on the Line is 151 days as of June 30, 2023. Flagstar Line’s outstanding balance is $23.5 million and is collateralized by $35.3 million in Loans at June 30, 2023. The Flagstar 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) quarter-end tangible net worth; 2) quarter-end liquidity; 3) a quarter-end ratio of total liabilities to tangible net worth; and 4) minimum profitability requirements in 2023. The 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 Line and the liquidation of Loans subject to a transaction. The Company was in compliance with all covenants and there were no defaults as of June 30, 2023.

Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

We lease office space under operating leases in Christiansted, St. Croix, U.S. Virgin Islands, Tampa, Florida, and Bengaluru, India.

The following table presents our future lease obligations under our operating leases as of June 30, 2023 ($ in thousands):


	Operating Lease Liabilities
2023 (1)	$	417
2024	307
2025	317
2026	227
2027	11

Total lease payments	1,279
Less: interest	142
Lease liabilities	$	1,137

_____________

(1)Excludes the six months ended June 30, 2023.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 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") Please refer to Note 1 – Section Series A Convertible Preferred Stock in 2014 Private Placement. 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 are due to be filed by 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 June 30, 2023 or December 31, 2022.

Share-Based Payments	6 Months Ended
Share-Based Payments	Jun. 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 remaining restricted stock units will vest in one installment on June 28, 2024 subject to forfeiture or acceleration. 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 remaining restricted stock units will vest in two equal annual installments in May 2024, and 2025 subject to forfeiture or acceleration. 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 recorded $0.09 million and $0.25 million of compensation expense related to our share-based compensation for the three and six months ended June 30, 2023, respectively. We recorded $0.08 million and $0.15 million of compensation expense related to our share-based compensation for the three and six months ended June 30, 2022, respectively. As of June 30, 2023 and December 31, 2022, we had an aggregate $0.1 million and $0.3 million, respectively, of total unrecognized share-based compensation cost to be recognized over a weighted average remaining estimated term of 1.3 years and 1.1 years, respectively.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesWe 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 June 30, 2023, the Company met the minimum employment requirements required under the provisions of the Waiver. The Company hired Jason Kopcak as President and Chief Operating Officer, now Chief Executive Officer, in May 2022, and he has relocated to the USVI. As of June 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 six months ended June 30, 2023 and 2022. The Company recorded tax expense of $16 thousand on a book loss of $4 million in the second 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.

Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

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):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Numerator

Net loss	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Gain on preferred stock transaction	—		—		—		5,122
Numerator for earnings per share - net loss attributable to common stockholders	$	(3,814)	$	(4,132)	$	(6,802)	$	(2,707)












Denominator
Weighted average common stock outstanding – basic	1,765,233		2,063,078		1,771,184		2,059,872



Weighted average common stock outstanding – diluted	1,765,233		2,063,078		1,771,184		2,059,872


Loss per basic common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)




Loss per diluted common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)

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):


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022



Denominator

Restricted stock	27,978	18,535	28,597	10,122
Preferred stock, if converted	115,370	115,370	115,370	115,498

Segment Information	6 Months Ended
Segment Information	Jun. 30, 2023
Segment Reporting [Abstract]
Segment Information	Segment Information ALG is our primary segment which we continue to grow in 2023. 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	6 Months Ended
Subsequent Events	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsManagement 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 July 27, 2023, the Company’s Board of Directors approved a two-for-one stock dividend to all stockholders of record on August 14, 2023 to be paid on September 13, 2023. The Company's common stock will begin trading on a stock split-adjusted basis on September 14, 2023, which is the ex-dividend date or effective date of the stock dividend. The computations of basic and diluted EPS will be adjusted on a retrospective basis for all periods presented in future periodic filings that occur subsequent to the effective date of the stock dividend.

Organization and Basis of Presentation (Policies)	6 Months Ended
Organization and Basis of Presentation (Policies)	Jun. 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.
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. See Note 2 for further discussion on fair value measurements. 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.
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. See Note 2 for further discussion on fair value measurements. 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.
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.

Loans Held for Sale or Investment at Fair Value (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

The composition of the loan portfolio by classification as of June 30, 2023 and December 31, 2022, is summarized in the table below ($ in thousands):


	Held for Sale				Held for Investment
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Total loan commitments	$	27,523	$	15,080	$	57,810	$	98,157
Less: construction holdbacks (1)	(5,901)		(3,350)		(5,162)		(13,188)
Total principal outstanding	21,622		11,730		52,648		84,969
Change in fair value of loans	151		(137)		(875)		(1,826)
Total loans at fair value	$	21,773	$	11,593	$	51,773	$	83,143

(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):


		Loans Held for Sale		Loans Held for Investment
Balance at	December 31, 2022	$	11,593	$	83,143

Originations		10,592		—
Proceeds from sales of loans (1)		(3,667)		(6,621)
Additional fundings		3,379		5,323
Change in interest receivable		79		(717)
Payoffs and repayments		(491)		(30,306)
Fair value adjustment		288		951
Balance at	June 30, 2023	$	21,773	$	51,773

(1) Includes net realized loss on sale of loans.

Schedule of Loan Commitment Classified by Geographic Areas

The composition of the total loan commitment by state as of June 30, 2023 is summarized below ($ in thousands):




State	Commitment		Percent of Portfolio
Florida	$	36,287	42.5	%
California	11,218		13.1	%
New York	9,617		11.3	%
Washington	5,025		5.9	%
New Jersey	4,950		5.8	%
Illinois	4,357		5.1	%
Connecticut	2,917		3.4	%






Other	10,962		12.9	%
Total	$	85,333	100.0	%

Schedule of Fair Value Measurements, Recurring



Assets	Carrying		Fair Value Measurements Using
(In thousands)	Value		Level 1		Level 2		Level 3
June 30, 2023
Loans held for sale	$	21,773	$	—	$	—	$	21,773
Loans held for investment	51,773		—		—		51,773
Total measured	$	73,546	$	—	$	—	$	73,546

December 31, 2022
Loans held for sale	$	11,593	$	—	$	—	$	11,593
Loans held for investment	83,143		—		—		83,143
Total measured	$	94,736	$	—	$	—	$	94,736

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Maturity Analysis of Operating Leases

The following table presents our future lease obligations under our operating leases as of June 30, 2023 ($ in thousands):


	Operating Lease Liabilities
2023 (1)	$	417
2024	307
2025	317
2026	227
2027	11

Total lease payments	1,279
Less: interest	142
Lease liabilities	$	1,137

_____________

(1)Excludes the six months ended June 30, 2023.

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

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):


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Numerator

Net loss	$	(3,814)	$	(4,132)	$	(6,802)	$	(7,829)

Gain on preferred stock transaction	—		—		—		5,122
Numerator for earnings per share - net loss attributable to common stockholders	$	(3,814)	$	(4,132)	$	(6,802)	$	(2,707)












Denominator
Weighted average common stock outstanding – basic	1,765,233		2,063,078		1,771,184		2,059,872



Weighted average common stock outstanding – diluted	1,765,233		2,063,078		1,771,184		2,059,872


Loss per basic common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)




Loss per diluted common share	$	(2.16)	$	(2.00)	$	(3.84)	$	(1.31)

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):


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022



Denominator

Restricted stock	27,978	18,535	28,597	10,122
Preferred stock, if converted	115,370	115,370	115,370	115,498

Organization and Basis of Presentation (Details)						3 Months Ended
Organization and Basis of Presentation (Details)	Jul. 18, 2022 USD ($) $ / shares shares	Jan. 06, 2022 USD ($) investor shares	Aug. 27, 2021 USD ($) shares	Feb. 17, 2021 USD ($) shares	Feb. 03, 2020 USD ($) $ / shares	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2014 USD ($) $ / shares shares	Jun. 30, 2023 shares	Dec. 31, 2022 shares
Organization and Basis of Presentation [Line Items]
Loans receivable, threshold period past due											90 days
Preferred stock, shares issued (in shares) \| shares										250,000	144,212	144,212
Proceeds from issuance of convertible preferred stock										$ 250,000,000
Temporary equity, redemption period										5 years
Redemption price per share (usd per share) \| $ / shares					$ 1,000					$ 1,000
Preferred stock, conversion price per share (in USD per share) \| $ / shares										$ 1,250
Exchange ratio for preferred stock to common stock										0.8
Loss contingency, damages awarded, number of business days to pay				3 days
Preferred stock conversion							$ 5,122,000
Number of institutional investors in settlement agreement \| investor		2
Stock repurchased during period (in shares) \| shares	286,873
Stock repurchased during period, value	$ 2,868,730					$ 1,504,000
Treasury stock acquired (in USD dollar per share) \| $ / shares	$ 10
Additional Paid-in Capital
Organization and Basis of Presentation [Line Items]
Preferred stock conversion							5,122,000		$ 71,900,000
Luxor v. AAMC
Organization and Basis of Presentation [Line Items]
Gain related to settlement agreement							$ 5,100,000
Luxor v. AAMC \| Putnam
Organization and Basis of Presentation [Line Items]
Loss contingency, damages awarded				$ 1,636,000
Loss contingency, damages awarded, due on one-year anniversary of the effective date of the agreement				$ 1,227,000
Settlement Agreement with Wellington
Organization and Basis of Presentation [Line Items]
Settlement agreement, amount awarded to other party			$ 2,093,000
Gain related to settlement agreement								$ 16,100,000
Luxor
Organization and Basis of Presentation [Line Items]
Damages sought					$ 150,000,000
Minimum \| Luxor
Organization and Basis of Presentation [Line Items]
Damages sought					144,212,000
Series A Preferred Stock
Organization and Basis of Presentation [Line Items]
Preferred stock, liquidation preference		$ 5,790,000			$ 250,000,000
Litigation settlement, shares awarded from other party (in shares) \| shares		5,788
Series A Preferred Stock \| Luxor v. AAMC
Organization and Basis of Presentation [Line Items]
Settlement agreement, amount awarded to other party		$ 665,000
Series A Preferred Stock \| Luxor v. AAMC \| Putnam
Organization and Basis of Presentation [Line Items]
Shares converted (in shares) \| shares				81,800
Series A Preferred Stock \| Settlement Agreement with Wellington
Organization and Basis of Presentation [Line Items]
Preferred stock, liquidation preference			$ 18,200,000
Litigation settlement, shares awarded from other party (in shares) \| shares			18,200
Common Stock \| Luxor v. AAMC \| Putnam
Organization and Basis of Presentation [Line Items]
Shares issued related to conversion of stock (in shares) \| shares				288,283

Loans Held for Sale or Investment at Fair Value - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loan commitments	$ 85,333
Total loans at fair value	51,773	$ 83,143
Loans Held for Sale
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loan commitments	27,523	15,080
Less: construction holdbacks	(5,901)	(3,350)
Total principal outstanding	21,622	11,730
Change in fair value of loans	151	(137)
Total loans at fair value	21,773	11,593
Loans Held for Investment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loan commitments	57,810	98,157
Less: construction holdbacks	(5,162)	(13,188)
Total principal outstanding	52,648	84,969
Change in fair value of loans	(875)	(1,826)
Total loans at fair value	$ 51,773	$ 83,143

Loans Held for Sale or Investment at Fair Value - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) loan	Dec. 31, 2022 USD ($)
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Number of loan portfolio	89
Weighted average coupon	9.50%
Net yield	8.80%
Weighted average life, terms	17 months
Number of loan outstanding	15
Percentage of outstanding total principal amount	64.00%
Number of loans on nonaccrual status or 90 days or more past due	6
Nonaccrual loans \| $	$ 6,900,000
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	8.80%
Fair Value Measurements, Recurring
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Liabilities, fair value disclosure \| $	$ 0	$ 0

Loans Held for Sale or Investment at Fair Value - Schedule Of Accounts Loan Portfolio By Classification (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Balance at December 31,2022	$ 83,143
Balance at June 30,2023	51,773
Loans Held for Sale
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Balance at December 31,2022	11,593
Originations	10,592
Proceeds from sales of loans	(3,667)
Additional fundings	3,379
Change in interest receivable	79
Payoffs and repayments	(491)
Fair value adjustment	288
Balance at June 30,2023	21,773
Loans Held for Investment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Balance at December 31,2022	83,143
Originations	0
Proceeds from sales of loans	(6,621)
Additional fundings	5,323
Change in interest receivable	(717)
Payoffs and repayments	(30,306)
Fair value adjustment	951
Balance at June 30,2023	$ 51,773

Loans Held for Sale or Investment at Fair Value - Loan Commitment Classified by Geographic Areas (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 85,333
Percent of Portfolio	100.00%
Florida
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 36,287
Percent of Portfolio	42.50%
California
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 11,218
Percent of Portfolio	13.10%
New York
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 9,617
Percent of Portfolio	11.30%
Washington
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 5,025
Percent of Portfolio	5.90%
New Jersey
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 4,950
Percent of Portfolio	5.80%
Illinois
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 4,357
Percent of Portfolio	5.10%
Connecticut
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 2,917
Percent of Portfolio	3.40%
Other
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Commitment	$ 10,962
Percent of Portfolio	12.90%

Loans Held for Sale or Investment at Fair Value - Fair Value Measurements, Recurring (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	$ 21,773	$ 11,593
Loans held for investment	51,773	83,143
Fair Value Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	21,773	11,593
Loans held for investment	51,773	83,143
Total measured	73,546	94,736
Fair Value Measurements, Recurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	0	0
Loans held for investment	0	0
Total measured	0	0
Fair Value Measurements, Recurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	0	0
Loans held for investment	0	0
Total measured	0	0
Fair Value Measurements, Recurring \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	21,773	11,593
Loans held for investment	51,773	83,143
Total measured	$ 73,546	$ 94,736

Borrowings (Details) - USD ($) $ in Thousands	1 Months Ended		6 Months Ended
Borrowings (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Aug. 31, 2022	Jun. 30, 2023
Line of Credit Facility [Line Items]
Credit facilities	$ 51,653		$ 42,992
Master Repurchase Agreement with NexBank
Line of Credit Facility [Line Items]
Credit facilities			$ 19,500
Line of Credit \| Master Repurchase Agreement with NexBank
Line of Credit Facility [Line Items]
Borrowing capacity	$ 50,000
Term for each draw on the line	180 days
Debt instrument, term	364 days
Average borrowing rate			8.25%
Weighted average remaining term			172 days
Line of credit facility, collateralized amount			$ 24,200
Line of Credit \| Master Repurchase Agreement with NexBank \| Minimum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable interest rate			3.50%
Line of Credit \| Master Repurchase Agreement with NexBank \| Maximum \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable interest rate			4.25%
Line of Credit \| Master Repurchase Agreement with Flagstar Bank FSB
Line of Credit Facility [Line Items]
Borrowing capacity		$ 50,000
Term for each draw on the line		180 days
Debt instrument, term		364 days
Average borrowing rate			8.33%
Weighted average remaining term			151 days
Line of credit facility, collateralized amount			$ 35,300
Credit facilities			$ 23,500
Required restricted cash balance		$ 4,000
Interest payable term		90 days

Leases - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
Leases - Additional Information (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Weighted average remaining lease term	3 years 4 months 24 days		3 years 4 months 24 days		3 years 9 months 18 days
Rent expense- long term lease	$ 122,000	$ 49,000	$ 246,000	$ 98,000
Rent expense- short term lease	0	0	0	0
Finance lease, liability	$ 0	$ 0	$ 0	$ 0

Leases - Maturity Analysis of Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
2023	$ 417
2024	307
2025	317
2026	227
2027	11
Total lease payments	1,279
Less: interest	142
Lease liabilities	$ 1,137	$ 1,323

Commitments and Contingencies (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Erbey Holding Corporation et al. v. Blackrock Management Inc., et al.
Loss Contingencies [Line Items]
Gain contingency	$ 0	$ 0

Share-Based Payments (Details)						3 Months Ended		6 Months Ended		12 Months Ended
Share-Based Payments (Details)	May 12, 2023	Mar. 09, 2023 shares	May 12, 2022 installment $ / shares shares	Sep. 20, 2021 $ / shares shares	Jun. 28, 2021 installment $ / shares shares	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation \| $						$ 90,000.00	$ 80,000.00	$ 250,000	$ 150,000
Unrecognized share-based compensation \| $						$ 100,000		$ 100,000		$ 300,000
Weighted average remaining amortization period of unamortized share based compensation								1 year 3 months 18 days		1 year 1 month 6 days
Restricted stock \| Management
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock granted (in shares) \| shares			22,500	3,000	5,000
Weighted average grant date fair value of market based restricted stock granted (usd per share) \| $ / shares			$ 9.89	$ 24.83	$ 19.64
Number of annual installments \| installment			2		1
Number of shares with accelerated vesting (in shares) \| shares		2,000
Restricted stock \| Management \| Tranche one
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage					33.30%
Restricted stock \| Management \| Tranche two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage					33.30%
Restricted stock \| Management \| Tranche three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage					33.30%
Restricted stock \| Management \| Tranche four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage				33.30%
Restricted stock \| Management \| Tranche five
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage	33.30%
Restricted stock \| Management \| Tranche six
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage	33.30%
Restricted stock \| Management \| Tranche seven
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded vesting percentage	33.30%
Restricted stock \| Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock granted (in shares) \| shares										8,571
Weighted average grant date fair value of market based restricted stock granted (usd per share) \| $ / shares										$ 21.00
Value of restricted stock granted to directors annually \| $								$ 60,000
Director attendance requirement								75.00%

Income Taxes (Details)	3 Months Ended		6 Months Ended
Income Taxes (Details)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) employee	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
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	16,000	$ 7,000	51,000	$ 12,000
Net loss	$ 3,814,000	$ 4,132,000	$ 6,802,000	$ 7,829,000

Earnings Per Share - Components of Diluted Earnings (Loss) per Share (Details) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2023 $ / shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 $ / shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2023 $ / shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 $ / shares
Numerator
Net loss	$ (3,814)		$ (4,132)		$ (6,802)		$ (7,829)
Gain on preferred stock transaction	0		0		0		5,122
Numerator for earnings per share - net loss attributable to common stockholders	$ (3,814)		$ (4,132)		$ (6,802)		$ (2,707)
Denominator
Weighted average common stock outstanding– basic (in shares) \| shares	1,765,233		2,063,078		1,771,184		2,059,872
Weighted average common stock outstanding- diluted (in shares) \| shares	1,765,233		2,063,078		1,771,184		2,059,872
Loss per share of common stock - Basic:
Loss per basic common share (in USD per share) \| (per share)	$ (2.16)	$ (2.16)	$ (2.00)	$ (2.00)	$ (3.84)	$ (3.84)	$ (1.31)	$ (1.31)
Loss per share of common stock - Diluted:
Loss per diluted common share (in USD per share) \| (per share)	$ (2.16)	$ (2.16)	$ (2.00)	$ (2.00)	$ (3.84)	$ (3.84)	$ (1.31)	$ (1.31)

Earnings Per Share - Antidilutive Securities (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restricted stock
Denominator
Antidilutive shares excluded from computation of earnings per share (in shares)	27,978	18,535	28,597	10,122
Preferred stock, if converted
Denominator
Antidilutive shares excluded from computation of earnings per share (in shares)	115,370	115,370	115,370	115,498

Segment Information (Details)	6 Months Ended
Segment Information (Details)	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of operating segments	1

Subsequent Events (Details)	Jul. 27, 2023
Subsequent event
Subsequent Event [Line Items]
Dividends declared, conversion ratio	2

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