Financial Performance - Loan interest income decreased to $34,000 and $0.3 million for the three and six months ended June 30, 2024, compared to $1.6 million and $3.6 million for the same periods in 2023, driven by the decision to liquidate the loan portfolio[99] - Loan fee income was $8,000 and $14,000 for the three and six months ended June 30, 2024, respectively, down from $0.3 million and $0.4 million in the same periods of 2023, also due to the liquidation of the loan portfolio[100] - Salaries and employee benefits decreased to $0.3 million and $0.5 million for the three and six months ended June 30, 2024, compared to $1.9 million and $3.8 million for the same periods in 2023, reflecting cost reduction measures[102] - General and administrative expenses were $0.2 million and $0.5 million for the three and six months ended June 30, 2024, down from $1.0 million and $1.9 million in the same periods of 2023, attributed to reduced operational costs[104] Cash Flow and Liquidity - As of June 30, 2024, cash and cash equivalents were $8.1 million, a decrease from $8.7 million as of December 31, 2023, indicating a need for ongoing liquidity management[112] - Net cash used in operating activities for the six months ended June 30, 2024, was $(1,177) thousand, a significant improvement from $(18,483) thousand in the same period of 2023[117] - Net cash provided by investing activities for the six months ended June 30, 2024, was $1,568 thousand, compared to $30,639 thousand in the prior year[117] - Net cash used in financing activities for the six months ended June 30, 2024, was $(1,000) thousand, down from $(10,401) thousand in 2023[119] - Total cash flows for the six months ended June 30, 2024, resulted in a net decrease of $(609) thousand, contrasting with an increase of $1,755 thousand in the same period of 2023[117] - The net cash used in operating activities primarily consisted of additional fundings of held for sale loans and general corporate expenses exceeding revenues[118] - The net cash provided by investing activities was mainly from proceeds of sales and principal payments on loans held for investment[118] - Financing activities in 2024 were primarily related to cash used in the conversion of preferred stock[119] Asset Management - Loans held for sale at fair value were $56,000 on June 30, 2024, down from $4.5 million at December 31, 2023, due to the liquidation of the loan portfolio[113] - Loans held for investment at fair value were $4.0 million on June 30, 2024, compared to $5.6 million at December 31, 2023, reflecting the phase-out of the ALG business line[114] Intellectual Property and Agreements - The company signed a non-exclusive patent and technology licensing agreement with System73 Limited, involving a payment of approximately $8.0 million for patents related to optimizing electric vehicle efficiency[89] - Electric vehicle intellectual property development costs were $1.0 million and $2.9 million for the three and six months ended June 30, 2024, with no costs incurred in the comparable prior year periods[109] Shareholder Actions - The company has repurchased a total of $275.2 million in shares under its repurchase plan, with $24.8 million remaining available for future repurchases as of June 30, 2024[115] Market Risks and Accounting - The company is exposed to market risks including changes in interest rates and foreign currency exchange rates[123] - Recent accounting pronouncements and critical accounting judgments are discussed in the company's annual report and financial statements[121][122]

Financial Performance - Loan interest income decreased to $0.2 million from $2.0 million for the three months ended March 31, 2024, due to a lower number of loans held for sale and investment [96]. - Salaries and employee benefits decreased to $0.2 million from $1.9 million for the three months ended March 31, 2024, attributed to an employee right-sizing initiative [99]. - Net cash used in operating activities for the three months ended March 31, 2024, was $(2,051) thousand, compared to $(6,944) thousand for the same period in 2023 [114]. - Total cash flows for the three months ended March 31, 2024, were $(2,060) thousand, contrasting with $1,107 thousand for the same period in 2023 [114]. Cash and Loans - Cash and cash equivalents as of March 31, 2024, were $6.7 million, down from $8.7 million as of December 31, 2023 [109]. - Loans held for sale at fair value decreased to $2.7 million on March 31, 2024, from $4.5 million at December 31, 2023, due to a decision to liquidate the loan portfolio [110]. - Loans held for investment at fair value decreased to $4.5 million on March 31, 2024, from $5.6 million at December 31, 2023, also driven by the liquidation of the loan portfolio [111]. Electric Vehicle Development - Electric vehicle intellectual property development costs were $1.9 million for the three months ended March 31, 2024, marking the first period of operations for this segment [106]. - The company signed a non-exclusive patent and technology licensing agreement with System73 Limited, focusing on optimizing electric vehicle efficiency [85]. - The company agreed to pay 6.2 million pounds sterling (approximately $8.0 million) for patent rights under the PTL Agreement [86]. Market Risk - Market risk includes risks from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes affecting market-sensitive instruments [120].

Financial Performance - Loan interest income increased to $4.9 million in 2023 from $4.6 million in 2022, representing a growth of approximately 6.5%[136] - Loan fee income rose to $0.5 million in 2023 from $0.4 million in 2022, marking a 25% increase[137] - Realized losses on loans held for sale were $2.2 million in 2023, compared to no losses in 2022, indicating a significant shift in portfolio performance[138] Expenses - Salaries and employee benefits decreased to $5.7 million in 2023 from $5.8 million in 2022, reflecting a reduction in overall compensation costs[139] - Legal fees decreased to $3.1 million in 2023 from $4.3 million in 2022, primarily due to lower litigation costs[140] - General and administrative expenses decreased to $3.3 million in 2023 from $3.5 million in 2022, despite increases in certain operational costs[141] - Interest expense increased to $2.8 million in 2023 from $1.3 million in 2022, attributed to the development of the ALG line of business[143] Loan Portfolio - Loans held for sale decreased to $4.5 million as of December 31, 2023, from $11.6 million in 2022, driven by a decision to liquidate the loan portfolio[150] - Loans held for investment decreased to $5.6 million as of December 31, 2023, from $83.1 million in 2022, reflecting a similar liquidation strategy[151] Cash and Financing Activities - Cash and cash equivalents decreased to $8.7 million as of December 31, 2023, from $10.7 million in 2022, primarily due to loan purchases[149] - Net cash used in financing activities for the year ended December 31, 2023, primarily consisted of funds borrowed and repaid under the Company's lines of credit[159] Off-Balance Sheet and Equity - The Company had no off-balance sheet arrangements as of December 31, 2023 or 2022[160] - The Series A preferred stock is classified as temporary equity, with an aggregate redemption request of $250.0 million made on March 15, 2020, which the Company could not fulfill due to lack of legally available funds[164] Fair Value and Internal Control - The Company has elected the fair value option for its business purpose loans held for sale and investment, which are carried at estimated fair value, affecting reported earnings and financial condition[165] - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2023, concluding it was effective in providing reasonable assurance regarding the reliability of financial reporting[170] - There were no changes in internal control over financial reporting that materially affected the Company during the year ended December 31, 2023[172] - The Company does not expect its controls to prevent or detect all errors or fraud, acknowledging inherent limitations[173]

Core Viewpoint - Altisource Asset Management Corporation (AAMC) has settled litigation with Luxor Capital Group, resulting in the surrender of Preferred Shares and a financial agreement that enhances the company's stockholders' equity [1][3]. Settlement Details - Luxor surrenders all 144,212 Preferred Shares, extinguishing all rights under the Securities Purchase Agreement and Certificate of Designations [2]. - AAMC will make a cash payment of $1,000,000 to Luxor, along with three promissory notes totaling $11,000,000, with varying due dates and interest rates [2]. - The promissory notes include $2,000,000 due in three years, $3,000,000 due in five years, and $6,000,000 due in eight years, with interest rates of 7.5% or 10% PIK [2]. - AAMC will also pay Luxor 50% of any proceeds from damage claims in ongoing litigation, capped at $50,000,000 [2]. Legal and Financial Implications - The settlement leads to the dismissal of litigation with prejudice and mutual releases of claims, with no admission of liability by any party [3]. - As a result of the settlement, AAMC's stockholders' equity increases to over $6,000,000, allowing the company to avoid delisting from the New York Stock Exchange [3]. Company Overview - AAMC is a private credit provider focused on originating alternative assets to provide liquidity and capital to underserved markets [4].

Financial Performance - Loan interest income for Q3 2023 was $1.1 million, down 35.3% from $1.7 million in Q3 2022[98] - Loan fee income for Q3 2023 was $0.1 million, a decrease from $0.2 million in Q3 2022[98] - Realized losses on loans held for sale were $2.2 million in Q3 2023, compared to no losses in Q3 2022[98] Expenses - Salaries and employee benefits decreased to $0.8 million in Q3 2023 from $1.6 million in Q3 2022, primarily due to workforce reduction[99] - Legal fees decreased to $0.6 million in Q3 2023 from $0.8 million in Q3 2022, reflecting lower litigation costs[100] - General and administrative expenses increased to $0.9 million in Q3 2023 from $0.8 million in Q3 2022[101] Cash and Loans - Cash and cash equivalents decreased to $7.9 million as of September 30, 2023, from $10.7 million at the end of 2022[105] - Loans held for sale at fair value were $5.4 million as of September 30, 2023, down from $11.6 million at the end of 2022[107] - Loans held for investment at fair value decreased to $28.1 million as of September 30, 2023, from $83.1 million at the end of 2022[108] Share Repurchase - The company repurchased 66,349 shares for $0.5 million in Q3 2023, compared to 286,873 shares for $2.9 million in Q3 2022[110] Internal Controls - The Company's disclosure controls and procedures were determined to be effective as of September 30, 2023[119] - There were no changes in internal control over financial reporting that materially affected the Company during the quarter ended September 30, 2023[120] - Management does not expect that the disclosure controls and procedures will prevent or detect all errors and fraud[121] - The Company is classified as a Smaller Reporting Company (SRC) and will not receive an attestation opinion of its internal controls over financial reporting until it no longer qualifies as an SRC[119]

Financial Data and Key Metrics Changes - The company is undergoing a comprehensive assessment of its Lending Operations due to underperformance, which has not met the Board's expectations [5][21] - The company is actively seeking to improve operational capacity, reduce costs, and enhance liquidity [6] Business Line Data and Key Metrics Changes - The fix and flip, construction, and other lending programs have not achieved profitability as quickly as anticipated [5] - The company is taking steps to move loans more quickly off its lines of credit during the ongoing review [6] Market Data and Key Metrics Changes - The potential new technology presented has significant upside potential in the rapidly growing electric vehicle market, with a total available market of $49.5 billion and a serviceable available market of $9.2 billion annually [15] Company Strategy and Development Direction - The company is exploring capital-light asset management businesses that could enhance shareholder value [6] - A new technology opportunity has been identified, focusing on reducing energy loss and heat generation in electric vehicles, which aligns with the company's strategic direction [7][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced in the Lending Operations and is committed to making necessary adjustments to achieve profitability [21][26] - The involvement of a significant shareholder, who owns 45% of the company, is expected to drive value creation for shareholders [26][27] Other Important Information - The company is engaged in ongoing legal matters, including a favorable ruling in a case against Luxor and a separate action against a former director [4] - The proposed technology requires an estimated $7 million to $8 million in working capital over the next 18 to 24 months, with no upfront cash commitment [7][8] Q&A Session Summary Question: Status of Lending Operations - Management indicated that specifics on Lending Operations will not be discussed until the overall review is completed, acknowledging that current results are not meeting expectations [21] Question: Asset-Light Management Services - Management confirmed that the new technology presented is an example of an asset-light business model, with revenues primarily from licensing [23] Question: Commitment to NYSE Listing - Management expressed a proactive approach to maintaining an acceptable listing on the New York Stock Exchange, despite current market cap challenges [25]

Financial Performance - Loan interest income for the three and six months ended June 30, 2023, was $1.6 million and $3.6 million, respectively, compared to $0.5 million for the same periods in 2022, representing a significant increase [94]. - Loan fee income increased to $0.3 million and $0.4 million for the three and six months ended June 30, 2023, respectively, compared to only $9,000 for the same periods in 2022 [94]. - The total cash flows for the six months ended June 30, 2023, were $1.755 million, compared to a negative cash flow of $47.009 million for the same period in 2022 [107]. Expenses - Salaries and employee benefits rose to $1.9 million and $3.8 million during the three and six months ended June 30, 2023, compared to $1.6 million and $2.5 million in the same periods of 2022, reflecting the addition of loan operations and ALG staff [95]. - General and administrative expenses were $1.0 million and $1.9 million for the three and six months ended June 30, 2023, compared to $0.8 million and $1.6 million for the same periods in 2022 [97]. Assets and Liabilities - As of June 30, 2023, cash and cash equivalents were $10.5 million, a slight decrease from $10.7 million as of December 31, 2022, primarily due to principal payments on loans [100]. - Loans held for sale at fair value amounted to $21.8 million as of June 30, 2023, primarily related to loans originated by the Alternative Lending Group (ALG) [103]. - Loans held for investment at fair value were $51.8 million as of June 30, 2023, primarily consisting of business purpose bridge loans [104]. - The company had repurchase agreements totaling $43.0 million as of June 30, 2023 [105]. Strategic Initiatives - The company intends to continue pursuing strategic business initiatives despite ongoing litigation, which may impact liquidity if the outcome is unfavorable [102].

Financial Data and Key Metrics Changes - First quarter earnings improved by $1.1 million, reducing the first quarter loss to $3 million on revenue of $2.1 million [6][12] - The company operates with a capital-light model, expecting to earn $7.50 for every dollar of capital deployed at the beginning of the year [5] Business Line Data and Key Metrics Changes - The product mix includes short duration high-yielding fixed income assets with a gross weighted average coupon of 9.5% to 12% [6] - The expected gross revenue per loan for residential transitional loans (RTLs) is in excess of 350 basis points, while for term and debt service coverage ratio (DSCR) loans, it is in excess of 250 basis points [9] Market Data and Key Metrics Changes - The direct-to-borrower origination pipeline is approximately $75 million, and the wholesale channel has a committed volume of $45 million [10] - Net submissions averaged $10.7 million per week over the past seven weeks, indicating strong demand for products [11] Company Strategy and Development Direction - The company is focused on scaling operations and perfecting processes to enhance customer experience and execution [12] - Plans to go live with the wholesale platform and direct-to-broker channel in Q2 2023 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of relationships with bank partners, stating that regional bank issues have positively impacted the company by strengthening partnerships [28] - The company is optimistic about continued growth in all three origination channels [11] Other Important Information - The company has added three additional takeout investors, two of which have insurance money [8] - The average loan size for RTLs is approximately $500,000, while for DSCR loans, it is approximately $300,000 [10] Q&A Session Summary Question: Growth in net submissions - Management acknowledged that net submissions have grown to an average of $10.7 million per week, indicating a strong upward trend [15][18] Question: Loan closing time and operational challenges - The average loan closing time is about 30 days, with improvements noted in the quality of loan packages over the past 30 days [20][22] Question: Stock repurchase plans - Management indicated that while they believe the stock is undervalued, they are currently prioritizing capital for loan originations over stock repurchases [26] Question: Impact of regional bank issues - Management stated that regional bank issues have not negatively affected the company, and relationships with bank partners have strengthened [28]

Financial Performance - Loan interest income for Q1 2023 was $2.0 million, compared to $0 in Q1 2022[89] - Loan fee income for Q1 2023 was $0.1 million, with no income in Q1 2022[89] - Realized gains on loans held for sale, net, were $10,000 in Q1 2023, with no gains in Q1 2022[89] - Interest expenses for Q1 2023 were $1.1 million, with no interest expense recorded in Q1 2022[94] - Total cash flows for Q1 2023 were $1.1 million, compared to a negative $23.97 million in Q1 2022[104] Staffing and Expenses - Salaries and employee benefits increased to $1.9 million in Q1 2023 from $0.9 million in Q1 2022, primarily due to the addition of loan operations and ALG staff[90] Loans and Investments - Loans held for sale at fair value as of March 31, 2023, totaled $13.5 million[100] - Loans held for investment at fair value as of March 31, 2023, amounted to $65.3 million[101] Cash Position - Cash and cash equivalents increased to $11.8 million as of March 31, 2023, from $10.7 million as of December 31, 2022[97] Share Repurchase - The company has repurchased $273.1 million in shares under its repurchase plan, with $26.9 million remaining available for future repurchases[103]

Financial Performance - Loan interest income for the year ended December 31, 2022, was $4.6 million, compared to $0 in 2021[128] - Loan fee income for the year ended December 31, 2022, was $0.4 million, with no income recorded in 2021[129] - Total cash flows from continuing operations for the year ended December 31, 2022, were $(65.5) million, compared to $30.4 million in 2021[148] - As of December 31, 2022, the company had cash and cash equivalents of $10.7 million, down from $78.3 million in 2021[141] - Net cash used in operating activities for the year ended December 31, 2022, was primarily due to originations and additional fundings of held for sale loans, totaling significant ongoing salaries and benefits payments[150] - Net cash used in investing activities for the year ended December 31, 2022, was primarily for website development and the purchase of loans held for investment, offset by principal payments on those loans[151] - Net cash provided by financing activities during the year ended December 31, 2022, was mainly related to funds borrowed and repaid under the Company's lines of credit[152] Expenses - Salaries and employee benefits increased to $5.8 million in 2022 from $5.6 million in 2021[130] - Legal fees decreased to $4.3 million in 2022 from $6.9 million in 2021, primarily due to higher costs in 2021 related to litigation[131] - General and administrative expenses rose to $3.5 million in 2022 from $2.6 million in 2021, driven by increased insurance and software license fees[132] - Interest expense was $1.3 million for the year ended December 31, 2022, compared to $0.1 million in 2021[134] Assets and Liabilities - Loans held for sale at fair value amounted to $11.6 million as of December 31, 2022[143] - Loans held for investment at fair value were $83.1 million as of December 31, 2022[144] - The Series A preferred stock is classified as temporary equity, with an aggregate redemption request of $250.0 million received in 2020, which the Company could not fulfill due to lack of legally available funds[158] - The Company has elected the fair value option for its business purpose loans held for sale and investment, which are carried at estimated fair value, indicating a focus on accurate asset valuation[159] Internal Controls and Governance - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2022, concluding that it was effective in providing reasonable assurance regarding the reliability of financial reporting[165] - The Company engaged a third-party consultant to assist in the documentation and integration of new internal control processes related to its ALG business line, reflecting ongoing growth and adaptation[168] - There were no changes in internal control over financial reporting that materially affected the Company during the year ended December 31, 2022, ensuring consistency in financial practices[169] - The Company plans to file a definitive Proxy Statement for the 2023 Annual Meeting of Stockholders within 120 days after December 31, 2022, indicating ongoing corporate governance compliance[173] Financial Stability - The Company had no off-balance sheet arrangements as of December 31, 2022 or 2021, indicating a stable financial position[154]