UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2020 (February 28, 2020)
ALTISOURCE ASSET MANAGEMENT CORPORATION
(Exact name of Registrant as specified in its charter)
United States Virgin Islands | 001-36063 | 66-0783125 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
5100 Tamarind Reef
Christiansted, United States Virgin Islands 00820
(Address of principal executive offices including zip code)
(340) 692-0525
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
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. ¨
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 |
Item 2.02 Results of Operations and Financial Condition
On February 28, 2020, Altisource Asset Management Corporation issued a press release announcing its financial results for the quarter and year ended December 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02, including the information in Exhibit 99.1, is furnished solely pursuant to Item 2.02 of this Form 8-K. Consequently, it is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section. It may only be incorporated by reference in another filing under the Securities Exchange Act of 1934 or Securities Act of 1933 if such subsequent filing specifically references this Item 2.02 of this Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. | Description | |
Press Release of Altisource Asset Management Corporation dated February 28, 2020 | ||
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 | ||
February 28, 2020 | By: | /s/ Indroneel Chatterjee |
Indroneel Chatterjee Co-Chief Executive Officer | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE | FOR FURTHER INFORMATION CONTACT: |
Investor Relations | |
T: 1-704-558-3068 | |
E: InvestorRelations@AltisourceAMC.com | |
Altisource Asset Management Corporation Reports Fourth Quarter and Full Year 2019 Results
CHRISTIANSTED, U.S. Virgin Islands, February 28, 2020 (GLOBE NEWSWIRE) - Altisource Asset Management Corporation (“AAMC” or the “Company”) (NYSE American: AAMC) today announced financial and operating results for the fourth quarter and full year of 2019.
Fourth Quarter 2019 Highlights and Recent Developments
• | Negotiated the entry by Front Yard Residential Corporation (“Front Yard”) into a definitive merger agreement on February 17, 2020 with affiliates of Amherst Residential, LLC (“Amherst”) whereby Amherst will acquire Front Yard for $12.50 per share in a transaction valued at approximately $2.3 billion, including debt to be assumed or refinanced. |
• | Increased Front Yard's rental revenue by 2.6% over third quarter 2019 to $52.1 million. |
• | Managed the improvement in Front Yard's key operating metrics. |
• | Advised Front Yard in the sale of 92 non-core homes for a $1.5 million gain over carrying value and negotiated the divestiture of Front Yard's remaining mortgage loans. |
• | Appointed Indroneel Chatterjee as Co-Chief Executive Officer to develop new business, including asset management services, investments in real estate related assets or other businesses that leverage his experience and our acquisition and portfolio management teams. |
“We saw strong improvement in Front Yard’s operating metrics in the fourth quarter of 2019 as we started to see the results of our initiatives to overcome the operating challenges faced by Front Yard in 2019 following the transition of approximately 12,000 properties onto Front Yard’s internal property management platform,” stated Co-Chief Executive Officer George Ellison. “We believe that the transaction with Amherst allows us to realize immediate value for Front Yard’s shareholders and provides capital for AAMC to pursue new business opportunities.”
“I am pleased to join the AAMC team as we look to engage in new lines of business and optimize our cost structure to create shareholder value,” stated Co-Chief Executive Officer Indroneel Chatterjee. “We are actively pursuing opportunities to diversify our revenues by harnessing our resources in acquisitions and portfolio management.”
Fourth Quarter and Full Year 2019 GAAP Financial Results
Net loss for the fourth quarter of 2019 totaled $1.5 million, or $1.00 per diluted common share, which included a $1.3 million change in the fair value of its shares of Front Yard common stock, compared to a net loss of $4.3 million, or $2.69 per diluted common share, for the fourth quarter of 2018, which included a $(3.4) million change in the fair value of its shares of Front Yard common stock.
Net loss for the year ended December 31, 2019 totaled $2.6 million, or $1.77 per diluted common share, which included a $5.9 million change in the fair value of its shares of Front Yard common stock, compared to net loss of $10.9 million, or $6.88 per diluted common share, for the year ended December 31, 2018, which included a $(5.1) million change in the fair value of its shares of Front Yard common stock.
About AAMC
AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles. Additional information is available at www.altisourceamc.com.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, anticipations and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies as well as industry and market conditions. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “target,” “seek,” “believe” and other expressions or words of similar meaning. We caution that forward-looking statements are qualified by the existence of certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. Factors that could cause our actual results to differ materially from these forward-looking statements may include, without limitation, our ability to implement our business strategy and the business strategy of Front Yard; our ability to retain Front Yard as a client; the likelihood that Front Yard (or its successor) will terminate our asset management agreement with Front Yard upon consummation of a merger to which Front Yard agreed on February 17, 2020; 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; our ability to retain and maintain our strategic relationships; the ability of Front Yard to generate returns in amounts that would enable our management fees to increase; our ability to obtain additional asset management clients or businesses; our ability to effectively compete with our competitors; Front Yard's ability to complete future or pending transactions; the failure of service providers to effectively perform their obligations under their agreements with us; our ability to integrate newly acquired rental assets into Front Yard's portfolio; our ability to effectively manage the performance of Front Yard’s internal property manager at the level and/or the cost that it anticipates; 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 are not obligated to redeem any of the Series A Shares on the upcoming 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; our failure to maintain Front Yard's qualification as a REIT; and other risks and uncertainties detailed in the “Risk Factors” and other sections described from time to time in the Company’s current and future filings with the Securities and Exchange Commission. The foregoing list of factors should not be construed as exhaustive.
The statements made in this press release are current as of the date of this press release only. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, whether as a result of new information, future events or otherwise.
Altisource Asset Management Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenues: | |||||||||||||||
Management fees from Front Yard | $ | 3,584 | $ | 3,583 | $ | 14,270 | $ | 14,567 | |||||||
Conversion fees from Front Yard | — | 25 | 29 | 176 | |||||||||||
Expense reimbursements from Front Yard | 543 | 416 | 1,463 | 1,183 | |||||||||||
Total revenues | 4,127 | 4,024 | 15,762 | 15,926 | |||||||||||
Expenses: | |||||||||||||||
Salaries and employee benefits | 4,154 | 3,977 | 17,029 | 17,320 | |||||||||||
Legal and professional fees | 1,524 | 312 | 3,611 | 1,605 | |||||||||||
General and administrative | 1,129 | 826 | 4,147 | 3,609 | |||||||||||
Total expenses | 6,807 | 5,115 | 24,787 | 22,534 | |||||||||||
Other income: | |||||||||||||||
Change in fair value of Front Yard common stock | 1,267 | (3,443 | ) | 5,864 | (5,084 | ) | |||||||||
Dividend income on Front Yard common stock | — | 244 | 731 | 975 | |||||||||||
Other income | 39 | 66 | 155 | 216 | |||||||||||
Total other income (loss) | 1,306 | (3,133 | ) | 6,750 | (3,893 | ) | |||||||||
Loss before income taxes | (1,374 | ) | (4,224 | ) | (2,275 | ) | (10,501 | ) | |||||||
Income tax expense | 165 | 66 | 338 | 375 | |||||||||||
Net loss | (1,539 | ) | (4,290 | ) | (2,613 | ) | (10,876 | ) | |||||||
Amortization of preferred stock issuance costs | (51 | ) | (51 | ) | (206 | ) | (206 | ) | |||||||
Net loss attributable to common stockholders | $ | (1,590 | ) | $ | (4,341 | ) | $ | (2,819 | ) | $ | (11,082 | ) | |||
Loss per share of common stock – basic: | |||||||||||||||
Loss per basic common share | $ | (1.00 | ) | $ | (2.69 | ) | $ | (1.77 | ) | $ | (6.88 | ) | |||
Weighted average common stock outstanding – basic | 1,597,384 | 1,615,848 | 1,589,952 | 1,611,424 | |||||||||||
Loss per share of common stock – diluted: | |||||||||||||||
Loss per diluted common share | $ | (1.00 | ) | $ | (2.69 | ) | $ | (1.77 | ) | $ | (6.88 | ) | |||
Weighted average common stock outstanding – diluted | 1,597,384 | 1,615,848 | 1,589,952 | 1,611,424 | |||||||||||
Altisource Asset Management Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 31, 2019 | December 31, 2018 | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,965 | $ | 27,171 | |||
Short-term investments | 517 | 584 | |||||
Front Yard common stock | 20,046 | 14,182 | |||||
Receivable from Front Yard | 5,014 | 3,968 | |||||
Prepaid expenses and other assets | 1,609 | 1,552 | |||||
Total current assets | 47,151 | 47,457 | |||||
Non-current assets: | |||||||
Right-of-use lease assets | 4,339 | — | |||||
Other non-current assets | 1,758 | 1,910 | |||||
Total non-current assets | 6,097 | 1,910 | |||||
Total assets | $ | 53,248 | $ | 49,367 | |||
Current liabilities: | |||||||
Accrued salaries and employee benefits | $ | 5,407 | $ | 5,583 | |||
Accounts payable and accrued liabilities | 1,328 | 1,188 | |||||
Short-term lease liabilities | 265 | — | |||||
Total current liabilities | 7,000 | 6,771 | |||||
Long-term lease liabilities | 4,218 | — | |||||
Total liabilities | 11,218 | 6,771 | |||||
Commitments and contingencies | — | — | |||||
Redeemable preferred stock: | |||||||
Series A preferred stock, $0.01 par value, 250,000 shares issued and outstanding as of December 31, 2019 and 2018; redemption value $250,000 | 249,958 | 249,752 | |||||
Stockholders' deficit: | |||||||
Common stock, $.01 par value, 5,000,000 authorized shares; 2,897,177 and 1,598,512 shares issued and outstanding, respectively, as of December 31, 2019 and 2,862,760 and 1,573,691 shares issued and outstanding, respectively, as of December 31, 2018 | 29 | 29 | |||||
Additional paid-in capital | 44,646 | 42,245 | |||||
Retained earnings | 23,662 | 26,558 | |||||
Accumulated other comprehensive loss | (33 | ) | — | ||||
Treasury stock, at cost, 1,298,665 and 1,289,069 shares as of December 31, 2019 and 2018, respectively | (276,232 | ) | (275,988 | ) | |||
Total stockholders' deficit | (207,928 | ) | (207,156 | ) | |||
Total liabilities and equity | $ | 53,248 | $ | 49,367 | |||