incorporated in the
“inception”), and we commenced operations in
applied for and were granted registration by the
of the Investment Advisers Act of 1940. We historically operated in a single
segment focused on providing asset management and certain corporate governance
services to investment vehicles. Our primary client was
focused on acquiring and managing quality, affordable single-family rental
(“SFR”) properties throughout
“Termination Agreement”) with
and to provide for a transition plan to facilitate the internalization of Front
Yard’s asset management function (the “Transition Plan”). The Termination
Agreement was effective on
agreed that the Transition Plan had been satisfactorily completed (the
“Termination Date”) and, the Amended AMA was terminated in its entirety.
As disclosed in our public filings, the Company’s prior business operations
ceased in the first week of 2021. During 2021, the Company engaged in a
comprehensive search to acquire an operating company with the proceeds received
from the sale of its operations in accordance with the Termination Agreement. A
range of industries were included in the search, including, but not limited to,
real estate lending, cryptocurrency, block-chain technology and insurance
operations. Outside professional firms, including among others,
practice, were engaged to provide due diligence, legal and valuation expertise
to assist in our search.
opportunity related to Crypto ATMs.
With a capital commitment of
Company intends to perform 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
Indiato 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 underserved
markets. We intend to stay agile on the loan product mix, but we are currently
focused on markets not addressed by banks, agency aggregators and most
traditional lenders, including but not limited to:
•Transitional Loans: bridge loans on single family and commercial real estate; •Ground-up Construction Loans: assisting developers in projects with the primary focus on workforce housing; •Investor Loans: Non-agency loans on investment rental properties that are debt service coverage ratio type loans; •Special Purpose Credit Programs: loans to extend special purpose credit to applicants who meet certain eligibility requirements such as credit assistance programs; and •"Gig Economy" Loans: Loans to professionals, self-employed borrowers, start-up business owners lacking income documentation to qualify for Agency purchase.
In the near future, we expect our main business segment to be ALG, whose primary
sources of income will be 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
(table of contents)
In addition to ALG operations, AAMC will also invest capital into a Crypto ATM
business through its Right of First Refusal Agreement with the cryptocurrency
company, ForumPay, with the intent to deploy crypto enabled ATMs worldwide. The
Crypto ATMs using ForumPay’s software will generally allow users to purchase
multiple cryptocurrencies such as Bitcoin, Ethereum and Litecoin, using fiat
currency, sell the same cryptocurrencies and eventually remit payments globally
either in cryptocurrency or the local fiat currency. The Company will earn
revenue by charging fees for utilizing the ATMs for exchange between
cryptocurrency and local fiat currency.
The Right of First Refusal Agreement includes the following provisions:
•Co-marketing efforts between AAMC and ForumPay; •ForumPay to provide advanced technology that includes: •Cash purchases of cryptocurrencies; •Cryptocurrency conversions to cash (in local currency); •Capacity to fund remittances to third parties (in crypto or local currencies); and •AAMC will be responsible for ATM hardware, installation, maintenance, operation and insurance.
We will initially invest
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.
Asset Management Agreement with Front Yard
For details on the Amended AMA with Front Yard and a description of the
Termination Agreement and its key terms, please see Item 1 – Financial
statements (unaudited) – “Note 1. Organization and Basis of Presentation” and
“Management Overview” above.
Metrics Affecting our Consolidated Results
Our operating results are affected by various factors and market conditions,
including the following:
Our expenses consist primarily of salaries and employee benefits, legal and
professional fees, and general and administrative expenses and acquisition
charges. 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.
Acquisition charges reflect professional fees incurred solely for the purpose of
assisting the Company in the identification of target companies and subsequent
due diligence, valuation, and deal structuring services required to properly
assess the viability of the target companies.
Other income primarily relates to income generated from marketable securities
acquired and sold by the Company either through the Front Yard transaction,
primarily in 2020 or on the public market in 2021.
(table of contents)
Results of Operations
The following sets forth discussion of our results of operations for the three
Results of Continuing Operations
The following discussion compares our results of continuing operations for the
three months ended
Our results of operations for the periods presented are not indicative of our
expected results in future periods.
Salaries and Employee Benefits
Salaries and employee benefits were
issued and vested in
Legal, Acquisition and Professional Fees
Legal fees increased slightly to
due to legal and consulting fees related to the Luxor litigation and employment
issues. We incurred
General and Administrative Expenses
General and administrative expenses decreased slightly to
Change in Fair Value of Front Yard Common Stock
The change in fair value of Front Yard common stock was
These changes in fair value were due solely to changes in the market price of
Front Yard’s common stock, as reported on the
closing of the Front Yard merger in
exchange for shares held.
Dividend and Gain on Sale Income
No dividends were received in three months ended
equity securities were held during that period. Dividend income was
during the three months ended
were recognized on REIT equity securities during the three months ended
Results of Discontinued Operations
pursuant to which they have agreed to effectively internalize the asset
management function of Front Yard. The termination of the Amended AMA and the
sale of the certain assets and operations to Front Yard represents a significant
strategic shift that will have a major effect on our operations and financial
results. Therefore, we have classified the results of our operations related to
Front Yard as discontinued operations in our condensed consolidated statements
of operations. Discontinued operations includes (i) the management fee revenues
generated under our asset management agreements with Front Yard, (ii) expense
reimbursements from Front Yard and the underlying expenses, (iii) the results of
operations of our
costs associated with certain individuals wholly dedicated to Front Yard and (v)
the costs associated with our lease in
assumed by Front Yard. On
remainder of the
Operations” for further information.
We had no results from discontinued operations in the three months ended
(table of contents)
Liquidity and Capital Resources
to cash and cash equivalents of
decrease in cash and cash equivalents was primarily due to the purchase of loans
in the ALG. At
developing new sources of income 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.
As referred to in Note 1 in our consolidated financial statements, the
Company has settled with certain owners of its Series A Shares which has reduced
the outstanding balance from
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 Company. ” 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
Loans held for investment, at fair value
These loans primarily relate to business purpose bridge loans for the
positioning of real estate properties.
equity securities with
under a standard margin arrangement with our banking institution. As of
margin arrangement was paid in full.
been repurchased under the authorization by our Board of Directors to repurchase
as treasury stock and are available for general corporate purposes. We have an
Board-approved repurchase plan.
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