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 ~~September 30~~March 31, ~~2023~~2024

☐ 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 ~~November 10~~May 8, ~~2023~~2024, 2,~~764~~554,~~134~~512 shares of our common stock were outstanding (excluding 12,~~920~~129,~~351~~973 shares held as treasury stock).

Altisource Asset Management Corporation

~~September 30~~March 31, ~~2023~~2024

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 Comprehensive Loss			3
Condensed Consolidated Statements of Stockholders' Deficit			4
Condensed Consolidated Statements of Stockholders' Equity (Deficit)			4
Condensed Consolidated Statements of Cash Flows			65
Notes to Condensed Consolidated Financial Statements			87
Item 2. Management's discussion and analysis of financial condition and results of operations			1917
Item 3. Quantitative and qualitative disclosures about market risk			2221
Item 4. Controls and procedures			2321
Part II			2423
Item 1. Legal proceedings			2423
Item 1A. Risk factors			2423
Item 2. Unregistered sales of equity securities and use of proceeds			2423
Item 3. Defaults upon senior securities			2423
Item 4. Mine safety disclosures			2423
Item 5. Other Information			2423
Item 6. Exhibits			2524
Signatures			2625

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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~~Current ininflationary ~~the~~economic ~~litigation~~and ~~regarding~~macro-economic ~~our~~and ~~redemption~~geopolitical ~~obligations under the Certificate of Designations of our Series A Convertible Preferred Stock (the “Series A Shares”)~~events, ~~including~~and ~~our~~market ~~ability~~conditions ~~to sustain, on appeal, a court decision in favor of the Company~~ that wecan ~~were~~affect ~~not~~our 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 datebusiness;

•~~While~~Our ~~the~~ability ~~Company~~to ~~has~~develop noand ~~direct~~implement ~~exposure~~a tonew ~~the~~business ~~recently~~with ~~failed~~respect ~~banks due~~ to ~~the~~assets ~~recent~~and ~~financial~~rights ~~conditions~~acquired ofby the ~~banking~~Company ~~system,~~through ifthe ~~other~~non-exclusive ~~banks~~patent orand ~~financial~~technology ~~institutions~~licensing ~~enter~~agreement ~~receivership~~between orthe ~~become~~Company ~~insolvent~~and inSystem73 ~~the future~~Limited, ~~our ability,~~ and that the ~~ability~~Company ofwill ~~our~~achieve ~~customers,~~its ~~clients~~expectations ~~and~~with ~~vendors,~~respect to ~~access~~the ~~capital,~~patents ~~may be threatened~~ and ~~could~~other ~~have~~intellectual aproperty ~~material~~associated ~~adverse effect on our business and financial condition~~therewith;

•~~Current~~Our ~~inflationary~~ability ~~economic~~to ~~and~~monetize ~~market~~our ~~conditions,~~remaining ~~including~~loan ~~the~~portfolio; ~~current rising interest rate environment~~ and ~~developments in the credit market;~~

•Our ability to develop and implement a new business with respect to that certain non-exclusive patent and technology licensing agreement between the Company and System73 Limited entered into on October 6, 2023 and that the Company will achieve its expectations with respect to the patents and other intellectual property associated therewith;

•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. Risk Factors in this Quarterly Report on Form 10-Q and “Item 1A. Risk ~~factors~~Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023.

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

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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, 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 (Unaudited)

(In thousands, except share and per share amounts)

(Unaudited)


	March 31, 2024		December 31, 2023
ASSETS
Loans held for sale, at fair value	$	2,746	$	4,456
Loans held for investment, at fair value	4,548		5,633







Cash and cash equivalents	6,653		8,713



Other assets	6,441		6,737
Total assets	$	20,388	$	25,539

LIABILITIES AND EQUITY
Liabilities


Accrued expenses and other liabilities	$	5,040	$	6,270

Lease liabilities	839		900

Notes payable	11,251		—
Total liabilities	$	17,130	$	7,170

Commitment and contingencies (Note 4)	—		—

Redeemable preferred stock:
Preferred stock, $0.01 par value, 250,000 shares authorized as of March 31, 2024 and December 31, 2023. No shares were issued and outstanding as of March 31, 2024. 144,212 shares were issued and outstanding and had a $144,212 redemption value as of December 31, 2023.	—		144,212

Stockholders' equity (deficit):
Common stock, $0.01 par value, 5,000,000 authorized shares; 4,684,485 and 2,554,512 shares issued and outstanding, respectively, as of March 31, 2024 and December 31, 2023, respectively.	46		46
Additional paid-in capital	281,372		149,160
Retained earnings	5,860		8,970
Accumulated other comprehensive income	13		14
Treasury stock, at cost, 2,129,973 shares as of March 31, 2024 and December 31, 2023.	(284,033)		(284,033)
Total stockholders' equity (deficit)	3,258		(125,843)
Total liabilities and equity (deficit)	$	20,388	$	25,539

	September 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Loans held for sale, at fair value	$	5,422	$	11,593
Loans held for investment, at fair value	28,097		83,143
Cash and cash equivalents	7,883		10,727
Restricted cash	—		2,047
Other assets	8,599		10,137
Total assets	$	50,001	$	117,647
LIABILITIES AND EQUITY
Liabilities
Accrued expenses and other liabilities	$	7,415	$	10,349
Lease liabilities	1,031		1,323
Credit facilities	9,554		51,653
Total liabilities	18,000		63,325
Commitments and contingencies (Note 5)
Redeemable preferred stock:
Preferred stock, $0.01 par value, 250,000 shares authorized as of September 30, 2023 and December 31, 2022. 144,212 shares issued and outstanding and $144,212 redemption value as of September 30, 2023 and December 31, 2022, respectively.	144,212		144,212
Stockholders' deficit:
Common stock, $0.01 par value, 5,000,000 authorized shares; 4,664,235 and 2,919,083 shares issued and outstanding, respectively, as of September 30, 2023 and 3,432,294 and 1,783,862 shares issued and outstanding, respectively, as of December 31, 2022.	46		34
Additional paid-in capital	149,160		149,010
Retained earnings	21,244		41,516
Accumulated other comprehensive income	14		20
Treasury stock, at cost, 1,745,152 shares as of September 30, 2023 and 1,648,432 shares as of December 31, 2022.	(282,675)		(280,470)
Total stockholder's deficit	(112,211)		(89,890)
Total liabilities and equity	$	50,001	$	117,647

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except share and per share amounts)

(Unaudited)


	Three months ended March 31,
		2024		2023
Revenues:
Loan interest income		$	228	$	2,036
Loan fee income		6		85

Realized gains on loans held for sale, net		—		10
Total revenues		234		2,131

Expenses:
Salaries and employee benefits		224		1,864
Legal fees		51		441
Professional fees		366		480
General and administrative		341		934
Servicing and asset management expense		85		183

Interest expense		251		1,082
Direct loan expense		7		263
Loan sales and marketing expense		—		409


Electric vehicle intellectual property development		1,926		—
Total expenses		3,251		5,656

Other income (expense)
Change in fair value of loans		(69)		849
Realized losses on loans held for investment, net		—		(275)



Other		(38)		(2)
Total other (expense) income		(107)		572

Net loss before income tax		(3,124)		(2,953)
Income tax (benefit) expense		(14)		35
Net loss		$	(3,110)	$	(2,988)






Earnings per share
Net loss		(3,110)		(2,988)

Gain of preferred stock transaction		132,212		—
Numerator for earnings per share		$	129,102	$	(2,988)

Income (loss) per share of common stock - Basic:
Income (loss) per basic common share		$	50.54	$	(0.99)

Weighted average common stock outstanding		2,554,512		3,021,128

Income (loss) per share of common stock - Diluted:
Income (loss) per diluted common share		$	49.98	$	(0.99)

Weighted average common stock outstanding		2,583,029		3,021,128

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Revenues:
Loan interest income	$	1,135	$	1,739	$	4,781	$	2,263
Loan fee income	80		166		465		175
Servicing fee revenue	—		1		—		1
Realized losses on loans held for sale, net	(2,162)		—		(2,142)		—
Total revenues	(947)		1,906		3,104		2,439
Expenses:
Salaries and employee benefits	847		1,563		4,620		4,042
Legal fees	553		796		1,930		3,532
Professional fees	542		262		1,630		837
General and administrative	887		779		2,805		2,336
Servicing and asset management expense	163		252		574		433
Acquisition charges	—		—		—		513
Interest expense	768		435		2,722		435
Direct loan expense	170		99		622		99
Loan sales and marketing expense	1,934		5		2,725		5
Impairment of operating lease right-of-use assets	72		—		72		—
Total expenses	5,936		4,191		17,700		12,232
Other income (expense):
Change in fair value of loans	541		(1,563)		1,780		(1,888)
Realized losses on sale of held for investment loans, net	(7,108)		—		(7,383)		—
Other	8		8		6		24
Total other expense	(6,559)		(1,555)		(5,597)		(1,864)
Net loss before tax	(13,442)		(3,840)		(20,193)		(11,657)
Income tax expense	28		146		79		158
Net loss	$	(13,470)	$	(3,986)	$	(20,272)	$	(11,815)
Gain of preferred stock transaction	—		—		—		5,122
Numerator for earnings per share	$	(13,470)	$	(3,986)	$	(20,272)	$	(6,693)
Loss per share of common stock - Basic:
Loss per basic common share	$	(4.52)	$	(1.32)	$	(6.76)	$	(2.00)
Weighted average common stock outstanding	2,977,049		3,020,916		2,999,524		3,339,137
Loss per share of common stock - Diluted:
Loss per diluted common share	$	(4.52)	$	(1.32)	$	(6.76)	$	(2.00)
Weighted average common stock outstanding	2,977,049		3,020,916		2,999,524		3,339,137

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Comprehensive ~~Income~~Loss (~~Loss~~Unaudited)

(In thousands)

(Unaudited)


	Three months ended March 31,
		2024		2023
Net loss		$	(3,110)	$	(2,988)
Other comprehensive (loss) income:
Currency translation adjustments, net		(1)		—



Total other comprehensive (loss) income		(1)		—

Comprehensive loss		$	(3,111)	$	(2,988)

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net loss	$	(13,470)	$	(3,986)	$	(20,272)	$	(11,815)
Other comprehensive loss:
Currency translation adjustments, net	(7)		(10)		(6)		(29)
Total other comprehensive loss	(7)		(10)		(6)		(29)
Comprehensive loss	$	(13,477)	$	(3,996)	$	(20,278)	$	(11,844)

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)

(In thousands, except share amounts)

(Unaudited)


		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders' Equity (Deficit)
	Preferred Stock	Number of Shares	Amount
December 31, 2023	144,212	4,684,485	$	46	$	149,160	$	8,970	$	14	$	(284,033)	$	(125,843)







Currency translation adjustments, net	—	—	—		—		—		(1)		—		(1)


Preferred stock conversion	(144,212)	—	—		132,212		—		—		—		132,212





Net loss	—	—	—		—		(3,110)		—		—		(3,110)
March 31, 2024	—	4,684,485	$	46	$	281,372	$	5,860	$	13	$	(284,033)	$	3,258

		~~Common Stock~~	Common Stock					~~Additional Paid-in Capital~~		Additional Paid-in Capital		~~Retained Earnings~~		Retained Earnings		~~Accumulated Other Comprehensive Income~~		Accumulated Other Comprehensive Income (Loss)		~~Treasury Stock~~		Treasury Stock		~~Total Stockholders' Deficit~~		Total Stockholders' Deficit
		Number of Shares		Amount
	Preferred Stock		Number of Shares			Amount
December 31, 2022	144,212	~~3,432,294~~	3,432,294	$	34	$	34	$	~~149,010~~	$	149,010	$	~~41,516~~	$	41,516	$	20	$	20	$	~~(280,470)~~	$	(280,470)	$	~~(89,890)~~	$	(89,890)
Adjustment for stock dividend	—	~~1,220,774~~	1,230,893	12		12		~~(12)~~		(12)		—		—		—		—		—		—		—		—
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	—	~~2,000~~	2,000	—		—		—		—		—		—		—		—		—		—		—		—
Treasury shares repurchased	—	—	—	—		—		—		—		—		—		—		—		~~(1,504)~~		(1,504)		~~(1,504)~~		(1,504)
Share-based compensation, net of tax	—	—	—	—		—		~~160~~		160		—		—		—		—		—		—		~~160~~		160
Net loss	—	—	—	—		—		—		—		~~(2,988)~~		(2,988)		—		—		—		—		~~(2,988)~~		(2,988)
March 31, 2023	144,212	~~4,655,068~~	4,665,187	46		$	46	~~149,158~~		$	149,158	~~38,528~~		$	38,528	20		$	20	~~(281,974)~~		$	(281,974)	~~(94,222)~~		$	(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		4,664,235		$	46			$	149,252			$	34,714			$	21			$	(282,209)			$	(98,176)
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes		—		—				—				—				—				235				235
Treasury shares repurchased		—		—				—				—				—				(701)				(701)
Share-based compensation, net of tax		—		—				(92)				—				—				—				(92)
Currency translation adjustments, net		—		—				—				—				(7)				—				(7)
Net loss		—		—				—				(13,470)				—				—				(13,470)
September 30, 2023		4,664,235		$	46			$	149,160			$	21,244			$	14			$	(282,675)			$	(112,211)

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)
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	1,000	—		—		—		—		—		—
Treasury shares repurchased	—	—		—		—		—		(2,869)		(2,869)
Share-based compensation, net of tax	—	—		79		—		—		—		79
Currency translation adjustments, net	—	—		—		—		(10)		—		(10)
Net loss	—	—		—		(3,986)		—		—		(3,986)
September 30, 2022	3,425,058	$	34	$	148,900	$	45,635	$	25	$	(280,458)	$	(85,864)

Altisource Asset Management Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Three months ended March 31,
	2024		2023
Operating activities:
Net loss	$	(3,110)	$	(2,988)
Adjustments to reconcile net loss to net cash used in operating activities






Depreciation and amortization	15		64
Share-based compensation	—		160

Amortization of operating lease right-of-use assets	61		94



Change in fair value of loans	69		(849)
Net realized loss on sale of loans held for investment	—		265



Loss on discarded assets	74		—


Interest on note payable	251		—
Amortization of deferred financing fees	—		31
Changes in operating assets and liabilities:
Originations of held for sale loans	—		(1,817)
Additional fundings of held for sale loans	(834)		(1,202)
Proceeds from sales of held for sale loans	—		1,087
Principal payments on held for sale loans	2,533		116
Interest receivable	36		340



Prepaid expenses and other assets	143		—




Accounts payable and other accrued liabilities	(1,227)		—

Other liabilities and operating lease liabilities	(62)		—


Other assets and liabilities	—		(2,245)
Net cash used in operating activities	(2,051)		(6,944)
Investing activities:



Additional fundings of loans held for investment	(27)		(2,612)
Proceeds from sales of loans held for investment	—		5,235
Principal payments on loans held for investment	1,018		15,382








Investment in property and equipment	—		(31)


Net cash provided by investing activities	991		17,974
Financing activities
Conversion of preferred stock	(1,000)		—

Proceeds from borrowed funds	—		23,370
Repayment of borrowed funds	—		(31,789)






Repurchase of common stock	—		(1,504)









Net cash used in financing activities	(1,000)		(9,923)
Net (decrease) increase in cash and cash equivalents	(2,060)		1,107
Effect of exchange rate changes on cash and cash equivalents	—		4
Consolidated cash, cash equivalents, and restricted cash, beginning of period	8,713		12,774
Consolidated cash, cash equivalents, and restricted cash, end of period	$	6,653	$	13,885

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited) (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 March 31, 2024 and 2023:

			Nine months ended September 30,
	March 31,
			2023				2022
	2024				2023
Operating activities:
Cash and cash equivalents	$	6,653			$	11,836
Net loss			$	(20,272)			$	(11,815)
Restricted cash	—				2,049
Adjustments to reconcile net loss to net cash used in operating activities
Total cash, cash equivalents, and restricted cash	$	6,653			$	13,885
Depreciation and amortization			197				181
Share-based compensation			162				230
Amortization of operating lease right-of-use assets			373				165
Change in fair value of loans			(1,780)				1,888
Net realized loss on sale of loans held for investment			7,383				—
Net realized loss on sale of held for sale loans			2,142				—
Impairment of operating lease right-of-use asset			72				—
Changes in operating assets and liabilities:
Originations of held for sale loans			(12,358)				(6,862)
Additional fundings of held for sale loans			(4,563)				(401)
Proceeds from sales of held for sale loans			20,558				—
Principal payments on held for sale loans			617				—
Interest receivable			838				—
Amortization of deferred financing fees			73				—
Other assets and liabilities			(1,713)				(3,836)
Net cash used in operating activities			(8,271)				(20,450)
Investing activities:
Purchase of loans held for investment			—				(98,350)
Additional fundings of loans held for investment			(6,232)				(7,185)
Proceeds from sales of loans held for investment			18,373				—
Principal payments on loans held for investment			36,239				13,238
Investment in property and equipment			(695)				—
Net cash provided by (used in) investing activities			47,685				(92,297)
Financing activities:
Conversion of preferred stock			—				(1,893)
Proceeds from borrowed funds			54,005				54,733
Repayment of borrowed funds			(96,104)				(2,266)
Deferred financing fees			—				(104)
Proceeds and payment of tax withholding stock options exercised, net			—				25
Payment of tax withholdings on exercise of stock options			(234)				—
Repurchase of common stock			(1,970)				(2,869)
Net cash (used in) provided by financing activities			(44,303)				47,626
Net change in cash and cash equivalents			(4,889)				(65,121)
Effect of exchange rate changes on cash and cash equivalents			(2)				(33)
Consolidated cash, cash equivalents and restricted cash, beginning of period			12,774				78,349
Consolidated cash, cash equivalents and restricted cash, end of period			$	7,883			$	13,195


	Three months ended March 31,
	2024		2023
Supplemental disclosure of cash information:
Cash paid for interest	$	—	$	900
Cash paid for income taxes	—		48

See accompanying notes to condensed consolidated financial statements.

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Altisource Asset Management Corporation

Notes to Condensed Consolidated Financial Statements ~~of Cash Flows~~ (~~Continued~~Unaudited)

~~(In~~March 31, ~~thousands)~~2024

~~(Unaudited)~~1. Organization and Basis of Presentation

~~The~~Altisource ~~following~~Asset ~~table~~Management ~~provides~~Corporation a(“we,” ~~reconciliation~~“our,” of“us,” ~~cash~~“AAMC,” ~~cash~~or ~~equivalents~~the “Company”) was incorporated in the United States Virgin Islands (“USVI”) on March 15, 2012 (our "inception"), and ~~restricted~~we ~~cash~~commenced ~~reported~~operations ~~within~~as ~~the~~an ~~Condensed~~asset ~~Consolidated~~manager ~~Balance~~on ~~Sheets:~~December 21, 2012.

	As of:
	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	7,883	$	10,727
Restricted cash	—		2,047
Total cash, cash equivalents, and restricted cash	$	7,883	$	12,774

During 2022 and 2023, the Company generated alternative private credit loans through Direct to Borrower Lending, Wholesale Originations and Correspondent Loan Acquisitions and funded the originated or acquired alternative loans from a combination of Company equity and lines of credit through its alternative lending group (“ALG”) business line. Those loans were then sold through forward commitments and repurchase contracts.

	Nine months ended September 30,
	2023		2022
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,238	$	12
Income taxes paid	92		3,794
Right-of-use lease assets recognized - operating leases	—		277
Operating lease liabilities recognized	—		277

Following a full year of ALG’s operations, our Board of Directors mandated a comprehensive review of the Company’s mortgage platform to improve the performance of the business. The review involved assessments of operational efficiency and capacity issues, opportunities for cost reductions, strategies for improving liquidity, among other initiatives, all with a view toward enhancing financial performance. While the Company will retain the ability to originate and purchase loans in the future, it does not anticipate doing so other than on a very selective basis.

~~See~~On ~~accompanying~~October ~~notes~~6, 2023, the Company signed a non-exclusive patent and technology licensing agreement (“the PTL Agreement”) with System73 Limited (“System 73”), an entity controlled and managed by the 53.6% owners of the Company’s common stock. Under the PTL Agreement, the Company obtained a non-exclusive license for a set of patents for a control system which seeks to ~~condensed~~optimize ~~consolidated~~the ~~financial~~efficiency ~~statements~~of electric vehicles (“EVs”). The Company’s investment in the EV business will be its principal line of business on a go-forward basis.

As consideration for the patent rights granted in the PTL Agreement, the Company has agreed to pay 6.2 million pounds sterling (approximately $8.0 million) in budgeted increments as they are incurred by System73 under a commercialization contract executed with Seabird Technologies Limited (“Seabird”), plus any future third-party expenses reasonably incurred in connection with the filing, prosecution and maintenance of the patents. Under the commercialization contract, Seabird has been engaged by System 73 to build a technology demonstrator to validate the functionality of an integrated drive unit using the technology and to develop a commercialization strategy for the technology, including the development of a sales pipeline, over an 18-month period commencing on January 1, 2024. Through March 31, 2024, AAMC has made payments of approximately $1.9 million in the aggregate toward these contractual obligations.

Under the terms of the commercialization contract, Seabird will be the exclusive distributor of the control system for two years following development and will earn 10% of revenue from sales directly attributable to their efforts up to $250 million per annum; 20% of revenue from sales directly attributable to their efforts over $250 million per annum; and 10% ownership in System 73 (or any potential future owner of the control system at that time) when revenue attributable to their efforts exceeds $500 million per annum.

In addition, the PTL Agreement contemplates certain equity incentives for System73 based on performance. The PTL Agreement sets out “AAMC Common Stock Milestones”, defined as each instance where the average closing price of the Company’s common stock for the preceding twenty (20) day period reaches an amount equal to or in excess of a multiple of $100 (i.e., $100, $200, $300, etc.). Upon the occurrence of each such AAMC Common Stock Milestone, System 73 would be awarded the number of shares of AAMC Common Stock equal to ten percent (10%) of the AAMC fully diluted Shares. Consistent with New York Stock Exchange rules, any equity award under the PTL Agreement will be subject to stockholder approval.

AAMC, at its option, may terminate the PTL Agreement by providing System73 written notice of intent to terminate at any time and for any reason. Upon termination, in addition to all other obligations under the PTL Agreement, System73 shall promptly pay to AAMC an amount equal to the value of all payments made by AAMC pursuant to the agreement, plus a twenty percent (20%) annualized return on investment on such payments.

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Altisource Asset Management Corporation

Notes to Condensed Consolidated Financial Statements

September 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~~(all ~~are~~ of awhich are normal and recurring in nature) ~~and~~considered ~~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~~2023.

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

WeThrough ~~originate~~our ALG business line we previously originated and ~~purchase~~purchased alternative loans. These loans ~~will~~are 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 is generally illiquid. Establishing fair values for illiquid assets is inherently subjective and is often dependent upon our estimates and modeling assumptions. In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value. This generally requires us to establish internal assumptions about future cash flows and appropriate risk-adjusted discount rates. Regardless of the valuation inputs we apply, the objective of fair value measurement for assets is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price. When the Company sells a loan, a gain or loss will be recognized at the time of the sale in net income for the difference between the fair value and the book value. The fair value is measured as the agreed upon selling price from the contractual agreement with the buyer.

See Note 2 - Loans Held for Sale or Investment at Fair Value 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.

(table of contents)

~~invest~~We inevaluate istransfers ~~generally~~of ~~illiquid.~~loans ~~Establishing~~held ~~fair~~for ~~values~~sale ~~for~~or ~~illiquid~~investment ~~assets~~at isfair ~~inherently~~value ~~subjective~~under ~~and~~the isguidance ~~often~~in ~~dependent~~Financial ~~upon~~Accounting ~~our~~Standards ~~estimates~~Board ~~and~~Accounting ~~modeling~~Standards ~~assumptions.~~Codification In("ASC") ~~circumstances~~Topic ~~where~~No. ~~relevant~~860, "Transfers ~~market~~and ~~inputs~~servicing ~~cannot~~of befinancial ~~obtained,~~assets" ~~increased~~("ASC ~~analysis~~860"), and ~~management~~account ~~judgment~~for ~~are~~such ~~required~~transfers toas ~~estimate~~sales ~~fair~~when ~~value.~~three ~~This~~conditions ~~generally~~in ~~requires~~ASC us810-10-45-5 tohave ~~establish~~been ~~internal~~met. That ~~assumptions~~is, ~~about~~we ~~future~~account ~~cash~~for ~~flows~~transfers ~~and~~of ~~appropriate~~such ~~risk-adjusted~~financial ~~discount~~assets ~~rates.~~as ~~Regardless~~sales ofwhen the ~~valuation~~assets ~~inputs~~have webeen ~~apply,~~isolated from the ~~objective~~Company, ofwhen ~~fair~~the ~~value~~transferee ~~measurement~~has ~~for~~the ~~assets~~right isto ~~unchanged~~pledge ~~from~~or ~~what~~exchanges the assets it ~~would~~receives beand ifthere ~~markets~~are ~~were~~no ~~operating~~restrictions aton ~~normal~~the ~~activity~~transferee ~~levels~~that constrain such right, and~~/or~~ ~~transactions~~when ~~were~~the ~~orderly;~~Company ~~that~~has ~~is,~~no toeffective ~~determine~~control over the ~~current~~transferred ~~exit~~financial ~~price~~assets. There ~~When~~were no transfers of financial assets during the ~~Company~~three ~~sells~~months aended ~~loan~~March 31, a2024. The ~~gain~~Company orrealized ~~loss~~an ~~will~~aggregate begain ~~recognized~~totaling at$0.01 million ~~the~~and ~~time~~an aggregate loss of $0.28 million for the three months ended March 31, 2023 on loans held for sale and loans held for investment, respectively, which is included in realized gains on loans held for sale, net ~~income~~and realized losses on loans held for ~~the~~investment, ~~difference~~net, ~~between~~respectively, in the ~~fair~~accompanying ~~value~~Condensed ~~and~~Consolidated ~~the~~Statement ~~book~~of ~~value~~Operations. ~~The~~Each ~~fair~~of ~~value~~the isloans ~~measured~~transferred during the three months ended March 31, 2023 qualified for sale accounting under ASC 860, as each of the ~~agreed~~loans ~~upon~~was ~~selling~~transferred ~~price~~to ~~from~~a third-party "as is" in exchange for cash, and the ~~contractual~~Company ~~agreement~~has no continuing involvement with the ~~buyer~~transferred financial assets or the transferees.

~~See~~Redeemable ~~Note~~preferred ~~2 for further discussion on fair value measurements.~~stock

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~~had the option to redeem all ~~Series A Shares from holders anytime between 15 and 30 days prior to a “Redemption Date.” Any such redemption, according to the Certificate, shall be “out~~ of ~~funds legally available therefor” and for “all, but not less than all,” of~~ the ~~outstanding~~ Series A ~~Preferred~~ Shares ~~held~~on ~~by such holder. The Certificate defines “Redemption Date” as “~~March 15, 2020 and on each successive five-year anniversary of March 15, 2020 thereafter.” ~~The~~In ~~Certificate~~connection ~~likewise provides that,~~ with ~~reference~~these tosame ~~these~~redemption dates, each holder of our Series A Shares ~~has~~had the right to ~~request~~give ~~that~~notice ~~the~~requesting ~~Company~~us to redeem “all, ~~but not less than all,”~~ of the Series A Shares held by such holder ~~payable~~ out of ~~“funds~~ legally available ~~therefor~~funds.” ~~The~~Under ~~Series A Shares are also redeemable on~~ the ~~“Mandatory~~terms ~~Redemption~~of ~~Date,” defined in~~ the Certificate ~~as “March 15~~, ~~2044”,~~the ~~provided~~Company ~~that~~would ~~any~~have ~~such~~been ~~redemption~~required beto ~~“out~~redeem ofif ~~funds~~it had legally available” ~~and~~funds ~~for~~to “redeem all, but not less than all,” of the Series A ~~Preferred~~ Shares ~~held~~requested by ~~all~~a ~~holders~~holder to be redeemed on a redemption date. ~~Under~~The ~~the~~redemption ~~Certificate,~~right ~~the~~would ~~cash~~have ~~price~~been ~~per~~exercisable ~~share~~in ofconnection ~~any~~with ~~required~~each redemption isdate ~~$1,000~~every five years until the mandatory redemption date in 2044.

The ~~holders of our~~ Series A Shares ~~are~~were not entitled to receive dividends ~~with respect to their Series A Shares~~. The Series A Shares ~~are~~were 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. For a further description of other terms and conditions in respect of the Series A Shares, please refer to Note 1 - Organization and Basis of Presentation to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and the Certificate of Designations for the Series A Convertible Preferred Stock referenced as Exhibit 3.3 in this Quarterly Report.

~~Upon~~Between ~~certain~~January ~~change~~31, in2020 ~~control~~and ~~transactions~~February or3, in2020, we received purported notices from all of the ~~event~~holders of aour ~~liquidation,~~Series ~~dissolution~~A orShares ~~winding~~requesting upus to redeem an aggregate of ~~the~~$250.0 million ~~Company,~~liquidation ~~whether~~preference ~~voluntary~~of orour ~~involuntary~~Series A Shares on March 15, ~~before~~2020. We ~~any~~did ~~payment~~not orhave ~~distribution~~legally isavailable ~~made~~funds to ~~holders~~redeem ofall, ~~junior~~but ~~shares,~~not ~~the~~less ~~holders~~than all, of the Series A Shares ~~will~~on beMarch ~~entitled~~15, to2020. As ~~receive~~a anresult, ~~amount~~we indid ~~cash~~not ~~per~~believe, ~~Series~~under Athe ~~Share~~terms ~~equal~~of the Certificate, that we were obligated to ~~the~~redeem ~~greater~~any of: the Series A Shares under the Certificate.

~~i.$1,000~~Related ~~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~~litigation

~~ii.The~~–Luxor ~~number~~(plaintiff) ofv. ~~shares~~AAMC ~~of common stock into which the Series A Shares are then convertible multiplied by the then current market price of the common stock.~~(defendant)

~~Because~~On ~~not~~February ~~all~~3, of2020, ~~these~~a ~~potential~~complaint ~~transactions~~was ~~are~~filed ~~wholly~~in ~~within~~New ~~the~~York ~~control~~state ofcourt ~~the~~by ~~Company,~~Luxor ~~the~~Capital ~~Series~~Group ALP ~~Shares~~and ~~are~~various ~~classified~~related asentities ~~mezzanine~~collectively ~~equity.~~“Luxor”), ~~The~~each ~~Certificate~~a ~~confers~~holder noof ~~voting~~AAMC ~~rights~~Series toA ~~holders~~Shares, ~~except~~against ~~with~~AAMC ~~respect~~claiming tobreach ~~matters~~of ~~that~~contract, ~~materially~~specific performance, unjust enrichment, and ~~adversely~~related ~~affect~~damages ~~the~~and ~~voting~~expenses. Luxor ~~powers,~~sought ~~rights~~an ororder ~~preferences~~requiring ofAAMC ~~the~~to redeem its Series A Shares, ordamages of up to $150,000,000, as ~~otherwise~~well ~~required~~as bypayment ~~applicable~~of ~~law~~its costs and expenses in the lawsuit.

~~With~~On ~~respect~~December ~~to the distribution of assets upon the liquidation~~1, ~~dissolution or winding up of the Company~~2022, ~~the~~following ~~Series~~extensive Abriefing ~~Shares rank senior to our common stock~~ and onoral ~~parity~~arguments ~~with~~by ~~all~~each ~~other~~side, ~~classes~~the oftrial ~~preferred~~court ~~stock~~denied ~~that~~the ~~may~~parties’ berespective ~~issued~~summary byjudgment ~~us in the future~~motions.

~~The~~On ~~Series~~June A13, ~~Shares~~2023, ~~are~~the ~~recorded~~Appellate ~~net~~Division - First Department issued a unanimous decision in favor of ~~issuance~~AAMC ~~costs~~and directed the trial court to enter judgment dismissing Luxor’s complaint. On July 19, ~~which~~2023, ~~were~~Luxor ~~amortized~~filed ona request for a ~~straight-line~~further ~~basis~~appeal ~~through~~to the ~~first~~New ~~potential~~York ~~redemption~~Court ~~date~~of inAppeals, ~~March~~and ~~2020.~~AAMC filed an opposition thereto on August 7, 2023.

As noted below, pursuant to a settlement agreement entered into by the parties dated January 11, 2024, this litigation has been terminated and dismissed with prejudice. See “Settlement activities”.

(table of contents)

Current Litigation

–Luxor (plaintiff) v. AAMC (defendant)

On February 3, 2020, Luxor filed a complaint in the Supreme Court of the State of New York, County of New York, against AAMC for breach of contract, specific performance, unjust enrichment, and related damages and expenses. The complaint alleged that AAMC’s position that it will not redeem any of Luxor’s Series A Shares on the March 15, 2020 redemption date was a material breach of AAMC’s redemption obligations under the Certificate. Luxor sought an order requiring AAMC to redeem its Series A Shares, recovery of $144,212,000 in damages or, in the alternative, return of its initial purchase price of $150,000,000 for the Series A Shares, plus costs and expenses of the lawsuit.

On May 25, 2020, Luxor’s complaint was amended to add Putnam Equity Spectrum Fund and Putnam Capital Spectrum Fund (collectively, “Putnam”), which also invested in the Series A Shares, as plaintiff. On February 23, 2021, in accordance with the terms of the Putnam Agreement described below, Putnam agreed to discontinue all claims against AAMC with prejudice related to the Series A shares.

On December 1, 2022, the trial court denied summary judgment motions filed by Luxor and AAMC.

AAMC and Luxor each appealed the trial court’s ruling to the Appellate Division - First Department, of the Supreme Court of the State of New York. On June 13, 2023, the appellate court issued its decision, unanimously finding in favor of AAMC that it did not breach any contractual obligation to redeem Luxor’s Series A Shares and directing the Clerk of the Court to enter judgment dismissing Luxor’s complaint.

On July 19, 2023, Luxor filed a motion for leave to appeal in the Court of Appeals of the State of New York, and AAMC filed an opposition thereto on August 7, 2023.

If Luxor were to be granted leave to continue its appeal to the Court of Appeals, and if the results of such an appeal were adverse to AAMC, our liquidity could be materially and adversely affected.

–AAMC (plaintiff) v. Nathaniel Redleaf (defendant)

On October 31, 2022, AAMC filed asuit ~~complaint with demand for jury trial~~ in the Superior Court of the Virgin Islands, ~~Division~~(subsequently ofremoved ~~St.~~to ~~Croix~~federal court), against ~~Nathaniel~~former ~~Redleaf~~Company ~~and~~director asNathaniel ~~yet~~Redleaf ~~unnamed John Doe defendants,~~ alleging ~~breach~~disclosure of ~~fiduciary~~confidential ~~duty~~information to ~~AAMC. Defendant~~Luxor ~~Redleaf~~in ~~was~~breach ~~a member~~ of ~~AAMC’s Board of Directors for five years, and~~ the ~~Company’s complaint alleges that he breached his~~ fiduciary duty, byhe ~~among~~owed ~~other things, disclosing AAMC’s confidential information~~ to ~~Luxor and potentially other third parties~~AAMC. AAMC ~~seeks~~sought a number of remedies, including compensatory damages and ~~punitive damages and~~ disgorgement of any benefit received by Luxor or ~~defendant~~Mr. Redleaf as a result of such alleged breaches.

OnAs ~~January~~noted 4below, ~~2023,~~all ~~the~~litigation ~~case~~with ~~was~~Mr. ~~removed~~Redleaf toand ~~the~~Luxor ~~United~~has ~~States~~been ~~District~~resolved ~~Court~~and ofdismissed ~~the~~with ~~Virgin~~prejudice. See ~~Islands,~~“Settlement ~~Division of St~~activities”. ~~Croix.~~

OnSettlement ~~February~~activities 28, 2023, defendant Redleaf filed a motion to dismiss the complaint. On May 15, 2023, the Court issued an order staying proceedings in this matter through November 16, 2023 pending a decision on defendant’s motion to dismiss. The Company intends to vigorously pursue its rights and remedies in the prosecution of this action.

~~Settlement~~From ~~Activities~~February In2021 ~~Respect~~through July 2022, the Company entered into a series of settlement agreements with various institutional holders of the Series A ~~Preferred~~ Shares resulting in the redemption and cancellation thereof. For information concerning the terms and conditions of these settlements, see Note 1 - Organization and Basis of Presentation to the Consolidated Financial Statements included in our Annual Report on From 10-K for the year ended December 31, 2023.

On ~~February~~January 1711, ~~2021,~~2024 ~~the Company entered into a settlement agreement with Putnam~~ (the “~~Putnam~~Effective ~~Agreement~~Date”)~~. Pursuant to the Putnam Agreement: (i) AAMC and Putnam exchanged all of Putnam’s 81~~,~~800~~ ~~Series A Shares for 288,283 shares of~~ AAMC’s common stock, (ii) AAMC paid Putnam $1,636,000 within three business days of the effective date and $1,227,000 on the one-year anniversary thereof, (iii) Putnam released AAMC from all claims related to the Series A Shares, (iv) Putnam entered into a ~~voting~~settlement ~~rights~~ agreement aswith ~~more~~Luxor ~~fully described in the Putnam Agreement,~~ and ~~(v) AAMC granted to Putnam a most favored nations provision with respect to future settlements of the Series A Shares~~Mr. ~~As a result of this settlement~~Redleaf, wepursuant ~~recognized a one-time gain directly~~ to ~~Additional~~which ~~paid-in capital of $71.9 million in~~ the ~~first~~parties ~~quarter~~agreed ofas ~~2021.~~follows:

On•Luxor ~~August~~surrendered ~~27,~~all ~~2021~~144,212 ~~the~~shares ~~Company~~of ~~entered~~AAMC ~~into~~Series aA ~~settlement~~Convertible ~~agreement~~Preferred ~~(the~~Stock ~~“Wellington~~it ~~Agreement”)~~held ~~with~~to ~~certain~~AAMC. Luxor ~~funds~~and ~~managed~~AAMC byagreed ~~Wellington~~that ~~Management~~their ~~Company~~related ~~LLP~~Securities ~~(collectively,~~Purchase ~~“Wellington”). Under the Wellington~~ Agreement, ~~the~~dated ~~Company~~March ~~paid Wellington $2~~13,~~093,000~~ ~~in exchange for 18~~2014,~~200~~ ~~Series~~along Awith ~~Shares~~the ~~($18.2 million~~Certificate of ~~liquidation~~Designations ~~preference)~~dated ~~held~~March ~~by Wellington~~17, ~~and~~2014 inattached ~~return~~thereto, ~~Wellington~~are ~~agreed~~void toand ~~release AAMC from~~ all ~~claims~~rights ~~related~~thereunder toare ~~the Series A Shares~~extinguished. ~~As a result of this~~

•The Company shall provide the following consideration to Luxor

▪A $1,000,000 cash payment within five days of the Effective Date, plus

▪Three Promissory Notes in the following principal amounts and durations:


Year	Principal Amount (Notes Payable)
2024	$	—
2025	—
2026	—
2027	2,000,000
2028	—
Thereafter	9,000,000

•Each Note bears annual interest at either 7.5% on a cash basis or 10% paid-in-kind (“PIK”) basis, at the election of AAMC and the carrying amount of such notes approximates fair value as of March 31, 2024. The Company shall refrain from making common stock repurchases or issuing dividends at any time the PIK option is in effect and is subject to certain additional covenants enumerated in the Notes.

•The Company shall also pay Luxor 50% of any proceeds received in respect of its damage claims in the action brought by Erbey Holding Corporation pending in USVI Superior Court with case number SX-2018-CV-146, up to a cumulative payout cap to Luxor of $50,000,000.

•The parties agreed and stipulated to dismissal with prejudice of the following actions: (i) Luxor Capital Group LP, et. al v. Altisource Asset Management Corporation filed in the Supreme Court of the State of New York in the County of New York, with index number 650746/2020 (including Luxor’s withdrawal of its pending request for further appellate review by the New York Court of Appeals), and (ii) Altisource Asset Management Corporation v. Nathaniel Redleaf et. al pending in the United States District Court for the District of the Virgin Islands, with case number 1:23-cv-00002. The parties exchanged mutual releases of their respective claims relating to the aforesaid actions, SPA and Certificate, as applicable, and agreed that their settlement shall not constitute or be construed as an admission that any of the parties violated the law, breached any contract or committed any wrong whatsoever.

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settlement, we recognized a one-time gain directly to Additional paid-in capital of $16.1 million gain in the third quarter of 2021.

On January 6, 2022, the Company entered into a settlement agreement (the "Settlement Agreement") with two institutional investors. Under the Settlement Agreement, the Company paid the institutional investors approximately $665,000 in cash in exchange for 5,788 Series A shares ($5.79 million of liquidation preference) held by the institutional investors. As a result of this settlement, the Company recognized a one-time gain directly to Additional paid-in capital of approximately $5.1 million in the first quarter of 2022.

On July 18, 2022, the Company entered into an agreement (the "Purchase Agreement") with Putnam Equity Spectrum Fund and Putnam Capital Spectrum Fund (collectively, “Putnam”) in which the Company repurchased 286,873 shares of common stock of the Company owned by Putnam (the "Putnam Shares"). The aggregate purchase price of the Putnam Shares was $2,868,730, or $10 per share.

Pursuant to the Purchase Agreement, the Company and Putnam also agreed to terminate the most favored nation clause granted to Putnam in the Putnam Agreement. The Company and Putnam also agreed to terminate all of Putnam's shareholder voting obligations included in the Putnam Agreement.

Recently issued accounting standards

For a discussion of our recently issued accounting standards, please see “Note 1, “- Organization and Basis of Presentation - “Recently issued accounting standards” in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023.

Recent Rules and Accounting Pronouncements

In March 2024, the Securities and Exchange Commission (the “SEC”) adopted the final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board oversight and risk management activities, the material impacts of these risks on a registrants’ strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay in the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosure which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of these rules on its disclosures.

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 ~~September 30~~March 31, ~~2023~~2024 and December 31, ~~2022~~2023, is summarized in the table below ($ in thousands):

Held for Sale

Held for Investment

September 30, 2023

December 31, 2022

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

March 31, 2024

December 31, 2023

Total loan commitments

92,~~708~~855

157,~~080~~420

295,~~807~~217

986,~~157~~235

Less: construction holdbacks (1)

(~~4,335~~133)

(32,~~350~~988)

(~~1,478~~212)

(~~13,188~~214)

Total principal outstanding

52,~~373~~722

114,~~730~~432

285,~~329~~005

846,~~969~~021

Change in fair value of loans

4924

~~(137)~~24

(~~232~~457)

(~~1,826~~388)

Total loans at fair value

52,~~422~~746

114,~~593~~456

284,~~097~~548

835,~~143~~633

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

The loan portfolio consists of 10 loans at March 31, 2024, with a weighted average coupon of 10.1%, of which the Company receives a net yield of 9.9% after taking into account the strip interest to the sellers of the loans. The weighted average life of the portfolio is approximately 0.4 years past maturity. Two loans represent 75% of the total principal outstanding at March 31, 2024. There were six loans on nonaccrual status or 90 days or more past due at March 31, 2024, with a fair value of $5.2 million. These loans have an unpaid principal balance of $7.7 million at March 31, 2024.

As of March 31, 2024, we have commenced formal foreclosure proceedings on six loans with an aggregate fair value of $4.6 million in order to force the sale of the real estate that serves as collateral for such loans. We expect that the sale of the collateral will allow us to recover the full repayment of the outstanding loans and accrued interest as of March 31, 2024.

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, 2023	$	4,456	$	5,633



Additional fundings	834		27
Interest receivable	(11)		(25)
Payoffs and repayments	(2,533)		(1,018)
Fair value adjustment	—		(69)
Balance at March 31, 2024	$	2,746	$	4,548

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The ~~loan~~composition ~~portfolio consists~~ of 44the ~~loans~~total atloan ~~September~~commitment ~~30,~~by ~~2023,~~state ~~with~~as ~~a weighted average coupon~~ of ~~9.7%~~March 31, of2024 ~~which the Company receives a net yield of 9.1% after taking into account the strip interest to the sellers of the loans. The weighted average life of the portfolio~~ is ~~approximately~~summarized ~~seven~~below ~~months.~~($ ~~Eight~~in loans represent 66% of the total principal outstanding at September 30, 2023. There were eight loans on nonaccrual status or 90 days or more past due at September 30, 2023 with a carrying value of $4.2 million.thousands):

				Loans Held for Sale				Loans Held for Investment
State		Commitment				Percent of Portfolio
Balance at	December 31, 2022			$	11,593			$	83,143
Washington		$	3,470			43.0	%
Originations				12,358				—
Florida		3,279				40.6	%
Proceeds from sales of loans (1)				(22,700)				(25,756)
Arkansas		553				6.9	%
Additional fundings				4,563				6,232
Texas		350				4.3	%
Change in interest receivable				38				(876)
Michigan		230				2.8	%
Payoffs and repayments				(617)				(36,239)
Pennsylvania		176				2.2	%
Fair value adjustment				187				1,593
Other		14				0.2	%
Balance at	September 30, 2023			$	5,422			$	28,097
Total		$	8,072			100.0	%

~~(1)~~For ~~Includes~~financial ~~net~~reporting ~~realized~~purposes ~~loss~~of onour ~~sale~~alternative loans, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of ~~loans~~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.

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

State	Commitment		Percent of Portfolio
Florida	$	14,287	36.2	%
California	10,701		27.1	%
New Jersey	4,255		10.8	%
Washington	3,470		8.8	%
Connecticut	2,917		7.4	%
Kentucky	811		2.1	%
Arkansas	553		1.4	%
Arizona	400		1.0	%
Other	2,121		5.2	%
Total	$	39,515	100	%

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 March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023.


Assets	Carrying		Fair Value Measurements Using
(In thousands)	Value		Level 1		Level 2		Level 3
March 31, 2024
Loans held for sale	$	2,746	$	—	$	—	$	2,746
Loans held for investment	4,548		—		—		4,548
Total measured	$	7,294	$	—	$	—	$	7,294

December 31, 2023
Loans held for sale	$	4,456	$	—	$	—	$	4,456
Loans held for investment	5,633		—		—		5,633
Total measured	$	10,089	$	—	$	—	$	10,089

The estimated fair value for our business purpose loans is determined using the 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 the overall yield on the portfolio of 9.9%, resulting in the decrease in value of the portfolio at March 31, 2024. 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). For nonaccrual loans, the discount applied to the value of the collateral was based on available market information on REO sales transaction as of the valuation date (Level 3).

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The following table presents the assets that are reported at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, as well as the fair value of hierarchy of the valuation inputs used to measure fair value. We did not ~~have~~transfer any ~~liabilities~~assets tofrom ~~report~~one atlevel ~~fair~~to ~~value~~another onlevel aduring ~~recurring~~the ~~basis~~three asmonths ofended ~~September 30, 2023 and December~~March 31, ~~2022.~~2024 or 2023.

Assets	Carrying		Fair Value Measurements Using
(In thousands)	Value		Level 1		Level 2		Level 3
September 30, 2023
Loans held for sale	$	5,422	$	—	$	—	$	5,422
Loans held for investment	28,097		—		—		28,097
Total measured	$	33,519	$	—	$	—	$	33,519
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 evaluate the change in fair value attributable to instrument-specific credit risk as the excess of the total change in fair value over the change in fair value attributable to changes in the risk-free rate. Instrument-specific credit risk had an immaterial impact on the change in fair value recognized for loans held during the three months ended March 31, 2024 and 2023.

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). Leases

OnWe acurrently ~~loan-by-loan~~lease ~~basis,~~office ~~the~~space ~~weighted~~under ~~average~~operating ~~discount~~leases ~~rate~~in ~~range~~Christiansted, ~~utilized for the DCF applied to the net yield to be received by the Company was 10~~St.0% ~~which~~Croix, ~~is greater than the overall yield on the portfolio of 9~~U.~~1%,~~S. ~~resulting~~Virgin inIslands ~~the~~and ~~decrease in value of the portfolio at September 30~~Bengaluru, ~~2023~~India. ~~The~~Prior ~~determination~~to of the ~~discount~~termination ~~rate was based on analysis~~ of the ~~current~~lease ~~interest~~in ~~rates~~October ~~charged~~2023, ~~for~~we ~~business~~also ~~purpose~~leased ~~loans~~space in ~~conjunction~~Tampa, ~~with the increase in rates for other underlying base rates such as the 10-year U~~Florida.S. ~~treasury bond and the 30 day Secured Overnight Financing Rate ("SOFR") (Level 3).~~

WeAs ~~did~~of ~~not~~March 31, ~~transfer~~2024 ~~any~~and ~~assets~~December 31, ~~from~~2023, ~~one~~our ~~level~~weighted average remaining lease term, including applicable extensions, was 3.0 years and 3.3 years respectively and we applied a discount rate of 7.0% to ~~another~~our ~~level~~office ~~during~~leases. We determined the ~~nine~~discount ~~months~~rate ~~ended~~for ~~September~~each ~~30,~~lease ~~2023~~to ~~and~~be either the ~~year~~discount ~~ended~~rate ~~December 31,~~stated ~~2022~~in the lease agreement or our estimated rate that we would charge to finance real estate assets.

3During each of the three month periods ended March 31, 2024 and 2023, we recognized rent expense of $0.1 ~~Borrowings~~million. We had no short-term rent expense for the three months ended March 31, 2024 or 2023. 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 months ended March 31, 2024 or 2023.

~~In December 2022, the Company entered into a $50.0 million Master Repurchase Agreement (the "NexBank Line") with NexBank, as the buyer.~~ The ~~Company~~following ~~uses~~table ~~the~~presents proceeds from the NexBank Line to fund the acquisition and origination of business purpose loans (the "Loans") secured by residential, multifamily and certain commercial properties. Each draw on the NexBank Line can be outstanding up to 180 days. NexBank has a ~~security interest in the Loans subject to a transaction under the NexBank Line. The NexBank Line's~~ maturity isanalysis ~~364 days from the execution date. The carrying value~~ of ~~the~~our ~~NexBank~~operating ~~Line~~leases ~~approximates its fair value~~ as of ~~September 30~~ March 31, ~~2023,~~2024 ~~due~~($ toin ~~its short-term nature and floating interest rate terms.~~thousands):

The NexBank Line accrues interest at a rate equal to the greater of (a) the one-month Term SOFR rate plus a spread dependent on three and one-half percent (3.50%) or (b) four and one-quarter percent (4.25%). The average borrowing rate was 9.79% and weighted average remaining term for the outstanding loans is 265 days as of September 30, 2023. The NexBank Line’s outstanding balance is $9.6 million and is collateralized by $13.6 million in Loans at September 30, 2023.


	Operating Lease Liabilities
2024(1)	$	302
2025	312
2026	272
2027	43


Total lease payments	929
Less: interest	90
Lease liabilities	$	839

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)Excludes maximum debt-to-net worth ratio; 2) minimum current ratio; 3) minimum liquidity; 4) minimum net worth; and 5) minimum net income. The NexBank Line also contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and representations and warranties, cross defaults, bankruptcy or insolvency proceedings and other events of default which are customary for this type of transaction. The remedies for such events of default include the ~~acceleration of the principal amount outstanding under the NexBank Line and the liquidation of Loans subject to a transaction. For the~~ three months ended ~~September 30~~March 31, 2023, the Company did not meet the twelve-trailing months profitability requirements of the NexBank Line. On September 26, 2023, NexBank provided the Company with a 90-day waiver. The Company was otherwise in compliance with all covenants and there were no defaults as of September 30, 2023. 2024

Right-of-use assets are periodically reviewed for impairment losses under ASC 360-10, “Property, plant, and equipment,” to determine whether a right-of-use asset is impaired, and if so, the amount of impairment loss to recognize. We did not recognize any impairments of right-of-use assets for the three months ended March 31, 2024 and 2023.

4. 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, 2023. 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 and Redleaf

Please refer to Note 1 - Organization and Basis of Presentation – Sections “Related litigation” and “Settlement activities”.

Arbitration regarding Indroneel Chatterjee, former Chief Executive Officer

On May 3, 2021, the Company’s former CEO Indroneel Chatterjee commenced an arbitration against the Company and each of its directors. The arbitration complaint alleged that the Company’s termination of Mr. Chatterjee’s employment for cause was in breach of his employment agreement. The complaint also alleged certain extra-contractual claims against the Company. On October 19, 2022, following extensive briefing by the parties, the arbitrator dismissed all of Mr. Chatterjee's then remaining

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Inclaims ~~August~~and ~~2022,~~granted ~~the~~summary ~~Company~~judgment ~~entered~~on ~~into~~one aof ~~$50.0 million~~the ~~Master~~Company's ~~Repurchase~~counterclaims ~~Agreement~~requiring ~~(the~~Mr. ~~“Flagstar~~Chatterjee ~~Line”)~~to ~~with~~pay ~~Flagstar~~the ~~Bank~~Company ~~FSB~~$400,000 (~~“Flagstar”),~~the areturn ~~federal~~of ~~savings~~half ~~bank,~~of ashis ainitial ~~buyer~~signing ~~and administrative agent~~bonus). On ~~The~~December ~~Company~~29, ~~used~~2022, the ~~proceeds~~arbitrator ~~from~~entered ~~the~~a ~~Flagstar~~final ~~Line~~order towhich ~~fund~~granted ~~the~~additional ~~acquisition~~award ~~and origination~~ of ~~Loans secured by residential~~fees, ~~multifamily~~costs and ~~certain~~interest ~~commercial~~to ~~properties. Each draw on~~ the ~~Flagstar~~Company ~~Line could be outstanding up to 180 days. Flagstar had a security interest~~ in the ~~Loans~~amount ~~subject~~of toover a$1 million, ~~transaction~~bringing ~~under~~ the ~~Flagstar~~Company's ~~Line~~total ~~and~~judgment ~~required~~against ~~the~~Mr. ~~Company~~Chatterjee to ~~maintain~~approximately a$1.6 million. The ~~restricted~~Company ~~cash~~has ~~balance~~taken insteps ato ~~Flagstar~~attempt ~~deposit~~to ~~account.~~enforce ~~The~~the ~~Flagstar~~judgment ~~Line's~~against ~~maturity~~Mr. ~~was~~Chatterjee ~~364~~and ~~days~~waives ~~from~~no ~~the~~rights ~~execution~~or ~~date~~remedies ~~but~~with ~~was~~respect ~~extended to July 31, 2024~~thereto.

~~The~~AAMC’s ~~Flagstar~~damage ~~Line~~claims ~~accrued~~against ~~interest~~Blackrock at a base one-Month Term SOFR rate plus a spread dependent upon the type of Loan subject to a transaction. Interest was payable at 90 days. The Company also incurred a fee on the unused portion of the $50.0 million if the average outstanding balance of the Flagstar Line was less than a threshold level of the total commitment. The Flagstar line was paid off and ~~terminated on September 7, 2023.~~PIMCO

4On April 12, 2018, an action was filed in the Superior Court of the Virgin Islands, Division of St. ~~Leases~~Croix under the caption Erbey Holding Corporation, et al. v. Blackrock Financial Management Inc., et al., case number SX-2018-CV-146. The action was initially filed by Plaintiffs Erbey Holding Corporation, John R. Erbey Family Limited Partnership, by its general partner Jupiter Capital, Inc., Salt Pond Holdings, LLC, Munus, L.P., Carisma Trust, by its trustee, Venia, LLC, and Tribue Limited Partnership (collectively, the “HoldCo Plaintiffs”). AAMC joined in the action as an additional named Plaintiff pursuant to Court order dated March 30, 2023.

~~We lease office~~The ~~space~~action ~~under~~was ~~operating~~filed ~~leases~~against inDefendants ~~Christiansted~~Blackrock Financial Management, StInc., ~~Croix~~Blackrock Investment Management, ULLC, Blackrock Investments, LLC, Blackrock Capital Management, Inc.S., ~~Virgin~~Blackrock, ~~Islands~~Inc, ~~Tampa~~Pacific Investment Management Company LLC, ~~Florida~~PIMCO Investments, LLC and ~~Bengaluru,~~John ~~India~~and Jane Does 1-10.

AsThe ofcomplaint ~~September~~alleges 30that Defendants, ~~2023~~aided ~~and~~by ~~December 31,~~their ~~2022,~~agents ~~our~~and ~~weighted~~co-conspirators, ~~average~~engaged ~~remaining~~in ~~lease~~an ~~term,~~unlawful ~~including~~enterprise ~~applicable~~and ~~extensions,~~conspiracy ~~was~~to ~~3.3~~harm ~~years~~Plaintiffs and ~~3.8~~related ~~years~~companies, ~~respectively.~~including WeOcwen ~~determine~~Financial ~~the~~Corporation ~~discount~~(“Ocwen”), ~~rate~~by ~~for~~damaging ~~each~~their ~~lease~~operations, tobusiness berelationships ~~either~~and ~~the~~standing ~~discount rate stated~~ in the ~~lease agreement or our estimated rate that we would be charged to finance real estate assets~~industry.

~~During~~As ~~the~~set ~~three~~out ~~and~~in ~~nine~~the ~~months~~complaint, ~~ended~~the ~~September~~alleged ~~30,~~wrongful ~~2023,we~~and ~~recognized~~malicious ~~rent~~conduct ~~expense~~ of ~~$123~~Defendants,~~000~~ ~~and~~which ~~$369,000,~~included ~~related~~fraudulent todisparagement ~~long-term~~and ~~operating~~targeted ~~leases~~short-selling, ~~respectfully.~~constitute ~~During~~common ~~the~~law ~~three~~intentional torts and ~~nine~~violations ~~months~~of ~~ended~~Section ~~September~~605 ~~30,~~of ~~2022,~~the weVirgin ~~recognized~~Islands ~~rent~~Criminally ~~expense~~Influenced ofand ~~$92,500~~Corrupt Organizations Act (“CICO”). AAMC and ~~$190,500,~~the ~~related~~HoldCo toPlaintiffs ~~long-term~~seek ~~operating~~compensatory ~~leases,~~damages ~~respectively.~~in Weamounts ~~had~~reflecting nothe ~~short-term~~substantial ~~rent~~diminution ~~expense~~in ~~during~~value ~~the~~of ~~three~~their stock and ~~nine~~stock ~~months~~holdings, ~~ended~~respectively, ~~September~~and/or 30lost profits, ~~2023~~plus lost future market value appreciation and ~~2022~~profits. Any Wedirect ~~include~~or ~~rent~~indirect ~~expense~~compensatory asdamages aawarded ~~component~~under ofCICO ~~general~~are ~~and~~subject ~~administrative~~to ~~expenses~~automatic intrebling. The ~~the~~action ~~Condensed~~also ~~Consolidated~~seeks ~~Statements~~punitive damages of ~~Operations.~~up Weto ~~had~~nine notimes ~~finance~~any ~~leases~~compensatory ~~during~~amounts based on the ~~three~~egregious ~~and~~nature ~~nine~~of ~~months~~the ~~ended~~alleged ~~September~~intentional 30torts, ~~2023~~as well as an award of attorneys’ fees and ~~2022.~~other expenses incurred in prosecuting the case.

~~The~~Defendants ~~following~~filed ~~table~~multiple ~~presents~~motions ~~our~~that ~~future~~sought ~~lease~~to ~~obligations~~dismiss ~~under~~the ~~our~~case ~~operating~~on ~~leases~~various asalleged ~~of September 30~~grounds, ~~2023~~including ($that inPlaintiffs ~~thousands):~~failed to adequately plead their respective statutory and common law tort claims and that the Court allegedly lacked personal jurisdiction over Defendants.

	Operating Lease Liabilities
2023 (1)	$	297
2024	304
2025	314
2026	226
2027	11
Total lease payments	1,152
Less: interest	121
Lease liabilities	$	1,031

On July 13, 2023, a court-appointed Staff Master issued a comprehensive recommendation that all of AAMC’s legal claims should be permitted to proceed and that the Court should exercise personal jurisdiction over four of the five named Blackrock-entity Defendants and both of the named PIMCO-entity Defendants. The Staff Master recommended that Blackrock, Inc. be dismissed for lack of personal jurisdiction.

~~(1)Excludes~~On December 4, 2023, the ~~nine~~trial ~~months~~judge ~~ended~~adopted ~~September~~the 30Staff Master’s recommendation and overruled Defendants’ objections thereto. The trial judge certified the findings of jurisdiction for a potential interlocutory discretionary appeal. The Virgin Islands Supreme Court has not yet determined whether or not to accept Defendants’ appeal. The trial judge also entered a final order dismissing Blackrock, ~~2023~~Inc., thus permitting an appeal by Plaintiffs as of right to the Virgin Islands Supreme Court. Briefing in Plaintiff’s appeal concluded on April 17, 2024.

5On February 27, 2024, the trial judge denied Defendants’ request for a stay of discovery during the pendency of appellate matters before the Virgin Islands Supreme Court and directed the Staff Master to conduct a discovery conference on an expedited basis. The ~~Commitments~~Staff Master held a discovery conference and ~~Contingencies~~on April 4, 2024, entered a Discovery and Scheduling Plan which provides for all discovery to be completed in the fall of 2025.

~~Litigation~~At this time, ~~claims~~we ~~and~~are ~~assessments~~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 March 31, 2024 or December 31, 2023.

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.

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~~On April 12, 2018, a partial stockholder derivative action was filed in the Superior Court of the Virgin Islands, Division of St~~5. ~~Croix~~Incentive ~~under~~Compensation 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 1Share-10Based (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.Payments

~~Defendants~~2012 ~~have~~Special ~~moved~~Equity toIncentive 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.Plan

OnA ~~October~~special ~~11,~~grant ~~2022,~~of stock options and restricted stock was made to certain employees of Altisource Portfolio Solutions N.A. (“ASPS”) related to our separation from ASPS under the ~~Court~~2012 ~~appointed~~Special aEquity ~~Staff~~Incentive ~~Master~~Plan (the “2012 Special Plan”). We included no share-based compensation in our condensed consolidated financial statements for the portion of these grants made to ~~decide,~~ASPS oremployees. The ~~issue~~shares aof ~~recommended~~restricted ~~decision~~stock became fully vested and were issued during 2017. Dividends received on, restricted stock are forfeitable and are accumulated until the ~~pending~~time ~~motions~~of vesting at the same rate and on the same date as on shares of common stock. Upon the vesting of stock options and restricted stock, ~~including~~we may withhold up to the ~~motion~~statutory minimum to ~~dismiss~~satisfy ~~for~~the ~~lack~~resulting ofemployee ~~personal~~tax ~~jurisdiction~~obligation.

OnStock 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.options

OnWe ~~April~~recorded 6,no ~~2023,~~compensation ~~Plaintiffs~~expense ~~and~~related ~~AAMC~~to ~~filed~~grants aof ~~Second~~stock ~~Amended~~options ~~Verified~~for ~~Complaint~~the ~~adding~~three ~~AAMC~~months aended ~~direct~~March 31, ~~plaintiff~~2024 ~~rather~~and ~~than~~2023, ~~a derivative party~~respectively.

OnAs ~~July~~of ~~13,~~both ~~2023~~March 31, ~~the~~2024 ~~Staff~~and ~~Master~~December ~~issued a Recommendation on the pending motions. The 132-page Recommendation recommends~~31, ~~among~~2023 ~~other~~we ~~things,~~had ~~that~~no ~~the~~outstanding ~~presiding~~options ~~judge~~issued ~~rule~~under ~~that the Court has personal jurisdiction over six of the seven named Defendants and that~~ all of ~~AAMC’s~~our ~~statutory~~share-based ~~and~~compensation ~~tort~~plans ~~claims~~or beas ~~permitted~~inducement ~~to proceed~~awards. ~~The Parties’ responses to the Recommendation were filed on August 24, 2023.~~

AtRestricted this time, we are not able to predict the ultimate outcome of this matter, nor can we estimate the range of possible damages to be awarded to AAMC, if any. As such, we have not recorded a gain contingency for this matter at September 30, 2023 or December 31, 2022.stock

6During the three months ended March 31, 2024 and 2023, we granted no shares of service-based restricted stock to members of management. We ~~Share~~recorded no compensation expense related to our share-~~Based~~based ~~Payments~~compensation plan for the three months ended March 31, 2024. We recorded $0.2 million of compensation expense related to our share-based compensation for the three months ended March 31, 2023. As of March 31, 2024 and December 31, 2023, we had an no unrecognized share-based compensation cost to be recognized.

~~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~~6.~~64.~~ ~~One-third~~Income of the shares of this grant vested on June 28, 2022 and one-third of the shares of this grant vested on June 28, 2023. The vesting of the additional 1,666 shares was forfeited due a separation agreement with the member of management. Taxes

OnWe ~~September~~are ~~20,~~domiciled ~~2021,~~in wethe ~~granted~~USVI 3and 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 EDC Certificate”),~~000~~ ~~shares~~effective as of ~~restricted~~February ~~stock~~1, 2013. Pursuant to ~~management~~the Certificate, so long as we comply with its provisions, we will receive a ~~weighted~~90% ~~average~~tax ~~grant~~reduction ~~date~~on ~~fair~~our ~~value~~USVI-sourced ~~per~~income ~~share~~taxes ofuntil ~~$24~~2043.~~83.~~ By ~~One-third~~letter dated April 13, 2023, the EDC approved an extension of the ~~shares~~temporary full-time employment waiver (the “Waiver”) of ~~this~~the ~~grant~~Company’s ~~vested~~minimum onemployment ~~September~~requirements 20to five full-time USVI employees for the period from January 1, ~~2022~~2023 through June 30, 2023. ~~The~~By ~~vesting~~letter ofdated February 19, 2024, the EDC approved an additional ~~2,000~~extension ~~shares~~for ~~were~~the ~~accelerated~~period July 1, 2023 to December 31, 2024. At March 31, 92024, ~~2023~~the ~~due~~Company tomet athe ~~separation~~minimum ~~agreement~~employment ~~with~~requirements required under the ~~member~~provisions of ~~management~~the Waiver.

OnAs ~~May~~of 12March 31, ~~2022,~~2024 weand ~~granted~~December 31, 222023,~~500~~ ~~shares~~we ofaccrued ~~restricted~~no ~~stock~~interest toor ~~management~~penalties associated with aany ~~weighted~~unrecognized ~~average~~tax ~~grant~~benefits, ~~date~~nor ~~fair~~did ~~value~~we ~~per~~recognize ~~share~~any ofinterest ~~$9.89. One-third~~expense ofor ~~the~~penalties ~~shares~~during ofthe ~~this~~three ~~grant~~months ~~vested~~ended onMarch 31, ~~May~~2024 ~~12,~~and 2023. ~~The vesting of the additional 15,000 shares was forfeited due a separation agreement with the member of management.~~

The Company recorded a $14,000 tax benefit and a book loss of $3.1 million for the first quarter of 2024. The material differences between the effective tax rate and the statutory tax rate are the EDC benefit discussed above and the fact that the USVI EDC is in a full valuation allowance position and incurred a current quarter loss.

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~~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~~7. ~~These~~Earnings ~~shares~~Per ofShare 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.

WeThe ~~reversed~~following ~~$0.1 million~~table ofsets ~~compensation~~forth ~~expense for~~ the ~~three~~components ~~months ended September 30, 2023 due to the forfeiture~~ of ~~restricted~~basic ~~stock related to the departure of certain officers,~~ and ~~recorded~~diluted ~~$0.2 million~~income of(loss) ~~compensation~~per ~~expense related to our~~ share~~-based~~ ~~compensation~~($ ~~for~~in ~~the nine months ended September 30~~thousands, ~~2023.~~except ~~We recorded $0.1 million and $0.2 million of compensation expense related to our~~ share~~-based~~ ~~compensation for the three~~ and ~~nine~~per ~~months ended September 30, 2022, respectively. As of September 30, 2023, we had no unrecognized~~ share~~-based~~ compensation expense to be recognized. As of December 31, 2022, we had an aggregate of $0.3 million of total unrecognized share-based compensation cost to be recognized over a weighted average remaining estimated term of 1.1 years.amounts):

7. Income Taxes


	Three months ended March 31,
		2024		2023
Numerator
Net loss		$	(3,110)	$	(2,988)

Gain of preferred stock transaction		132,212		—
Numerator for earnings per share - net income (loss) attributable to common stockholders		$	129,102	$	(2,988)

Denominator
Weighted average common stock outstanding - basic		2,554,512		3,021,128



Weighted average common stock outstanding - diluted		2,583,029		3,021,128

Income (loss) per basic common share		$	50.54	$	(0.99)
Income (loss) per diluted common share		$	49.98	$	(0.99)

WeOn ~~are~~September ~~domiciled~~8, in2023, the ~~USVI~~Company’s ~~and~~Board ~~are~~of ~~obligated~~Directors toapproved ~~pay~~a ~~taxes~~70% tostock ~~the USVI on our income~~dividend. Each Westockholder ~~applied~~of ~~for~~record ~~tax~~on ~~benefits~~September ~~from~~18, ~~the~~2023 ~~USVI Economic Development Commission (“EDC”) and~~ received ~~our~~a ~~certificate~~dividend of ~~benefits~~seven ~~(the~~tenths ~~“Certificate”),~~additional ~~effective~~share as of ~~February~~common 1,stock ~~2013.~~for ~~Pursuant~~each tothen-held ~~the Certificate~~share, aswith ~~long~~any asfractional weshares ~~comply~~rounded ~~with its provisions~~up, weto ~~will~~be ~~receive~~distributed aafter ~~90%~~close ~~tax~~of ~~credit~~trading on ~~our~~October ~~USVI-sourced~~31, ~~income taxes until 2043~~2023. ByThe ~~letter~~Company’s ~~dated~~common ~~April~~stock ~~13,~~began ~~2023,~~trading ~~the~~on ~~EDC~~a ~~approved~~stock-adjusted anbasis ~~extension~~on ofNovember ~~the~~1, ~~temporary~~2023. The ~~full-time~~par ~~employment~~value ~~waiver (the “Waiver”)~~ of the Company’s ~~minimum~~common ~~employment~~stock ~~requirements~~was tonot ~~five~~affected ~~full-time~~by ~~USVI employees for~~ the ~~period~~split ~~from~~and ~~January~~remained 1,at ~~2023~~$0.01 ~~through~~per ~~June 30, 2023~~share. The ~~Company~~computations ~~has applied for an extension~~ of ~~the~~basic ~~waiver~~and ~~through~~diluted ~~December~~EPS ~~31,~~have ~~2023.~~been Atadjusted ~~September~~on ~~30,~~a ~~2023,~~retrospective ~~the~~basis ~~Company~~for ~~met~~all ~~the~~periods ~~minimum employment requirements required under the provisions of the Waiver~~presented.

AsWe ofexcluded ~~September~~the ~~30,~~items ~~2023~~presented ~~and~~below ~~December~~from ~~31,~~the ~~2022,~~calculation weof ~~accrued~~diluted noincome ~~interest~~(loss) orper ~~penalties~~share ~~associated~~as ~~with~~they ~~any~~were ~~unrecognized~~antidilutive ~~tax~~for ~~benefits,~~the ~~nor~~periods ~~did~~indicated, weas ~~recognize~~the ~~any~~Company ~~interest~~had ~~expense~~a ornet ~~penalties~~loss ~~during~~from ~~the~~operations ~~nine~~for ~~months~~each ~~ended~~period ~~September~~presented ~~30,~~($ ~~2023~~in ~~and 2022.~~thousands):

The Company recorded tax expense of $28,000 on a book loss of $13.5 million in the third quarter of 2023. The material differences between the effective tax rate and the statutory tax rate are the EDC benefit discussed above and the fact that the USVI EDC is in a full valuation allowance position and incurred a current quarter loss.


	Three months ended March 31,
		2024	2023
Denominator

Restricted stock		—	49,667
Preferred stock, if converted		—	196,128

8. Segment Information

The Company has two reportable segments: Loan Operations and Control System Commercialization. ALG is our primary business in the Loan Operations segment. Activity in the Control System Commercialization segment began during the first quarter of 2024 and is comprised entirely of electric vehicle intellectual property development expenses. The segment has no assets or liabilities at March 31, 2024.

9. Subsequent Events

Management has evaluated the impact of all subsequent events through the issuance of these condensed consolidated financial statements and determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.

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8Item 2. ~~Earnings~~Management's ~~Per~~Discussion ~~Share~~and Analysis of Financial Condition and Results of Operations

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 September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Numerator
Net loss	$	(13,470)	$	(3,986)	$	(20,272)	$	(11,815)
Gain on preferred stock transaction	—		—		—		5,122
Numerator for earnings per share - net loss attributable to common stockholders	$	(13,470)	$	(3,986)	$	(20,272)	$	(6,693)
Denominator
Weighted average common stock outstanding – basic	2,977,049		3,020,916		2,999,524		3,339,137
Weighted average common stock outstanding – diluted	2,977,049		3,020,916		2,999,524		3,339,137
Loss per basic common share	$	(4.52)	$	(1.32)	$	(6.76)	$	(2.00)
Loss per diluted common share	$	(4.52)	$	(1.32)	$	(6.76)	$	(2.00)

On September 8, 2023, the Company’s Board of Directors approved a 70% stock dividend. Each stockholder of record on September 18, 2023 received a dividend of seven tenths additional share of common stock for each then-held share, with any fractional shares rounded up, to be distributed after close of trading on October 31, 2023. The Company’s common stock began trading on a stock-adjusted basis on November 1, 2023, which is the ex-dividend date of the effective date of the dividend. The par value of the Company’s common stock was not affected by the split and remained at $0.01 per share. The computations of basic and diluted EPS have been adjusted on a retrospective basis for all periods presented. The common stock and per-share data has been retroactively adjusted as well, as the ex-dividend date occurred before the interim financial statements were issued.

We excluded the items presented below from the calculation of diluted earnings per share as they were antidilutive to loss per share for the period indicated ($ in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2023	2022	2023	2022
Denominator
Restricted stock	30,578	42,067	42,603	25,494
Preferred stock, if converted	196,128	196,128	196,128	196,274

9. Segment Information

ALG is our primary segment. The Company’s chief operating decision maker, its Chief Executive Officer, reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment.

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:

•On October 6, 2023, the Company signed a non-exclusive patent and technology licensing agreement with System73 Limited (an entity controlled and managed by the majority owners of the Company’s common stock). The Company acquired a non-exclusive license for a set of patents which seek to improve the efficiency of electric vehicles. The

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patents, among additional items, seek to use multiple electric motors in electric machines to improve the efficiency beyond the standard single motor drive used currently in most of these vehicles. System73 has strategically aligned itself with two companies, Seabird Technologies and Purple Sector, to facilitate the creation of a prototype electric vehicle over the next 24 months. These two partners have extensive relationships with auto manufacturers and suppliers and are incentivized to generate revenues from these patents over the same 24-month period.

◦Upon the occurrence of each AAMC Common Stock Milestone, AAMC will issue to System73 the number of shares of AAMC Common Stock equal to ten percent of the AAMC Full-Diluted Shares.

•The NexBank Line was paid off and terminated on November 7, 2023.

•The Company continued to repurchase shares after the quarter ended, and repurchased 97,726 shares ($0.6 million) through November 10, 2023.

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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~~2022 ~~first~~and ~~quarter of 2022~~2023, the Company ~~created~~generated ~~Alternative Lending Group (“ALG”) to generate~~ alternative private credit loans through Direct to Borrower Lending, Wholesale Originations, and Correspondent Loan Acquisitions~~. The~~ ~~initial~~and ~~operations~~funded the originated or acquired alternative loans from a combination of Company equity and lines of credit through its alternative lending group (“ALG”) ~~entail~~business ~~the~~line. Those ~~following:~~loans were then sold through forward commitments and repurchase contracts.

~~•Build~~Following ~~out~~a full year of ALG’s operations, our Board of Directors mandated a ~~niche~~comprehensive ~~origination~~review of the Company’s mortgage platform asto ~~well~~improve asthe performance of the business. The review involved assessments of operational efficiency and capacity issues, opportunities for cost reductions, strategies for improving liquidity, among other initiatives, all with a ~~loan~~view ~~acquisition~~toward ~~team;~~enhancing financial performance. The Company made significant progress in reducing costs and streamlining operations. This included an across-the-board employee right-sizing, reducing expenditures for third-party professional services, reducing reliance on lines of credit and significantly reducing our investment in loans held for sale and investment. While the Company will retain the ability to originate and purchase loans in the future, it does not anticipate doing so other than on a very selective basis.

~~•Fund~~On October 6, 2023, the ~~originated~~Company orsigned ~~acquired~~a ~~alternative~~non-exclusive ~~loans~~patent ~~from~~and technology licensing agreement (“the PTL Agreement”) with System73 Limited (“System 73”), an entity controlled and managed by the 53.6% owners of the Company’s common stock. Under the PTL Agreement, the Company obtained a ~~combination~~non-exclusive license for a set of patents for a control system which seeks to optimize the efficiency of electric vehicles (“EVs”). The patents cover algorithms which optimize the utilization of multiple motors not only at a point in time but over the entire trip. The Company’s ~~equity~~investment ~~and~~in ~~future~~the ~~lines~~EV business will be its principal line of ~~credit;~~business on a go-forward basis.

~~•Sell~~As consideration for the ~~originated~~patent rights granted in the PTL Agreement, the Company has agreed to pay 6.2 million pounds sterling (approximately $8.0 million) in budgeted increments as they are incurred by System73 under a commercialization contract executed with Seabird Technologies Limited (“Seabird”), plus any future third-party expenses reasonably incurred in connection with the filing, prosecution and ~~acquired~~maintenance ~~alternative~~of ~~loans~~the ~~through~~patents. Under ~~forward~~the ~~commitment~~commercialization contract, Seabird has been engaged by System 73 to build a technology demonstrator to validate the functionality of an integrated drive unit using the technology and ~~repurchase~~to ~~contracts;~~develop a commercialization strategy for the technology, including the development of a sales pipeline, over an 18-month period commencing on January 1, 2024. Through March 31, 2024, AAMC has made payments of approximately $1.9 million in the aggregate toward these contractual obligations.

~~•Leverage~~Electric ~~senior~~motors ~~management’s~~have ~~expertise~~very innarrow ~~this~~ranges ~~space;~~of torque and speed where they are highly efficient. Outside of that range, efficiency generally rapidly deteriorates. By employing multiple motors with differing peak efficiency ranges in an electric vehicle, the overall efficiency can be improved. The patent covers algorithms which optimize the utilization of multiple motors not only at a point in time but over the entire trip.

~~•Utilize~~There ~~AAMC’s~~are ~~existing~~two ~~operations~~primary invalue ~~India~~propositions towhich ~~drive~~are ~~controls~~being ~~and~~pursued ~~cost~~in ~~efficiencies.~~this venture:

~~The~~•Consumer ~~type~~- ofautomotive ~~product~~and welight ~~expect~~truck to ~~originate~~extend orrange ~~acquire are alternative loans that offer opportunities for rapid growth~~ and ~~allow~~performance; ~~us to tap into under-served markets.~~ and

~~Currently,~~•Commercial ~~ALG’s primary sources of income are derived from mortgage banking activities generated through the origination~~ and ~~acquisition~~industrial ofboth ~~loans,~~delivery and ~~their~~construction/mining ~~subsequent~~equipment ~~sale~~– orminimize ~~securitization~~downtime asfor ~~well~~both asexpensive ~~net~~personnel ~~interest~~and ~~income~~equipment ~~from~~during ~~loans while held on the balance sheet~~recharging.

~~Following~~Under athe ~~full~~terms ~~year~~ of ~~operating~~ the ~~new~~commercialization ~~ALG business line~~contract, ~~our~~Seabird ~~board~~will ofbe ~~directors~~the ~~mandated~~exclusive adistributor ~~comprehensive review~~ of the ~~Company’s~~control ~~mortgage~~system ~~platform~~for totwo ~~improve~~years ~~the~~following ~~performance~~development ofand ~~the~~will ~~business. This~~earn ~~review~~10% ~~involved~~of ~~assessments~~revenue offrom ~~operational~~sales ~~efficiency~~directly ~~and~~attributable ~~capacity~~to ~~issues,~~their ~~opportunities~~efforts ~~for~~up ~~cost~~to ~~reductions,~~$250 ~~strategies~~million ~~for~~per ~~improving~~annum; ~~liquidity,~~20% ~~among~~of ~~other~~revenue ~~initiatives,~~from ~~all~~sales ~~with~~directly aattributable ~~view~~to ~~toward~~their ~~enhancing~~efforts ~~financial~~over ~~performance. The~~$250 ~~Company~~million ~~has~~per ~~made~~annum; ~~significant~~and ~~progress~~10% ownership in ~~reducing~~System ~~costs~~73 ~~and~~(or ~~streamlining~~any ~~operations,~~potential ~~including~~future anowner ~~across-~~of the~~-board~~ ~~employee~~control ~~right-sizing,~~system ~~reducing~~at ~~expenditures~~that ~~for~~time) ~~third-party~~when ~~professional~~revenue ~~services~~attributable ~~and~~to ~~reducing~~their ~~reliance~~efforts onexceeds ~~lines~~$500 ofmillion ~~credit~~per annum.

~~For~~In aaddition, ~~discussion~~the ofPTL Agreement contemplates certain equity incentives for System73 based on performance. The PTL Agreement sets out “AAMC Common Stock Milestones”, defined as each instance where the ~~risks~~average ~~associated~~closing ~~with~~price of the Company'’s ~~new~~common ~~business,~~stock ~~see~~for ~~Item~~the 1Apreceding -twenty ~~“Risk~~(20) ~~Factors”~~day period reaches an amount equal to or in ~~Part~~excess IIof a multiple of ~~this~~$100 ~~Quarterly~~(i.e., ~~Report~~$100, on$200, ~~Form~~$300, etc.). Upon the occurrence of each such AAMC Common Stock Milestone, System 73 would be awarded the number of shares of AAMC Common Stock equal to ten percent (10-Q%) of the AAMC fully diluted Shares.

~~Metrics Affecting our Consolidated Results~~17

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Consistent with New York Stock Exchange rules, any equity award under the PTL Agreement will be subject to stockholder approval.

Metrics Affecting Our Consolidated Results

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

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. and electric vehicle intellectual property development. 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.

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Other Income (Expense)

Other income (expense) primarily relates to income or expense recognized in the change of fair value of loans, ~~and~~change ~~net~~in ~~realized~~the ~~gains~~fair orvalue ~~losses~~of onequity ~~loans~~securities, ~~held~~gain ~~for~~and ~~investment~~dividends on equity securities.

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Results of Operations

The following sets forth discussion of our results of operations for the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2023~~2024 and ~~2022~~2023. 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~~decreased to $10.12 million ~~and~~from $42.80 million for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively, ~~compared~~as toa ~~$1.7 million~~result ~~and~~of ~~$2.3 million~~the ~~for~~lower ~~the~~number ~~three~~of loans held for sale and ~~nine~~investment ~~months~~during ~~ended~~the ~~September~~first ~~30,~~three ~~2022~~months of 2024.

Loan Fee Income

Loan fee income ~~was~~decreased to $~~0.1 million~~6,000 ~~and~~from $0.51 million for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively, ~~compared~~as toa ~~$0.2 million~~result ~~for~~of the ~~three~~lower number of loans held for sale and ~~nine~~investment ~~months~~during ~~ended~~the ~~September~~first ~~30,~~three ~~2022.~~months of 2024.

Realized ~~Losses~~Gains on Loans Held for Sale, net

Realized ~~losses~~gains on loans held for sale, net, were $~~2.2 million~~0 and $~~2.1 million~~10,000 for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively~~. No~~, ~~losses~~due ~~were~~to ~~recognized~~the onlower number of loans held for sale ~~for~~during the first three ~~and nine~~ months ~~ended September 30, 2022 as we had no sales~~ of ~~loans during the period~~2024.

Salaries and Employee Benefits

Salaries and employee benefits ~~were~~decreased to $0.82 million ~~and~~from $41.69 million ~~during~~for the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2023,~~2024 ~~respectively, compared to $1.6 million~~ and ~~$4.0 million during the three and nine months ended September 30~~2023, ~~2022,~~ respectively. The ~~2023~~2024 ~~quarterly~~ decrease ~~was~~is ~~primarily~~ due to ~~the~~an ~~reduction~~across-inthe-~~workforce~~board asemployee weright-sizing ~~scaled~~during ~~down~~ the ~~Company’s~~fourth ~~lending~~quarter ~~operations~~of 2023.

Legal, Acquisition and Professional Fees

Legal fees ~~were~~decreased to $~~0.6 million~~51,000 ~~and~~from $10.94 million ~~million~~for ~~during~~ the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2023,~~2024 ~~respectively, compared to $0.8 million~~ and ~~$3.5 million during the three and nine months ended September 30~~2023, ~~2022,~~ respectively. This ~~The 2023~~ decrease was primarily due to ~~lower~~higher ~~legal~~costs ~~and~~in ~~consulting~~2023 ~~fees~~ related to the Luxor litigation and employment issues ~~incurred in 2023~~. We incurred no acquisition costs infor ~~2023, while we incurred $0.0 million and $0.5 million in acquisition costs in~~ the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2022,~~2024 ~~respectively. Professional fees were $0.5 million~~ and ~~$1.6 million during the three and nine months ended September 30,~~ 2023, respectively,. Professional ~~compared~~fees toof $0.34 million ~~and~~were ~~$0.8 million~~flat ~~for the three and nine months ended September 30, 2022, respectively~~period-over-period.

General and Administrative ~~Expense~~Expenses

General and administrative ~~expense~~expenses ~~was~~decreased to $0.93 million ~~and~~from $20.89 million ~~during~~for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively, ~~compared~~as toa ~~$0.8 million~~result of reducing costs and ~~$2.3 million~~streamlining ~~during~~operations, including an across-the-board ~~three~~employee right-sizing, and ~~nine~~reducing ~~months~~expenditures ~~ended~~for ~~September~~third-party ~~30,~~professional ~~2022, respectively~~services.

Servicing and Asset Management Expense

Servicing and asset management expense ~~was~~decreased to $0.21 million ~~and~~from $0.62 million ~~during~~for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively, ~~compared~~as toa ~~$0.3 million~~result ~~and~~of ~~$0.4 million~~the ~~for~~lower ~~the~~number ~~three~~of loans held for sale and ~~nine~~investment ~~months~~during ~~ended~~the ~~September~~first ~~30,~~three ~~2022~~months of 2024.

Interest Expense

Interest expense ~~was $0.8 million and $2.7 million during the three and nine months ended September 30, 2023, respectively. Interest expense~~ includes interest incurred on our margin account, line of credit and amortized commitment fees. We ~~Interest~~incurred ~~expense~~no ofinterest ~~$0.4 million~~expenses ~~was~~during ~~recorded~~the in three ~~and nine~~ months ended ~~September 30~~March 31, ~~2022,~~2024 as wethe ~~had~~Company nohas ~~outstanding~~been ~~borrowings~~debt infree since the ~~first~~fourth ~~half~~quarter of ~~2022~~2023. Interest ~~and~~expense ~~lower~~of ~~average~~$1.1 million ~~borrowings~~was inrecorded for the ~~third~~three ~~quarter~~months ofended ~~2022~~March 31, 2023.

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Direct Loan Expense

Direct loan expense ~~was~~decreased to $~~0.2 million~~7,000 ~~and~~from $0.63 million ~~during~~for the three ~~and nine~~ months ended ~~September 30~~March 31, 2024 and 2023, respectively~~. Direct~~, ~~loan~~as ~~expense~~a ~~includes~~result ~~loan~~of ~~broker~~the ~~fees,~~lower ~~inspection~~number ~~fees,~~of ~~title~~loans ~~search~~held ~~and~~for ~~other~~sale ~~fees.~~and ~~Direct~~investment ~~loan~~during ~~expense~~the offirst ~~$0.1 million was recorded in~~ three ~~and nine~~ months ~~ended~~of ~~September~~2024. Direct ~~30,~~loan ~~2022~~expenses asinclude weloan ~~began~~broker ~~originating~~fees, ~~loans~~inspection infees, ~~the~~title ~~third~~search ~~quarter~~and ofother ~~2022~~fees.

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Loan Sales and Marketing Expense

~~Loan~~We incurred no loan sales and marketing expense ~~was~~during ~~$1.9~~the three months ended March ~~million~~31, ~~and~~2024 , compared to $20.74 million ~~during~~for the three ~~and nine~~ months ended ~~September 30~~March 31, 2023, ~~respectively~~due to our retrenchment from the loan business during the second half of 2023. Loan sales and marketing ~~expense~~expenses include expenses related to the promotion and exposure to ~~new business~~ leads which may result in originations of loans. We began incurring Loan sales and marketing expense during the third quarter of 2022. We incurred approximately $5,000 loan sales and marketing expense in the three and nine months ended September 30, 2022.

Electric Vehicle Intellectual Property Development Cost

Electric vehicle intellectual property development costs were $1.9 million for the three months ended March 31, 2024. The company did not incur any electric vehicle intellectual property developments costs in prior periods, as electric vehicle development saw its first period of operations in 2024.

Change in Fair Value of Loans

We recognized a $0.~~5 million income and $~~1.8 million ~~income~~in expense for the change in the fair value of loans ~~three~~during ~~and~~the ~~nine~~three months ended ~~September 30~~March 31, ~~2023, respectively~~2024. We recognized $10.6 8 million ~~and~~in ~~$1.9 million~~income ~~expense~~for the change in the ~~three~~fair ~~and~~value ~~nine~~of loans during the three months ended ~~September 30~~March 31, ~~2022, respectively~~2023.

Realized Losses on ~~Sale~~Loans of Held for Investment ~~Loans~~, net

We ~~recognized~~incurred ~~$7.1 million~~no inrealized losses ~~for~~on ~~the~~loans ~~three~~held ~~months~~for ~~ended September 30~~investment, ~~2023~~during ~~and $7.4 million in losses for~~ the ~~nine~~three months ended ~~September~~March 31, 302024, ~~2023~~while ~~for~~$0.3 ~~realized~~ losses onwere ~~the~~recognized ~~sale~~on ofloans held for investment ~~loans~~, net~~. No~~, ~~losses~~for ~~were recognized in~~ the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2022, as we had no sales of loans during the period~~2023.

Liquidity and Capital Resources

As of ~~September 30~~March 31, ~~2023~~2024, we had cash and cash equivalents of $76.97 million compared to $108.7 million as of December 31, ~~2022. The decrease in cash and cash equivalents was primarily due to the losses generated by the business. As of September 30,~~ 2023~~, we had no restricted cash~~. 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 and investment in electric vehicle intellectual property. Certain account balances exceed FDIC insurance coverage and, as a result, there is a 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 ~~September 30~~March 31, ~~2023~~2024, our loans held for sale, at fair value, was $52.47 million, compared to $114.6 5 million as at December 31, ~~2022~~2023. The reduction was driven by our decision to liquidate our loan portfolio. 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 ~~September 30~~March 31, ~~2023~~2024, our loans held for investment, at fair value, was $284.15 million, compared to $835.1 6 million as at December 31, ~~2022~~2023. The reduction was driven by our decision to liquidate our loan portfolio and phase out our ALG business line. 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

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As of September 30, 2023, our repurchase agreements totaled $9.6 million compared to $51.7 million as at December 31, 2022. See Note 3 for more detail.

Treasury Shares

AtAs ~~September~~of 30March 31, ~~2023~~2024, a total of $~~273~~275.8 2 million in shares of our common stock ~~had~~have 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 ~~September 30~~March 31, ~~2023~~2024, we had an aggregate of $2624.28 million shares remaining available for ~~repurchases~~repurchase under our Board-approved repurchase plan.

The Company ~~repurchased~~did ~~66,349~~not ~~shares~~repurchase ~~($0.5 million)~~any ~~and 96,720~~ shares ~~($2.2 million)~~ during the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2023,~~2024. The ~~respectively,~~Company ~~compared~~repurchased ~~to 286~~27,~~873~~441 shares (for $21.95 million) during the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2022~~2023.

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Cash Flows

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

			Nine months ended September 30,
	Three months ended March 31,
			2023				2022
	2024				2023
Net cash used in operating activities	$	(2,051)	$	~~(8,271)~~	$	(6,944)	$	~~(20,450)~~
Net cash provided by (used in) investing activities			47,685				(92,297)
Net cash provided by investing activities	991				17,974
Net cash (used in) provided by financing activities			(44,303)				47,626
Net cash used in financing activities	(1,000)				(9,923)
Total cash flows	$	(2,060)	$	~~(4,889)~~	$	1,107	$	~~(65,121)~~

~~Net~~Operating cash used in operating activities for the nine months ended September 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 nine months ended September 30, 2022, consisted primarily of payment of ongoing salaries and benefits, annual incentive compensation and general corporate expenses in excess of revenues.Activities

Net cash ~~provided~~used byin ~~investing~~operating activities for the ~~nine~~three months ended ~~September 30~~March 31, 2024 and 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~~sale ~~cash~~loans, ~~used~~interest inreceivable, ~~investing~~payment ~~activities~~of ~~for~~ongoing ~~the~~salaries ~~nine~~and ~~months ended September 30~~benefits, ~~2022,~~and ~~consisted~~general ~~primarily~~corporate ofexpenses ~~the~~in ~~purchase~~excess of ~~ALG loans~~revenues.

~~Net~~Investing ~~cash~~Activities used in financing activities for the nine months ended September 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 provided by financing activities for the nine months ended September 30, 2022, primarily relates to the conversion of preferred stock.

Net cash provided by investing activities for the three months ended March 31, 2024 and 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.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2024, consisted primarily of cash used in the conversion of preferred stock. Net cash used in financing activities for the three months ended March 31, 2023, consisted primarily of funds borrowed and repaid under the Company’s line of credit, and cash used in the repurchase of common stock.

Off-balance Sheet Arrangements

We had no off-balance sheet arrangements as of ~~September 30~~March 31, ~~2023~~2024 or December 31, ~~2022~~2023.

Recent ~~Accounting~~accounting ~~Pronouncements~~pronouncements

See Item 1 - Financial statements (unaudited) - “Note 1. - Organization and ~~basis~~Basis of ~~presentation~~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~~2023; and ~~Footnotes~~Note 1 - Organization and Basis of Presentation and Note 2 - Loans Held for Sale or Investment at Fair Value of the condensed consolidated interim financial statements.

Item 3. Quantitative and ~~qualitative~~Qualitative ~~disclosures~~Disclosures ~~about~~About ~~market~~Market ~~risk~~ 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.

22Item 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

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~~Item 4.~~information ~~Controls~~is accumulated and ~~procedures~~communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

~~The~~Our ~~Company~~Chief ~~maintains~~Executive ~~disclosure~~Officer ~~controls~~ and ~~procedures~~Chief ~~that~~Financial ~~are~~Officer ~~designed~~have toevaluated ~~ensure~~the ~~that~~effectiveness ~~information~~of ~~required~~our todisclosure becontrols ~~disclosed~~and inprocedures ~~the~~(as ~~Company's~~defined ~~filings~~in ~~under~~Rule ~~the~~13a-15(e) ~~Securities~~and ~~Exchange~~Rule ~~Act~~15d-15(e) of ~~1934, as amended (~~the “Exchange Act”), isas ~~recorded,~~of ~~processed, summarized and reported within~~ the ~~time~~end ~~periods~~of ~~specified in~~ the ~~SEC's~~period ~~rules~~covered ~~and~~by ~~forms~~this ~~and~~quarterly toreport. Based ~~ensure~~upon that ~~such~~evaluation, ~~information~~management ishas ~~accumulated~~determined ~~and~~that ~~communicated to~~ the Company’'s ~~management,~~disclosure ~~including~~controls ~~its Chief Executive Officer~~ and ~~Chief~~procedures ~~Financial~~were ~~Officer,~~effective as ~~appropriate~~of March 31, ~~to allow timely decisions regarding required disclosure~~2024.

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 September 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 ~~September 30~~March 31, ~~2023~~2024 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 51 - Organization and Basis of Presentation, “Settlement activities and Note 4 - Commitments and Contingencies” of the condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for material developments of legal proceedings to which the Company is a party.

Item 1A. Risk ~~factors~~ Factors

Our risk factors reflected in our December 31, ~~2022~~2023 Form 10-K (filed on March 27 29, ~~2023~~2024) 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~~Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023.

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~~During the fiscal quarter ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

24Chief Financial Officer Transition

On May 13, 2024, Richard G. Rodick notified the Company that he will retire from the position of Chief Financial Officer, effective August 15, 2024. Mr. Rodick will continue to serve as the Company’s Chief Financial Officer until that date (such date, subject to change, the “Separation Date”) to assist with a successful transition of responsibilities. Mr. Rodick will continue to earn his current annual base salary through the Separation Date. The Company has identified Michael L. DelGiacco as Mr. Rodick’s successor. Mr. DelGiacco brings over 20 years of experience as a global finance executive across multiple industries. He currently resides with his family in the U.S. Virgin Islands. Mr. DelGiacco has been hired as Senior Vice President, Finance and will transition to the Chief Financial Officer role effective August 15, 2024. There are no family relationships between Mr. DelGiacco and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

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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).

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 (incorporated by reference to Exhibit 3.2 of the Registrant's Current Report on Form 8-K filed with the SEC on July 6, 2022).
3.3						Certificate of Designations establishing the Company’s Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 19, 2014).
10						Settlement Agreement, dated January 11, 2024, by and between Luxor Capital Group, LP; Luxor Capital Partners Offshore Master Fund, LP; Luxor Capital Partners, LP; Luxor Wavefront, LP; Luxor Spectrum, LLC; and Thebes Offshore Master Fund, LP, Nathaniel Redleaf, and Altisource Asset Management Corporation (incorporated by reference to Exhibit 10 to the Registrant's Current Report on Form 8-K filed with the SEC on January 16, 2024).





















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*						XBRL Instance Document.
101.SCH*						XBRL Taxonomy Extension Schema Document.
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						XBRL Extension Label Linkbase Document.
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

__________

* Filed herewith.

†** ~~This~~Indicates ~~Certification~~the exhibit is being furnished, ~~and~~ not filed, ~~for~~with ~~purposes~~this ~~of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934~~report.

2524

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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:

~~November~~May 1415, ~~2023~~2024

By:

/s/

~~Ricardo~~William C. ~~Byrd~~Erbey

Ricardo C. Byrd

William C. Erbey

Chairman of the Board

Chairman and Chief Executive Officer

Date:

~~November~~May 1415, ~~2023~~2024

By:

/s/

Richard G. Rodick

Chief Financial Officer

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Filing Compare · Altisource Asset Management Corp