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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year ended December 31, 2015
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Transition Period From __________to __________
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Maryland
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74-2830661
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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2114 Central Street, Suite 600, Kansas City, MO
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64108
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(Address of Principal Executive Office)
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(Zip Code)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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o
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o
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o
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x
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TABLE OF CONTENTS
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PART I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
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Item 5.
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Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accountant Fees and Services
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PART IV
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Item 15.
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Exhibits and Financial Statement Schedules
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Exhibit Index
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Signatures
|
•
|
incur indebtedness;
|
•
|
create certain liens;
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•
|
make payments from our subsidiaries to us;
|
•
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make payments to our shareholders;
|
•
|
acquire our outstanding shares, or the shares of our subsidiaries;
|
•
|
make payments on debt securities
pari passu
or junior to the Senior Notes; and
|
•
|
merge, consolidate, transfer and/or sell substantially all of our assets.
|
•
|
actual or perceived changes in our ability to continue as a going concern;
|
•
|
actual or anticipated changes in our earnings and cash flow;
|
•
|
general market and economic conditions, including the operations and stock performance of other industry participants;
|
•
|
the impact of new state or federal legislation or adverse court decisions;
|
•
|
actual or anticipated changes in the delinquency and default rates on mortgage loans, in general, and specifically on the loans we invest in through our mortgage securities;
|
•
|
actual or anticipated changes in financial estimates by securities analysts;
|
•
|
sales, or the perception that sales could occur, of a substantial number of shares of our common stock by insiders;
|
•
|
additions or departures of senior management and key personnel; and
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•
|
actions by institutional shareholders.
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||||
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High
|
|
Low
|
||||
2015
|
|
|
|
|
||||
First Quarter
|
|
$
|
0.35
|
|
|
$
|
0.24
|
|
Second Quarter
|
|
0.42
|
|
|
0.22
|
|
||
Third Quarter
|
|
0.32
|
|
|
0.22
|
|
||
Fourth Quarter
|
|
0.31
|
|
|
0.12
|
|
||
|
|
|
|
|
||||
2014
|
|
|
|
|
||||
First Quarter
|
|
$
|
0.37
|
|
|
$
|
0.23
|
|
Second Quarter
|
|
0.40
|
|
|
0.24
|
|
||
Third Quarter
|
|
0.31
|
|
|
0.23
|
|
||
Fourth Quarter
|
|
0.34
|
|
|
0.19
|
|
||
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|
•
|
Corporate Overview, Background and Strategy
–
a brief overview of our business, current strategy, and significant recent events.
|
•
|
Consolidated Results of Operations
–
an analysis of our results of operations for the years ended December 31, 2015 and 2014 as presented in our Consolidated Financial Statements.
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•
|
Operating Segment Results of Operations
–
an analysis of our results of operations for the years ended December 31, 2015 and 2014 as presented in our Consolidated Financial Statements for our reporting segments.
|
•
|
Liquidity and Capital Resources
–
an analysis of our cash flows and financial commitments.
|
•
|
Critical Accounting Estimates
–
a discussion of our critical accounting estimates, which involve a high degree of judgment or complexity. This section also includes the impact of new accounting standards.
|
•
|
maintaining and/or generating adequate liquidity to sustain us and allow us to take advantage of acquisition opportunities, and
|
•
|
generating taxable income and long-term value for our shareholders.
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December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Cash and cash equivalents
|
|
$
|
2,826
|
|
|
$
|
3,235
|
|
Marketable securities
|
|
$
|
18,897
|
|
|
$
|
43,057
|
|
Net (loss) income available to common shareholders, per diluted share
|
|
$
|
(0.32
|
)
|
|
$
|
0.34
|
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Consolidated Statements of Cash Flows:
|
|
|
|
||||
Cash flows (used in) provided by operating activities of continuing operations
|
$
|
(1,742
|
)
|
|
$
|
5,034
|
|
Cash flows provided by investing activities of continuing operations
|
26,993
|
|
|
15,269
|
|
||
Cash flows used in financing activities of continuing operations
|
(25,660
|
)
|
|
(22,460
|
)
|
||
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|
|
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Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
After 5 Years
|
||||||||||
Senior notes (A)
|
$
|
167,787
|
|
|
$
|
3,866
|
|
|
$
|
8,271
|
|
|
$
|
8,878
|
|
|
$
|
146,772
|
|
Operating leases
|
2,087
|
|
|
700
|
|
|
1,200
|
|
|
187
|
|
|
—
|
|
|||||
Total obligations
|
$
|
169,874
|
|
|
$
|
4,566
|
|
|
$
|
9,471
|
|
|
$
|
9,065
|
|
|
$
|
146,772
|
|
|
|
|
|
|
|
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|
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|
(A)
|
In computing the future obligations relating to the Senior Notes, interest payments are calculated using an interest rate of 1.0% per annum until January 2016 and the estimated Full Rate thereafter, as based on current forward rate curves. The Senior Notes are assumed to mature in March 2033. The Senior Notes, including the actual interest rates, are described in detail in
Note 6
to our consolidated financial statements.
|
•
|
the interest spread between the coupon net of servicing fees on the underlying loans, the cost of financing, mortgage insurance, payments or receipts on or from derivative contracts and bond administrative costs;
|
•
|
prepayment penalties received from borrowers who pay off their loans early in their term; and
|
•
|
overcollateralization which is designed to protect the primary bondholder from credit loss on the underlying loans.
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|
Report of Independent Registered Public Accounting Firm
|
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Consolidated Balance Sheets
|
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Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Shareholders' Deficit
|
|
Consolidated Statements of Cash Flow
|
|
Notes to Consolidated Financial Statements
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|
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,826
|
|
|
$
|
3,235
|
|
Marketable securities, current
|
17,500
|
|
|
28,410
|
|
||
Other current assets
|
1,119
|
|
|
966
|
|
||
Current assets of discontinued operations
|
1,843
|
|
|
5,565
|
|
||
Total current assets
|
23,288
|
|
|
38,176
|
|
||
Non-Current Assets
|
|
|
|
||||
Marketable securities, non-current
|
1,397
|
|
|
14,647
|
|
||
Property and equipment, net of accumulated depreciation
|
358
|
|
|
504
|
|
||
Other assets
|
481
|
|
|
611
|
|
||
Non-current assets of discontinued operations
|
6,415
|
|
|
7,273
|
|
||
Total non-current assets
|
8,651
|
|
|
23,035
|
|
||
Total assets
|
$
|
31,939
|
|
|
$
|
61,211
|
|
|
|
|
|
||||
Liabilities and Shareholders' Deficit
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
1,453
|
|
|
$
|
2,314
|
|
Other current liabilities
|
—
|
|
|
628
|
|
||
Current liabilities of discontinued operations
|
2,470
|
|
|
3,263
|
|
||
Total current liabilities
|
3,923
|
|
|
6,205
|
|
||
Non-Current Liabilities
|
|
|
|
||||
Senior notes
|
88,385
|
|
|
85,937
|
|
||
Other liabilities
|
391
|
|
|
494
|
|
||
Non-current liabilities of discontinued operations
|
1,833
|
|
|
1,925
|
|
||
Total non-current liabilities
|
90,609
|
|
|
88,356
|
|
||
Total liabilities
|
94,532
|
|
|
94,561
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 7)
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders' deficit:
|
|
|
|
||||
Capital stock, $0.01 par value per share, 120,000,000 shares authorized:
|
|
|
|
||||
Common stock, 92,748,753 shares issued and outstanding
|
928
|
|
|
915
|
|
||
Additional paid-in capital
|
744,575
|
|
|
743,919
|
|
||
Accumulated deficit
|
(809,532
|
)
|
|
(780,803
|
)
|
||
Accumulated other comprehensive income
|
1,436
|
|
|
2,619
|
|
||
Total shareholders' deficit
|
(62,593
|
)
|
|
(33,350
|
)
|
||
Total liabilities and shareholders' deficit
|
$
|
31,939
|
|
|
$
|
61,211
|
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
|
2015
|
|
2014
|
||||
Income:
|
|
|
|
|
||||
Service fee income – transition services
|
|
$
|
—
|
|
|
$
|
243
|
|
Interest income – mortgage securities
|
|
6,131
|
|
|
7,192
|
|
||
Total
|
|
6,131
|
|
|
7,435
|
|
||
|
|
|
|
|
||||
Operating Expenses:
|
|
|
|
|
||||
General and administrative
|
|
5,704
|
|
|
8,206
|
|
||
Total
|
|
5,704
|
|
|
8,206
|
|
||
|
|
|
|
|
||||
Other (expense) income
|
|
(27
|
)
|
|
84
|
|
||
Interest expense
|
|
(3,193
|
)
|
|
(2,941
|
)
|
||
|
|
|
|
|
||||
Loss from continuing operations before income taxes
|
|
(2,793
|
)
|
|
(3,628
|
)
|
||
Income tax benefit
|
|
(28
|
)
|
|
(1,722
|
)
|
||
Net loss from continuing operations
|
|
(2,765
|
)
|
|
(1,906
|
)
|
||
(Loss) income from discontinued operations, net of income taxes
|
|
(25,964
|
)
|
|
32,845
|
|
||
Net (loss) income
|
|
$
|
(28,729
|
)
|
|
$
|
30,939
|
|
|
|
|
|
|
||||
(Loss) Earnings Per Common Share attributable to Novation:
|
|
|
|
|
||||
Basic
|
|
$
|
(0.32
|
)
|
|
$
|
0.34
|
|
Diluted
|
|
$
|
(0.32
|
)
|
|
$
|
0.34
|
|
Weighted average basic common shares outstanding
|
|
91,138,068
|
|
|
90,926,211
|
|
||
Weighted average diluted common shares outstanding
|
|
91,138,068
|
|
|
90,926,211
|
|
|
|
For the Year Ended
December 31, |
||||||
|
|
2015
|
|
2014
|
||||
Net (loss) income
|
|
$
|
(28,729
|
)
|
|
$
|
30,939
|
|
Other comprehensive income (loss):
|
|
|
|
|
||||
Change in unrealized gain on marketable securities – available-for-sale
|
|
(1,183
|
)
|
|
(484
|
)
|
||
Total comprehensive income (loss)
|
|
$
|
(29,912
|
)
|
|
$
|
30,455
|
|
|
Total NCI Shareholders' Deficit
|
|
|
|
|
||||||||||||||||||
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling
Interest
|
|
Total
Shareholders’
Deficit
|
||||||||||||
Balance, December 31, 2014
|
$
|
915
|
|
|
$
|
743,919
|
|
|
$
|
(780,803
|
)
|
|
$
|
2,619
|
|
|
$
|
—
|
|
|
$
|
(33,350
|
)
|
Issuance of nonvested shares
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Compensation recognized under stock compensation plans
|
—
|
|
|
669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
669
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
(28,729
|
)
|
|
—
|
|
|
—
|
|
|
(28,729
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,183
|
)
|
|
—
|
|
|
(1,183
|
)
|
||||||
Balance, December 31, 2015
|
$
|
928
|
|
|
$
|
744,575
|
|
|
$
|
(809,532
|
)
|
|
$
|
1,436
|
|
|
$
|
—
|
|
|
$
|
(62,593
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Continued
|
|
|
Total NCI Shareholders’ Deficit
|
|
|
|
|
||||||||||||||||||
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling
Interest
|
|
Total
Shareholders’
Deficit
|
||||||||||||
Balance, December 31, 2013
|
$
|
915
|
|
|
$
|
739,468
|
|
|
$
|
(811,742
|
)
|
|
$
|
3,103
|
|
|
$
|
36
|
|
|
$
|
(68,220
|
)
|
Compensation recognized under stock compensation plans
|
—
|
|
|
637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
637
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Exchange of membership interests for forgiveness of note payable
|
—
|
|
|
3,814
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
3,921
|
|
||||||
Other changes in noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|
(138
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
30,939
|
|
|
—
|
|
|
—
|
|
|
30,939
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(484
|
)
|
|
—
|
|
|
(484
|
)
|
||||||
Balance, December 31, 2014
|
$
|
915
|
|
|
$
|
743,919
|
|
|
$
|
(780,803
|
)
|
|
$
|
2,619
|
|
|
$
|
—
|
|
|
$
|
(33,350
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
See notes to consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
Concluded
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(28,729
|
)
|
|
$
|
30,939
|
|
(Loss) income from discontinued operations, net of income taxes
|
(25,964
|
)
|
|
32,845
|
|
||
Net loss from continuing operations
|
(2,765
|
)
|
|
(1,906
|
)
|
||
|
|
|
|
||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Accretion of marketable securities, net
|
(235
|
)
|
|
(512
|
)
|
||
Amortization of deferred debt issuance costs and senior debt discount
|
2,448
|
|
|
2,070
|
|
||
Other non-cash losses, net
|
203
|
|
|
277
|
|
||
Compensation recognized under stock compensation plans
|
669
|
|
|
637
|
|
||
Depreciation expense
|
148
|
|
|
249
|
|
||
Deferred taxes
|
—
|
|
|
(1,498
|
)
|
||
Changes in:
|
|
|
|
||||
Due from discontinued operations
|
89
|
|
|
6,609
|
|
||
Other current assets and liabilities, net
|
(1,346
|
)
|
|
500
|
|
||
Other noncurrent assets and liabilities, net
|
(91
|
)
|
|
(603
|
)
|
||
Accounts payable and accrued expenses
|
(862
|
)
|
|
(789
|
)
|
||
Net cash (used in) provided by operating activities of continuing operations
|
(1,742
|
)
|
|
5,034
|
|
||
Net cash used in operating activities of discontinued operations
|
(23,005
|
)
|
|
(17,332
|
)
|
||
Net cash used in operating activities
|
(24,747
|
)
|
|
(12,298
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from sales and maturities of marketable securities
|
26,995
|
|
|
12,085
|
|
||
Proceeds from other investing activities, net
|
2
|
|
|
—
|
|
||
Proceeds from sale of subsidiary
|
—
|
|
|
54,748
|
|
||
Purchases of marketable securities
|
—
|
|
|
(51,379
|
)
|
||
Purchases of property and equipment
|
(4
|
)
|
|
(185
|
)
|
||
Net cash provided by investing activities of continuing operations
|
26,993
|
|
|
15,269
|
|
||
Net cash used in investing activities of discontinued operations
|
(4,490
|
)
|
|
(6,253
|
)
|
||
Net cash provided by investing activities
|
22,503
|
|
|
9,016
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Cash payments for contributions of capital to discontinued operations
|
(25,660
|
)
|
|
(23,229
|
)
|
||
Cash receipts from distributions of earnings from discontinued operations
|
—
|
|
|
774
|
|
||
Principal payments under capital leases
|
—
|
|
|
(5
|
)
|
||
Net cash used in financing activities of continuing operations
|
(25,660
|
)
|
|
(22,460
|
)
|
||
Net cash provided by financing activities of discontinued operations
|
25,428
|
|
|
22,129
|
|
||
Net cash used in financing activities
|
(232
|
)
|
|
(331
|
)
|
||
|
|
|
|
||||
|
Continued
|
|
|||||
|
|
|
|
NOVATION COMPANIES, INC.
|
|
|
|
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
||||
(dollars in thousands)
|
|
|
|
||||
|
|
|
|
||||
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
|
|
|
|
||||
Net decrease in cash and cash equivalents of continuing operations
|
$
|
(409
|
)
|
|
$
|
(2,157
|
)
|
Cash and cash equivalents of continuing operations, beginning of period
|
3,235
|
|
|
5,392
|
|
||
Cash and cash equivalents of continuing operations, end of period
|
$
|
2,826
|
|
|
$
|
3,235
|
|
|
|
|
|
||||
Net decrease in cash and cash equivalents of discontinued operations
|
$
|
(2,067
|
)
|
|
$
|
(1,456
|
)
|
Cash and cash equivalents of discontinued operations, beginning of period
|
2,419
|
|
|
3,875
|
|
||
Cash and cash equivalents of discontinued operations, end of period
|
$
|
352
|
|
|
$
|
2,419
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Cash paid for interest
|
$
|
871
|
|
|
$
|
910
|
|
Cash (paid) received from income taxes, net
|
(708
|
)
|
|
48
|
|
||
Cash received on mortgage securities - available-for-sale with no cost basis
|
5,603
|
|
|
6,479
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Exchange of membership interests for forgiveness of note payable
|
—
|
|
|
3,921
|
|
||
|
|
|
|
||||
See notes to consolidated financial statements.
|
|
|
Concluded
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
|
|
|
|
||||
Service fee income
|
$
|
3,254
|
|
|
$
|
42,651
|
|
|
|
|
|
||||
Income from discontinued operations before income taxes
|
$
|
(25,964
|
)
|
|
$
|
34,894
|
|
Income tax expense
|
—
|
|
|
2,049
|
|
||
Income from discontinued operations, net of income taxes
|
$
|
(25,964
|
)
|
|
$
|
32,845
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31,
2014 |
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
352
|
|
|
$
|
2,419
|
|
Service fee receivable, net
|
282
|
|
|
729
|
|
||
Marketable securities, current
|
—
|
|
|
1,405
|
|
||
Other current assets
|
1,209
|
|
|
1,012
|
|
||
Total current assets
|
1,843
|
|
|
5,565
|
|
||
Non-Current Assets
|
|
|
|
||||
Property and equipment, net of accumulated depreciation
|
5,708
|
|
|
5,128
|
|
||
Marketable securities, noncurrent
|
—
|
|
|
1,365
|
|
||
Other assets
|
707
|
|
|
780
|
|
||
Total non-current assets
|
6,415
|
|
|
7,273
|
|
||
Total assets
|
$
|
8,258
|
|
|
$
|
12,838
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
2,159
|
|
|
$
|
2,949
|
|
Other current liabilities
|
311
|
|
|
314
|
|
||
Total current liabilities
|
2,470
|
|
|
3,263
|
|
||
Non-Current Liabilities
|
|
|
|
||||
Other liabilities
|
1,833
|
|
|
1,925
|
|
||
Total non-current liabilities
|
1,833
|
|
|
1,925
|
|
||
Total liabilities
|
$
|
4,303
|
|
|
$
|
5,188
|
|
|
|
|
|
|
As of December 31, 2015
|
||||||||||||||
Description of Securities
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Marketable securities, current
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
$
|
15,517
|
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
|
$
|
15,489
|
|
Mortgage securities
|
525
|
|
|
1,486
|
|
|
—
|
|
|
2,011
|
|
||||
Total
|
16,042
|
|
|
1,486
|
|
|
(28
|
)
|
|
17,500
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Marketable securities, non-current
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
1,419
|
|
|
—
|
|
|
(22
|
)
|
|
1,397
|
|
||||
Total
|
$
|
1,419
|
|
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
1,397
|
|
|
|
|
|
|
|
|
|
||||||||
|
As of December 31, 2014
|
||||||||||||||
Description of Securities
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Marketable securities, current
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
$
|
23,056
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
23,031
|
|
Commercial paper
|
1,998
|
|
|
—
|
|
|
—
|
|
|
1,998
|
|
||||
Mortgage securities
|
682
|
|
|
2,699
|
|
|
—
|
|
|
3,381
|
|
||||
Total
|
25,736
|
|
|
2,699
|
|
|
(25
|
)
|
|
28,410
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Marketable securities, non-current
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
13,694
|
|
|
—
|
|
|
(45
|
)
|
|
13,649
|
|
||||
Agency securities
|
1,000
|
|
|
—
|
|
|
(2
|
)
|
|
998
|
|
||||
Total
|
$
|
14,694
|
|
|
$
|
—
|
|
|
$
|
(47
|
)
|
|
$
|
14,647
|
|
|
|
|
|
|
|
|
|
|
Size/Principal Outstanding (A)
|
|
Assets on Balance Sheet (B)
|
|
Liabilities on Balance Sheet
|
|
Maximum Exposure to Loss(C)
|
|
Year to Date Loss on Sale
|
|
Year to Date Cash Flows
|
||||||||||||
December 31, 2015
|
$
|
3,601,468
|
|
|
$
|
2,011
|
|
|
$
|
—
|
|
|
$
|
2,011
|
|
|
$
|
—
|
|
|
$
|
6,287
|
|
December 31, 2014
|
$
|
4,062,068
|
|
|
$
|
3,381
|
|
|
$
|
—
|
|
|
$
|
3,381
|
|
|
$
|
—
|
|
|
$
|
7,136
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
Size/Principal Outstanding reflects the estimated principal of the underlying assets held by the securitization trust.
|
(B)
|
Assets on balance sheet are securities issued by the entity and are recorded in the current marketable securities line item of the consolidated balance sheets.
|
(C)
|
The maximum exposure to loss includes the assets held by the Company. The maximum exposure to loss assumes a total loss on the referenced assets held by the securitization trust.
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Furniture, fixtures and office equipment
|
$
|
314
|
|
|
$
|
318
|
|
Hardware and computer equipment
|
157
|
|
|
519
|
|
||
Software
|
547
|
|
|
580
|
|
||
Leasehold improvements
|
402
|
|
|
402
|
|
||
Total Cost
|
1,420
|
|
|
1,819
|
|
||
Less: Accumulated depreciation and amortization
|
(1,062
|
)
|
|
(1,315
|
)
|
||
Property and equipment, net
|
$
|
358
|
|
|
$
|
504
|
|
|
|
Lease
|
||
|
Obligations
|
||
2015
|
$
|
700
|
|
2016
|
722
|
|
|
2017
|
478
|
|
|
2018
|
187
|
|
|
2019
|
—
|
|
|
|
$
|
2,087
|
|
|
•
|
Level 1 – Valuations based on quoted prices in active markets for
identical
assets and liabilities.
|
•
|
Level 2 – Valuations based on observable inputs in active markets for
similar
assets and liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates.
|
•
|
Level 3 – Valuations based on significant unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies based on internal cash flow forecasts.
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
Description
|
|
Fair Value at
December 31, 2015 |
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
$
|
1,674
|
|
|
$
|
1,674
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
|
1,152
|
|
|
1,152
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities, current:
|
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
|
15,489
|
|
|
—
|
|
|
15,489
|
|
|
—
|
|
||||
Mortgage securities
|
|
2,011
|
|
|
—
|
|
|
—
|
|
|
2,011
|
|
||||
Marketable securities, non-current:
|
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
|
1,397
|
|
|
—
|
|
|
1,397
|
|
|
—
|
|
||||
Total
|
|
$
|
21,723
|
|
|
$
|
2,826
|
|
|
$
|
16,886
|
|
|
$
|
2,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
Description
|
|
Fair Value at December 31, 2014
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
$
|
2,354
|
|
|
$
|
2,354
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds
|
|
881
|
|
|
881
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities, current:
|
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
|
23,031
|
|
|
—
|
|
|
23,031
|
|
|
—
|
|
||||
Commercial paper
|
|
1,998
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
||||
Mortgage securities
|
|
3,381
|
|
|
—
|
|
|
—
|
|
|
3,381
|
|
||||
Marketable securities, non-current:
|
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
|
13,649
|
|
|
—
|
|
|
13,649
|
|
|
—
|
|
||||
Agency securities
|
|
998
|
|
|
—
|
|
|
998
|
|
|
—
|
|
||||
Total
|
|
$
|
46,292
|
|
|
$
|
3,235
|
|
|
$
|
39,676
|
|
|
$
|
3,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Valuation Techniques
|
|
Significant Unobservable Inputs
|
|
Range
|
Assets:
|
|
|
|
|
|
|
Mortgage securities – available-for-sale
|
|
Present value analysis
|
|
Prepayment rates
|
|
8.0% – 11.5%
|
|
|
|
|
Weighted average life (years)
|
|
2.0
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Balance, beginning of period
|
$
|
3,381
|
|
|
$
|
3,728
|
|
Increases (decreases) to mortgage securities – available-for-sale:
|
|
|
|
||||
Accretion of income (A)
|
528
|
|
|
713
|
|
||
Proceeds from paydowns of securities (A)
|
(685
|
)
|
|
(656
|
)
|
||
Mark-to-market value adjustment
|
(1,213
|
)
|
|
(404
|
)
|
||
Net increases (decreases) to mortgage securities – available-for-sale
|
(1,370
|
)
|
|
(347
|
)
|
||
Balance, end of period
|
$
|
2,011
|
|
|
$
|
3,381
|
|
|
|
|
|
(A)
|
Cash received on mortgage securities with no cost basis was
$5.6 million
and
$6.5 million
for
2015
and
2014
, respectively.
|
|
As of December 31, 2015
|
|
As of December 31, 2014
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
$
|
598
|
|
|
$
|
435
|
|
|
$
|
597
|
|
|
$
|
450
|
|
Marketable securities
|
18,897
|
|
|
18,897
|
|
|
43,057
|
|
|
43,057
|
|
||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
$
|
88,385
|
|
|
$
|
18,331
|
|
|
$
|
85,937
|
|
|
$
|
15,189
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Numerator:
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(2,765
|
)
|
|
$
|
(1,906
|
)
|
(Loss) Income from discontinued operations
|
(25,964
|
)
|
|
32,845
|
|
||
Net (loss) income
|
$
|
(28,729
|
)
|
|
$
|
30,939
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted average common shares outstanding – basic
|
91,138,068
|
|
|
90,926,211
|
|
||
|
|
|
|
||||
Weighted average common shares outstanding – diluted:
|
|
|
|
||||
Weighted average common shares outstanding – basic
|
91,138,068
|
|
|
90,926,211
|
|
||
Stock options
|
—
|
|
|
—
|
|
||
Nonvested shares
|
—
|
|
|
—
|
|
||
Weighted average common shares outstanding – diluted
|
91,138,068
|
|
|
90,926,211
|
|
||
|
|
|
|
||||
Basic earnings per share:
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
(Loss) Income from discontinued operations
|
(0.29
|
)
|
|
0.36
|
|
||
Net (loss) income
|
$
|
(0.32
|
)
|
|
$
|
0.34
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
(Loss) Income from discontinued operations
|
(0.29
|
)
|
|
0.36
|
|
||
Net (loss) income
|
$
|
(0.32
|
)
|
|
$
|
0.34
|
|
|
|
|
|
|
For the Year Ended
December 31, |
||||||
|
2015
|
|
2014
|
||||
Number of stock options
|
10,549
|
|
|
9,859
|
|
||
Weighted average exercise price of stock options
|
$
|
0.62
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
For the Year Ended
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Current:
|
|
|
|
|
|
|
||
Federal
|
|
$
|
(13
|
)
|
|
$
|
(227
|
)
|
State and local
|
|
(15
|
)
|
|
3
|
|
||
Total current
|
|
(28
|
)
|
|
(224
|
)
|
||
|
|
|
|
|
||||
Deferred:
|
|
|
|
|
|
|
||
Federal
|
|
—
|
|
|
(1,306
|
)
|
||
State and local
|
|
—
|
|
|
(192
|
)
|
||
Total deferred
|
|
—
|
|
|
(1,498
|
)
|
||
Total income tax benefit
|
|
$
|
(28
|
)
|
|
$
|
(1,722
|
)
|
|
|
|
|
|
|
|
For the Year Ended
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Income tax at statutory rate
|
|
$
|
(977
|
)
|
|
$
|
(1,270
|
)
|
State income taxes, net of federal tax benefit
|
|
(96
|
)
|
|
(226
|
)
|
||
Valuation allowance
|
|
2,519
|
|
|
(2,740
|
)
|
||
Change in state tax rate
|
|
—
|
|
|
(85
|
)
|
||
State tax credits
|
|
488
|
|
|
—
|
|
||
Adjustment to deferred tax asset
|
|
(1,965
|
)
|
|
162
|
|
||
Expiration of loss carryforward
|
|
—
|
|
|
3,007
|
|
||
Uncertain tax positions
|
|
(87
|
)
|
|
(504
|
)
|
||
Other
|
|
90
|
|
|
(66
|
)
|
||
Total income tax benefit
|
|
$
|
(28
|
)
|
|
$
|
(1,722
|
)
|
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Basis difference – investments
|
|
$
|
18,043
|
|
|
$
|
20,049
|
|
Federal net operating loss carryforwards
|
|
239,003
|
|
|
227,519
|
|
||
State net operating loss carryforwards
|
|
20,168
|
|
|
16,922
|
|
||
Other
|
|
4,882
|
|
|
5,102
|
|
||
Gross deferred tax asset
|
|
282,096
|
|
|
269,592
|
|
||
Valuation allowance
|
|
(281,548
|
)
|
|
(268,592
|
)
|
||
Deferred tax asset
|
|
548
|
|
|
1,000
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Other
|
|
548
|
|
|
1,000
|
|
||
Deferred tax liability
|
|
548
|
|
|
1,000
|
|
||
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Beginning balance
|
|
$
|
475
|
|
|
$
|
731
|
|
Gross increases – tax positions in current period
|
|
19
|
|
|
300
|
|
||
Lapse of statute of limitations
|
|
(126
|
)
|
|
(556
|
)
|
||
Ending balance
|
|
$
|
368
|
|
|
$
|
475
|
|
|
|
|
|
|
(1)
|
The financial statements as set forth under Item 8 of this report on Form 10-K are included herein.
|
(2)
|
The required financial statement schedules are omitted because the information is disclosed elsewhere herein.
|
Exhibit No.
|
|
Description of Document
|
2.1
|
|
Membership Interest Purchase Agreement, dated as of December 21, 2015, by and among Novation Companies, Inc., Corvisa Services LLC and ShoreTel, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on December 21, 2015).
|
3.1
|
|
Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 7, 2015).
|
3.2
|
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 6, 2015).
|
3.3
|
|
Amendment to the Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2.1 to the Current Report on Form 8-K filed on March 16, 2009).
|
4.1
|
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Quarterly Report Form 10-Q filed on August 5, 2005).
|
4.2
|
|
Registration Rights Agreement, dated March 15, 2011, between the Company and W. Lance Anderson (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 21, 2011).
|
4.3
|
|
Registration Rights Agreement, dated June 23, 2011, among NovaStar Financial, Inc., Jefferies Capital Partners IV L.P., Jefferies Employee Partners IV LLC, JCP Partners IV LLC and Massachusetts Mutual Life Insurance Company (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on June 29, 2011).
|
4.4
|
|
Rights Agreement, dated as of September 15, 2011, by and between NovaStar Financial, Inc. and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 21, 2011).
|
4.5
|
|
First Amendment to Rights Agreement, dated June 20, 2014, by and between the Company and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.2 to Form 8-A/A filed on June 20, 2014).
|
4.6
|
|
Second Amendment to Rights Agreement, dated August 24, 2015, by and between the Company and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.3 to the Form 8-A12G filed on August 28, 2015).
|
4.7
|
|
Series 1 Senior Notes Indenture, dated as of March 22, 2011, by and among NovaStar Financial, Inc. and The Bank Of New York Mellon Trust Company, National Association (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed under Form 425 on March 22, 2011).
|
4.8
|
|
Series 2 Senior Notes Indenture, dated as of March 22, 2011, by and among NovaStar Financial, Inc. and The Bank Of New York Mellon Trust Company, National Association (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed under Form 425 on March 22, 2011).
|
4.9
|
|
Series 3 Senior Notes Indenture, dated as of March 22, 2011, by and among NovaStar Financial, Inc. and The Bank Of New York Mellon Trust Company, National Association (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed under Form 425 on March 22, 2011).
|
10.1
|
|
Employment Agreement, dated as of January 7, 2008, by and between NovaStar Financial, Inc. and Rodney E. Schwatken (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed on January 10, 2008).*
|
10.2
|
|
Employee Non-Qualified Stock Option Agreement, between the Company and Rodney Schwatken, dated August 18, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 20, 2015).*
|
10.3
|
|
Form of Indemnification Agreement for Officers and Directors of NovaStar Financial, Inc. and its Subsidiaries (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 16, 2005).*
|
10.4
|
|
Novation Companies, Inc. 2015 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Quarterly Report Form 10-Q filed on August 7, 2015).*
|
10.5
|
|
Amended and Restated Employee Non-Qualified Stock Option Agreement, dated as of March 2, 2015, by and between Novation Companies, Inc. and Rodney E. Schwatken (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on March 3, 2015).*
|
10.6
|
|
Amended and Restated 2004 Incentive Stock Plan (as amended May 29, 2014) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 30, 2014).*
|
10.7
|
|
First Amendment to the Company's Amended and Restated 2004 Incentive Stock Plan (incorporated by reference to Appendix A to Form DEF 14A filed on April 25, 2014).*
|
10.8
|
|
Form of Stock Option Agreement under NovaStar Financial, Inc. 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.25.1 to the Current Report on Form 8-K filed on February 4, 2005).*
|
10.9
|
|
Form of Restricted Stock Award for Non-Employee Directors under the Novation Companies, Inc. 2015 Incentive Stock Plan (incorporated by reference to Exhibit 10.2 to the Quarterly Report Form 10-Q filed on August 7, 2015).*
|
10.10
|
|
Form of Option Award for Key Executives under the Novation Companies, Inc. 2015 Incentive Stock Plan (incorporated by reference to Exhibit 10.3 to the Quarterly Report Form 10-Q filed on August 7, 2015).*
|
10.11
|
|
Form of Option Award for Corvisa Employees under the Novation Companies, Inc. 2015 Incentive Stock Plan (incorporated by reference to Exhibit 10.4 to the Quarterly Report Form 10-Q filed on August 7, 2015).*
|
10.12
|
|
Form of Restricted Stock Award Agreement under NovaStar Financial, Inc. 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.25.2 to the Current Report on Form 8-K filed on February 4, 2005).*
|
10.13
|
|
Second Amended and Restated Stock Option Agreement, dated August 14, 2015, between the Company and W. Lance Anderson (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 14, 2015).*
|
10.14
|
|
2011 Compensation Plan for Independent Directors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 15, 2011).*
|
10.15
|
|
Employment Agreement, dated as of March 2, 2012, by and between NovaStar Financial, Inc. and Matthew Lautz (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on March 9, 2012).*
|
10.16
|
|
Second Amended and Restated Employee Non-Qualified Stock Option Agreement, by and between Novation Companies, Inc. and Matthew Lautz (incorporated by reference to Exhibit 10.15 to the Form 10-K/A filed on April 30, 2015).*
|
10.17
|
|
Employee Non-Qualified Stock Option Agreement, between the Company and Matthew Lautz, dated August 18, 2015 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 20, 2015).*
|
10.18
|
|
Employment Agreement, dated as of March 1, 2012, by and between NovaStar Financial, Inc. and Brett Monger (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on March 9, 2012).*
|
10.19
|
|
Employee Non-Qualified Stock Option Agreement, dated March 8, 2012, by and between NovaStar Financial, Inc. and Brett Monger (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on March 9, 2012).*
|
10.20
|
|
Amended and Restated Restricted Stock Award Agreement to Non-Employee Director, by and between the Company and Gregory T. Barmore, dated March 2, 2015 (incorporated by reference to Exhibit 10.19 to the Form 10-K/A filed on April 30, 2015).*
|
10.21
|
|
Amended and Restated Restricted Stock Award Agreement to Non-Employee Director, by and between the Company and Art. N. Burtscher, dated March 2, 2015 (incorporated by reference to Exhibit 10.20 to the Form 10-K/A filed on April 30, 2015).*
|
10.22
|
|
Amended and Restated Restricted Stock Award Agreement to Non-Employee Director, by and between the Company and Edward W. Mehrer, dated March 2, 2015 (incorporated by reference to Exhibit 10.21 to the Form 10-K/A filed on April 30, 2015).*
|
10.23
|
|
Amended and Restated Restricted Stock Award Agreement to Non-Employee Director, by and between the Company and Howard M. Amster, dated March 2, 2015 (incorporated by reference to Exhibit 10.22 to the Form 10-K/A filed on April 30, 2015).*
|
10.24
|
|
Amended and Restated Restricted Stock Award Agreement to Non-Employee Director, by and between the Company and Barry A. Igdaloff, dated March 2, 2015 (incorporated by reference to Exhibit 10.23 to the Form 10-K/A filed on April 30, 2015).*
|
10.25
|
|
Form of Employee Non-Qualified Stock Option Agreement under the Company's Amended and Restated 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-Q filed on August 7, 2014).*
|
10.26
|
|
Transaction Bonus and Release Agreement, dated December 20, 2015, by and between the Company and Matthew Lautz.*
|
10.27
|
|
Agreement, by and among Novation Companies, Inc. a Maryland corporation, Lone Star Value Investors, LP, Lone Star Value Investors GP, LLC, Lone Star Value Management, LLC and Jeffrey E. Eberwein, dated April 22, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 27, 2015).
|
21.1
|
|
Subsidiaries of the Registrant.
|
23.1
|
|
Consent of Grant Thornton LLP.
|
31.1
|
|
Chief Executive Officer and Chief Financial Officer Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
|
Chief Executive Officer and Chief Financial Officer Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
NOVATION COMPANIES, INC.
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ RODNEY E. SCHWATKEN
|
|
|
|
Rodney E. Schwatken, Chief Executive Officer and
|
|
|
|
and Chief Financial Officer
|
DATE:
|
February 16, 2016
|
|
/s/ RODNEY E. SCHWATKEN
|
|
|
|
Rodney E. Schwatken, Chief Executive Officer and
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Executive Officer and Principal Financial Officer)
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ BRETT A. MONGER
|
|
|
|
Brett A. Monger, Vice President,
|
|
|
|
Controller and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ HOWARD M. AMSTER
|
|
|
|
Howard M. Amster, Director
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ ART N. BURTSCHER
|
|
|
|
Art N. Burtscher, Director
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ JEFFREY E. EBERWEIN
|
|
|
|
Jeffrey E. Eberwein, Director
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ CHARLES M. GILLMAN
|
|
|
|
Charles M. Gillman, Director
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ BARRY A. IGDALOFF
|
|
|
|
Barry A. Igdaloff, Director
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ ROBERT G. PEARSE
|
|
|
|
Robert G. Pearse, Director
|
|
|
|
|
|
MATTHEW LAUTZ
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Matthew Lautz
|
|
Date:
|
12/20/2015
|
|
Matthew Lautz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVATION COMPANIES, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Rodney Schwatken
|
|
Date:
|
12/20/2015
|
|
Rodney Schwatken
|
|
|
|
|
Chief Executive Officer
|
|
|
|
▪
|
NovaStar Mortgage Funding Corporation, a Delaware corporation
|
▪
|
NovaStar REMIC Financing Corporation, a Delaware corporation
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ Rodney E. Schwatken
|
|
|
|
Rodney E. Schwatken
|
|
|
|
Chief Executive Officer and Chief Financial Officer
|
|
|
|
(Principal Executive and Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
DATE:
|
February 16, 2016
|
|
/s/ Rodney E. Schwatken
|
|
|
|
Rodney E. Schwatken
|
|
|
|
Chief Executive Officer and Chief Financial Officer
|
|
|
|
(Principal Executive and Financial Officer)
|