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Florida
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30-0663473
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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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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.01 per share
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New York Stock Exchange
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Large accelerated filer
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¨
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Accelerated filer
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þ
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Item
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Page No.
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PART I
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||
1.
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1A.
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||
1B.
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||
2.
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||
3.
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||
4.
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PART II
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||
5.
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6.
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||
7.
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7A.
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||
8.
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9.
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9A.
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9B.
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PART III
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10.
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11.
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12.
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13.
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14.
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PART IV
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15.
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||
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•
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our ability to obtain future financings on favorable terms, or at all;
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•
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our ability to receive distributions from policy proceeds from life insurance policies pledged as collateral under our revolving credit facilities;
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•
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our ability to meet our debt service obligations;
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•
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delays in the receipt of death benefits from our portfolio of life insurance policies;
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•
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costs related to obtaining death benefits from our portfolio of life insurance policies;
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•
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our ability to continue to comply with the covenants and other obligations, including the conditions precedent for additional fundings under our revolving credit facilities;
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•
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increases in premiums on, or the cost of insurance of, life insurance policies that we own;
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•
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changes to actuarial life expectancy tables;
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•
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changes in general economic conditions, including inflation, changes in interest or tax rates;
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•
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our results of operations;
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•
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our ability to continue to make premium payments on the life insurance policies that we own;
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•
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continuing costs associated with an investigation by the U.S. Securities and Exchange Commission (“SEC”) (the “SEC Investigation”) and an investigation by the Internal Revenue Services (“IRS”) (the “IRS Investigation”);
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•
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adverse developments, including financial ones, associated with the SEC Investigation and the IRS Investigation, other litigation and judicial actions or similar matters;
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•
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inaccurate estimates regarding the likelihood and magnitude of death benefits related to life insurance policies that we own;
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•
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lack of mortalities of insureds of the life insurance policies that we own;
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•
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increases to the discount rates used to value the life insurance policies that we own;
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•
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changes in mortality rates and inaccurate assumptions about life expectancies;
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•
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changes in life expectancy calculation methodologies by third party medical underwriters;
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•
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the effect on our financial condition as a result of any lapse of life insurance policies;
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•
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our ability to sell the life insurance policies we own at favorable prices, if at all;
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•
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adverse developments in capital markets;
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•
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deterioration of the market for life insurance policies and life settlements;
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•
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increased carrier challenges to the validity of our life insurance policies;
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•
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adverse court decisions regarding insurable interest and the obligation of a life insurance carrier to pay death benefits or return premiums upon a successful rescission or contest;
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•
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challenges to the ownership of the policies in our portfolio;
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•
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changes in laws and regulations;
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•
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deterioration in the credit worthiness of the life insurance companies that issue the policies included in our portfolio;
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•
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regulation of life settlement transactions as securities;
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•
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liabilities associated with our legacy structured settlement business;
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•
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our failure to maintain the security of personally identifiable information pertaining to insureds and counterparties;
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•
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disruption of our information technology systems;
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•
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loss of the services of any of our executive officers; and
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•
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the effects of United States involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts.
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•
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we may have difficulty satisfying our debt obligations;
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•
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we may have difficulty refinancing our existing indebtedness or obtaining financing in the future for working capital, premium payments, portfolio lending, acquisitions or other purposes;
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•
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we will need to use a substantial portion of our available cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities;
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•
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our debt level increases our vulnerability to general economic downturns and adverse industry conditions;
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•
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our debt level could limit our flexibility in planning for, or reacting to, changes in our business and in our industry in general; and
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•
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our leverage could place us at a competitive disadvantage compared to our competitors that have less debt.
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2015
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||||||
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High
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Low
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||||
1st Quarter
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$
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7.52
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$
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5.86
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2nd Quarter
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$
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7.06
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$
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5.68
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3rd Quarter
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$
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6.06
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|
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$
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4.85
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4th Quarter
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$
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5.44
|
|
|
$
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3.65
|
|
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2014
|
||||||
|
High
|
|
Low
|
||||
1st Quarter
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$
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6.59
|
|
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$
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4.71
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2nd Quarter
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$
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7.13
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|
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$
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5.67
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3rd Quarter
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$
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7.21
|
|
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$
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6.34
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4th Quarter
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$
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6.70
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$
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6.00
|
|
|
Comparison of Cumulative Total Return
|
||||||||||||||||||||||
|
02/08/11
|
|
12/31/11
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12/31/12
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|
12/31/13
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12/31/14
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12/31/15
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||||||||||||
Emergent Capital, Inc.
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$
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100.00
|
|
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$
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17.39
|
|
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$
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41.17
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|
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$
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60.50
|
|
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$
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60.31
|
|
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$
|
34.14
|
|
Russell Microcap Index
|
$
|
100.00
|
|
|
$
|
88.09
|
|
|
$
|
105.03
|
|
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$
|
150.96
|
|
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$
|
155.15
|
|
|
$
|
146.38
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|
Nasdaq Financial Index
|
$
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100.00
|
|
|
$
|
86.00
|
|
|
$
|
97.76
|
|
|
$
|
135.20
|
|
|
$
|
138.36
|
|
|
$
|
142.74
|
|
Period
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Total Number of Shares Purchased (1)
|
Average Price Paid per share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number (or Dollar Value) of Shares Remaining to be Purchased Under the Plans or Programs
|
||||||
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(In thousands)
|
||||||
October 1 through October 31
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23,100
|
|
$
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5.20
|
|
88,721
|
|
$
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9,532
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November 1 through November 30
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25,700
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$
|
4.88
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|
114,421
|
|
$
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9,407
|
|
December 1 through December 31
|
493,579
|
|
$
|
3.93
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|
608,000
|
|
$
|
7,466
|
|
Total
|
542,379
|
|
$
|
4.03
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|
608,000
|
|
$
|
7,466
|
|
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Historical
|
||||||||||||||||||
|
Years Ended December 31,
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||||||||||||||||||
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2015
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2014
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2013
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2012
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2011
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||||||||||
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(in thousands, except share and per share data)
|
||||||||||||||||||
Income
|
|
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|
|
|
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|
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||||||||||
Agency fee income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,470
|
|
Interest income
|
22
|
|
|
29
|
|
|
28
|
|
|
1,685
|
|
|
7,750
|
|
|||||
Interest and dividends on investment securities available for sale
|
—
|
|
|
—
|
|
|
14
|
|
|
391
|
|
|
640
|
|
|||||
Origination fee income
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|
6,480
|
|
|||||
Gain on forgiveness of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,023
|
|
|||||
(Loss) gain on life settlements, net
|
(41
|
)
|
|
(426
|
)
|
|
(1,990
|
)
|
|
151
|
|
|
5
|
|
|||||
Change in fair value of life settlements
|
46,717
|
|
|
44,128
|
|
|
88,686
|
|
|
(5,660
|
)
|
|
570
|
|
|||||
Servicing fee income
|
—
|
|
|
—
|
|
|
310
|
|
|
1,183
|
|
|
1,814
|
|
|||||
Gain on maturities of life settlements with subrogation rights, net
|
—
|
|
|
—
|
|
|
—
|
|
|
6,090
|
|
|
3,188
|
|
|||||
Other income
|
193
|
|
|
85
|
|
|
2,030
|
|
|
748
|
|
|
341
|
|
|||||
Total income
|
46,891
|
|
|
43,816
|
|
|
89,078
|
|
|
5,088
|
|
|
32,281
|
|
|||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
27,286
|
|
|
16,245
|
|
|
13,657
|
|
|
1,255
|
|
|
8,524
|
|
|||||
Change in fair value of Revolving Credit Facilities
|
12,197
|
|
|
(5,472
|
)
|
|
(9,373
|
)
|
|
—
|
|
|
—
|
|
|||||
Loss on extinguishment of Secured Notes
|
8,782
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss on extinguishment of Bridge Facility
|
—
|
|
|
—
|
|
|
3,991
|
|
|
—
|
|
|
—
|
|
|||||
Change in fair value of conversion derivative liability
|
—
|
|
|
6,759
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Provision for losses on loans receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
515
|
|
|
7,589
|
|
|||||
(Gain) loss on loan payoffs and settlements, net
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
125
|
|
|
3,837
|
|
|||||
Amortization of deferred costs
|
—
|
|
|
—
|
|
|
7
|
|
|
1,867
|
|
|
6,076
|
|
|||||
Personnel costs
|
6,384
|
|
|
8,763
|
|
|
8,177
|
|
|
9,452
|
|
|
12,906
|
|
|||||
Department of Justice
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,000
|
|
|||||
Legal fees
|
20,739
|
|
|
13,620
|
|
|
11,701
|
|
|
23,974
|
|
|
9,855
|
|
|||||
Professional fees
|
7,133
|
|
|
5,254
|
|
|
5,281
|
|
|
5,262
|
|
|
4,373
|
|
|||||
Insurance
|
1,275
|
|
|
1,667
|
|
|
1,953
|
|
|
2,330
|
|
|
756
|
|
|||||
Other selling, general and administrative expenses
|
2,194
|
|
|
2,006
|
|
|
1,887
|
|
|
2,366
|
|
|
4,139
|
|
|||||
Total expenses
|
85,990
|
|
|
48,842
|
|
|
37,216
|
|
|
47,146
|
|
|
66,055
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(39,099
|
)
|
|
(5,026
|
)
|
|
51,862
|
|
|
(42,058
|
)
|
|
(33,774
|
)
|
|||||
(Benefit) provision for income taxes
|
(8,719
|
)
|
|
125
|
|
|
39
|
|
|
(39
|
)
|
|
—
|
|
|||||
Net (loss) income from continuing operations
|
$
|
(30,380
|
)
|
|
$
|
(5,151
|
)
|
|
$
|
51,823
|
|
|
$
|
(42,019
|
)
|
|
$
|
(33,774
|
)
|
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) Income from discontinued operations, net of income taxes
|
(644
|
)
|
|
(601
|
)
|
|
2,198
|
|
|
(2,615
|
)
|
|
(5,424
|
)
|
|||||
Gain on disposal of discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
11,311
|
|
|
—
|
|
|
—
|
|
|||||
Benefit for income taxes
|
—
|
|
|
232
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net (loss) income from discontinued operations
|
(644
|
)
|
|
(369
|
)
|
|
13,509
|
|
|
(2,615
|
)
|
|
(5,424
|
)
|
|||||
Net (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,332
|
|
|
$
|
(44,634
|
)
|
|
$
|
(39,198
|
)
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic (loss) earnings per common share
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
|
$
|
(1.98
|
)
|
|
$
|
(1.75
|
)
|
Discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.64
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.28
|
)
|
Net (loss) income
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
|
$
|
(2.10
|
)
|
|
$
|
(2.03
|
)
|
Diluted (loss) earnings per common share
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
|
$
|
(1.98
|
)
|
|
$
|
(1.75
|
)
|
Discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.64
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.28
|
)
|
Net (loss) income
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
|
$
|
(2.10
|
)
|
|
$
|
(2.03
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic(1)
|
24,851,178
|
|
|
21,354,567
|
|
|
21,216,487
|
|
|
21,205,747
|
|
|
19,352,063
|
|
|||||
Diluted(1)
|
24,851,178
|
|
|
21,354,567
|
|
|
21,218,938
|
|
|
21,205,747
|
|
|
19,352,063
|
|
(1)
|
As of February 3, 2011, the Company had 3,600,000 shares of common stock outstanding. As of December 31, 2015, there were 28,130,508 issued and outstanding shares and
608,000
shares of treasury stock.
|
|
Historical
|
||||||||||||||||||
|
December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(In thousands except share data)
|
||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
12,946
|
|
|
$
|
51,166
|
|
|
$
|
14,722
|
|
|
$
|
7,001
|
|
|
$
|
16,255
|
|
Cash and cash equivalents (VIE)
|
7,395
|
|
|
3,751
|
|
|
7,977
|
|
|
—
|
|
|
—
|
|
|||||
Restricted cash
|
—
|
|
|
—
|
|
|
13,506
|
|
|
1,162
|
|
|
691
|
|
|||||
Certificate of deposit
|
2,501
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
891
|
|
|||||
Investment securities available for sale, at estimated fair value
|
—
|
|
|
—
|
|
|
—
|
|
|
12,147
|
|
|
57,242
|
|
|||||
Prepaid expenses and other assets
|
1,017
|
|
|
1,502
|
|
|
1,331
|
|
|
14,165
|
|
|
3,277
|
|
|||||
Deposits—other
|
1,347
|
|
|
1,340
|
|
|
1,597
|
|
|
2,855
|
|
|
761
|
|
|||||
Deposits on purchases of life settlements
|
—
|
|
|
1,630
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest receivable, net
|
—
|
|
|
—
|
|
|
—
|
|
|
822
|
|
|
5,758
|
|
|||||
Loans receivable, net
|
—
|
|
|
—
|
|
|
—
|
|
|
3,044
|
|
|
29,376
|
|
|||||
Structured settlement receivables at estimated fair value, net
|
—
|
|
|
384
|
|
|
660
|
|
|
1,680
|
|
|
12,376
|
|
|||||
Structured settlement receivables at cost, net
|
—
|
|
|
597
|
|
|
797
|
|
|
1,574
|
|
|
1,553
|
|
|||||
Investment in life settlements, at estimated fair value
|
11,946
|
|
|
82,575
|
|
|
48,442
|
|
|
113,441
|
|
|
90,917
|
|
|||||
Investment in life settlements, at estimated fair value (VIE)
|
449,979
|
|
|
306,311
|
|
|
254,519
|
|
|
—
|
|
|
—
|
|
|||||
Receivable for maturity of life settlements (VIE)
|
18,223
|
|
|
4,000
|
|
|
2,100
|
|
|
—
|
|
|
—
|
|
|||||
Fixed assets, net
|
322
|
|
|
355
|
|
|
74
|
|
|
217
|
|
|
555
|
|
|||||
Investment in affiliates
|
2,384
|
|
|
2,384
|
|
|
2,378
|
|
|
2,212
|
|
|
1,043
|
|
|||||
Assets of segment held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
30
|
|
|||||
Deferred costs, net
|
1,797
|
|
|
3,936
|
|
|
—
|
|
|
7
|
|
|
1,874
|
|
|||||
Total assets
|
$
|
509,857
|
|
|
$
|
459,931
|
|
|
$
|
348,103
|
|
|
$
|
160,342
|
|
|
$
|
222,599
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
3,051
|
|
|
6,140
|
|
|
2,977
|
|
|
6,606
|
|
|
16,336
|
|
|||||
Accounts payable and accrued expenses (VIE)
|
419
|
|
|
423
|
|
|
341
|
|
|
—
|
|
|
—
|
|
|||||
Other liabilities
|
360
|
|
|
1,256
|
|
|
21,221
|
|
|
20,796
|
|
|
4,279
|
|
|||||
Interest payable—senior unsecured convertible notes
|
2,272
|
|
|
2,272
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Senior unsecured convertible notes, net of discount
|
58,609
|
|
|
55,881
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest payable—senior secured notes
|
—
|
|
|
261
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Senior secured notes
|
—
|
|
|
24,036
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
White Eagle Revolving Credit Facility, at estimated fair value (VIE)
|
169,131
|
|
|
145,831
|
|
|
123,847
|
|
|
—
|
|
|
—
|
|
|||||
Red Falcon Revolving Credit Facility, at estimated fair value (VIE)
|
55,658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest payable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,505
|
|
|||||
Notes payable and debenture payable, net of discount
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,277
|
|
|||||
Income taxes payable
|
—
|
|
|
—
|
|
|
6,295
|
|
|
6,295
|
|
|
6,295
|
|
|||||
Deferred tax liability
|
—
|
|
|
8,728
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
289,500
|
|
|
244,828
|
|
|
154,681
|
|
|
33,697
|
|
|
51,692
|
|
|||||
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock, $0.01 par value (80,000,000 authorized; 28,130,508, 21,402,990, 21,237,166, 21,206,121 and 21,202,614 issued and outstanding as of December 31, 2015, 2014, 2013, 2012 and 2011, respectively)
|
281
|
|
|
214
|
|
|
212
|
|
|
212
|
|
|
212
|
|
|||||
Preferred stock, $0.01 par value (40,000,000 authorized; 0 issued and outstanding as of December 31, 2014, 2013, 2012 and 2011)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Treasury stock (608,000 shares as of December 31, 2015 and 0 shares as of December 31, 2014, 2013, 2012 and 2011)
|
(2,534
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Additional paid-in-capital
|
305,450
|
|
|
266,705
|
|
|
239,506
|
|
|
238,064
|
|
|
237,755
|
|
|||||
Accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(66
|
)
|
|||||
Accumulated deficit
|
(82,840
|
)
|
|
(51,816
|
)
|
|
(46,296
|
)
|
|
(111,628
|
)
|
|
(66,994
|
)
|
|||||
Total stockholders’ equity
|
220,357
|
|
|
215,103
|
|
|
193,422
|
|
|
126,645
|
|
|
170,907
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
509,857
|
|
|
$
|
459,931
|
|
|
$
|
348,103
|
|
|
$
|
160,342
|
|
|
$
|
222,599
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Period Acquisitions—Policies Owned
|
|
|
|
|
|
||||||
Number of policies acquired
|
43
|
|
|
16
|
|
|
432
|
|
|||
Average age of insured at acquisition
|
85.0
|
|
|
85.2
|
|
|
77.7
|
|
|||
Average life expectancy—Calculated LE (Years)
|
5.4
|
|
|
5.9
|
|
|
12.7
|
|
|||
Average death benefit
|
$
|
2,811
|
|
|
$
|
4,444
|
|
|
$
|
4,749
|
|
Aggregate purchase price
|
$
|
30,695
|
|
|
$
|
16,296
|
|
|
$
|
58,645
|
|
End of Period—Policies Owned
|
|
|
|
|
|
||||||
Number of policies owned
|
632
|
|
|
607
|
|
|
612
|
|
|||
Average life expectancy—Calculated LE (Years)
|
9.9
|
|
|
10.7
|
|
|
11.6
|
|
|||
Aggregate death benefit
|
$
|
2,979,352
|
|
|
$
|
2,931,066
|
|
|
$
|
2,954,890
|
|
Aggregate fair value
|
$
|
461,925
|
|
|
$
|
388,886
|
|
|
$
|
302,961
|
|
Monthly premium—average per policy
|
$
|
9.1
|
|
|
$
|
7.8
|
|
|
$
|
7.5
|
|
•
|
Changes in Fair Value of Life Settlements
—When the Company acquires certain life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment based on evaluations are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The Company recognizes income from life settlement maturities upon receipt of death notice or verified obituary of the insured. This income is the difference between the death benefits and fair values of the policy at the time of maturity.
|
•
|
Gains on Life Settlements, Net
—The Company recognizes gains from life settlement contracts that the Company owns upon the signed sale agreement and/or filing of ownership forms and funds transferred to escrow.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Statement of Cash Flows Data:
|
|
|
|
|
|
||||||
Total cash (used in) provided by:
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(54,348
|
)
|
|
$
|
(32,899
|
)
|
|
$
|
(24,431
|
)
|
Investing activities
|
(40,954
|
)
|
|
(46,017
|
)
|
|
(29,044
|
)
|
|||
Financing activities
|
60,726
|
|
|
111,134
|
|
|
69,173
|
|
|||
(Decrease)/increase in cash and cash equivalents
|
$
|
(34,576
|
)
|
|
$
|
32,218
|
|
|
$
|
15,698
|
|
|
Total
|
|
Due in Less than 1 Year
|
|
Due 1-3 Years
|
|
Due 3-5 Years
|
|
More than 5 Years
|
||||||||||
Operating leases
|
$
|
1,174
|
|
|
$
|
234
|
|
|
$
|
489
|
|
|
$
|
451
|
|
|
$
|
—
|
|
Finance lease obligation
|
$
|
63
|
|
|
$
|
38
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
White Eagle Revolving Credit Facility
(1)
|
$
|
172,050
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
172,050
|
|
Red Falcon Revolving Credit Facility
(2)
|
$
|
55,388
|
|
|
$
|
4,320
|
|
|
$
|
8,640
|
|
|
$
|
8,640
|
|
|
$
|
33,788
|
|
Interest payable
(3)
|
$
|
4,384
|
|
|
$
|
4,384
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior unsecured convertible notes
|
$
|
70,743
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70,743
|
|
|
$
|
—
|
|
|
$
|
303,802
|
|
|
$
|
8,976
|
|
|
$
|
9,154
|
|
|
$
|
79,834
|
|
|
$
|
205,838
|
|
(1)
|
Please see Note 8, “White Eagle Revolving Credit Facility,” to our consolidated financial statements
.
|
(2)
|
Required amortization is the greater of outstanding principal or amount drawn at origination due monthly, amount included is estimated based on amount drawn at origination. Please see Note 9, “Red Falcon Revolving Credit Facility,” to our consolidated financial statements.
|
(3)
|
Includes
$2.1 million
related to outstanding interest due for the Revolving Credit Facilities.
|
Carrier
|
Percentage of Total Fair Value
|
|
Percentage of Total Death Benefit
|
|
Moody’s Rating
|
|
S&P Rating
|
||
Lincoln National Life Insurance Company
|
22.5
|
%
|
|
19.7
|
%
|
|
A1
|
|
AA-
|
Transamerica Life Insurance Company
|
20.2
|
%
|
|
20.6
|
%
|
|
A1
|
|
AA-
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted- average exercise price of
outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in other column)
|
|||||
Equity compensation plans approved by security holders
|
774,394
|
|
|
$
|
8.50
|
|
|
$
|
1,808,735
|
|
Equity compensation plans not approved by security holders
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||
Total
|
774,394
|
|
|
$
|
8.50
|
|
|
$
|
1,808,735
|
|
|
|
EMERGENT CAPITAL, INC.
|
|
|
|
By:
|
/
S
/ A
NTONY
M
ITCHELL
|
Name:
|
Antony Mitchell
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ A
NTONY
M
ITCHELL
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 14, 2016
|
Antony Mitchell
|
|
|
||
|
|
|
|
|
/
S
/ R
ICHARD
O’C
ONNELL
, J
R
.
|
|
Chief Financial Officer and Chief Credit Officer (Principal Financial and Accounting Officer)
|
|
March 14, 2016
|
Richard O’Connell, Jr.
|
|
|
||
|
|
|
|
|
/
S
/ J
AMES
C
HADWICK
|
|
Director
|
|
March 14, 2016
|
James Chadwick
|
|
|
||
|
|
|
|
|
/
S
/ M
ICHAEL
A. C
ROW
|
|
Director
|
|
March 14, 2016
|
Michael A. Crow
|
|
|
||
|
|
|
|
|
/
S
/ A
NDREW
D
AKOS
|
|
Director
|
|
March 14, 2016
|
Andrew Dakos
|
|
|
||
|
|
|
|
|
/
S
/ R
ICHARD
D
AYAN
|
|
Director
|
|
March 14, 2016
|
Richard Dayan
|
|
|
||
|
|
|
|
|
/
S
/ P
HILLIP
G
OLDSTEIN
|
|
Chairman of the Board of Directors
|
|
March 14, 2016
|
Phillip Goldstein
|
|
|
||
|
|
|
|
|
/
S
/ G
ERALD
H
ELLERMAN
|
|
Director
|
|
March 14, 2016
|
Gerald Hellerman
|
|
|
||
|
|
|
|
|
/
S
/ G
ILBERT NATHAN
|
|
Director
|
|
March 14, 2016
|
Gilbert Nathan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
||||
|
(In thousands except share data)
|
||||||
ASSETS
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,946
|
|
|
$
|
51,166
|
|
Cash and cash equivalents (VIE Note 3)
|
7,395
|
|
|
3,751
|
|
||
Certificate of deposit
|
2,501
|
|
|
—
|
|
||
Prepaid expenses and other assets
|
1,017
|
|
|
1,502
|
|
||
Deposits - other
|
1,347
|
|
|
1,340
|
|
||
Deposits on purchases of life settlements
|
—
|
|
|
1,630
|
|
||
Structured settlement receivables, at estimated fair value
|
—
|
|
|
384
|
|
||
Structured settlement receivables at cost, net
|
—
|
|
|
597
|
|
||
Life settlements, at estimated fair value
|
11,946
|
|
|
82,575
|
|
||
Life settlements, at estimated fair value (VIE Note 3)
|
449,979
|
|
|
306,311
|
|
||
Receivable for maturity of life settlements (VIE Note 3)
|
18,223
|
|
|
4,000
|
|
||
Fixed assets, net
|
322
|
|
|
355
|
|
||
Investment in affiliates
|
2,384
|
|
|
2,384
|
|
||
Deferred debt costs, net
|
1,797
|
|
|
3,936
|
|
||
Total assets
|
$
|
509,857
|
|
|
$
|
459,931
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
3,051
|
|
|
$
|
6,140
|
|
Accounts payable and accrued expenses (VIE Note 3)
|
419
|
|
|
423
|
|
||
Other liabilities
|
360
|
|
|
1,256
|
|
||
Interest payable - Convertible Notes (Note 10)
|
2,272
|
|
|
2,272
|
|
||
Convertible Notes, net of discount (Note 10)
|
58,609
|
|
|
55,881
|
|
||
Interest payable - Secured Notes (Note 11)
|
—
|
|
|
261
|
|
||
Secured Notes, net of discount (Note 11)
|
—
|
|
|
24,036
|
|
||
White Eagle Revolving Credit Facility, at estimated fair value (VIE Note 3)
|
169,131
|
|
|
145,831
|
|
||
Red Falcon Revolving Credit Facility, at estimated fair value (VIE Note 3)
|
55,658
|
|
|
—
|
|
||
Deferred tax liability
|
—
|
|
|
8,728
|
|
||
Total liabilities
|
289,500
|
|
|
244,828
|
|
||
Commitments and Contingencies (Note 14)
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Common stock (par value $0.01 per share, 80,000,000 authorized; 28,130,508 and 21,402,990 issued and outstanding as of December 31, 2015 and 2014, respectively)
|
281
|
|
|
214
|
|
||
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of December 31, 2015 and 2014)
|
—
|
|
|
—
|
|
||
Treasury stock (608,000 and 0 shares as of December 31, 2015 and 2014, respectively)
|
(2,534
|
)
|
|
—
|
|
||
Additional paid-in-capital
|
305,450
|
|
|
266,705
|
|
||
Accumulated deficit
|
(82,840
|
)
|
|
(51,816
|
)
|
||
Total stockholders’ equity
|
220,357
|
|
|
215,103
|
|
||
Total liabilities and stockholders’ equity
|
$
|
509,857
|
|
|
$
|
459,931
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||
Income
|
|
||||||||||
Interest income
|
22
|
|
|
29
|
|
|
28
|
|
|||
Interest and dividends on investment securities available for sale
|
—
|
|
|
—
|
|
|
14
|
|
|||
Loss on life settlements, net
|
(41
|
)
|
|
(426
|
)
|
|
(1,990
|
)
|
|||
Change in fair value of life settlements (Notes 7 & 12)
|
46,717
|
|
|
44,128
|
|
|
88,686
|
|
|||
Servicing fee income
|
—
|
|
|
—
|
|
|
310
|
|
|||
Other income
|
193
|
|
|
85
|
|
|
2,030
|
|
|||
Total income
|
46,891
|
|
|
43,816
|
|
|
89,078
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Interest expense
|
27,286
|
|
|
16,245
|
|
|
13,657
|
|
|||
Change in fair value of Revolving Credit Facilities (Notes 8, 9 & 12)
|
12,197
|
|
|
(5,472
|
)
|
|
(9,373
|
)
|
|||
Loss on extinguishment of Secured Notes
|
8,782
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of Bridge Facility
|
—
|
|
|
—
|
|
|
3,991
|
|
|||
Change in fair value of conversion derivative liability (Notes 10 & 12)
|
—
|
|
|
6,759
|
|
|
—
|
|
|||
Gain on loan payoffs and settlements, net
|
—
|
|
|
—
|
|
|
(65
|
)
|
|||
Amortization of deferred costs
|
—
|
|
|
—
|
|
|
7
|
|
|||
Personnel costs
|
6,384
|
|
|
8,763
|
|
|
8,177
|
|
|||
Legal fees
|
20,739
|
|
|
13,620
|
|
|
11,701
|
|
|||
Professional fees
|
7,133
|
|
|
5,254
|
|
|
5,281
|
|
|||
Insurance
|
1,275
|
|
|
1,667
|
|
|
1,953
|
|
|||
Other selling, general and administrative expenses
|
2,194
|
|
|
2,006
|
|
|
1,887
|
|
|||
Total expenses
|
85,990
|
|
|
48,842
|
|
|
37,216
|
|
|||
(Loss) income from continuing operations before income taxes
|
(39,099
|
)
|
|
(5,026
|
)
|
|
51,862
|
|
|||
(Benefit) provision for income taxes
|
(8,719
|
)
|
|
125
|
|
|
39
|
|
|||
Net (loss) income from continuing operations
|
$
|
(30,380
|
)
|
|
$
|
(5,151
|
)
|
|
$
|
51,823
|
|
Discontinued Operations:
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations, net of income taxes
|
(644
|
)
|
|
(601
|
)
|
|
2,198
|
|
|||
Gain on disposal of discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
11,311
|
|
|||
Benefit for income taxes
|
—
|
|
|
232
|
|
|
—
|
|
|||
Net (loss) income from discontinued operations
|
(644
|
)
|
|
(369
|
)
|
|
13,509
|
|
|||
Net (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,332
|
|
(Loss) earnings per share:
|
|
|
|
|
|
||||||
Basic (loss) earnings per common share
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
Discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.64
|
|
Net (loss) income
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
Diluted (loss) earnings per common share
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
Discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.64
|
|
Net (loss) income
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
24,851,178
|
|
|
21,354,567
|
|
|
21,216,487
|
|
|||
Diluted
|
24,851,178
|
|
|
21,354,567
|
|
|
21,218,938
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In thousands)
|
||||||||||
Net (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,332
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Reclassification adjustment for gains included in net income
|
—
|
|
|
—
|
|
|
3
|
|
|||
Comprehensive (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,335
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
|
(in thousands, except share data)
|
||||||||||||||||||||||||||||
Balance, January 1, 2013
|
21,206,121
|
|
|
$
|
212
|
|
|
—
|
|
|
$
|
—
|
|
|
238,064
|
|
|
$
|
(111,628
|
)
|
|
$
|
(3
|
)
|
|
$
|
126,645
|
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,332
|
|
|
3
|
|
|
65,335
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,316
|
|
|
—
|
|
|
—
|
|
|
1,316
|
|
||||||
Restricted stock issued
|
17,286
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
||||||
Issuance of common stock
|
13,759
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
57
|
|
|||||||||||
Balance, December 31, 2013
|
21,237,166
|
|
|
$
|
212
|
|
|
—
|
|
|
$
|
—
|
|
|
239,506
|
|
|
$
|
(46,296
|
)
|
|
—
|
|
|
$
|
193,422
|
|
||
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,520
|
)
|
|
—
|
|
|
(5,520
|
)
|
||||||
Stock-based compensation
|
41,060
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
955
|
|
|
—
|
|
|
—
|
|
|
956
|
|
||||||
Issuance of common stock
|
125,628
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
499
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||||
Retirement of common stock
|
(864
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reclassification of derivative liability, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,069
|
|
|
—
|
|
|
—
|
|
|
14,069
|
|
||||||
Issuance of warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,381
|
|
|
—
|
|
|
—
|
|
|
5,381
|
|
||||||
Pre-conversion tax adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,295
|
|
|
—
|
|
|
—
|
|
|
6,295
|
|
||||||
Balance, December 31, 2014
|
21,402,990
|
|
|
$
|
214
|
|
|
—
|
|
|
$
|
—
|
|
|
266,705
|
|
|
$
|
(51,816
|
)
|
|
$
|
—
|
|
|
215,103
|
|
||
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,024
|
)
|
|
—
|
|
|
(31,024
|
)
|
||||||
Stock-based compensation
|
41,259
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|
—
|
|
|
490
|
|
||||||
Purchase of treasury stock, net of costs
|
|
|
|
—
|
|
|
608,000
|
|
|
(2,534
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,534
|
)
|
||||||
Common stock issued for rights offering, net of costs
|
6,688,433
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
38,267
|
|
|
—
|
|
|
—
|
|
|
38,334
|
|
||||||
Retirement of common stock
|
(2,174
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||||
Balance, December 31, 2015
|
28,130,508
|
|
|
$
|
281
|
|
|
608,000
|
|
|
$
|
(2,534
|
)
|
|
$
|
305,450
|
|
|
$
|
(82,840
|
)
|
|
$
|
—
|
|
|
$
|
220,357
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,332
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
113
|
|
|
88
|
|
|
183
|
|
|||
Red Falcon Revolving Credit Facility origination cost
|
3,329
|
|
|
—
|
|
|
—
|
|
|||
White Eagle Revolving Credit Facility origination cost
|
—
|
|
|
—
|
|
|
10,340
|
|
|||
Revolving Credit Facilities financing cost and fees
|
7,493
|
|
|
6,716
|
|
|
2,028
|
|
|||
Amortization of premiums and accretion of discounts on available for sale securities sale securities
|
—
|
|
|
—
|
|
|
21
|
|
|||
Amortization of discount and deferred cost for Convertible Notes
|
3,132
|
|
|
2,371
|
|
|
—
|
|
|||
Amortization of discount and deferred costs for Secured Notes
|
541
|
|
|
102
|
|
|
—
|
|
|||
Stock-based compensation
|
490
|
|
|
956
|
|
|
1,442
|
|
|||
(Gain) loss on loan payoffs and settlements, net
|
—
|
|
|
—
|
|
|
(65
|
)
|
|||
Change in fair value of life settlements
|
(46,717
|
)
|
|
(44,128
|
)
|
|
(88,686
|
)
|
|||
Unrealized change in fair value of structured settlements
|
(20
|
)
|
|
(32
|
)
|
|
(1,230
|
)
|
|||
Change in fair value of Revolving Credit Facilities
|
12,197
|
|
|
(5,472
|
)
|
|
(9,373
|
)
|
|||
Loss on life settlements
|
41
|
|
|
426
|
|
|
1,990
|
|
|||
Interest income
|
(87
|
)
|
|
(136
|
)
|
|
(258
|
)
|
|||
Amortization of deferred costs
|
—
|
|
|
—
|
|
|
7
|
|
|||
Extinguishment of Secured Notes
|
8,782
|
|
|
—
|
|
|
—
|
|
|||
Extinguishment of Bridge Facility
|
—
|
|
|
—
|
|
|
3,991
|
|
|||
Gain on sale and prepayment of investment securities available for sale
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||
Net gain from business dispositions
|
—
|
|
|
—
|
|
|
(11,311
|
)
|
|||
Change in value of warrants to be issued
|
—
|
|
|
—
|
|
|
2,299
|
|
|||
Change in fair value of conversion derivative liability
|
—
|
|
|
6,759
|
|
|
—
|
|
|||
Deferred income tax
|
(8,729
|
)
|
|
(107
|
)
|
|
39
|
|
|||
Change in assets and liabilities:
|
—
|
|
|
—
|
|
|
—
|
|
|||
Restricted cash
|
—
|
|
|
13,506
|
|
|
(13,506
|
)
|
|||
Deposits—other
|
(654
|
)
|
|
257
|
|
|
1,258
|
|
|||
Investment in affiliates
|
—
|
|
|
(6
|
)
|
|
(165
|
)
|
|||
Structured settlement receivables
|
1,065
|
|
|
614
|
|
|
3,124
|
|
|||
Prepaid expenses and other assets
|
(74
|
)
|
|
(153
|
)
|
|
12,848
|
|
|||
Deferred costs
|
—
|
|
|
(739
|
)
|
|
—
|
|
|||
Accounts payable and accrued expenses
|
(3,105
|
)
|
|
3,244
|
|
|
(2,938
|
)
|
|||
Other liabilities
|
(860
|
)
|
|
(14,178
|
)
|
|
(1,874
|
)
|
|||
Interest receivable
|
—
|
|
|
—
|
|
|
95
|
|
|||
Interest payable- Convertible Notes
|
—
|
|
|
2,533
|
|
|
—
|
|
|||
Interest payable- Secured Notes
|
(261
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in operating activities
|
(54,348
|
)
|
|
(32,899
|
)
|
|
(24,431
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchase of fixed assets, net of disposals
|
(69
|
)
|
|
(256
|
)
|
|
(15
|
)
|
|||
Capital lease asset
|
—
|
|
|
(8
|
)
|
|
—
|
|
|||
Certificate of deposit
|
(2,501
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale and prepayments of investment securities available for sale
|
—
|
|
|
—
|
|
|
12,111
|
|
|||
Premiums paid on life settlements
|
(64,923
|
)
|
|
(55,458
|
)
|
|
(65,121
|
)
|
|||
Purchases of life settlements
|
(29,065
|
)
|
|
(16,296
|
)
|
|
(7,000
|
)
|
|||
Proceeds from sale of life settlements, net
|
2,150
|
|
|
4,031
|
|
|
5,780
|
|
|||
Proceeds from maturity of life settlements
|
53,454
|
|
|
23,600
|
|
|
12,039
|
|
|||
Proceeds from surrender of life settlement
|
—
|
|
|
—
|
|
|
1,049
|
|
|||
Proceeds from loan payoffs and lender protection insurance claims received in advance
|
—
|
|
|
—
|
|
|
691
|
|
|||
Deposit on purchase of life settlement
|
—
|
|
|
(1,630
|
)
|
|
—
|
|
|||
Net proceeds associated with business disposition
|
—
|
|
|
—
|
|
|
11,422
|
|
|||
Net cash used in investing activities
|
(40,954
|
)
|
|
(46,017
|
)
|
|
(29,044
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Revolving Credit and Bridge Facility origination cost
|
—
|
|
|
—
|
|
|
(6,731
|
)
|
|||
Repayment of borrowings under White Eagle Revolving Credit Facility
|
(43,241
|
)
|
|
(29,777
|
)
|
|
—
|
|
|||
Repayment of borrowings under Red Falcon Revolving Credit Facility
|
(4,378
|
)
|
|
—
|
|
|
—
|
|
|||
Restricted cash
|
—
|
|
|
—
|
|
|
1,162
|
|
|||
Repayment of borrowings under Bridge Facility
|
—
|
|
|
—
|
|
|
(45,000
|
)
|
|||
Borrowings from White Eagle Revolving Credit Facility
|
47,146
|
|
|
50,518
|
|
|
78,342
|
|
|||
Borrowings from Red Falcon Revolving Credit Facility
|
5,741
|
|
|
—
|
|
|
—
|
|
|||
Borrowings from Bridge Facility
|
—
|
|
|
—
|
|
|
41,400
|
|
|||
Proceeds from Convertible Notes, net
|
—
|
|
|
67,893
|
|
|
—
|
|
|||
Proceeds from rights offering, net
|
38,334
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from Secured Notes, net
|
23,750
|
|
|
22,500
|
|
|
—
|
|
|||
Purchase of treasury shares
|
(2,534
|
)
|
|
—
|
|
|
—
|
|
|||
Payment under finance lease obligations
|
(34
|
)
|
|
—
|
|
|
—
|
|
|||
Extinguishment of Secured Notes
|
(3,570
|
)
|
|
—
|
|
|
—
|
|
|||
Red Falcon Revolving Credit Facility origination costs
|
(483
|
)
|
|
—
|
|
|
—
|
|
|||
Secured Notes deferred cost
|
(5
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
60,726
|
|
|
111,134
|
|
|
69,173
|
|
|||
Net (decrease)/increase in cash and cash equivalents
|
(34,576
|
)
|
|
32,218
|
|
|
15,698
|
|
|||
Cash and cash equivalents, at beginning of the year
|
54,917
|
|
|
22,699
|
|
|
7,001
|
|
|||
Cash and cash equivalents, at end of the year
|
$
|
20,341
|
|
|
$
|
54,917
|
|
|
$
|
22,699
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest during the period
|
$
|
13,802
|
|
|
$
|
5,414
|
|
|
$
|
1,270
|
|
Supplemental disclosures of non-cash investing activities:
|
|
|
|
|
|
||||||
Life settlements acquired in foreclosure
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,168
|
|
Supplemental disclosures of non-cash financing activities:
|
|
|
|
|
|
||||||
Purchase of policies through release of subrogation claim paid by lender
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,500
|
|
White Eagle Revolving Credit Facility origination costs paid to lender
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,000
|
|
Interest payment and fees withheld from borrowings by lender
|
$
|
7,493
|
|
|
$
|
6,716
|
|
|
$
|
2,378
|
|
Reclassification of derivative liability, net of tax
|
$
|
—
|
|
|
$
|
14,069
|
|
|
$
|
—
|
|
Issuance of warrants and common stock in connection with settlement of class action litigation
|
$
|
—
|
|
|
$
|
5,881
|
|
|
$
|
—
|
|
Pre-conversion tax adjustment
|
$
|
—
|
|
|
$
|
6,295
|
|
|
$
|
—
|
|
Red Falcon Revolving Credit Facility origination cost paid to lender
|
$
|
2,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Repayment of Secured Notes by lender of Red Falcon Revolving Credit Facility
|
$
|
51,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Borrowings under Red Falcon Revolving Credit Facility
|
$
|
54,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Changes in Fair Value of Life Settlements
—When the Company acquires certain life insurance policies we initially record these investments at the transaction price, which is the fair value of the policy for those acquired upon relinquishment or the amount paid for policies acquired for cash. The fair value of the investment in insurance policies is evaluated at the end of each reporting period. Changes in the fair value of the investment are recorded as changes in fair value of life settlements in our consolidated statement of operations. The fair value is determined on a discounted cash flow basis that incorporates current life expectancy assumptions. The discount rate incorporates current information about market interest rates, the credit exposure to the insurance company that issued the life insurance policy and our estimate of the risk premium an investor in the policy would require. The Company recognizes income from life settlement maturities upon receipt of a death notice or verified obituary of the insured. This income is the difference between the death benefit and fair value of the policy at the time of maturity.
|
•
|
Gain/ (Loss) on Life Settlements, Net
—The Company recognizes gains from the sale of life settlement contracts that the Company owns upon the signed sale agreement and/or filing of ownership forms and funds transferred to escrow.
|
|
Primary Beneficiary
|
|
Not Primary Beneficiary
|
||||||||||||
|
Consolidated VIEs
|
|
Non-consolidated VIEs
|
||||||||||||
|
Assets
|
|
Liabilities
|
|
Total Assets
|
|
Maximum Exposure To Loss
|
||||||||
December 31, 2015
|
$
|
475,597
|
|
|
$
|
225,208
|
|
|
$
|
2,384
|
|
|
$
|
2,384
|
|
December 31, 2014
|
$
|
314,062
|
|
|
$
|
146,254
|
|
|
$
|
2,384
|
|
|
$
|
2,384
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(1)
|
|
(2)
|
|
(3)
|
||||||
Loss per share:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(30,380
|
)
|
|
$
|
(5,151
|
)
|
|
$
|
51,823
|
|
Net (loss) income from discontinued operations
|
(644
|
)
|
|
(369
|
)
|
|
13,509
|
|
|||
Net (loss) income
|
$
|
(31,024
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
65,332
|
|
Basic (loss) income per common share:
|
|
|
|
|
|
||||||
Basic (loss) income per share from continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
Basic (loss) income per share from discontinued operations
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
0.64
|
|
|
Basic (loss) income per share available to common shareholders
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
Diluted (loss) income per common share:
|
|
|
|
|
|
||||||
Diluted (loss) income per share from continuing operations
|
$
|
(1.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
2.44
|
|
Diluted (loss) income per share from discontinued operations
|
(0.03
|
)
|
|
(0.02
|
)
|
|
0.64
|
|
|||
Diluted (loss) income per share available to common shareholders
|
$
|
(1.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
3.08
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic
|
24,851,178
|
|
|
21,354,567
|
|
|
21,216,487
|
|
|||
Add: Restricted stock
|
—
|
|
|
—
|
|
|
2,451
|
|
|||
Diluted
|
24,851,178
|
|
|
21,354,567
|
|
|
21,218,938
|
|
(1)
|
The computation of diluted EPS did not include
774,394
options,
6,240,521
warrants,
41,259
shares of restricted stock, up to
10,738,165
shares of underlying common stock issuable upon conversion of the Convertible Notes and
319,500
performance shares for the year ended
December 31, 2015
, as the effect of their inclusion would have been anti-dilutive.
|
(2)
|
The computation of diluted EPS did not include
807,949
options,
6,240,521
warrants,
41,060
shares of restricted stock, up to
10,464,941
shares of underlying common stock issuable upon conversion of the Convertible Notes and
323,500
performance shares for the year ended
December 31, 2014
, as the effect of their inclusion would have been anti-dilutive.
|
(3)
|
The computation of diluted EPS did not include
831,282
options and
4,240,521
warrants for the year ended
December 31, 2013
, as the effect of their inclusion would have been anti-dilutive. The computation of diluted EPS included
2,451
incremental shares of the
17,286
unvested restricted stock outstanding as of
December 31, 2013
.
|
Common Stock Options
|
Number of Shares
|
|
Weighted Average Price per Share
|
|
Weighted Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
||||||
Options outstanding, January 1, 2015
|
807,949
|
|
|
$
|
8.50
|
|
|
4.48
|
|
|
$
|
—
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
||
Options exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
||
Options forfeited
|
(33,555
|
)
|
|
8.50
|
|
|
—
|
|
|
|
|
||
Options expired
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
||
Options outstanding, December 31, 2015
|
774,394
|
|
|
$
|
8.50
|
|
|
3.47
|
|
|
$
|
—
|
|
Exercisable at December 31, 2015
|
774,394
|
|
|
8.50
|
|
|
3.47
|
|
|
|
|
||
Unvested at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Common Unvested Shares
|
Number of Shares
|
|
Outstanding January 1, 2015
|
41,060
|
|
Granted
|
41,259
|
|
Vested
|
(41,060
|
)
|
Forfeited
|
—
|
|
Outstanding December 31, 2015
|
41,259
|
|
Performance Shares
|
Number of Shares
|
|
Outstanding January 1, 2014
|
323,500
|
|
Awarded
|
—
|
|
Vested
|
—
|
|
Forfeited
|
(4,000
|
)
|
Outstanding December 31, 2015
|
319,500
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Total income
|
$
|
81
|
|
|
$
|
192
|
|
|
$
|
11,331
|
|
Total expenses
|
(725
|
)
|
|
(793
|
)
|
|
(9,133
|
)
|
|||
Income (loss) before income taxes
|
(644
|
)
|
|
(601
|
)
|
|
2,198
|
|
|||
Income tax benefit
|
—
|
|
|
232
|
|
|
—
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
$
|
(644
|
)
|
|
$
|
(369
|
)
|
|
$
|
2,198
|
|
Gain on disposal of discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
11,311
|
|
|||
Net income (loss) from discontinued operations
|
$
|
(644
|
)
|
|
$
|
(369
|
)
|
|
$
|
13,509
|
|
Remaining Life Expectancy (In Years)
|
Number of Life Settlement Contracts
|
|
Fair Value
|
|
Face Value
|
|||||
0-1
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1-2
|
12
|
|
|
28,873
|
|
|
42,988
|
|
||
2-3
|
17
|
|
|
47,272
|
|
|
84,497
|
|
||
3-4
|
18
|
|
|
24,450
|
|
|
58,154
|
|
||
4-5
|
31
|
|
|
42,304
|
|
|
124,720
|
|
||
Thereafter
|
554
|
|
|
319,026
|
|
|
2,668,993
|
|
||
Total
|
632
|
|
|
$
|
461,925
|
|
|
$
|
2,979,352
|
|
Remaining Life Expectancy (In Years)
|
Number of Life Settlement Contracts
|
|
Fair Value
|
|
Face Value
|
|||||
0-1
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1-2
|
4
|
|
|
9,227
|
|
|
12,728
|
|
||
2-3
|
10
|
|
|
23,202
|
|
|
45,852
|
|
||
3-4
|
16
|
|
|
29,531
|
|
|
67,735
|
|
||
4-5
|
19
|
|
|
23,012
|
|
|
65,614
|
|
||
Thereafter
|
558
|
|
|
303,914
|
|
|
2,739,137
|
|
||
Total
|
607
|
|
|
$
|
388,886
|
|
|
$
|
2,931,066
|
|
2016
|
$
|
68,927
|
|
2017
|
76,405
|
|
|
2018
|
79,192
|
|
|
2019
|
86,153
|
|
|
2020
|
90,138
|
|
|
Thereafter
|
1,032,771
|
|
|
|
$
|
1,433,586
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investment in life settlements
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
461,925
|
|
|
$
|
461,925
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
461,925
|
|
|
$
|
461,925
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
White Eagle Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
169,131
|
|
|
$
|
169,131
|
|
Red Falcon Revolving Credit Facility
|
—
|
|
|
—
|
|
|
$
|
55,658
|
|
|
55,658
|
|
|||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
224,789
|
|
|
$
|
224,789
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investment in life settlements
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
388,886
|
|
|
$
|
388,886
|
|
Structured settlement receivables
|
—
|
|
|
—
|
|
|
384
|
|
|
384
|
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
389,270
|
|
|
$
|
389,270
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
White Eagle Revolving Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
145,831
|
|
|
$
|
145,381
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
145,831
|
|
|
$
|
145,381
|
|
($ in thousands)
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||||
|
Fair Value at 12/31/15
|
|
Aggregate death benefit 12/31/2015
|
|
Valuation Technique (s)
|
|
Unobservable Input
|
|
Range (Weighted Average)
|
||||
Non-premium financed
|
$
|
97,133
|
|
|
$
|
339,183
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
15.00% - 21.00%
|
|
|
|
|
|
|
|
Life expectancy evaluation
|
|
6.4 years
|
||||
Premium financed
|
$
|
364,792
|
|
|
$
|
2,640,169
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
16.00% - 24.50%
|
|
|
|
|
|
|
|
Life expectancy evaluation
|
|
10.3 years
|
||||
Life settlements
|
$
|
461,925
|
|
|
$
|
2,979,352
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
(17.02)%
|
|
|
|
|
|
|
|
Life expectancy evaluation
|
|
9.9 years
|
||||
|
|
|
|
|
|
|
Discount rate
|
|
20.55%
|
||||
White Eagle Revolving Credit Facility
|
$
|
169,131
|
|
|
N/A
|
|
|
Discounted cash flow
|
|
Life expectancy evaluation
|
|
9.8 years
|
|
|
|
|
|
|
|
|
Discount rate
|
|
11.65%
|
||||
Red Falcon Revolving Credit Facility
|
$
|
55,658
|
|
|
N/A
|
|
|
Discounted cash flow
|
|
Life expectancy evaluation
|
|
9.3 years
|
Life Expectancy Months Adjustment
|
Value
|
|
Change in Value
|
||||
+6
|
$
|
388,776
|
|
|
$
|
(73,149
|
)
|
-
|
$
|
461,925
|
|
|
—
|
|
|
-6
|
$
|
540,821
|
|
|
$
|
78,896
|
|
Carrier
|
Percentage of Total Fair Value
|
|
Percentage of Total Death Benefit
|
|
Moody’s Rating
|
|
S&P Rating
|
||
Lincoln National Life Insurance Company
|
22.5
|
%
|
|
19.7
|
%
|
|
A1
|
|
AA-
|
Transamerica Life Insurance Company
|
20.2
|
%
|
|
20.6
|
%
|
|
A1
|
|
AA-
|
Weighted Average Rate Calculated Based on Death Benefit
|
Rate Adjustment
|
|
Value
|
|
Change in Value
|
|||||
16.52%
|
-0.50
|
%
|
|
$
|
473,585
|
|
|
$
|
(11,660
|
)
|
17.02%
|
—
|
|
|
$
|
461,925
|
|
|
$
|
—
|
|
17.52%
|
0.50
|
%
|
|
$
|
450,751
|
|
|
$
|
(11,174
|
)
|
Life Expectancy Months Adjustment
|
Fair Value of White Eagle Revolving Credit Facility
|
|
Change in Value
|
||||
+6
|
$
|
141,010
|
|
|
$
|
(28,121
|
)
|
-
|
$
|
169,131
|
|
|
—
|
|
|
-6
|
$
|
198,707
|
|
|
$
|
29,576
|
|
Discount Rate
|
Rate Adjustment
|
|
Fair Value of White Eagle Revolving Credit Facility
|
|
Change in Value
|
|||||
20.05%
|
-0.50
|
%
|
|
$
|
172,840
|
|
|
$
|
3,709
|
|
20.55%
|
—
|
|
|
$
|
169,131
|
|
|
$
|
—
|
|
21.05%
|
0.50
|
%
|
|
$
|
165,557
|
|
|
$
|
(3,574
|
)
|
Life Expectancy Months Adjustment
|
Fair Value of Red Falcon
Revolving Credit Facility |
|
Change in Value
|
||||
+6
|
$
|
53,559
|
|
|
$
|
(2,099
|
)
|
|
$
|
55,658
|
|
|
—
|
|
|
-6
|
$
|
57,273
|
|
|
$
|
1,615
|
|
Discount Rate
|
Rate Adjustment
|
|
Fair Value of Red Falcon
Revolving Credit Facility |
|
Change in Value
|
|||||
11.15%
|
-0.50
|
%
|
|
$
|
56,489
|
|
|
$
|
831
|
|
11.65%
|
—
|
|
|
$
|
55,658
|
|
|
$
|
—
|
|
12.15%
|
+0.50
|
%
|
|
$
|
54,848
|
|
|
$
|
(810
|
)
|
Life Settlements:
|
|
||
Balance, January 1, 2015
|
$
|
388,886
|
|
Purchase of policies
|
30,695
|
|
|
Change in fair value
|
46,717
|
|
|
Matured/lapsed/sold polices
|
(69,296
|
)
|
|
Premiums paid
|
64,923
|
|
|
Transfers into level 3
|
—
|
|
|
Transfers out of level 3
|
—
|
|
|
Balance, December 31, 2015
|
$
|
461,925
|
|
Changes in fair value included in earnings for the period relating to assets held at December 31, 2015
|
$
|
(1,442
|
)
|
White Eagle Revolving Credit Facility:
|
|
||
Balance, January 1, 2015
|
$
|
145,831
|
|
Draws under the White Eagle Revolving Credit Facility
|
54,614
|
|
|
Payments on White Eagle Revolving Credit Facility
|
(43,241
|
)
|
|
Unrealized change in fair value
|
11,927
|
|
|
Transfers into level 3
|
—
|
|
|
Transfer out of level 3
|
—
|
|
|
Balance, December 31, 2015
|
$
|
169,131
|
|
Changes in fair value included in earnings for the period relating to liabilities at December 31, 2015
|
$
|
11,927
|
|
Red Falcon Revolving Credit Facility:
|
|
||
Balance, January 1, 2015
|
$
|
—
|
|
Initial advance under the Red Falcon Revolving Credit Facility
|
54,000
|
|
|
Subsequent draws under the Red Falcon Revolving Credit Facility
|
5,766
|
|
|
Payments on Red Falcon Revolving Credit Facility
|
(4,378
|
)
|
|
Unrealized change in fair value
|
270
|
|
|
Transfers into level 3
|
—
|
|
|
Transfer out of level 3
|
—
|
|
|
Balance, December 31, 2015
|
$
|
55,658
|
|
Changes in fair value included in earnings for the period relating to liabilities held at December 31, 2015
|
$
|
270
|
|
Life Settlements:
|
|
||
Balance, January 1, 2014
|
$
|
302,961
|
|
Purchase of policies
|
16,296
|
|
|
Change in fair value
|
44,128
|
|
|
Matured/lapsed/sold polices
|
(29,957
|
)
|
|
Premiums paid
|
55,458
|
|
|
Transfers into level 3
|
—
|
|
|
Transfers out of level 3
|
—
|
|
|
Balance, December 31, 2014
|
$
|
388,886
|
|
Changes in fair value included in earnings for the period relating to assets held at December 31, 2014
|
$
|
22,597
|
|
White Eagle Revolving Credit Facility:
|
|
||
Balance, January 1, 2014
|
$
|
123,847
|
|
Draws under the White Eagle Revolving Credit Facility
|
57,233
|
|
|
Payments on White Eagle Revolving Credit Facility
|
(29,777
|
)
|
|
Unrealized change in fair value
|
(5,472
|
)
|
|
Transfers into level 3
|
—
|
|
|
Transfer out of level 3
|
—
|
|
|
Balance, December 31, 2014
|
$
|
145,831
|
|
Changes in fair value included in earnings for the period relating to liabilities at December 31, 2014
|
$
|
(5,472
|
)
|
December 31,
|
|
||
2016
|
$
|
234
|
|
2017
|
241
|
|
|
2018
|
248
|
|
|
2019
|
255
|
|
|
2020
|
196
|
|
|
|
$
|
1,174
|
|
|
Fiscal 2015
|
|
||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
||||||||
Total income
|
12,980
|
|
|
28,034
|
|
|
2,769
|
|
|
3,108
|
|
|
||||
(Loss)/income from continuing operations before taxes
|
(6,102
|
)
|
|
644
|
|
|
(18,212
|
)
|
|
(15,429
|
)
|
|
||||
Net (loss)/income from continuing operations
|
(4,165
|
)
|
|
966
|
|
|
(13,491
|
)
|
|
(13,690
|
)
|
|
||||
(Loss)/income per share from continuing operations:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.48
|
)
|
|
$
|
(0.49
|
)
|
(1)
|
Diluted
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.48
|
)
|
|
$
|
(0.49
|
)
|
(1)
|
|
Fiscal 2014
|
|
|||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
|||||||||
Total income
|
13,602
|
|
|
8,996
|
|
|
(3,617
|
)
|
|
24,835
|
|
|
|||||
(Loss)/income from continuing operations before income taxes
|
658
|
|
|
(10,474
|
)
|
|
(6,499
|
)
|
|
11,289
|
|
|
|||||
Net (loss)/income from continuing operations
|
(3,318
|
)
|
(2
|
)
|
(6,281
|
)
|
|
(4,264
|
)
|
|
8,712
|
|
|
||||
(Loss)/income per share from continuing operations:
|
|
|
|
|
|
|
|
|
|||||||||
Basic
|
$
|
(0.16
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.41
|
|
|
|
Diluted
|
$
|
(0.16
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.32
|
|
(1)
|
(1)
|
The sum of the basic and diluted earnings per share amounts for each quarter in fiscal year
2015
and the diluted for
2014
do not equal the amount presented in the statements of operations for the years ended
December 31, 2015
and
December 31, 2014
due to the Company having a net loss for the years ended
December 31, 2015
and
December 31, 2014
and therefore all common stock equivalents were antidilutive.
|
(2)
|
The Company recorded an income tax expense of
$3.7 million
, in the first quarter of
2014
upon the adoption of ASU 2013-11.
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Continuing operations
|
$
|
(8,719
|
)
|
|
$
|
125
|
|
|
$
|
39
|
|
Discontinued operations
|
—
|
|
|
(232
|
)
|
|
—
|
|
|||
Provision (benefit) for income taxes
|
$
|
(8,719
|
)
|
|
$
|
(107
|
)
|
|
$
|
39
|
|
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
|
|
|
|
|
||||||
Federal
|
(9,375
|
)
|
|
5,214
|
|
|
17,182
|
|
|||
State
|
(3,869
|
)
|
|
(2,522
|
)
|
|
2,857
|
|
|||
|
(13,244
|
)
|
|
2,692
|
|
|
20,039
|
|
|||
Valuation allowance increase (decrease)
|
4,515
|
|
|
(2,567
|
)
|
|
(20,000
|
)
|
|||
|
$
|
(8,729
|
)
|
|
$
|
125
|
|
|
$
|
39
|
|
|
|
|
|
|
|
||||||
Provision (benefit) for income taxes from continuing operations
|
$
|
(8,719
|
)
|
|
$
|
125
|
|
|
$
|
39
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
U.S.
|
$
|
(51,749
|
)
|
|
$
|
(10,824
|
)
|
|
$
|
51,862
|
|
Foreign
|
12,650
|
|
|
5,798
|
|
|
—
|
|
|||
|
$
|
(39,099
|
)
|
|
$
|
(5,026
|
)
|
|
$
|
51,862
|
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||
Tax provision (benefit) at statutory rate
|
$
|
(13,685
|
)
|
|
35.00
|
%
|
|
$
|
(1,759
|
)
|
|
35.00
|
%
|
|
$
|
18,152
|
|
|
35.00
|
%
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
State tax (net of federal benefit)
|
(1,617
|
)
|
|
4.14
|
|
|
(364
|
)
|
|
7.24
|
|
|
1,857
|
|
|
3.58
|
|
|||
Impact of rate changes
|
23
|
|
|
(0.06
|
)
|
|
(1,851
|
)
|
|
36.84
|
|
|
—
|
|
|
—
|
|
|||
Litigation settlement
|
2,275
|
|
|
(5.82
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other permanent items
|
18
|
|
|
(0.05
|
)
|
|
371
|
|
|
(7.40
|
)
|
|
30.00
|
|
|
0.06
|
|
|||
Adoption of ASU 2013-11
|
—
|
|
|
—
|
|
|
6,295
|
|
|
(125.26
|
)
|
|
—
|
|
|
—
|
|
|||
Valuation allowance (decrease) increase
|
4,267
|
|
|
(10.91
|
)
|
|
(2,567
|
)
|
|
51.08
|
|
|
(20,000
|
)
|
|
(38.56
|
)
|
|||
Provision (benefit) for income taxes
|
$
|
(8,719
|
)
|
|
22.30
|
%
|
|
$
|
125
|
|
|
(2.50
|
)%
|
|
$
|
39
|
|
|
0.08
|
%
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Federal and State net operating loss carryforward
|
$
|
31,588
|
|
|
$
|
28,864
|
|
Litigation reserves
|
—
|
|
|
328
|
|
||
Revolving credit facility
|
8,973
|
|
|
1,735
|
|
||
Deferred gain
|
13,423
|
|
|
2,367
|
|
||
Other
|
1,960
|
|
|
1,592
|
|
||
Total gross deferred tax assets
|
55,944
|
|
|
34,886
|
|
||
Less valuation allowance
|
(4,515
|
)
|
|
—
|
|
||
Total deferred tax assets
|
51,429
|
|
|
34,886
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Unrealized gains on life and structured settlements
|
29,473
|
|
|
32,568
|
|
||
Gain on structured settlements deferred for tax purposes
|
4,607
|
|
|
4,443
|
|
||
Convertible debt discount
|
4,681
|
|
|
5,733
|
|
||
Deferred income
|
12,668
|
|
|
870
|
|
||
Total deferred tax liabilities
|
51,429
|
|
|
43,614
|
|
||
Total net deferred tax asset (liability)
|
$
|
—
|
|
|
$
|
(8,728
|
)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Balance as of beginning of period
|
$
|
6,295
|
|
|
$
|
6,295
|
|
|
$
|
6,295
|
|
Additions based on tax positions taken in the current year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reductions of tax positions for prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance as of end of period
|
$
|
6,295
|
|
|
$
|
6,295
|
|
|
$
|
6,295
|
|
•
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
•
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
2.1
|
|
Asset Purchase Agreement, dated as of October 25, 2013, between Majestic Opco L.L.C. and the Registrant.
|
|
8-K
|
|
2.1
|
|
10/28/13
|
|
|
3.1
|
|
Articles of Incorporation of Registrant.
|
|
S-1/A
|
|
3.1
|
|
10/01/10
|
|
|
3.2
|
|
Articles of Amendment to Articles of Incorporation of Registrant
|
|
8-K
|
|
3.1
|
|
09/01/15
|
|
|
3.3
|
|
Amended and Restated Bylaws of Registrant.
|
|
8-K
|
|
3.2
|
|
09/01/15
|
|
|
4.1
|
|
Form of Common Stock Certificate.
|
|
S-1/A
|
|
4.1
|
|
11/10/10
|
|
|
4.2
|
|
Form of Warrant to purchase common stock
|
|
S-1/A
|
|
4.2
|
|
01/12/11
|
|
|
4.3
|
|
Warrant Agreement related to Class Action Settlement
|
|
|
|
|
|
|
|
*
|
4.4
|
|
Indenture, dated as of February 21, 2014, by and among the Registrant and U.S. Bank, National Association, as indenture trustee.
|
|
8-K
|
|
4.4
|
|
02/19/14
|
|
|
4.5
|
|
Indenture, dated as of March 11, 2016, by and among the Registrant and Wilmington Trust, National Association, as indenture trustee.
|
|
|
|
|
|
|
|
*
|
10.1†
|
|
Employment Agreement between the Registrant and Antony Mitchell dated November 8, 2010.
|
|
S-1/A
|
|
10.1
|
|
11/10/10
|
|
|
10.2†
|
|
Employment Agreement between the Registrant and Richard O’Connell dated December 31, 2013 and effective January 1, 2014.
|
|
8-K
|
|
10.1
|
|
12/30/13
|
|
|
10.3†
|
|
Employment Agreement between the Registrant and Miriam Martinez dated December 31, 2013 and effective January 1, 2014.
|
|
8-K
|
|
10.2
|
|
12/30/13
|
|
|
10.4†
|
|
Employment Agreement between the Registrant and Michael Altschuler dated December 31, 2013 and effective January 1, 2014.
|
|
8-K
|
|
10.3
|
|
12/30/13
|
|
|
10.5†
|
|
Employment Agreement between the Registrant and David Sasso dated December 31, 2013 and effective January 1, 2014.
|
|
10-Q
|
|
10.1
|
|
11/09/15
|
|
|
10.6
|
|
Separation Agreement and General Release of Claims between the Registrant and Jonathan Neuman, dated April 26, 2012.
|
|
8-K
|
|
10.2
|
|
04/30/12
|
|
|
10.7†
|
|
Amended & Restated Imperial Holdings 2010 Omnibus Incentive Plan.
|
|
Def 14A
|
|
A
|
|
04/08/15
|
|
|
10.8†
|
|
2010 Omnibus Incentive Plan Form of Stock Option Award Agreement.
|
|
10-Q
|
|
10.7
|
|
08/13/13
|
|
|
10.9†
|
|
2010 Omnibus Incentive Plan Form Performance Share Award Agreement.
|
|
8-K
|
|
10.1
|
|
06/09/14
|
|
|
10.10
|
|
Master Trust Indenture dated as of September 24, 2010 by and among Imperial Settlements Financing 2010, LLC as the Issuer, Portfolio Financial Servicing Company as the Initial Master Servicer, and Wilmington Trust Company as the Trustee and Collateral Trustee.
|
|
S-1/A
|
|
10.15
|
|
11/10/10
|
|
|
10.11
|
|
Series 2010-1 Supplement dated as of September 24, 2010 to the Master Trust Indenture dated as of September 24, 2010 by and among Imperial Settlements Financing 2010, LLC as the Issuer, Portfolio Financial Servicing Company as the Initial Servicer, and Wilmington Trust Company as the Trustee and Collateral Trustee.
|
|
S-1/A
|
|
10.16
|
|
11/10/10
|
|
|
10.12
|
|
Non-Prosecution Agreement between the Registrant and the United States Attorney’s Office for the District of New Hampshire, dated April 30, 2012.
|
|
8-K
|
|
10.1
|
|
04/30/12
|
|
|
10.12††
|
|
Amended and Restated Loan and Security Agreement, dated May 16, 2014, among White Eagle Asset Portfolio, L.P., as borrower, Imperial Finance & Trading, LLC, as initial servicer, initial portfolio manager and guarantor, Lamington Road Bermuda Ltd., as portfolio manager, LNV Corporation, as initial lender, and CLMG Corp, as the administrative agent.
|
|
10-Q
|
|
10.1
|
|
07/30/14
|
|
|
10.13
|
|
First Amendment, dated November 15, 2015, to Amended and Restated Loan and Security Agreement, dated May 16, 2014, among White Eagle Asset Portfolio, L.P., as borrower, Imperial Finance & Trading, LLC, as initial servicer, initial portfolio manager and guarantor, Lamington Road Bermuda Ltd., as portfolio manager, LNV Corporation, as initial lender, and CLMG Corp, as the administrative agent.
|
|
8-K
|
|
10.1
|
|
11/10/15
|
|
|
10.14††
|
|
Master Termination Agreement and Release, effective as of April 30, 2013, by and among Lexington Insurance Company, Imperial Holding, Inc., Imperial PFC Financing, LLC, Imperial PFC Financing II, LLC, Imperial Life Financing II, LLC, Imperial Life & Annuity Services, LLC, Imperial Premium Finance, LLC and CTL Holdings, LLC.
|
|
10-Q
|
|
10.5
|
|
08/13/13
|
|
|
10.15††
|
|
Loan and Security Agreement, dated as of July 16, 2015, among Red Falcon Trust, as borrower, Imperial Finance & Trading, LLC, as guarantor, Blue Heron Designated Activity Company, as portfolio administrator, LNV Corporation, as initial lender, the other lenders party thereto from time to time and CLMG Corp, as the administrative agent
|
|
10-Q/A
|
|
10.1
|
|
12/15/15
|
|
|
10.16
|
|
Form of Purchase Agreement to purchase 15.0% Senior Secured Notes due 2018.
|
|
|
|
|
|
|
|
*
|
21.1
|
|
Subsidiaries of the Registrant.
|
|
|
|
|
|
|
|
*
|
23.1
|
|
Consent of Grant Thornton LLP.
|
|
|
|
|
|
|
|
*
|
31.1
|
|
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
*
|
31.2
|
|
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
*
|
32.1
|
|
Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
*
|
32.2
|
|
Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
*
|
101
|
|
Interactive Data Files.
|
|
|
|
|
|
|
|
*
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
*
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
*
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
*
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
|
|
|
|
|
*
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document 10.1 & 10.2
|
|
|
|
|
|
|
|
*
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
*
|
††
|
Certain portions of the exhibit have been omitted pursuant to a confidential treatment order. An unredacted copy of the exhibit has been filed separately with the United States Securities and Exchange Commission pursuant to the request for confidential treatment.
|
*
|
Filed herewith.
|
†
|
Management compensatory arrangement.
|
Term
|
Defined in Section
|
“Agreement”
|
Recitals
|
“Agent Members”
|
2.01(b)
|
“Certificate Register”
|
2.03
|
“Common Stock”
|
Recitals
|
“Company”
|
Recitals
|
“Exercise Price”
|
3.01
|
“Expiration Date”
|
3.02(b)
|
“Holders”
|
Recitals
|
“Reorganization”
|
4.04
|
“Shelf Registration Statement”
|
5.01
|
“Stock Transfer Agent”
|
3.05
|
“Warrant”
|
Recitals
|
“Warrant Shares”
|
Recitals
|
“Warrant Agent”
|
Recitals
|
No. [ ]
|
Certificate for [ ] Warrants
|
SECTION 1.01.
|
Definitions
3
|
SECTION 1.02.
|
Other Definitions
16
|
SECTION 1.03.
|
Rules of Construction
17
|
SECTION 2.01.
|
Forms; Denominations
18
|
SECTION 2.02.
|
Execution, Authentication, Delivery and Dating
18
|
SECTION 2.03.
|
Interest, Payment of Note Balance of Outstanding Notes
19
|
SECTION 2.04.
|
Registration of Transfer and Exchange of Notes
20
|
SECTION 2.05.
|
Mutilated, Destroyed, Lost or Stolen Notes
22
|
SECTION 2.06.
|
Holder Lists
23
|
SECTION 2.07.
|
Persons Deemed Owners
23
|
SECTION 2.08.
|
Payments on the Notes
23
|
SECTION 2.09.
|
Compliance with Withholding and Other Requirements
24
|
SECTION 2.10.
|
Cancellation
25
|
SECTION 2.11.
|
Lien of the Indenture
25
|
SECTION 2.12.
|
Acknowledgment of Trustee
26
|
SECTION 3.01.
|
Applicability of Article
26
|
SECTION 3.02.
|
Optional Redemption; Notices to Indenture Trustee
26
|
SECTION 3.03.
|
Effect of Notice of Redemption
26
|
SECTION 3.04.
|
Payment of Redemption Price
27
|
SECTION 3.05.
|
Reserved
27
|
SECTION 3.06.
|
Mandatory Redemption
27
|
SECTION 3.07.
|
Redemption Upon a Change of Contro
l 27
|
SECTION 4.01.
|
Deposit and Payment of Notes
27
|
SECTION 4.02.
|
Reports and Other Information
27
|
SECTION 4.03.
|
Further Instruments and Acts
29
|
SECTION 4.04.
|
Liens on Pledged Subsidiaries or Collateral
29
|
SECTION 4.05.
|
Maintenance of Office or Agency
29
|
SECTION 4.06.
|
Amendment of Security Documents
29
|
SECTION 4.07.
|
Limitation of Incurrence of Indebtedness
29
|
SECTION 4.08.
|
Maintenance of Existence; Compliance
30
|
SECTION 4.09.
|
Maintenance of Property; Insurance
30
|
SECTION 4.10.
|
Inspection of Property; Books and Records; Discussions
30
|
SECTION 4.11.
|
Post-Closing Obligations
30
|
SECTION 4.12.
|
Restricted Payments
31
|
SECTION 5.01.
|
Events of Default
31
|
SECTION 5.02.
|
Acceleration
33
|
SECTION 5.03.
|
Other Remedies
33
|
SECTION 5.04.
|
Waiver of Past Defaults
33
|
SECTION 5.05.
|
Control by Specified Percentage of Holders
34
|
SECTION 5.06.
|
Limitation on Suits
34
|
SECTION 5.07.
|
Rights of the Holders to Receive Payment
35
|
SECTION 5.08.
|
Collection Suit by Indenture Trustee
35
|
SECTION 5.09.
|
Indenture Trustee May File Proofs of Claim
35
|
SECTION 5.10.
|
Priorities
35
|
SECTION 5.11.
|
Waiver of Stay or Extension Laws
36
|
SECTION 6.01.
|
Duties of Indenture Trustee
36
|
SECTION 6.02.
|
Rights of Indenture Trustee
37
|
SECTION 6.03.
|
Individual Rights of Indenture Trustee
41
|
SECTION 6.04.
|
Indenture Trustee’s Disclaimer
42
|
SECTION 6.05.
|
Reserved
42
|
SECTION 6.06.
|
Compensation and Indemnity
42
|
SECTION 6.07.
|
Replacement of Indenture Trustee
43
|
SECTION 6.08.
|
Successor Indenture Trustee by Merger
44
|
SECTION 6.09.
|
Eligibility; Disqualification
45
|
SECTION 7.01.
|
Satisfaction and Discharge of Indenture
45
|
SECTION 7.02.
|
Application of Trust Money
46
|
SECTION 8.01.
|
Without Consent of the Holders
46
|
SECTION 8.02.
|
With Consent of the Holders
46
|
SECTION 8.03.
|
Revocation and Effect of Consents and Waivers
47
|
SECTION 8.04.
|
Notation on or Exchange of Notes
48
|
SECTION 8.05.
|
Indenture Trustee to Sign Amendments
48
|
SECTION 8.06.
|
Reserved
48
|
SECTION 8.07.
|
Additional Voting Terms; Calculation of Principal Amount
48
|
SECTION 8.08.
|
Payment for Consent 48
|
SECTION 9.01.
|
Collateral and Security Documents
49
|
SECTION 9.02.
|
Recording and Opinions
49
|
SECTION 9.03.
|
Release of Collateral
50
|
SECTION 9.04.
|
Permitted Releases Not To Impair Lien
51
|
SECTION 9.05.
|
Suits To Protect the Collateral
51
|
SECTION 9.06.
|
Authorization of Receipt of Funds by the Indenture Trustee Under the Security Documents
51
|
SECTION 9.07.
|
Purchaser Protected
52
|
SECTION 9.08.
|
Powers Exercisable by Receiver or Indenture Trustee
52
|
SECTION 9.09.
|
Release Upon Termination of the Issuer’s Obligations
52
|
SECTION 10.01.
|
Notices
52
|
SECTION 10.02.
|
Certificate and Opinion as to Conditions Precedent
53
|
SECTION 10.03.
|
Statements Required in Certificate
53
|
SECTION 10.04.
|
When Notes Disregarded
54
|
SECTION 10.05.
|
Rules by Indenture Trustee and Note Registrar
54
|
SECTION 10.06.
|
Legal Holidays
54
|
SECTION 10.07.
|
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITY
54
|
SECTION 10.08.
|
Successors
55
|
SECTION 10.09.
|
Multiple Originals
55
|
SECTION 10.10.
|
Table of Contents; Headings
55
|
SECTION 10.11.
|
Indenture Controls
55
|
SECTION 10.12.
|
Severability
55
|
(i)
|
Litigation Proceeds;
|
(ii)
|
(a) 65% of the issued and outstanding Equity Interests of Red Reef, (b) 65% of the issued and outstanding Equity Interests of OLIPP IV and Blue Heron and (c) the Pledged Irish Profit Participating Note, representing 65% of the Irish Profit Participating Notes (the “Pledged Collateral”);
|
(iii)
|
(a) 65% of any dividends and distributions of OLIPP IV and Blue Heron and (b) 65% of any dividends and distributions of Red Reef;
|
(iv)
|
the deposit accounts listed on Schedule 1.01(A) (the “Pledged Deposit Accounts”); and
|
(v)
|
all Proceeds (as defined in the Uniform Commercial Code) of and from any of the foregoing.
|
(i)
|
the Notes;
|
(ii)
|
Indebtedness existing on the Initial Issue Date;
|
(iii)
|
Indebtedness now or hereafter incurred under the Credit Facilities; and
|
(iv)
|
Permitted Refinancing Indebtedness.
|
(1)
|
the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by
|
(2)
|
the then outstanding principal amount of such Indebtedness.
|
Term
|
Defined in Section
|
|
|
“Applicable Regulations”
|
2.09
|
“Authenticating Agent”
|
2.02(b)
|
“Bankruptcy Law”
|
5.01
|
“Change of Control Offer”
|
3.07
|
“Change of Control Offer Period”
|
3.07
|
“Claim Notice”
|
6.06
|
“consolidated”
|
“GAAP” definition
|
“custodian”
|
5.01
|
“Event of Default”
|
5.01
|
“Indemnified Person”
|
6.06
|
“Issuer”
|
Preamble
|
“Note Registrar”
|
2.04(a)
|
“Note Register”
|
2.04(a)
|
“Payment Account”
|
2.08
|
“Pledged Collateral”
|
Granting Clause
|
“Pledged Deposit Accounts”
|
Granting Clause
|
“primary obligations”
|
“Contingent Obligations” definition
|
“primary obligor”
|
“Contingent Obligations” definition
|
“Restricted Payments
|
4.12
|
“Retained Counsel”
|
6.06
|
“Secured Parties”
|
Preamble
|
“Selection Notice”
|
6.06
|
“Site”
|
6.02(y)
|
“Trust Estate”
|
Granting Clause
|
|
|
SECTION 4.01.
|
Limitation of Incurrence of Indebtedness
.
|
By:
|
/s/ Robert Donaldson
|
Company Name
|
Jurisdiction of
Organization |
Organizational
Identification Number |
Federal Identification
Number |
Red Reef Alternative Investments, LLC*
|
Delaware
|
|
|
OLIPP IV, LLC*
|
Delaware
|
|
|
Blue Heron Designated Activity Company*
|
Ireland
|
|
|
SECTION I.
|
PURCHASE AND SALE; ISSUE DATE............................................................. 1
|
Section 1.1
|
Purchase and Sale
........................................................................................
1
|
Section 1.2
|
Closing
......................................................................................................... 2
|
SECTION II.
|
CONDITIONS PRECEDENT.............................................................................. 2
|
Section 2.1
|
Conditions to Purchase
................................................................................
2
|
Section 2.2
|
Issuer's Acceptance
......................................................................................
3
|
Section 2.3
|
Purchaser’s Waiver of Compliance
..............................................................
3
|
SECTION III.
|
REPRESENTATIONS AND WARRANTIES...................................................... 4
|
Section 3.1
|
Representations and Warranties of the Issuer
..............................................
4
|
Section 3.2
|
Representations and Warranties of the Purchaser
......................................
10
|
SECTION IV.
|
INDEMNIFICATION......................................................................................... 11
|
SECTION V.
|
MISCELLANEOUS........................................................................................... 12
|
Section 5.1
|
Amendments and Waivers
.........................................................................
12
|
Section 5.2
|
Notices
.......................................................................................................
12
|
Section 5.3
|
No Waiver; Cumulative Remedies
.............................................................
12
|
Section 5.4
|
Successors and Assigns
..............................................................................
13
|
Section 5.5
|
Counterparts
...............................................................................................
13
|
Section 5.6
|
Severability
................................................................................................
13
|
Section 5.7
|
Governing Law
...........................................................................................
13
|
Section 5.8
|
Termination
................................................................................................
13
|
Section 5.9
|
Limited Recourse; No Proceedings
...........................................................
13
|
Section 5.10
|
Legal Counsel
............................................................................................
13
|
Section 5.11
|
Survival of Representations and Warranties and Indemnification
.............
14
|
Section 5.12
|
Submission to Jurisdiction; Waivers
..........................................................
14
|
Section 5.13
|
Waivers of Jury Trial
..................................................................................
15
|
Section 5.14
|
Authorization for Indenture Trustee
...........................................................
15
|
The Issuer:
|
Emergent Capital, Inc.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Emergent Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
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 control over financial reporting.
|
/s/ Antony Mitchell
|
Antony Mitchell
|
Chief Executive Officer and Director
|
(Principal Executive Officer)
|
|
March 14, 2016
|
1.
|
I have reviewed this Annual Report on Form 10-K of Emergent Capital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
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 control over financial reporting.
|
/s/ Richard S. O’Connell, Jr.
|
Richard S. O’Connell, Jr.
|
Chief Financial Officer and Chief Credit Officer
|
(Principal Financial Officer)
|
|
March 14, 2016
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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/s/ Antony Mitchell
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Antony Mitchell
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Chief Executive Officer and Director
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March 14, 2016
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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/s/ Richard S. O’Connell, Jr.
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Richard S. O’Connell, Jr.
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Chief Financial Officer and Chief Credit Officer
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March 14, 2016
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