Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 13, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GWG Holdings, Inc. | |
Entity Central Index Key | 1,522,690 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,973,790 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
A S S E T S | ||
Cash and cash equivalents | $ 10,998,625 | $ 34,425,105 |
Restricted cash | 19,828,620 | 2,341,900 |
Investment in life insurance contracts, at fair value | 387,402,111 | $ 356,649,715 |
Secured MCA advances | 4,235,442 | |
Policy benefits receivable | 15,912,839 | |
Other assets | 3,224,325 | $ 2,461,045 |
TOTAL ASSETS | 441,601,962 | 395,877,765 |
LIABILITIES | ||
Revolving credit facility | 82,304,099 | 63,279,596 |
Series I Secured Notes payable | 18,226,541 | 23,287,704 |
L Bonds | 301,924,332 | $ 276,482,796 |
Notes payable to related parties | 1,760,000 | |
Accounts payable | 2,119,791 | $ 1,517,440 |
Interest payable | 12,915,598 | 12,340,061 |
Other accrued expenses | 1,397,378 | 1,060,786 |
Deferred taxes, net | 2,819,697 | 1,763,968 |
TOTAL LIABILITIES | 423,467,436 | 379,732,351 |
STOCKHOLDERS' EQUITY | ||
CONVERTIBLE PREFERRED STOCK (par value $0.001; shares authorized 40,000,000; shares outstanding 2,713,246 and 2,781,735; liquidation preference of $20,349,000 and $20,863,000 on March 31, 2016 and December 31, 2015, respectively) | 20,274,155 | $ 20,784,841 |
REDEEMABLE PREFERRED STOCK (par value $0.001; shares authorized 100,000; shares outstanding 1,449 on March 31, 2016) | 1,369,938 | |
COMMON STOCK (par value $0.001: shares authorized 210,000,000; shares issued and outstanding 5,948,290 and 5,941,790 on March 31, 2016 and December 31, 2015) | 5,948 | $ 5,942 |
Additional paid-in capital | 17,204,940 | 17,149,391 |
Accumulated deficit | (20,720,455) | (21,794,760) |
TOTAL STOCKHOLDERS' EQUITY | 18,134,526 | 16,145,414 |
TOTAL LIABILITIES & EQUITY | $ 441,601,962 | $ 395,877,765 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 40,000,000 | 40,000,000 |
Convertible preferred stock, shares outstanding | 2,713,246 | 2,781,735 |
Convertible preferred stock, liquidation preference | $ 20,349,000 | $ 20,863,000 |
Redeemable preferred stock, par value | $ 0.001 | |
Redeemable preferred stock, shares authorized | 100,000 | |
Convertible preferred stock, shares outstanding | 1,449 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 |
Common stock, shares issued | 5,948,290 | 5,941,790 |
Common stock, shares outstanding | 5,948,290 | 5,941,790 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
REVENUE | ||
Gain on life insurance contracts, net | $ 17,713,712 | $ 16,783,409 |
Interest and other income | 190,181 | 49,296 |
TOTAL REVENUE | 17,903,893 | 16,832,705 |
EXPENSES | ||
Interest expense | 9,660,386 | 7,176,534 |
Employee compensation and benefits | 2,466,197 | 1,727,917 |
Legal and professional fees | 1,206,128 | 578,144 |
Other expenses | 2,412,160 | 1,478,848 |
TOTAL EXPENSES | 15,744,871 | 10,961,443 |
INCOME BEFORE INCOME TAXES | 2,159,022 | 5,871,262 |
INCOME TAX EXPENSE | 1,084,717 | 2,609,371 |
NET INCOME | 1,074,305 | 3,261,891 |
Income attributable to preferred shareholders | 342,962 | 353,155 |
INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 1,417,267 | $ 3,615,046 |
NET INCOME PER COMMON SHARE | ||
Basic | $ 0.24 | $ 0.62 |
Diluted | $ 0.18 | $ 0.46 |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic | 5,942,790 | 5,870,193 |
Diluted | 7,987,321 | 7,940,645 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 1,074,305 | $ 3,261,891 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||
(Gain) loss on life insurance contracts | (11,531,553) | 1,893,845 |
Amortization of deferred financing and issuance costs | 784,188 | (549,030) |
Deferred income taxes | 1,055,729 | 2,182,251 |
Preferred stock dividends payable | 163,577 | 188,812 |
(Increase) decrease in operating assets: | ||
Policy benefits receivable | (15,912,839) | (17,890,000) |
Other assets | 173,426 | $ (131,173) |
Increase in operating liabilities: | ||
Due to related party | 1,712,392 | |
Accounts payable and other accrued expenses | 1,967,969 | $ 2,635,687 |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (20,512,806) | (8,407,717) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in life insurance contracts | (24,326,322) | (2,446,477) |
Proceeds from settlement of life insurance contracts | 4,610,479 | $ 3,610,595 |
Investment in Secured MCA advances | (4,353,585) | |
Proceeds from Secured MCA advances | 118,143 | |
NET CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES | (23,951,285) | $ 1,164,118 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings on senior revolving credit facility | 20,000,000 | |
Payments for redemption of Series I Secured notes payable | (5,237,393) | $ (1,273,189) |
Proceeds from issuance of L Bonds | 34,368,889 | 27,960,297 |
Payments for issuance and redemption of L Bonds | (10,909,693) | (6,878,122) |
Increase in restricted cash | (17,486,720) | $ (7,037,564) |
Issuance of common stock | 46,545 | |
Proceeds from issuance of preferred stock | 1,028,536 | |
Payments for issuance and redemption of preferred stock | (772,553) | |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 21,037,611 | $ 12,771,422 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (23,426,480) | 5,527,823 |
CASH AND CASH EQUIVALENTS | ||
BEGINNING OF THE PERIOD | 34,425,105 | 30,662,704 |
END OF THE PERIOD | 10,998,625 | 36,190,527 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest and preferred dividends paid | 6,453,000 | 6,102,000 |
Premiums paid | 8,445,000 | 6,325,000 |
Stock-based compensation | 9,000 | 33,000 |
Series I Secured Notes: | ||
Conversion of accrued interest and commission payable to principal | 44,000 | 41,000 |
L Bonds: | ||
Conversion of accrued interest and commission payable to principal | 291,000 | 218,000 |
Series A Preferred Stock: | ||
Issuance of preferred stock in lieu of cash dividends | 168,000 | 184,000 |
Investment in life insurance contracts included in accounts payable | $ 1,551,000 | $ 87,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2014 | $ 22,389,936 | $ 20,527,866 | $ 5,870 | $ 16,257,686 | $ (14,401,486) |
Begining balance, Shares at Dec. 31, 2014 | 2,738,966 | 5,870,193 | |||
Net income/loss | (7,393,274) | $ (7,393,274) | |||
Issuance of common stock | $ 582,000 | $ 60 | $ 581,940 | ||
Issuance of common stock, Share | 60,000 | ||||
Series A Preferred Stock conversion to common stock | $ (115,973) | $ 12 | $ 115,961 | ||
Series A Preferred Stock conversion to common stock, Shares | (15,463) | 11,597 | |||
Issuance of preferred stock | $ 387,948 | $ 387,948 | |||
Issuance of preferred stock, Shares | 58,232 | ||||
Issuance of stock options | 193,804 | $ 193,804 | |||
Ending balance at Dec. 31, 2015 | 16,145,414 | $ 20,799,841 | $ 5,942 | $ 17,149,391 | $ (21,794,760) |
Ending balance, Shares at Dec. 31, 2015 | 2,781,735 | 5,941,790 | |||
Net income/loss | 1,074,305 | $ 1,074,305 | |||
Issuance of common stock | 46,545 | $ 6 | $ 46,539 | ||
Issuance of common stock, Share | 6,500 | ||||
Redemption of Series A Preferred Stock | (693,955) | $ (693,955) | |||
Redemption of Series A Preferred Stock, Shares | (92,527) | ||||
Issuance of Series A Preferred Stock | 168,269 | $ 168,269 | |||
Issuance of Series A Preferred Stock, Shares | 24,038 | ||||
Issuance of redeemable preferred stock | 1,448,536 | $ 1,448,536 | |||
Issuance of redeemable preferred stock, Shares | 1,028 | ||||
Issuance of stock options | 9,010 | $ 9,010 | |||
Ending balance at Mar. 31, 2016 | $ 18,134,526 | $ 21,722,691 | $ 5,948 | $ 17,204,940 | $ (20,720,455) |
Ending balance, Shares at Mar. 31, 2016 | 2,714,274 | 5,948,290 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Nature of business and summary of significant accounting policies | (1) Nature of business and summary of significant accounting policies Nature of business On September 30, 2015, GWG Holdings formed a wholly owned subsidiary, Wirth Park Agency, LLC. Wirth Park Agency was formed to convert term life insurance policies into universal, or permanent life insurance. Wirth Park Agency produces commission revenue through this activity. On December 7, 2015, GWG Holdings formed a wholly owned subsidiary, GWG MCA, LLC. On January 13, 2016, GWG MCA, LLC was converted to a corporation and became GWG MCA Capital, Inc. GWG MCA was formed to engage in the merchant cash advance business. Use of estimates Cash and cash equivalents Life insurance contracts Investments in Insurance Contracts The Company recognizes realized gains (revenue) from life settlement contracts upon one of the two following events: 1) Receipt of notice or verified mortality of insured; or 2) Sale of policy and filing of change of ownership forms and receipt of payment The Company recognizes the difference between the policy benefits and carrying values of the policy when an insured’s mortality event has occurred and the Company determines that settlement and ultimate collection of the policy benefits is realizable and reasonably assured. Revenue from a transaction must meet both criteria in order to be recognized. In an event of a sale of a policy, the Company recognizes gain or loss as the difference between the sale price and the carrying value of the policy on the date of the receipt of payment on such sale. Deposits and initial direct costs advanced on unsettled policy acquisitions are recorded as other assets until policy ownership has been transferred to the Company. Such deposits and direct cost advances were $526,000 and $31,000 at March 31, 2016 and December 31, 2015, respectively. Deferred financing and issuance costs Earnings (loss) per share - Basic per share earnings (loss) attributable to non-redeemable interests is calculated using the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share is calculated based on the potential dilutive impact, if any, of the Company’s Series A Preferred Stock, Redeemable Preferred Stock, outstanding warrants, and stock options. Subsequent events Recently adopted pronouncements On April 7, 2015 the FASB issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs The impact of the new ASU on the Company’s balance sheet was a reduction of approximately $2,288,000 to assets and the corresponding reduction to liabilities and stockholders’ equity. There was no impact on the Company’s statements of operations. Reclassification - ASU No. 2015-03 |
Restrictions on Cash
Restrictions on Cash | 3 Months Ended |
Mar. 31, 2016 | |
Restrictions on Cash [Abstract] | |
Restrictions on cash | (2) Restrictions on cash The Company is required by its lenders to maintain collection and escrow accounts. These accounts are used to fund the acquisition, pay annual premiums of insurance policies, pay interest and other charges under the revolving senior credit facility, and collect policy benefits. DZ Bank AG, as agent for Autobahn Funding Company, LLC, the lender for the revolving senior credit facility as described in note 5, authorizes the disbursements from these accounts. At March 31, 2016 and December 31, 2015, there was a balance of $19,829,000, and $2,342,000, respectively, maintained in these restricted cash accounts. |
Investment in Life Insurance Po
Investment in Life Insurance Policies | 3 Months Ended |
Mar. 31, 2016 | |
Investment in Life Insurance Policies [Abstract] | |
Investment in life insurance policies | (3) Investment in life insurance policies The life insurance policies (Level 3 fair value measurements) are valued based on unobservable inputs that are significant to the overall fair value measurement. Changes in the fair value of these instruments are recorded in gain or loss on life insurance policies in the consolidated statements of operations (net of the cash premiums paid on the policies). The fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions. Life expectancy reports have been obtained from widely accepted life expectancy providers. 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. As a result of management’s analysis, discount rates of 11.08% and 11.09% were applied to the portfolio as of March 31, 2016 and December 31, 2015, respectively. In September of 2015, AXA (an insurance company) announced pending cost of insurance rate increases for certain universal life policies. The effective date of the increases was originally scheduled for January 1, 2016, but was later delayed until March 1, 2016. GWG identified 14 such policies in the portfolio that are affected. As of April 21, 2016 we were in receipt of the related updated policy illustrations from AXA. We calculated the change in fair value related to the increased premiums on these 14 policies to be a reduction of $2,395,000 to the MAPS valuation of the portfolio of $389,797,000 resulting in a net valuation of $387,402,000 as of March 31, 2016. A summary of the Company’s life insurance policies accounted for under the fair value method and their estimated maturity dates, based on remaining life expectancy is as follows: As of March 31, 2016 As of December 31, 2015 Years Ending December 31, Number of Contracts Estimated Fair Value Face Value Number of Contracts Estimated Fair Value Face Value 2016 3 $ 5,440,000 $ 6,000,000 5 $ 7,503,000 $ 8,500,000 2017 11 13,855,000 18,043,000 12 12,875,000 17,418,000 2018 29 32,989,000 50,905,000 27 37,109,000 58,428,000 2019 51 51,866,000 91,707,000 51 54,242,000 100,967,000 2020 70 71,319,000 148,360,000 59 64,750,000 137,868,000 2021 56 53,756,000 130,169,000 48 45,724,000 116,805,000 2022 49 36,273,000 109,262,000 44 38,394,000 116,998,000 Thereafter 196 121,904,000 473,375,000 150 96,053,000 387,860,000 Totals 465 $ 387,402,000 $ 1,027,821,000 396 $ 356,650,000 944,844,000 T h C m n i i it , , i , t i e l r l t t o l i i wi t i l , , a t i e l h m n li i , , o l i i Reconciliation of gain on life insurance contracts: Three Months Ended: March 31, 2016 March 31, 2015 Change in fair value $ 11,532,000 $ (1,894,000 ) Premiums and other annual fees (8,445,000 ) (6,337,000 ) Policy maturities 14,627,000 25,014,000 Gain on life insurance contracts, net $ 17,714,000 $ 16,783,000 The estimated expected premium payments and servicing fees to maintain the above life insurance policies in force for the next five years, assuming no mortalities, are as follows: Years Ending December 31, Premiums Servicing Premiums and Servicing Fees Nine months ending December 31 ,2016 $ 25,258,000 $ 558,000 $ 25,816,000 2017 36,083,000 558,000 36,641,000 2018 39,398,000 558,000 39,956,000 2019 44,304,000 558,000 44,862,000 2020 49,314,000 558,000 49,872,000 2021 54,825,000 558,000 55,383,000 $ 249,182,000 $ 3,348,000 $ 252,530,000 Management anticipates funding the estimated premium payments as noted above with proceeds from the DZ Bank revolving senior credit facility and through additional debt and equity financing as well as from cash proceeds from maturities of life insurance policies. The proceeds of these capital sources are also intended to be used for the purchase, financing, and maintenance of additional life insurance policies. |
Fair Value Definition and Hiera
Fair Value Definition and Hierarchy | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Definition and Hierarchy [Abstract] | |
Fair value definition and hierarchy | (4) Fair value definition and hierarchy ASC 820 establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace including the existence and transparency of transactions between market participants. Assets and liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices in an orderly market generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. ASC 820 establishes a three-level valuation hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’ s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows: ● Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. ● Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. ● Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of observable inputs can vary by types of assets and liabilities and is affected by a wide variety of factors, including, for example, whether an instrument is established in the marketplace, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for assets and liabilities categorized in Level 3. Level 3 Valuation Process The estimated fair value of the Company’s portfolio of life insurance contracts is determined on a quarterly basis by the Company’s portfolio management committee, taking into consideration changes in discount rate assumptions, estimated premium payments and life expectancy estimate assumptions, as well as any changes in economic and other relevant conditions. The discount rate incorporates current information about discount rate applied by other reporting companies owning portfolios of life insurance policies, discount rates observed in the life insurance secondary market, market interest rates, the credit exposure to the insurance company that issued the life insurance policy and management’s estimate of the risk premium a purchaser would require to receive the future cash flows derived from our portfolio of life insurance policies. These inputs are then used to estimate the discounted cash flows using the Model Actuarial Pricing System (MAPS), probabilistic portfolio price model, which estimates the cash flows using various probabilities and scenarios. The valuation process includes a review by senior management as of each valuation date. Management has also engaged a third-party expert to independently test the accuracy of the valuations using the inputs provided by management on a quarterly basis. See Exhibit 99.1 filed herewith. Life insurance policies, as well as the portfolio taken as a whole, represent financial instruments recorded at fair value on a recurring basis. The following table reconciles the beginning and ending fair value of the Company’s Level 3 investments in its portfolio of life insurance policies for the years ending December 31, as follows: Three Months Ended 2016 2015 Beginning balance $ 356,650,000 $ 282,883,000 Purchases 23,831,000 1,016,000 Maturities (cash in excess of carrying value) (4,611,000 ) (3,610,000 ) Net change in fair value 11,532,000 (1,894,000 ) Ending balance $ 387,402,000 $ 278,395,000 The fair value of a portfolio of life insurance policies is based on information available to the Company at the reporting date. Fair value is based upon a discounted cash flow model that incorporates life expectancy estimate assumptions. Life expectancy estimates are obtained from independent, third- party widely accepted life expectancy estimate providers at policy acquisition. The life expectancy values of each insured, as determined at policy acquisition, are rolled down monthly for the passage of time by the MAPS actuarial software the Company uses for ongoing valuation of its portfolio of life insurance policies. During the fourth quarter of 2014, GWG adopted a plan to update the independent life expectancy estimates, where possible, on the insured lives in our portfolio. The plan covers all policies with the exception of those policies purchased with small face amount underwriting standards (under $1 million in face amount). The plan is for each set of life expectancy estimates and medical records to be updated on a continuous rotating three-year cycle. The records for approximately 1/12 th We have been notified of potential cost of insurance increases on certain universal life policies in our portfolio by other life insurance companies. Although we cannot now precisely quantify the impact of the increase upon our costs, or upon the fair value of our portfolio, less than 4% of the fair value of our portfolio is attributable to such policies. As a result, we expect that our premium expense will increase and the fair value of our portfolio will be negatively impacted once we are in receipt of all of the required information regarding the proposed increases. The fair value of life insurance policies is estimated using present value calculations of estimated cash flows based on the data specific to each individual life insurance policy. Estimated future policy premium payments are calculated based on the terms of the policy and the premium payment history. The following summarizes the unobservable and other inputs utilized in estimating the fair value of the portfolio of life insurance policies: As of March 31, 2016 As of December 31, 2015 Weighted-average age of insured, years 82.4 82.6 Weighted-average life expectancy, months 80.2 79.3 Average face amount per policy $ 2,210,000 $ 2,386,000 Discount rate 11.08 % 11.09 % These assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. The techniques used in estimating the present value of estimated cash flows are derived from valuation techniques generally used in the industry that include inputs for the asset that are not based on observable market data. The extent to which the fair value could reasonably vary in the near term has been quantified by evaluating the effect of changes in significant underlying assumptions used to estimate the fair value. If the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy and the discount factors were increased or decreased by 1% and 2%, while all other variables are held constant, the fair value of the investment in life insurance policies would increase or (decrease) by the amounts summarized below: Change in Fair Value of the Investment in Life Insurance Policies Change in life expectancy estimates minus 8 months minus 4 months plus 4 months plus 8 months March 31, 2016 $ 52,011,000 $ 25,901,000 $ (25,278,000 ) $ (49,990,000 ) December 31, 2015 $ 48,339,000 $ 24,076,000 $ (23,501,000 ) $ (46,482,000 ) Change in discount rate minus 2% minus 1% plus 1% plus 2% March 31, 2016 $ 38,567,000 $ 18,477,000 $ (17,033,000 ) $ (32,772,000 ) December 31, 2015 $ 35,024,000 $ 16,786,000 $ (15,485,000 ) $ (29,803,000 ) Other Fair Value Considerations C r i l r e i v l e p r e i n a t y l n s e im t i l t t e i o r t - t r m a t i t i l i r i t im t i l t C m i c N t l n d i p i m t l , 0 w i t m i t e r e s t o a s e i m h t m i f a a l t t i , 0 March 3 h r y i a l t l i n senior credit facility l t i t a r g t mm i a e t l u p l i l m i T m a r g i t i r i t t t t p r t l i li i l i c i l l t l i z i t d t l t l t m t t h i l t l im t i l Al t i n i i t m t r L i l m m t The Company has issued warrants to purchase common stock in connection with the issuance of its convertible preferred stock. Warrants were determined by the Company as permanent equity. The fair value measurements associated with the warrants, measured at issuance represent Level 3 instruments. As of March 31, 2016: Month issued Warrants issued Fair value per share Risk free Volatility Term December 2011 68,937 $ 0.22 0.42 % 25.25 % 5 years March 2012 38,130 $ 0.52 0.38 % 36.20 % 5 years June 2012 161,840 $ 1.16 0.41 % 47.36 % 5 years July 2012 144,547 $ 1.16 0.41 % 47.36 % 5 years September 2012 2,500 $ 0.72 0.31 % 40.49 % 5 years September 2014 16,000 $ 1.26 1.85 % 17.03 % 5 years 431,954 Volatility is based upon the weekly percentage change in the stock price of selected comparable insurance companies. In June 2012, we evaluated the comparable companies used, and made certain changes to those used. The percentage change is calculated on the average price of those selected stocks at the weekly close of business for the year preceding the balance sheet date. We compare annual volatility based on this weekly information. |
Credit Facilities
Credit Facilities | 3 Months Ended |
Mar. 31, 2016 | |
Credit facilities / Series I Secured Notes payable Renewable / L Bonds [Abstract] | |
Credit facilities | (5) Credit facilities Revolving senior credit facility – Autobahn Funding Company LLC On July 15, 2008, DLP II entered into a revolving senior credit facility pursuant to a Credit and Security Agreement (Agreement) with Autobahn Funding Company LLC (Autobahn), providing the Company with a maximum borrowing amount of $100,000,000. Autobahn is a commercial paper conduit that issues commercial paper to investors in order to provide funding to DLP II. DZ Bank AG Deutsche Zentral-Genossenschaftsbank (DZ Bank) acts as the agent for Autobahn. The original Agreement was to expire on July 15, 2013. On January 29, 2013, GWG Holdings, together with GWG Life and DLP II, entered into an Amended and Restated Credit and Security Agreement with Autobahn, extending the facility expiration date to December 31, 2014. On May 29, 2014, GWG Holdings, together with GWG Life and DLP II, entered into an Amendment No. 1 to Amended and Restated Credit and Security Agreement with Autobahn and DZ Bank (as committed lender and Agent). The amendment was entered into for the purpose of extending the maturity date for borrowings under the Agreement to December 31, 2016. Effective May 11, 2015, GWG Holdings, together with certain of its subsidiaries, entered into a Second Amended and Restated Credit and Security Agreement with Autobahn Funding Company LLC, as the conduit lender, and DZ Bank AG Deutsche Zentral-Genossenschaftsbank, as the committed lender and as the agent on behalf of secured parties under such agreement. The Second Amended and Restated Credit and Security Agreement extends the maturity date of borrowings made by DLP II and DLP III, to June 30, 2018. Advances under the senior credit facility made after May 11, 2015 bear interest at the commercial paper rate of the lender at the time of the advance, or at the lender’s cost of borrowing plus 4.25%, which is 1.75% less than under the previous Credit and Security Agreement executed on January 25, 2013. In addition to the extended term and decreased interest rate and borrowing cost, the Second Amended and Restated Credit and Security Agreement also removes the requirement that the Company maintain a reserve for certain projected expenditures (including anticipated premium payments required to service its life insurance portfolio), thereby allowing for the Company’s full use of the senior credit facility up to its limit of $105,000,000. In connection with the Second Amended and Restated Credit and Security Agreement, GWG Holdings and its subsidiaries entered into certain other agreements and amendments and restatements of earlier agreements entered into in connection with the original and renewal Credit and Security Agreements. Included among these other agreements was an Amended and Restated Performance Guaranty affirming the performance guaranty that GWG Holdings earlier provided in connection with the original and first Amended and Restated Credit and Security Agreements to DZ Bank AG Deutsche Zentral-Genossenschaftsbank, as agent. The amount outstanding under this facility was $85,011,000 and $65,011,000 at March 31, 2016 and December 31, 2015, respectively. The Agreement requires DLP III to pay, on a monthly basis, interest at the commercial paper rate plus an applicable margin, as defined in the Agreement. The effective rate was 5.69% at March 31, 2016 and 5.58% at December 31, 2015. The Agreement also requires payment of an unused line fee on the unfunded amount under the revolving senior credit facility. The weighted-average effective interest rate (including the unused line fee) was 5.68% and 6.20% for the three months ended March 31, 2016 and 2015, respectively. The note is secured by the ownership of life insurance policies pledged to DZ Bank by DLP III via Wells Fargo as securities intermediary. The Agreement has certain financial and nonfinancial covenants. The Company was in compliance with these covenants at March 31, 2016 and December 31, 2015. The Company has agreed to maintain (i) a positive consolidated net income on a non-GAAP basis (as defined and calculated under the Agreement) for each complete fiscal year and (ii) a tangible net worth on a non-GAAP basis (again, as defined and calculated under the Agreement) of not less than $45 million, and (iii) maintain cash and eligible investments of $15 million or above. Consolidated Non-GAAP net income and Non-GAAP tangible net worth as of and for the four quarters ended March 31, 2016, as calculated under the Agreement, was $28,333,000 and $118,922,000 respectively. Advances under the Agreement are subject to a borrowing base formula, which limits the availability of advances based on attributes of policies pledged to the facility. Over-concentration of policies by insurance carrier, over-concentration of policies by insurance carriers with ratings below a AA- rating, and the premiums and facility fees reserve are the four primary factors which might limit availability of funds on the facility. Total funds available for additional borrowings under the borrowing base formula criteria at March 31, 2016 and December 31, 2015, were $20,000,000 and $39,989,000 respectively. |
Series I Secured Notes payable
Series I Secured Notes payable | 3 Months Ended |
Mar. 31, 2016 | |
Credit facilities / Series I Secured Notes payable Renewable / L Bonds [Abstract] | |
Series I Secured Notes payable | (6) Series I Secured Notes payable Series I Secured Notes payable have been issued in conjunction with the GWG Series I Secured Notes private placement memorandum dated August 25, 2009. Series I Secured Notes are secured by assets of GWG Life and are subordinate to our revolving senior credit facility (see Note 5). On June 14, 2011, the Company closed the Series I Secured Notes offering to additional investors; however, existing investors may elect to continue advancing amounts outstanding through the renewal provisions upon maturity subject to the Company’s option. Series I Secured Notes have maturity dates ranging from six months to seven years with fixed interest rates varying from 5.65% to 9.55% depending on the term of the note. Interest is payable monthly, quarterly, annually or at maturity depending on the terms of the note. At March 31, 2016 and December 31, 2015, the weighted-average interest rate of Series I Secured Notes was 8.61% and 8.47%, respectively. The notes are secured by assets of GWG Life. The principal amount outstanding under these Series I Secured Notes was $18,508,000 and $23,578,000 at March 31, 2016 and December 31, 2015, respectively. The difference between the amount outstanding on the Series I Secured Notes and the carrying amount on the consolidated balance sheet is due to netting of unamortized deferred issuance costs. Overall, interest expense includes amortization of deferred financing and issuance costs of $111,000 and $130,000 for the three months ended March 31, 2016 and 2015, respectively. Future expected amortization of deferred financing costs is $281,000 in total over the next six years. Future contractual maturities of Series I Secured Notes payable and future amortization of their deferred financing costs at March 31, 2016 are as follows: Years Ending December 31, Contractual Maturities Amortization of Deferred Financing Costs Nine months ending December 31 ,2016 $ 6,581,000 $ 35,000 2017 7,956,000 128,000 2018 1,596,000 41,000 2019 444,000 7,000 2020 1,766,000 63,000 Thereafter 165,000 7,000 $ 18,508,000 $ 281,000 |
L Bonds
L Bonds | 3 Months Ended |
Mar. 31, 2016 | |
Credit facilities / Series I Secured Notes payable Renewable / L Bonds [Abstract] | |
L Bonds | (7) L Bonds The Company registered with the SEC, effective January of 2012, the offer and sale of $250,000,000 of Renewable Secured Debentures (subsequently renamed “L Bonds”). The debt securities are secured by assets of GWG Holdings and GWG Life and are subordinate to our revolving senior credit facility (see Note 5). L Bonds have maturity dates ranging from six months to seven years with fixed interest rates varying from 4.25% to 9.50% depending on the term of the note. Interest is payable monthly, annually or at maturity depending on the terms of the debenture. Effective January 9, 2015, the Company registered a $1 billion follow-on offering of L Bonds. The Company is offering L Bonds on a continuous basis and there is no minimum amount of L Bonds that must be sold before the Company can use proceeds from the sale of L Bonds. Emerson Equity LLC is serving as the managing broker-dealer for the offering, which is being sold through a network of participating dealers and licensed financial advisors and representatives in minimum increments of $25,000. At March 31, 2016 and December 31, 2015, the weighted-average interest rate of L Bonds was 7.14% and 7.18%, respectively. The amount outstanding under these L Bonds was $306,831,000 and $282,171,000 at March 31, 2016 and December 31, 2015, respectively. The difference between the amount outstanding on the L Bonds and the carrying amount on the consolidated balance sheets is due to netting of unamortized deferred issuance costs and cash receipts for new issuances in process. Amortization of deferred issuance costs was $1,568,000 and $974,000 for the three months ended March 31, 2016 and 2015, respectively. Future expected amortization of deferred financing costs as of March 31, 2016 is $9,522,000 in total over the next eight years. Future contractual maturities of L Bonds and future amortization of their deferred financing costs at March 31, 2016 are as follows: Years Ending December 31, Contractual Maturities Amortization of Deferred Financing Costs Nine months ending December 31 ,2016 $ 76,618,000 $ 562,000 2017 73,736,000 1,734,000 2018 75,804,000 2,976,000 2019 33,648,000 1,521,000 2020 19,602,000 995,000 Thereafter 27,423,000 1,734,000 $ 306,831,000 $ 9,522,000 The Company entered into an Indenture effective October 19, 2011 with Holdings as obligor, GWG Life as guarantor, and Bank of Utah as trustee for the benefit of the bond holders. The Indenture has certain financial and non-financial covenants. The Company was in compliance with these covenants at March 31, 2016 and December 31, 2015. |
Note Payable to Related Party
Note Payable to Related Party | 3 Months Ended |
Mar. 31, 2016 | |
Note Payable to Related Party [Abstract] | |
Note Payable to Related Party | (8) Note Payable to Related Party In February 2016, we acquired certain assets in our wholly owned subsidiary, GWG MCA. To finance this acquisition, GWG MCA borrowed $1,760,000 from Insurance Strategies Fund, LLC (ISF), a related party, under a promissory note dated February 16, 2016. ISF owns 100,000 shares of common stock in GWG Holdings. ISF is owned by SABKA, a trust controlled by Robert Sabes, the father of Jon and Steve Sabes, who beneficially own or control approximately 74% of our common stock. The promissory note accrues interest at an annual rate of 9%, and the obligations under this promissory note are unsecured. The maturity date of this note is the earlier of (i) December 31, 2016 or (ii) 30 calendar days after the date on which the GWG MCA shall have received net financings proceeds from it's private offer and sale of it's preferred stock equaling the amount of debt for borrowed money then outstanding under this promissory note. |
Convertible Preferred Stock
Convertible Preferred Stock | 3 Months Ended |
Mar. 31, 2016 | |
Convertible and Redeemable Preferred Stock/Common Stock [Abstract] | |
Convertible preferred stock | (9) Convertible preferred stock The Company offered 3,333,333 shares of convertible redeemable preferred stock (Series A Preferred Stock) for sale to accredited investors in a private placement on July 31, 2011. The offering of Series A Preferred Stock concluded on September 2, 2012 and resulted in 3,278,000 shares being issued for gross consideration of $24,582,000. The Series A Preferred Stock was sold at an offering price of $7.50 per share. Series A Preferred Stock has a preferred yield of 10% per annum, and each share has the right to convert into 0.75 shares of the Company’s common stock at $10 per share. As of March 31, 2016, the Company had 2,713,000 shares of Series A Preferred Stock outstanding with gross consideration of $20,274,000 (including cash proceeds, conversion of Series I Secured Notes and accrued interest on Series I notes, and conversion of preferred dividends payable). The Company incurred Series A Preferred Stock issuance costs of $2,838,000, all of which was included as a component of additional paid in capital as of March 31, 2016. Series A preferred shareholders also received three-year warrants to purchase, at an exercise price per share of $12.50, one share of common stock for every 40 shares of Series A Preferred Stock purchased. The warrants are exercisable immediately. The Company determined that the grant date fair value of the outstanding warrants attached to the Series A Preferred Stock was $428,000 for warrants outstanding as of March 31, 2016. The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share upon 30 days written notice to the investors at any time after (i) the Company has completed a registration of its common stock with the SEC and (ii) the volume of weighted-average sale price per share of common stock equals or exceeds $14.00 per share for ten consecutive trading days ending on the third business day prior to proper notice of such redemption. Total warrants outstanding as of both March 31, 2016 and December 31, 2015, were 431,954 with a weighted-average remaining life of 1.18 and 1.43 years, respectively. As of March 31, 2016, none of these warrants have been exercised. The Company’s obligation to redeem its Series A Preferred Stock terminated upon the Company completing a registration of its common stock with the SEC, which occurred on September 24, 2014 (see Note 11). As such, the convertible redeemable preferred stock was reclassified from temporary equity to permanent equity. The Company may redeem the Series A Preferred Stock at a price equal to 110% of its liquidation preference ($7.50 per share) at any time. As of March 31, 2016, the Company had redeemed an aggregate of 277,000 shares of Series A Preferred Stock. The Series A Preferred Stock shares (i) were convertible, at the election of the Company, into common stock of the Company in the event of either a registered offering of the Company’s common stock with the SEC aggregating gross proceeds of at least $5.0 million and at a price equal to or greater than $11.00 per share; (ii) remain convertible at the option of each holder; and (iii) are required to be converted upon the consent of shareholders holding at least a majority of the then-outstanding Series A Preferred Stock. In connection with the Company’s initial public offering, the Company elected to cause the conversion of 677,566 shares of preferred stock into 508,193 shares of common stock. As of March 31, 2016, 398,000 shares of Series A Preferred Stock have been issued as a result of conversion of $2,788,000 in dividends, and 678,000 shares of Series A Preferred Stock have been converted to 508,000 shares of the Company’s common stock. Dividends on the Series A Preferred Stock may be paid in either cash or additional shares of Series A Preferred Stock at the election of the holder and approval of the Company. The dividends are reported as an expense and included in the caption interest expense in the consolidated statements of operations. The Company declared and accrued dividends of $507,000 and $537,000 for the three months ended March 31, 2016 and 2015, respectively, pursuant to a board resolution declaring the dividend. 24,000 and 26,000 shares of Series A Preferred Stock were issued in lieu of cash dividends in the three months ended March 31, 2016 and 2015, respectively. The shares issued in lieu of cash dividends were issued at $7.00 per share. As of March 31, 2016, GWG Holdings has $507,000 of accrued Series A Preferred Stock dividends which were paid or converted to shares of Series A Preferred Stock on April 15, 2016. |
Redeemable Preferred Stock
Redeemable Preferred Stock | 3 Months Ended |
Mar. 31, 2016 | |
Convertible and Redeemable Preferred Stock/Common Stock [Abstract] | |
Redeemable Preferred Stock | (10) Redeemable Preferred Stock The Company began offering up to 100,000 shares of Redeemable Preferred Stock for sale via Form S-1 registration statement effective November 30, 2015. The maximum offering price per share is $1,000 with a par value per share of $.001. The Redeemable Preferred Stock ranks senior to our common stock and pari passu to our Series A Preferred Stock with respect to payment of dividends and rights upon liquidation dissolution or winding up. Redeemable Preferred Stock has an annualized yield of 7%. Subject to the limitations described below, holders of Redeemable Preferred Stock will have the option to convert the Redeemable Preferred Stock they purchase from us and hold into common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date on which notice of conversion is delivered to us, subject to a minimum conversion price of $15.00, subject to equitable adjustment. The right of holders to convert their Redeemable Preferred Stock is limited to 15% of the stated value of Redeemable Preferred Stock originally purchased by such holder from us and A holder will have the opportunity to request that we redeem such holder's Redeemable Preferred Stock at a redemption price equal to the stated value of such redeemed shares, plus any accrued but unpaid dividends thereon, less the applicable redemption fee (if any). As a percentage of the aggregate redemption price of a holder’s shares to be redeemed, the redemption fee shall be: ● 12% if the redemption is requested before the first anniversary of the original issuance of the shares; and ● 10% if the redemption is requested on or after the first anniversary and before the second anniversary of the original issuance of such shares; and ● 8% if the redemption is requested on or after the second anniversary and before the third anniversary of the original issuance of such shares. Beginning three years from the date of original issuance of such shares, no redemption fee shall be subtracted from the redemption price. Subject to certain restrictions and conditions, we will also redeem shares of Redeemable Preferred Stock of a holder who is a natural person (including an individual beneficial holder who holds our preferred shares through a custodian or nominee, such as a broker-dealer) upon his or her death, total disability or bankruptcy, within 60 days of our receipt of a written request from the holder or the holder’s estate at a redemption price equal to the stated value, plus accrued and unpaid dividends thereon. After one year from the date of original issuance of shares of Redeemable Preferred Stock, we will have the right (but not the obligation) to call and redeem such shares of Redeemable Preferred Stock at 100% of their stated value, plus any accrued but unpaid dividends thereon. We will not be obligated in all cases to redeem shares of Redeemable Preferred Stock, whether upon a redemption request by a holder, at the option of the Company, or upon the death, total disability or bankruptcy of a holder. In particular, we will not redeem or repurchase any preferred shares if we are restricted by applicable law or our Certificate of Incorporation, as amended, from making such redemption or to the extent any such redemption would cause or constitute a default under any borrowing agreements to which we or any of our subsidiaries are a party or otherwise bound. In addition, we will have no obligation to redeem preferred shares upon a redemption request made by a holder if we do not have sufficient funds available to fund that redemption. We have discretion under the Certificate of Designation for the Redeemable Preferred Stock to determine whether we are in possession of “sufficient funds” to fund a redemption request. As of March 31, 2016 the Company sold 1,449 shares of the Redeemable Preferred Stock raising approximately $1,449,000. The Company incurred approximately $79,000 of selling costs related to the sale of the Redeemable Preferred Stock. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income taxes | (11) Income taxes The Company has a $29,000 and $0 of current income tax liability as of March 31, 2016 and December 31, 2015. The components of current and deferred income tax expense for the three months ended March 31, 2016 and 2015, respectfully, consisted of the following: Three Months Ended March 31, March 31, 2016 2015 Income tax: Current: Federal $ (23,000 ) $ (324,000 ) State (6,000 ) (103,000 ) Total current tax expense (29,000 ) (427,000 ) Deferred: Federal $ (806,000 ) $ (1,654,000 ) State (250,000 ) (528,000 ) Total deferred tax expense (1,056,000 ) (2,182,000 ) Total income tax expense $ (1,085,000 ) $ (2,609,000 ) The primary differences between the Company’s March 31, 2016 effective tax rate and the statutory federal rate are the accrual of nondeductible preferred stock dividend expense of $511,000, state taxes, and other non-deductible expenses. The most significant temporary differences between GAAP net income and taxable net income are the treatment of interest costs with respect to the acquisition of the life insurance policies and revenue recognition with respect to the mark-to-market of life insurance portfolio. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2016 | |
Convertible and Redeemable Preferred Stock/Common Stock [Abstract] | |
Common Stock | (12) Common Stock On September 24, 2014, GWG consummated an initial public offering of its common stock which resulted in the sale of 800,000 shares of common stock at $12.50 per share. The sale resulted in net proceeds of approximately $8.6 million after the deduction of underwriting commissions, discounts and expense reimbursements. In connection with this offering, the Company listed its common stock on The NASDAQ Capital Market under the ticker symbol “GWGH” effective September 25, 2014. On June 24, 2015 GWG issued 60,000 restricted shares of common stock at $9.70 per share, determined by closing market price, to a vendor as a form of payment for the services the vendor will provide to the Company in the next three years. The cost of the issued shares is being amortized over a twelve-month period. On March 17, 2016 GWG issued 6,500 restricted shares of common stock at an average price of $7.16 per share, determined by closing market price, to the same vendor as a form of payment for additional services the vendor provided to the Company. |
Stock Incentive Plan
Stock Incentive Plan | 3 Months Ended |
Mar. 31, 2016 | |
Stock Incentive Plan [Abstract] | |
Stock Incentive Plan | (13) Stock Incentive Plan The Company adopted the GWG Holdings, Inc. 2013 Stock Incentive Plan on March 27, 2013. On April 23, 2015 the Board of Directors approved amendments to the plan which were subsequently approved by a majority of the Company’s stockholders at the annual meeting of stockholders on June 1, 2015. The plan is administered by Compensation Committee of the Board of Directors of the Company. The Company’s Chief Executive Officer may, on a discretionary basis and without committee review or approval, grant incentives to new employees of the Company who are not officers of the Company. Incentives under the plan may be granted in one or a combination of the following forms: (a) incentive stock options and non-statutory stock options; (b) stock appreciation rights; (c) stock awards; (d) restricted stock; (e) restricted stock units; and (f) performance shares. Eligible participants include officers and employees of the company, members of the Board of Directors, and consultants or other independent contractors. 2,000,000 shares are issuable under the plan. No person shall receive grants of stock options and SARs under the plan that exceed, in the aggregate 400,000 shares of common stock in any one year. The term of each stock option shall be determined by the committee but shall not exceed ten years. Vested stock options may be exercised in whole or part by the holder giving notice to the Company. The holder of the option may provide payment for the exercise price or surrender shares equal to the exercise price. The Company issued stock options for 1,050,615 shares of common stock to employees, officers, and directors of the Company through March 31, 2016. Options for 502,205 shares have vested, and the remaining options will vest over three years. The options were issued with an exercise price between $6.60 and $10.18 for those owning more than 10% of the Company’s stock and between $6.00 and $10.25 for others, which is equal to the estimated market price of the shares on the date of grant valued using Black-Scholes binomial option pricing model. The expected volatility used in the Black-Scholes model valuation of options issued during the year was 20.59% annualized. The annual volatility rate is based on the standard deviation of the average continuously compounded rate of return of five selected comparable companies over the previous 52 weeks. Forfeiture rate of 15% is based on historical Company information and expected future trend. As of March 31, 2016, stock options for 345,685 shares were forfeited and stock options for 28,001 shares were exercised. In September 2014, we entered into a stock option agreement (the Agreement) with a new management employee (the Employee) granting the Employee the right to purchase up to 318,000 of the Company’s common stock at an exercise price of $12.50. The grant of such rights to purchase the Company’s common stock was treated as an inducement grant and was issued outside the GWG Holdings Inc. 2013 Stock Incentive Plan. The Agreement specifies that, among other things, options to purchase 159,000 shares of the Company’s common stock will vest with the Employee ratably on the first, second and third anniversary of the date of the Agreement. The remaining 159,000 options will vest quarterly using a formula based upon the closing price of the Company’s common stock on the last business day of such quarter. The maximum number of these remaining options that will vest with the Employee is 53,000 in each successive one-year period beginning on the date of the Agreement. As of March 31, 2016 53,000 of these options were forfeited and 53,000 have vested. Outstanding stock options: Vested Un-vested Total Balance as of December 31, 2014 314,288 685,813 1,000,101 Granted during the year 79,500 273,700 353,200 Vested during the year 238,999 (238,999 ) - Exercised during the year (27,667 ) - (27,667 ) Forfeited during the year (121,417 ) (150,602 ) (272,019 ) Balance as of December 31, 2015 483,703 569,912 1,053,615 Granted during the quarter 7,500 - 7,500 Vested during the quarter 14,092 (14,092 ) - Forfeited during the quarter (3,090 ) (7,410 ) (10,500 ) Balance as of March 31, 2016 502,205 548,410 1,050,615 Compensation expense related to un-vested options not yet recognized is $451,000. We expect to recognize this compensation expense over the next three years ($214,000 in 2016, $187,000 in 2017, and 50,000 in 2018). The Company issues new common stock for options exercised. |
Net income per common share
Net income per common share | 3 Months Ended |
Mar. 31, 2016 | |
Net Income Per Common Share [Abstract] | |
Net income per common share | (14) Net income per common share The Company began issuing Series A Preferred Stock September, 1, 2011, as described in note 8. The Series A Preferred Stock is dilutive to the net income per common share calculation at both March 31, 2016 and 2015. The Company has also issued warrants to purchase common stock in conjunction with the sale of convertible preferred stock (see Note 9). The warrants and vested stock options are anti-dilutive at both March 31, 2016 and 2015 and have not been included in the fully diluted net loss per common share calculation. The Company’s outstanding stock options are anti-dilutive at both March 31, 2016 and 2015. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments | (15) Commitments The Company entered into an office lease with U.S. Bank National Association as the landlord. The lease was effective April 22, 2012 with a term through August 31, 2015. The lease was for 11,695 square feet of office space located at 220 South Sixth Street, Minneapolis, Minnesota. The Company was obligated to pay base rent plus common area maintenance and a share of the building operating costs. Effective September 1, 2015, the Company entered into a Second Amendment to the office lease with US Bank National Association that extended the term of the lease to 120 months from the effective date and expanded to 17,687 square feet. The Second Amendment provides the right for us to extend the term of the lease for one three-year term, and a right of first offer on space adjacent to our leased premises. The Company is obligated to pay base rent plus common area maintenance and a share of the building operating costs. Rent expenses under the above agreements were $224,000 and $68,000 during the three months ended March 2016 and 2015, respectively. Minimum lease payments under the Second Amendment to Lease are as follows: Nine months ending December 31, 2016 $ 130,000 2017 178,000 2018 185,000 2019 191,000 2020 198,000 2021 204,000 2022 210,000 2023 217,000 2024 223,000 2025 230,000 2026 38,000 $ 2,004,000 GWG MCA entered into a sublease agreement with Wellington Group as tenant. The sublease was effective February 1, 2016 with a term through August 1, 2016. The sublease was for an office space and use of reception, kitchen and common areas of 450 Seventh Avenue, Suite 809, New York, New York. The total rent for the sublease term is $30,000 paid in $5,000 monthly installments. Additional charges for services (utilities and cleaning services) during the sublease term equal to monthly payments of $500. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Contingencies | (16) Contingencies Litigation - In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Guarantees of L Bonds
Guarantees of L Bonds | 3 Months Ended |
Mar. 31, 2016 | |
Guarantees of L Bonds [Abstract] | |
Guarantees of L Bonds | (17) Guarantees of L Bonds GWG Holdings has registered with the SEC the offer and sale $250,000,000 of L Bonds, and effective January 9, 2015, launched a $1 billion follow-on to its publicly registered L Bond offering as described in note 7. The L Bonds are secured by the assets of GWG Holdings as described in note 7 and a pledge of all the common stock held by the largest individual shareholders. Obligations under the L Bonds are guaranteed by GWG Life. This guarantee involves the grant of a security interest in all the assets of GWG Life. The payment of principal and interest on the L Bonds is fully and unconditional guaranteed by GWG Life. Substantially all of the Company’s life insurance policies are held by DLP III and the Trust. The policies held by DLP III are not collateral for the L Bond obligations as such policies serve as collateral for the senior credit facility. The consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because management does not believe that separate financial statements and related disclosures would be material to investors. There are currently no significant restrictions on the ability of GWG Holdings or GWG Life, the guarantor subsidiary, to obtain funds from its subsidiaries by dividend or loan, except as follows. DLP II and DLP III are borrowers under a credit agreement with Autobahn, with DZ Bank AG as agent, as described in note 5. The significant majority of insurance policies owned by the Company are subject to a collateral arrangement with DZ Bank AG described in notes 2 and 5. Under this arrangement, collection and escrow accounts are used to fund premiums of the insurance policies and to pay interest and other charges under the revolving senior credit facility. DZ Bank AG and Autobahn must authorize all disbursements from these accounts, including any distributions to GWG Life. Distributions are limited to an amount that would result in the borrowers (DLP II, DLP III, GWG Life and GWG Holdings) realizing an annualized rate of return on the equity funded amount for such assets of not more than 18%, as determined by DZ Bank AG. After such amount is reached, the credit agreement requires that excess funds be used for repayments of borrowings before any additional distributions may be made. The following represents consolidating financial information as of March 31, 2016 and December 31, 2015, with respect to the financial position, and for the three months ended March 31, 2016 and 2015 with respect to results of operations and cash flows of GWG Holdings and its subsidiaries. The parent column presents the financial information of GWG Holdings, the primary obligor of the L Bonds. The guarantor subsidiary column presents the financial information of GWG Life, the guarantor subsidiary of the L Bonds, presenting its investment in DLP II, DLP III and Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries including DLP II, DLP III and Trust. Condensed Consolidating Balance Sheets March 31, 2016 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated A S S E T S Cash and cash equivalents $ 6,274,035 $ 4,340,365 $ 384,225 $ - $ 10,998,625 Restricted cash - 4,807,637 15,020,983 - 19,828,620 Investment in life insurance contracts, at fair value - - 387,402,111 - 387,402,111 Secured MCA advances - - 4,235,442 - 4,235,442 Policy benefits receivable - - 15,912,839 - 15,912,839 Other assets 4,560,495 863,833 530,899 (2,730,902 ) 3,224,325 Investment in subsidiaries 321,992,234 332,430,230 - (645,422,464 ) - TOTAL ASSETS $ 332,826,764 $ 342,442,065 $ 423,486,499 $ (657,153,366 ) $ 441,601,962 L I A B I L I T I E S & S T O C K H O L D E R S' E Q U I T Y (D E F I C I T) LIABILITIES Revolving senior credit facility $ - $ (2,275,000 ) $ 84,579,099 $ - $ 82,304,099 Series I Secured Notes payable - 18,226,541 - - 18,226,541 L Bonds 301,924,332 - - - 301,924,332 Notes payable to related parties - - 4,460,000 (2,700,000 ) 1,760,000 Accounts payable 188,894 365,147 1,565,750 - 2,119,791 Interest payable 8,879,457 3,714,441 352,602 (30,902 ) 12,915,598 Other accrued expenses 879,858 486,943 30,577 - 1,397,378 Deferred taxes 2,819,697 - - - 2,819,697 TOTAL LIABILITIES 314,692,238 20,518,072 90,988,028 (2,730,902 ) 423,467,436 STOCKHOLDERS’ EQUITY (DEFICIT) Member capital - 321,923,993 332,498,471 (654,422,464 ) - Convertible preferred stock 20,274,155 - - - 20,274,155 Redeemable preferred stock 1,369,938 - - - 1,369,938 Common stock 5,948 - - - 5,948 Additional paid-in capital 17,204,940 - - - 17,204,940 Accumulated deficit (20,720,455 ) - - - (20,720,455 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 18,134,526 321,923,993 332,498,471 (654,422,464 ) 18,134,526 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 332,826,764 $ 342,442,065 $ 423,486,499 $ (657,153,366 ) $ 441,601,962 December 31, 2015 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated A S S E T S Cash and cash equivalents $ 32,292,162 $ 1,982,722 $ 150,221 $ - $ 34,425,105 Restricted cash - 2,102,257 239,643 - 2,341,900 Investment in life insurance contracts, at fair value - - 356,649,715 - 356,649,715 Other assets 1,742,074 688,071 30,900 - 2,461,045 Investment in subsidiaries 269,886,254 291,295,951 - (561,182,205 ) - TOTAL ASSETS $ 303,920,490 $ 296,069,001 $ 357,070,479 $ (561,182,205 ) $ 395,877,765 L I A B I L I T I E S & S T O C K H O L D E R S' E Q U I T Y (D E F I C I T) LIABILITIES Revolving senior credit facility $ - $ (1,000,000 ) $ 64,279,596 $ - $ 63,279,596 Series I Secured Notes payable - 23,287,704 - - 23,287,704 L Bonds 276,482,796 - - - 276,482,796 Accounts payable 280,988 157,217 1,079,235 - 1,517,440 Interest payable 8,529,959 3,544,626 265,476 - 12,340,061 Other accrued expenses 717,365 343,421 - - 1,060,786 Deferred taxes 1,763,968 - - - 1,763,968 TOTAL LIABILITIES 287,775,076 26,332,968 65,624,307 - 379,732,351 STOCKHOLDERS’ EQUITY (DEFICIT) Member capital - 269,736,033 291,446,172 (561,182,205 ) - Convertible preferred stock 20,784,841 - - - 20,784,841 Common stock 5,942 - - - 5,942 Additional paid-in capital 17,149,391 - - - 17,149,391 Accumulated deficit (21,794,760 ) - - - (21,794,760 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 16,145,414 269,736,033 291,446,172 (561,182,205 ) 16,145,414 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 303,920,490 $ 296,069,001 $ 357,070,479 $ (561,182,205 ) $ 395,877,765 Condensed Consolidating Statements of Operations For the three months ended March 31, 2016 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated REVENUE Contract servicing fees $ - $ 13,417 $ - $ (13,417 ) $ - Gain on life insurance contracts, net - - 17,713,712 - 17,713,712 Interest and other income 34,798 306 185,979 (30,902 ) 190,181 TOTAL REVENUE 34,798 2,762,748 17,899,691 (44,319 ) 17,903,893 EXPENSES Origination and servicing fees - - 13,417 (13,417 ) - Interest expense 7,598,824 657,236 1,435,228 (30,902 ) 9,660,386 Employee compensation and benefits 1,536,430 829,081 100,686 - 2,466,197 Legal and professional fees 594,739 534,650 76,739 - 1,206,128 Other expenses 1,257,977 968,674 185,509 - 2,412,160 TOTAL EXPENSES 10,987,970 2,989,641 1,811,579 (44,319 ) 15,744,871 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (10,953,172 ) (2,975,918 ) 16,088,112 - 2,159,022 EQUITY IN INCOME OF SUBSIDIARY 13,112,194 16,301,366 - (29,413,560 ) - NET INCOME BEFORE INCOME TAXES 2,159,022 13,325,448 16,088,112 (29,413,560 ) 2,159,022 INCOME TAX EXPENSE 1,084,717 - - - 1,084,717 NET INCOME (LOSS) 1,074,305 13,325,448 16,088,112 (29,413,560 ) 1,074,305 For the three months ended March 31, 2015 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated REVENUE Contract servicing fees $ - $ 357,486 $ - $ (357,486 ) $ - Gain on life insurance contracts, net - - 16,783,409 - 16,783,409 Interest and other income 7,543 6,450 35,303 - 49,296 TOTAL REVENUE 7,543 363,936 16,818,712 (357,486 ) 16,832,705 EXPENSES Origination and servicing fees - - 357,486 (357,486 ) - Interest expense 5,249,962 774,086 1,152,486 - 7,176,534 Employee compensation and benefits 1,305,801 422,116 - - 1,727,917 Legal and professional fees 477,351 100,793 - - 578,144 Other expenses 951,362 514,902 12,584 - 1,478,848 TOTAL EXPENSES 7,984,476 1,811,897 1,522,556 (357,486 ) 10,961,443 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (7,976,933 ) (1,447,961 ) 15,296,156 - 5,871,262 EQUITY IN INCOME OF SUBSIDIARY 13,848,195 15,296,105 - (29,144,300 ) - NET INCOME BEFORE INCOME TAXES 5,871,262 13,848,144 15,296,156 (29,144,300 ) 5,871,262 INCOME TAX EXPENSE 2,609,371 - - - 2,609,371 NET INCOME (LOSS) 3,261,891 13,848,144 15,296,156 (29,144,300 ) 3,261,891 Condensed Consolidating Statements of Cash Flows For the three months ended March 31, 2016 Parent Guarantor Sub Non-Guarantor Sub Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,074,305 $ 13,325,448 $ 16,088,112 $ (29,413,560 ) $ 1,074,305 Adjustments to reconcile net income to cash flows from operating activities: Equity of subsidiaries (13,112,194 ) (16,301,366 ) - 29,413,560 - Gain on life insurance contracts - - (11,531,553 ) - (11,531,553 ) Amortization of deferred financing and issuance costs 1,648,891 (1,164,206 ) 299,503 - 784,188 Deferred income taxes 1,055,729 - - - 1,055,729 Preferred stock dividends payable 163,577 - - - 163,577 (Increase) decrease in operating assets: Policy benefits receivable - - (15,912,839 ) - (15,912,839 ) Other assets (38,661,205 ) (24,992,068 ) - 63,826,699 173,426 Increase (decrease) in operating liabilities: Due to related party (2,731,001 ) (16,607 ) 4,460,000 - 1,712,392 Accounts payable and other accrued expenses 782,047 586,702 599,220 - 1,967,969 NET CASH FLOWS USED IN OPERATING ACTIVITIES (49,779,851 ) (28,562,097 ) (5,997,557 ) 63,826,699 (20,512,806 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance contracts - - (24,326,322 ) - (24,326,322 ) Proceeds from settlement of life insurance contracts - - 4,610,479 - 4,610,479 Investments in Secured MCA advances - - (4,353,585 ) - (4,353,585 ) Proceeds from Secured MCA advances - 118,143 - 118,143 NET CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES - - (23,951,285 ) - (23,951,285 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on Senior Revolving Credit Facility - - 20,000,000 - 20,000,000 Payments for redemption of Series I Secured notes payable - (5,237,393 ) - - (5,237,393 ) Proceeds from issuance of L Bonds 34,368,889 - - - 34,368,889 Payments for issuance and redemption of L Bonds (10,909,693 ) - - - (10,909,693 ) Increase in restricted cash - (2,705,379 ) (14,781,341 ) - (17,486,720 ) Issuance of common stock 46,545 - - - 46,545 Proceeds from issuance of preferred stock 1,028,536 - - - 1,028,536 Payments for issuance and redemption of preferred stock (772,553 ) - - - (772,553 ) Issuance of member capital - 38,862,512 24,964,187 (63,826,699 ) - NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 23,761,724 30,919,740 30,182,846 (63,826,699 ) 21,037,611 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (26,018,127 ) 2,357,643 234,004 - (23,426,480 ) CASH AND CASH EQUIVALENTS BEGINNING OF THE PERIOD 32,292,162 1,982,722 150,221 - 34,425,105 END OF THE PERIOD $ 6,274,035 $ 4,340,365 $ 384,225 $ - $ 10,998,625 For the three months ended March 31, 2015 Parent Guarantor Sub Non-Guarantor Sub Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,261,891 $ 13,848,144 $ 15,296,156 $ (29,144,300 ) $ 3,261,891 Adjustments to reconcile net income to cash flows from operating activities: Equity of subsidiaries (13,848,196 ) (15,296,104 ) - 29,144,300 - Loss on life insurance contracts - - 1,893,845 - 1,893,845 Amortization of deferred financing and issuance costs 43,475 130,188 (722,693 ) - (549,030 ) Deferred income taxes 2,182,251 - - - 2,182,251 Preferred stock dividends payable 188,812 - - - 188,812 (Increase) decrease in operating assets: Policy benefits receivable - - (17,890,000 ) - (17,890,000 ) Other assets (10,874,436 ) (5,877,435 ) - 16,620,698 (131,173 ) Increase in operating liabilities: Accounts payable and other accrued expenses 2,279,652 738,084 382,049 - 2,635,687 NET CASH FLOWS USED IN OPERATING ACTIVITIES (16,766,551 ) (6,457,123 ) (1,804,741 ) 16,620,698 (8,407,717 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance contracts - - (2,446,477 ) - (2,446,477 ) Proceeds from settlement of life insurance contracts - - 3,610,595 - 3,610,595 NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES - - 1,164,118 - 1,164,118 CASH FLOWS FROM FINANCING ACTIVITIES Payments for redemption of Series I Secured notes payable - (1,273,189 ) - - (1,273,189 ) Proceeds from issuance of L Bonds 27,960,297 - - - 27,960,297 Payments from issuance and redemption of L Bonds (6,878,122 ) - - - (6,878,122 ) Proceeds from restricted cash - (1,780,000 ) (5,257,564 ) - (7,073,564 ) Issuance of member capital - 10,572,459 6,048,239 (16,620,698 ) - NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 21,082,175 7,519,270 790,675 (16,620,698 ) 12,771,422 NET INCREASE IN CASH AND CASH EQUIVALENTS 4,315,624 1,062,147 150,052 - 5,527,823 CASH AND CASH EQUIVALENTS BEGINNING OF THE PERIOD 30,446,473 216,231 - - 30,662,704 END OF THE PERIOD $ 34,762,097 $ 1,278,378 $ 150,052 $ - $ 36,190,527 |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2016 | |
Concentrations [Abstract] | |
Concentrations | (18) Concentrations GWG purchases life insurance policies written by life insurance companies having investment grade ratings by independent rating agencies. As a result there may be certain concentrations of contracts with life insurance companies. The following summarizes the face value of insurance contracts with specific life insurance companies exceeding 10% of the total face value held by the Company. Life insurance company March 31, December 31, 2016 2015 AXA Equitable 14.01 % 14.00 % John Hancock 11.64 % 12.73 % Transamerica 10.38 % * * percentage does not exceed 10% of the total face value. The following summarizes the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company: State of Residence March 31, December 31, 2016 2015 California 23.66 % 25.25 % Florida 18.92 % 19.25 % |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent events | (19) Subsequent events Su b s e t March 1 t C m i im t l d i t i o , i i c i m o Subsequent to March 31, 2016, the Company has issued approximately $4,214,000 of Redeemable Preferred Stock. Subsequent to March 31, 2016, the Company has issued 25,000 restricted shares of common stock at $6.25 per share, determined by closing market price, to a vendor as a form of payment for services the vendor will provide to the Company. Effective February 4, 2016, GWG MCA began to offer for sale up to of 2,000,000 shares of 9% Preferred Stock at an offering price of $10 per share in a private placement. As of May 13, 2016, GWG MCA had not issued any 9% Preferred Stock in this offering. |
Nature of Business and Summar26
Nature of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Use of estimates | Use of estimates |
Cash and cash equivalents | Cash and cash equivalents |
Life insurance contracts | Life insurance contracts Investments in Insurance Contracts The Company recognizes realized gains (revenue) from life settlement contracts upon one of the two following events: 1) Receipt of notice or verified mortality of insured; or 2) Sale of policy and filing of change of ownership forms and receipt of payment The Company recognizes the difference between the policy benefits and carrying values of the policy when an insured’s mortality event has occurred and the Company determines that settlement and ultimate collection of the policy benefits is realizable and reasonably assured. Revenue from a transaction must meet both criteria in order to be recognized. In an event of a sale of a policy, the Company recognizes gain or loss as the difference between the sale price and the carrying value of the policy on the date of the receipt of payment on such sale. Deposits and initial direct costs advanced on unsettled policy acquisitions are recorded as other assets until policy ownership has been transferred to the Company. Such deposits and direct cost advances were $526,000 and $31,000 at March 31, 2016 and December 31, 2015, respectively. |
Deferred financing and issuance costs | Deferred financing and issuance costs |
Earnings (loss) per share | Earnings (loss) per share - Basic per share earnings (loss) attributable to non-redeemable interests is calculated using the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share is calculated based on the potential dilutive impact, if any, of the Company’s Series A Preferred Stock, Redeemable Preferred Stock, outstanding warrants, and stock options. |
Subsequent events | Subsequent events |
Recently adopted pronouncements | Recently adopted pronouncements On April 7, 2015 the FASB issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs The impact of the new ASU on the Company’s balance sheet was a reduction of approximately $2,288,000 to assets and the corresponding reduction to liabilities and stockholders’ equity. There was no impact on the Company’s statements of operations. |
Reclassification | Reclassification - ASU No. 2015-03 |
Investment in Life Insurance 27
Investment in Life Insurance Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investment in Life Insurance Policies [Abstract] | |
Summary of life insurance policies, under the fair value method and estimated maturity dates, based on remaining life expectancy | As of March 31, 2016 As of December 31, 2015 Years Ending December 31, Number of Contracts Estimated Fair Value Face Value Number of Contracts Estimated Fair Value Face Value 2016 3 $ 5,440,000 $ 6,000,000 5 $ 7,503,000 $ 8,500,000 2017 11 13,855,000 18,043,000 12 12,875,000 17,418,000 2018 29 32,989,000 50,905,000 27 37,109,000 58,428,000 2019 51 51,866,000 91,707,000 51 54,242,000 100,967,000 2020 70 71,319,000 148,360,000 59 64,750,000 137,868,000 2021 56 53,756,000 130,169,000 48 45,724,000 116,805,000 2022 49 36,273,000 109,262,000 44 38,394,000 116,998,000 Thereafter 196 121,904,000 473,375,000 150 96,053,000 387,860,000 Totals 465 $ 387,402,000 $ 1,027,821,000 396 $ 356,650,000 944,844,000 |
Reconciliation of gain on life insurance contracts | Three Months Ended: March 31, 2016 March 31, 2015 Change in fair value $ 11,532,000 $ (1,894,000 ) Premiums and other annual fees (8,445,000 ) (6,337,000 ) Policy maturities 14,627,000 25,014,000 Gain on life insurance contracts, net $ 17,714,000 $ 16,783,000 |
Estimated expected premium payments to maintain the above life insurance policies assuming no mortalities | Years Ending December 31, Premiums Servicing Premiums and Servicing Fees Nine months ending December 31 ,2016 $ 25,258,000 $ 558,000 $ 25,816,000 2017 36,083,000 558,000 36,641,000 2018 39,398,000 558,000 39,956,000 2019 44,304,000 558,000 44,862,000 2020 49,314,000 558,000 49,872,000 2021 54,825,000 558,000 55,383,000 $ 249,182,000 $ 3,348,000 $ 252,530,000 |
Fair Value Definition and Hie28
Fair Value Definition and Hierarchy (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Definition and Hierarchy [Abstract] | |
Reconciliation of investments in life insurance policies | Three Months Ended 2016 2015 Beginning balance $ 356,650,000 $ 282,883,000 Purchases 23,831,000 1,016,000 Maturities (cash in excess of carrying value) (4,611,000 ) (3,610,000 ) Net change in fair value 11,532,000 (1,894,000 ) Ending balance $ 387,402,000 $ 278,395,000 |
Summary of inputs utilized in estimating the fair value | As of March 31, 2016 As of December 31, 2015 Weighted-average age of insured, years 82.4 82.6 Weighted-average life expectancy, months 80.2 79.3 Average face amount per policy $ 2,210,000 $ 2,386,000 Discount rate 11.08 % 11.09 % |
Fair value sensitivity analysis on the investment in life insurance policies | Change in life expectancy estimates minus 8 months minus 4 months plus 4 months plus 8 months March 31, 2016 $ 52,011,000 $ 25,901,000 $ (25,278,000 ) $ (49,990,000 ) December 31, 2015 $ 48,339,000 $ 24,076,000 $ (23,501,000 ) $ (46,482,000 ) Change in discount rate minus 2% minus 1% plus 1% plus 2% March 31, 2016 $ 38,567,000 $ 18,477,000 $ (17,033,000 ) $ (32,772,000 ) December 31, 2015 $ 35,024,000 $ 16,786,000 $ (15,485,000 ) $ (29,803,000 ) |
Warrants Level 3 instruments and measured at fair value upon issuance | Month issued Warrants issued Fair value per share Risk free Volatility Term December 2011 68,937 $ 0.22 0.42 % 25.25 % 5 years March 2012 38,130 $ 0.52 0.38 % 36.20 % 5 years June 2012 161,840 $ 1.16 0.41 % 47.36 % 5 years July 2012 144,547 $ 1.16 0.41 % 47.36 % 5 years September 2012 2,500 $ 0.72 0.31 % 40.49 % 5 years September 2014 16,000 $ 1.26 1.85 % 17.03 % 5 years 431,954 |
Series I Secured Notes payable
Series I Secured Notes payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Credit facilities / Series I Secured Notes payable Renewable / L Bonds [Abstract] | |
Future contractual maturities of series I secured notes payable and future amortization of their deferred financing costs | Years Ending December 31, Contractual Maturities Amortization of Deferred Financing Costs Nine months ending December 31 ,2016 $ 6,581,000 $ 35,000 2017 7,956,000 128,000 2018 1,596,000 41,000 2019 444,000 7,000 2020 1,766,000 63,000 Thereafter 165,000 7,000 $ 18,508,000 $ 281,000 |
L Bonds (Tables)
L Bonds (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Credit facilities / Series I Secured Notes payable Renewable / L Bonds [Abstract] | |
Schedule of future contractual maturities of L Bonds and future amortization of their deferred financing costs | Years Ending December 31, Contractual Maturities Amortization of Deferred Financing Costs Nine months ending December 31 ,2016 $ 76,618,000 $ 562,000 2017 73,736,000 1,734,000 2018 75,804,000 2,976,000 2019 33,648,000 1,521,000 2020 19,602,000 995,000 Thereafter 27,423,000 1,734,000 $ 306,831,000 $ 9,522,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Components of current and deferred income tax expense | Three Months Ended March 31, March 31, 2016 2015 Income tax: Current: Federal $ (23,000 ) $ (324,000 ) State (6,000 ) (103,000 ) Total current tax expense (29,000 ) (427,000 ) Deferred: Federal $ (806,000 ) $ (1,654,000 ) State (250,000 ) (528,000 ) Total deferred tax expense (1,056,000 ) (2,182,000 ) Total income tax expense $ (1,085,000 ) $ (2,609,000 ) |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stock Incentive Plan [Abstract] | |
Schedule of outstanding stock options | Vested Un-vested Total Balance as of December 31, 2014 314,288 685,813 1,000,101 Granted during the year 79,500 273,700 353,200 Vested during the year 238,999 (238,999 ) - Exercised during the year (27,667 ) - (27,667 ) Forfeited during the year (121,417 ) (150,602 ) (272,019 ) Balance as of December 31, 2015 483,703 569,912 1,053,615 Granted during the quarter 7,500 - 7,500 Vested during the quarter 14,092 (14,092 ) - Forfeited during the quarter (3,090 ) (7,410 ) (10,500 ) Balance as of March 31, 2016 502,205 548,410 1,050,615 |
Commitments (Tables)
Commitments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Schedule of minimum lease payments under the second amendment to lease | Nine months ending December 31, 2016 $ 130,000 2017 178,000 2018 185,000 2019 191,000 2020 198,000 2021 204,000 2022 210,000 2023 217,000 2024 223,000 2025 230,000 2026 38,000 $ 2,004,000 |
Guarantees of L Bonds (Tables)
Guarantees of L Bonds (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Guarantees of L Bonds [Abstract] | |
Condensed consolidating balance sheets | March 31, 2016 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated A S S E T S Cash and cash equivalents $ 6,274,035 $ 4,340,365 $ 384,225 $ - $ 10,998,625 Restricted cash - 4,807,637 15,020,983 - 19,828,620 Investment in life insurance contracts, at fair value - - 387,402,111 - 387,402,111 Secured MCA advances - - 4,235,442 - 4,235,442 Policy benefits receivable - - 15,912,839 - 15,912,839 Other assets 4,560,495 863,833 530,899 (2,730,902 ) 3,224,325 Investment in subsidiaries 321,992,234 332,430,230 - (645,422,464 ) - TOTAL ASSETS $ 332,826,764 $ 342,442,065 $ 423,486,499 $ (657,153,366 ) $ 441,601,962 L I A B I L I T I E S & S T O C K H O L D E R S' E Q U I T Y (D E F I C I T) LIABILITIES Revolving senior credit facility $ - $ (2,275,000 ) $ 84,579,099 $ - $ 82,304,099 Series I Secured Notes payable - 18,226,541 - - 18,226,541 L Bonds 301,924,332 - - - 301,924,332 Notes payable to related parties - - 4,460,000 (2,700,000 ) 1,760,000 Accounts payable 188,894 365,147 1,565,750 - 2,119,791 Interest payable 8,879,457 3,714,441 352,602 (30,902 ) 12,915,598 Other accrued expenses 879,858 486,943 30,577 - 1,397,378 Deferred taxes 2,819,697 - - - 2,819,697 TOTAL LIABILITIES 314,692,238 20,518,072 90,988,028 (2,730,902 ) 423,467,436 STOCKHOLDERS’ EQUITY (DEFICIT) Member capital - 321,923,993 332,498,471 (654,422,464 ) - Convertible preferred stock 20,274,155 - - - 20,274,155 Redeemable preferred stock 1,369,938 - - - 1,369,938 Common stock 5,948 - - - 5,948 Additional paid-in capital 17,204,940 - - - 17,204,940 Accumulated deficit (20,720,455 ) - - - (20,720,455 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 18,134,526 321,923,993 332,498,471 (654,422,464 ) 18,134,526 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 332,826,764 $ 342,442,065 $ 423,486,499 $ (657,153,366 ) $ 441,601,962 December 31, 2015 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated A S S E T S Cash and cash equivalents $ 32,292,162 $ 1,982,722 $ 150,221 $ - $ 34,425,105 Restricted cash - 2,102,257 239,643 - 2,341,900 Investment in life insurance contracts, at fair value - - 356,649,715 - 356,649,715 Other assets 1,742,074 688,071 30,900 - 2,461,045 Investment in subsidiaries 269,886,254 291,295,951 - (561,182,205 ) - TOTAL ASSETS $ 303,920,490 $ 296,069,001 $ 357,070,479 $ (561,182,205 ) $ 395,877,765 L I A B I L I T I E S & S T O C K H O L D E R S' E Q U I T Y (D E F I C I T) LIABILITIES Revolving senior credit facility $ - $ (1,000,000 ) $ 64,279,596 $ - $ 63,279,596 Series I Secured Notes payable - 23,287,704 - - 23,287,704 L Bonds 276,482,796 - - - 276,482,796 Accounts payable 280,988 157,217 1,079,235 - 1,517,440 Interest payable 8,529,959 3,544,626 265,476 - 12,340,061 Other accrued expenses 717,365 343,421 - - 1,060,786 Deferred taxes 1,763,968 - - - 1,763,968 TOTAL LIABILITIES 287,775,076 26,332,968 65,624,307 - 379,732,351 STOCKHOLDERS’ EQUITY (DEFICIT) Member capital - 269,736,033 291,446,172 (561,182,205 ) - Convertible preferred stock 20,784,841 - - - 20,784,841 Common stock 5,942 - - - 5,942 Additional paid-in capital 17,149,391 - - - 17,149,391 Accumulated deficit (21,794,760 ) - - - (21,794,760 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 16,145,414 269,736,033 291,446,172 (561,182,205 ) 16,145,414 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 303,920,490 $ 296,069,001 $ 357,070,479 $ (561,182,205 ) $ 395,877,765 - |
Condensed consolidating statements of operations | For the three months ended March 31, 2016 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated REVENUE Contract servicing fees $ - $ 13,417 $ - $ (13,417 ) $ - Gain on life insurance contracts, net - - 17,713,712 - 17,713,712 Interest and other income 34,798 306 185,979 (30,902 ) 190,181 TOTAL REVENUE 34,798 2,762,748 17,899,691 (44,319 ) 17,903,893 EXPENSES Origination and servicing fees - - 13,417 (13,417 ) - Interest expense 7,598,824 657,236 1,435,228 (30,902 ) 9,660,386 Employee compensation and benefits 1,536,430 829,081 100,686 - 2,466,197 Legal and professional fees 594,739 534,650 76,739 - 1,206,128 Other expenses 1,257,977 968,674 185,509 - 2,412,160 TOTAL EXPENSES 10,987,970 2,989,641 1,811,579 (44,319 ) 15,744,871 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (10,953,172 ) (2,975,918 ) 16,088,112 - 2,159,022 EQUITY IN INCOME OF SUBSIDIARY 13,112,194 16,301,366 - (29,413,560 ) - NET INCOME BEFORE INCOME TAXES 2,159,022 13,325,448 16,088,112 (29,413,560 ) 2,159,022 INCOME TAX EXPENSE 1,084,717 - - - 1,084,717 NET INCOME (LOSS) 1,074,305 13,325,448 16,088,112 (29,413,560 ) 1,074,305 For the three months ended March 31, 2015 Parent Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated REVENUE Contract servicing fees $ - $ 357,486 $ - $ (357,486 ) $ - Gain on life insurance contracts, net - - 16,783,409 - 16,783,409 Interest and other income 7,543 6,450 35,303 - 49,296 TOTAL REVENUE 7,543 363,936 16,818,712 (357,486 ) 16,832,705 EXPENSES Origination and servicing fees - - 357,486 (357,486 ) - Interest expense 5,249,962 774,086 1,152,486 - 7,176,534 Employee compensation and benefits 1,305,801 422,116 - - 1,727,917 Legal and professional fees 477,351 100,793 - - 578,144 Other expenses 951,362 514,902 12,584 - 1,478,848 TOTAL EXPENSES 7,984,476 1,811,897 1,522,556 (357,486 ) 10,961,443 INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES (7,976,933 ) (1,447,961 ) 15,296,156 - 5,871,262 EQUITY IN INCOME OF SUBSIDIARY 13,848,195 15,296,105 - (29,144,300 ) - NET INCOME BEFORE INCOME TAXES 5,871,262 13,848,144 15,296,156 (29,144,300 ) 5,871,262 INCOME TAX EXPENSE 2,609,371 - - - 2,609,371 NET INCOME (LOSS) 3,261,891 13,848,144 15,296,156 (29,144,300 ) 3,261,891 |
Condensed consolidating statements of cash flows | For the three months ended March 31, 2016 Parent Guarantor Sub Non-Guarantor Sub Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,074,305 $ 13,325,448 $ 16,088,112 $ (29,413,560 ) $ 1,074,305 Adjustments to reconcile net income to cash flows from operating activities: Equity of subsidiaries (13,112,194 ) (16,301,366 ) - 29,413,560 - Gain on life insurance contracts - - (11,531,553 ) - (11,531,553 ) Amortization of deferred financing and issuance costs 1,648,891 (1,164,206 ) 299,503 - 784,188 Deferred income taxes 1,055,729 - - - 1,055,729 Preferred stock dividends payable 163,577 - - - 163,577 (Increase) decrease in operating assets: Policy benefits receivable - - (15,912,839 ) - (15,912,839 ) Other assets (38,661,205 ) (24,992,068 ) - 63,826,699 173,426 Increase (decrease) in operating liabilities: Due to related party (2,731,001 ) (16,607 ) 4,460,000 - 1,712,392 Accounts payable and other accrued expenses 782,047 586,702 599,220 - 1,967,969 NET CASH FLOWS USED IN OPERATING ACTIVITIES (49,779,851 ) (28,562,097 ) (5,997,557 ) 63,826,699 (20,512,806 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance contracts - - (24,326,322 ) - (24,326,322 ) Proceeds from settlement of life insurance contracts - - 4,610,479 - 4,610,479 Investments in Secured MCA advances - - (4,353,585 ) - (4,353,585 ) Proceeds from Secured MCA advances - 118,143 - 118,143 NET CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES - - (23,951,285 ) - (23,951,285 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on Senior Revolving Credit Facility - - 20,000,000 - 20,000,000 Payments for redemption of Series I Secured notes payable - (5,237,393 ) - - (5,237,393 ) Proceeds from issuance of L Bonds 34,368,889 - - - 34,368,889 Payments for issuance and redemption of L Bonds (10,909,693 ) - - - (10,909,693 ) Increase in restricted cash - (2,705,379 ) (14,781,341 ) - (17,486,720 ) Issuance of common stock 46,545 - - - 46,545 Proceeds from issuance of preferred stock 1,028,536 - - - 1,028,536 Payments for issuance and redemption of preferred stock (772,553 ) - - - (772,553 ) Issuance of member capital - 38,862,512 24,964,187 (63,826,699 ) - NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 23,761,724 30,919,740 30,182,846 (63,826,699 ) 21,037,611 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (26,018,127 ) 2,357,643 234,004 - (23,426,480 ) CASH AND CASH EQUIVALENTS BEGINNING OF THE PERIOD 32,292,162 1,982,722 150,221 - 34,425,105 END OF THE PERIOD $ 6,274,035 $ 4,340,365 $ 384,225 $ - $ 10,998,625 For the three months ended March 31, 2015 Parent Guarantor Sub Non-Guarantor Sub Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,261,891 $ 13,848,144 $ 15,296,156 $ (29,144,300 ) $ 3,261,891 Adjustments to reconcile net income to cash flows from operating activities: Equity of subsidiaries (13,848,196 ) (15,296,104 ) - 29,144,300 - Loss on life insurance contracts - - 1,893,845 - 1,893,845 Amortization of deferred financing and issuance costs 43,475 130,188 (722,693 ) - (549,030 ) Deferred income taxes 2,182,251 - - - 2,182,251 Preferred stock dividends payable 188,812 - - - 188,812 (Increase) decrease in operating assets: Policy benefits receivable - - (17,890,000 ) - (17,890,000 ) Other assets (10,874,436 ) (5,877,435 ) - 16,620,698 (131,173 ) Increase in operating liabilities: Accounts payable and other accrued expenses 2,279,652 738,084 382,049 - 2,635,687 NET CASH FLOWS USED IN OPERATING ACTIVITIES (16,766,551 ) (6,457,123 ) (1,804,741 ) 16,620,698 (8,407,717 ) CASH FLOWS FROM INVESTING ACTIVITIES Investment in life insurance contracts - - (2,446,477 ) - (2,446,477 ) Proceeds from settlement of life insurance contracts - - 3,610,595 - 3,610,595 NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES - - 1,164,118 - 1,164,118 CASH FLOWS FROM FINANCING ACTIVITIES Payments for redemption of Series I Secured notes payable - (1,273,189 ) - - (1,273,189 ) Proceeds from issuance of L Bonds 27,960,297 - - - 27,960,297 Payments from issuance and redemption of L Bonds (6,878,122 ) - - - (6,878,122 ) Proceeds from restricted cash - (1,780,000 ) (5,257,564 ) - (7,073,564 ) Issuance of member capital - 10,572,459 6,048,239 (16,620,698 ) - NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 21,082,175 7,519,270 790,675 (16,620,698 ) 12,771,422 NET INCREASE IN CASH AND CASH EQUIVALENTS 4,315,624 1,062,147 150,052 - 5,527,823 CASH AND CASH EQUIVALENTS BEGINNING OF THE PERIOD 30,446,473 216,231 - - 30,662,704 END OF THE PERIOD $ 34,762,097 $ 1,278,378 $ 150,052 $ - $ 36,190,527 |
Concentrations (Tables)
Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Concentrations [Abstract] | |
Summary of the face value of insurance contracts | March 31, December 31, 2016 2015 AXA Equitable 14.01 % 14.00 % John Hancock 11.64 % 12.73 % Transamerica 10.38 % * |
Summary of the number of insurance contracts | March 31, December 31, 2016 2015 California 23.66 % 25.25 % Florida 18.92 % 19.25 % |
Nature of Business and Summar36
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Nature of business and summary of significant accounting policies (Textual) | ||
Deposits and direct cost advances | $ 526,000 | $ 31,000 |
Redemption period for amortization of discount related to financing cost | 3 years | |
Debt issuance costs in financial statement | $ 2,288,000 |
Restrictions on Cash (Details)
Restrictions on Cash (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Restrictions on Cash (Textual) | ||
Restricted cash | $ 19,829,000 | $ 2,342,000 |
Investment in Life Insurance 38
Investment in Life Insurance Policies (Details) | Mar. 31, 2016USD ($)INF | Dec. 31, 2015USD ($)Contract |
Summary of Company's life insurance policies accounted for under fair value method and their estimated maturity dates, based on remaining life expectancy | ||
Number of Contracts, 2016 | 3 | 5 |
Number of Contracts, 2017 | 11 | 12 |
Number of Contracts, 2018 | 29 | 27 |
Number of Contracts, 2019 | 51 | 51 |
Number of Contracts, 2020 | 70 | 59 |
Number of Contracts, 2021 | 56 | 48 |
Number of Contracts, 2022 | 49 | 44 |
Number of Contracts, Thereafter | 196 | 150 |
Life Settlement Contracts, Number of Contracts, Total | 465 | 396 |
Estimated Fair Value, 2016 | $ 5,440,000 | $ 7,503,000 |
Estimated Fair Value, 2017 | 13,855,000 | 12,875,000 |
Estimated Fair Value, 2018 | 32,989,000 | 37,109,000 |
Estimated Fair Value, 2019 | 51,866,000 | 54,242,000 |
Estimated Fair Value, 2020 | 71,319,000 | 64,750,000 |
Estimated Fair Value, 2021 | 53,756,000 | 45,724,000 |
Estimated Fair Value, 2022 | 36,273,000 | 38,394,000 |
Estimated Fair Value, Thereafter | 121,904,000 | 96,053,000 |
Life Settlement Contracts, Estimated Fair Value, Total | 387,402,000 | 356,650,000 |
Face Value, 2016 | 6,000,000 | 8,500,000 |
Face Value, 2017 | 18,043,000 | 17,418,000 |
Face Value, 2018 | 50,905,000 | 58,428,000 |
Face Value, 2019 | 91,707,000 | 100,967,000 |
Face Value, 2020 | 148,360,000 | 137,868,000 |
Face Value, 2021 | 130,169,000 | 116,805,000 |
Face Value, 2022 | 109,262,000 | 116,998,000 |
Face Value, Thereafter | 473,375,000 | 387,860,000 |
Life Settlement Contracts, Face Value, Total | $ 1,027,821,000 | $ 944,844,000 |
Investment in Life Insurance 39
Investment in Life Insurance Policies (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Summary of reconciliation of gain on life settlements | ||
Change in fair value | $ 11,532,000 | $ (1,894,000) |
Premiums and other annual fees | (8,445,000) | (6,337,000) |
Policy maturities | 14,627,000 | 25,014,000 |
Gain on life insurance contracts, net | $ 17,714,000 | $ 16,783,000 |
Investment in Life Insurance 40
Investment in Life Insurance Policies(Details 2) | Mar. 31, 2016USD ($) |
Summary of estimated expected premium payments to maintain the above life insurance policies assuming no mortalities | |
Nine months ending December 31 ,2016 | $ 25,816,000 |
2,017 | 36,641,000 |
2,018 | 39,956,000 |
2,019 | 44,862,000 |
2,020 | 49,872,000 |
2,021 | 55,383,000 |
Estimated expected premium payments | 252,530,000 |
Premiums [Member] | |
Summary of estimated expected premium payments to maintain the above life insurance policies assuming no mortalities | |
Nine months ending December 31 ,2016 | 25,258,000 |
2,017 | 36,083,000 |
2,018 | 39,398,000 |
2,019 | 44,304,000 |
2,020 | 49,314,000 |
2,021 | 54,825,000 |
Estimated expected premium payments | 249,182,000 |
Servicing [Member] | |
Summary of estimated expected premium payments to maintain the above life insurance policies assuming no mortalities | |
Nine months ending December 31 ,2016 | 558,000 |
2,017 | 558,000 |
2,018 | 558,000 |
2,019 | 558,000 |
2,020 | 558,000 |
2,021 | 558,000 |
Estimated expected premium payments | $ 3,348,000 |
Investment in Life Insurance 41
Investment in Life Insurance Policies (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Investment in Life Insurance Policies (Textual) | |||
Benefit recognized from insurance policy | $ 19,238,000 | $ 28,625,000 | |
Carrying value of life insurance policy | 4,611,000 | 3,611,000 | |
Realized gains from life insurance policy | $ 14,627,000 | $ 25,014,000 | |
Discount rate applied to portfolio | 11.08% | 11.09% | |
Change in fair value related to policies | $ (2,395,000) | ||
Net valuation of life policies | 387,402,000 | $ 356,650,000 | |
Valuation of the portfolio of life policies | $ 389,797,000 | ||
Life insurance policies [Member] | |||
Investment in Life Insurance Policies (Textual) | |||
Discount rate applied to portfolio | 11.08% | 11.09% |
Fair Value Definition and Hie42
Fair Value Definition and Hierarchy (Details) - Life insurance policies [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Summary of reconciliation of investments in life insurance policies | ||
Beginning balance | $ 356,650,000 | $ 282,883,000 |
Purchases | 23,831,000 | 1,016,000 |
Maturities (cash in excess of carrying value) | (4,611,000) | (3,610,000) |
Net change in fair value | 11,532,000 | (1,894,000) |
Ending balance | $ 387,402,000 | $ 278,395,000 |
Fair Value Definition and Hie43
Fair Value Definition and Hierarchy (Details 1) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Summary of inputs utilized in estimating the fair value | |||
Discount rate | 11.08% | 11.09% | |
Life insurance policies [Member] | |||
Summary of inputs utilized in estimating the fair value | |||
Weighted-average age of insured, years | 82 years 4 months 24 days | 82 years 7 months 6 days | |
Weighted average life expectancy, months | 80 months 6 days | 79 months 9 days | |
Average face amount per policy | $ 2,210,000 | $ 2,386,000 | |
Discount rate | 11.08% | 11.09% |
Fair Value Definition and Hie44
Fair Value Definition and Hierarchy (Details 2) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Minus 8 months [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | $ 52,011,000 | $ 48,339,000 |
Minus 4 Months [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | 25,901,000 | 24,076,000 |
Plus 4 Months [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | (25,278,000) | (23,501,000) |
Plus 8 months [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | (49,990,000) | (46,482,000) |
Minus 2% [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | 38,567,000 | 35,024,000 |
Minus 1% [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | 18,477,000 | 16,786,000 |
Plus 1% [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | (17,033,000) | (15,485,000) |
Plus 2% [Member] | ||
Fair value sensitivity analysis on the investment in life insurance policies | ||
Investment in life policies | $ (32,772,000) | $ (29,803,000) |
Fair value definition and hie45
Fair value definition and hierarchy (Details 3) - Level 3 [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Warrants issued | 431,954 |
December 2011 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Dec. 31, 2011 |
Warrants issued | 68,937 |
Fair value per share | $ / shares | $ 0.22 |
Risk free rate | 0.42% |
Volatility | 25.25% |
Term | 5 years |
March 2012 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Mar. 31, 2012 |
Warrants issued | 38,130 |
Fair value per share | $ / shares | $ 0.52 |
Risk free rate | 0.38% |
Volatility | 36.20% |
Term | 5 years |
June 2012 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Jun. 12, 2012 |
Warrants issued | 161,840 |
Fair value per share | $ / shares | $ 1.16 |
Risk free rate | 0.41% |
Volatility | 47.36% |
Term | 5 years |
July 2012 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Jul. 31, 2012 |
Warrants issued | 144,547 |
Fair value per share | $ / shares | $ 1.16 |
Risk free rate | 0.41% |
Volatility | 47.36% |
Term | 5 years |
September 2012 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Sep. 30, 2012 |
Warrants issued | 2,500 |
Fair value per share | $ / shares | $ 0.72 |
Risk free rate | 0.31% |
Volatility | 40.49% |
Term | 5 years |
September 2014 [Member] | |
Warrants Level 3 instruments and measured at fair value upon issuance | |
Month issued | Sep. 30, 2014 |
Warrants issued | 16,000 |
Fair value per share | $ / shares | $ 1.26 |
Risk free rate | 1.85% |
Volatility | 17.03% |
Term | 5 years |
Fair Value Definition and Hie46
Fair Value Definition and Hierarchy (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2014 | |
Fair Value Definition and Hierarchy (Textual) | ||
Life expectancy report, Description | During the fourth quarter of 2014, GWG adopted a plan to update the independent life expectancy estimates, where possible, on the insured lives in our portfolio. The plan covers all policies with the exception of those policies purchased with small face amount underwriting standards (under $1 million in face amount). The plan is for each set of life expectancy estimates and medical records to be updated on a continuous rotating three-year cycle. The records for approximately 1/12th of the portfolio are being updated each quarter. | |
Estimated fair value of series I secured notes payable | $ 326,944,000 | |
Weighted average market interest rate of secured notes payable | 7.06% | |
Debt instruments face value | $ 325,339,000 | |
Description for change in discount factor | If the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy and the discount factors were increased or decreased by 1% and 2%, while all other variables are held constant. | |
Increase decrease in life expectancy | Four and eight months | |
Increase decrease in discount rate | 1% and 2 |
Credit Facilities (Details)
Credit Facilities (Details) - USD ($) | Jul. 15, 2008 | May. 29, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Credit Facilities (Textual) | |||||
Maximum borrowing amount under line of credit facility | $ 100,000,000 | ||||
Expiry date of line of credit | Jul. 15, 2013 | Dec. 31, 2016 | |||
Amount outstanding under line of credit facility | $ 85,011,000 | $ 65,011,000 | |||
Effective rate of interest | 5.69% | 5.58% | |||
Total funds available for additional borrowings under the borrowing base formula criteria | $ 20,000,000 | $ 39,989,000 | |||
Weighted average effective interest rate | 5.68% | 6.20% | |||
Minimum tangible net worth to be maintained by company | $ 45,000,000 | ||||
Minimum cash and eligible investments | 15,000,000 | ||||
Consolidated tangible net worth under credit and security agreement | 28,333,000 | ||||
Consolidated net income under credit and security agreement | $ 118,922,000 | ||||
Credit facility, Description | Advances under the senior credit facility made after May 11, 2015 will bear interest at the commercial paper rate of the lender at the time of the advance, or at the lender's cost of borrowing plus 4.25 percent, which is 1.75 percent less than under the previous Credit and Security Agreement executed on January 25, 2013. | ||||
Credit facility up to limit | $ 105,000,000 |
Series I Secured Notes payabl48
Series I Secured Notes payable (Details) - Series I Secured Notes Payable [Member] | Mar. 31, 2016USD ($) |
Summary of future contractual maturities of notes payable | |
Nine months ending December 31 ,2016 | $ 6,581,000 |
2,017 | 7,956,000 |
2,018 | 1,596,000 |
2,019 | 444,000 |
2,020 | 1,766,000 |
Thereafter | 165,000 |
Total | 18,508,000 |
Summary of amortization of deferred financing costs of notes payable | |
Nine months ending December 31 ,2016 | 35,000 |
2,017 | 128,000 |
2,018 | 41,000 |
2,019 | 7,000 |
2,020 | 63,000 |
Thereafter | 7,000 |
Total | $ 281,000 |
Series I Secured Notes payabl49
Series I Secured Notes payable (Details Textual) - USD ($) | Jun. 14, 2011 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Series I Secured Notes Payable (Textual) | ||||
Effective rate of interest | 5.69% | 5.58% | ||
Weighted average interest rate of secured notes payable | 7.06% | |||
Series I Secured Notes Payable [Member] | ||||
Series I Secured Notes Payable (Textual) | ||||
Description of interest payment | Interest is payable monthly, quarterly, annually or at maturity depending on the terms of the note. | |||
Weighted average interest rate of secured notes payable | 8.61% | 8.47% | ||
Principal amount outstanding under Series I Secured notes | $ 18,508,000 | $ 23,578,000 | ||
Amortization of deferred financing and issuance costs | 111,000 | $ 130,000 | ||
Future expected amortization of deferred financing costs | $ 281,000 | |||
Minimum maturity period of secured notes | 6 months | 6 months | ||
Maximum maturity period of secured notes | 7 years | 7 years | ||
Amortizatoin period of deferred financing cost | 6 years | |||
Series I Secured Notes Payable [Member] | Maximum [Member] | ||||
Series I Secured Notes Payable (Textual) | ||||
Effective rate of interest | 9.55% | |||
Series I Secured Notes Payable [Member] | Minimum [Member] | ||||
Series I Secured Notes Payable (Textual) | ||||
Effective rate of interest | 5.65% |
L Bonds (Details)
L Bonds (Details) - Renewable Secured Debentures [Member] | Mar. 31, 2016USD ($) |
Summary of future contractual maturities of L Bonds | |
Nine months ending December 31 ,2016 | $ 76,618,000 |
2,017 | 73,736,000 |
2,018 | 75,804,000 |
2,019 | 33,648,000 |
2,020 | 19,602,000 |
Thereafter | 27,423,000 |
Total | 306,831,000 |
Summary of amortization of deferred financing costs of L Bonds | |
Nine months ending December 31 ,2016 | 562,000 |
2,017 | 1,734,000 |
2,018 | 2,976,000 |
2,019 | 1,521,000 |
2,020 | 995,000 |
Thereafter | 1,734,000 |
Total | $ 9,522,000 |
L Bonds (Details Textual)
L Bonds (Details Textual) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Jan. 09, 2015 | Jan. 31, 2012 | |
Renewable Secured Debentures (Textual) | |||||
Debentures offer for sale | $ 325,339,000 | ||||
Weighted average market interest rate of secured notes payable | 7.06% | ||||
Renewable Secured Debentures [Member] | |||||
Renewable Secured Debentures (Textual) | |||||
Debentures offer for sale | $ 1,000,000,000 | $ 250,000,000 | |||
Maturity period of debentures, Minimum | 6 months | ||||
Maturity period of debentures, Maximum | 7 years | ||||
Description of interest payment | Interest is payable monthly, annually or at maturity depending on the terms of the debenture. | ||||
Minimum increments | $ 25,000 | ||||
Weighted average market interest rate of secured notes payable | 7.14% | 7.18% | |||
Amount outstanding under L Bonds | $ 306,831,000 | $ 282,171,000 | |||
Amortization of deferred issuance costs | 1,568,000 | $ 974,000 | |||
Future expected amortization of deferred financing costs | $ 952,200 | ||||
Amortizatoin period of deferred financing cost | 8 years | ||||
Renewable Secured Debentures [Member] | Maximum [Member] | |||||
Renewable Secured Debentures (Textual) | |||||
Interest rate | 9.50% | ||||
Renewable Secured Debentures [Member] | Minimum [Member] | |||||
Renewable Secured Debentures (Textual) | |||||
Interest rate | 4.25% |
Note Payable to Related Party (
Note Payable to Related Party (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||
Notes payable to related parties | $ 1,760,000 | |
ISF [Member] | ||
Related Party Transaction [Line Items] | ||
Shares issued of common stock | 100,000 | |
Percentage of common stock ownership | 74.00% | |
Interest rate | 9.00% | |
Note payable maturity date, Description | The maturity date of this note is the earlier of (i) December 31, 2016 or (ii) 30 calendar days after the date on which the GWG MCA shall have received net financings proceeds from it's private offer and sale of it's preferred stock equaling the amount of debt for borrowed money then outstanding under this promissory note |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) - USD ($) | Sep. 02, 2012 | Jul. 31, 2011 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Convertible Preferred Stock (Textual) | |||||
Preferred stock, liquidation preference per share | $ 7.50 | ||||
Series A preferred stock outstanding | 1,449 | ||||
Gross consideration from convertible preferred stock | $ 20,274,000 | ||||
Series A preferred stock issuance costs | 2,838,000 | ||||
Warrant outstanding | $ 431,954 | $ 431,954 | |||
Weighted average remaining life of warrants outstanding | 1 year 2 months 5 days | 1 year 5 months 5 days | |||
Accrued preferred dividend | $ 507,000 | $ 537,000 | |||
Redeemed shares of Series A preferred stock | 277,000 | ||||
Minimum offering price of common stock | $ 11 | ||||
Fair value of outstanding warrants attached to Series A preferred stock | $ 428,000 | ||||
Term of redemption of warrants prior to expiration | The Company may redeem outstanding warrants prior to their expiration, at a price of $0.01 per share upon 30 days written notice to the investors at any time after (i) the Company has completed a registration of its common stock with the SEC and (ii) the volume of weighted-average sale price per share of common stock equals or exceeds $14.00 per share for ten consecutive trading days ending on the third business day prior to proper notice of such redemption. | ||||
Declared and accrued dividends | $ 507,000 | ||||
Preferred stock issued in lieu of cash dividend | 24,000 | 26,000 | |||
Cash dividend rate, per share | $ 7 | ||||
Initial public offering [Member] | |||||
Convertible Preferred Stock (Textual) | |||||
Convertible preferred stock, shares issued upon conversion | 677,566 | ||||
Conversion of stock, shares converted into common stock | 508,193 | ||||
Series A convertible Preferred Stock [Member] | |||||
Convertible Preferred Stock (Textual) | |||||
Company offering shares of convertible redeemable preferred stock | 3,333,333 | ||||
Series A preferred stock shares sold for cash | 3,278,000 | ||||
Consideration received on sale of Series A preferred stock | $ 24,582,000 | ||||
Series A preferred stock shares issued in conversion of dividends | 398,000 | ||||
Series A preferred stock value issued in conversion of dividends | $ 2,788,000 | ||||
Series A preferred stock, Dividend rate | 10.00% | ||||
Conversion term for series A preferred stock | Each share has the right to convert into 0.75 shares of the Company's common stock at $10 per share. | ||||
Conversion price per share | $ 10 | ||||
Exercise price of warrants | $ 12.50 | ||||
Conversion of Series A preferred stock into common stock, description | One share of common stock for every 40 shares of Series A Preferred Stock purchased. | ||||
Preferred stock redemption terms | The Company may redeem the Series A Preferred Stock at a price equal to 110% of its liquidation preference ($7.50 per share) at any time. | ||||
Series A preferred stock outstanding | 2,713,000 | ||||
Convertible preferred stock, shares issued upon conversion | 678,000 | ||||
Conversion of stock, shares converted into common stock | 508,000 | ||||
Minimum gross proceeds from common stock offering | $ 5,000,000 | ||||
Exercise price | $ 12.50 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) | 3 Months Ended | |
Mar. 31, 2016USD ($)Tradingdays$ / sharesshares | Mar. 31, 2015USD ($) | |
Subsidiary, Sale of Stock [Line Items] | ||
Offering price of series redeemable preferred stock | $ 6.25 | |
Minimum conversion price | $ 15 | |
Number of trading days | Tradingdays | 20 | |
Redeemable Preferred Stock For Sale | $ | $ 79,000 | |
Redemption, description | ? 12% if the redemption is requested before the first anniversary of the original issuance of the shares; and ? 10% if the redemption is requested on or after the first anniversary and before the second anniversary of the original issuance of such shares; and ? 8% if the redemption is requested on or after the second anniversary and before the third anniversary of the original issuance of such shares. | |
Series A 7% redeemable preferred stocks [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Company offering shares of convertible redeemable preferred stock | shares | 100,000 | |
Offering price of series redeemable preferred stock | $ 1,000 | |
Redeemable preferred stock par value per share | $ 0.001 | |
Dividend rate of convertible redeemable preferred stock | 7.00% | |
Preferred stock redemption percentage | 15.00% | |
Redeemable Preferred Stock [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Proceeds from redeemable preferred stock | $ | $ 1,449,000 | |
Redeemable preferred stock, shares issued | shares | 1,449 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Current: | |||
Federal | $ (23,000) | $ (324,000) | |
State | (6,000) | (103,000) | |
Total current tax expense | (29,000) | (427,000) | $ 0 |
Deferred: | |||
Federal | (806,000) | (1,654,000) | |
State | (250,000) | (528,000) | |
Total deferred tax expense | 1,055,729 | 2,182,251 | |
Total income tax expense | $ 1,084,717 | $ 2,609,371 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Taxes (Textual) | |||
Income tax liability current | $ (29,000) | $ (427,000) | $ 0 |
Accrual of non-deductible preferred stock dividend expense | $ 511,000 |
Common Stock (Details)
Common Stock (Details) - USD ($) | Sep. 24, 2014 | Mar. 17, 2016 | Jun. 24, 2015 | Mar. 31, 2016 | Mar. 31, 2015 |
Common Stock (Textual) | |||||
Common stock, par value | $ 6.25 | ||||
Net proceeds | $ 46,545 | ||||
GWG MCA Capital, Inc. (Member) | |||||
Common Stock (Textual) | |||||
Restricted Common stock issued | 800,000 | 6,500 | 60,000 | ||
Common stock, par value | $ 12.50 | $ 7.16 | $ 9.70 |
Stock Incentive Plan (Details)
Stock Incentive Plan (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Outstanding stock options | ||
Beginning Balance | 1,053,615 | 1,000,101 |
Granted during the year | 7,500 | 353,200 |
Vested during the year | ||
Exercised during the year | (27,667) | |
Forfeited during the year | (10,500) | (272,019) |
Ending Balance | 1,050,615 | 1,053,615 |
Vested [Member] | ||
Outstanding stock options | ||
Beginning Balance | 483,703 | 314,288 |
Granted during the year | 7,500 | 79,500 |
Vested during the year | 14,092 | 238,999 |
Exercised during the year | (27,667) | |
Forfeited during the year | (3,090) | (121,417) |
Ending Balance | 502,205 | 483,703 |
Un-vested [Member] | ||
Outstanding stock options | ||
Beginning Balance | 569,912 | 685,813 |
Granted during the year | 273,700 | |
Vested during the year | (14,092) | (238,999) |
Exercised during the year | ||
Forfeited during the year | (7,410) | (150,602) |
Ending Balance | 548,410 | 569,912 |
Stock Incentive Plan (Details T
Stock Incentive Plan (Details Textual) - USD ($) | Mar. 27, 2013 | Sep. 30, 2014 | Mar. 31, 2016 | Dec. 31, 2015 |
Stock Incentive Plan (Textual) | ||||
Number of shares issued to employees, officers and directors | 7,500 | 353,200 | ||
Options vesting period | 3 years | |||
Forfeited during the year | 10,500 | 272,019 | ||
Compensation expense related to un-vested options not yet recognized | $ 451,000 | |||
Compensation expense related to un-vested options, period of recognition | 3 years | |||
Compensation Expense in 2016 | $ 214,000 | |||
Compensation Expense in 2017 | 187,000 | |||
Compensation Expense in 2018 | $ 50,000 | |||
Exercised during the year | (27,667) | |||
Share-based options, forfeited | 53,000 | |||
Share-based options, vested | 53,000 | |||
Common Stock [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Number of shares issued to employees, officers and directors | 1,050,615 | |||
Number of options vested | 502,205 | |||
Others [Member] | Maximum [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Exercise Price | $ 10.25 | |||
Others [Member] | Minimum [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Exercise Price | 6 | |||
Owning more than 10% [Member] | Maximum [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Exercise Price | 10.18 | |||
Owning more than 10% [Member] | Minimum [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Exercise Price | $ 6.60 | |||
2013 Stock Incentive Plan [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Number of shares issuable | 2,000,000 | |||
Stock based compensation, Method used | The annual volatility rate is based on the standard deviation of the average continuously compounded rate of return of five selected comparable companies over the previous 52 weeks. | |||
Expected volatility rate | 20.59% | |||
2013 Stock Incentive Plan [Member] | Maximum [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Stock option period | 10 years | |||
2013 Stock Incentive Plan [Member] | Employee Stock Option [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Maximum number of shares for an employee | 53,000 | |||
Employee granting right purchase of common stock | 318,000 | |||
Number of options vested | 159,000 | |||
Exercise Price | $ 12.50 | |||
Options vesting period | 1 year | |||
2013 Stock Incentive Plan [Member] | Common Stock [Member] | ||||
Stock Incentive Plan (Textual) | ||||
Maximum number of shares for an employee | 400,000 | |||
Forfeited during the year | 345,685 | |||
Forfeited during the year, Percent | 15.00% | |||
Exercised during the year | 28,001 |
Commitments (Details)
Commitments (Details) | Mar. 31, 2016USD ($) |
Summary of Minimum lease payments under the lease agreement | |
Nine months ending December 31, 2016 | $ 130,000 |
2,017 | 178,000 |
2,018 | 185,000 |
2,019 | 191,000 |
2,020 | 198,000 |
2,021 | 204,000 |
2,022 | 210,000 |
2,023 | 217,000 |
2,024 | 223,000 |
2,025 | 230,000 |
2,026 | 38,000 |
Total | $ 2,004,000 |
Commitments (Details Textual)
Commitments (Details Textual) | Feb. 01, 2016USD ($) | Sep. 01, 2015ft² | Mar. 31, 2016USD ($)ft² | Dec. 31, 2015USD ($) |
Commitments (Textual) | ||||
Office space in square feet | ft² | 17,687 | 11,695 | ||
Lease term date | Aug. 31, 2015 | |||
Rent expenses | $ 224,000 | $ 68,000 | ||
Description of lessor leasing arrangements | Effective September 1, 2015, the Company entered into a Second Amendment to the office lease with US Bank National Association that extended the term of the lease to 120 months from the effective date and expanded to 17,687 square feet. The Second Amendment provides the right for us to extend the term of the lease for one three-year term, and a right of first offer on space adjacent to our leased premises. | |||
Total rent for sublease term | $ 30,000 | |||
Rent paid for monthly installments | 5,000 | |||
Additional charges for services in sublease | $ 500 |
Guarantees of L Bonds (Details)
Guarantees of L Bonds (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
A S S E T S | ||||
Cash and cash equivalents | $ 10,998,625 | $ 34,425,105 | $ 36,190,527 | $ 30,662,704 |
Restricted cash | 19,828,620 | 2,341,900 | ||
Investment in life insurance contracts, at fair value | 387,402,111 | $ 356,649,715 | ||
Secured MCA advances | 4,235,442 | |||
Policy benefits receivable | 15,912,839 | |||
Other assets | $ 3,224,325 | $ 2,461,045 | ||
Investment in subsidiaries | ||||
TOTAL ASSETS | $ 441,601,962 | $ 395,877,765 | ||
LIABILITIES | ||||
Revolving senior credit facility | 82,304,099 | 63,279,596 | ||
Series I Secured Notes payable | 18,226,541 | 23,287,704 | ||
L Bonds | 301,924,332 | $ 276,482,796 | ||
Notes payable to related parties | 1,760,000 | |||
Accounts payable | 2,119,791 | $ 1,517,440 | ||
Interest payable | 12,915,598 | 12,340,061 | ||
Other accrued expenses | 1,397,378 | 1,060,786 | ||
Deferred taxes | 2,819,697 | 1,763,968 | ||
TOTAL LIABILITIES | $ 423,467,436 | $ 379,732,351 | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Member capital | ||||
Convertible preferred stock | $ 20,274,155 | $ 20,784,841 | ||
Redeemable preferred stock | 1,369,938 | |||
Common stock | 5,948 | $ 5,942 | ||
Additional paid-in capital | 17,204,940 | 17,149,391 | ||
Accumulated deficit | (20,720,455) | (21,794,760) | ||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 18,134,526 | 16,145,414 | $ 22,389,936 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 441,601,962 | 395,877,765 | ||
Parent [Member] | ||||
A S S E T S | ||||
Cash and cash equivalents | $ 6,274,035 | $ 32,292,162 | 34,762,097 | 30,446,473 |
Restricted cash | ||||
Investment in life insurance contracts, at fair value | ||||
Secured MCA advances | ||||
Policy benefits receivable | ||||
Other assets | $ 4,560,495 | $ 1,742,074 | ||
Investment in subsidiaries | 321,992,234 | 269,886,254 | ||
TOTAL ASSETS | $ 332,826,764 | $ 303,920,490 | ||
LIABILITIES | ||||
Revolving senior credit facility | ||||
Series I Secured Notes payable | ||||
L Bonds | $ 301,924,332 | $ 276,482,796 | ||
Notes payable to related parties | ||||
Accounts payable | $ 188,894 | $ 280,988 | ||
Interest payable | 8,879,457 | 8,529,959 | ||
Other accrued expenses | 879,858 | 717,365 | ||
Deferred taxes | 2,819,697 | 1,763,968 | ||
TOTAL LIABILITIES | $ 314,692,238 | $ 287,775,076 | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Member capital | ||||
Convertible preferred stock | $ 20,274,155 | $ 20,784,841 | ||
Redeemable preferred stock | 1,369,938 | |||
Common stock | 5,948 | $ 5,942 | ||
Additional paid-in capital | 17,204,940 | 17,149,391 | ||
Accumulated deficit | (20,720,455) | (21,794,760) | ||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 18,134,526 | 16,145,414 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 332,826,764 | 303,920,490 | ||
Guarantor Subsidiary [Member] | ||||
A S S E T S | ||||
Cash and cash equivalents | 4,340,365 | 1,982,722 | 1,278,378 | $ 216,231 |
Restricted cash | $ 4,807,637 | $ 2,102,257 | ||
Investment in life insurance contracts, at fair value | ||||
Secured MCA advances | ||||
Policy benefits receivable | ||||
Other assets | $ 863,833 | $ 688,071 | ||
Investment in subsidiaries | 332,430,230 | 291,295,951 | ||
TOTAL ASSETS | 342,442,065 | 296,069,001 | ||
LIABILITIES | ||||
Revolving senior credit facility | (2,275,000) | (1,000,000) | ||
Series I Secured Notes payable | $ 18,226,541 | $ 23,287,704 | ||
L Bonds | ||||
Notes payable to related parties | ||||
Accounts payable | $ 365,147 | $ 157,217 | ||
Interest payable | 3,714,441 | 3,544,626 | ||
Other accrued expenses | $ 486,943 | $ 343,421 | ||
Deferred taxes | ||||
TOTAL LIABILITIES | $ 20,518,072 | $ 26,332,968 | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Member capital | $ 321,923,993 | $ 269,736,033 | ||
Convertible preferred stock | ||||
Redeemable preferred stock | ||||
Common stock | ||||
Additional paid-in capital | ||||
Accumulated deficit | ||||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $ 321,923,993 | $ 269,736,033 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 342,442,065 | 296,069,001 | ||
Non-Guarantor Subsidiaries [Member] | ||||
A S S E T S | ||||
Cash and cash equivalents | 384,225 | 150,221 | $ 150,052 | |
Restricted cash | 15,020,983 | 239,643 | ||
Investment in life insurance contracts, at fair value | 387,402,111 | $ 356,649,715 | ||
Secured MCA advances | 4,235,442 | |||
Policy benefits receivable | 15,912,839 | |||
Other assets | $ 530,899 | $ 30,900 | ||
Investment in subsidiaries | ||||
TOTAL ASSETS | $ 423,486,499 | $ 357,070,479 | ||
LIABILITIES | ||||
Revolving senior credit facility | $ 84,579,099 | $ 64,279,596 | ||
Series I Secured Notes payable | ||||
L Bonds | ||||
Notes payable to related parties | $ 4,460,000 | |||
Accounts payable | 1,565,750 | $ 1,079,235 | ||
Interest payable | 352,602 | $ 265,476 | ||
Other accrued expenses | $ 30,577 | |||
Deferred taxes | ||||
TOTAL LIABILITIES | $ 90,988,028 | $ 65,624,307 | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Member capital | $ 332,498,471 | $ 291,446,172 | ||
Convertible preferred stock | ||||
Redeemable preferred stock | ||||
Common stock | ||||
Additional paid-in capital | ||||
Accumulated deficit | ||||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $ 332,498,471 | $ 291,446,172 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 423,486,499 | $ 357,070,479 | ||
Eliminations [Member] | ||||
A S S E T S | ||||
Cash and cash equivalents | ||||
Restricted cash | ||||
Investment in life insurance contracts, at fair value | ||||
Secured MCA advances | ||||
Policy benefits receivable | ||||
Other assets | $ (2,730,902) | |||
Investment in subsidiaries | (645,422,464) | $ (561,182,205) | ||
TOTAL ASSETS | $ (657,153,366) | $ (561,182,205) | ||
LIABILITIES | ||||
Revolving senior credit facility | ||||
Series I Secured Notes payable | ||||
L Bonds | ||||
Notes payable to related parties | $ (2,700,000) | |||
Accounts payable | ||||
Interest payable | $ (30,902) | |||
Other accrued expenses | ||||
Deferred taxes | ||||
TOTAL LIABILITIES | $ (2,730,902) | |||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Member capital | $ (654,422,464) | $ (561,182,205) | ||
Convertible preferred stock | ||||
Redeemable preferred stock | ||||
Common stock | ||||
Additional paid-in capital | ||||
Accumulated deficit | ||||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $ (654,422,464) | $ (561,182,205) | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ (657,153,366) | $ (561,182,205) |
Guarantees of L Bonds (Details
Guarantees of L Bonds (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
REVENUE | |||
Contract servicing fees | |||
Gain on life insurance contracts, net | $ 17,713,712 | $ 16,783,409 | |
Interest and other income | 190,181 | 49,296 | |
TOTAL REVENUE | $ 17,903,893 | $ 16,832,705 | |
EXPENSES | |||
Origination and servicing fees | |||
Interest expense | $ 9,660,386 | $ 7,176,534 | |
Employee compensation and benefits | 2,466,197 | 1,727,917 | |
Legal and professional fees | 1,206,128 | 578,144 | |
Other expenses | 2,412,160 | 1,478,848 | |
TOTAL EXPENSES | 15,744,871 | 10,961,443 | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | $ 2,159,022 | $ 5,871,262 | |
EQUITY IN INCOME OF SUBSIDIARY | |||
NET INCOME BEFORE INCOME TAXES | $ 2,159,022 | $ 5,871,262 | |
INCOME TAX EXPENSE | 1,084,717 | 2,609,371 | |
NET INCOME (LOSS) | $ 1,074,305 | $ 3,261,891 | $ (7,393,274) |
Parent [Member] | |||
REVENUE | |||
Contract servicing fees | |||
Gain on life insurance contracts, net | |||
Interest and other income | $ 34,798 | $ 7,543 | |
TOTAL REVENUE | $ 34,798 | $ 7,543 | |
EXPENSES | |||
Origination and servicing fees | |||
Interest expense | $ 7,598,824 | $ 5,249,962 | |
Employee compensation and benefits | 1,536,430 | 1,305,801 | |
Legal and professional fees | 594,739 | 477,351 | |
Other expenses | 1,257,977 | 951,362 | |
TOTAL EXPENSES | 10,987,970 | 7,984,476 | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (10,953,172) | (7,976,933) | |
EQUITY IN INCOME OF SUBSIDIARY | 13,112,194 | 13,848,196 | |
NET INCOME BEFORE INCOME TAXES | 2,159,022 | 5,871,262 | |
INCOME TAX EXPENSE | 1,084,717 | 2,609,371 | |
NET INCOME (LOSS) | 1,074,305 | 3,261,891 | |
Guarantor Subsidiary [Member] | |||
REVENUE | |||
Contract servicing fees | $ 13,417 | $ 357,486 | |
Gain on life insurance contracts, net | |||
Interest and other income | $ 306 | $ 6,450 | |
TOTAL REVENUE | $ 2,762,748 | $ 363,936 | |
EXPENSES | |||
Origination and servicing fees | |||
Interest expense | $ 657,236 | $ 774,086 | |
Employee compensation and benefits | 829,081 | 422,116 | |
Legal and professional fees | 534,650 | 100,793 | |
Other expenses | 968,674 | 514,902 | |
TOTAL EXPENSES | 2,989,641 | 1,811,897 | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | (2,975,918) | (1,447,961) | |
EQUITY IN INCOME OF SUBSIDIARY | 16,301,366 | 15,296,104 | |
NET INCOME BEFORE INCOME TAXES | $ 13,325,448 | $ 13,848,144 | |
INCOME TAX EXPENSE | |||
NET INCOME (LOSS) | $ 13,325,448 | $ 13,848,144 | |
Non-Guarantor Subsidiaries [Member] | |||
REVENUE | |||
Contract servicing fees | |||
Gain on life insurance contracts, net | $ 17,713,712 | $ 16,783,409 | |
Interest and other income | 185,979 | 35,303 | |
TOTAL REVENUE | 17,899,691 | 16,818,712 | |
EXPENSES | |||
Origination and servicing fees | 13,417 | 357,486 | |
Interest expense | 1,435,228 | $ 1,152,486 | |
Employee compensation and benefits | 100,686 | ||
Legal and professional fees | 76,739 | ||
Other expenses | 185,509 | $ 12,584 | |
TOTAL EXPENSES | 1,811,579 | 1,522,556 | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | $ 16,088,112 | $ 15,296,156 | |
EQUITY IN INCOME OF SUBSIDIARY | |||
NET INCOME BEFORE INCOME TAXES | $ 16,088,112 | $ 15,296,156 | |
INCOME TAX EXPENSE | |||
NET INCOME (LOSS) | $ 16,088,112 | $ 15,296,156 | |
Eliminations [Member] | |||
REVENUE | |||
Contract servicing fees | $ (13,417) | $ (357,486) | |
Gain on life insurance contracts, net | |||
Interest and other income | $ (30,902) | ||
TOTAL REVENUE | (44,319) | $ (357,486) | |
EXPENSES | |||
Origination and servicing fees | (13,417) | $ (357,486) | |
Interest expense | $ (30,902) | ||
Employee compensation and benefits | |||
Legal and professional fees | |||
Other expenses | |||
TOTAL EXPENSES | $ (44,319) | $ (357,486) | |
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES | |||
EQUITY IN INCOME OF SUBSIDIARY | $ (29,413,560) | $ (29,144,300) | |
NET INCOME BEFORE INCOME TAXES | $ (29,413,560) | $ (29,144,300) | |
INCOME TAX EXPENSE | |||
NET INCOME (LOSS) | $ 29,413,560 | $ (29,144,300) |
Guarantees of L Bonds (Detail64
Guarantees of L Bonds (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 1,074,305 | $ 3,261,891 | $ (7,393,274) |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity of subsidiaries | |||
Gain on life insurance contracts | $ (11,531,553) | $ 1,893,845 | |
Amortization of deferred financing and issuance costs | 784,188 | (549,030) | |
Deferred income taxes | 1,055,729 | 2,182,251 | |
Preferred stock dividends payable | 163,577 | 188,812 | |
(Increase) decrease in operating assets: | |||
Policy benefits receivable | (15,912,839) | (17,890,000) | |
Other assets | 173,426 | $ (131,173) | |
Increase (decrease) in operating liabilities: | |||
Due to related party | 1,712,392 | ||
Accounts payable and other accrued expenses | 1,967,969 | $ 2,635,687 | |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (20,512,806) | (8,407,717) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance contracts | (24,326,322) | (2,446,477) | |
Proceeds from settlement of life insurance contracts | 4,610,479 | $ 3,610,595 | |
Investments in Secured MCA advances | (4,353,585) | ||
Proceeds from Secured MCA advances | 118,143 | ||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | (23,951,285) | $ 1,164,118 | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings on Senior Revolving Credit Facility | 20,000,000 | ||
Payments for redemption of Series I Secured notes payable | (5,237,393) | $ (1,273,189) | |
Proceeds from issuance of L Bonds | 34,368,889 | 27,960,297 | |
Payments for issuance and redemption of L Bonds | (10,909,693) | (6,878,122) | |
Proceeds from restricted cash | (17,486,720) | $ (7,037,564) | |
Issuance of common stock | 46,545 | ||
Payments for issuance and redemption of preferred stock | $ 1,028,536 | ||
Issuance of member capital | |||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | $ 21,037,611 | $ 12,771,422 | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | (23,426,480) | 5,527,823 | |
CASH AND CASH EQUIVALENTS | |||
BEGINNING OF THE PERIOD | 34,425,105 | 30,662,704 | 30,662,704 |
END OF THE PERIOD | 10,998,625 | 36,190,527 | 34,425,105 |
Parent [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | 1,074,305 | 3,261,891 | |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity of subsidiaries | $ (13,112,194) | $ (13,848,196) | |
Gain on life insurance contracts | |||
Amortization of deferred financing and issuance costs | $ 1,648,891 | $ 43,475 | |
Deferred income taxes | 1,055,729 | 2,182,251 | |
Preferred stock dividends payable | $ 163,577 | $ 188,812 | |
(Increase) decrease in operating assets: | |||
Policy benefits receivable | |||
Other assets | $ (38,661,205) | $ (10,874,436) | |
Increase (decrease) in operating liabilities: | |||
Due to related party | (2,731,001) | ||
Accounts payable and other accrued expenses | 782,047 | $ 2,279,652 | |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | $ (49,779,851) | $ (16,766,551) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance contracts | |||
Proceeds from settlement of life insurance contracts | |||
Investments in Secured MCA advances | |||
Proceeds from Secured MCA advances | |||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings on Senior Revolving Credit Facility | |||
Payments for redemption of Series I Secured notes payable | |||
Proceeds from issuance of L Bonds | $ 34,368,889 | $ 27,960,297 | |
Payments for issuance and redemption of L Bonds | $ (10,909,693) | $ (6,878,122) | |
Proceeds from restricted cash | |||
Issuance of common stock | $ 46,545 | ||
Proceeds from issuance of preferred stock | 1,028,536 | ||
Payments for issuance and redemption of preferred stock | $ (772,553) | ||
Issuance of member capital | |||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | $ 23,761,724 | $ 21,082,175 | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | (26,018,127) | 4,315,624 | |
CASH AND CASH EQUIVALENTS | |||
BEGINNING OF THE PERIOD | 32,292,162 | 30,446,473 | 30,446,473 |
END OF THE PERIOD | 6,274,035 | 34,762,097 | 32,292,162 |
Guarantor Subsidiary [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | 13,325,448 | 13,848,144 | |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity of subsidiaries | $ (16,301,366) | $ (15,296,104) | |
Gain on life insurance contracts | |||
Amortization of deferred financing and issuance costs | $ (1,164,206) | $ 130,188 | |
Deferred income taxes | |||
Preferred stock dividends payable | |||
(Increase) decrease in operating assets: | |||
Policy benefits receivable | |||
Other assets | $ (24,992,068) | $ (5,877,435) | |
Increase (decrease) in operating liabilities: | |||
Due to related party | (16,607) | ||
Accounts payable and other accrued expenses | 586,702 | $ 738,084 | |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | $ (28,562,097) | $ (6,457,123) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance contracts | |||
Proceeds from settlement of life insurance contracts | |||
Investments in Secured MCA advances | |||
Proceeds from Secured MCA advances | |||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings on Senior Revolving Credit Facility | |||
Payments for redemption of Series I Secured notes payable | $ (5,237,393) | $ (1,273,189) | |
Proceeds from issuance of L Bonds | |||
Payments for issuance and redemption of L Bonds | |||
Proceeds from restricted cash | $ (2,705,379) | $ (1,780,000) | |
Issuance of common stock | |||
Proceeds from issuance of preferred stock | |||
Payments for issuance and redemption of preferred stock | |||
Issuance of member capital | $ 38,862,512 | $ 10,572,459 | |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 30,919,740 | 7,519,270 | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,357,643 | 1,062,147 | |
CASH AND CASH EQUIVALENTS | |||
BEGINNING OF THE PERIOD | 1,982,722 | 216,231 | 216,231 |
END OF THE PERIOD | 4,340,365 | 1,278,378 | $ 1,982,722 |
Non-Guarantor Subsidiaries [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 16,088,112 | $ 15,296,156 | |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity of subsidiaries | |||
Gain on life insurance contracts | $ (11,531,553) | $ 1,893,845 | |
Amortization of deferred financing and issuance costs | $ 299,503 | $ (722,693) | |
Deferred income taxes | |||
Preferred stock dividends payable | |||
(Increase) decrease in operating assets: | |||
Policy benefits receivable | $ (15,912,839) | $ 17,890,000 | |
Other assets | |||
Increase (decrease) in operating liabilities: | |||
Due to related party | $ 4,460,000 | ||
Accounts payable and other accrued expenses | 599,220 | $ 382,049 | |
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (5,997,557) | (1,804,741) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance contracts | (24,326,322) | (2,446,477) | |
Proceeds from settlement of life insurance contracts | 4,610,479 | $ 3,610,595 | |
Investments in Secured MCA advances | (4,353,585) | ||
Proceeds from Secured MCA advances | 118,143 | ||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | (23,951,285) | $ 1,164,118 | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings on Senior Revolving Credit Facility | $ 20,000,000 | ||
Payments for redemption of Series I Secured notes payable | |||
Proceeds from issuance of L Bonds | |||
Payments for issuance and redemption of L Bonds | |||
Proceeds from restricted cash | $ (14,781,341) | $ (5,257,564) | |
Issuance of common stock | |||
Proceeds from issuance of preferred stock | |||
Payments for issuance and redemption of preferred stock | |||
Issuance of member capital | $ 24,964,187 | $ 6,048,239 | |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 30,182,846 | 790,675 | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 234,004 | $ 150,052 | |
CASH AND CASH EQUIVALENTS | |||
BEGINNING OF THE PERIOD | 150,221 | ||
END OF THE PERIOD | 384,225 | $ 150,052 | $ 150,221 |
Eliminations [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | 29,413,560 | (29,144,300) | |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Equity of subsidiaries | $ 29,413,560 | $ 29,144,300 | |
Gain on life insurance contracts | |||
Amortization of deferred financing and issuance costs | |||
Deferred income taxes | |||
Preferred stock dividends payable | |||
(Increase) decrease in operating assets: | |||
Policy benefits receivable | |||
Other assets | $ 63,826,699 | $ 16,620,698 | |
Increase (decrease) in operating liabilities: | |||
Due to related party | |||
Accounts payable and other accrued expenses | |||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | $ 63,826,699 | $ 16,620,698 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Investment in life insurance contracts | |||
Proceeds from settlement of life insurance contracts | |||
Investments in Secured MCA advances | |||
Proceeds from Secured MCA advances | |||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Net borrowings on Senior Revolving Credit Facility | |||
Payments for redemption of Series I Secured notes payable | |||
Proceeds from issuance of L Bonds | |||
Payments for issuance and redemption of L Bonds | |||
Proceeds from restricted cash | |||
Issuance of common stock | |||
Proceeds from issuance of preferred stock | |||
Payments for issuance and redemption of preferred stock | |||
Issuance of member capital | $ (63,826,699) | $ (16,620,698) | |
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | $ (63,826,699) | $ (16,620,698) | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | |||
CASH AND CASH EQUIVALENTS | |||
BEGINNING OF THE PERIOD | |||
END OF THE PERIOD |
Guarantees of L Bonds (Detail65
Guarantees of L Bonds (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Jan. 09, 2015 | Jan. 31, 2012 | |
Guarantees of L Bonds (Textual) | |||
Debentures offer for sale | $ 325,339,000 | ||
Maximum rate of return on equity fund amount | 18.00% | ||
Guarantees of L Bonds [Member] | |||
Guarantees of L Bonds (Textual) | |||
Debentures offer for sale | $ 1,000,000,000 | $ 250,000,000 |
Concentrations (Details)
Concentrations (Details) | Mar. 31, 2016 | Dec. 31, 2015 | |
AXA Equitable [Member] | |||
Summary of the face value of insurance contracts with specific life insurance companies | |||
Face value percentage of insurance contracts with specific life insurance companies | 14.01% | 14.00% | |
John Hancock [Member] | |||
Summary of the face value of insurance contracts with specific life insurance companies | |||
Face value percentage of insurance contracts with specific life insurance companies | 11.64% | 12.73% | |
Transamerica [Member] | |||
Summary of the face value of insurance contracts with specific life insurance companies | |||
Face value percentage of insurance contracts with specific life insurance companies | 10.38% | [1] | |
[1] | percentage does not exceed 10% of the total face value. |
Concentrations (Details 1)
Concentrations (Details 1) | Mar. 31, 2016 | Dec. 31, 2015 |
California [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance contracts held in specific states | 23.66% | 25.25% |
Florida [Member] | ||
Summary of the number of insurance contracts held in specific states exceeding 10% of the total face value held by the Company | ||
Percentage of insurance contracts held in specific states | 18.92% | 19.25% |
Concentrations (Details Textual
Concentrations (Details Textual) | 3 Months Ended |
Mar. 31, 2016 | |
Concentration (Textual) | |
Description of issuance contracts with specific life insurance companies and contracts held in specific states | Exceeding 10% of the total face value |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Feb. 04, 2016 | Mar. 31, 2016 |
Subsequent Event [Line Items] | ||
Additional principal amount of L bonds | $ 13,863,000 | |
Preferred stock, sale price per share | $ 6.25 | |
Redeemable preferred stock issued, value | $ 4,214,000 | |
Restricted shares of common stock | 25,000 | |
Private Placement [Member] | ||
Subsequent Event [Line Items] | ||
Preferred stock shares sold for cash, shares | 2,000,000 | |
Preferred stock, sale price per share | $ 10 | |
Percentage of preferred stock issued | 9.00% |