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EX-99.1 - EXHIBIT 99.1 - Lument Finance Trust, Inc.tv506255_ex99-1.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 5, 2018

 

HUNT COMPANIES FINANCE TRUST, INC.

(Exact name of registrant as specified in its charter)

 

Maryland   001-35845   45-4966519
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification Number)

 

230 Park Avenue, 19th Floor

New York, New York 10169 

(Address of principal executive offices)

 

(212) 521-6323
(Registrant’s telephone number, including area code)

 

Not applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 6, 2018, Hunt Companies Finance Trust, Inc. (the “Company”) issued a press release announcing its intent to restate its Annual Reports on Form 10-K for the fiscal years ended December 31, 2016 and December 31, 2017 and its Quarterly Reports on Form 10-Q for the quarter ended June 30, 2016 and each subsequent quarters through June 30, 2018 and the anticipated impacts to its consolidated financial statements for the Relevant Periods (as defined below). A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information disclosed in “Item 2.02 Results of Operations and Financial Condition,” including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or a related Audit Report or Completed interim Review.

 

On November 5, 2018, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company concluded that the Company’s previously issued audited financial statements (and any related audit reports of the Company’s independent registered public accounting firm, Grant Thornton LLP) contained in the Company’s 2016 and 2017 Annual Reports on Form 10-K and the unaudited consolidated financial statements contained in the Company’s Quarterly Reports on Form 10-Q for the quarter ended June 30, 2016 and each subsequent quarter through June 30, 2018 (collectively, the “Relevant Periods”) should no longer be relied upon due to accounting errors which occurred in fiscal year 2016. The Company determined that it had incorrectly reported a release of credit reserves relating to certain Non-Agency Residential Mortgage Backed Securities (“RMBS”) upon the sale of such securities in 2016 and incorrectly reported unrealized losses on Non-Agency RMBS Interest Only Certificates (“RMBS IO’s”) upon the deconsolidation in 2016 of the JPMMT 2014-OAK4 Trust. The unrealized losses on the RMBS IO’s were incorrectly reported through OCI instead of through unrealized gain (loss) on fair value option securities on the Company’s statements of operations for each of the quarter and year-to-date periods ended June 30, 2016 and September 30, 2016 and for the fiscal year ended December 31, 2016 as included in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the Relevant Periods. The release of credit reserves was incorrectly reported through other comprehensive income (“OCI”) instead of through the Company’s statements of operations for the quarter and year-to-date period ended September 30, 2016 and for the fiscal year ended December 31, 2016. While having no impact on total stockholders’ equity, as a result of the above errors, accumulated other comprehensive income (loss) and accumulated earnings (deficit) were incorrectly stated by equal and offsetting amounts in the Company’s balance sheets for each of the quarter-end and year-end periods from June 30, 2016 through June 30, 2018 as included in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the Relevant Periods.

 

The Company will file amendments to its Annual Reports on Form 10-K for the fiscal years ended December 31, 2016 and December 31, 2017 to restate the previously issued annual financial statements and to its Quarterly Reports on Form 10-Q for the Relevant Periods to restate the previously issued interim financial statements. Although the Company cannot yet estimate when it will complete the restatements and file the amended annual reports and quarterly reports, the Company is working diligently and expeditiously toward completion of the restatements and intends to file such amended annual reports and quarterly reports as soon as reasonably practicable. The Company expects to file a Form 12b-25 in connection with its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and the Company expects to file such Quarterly Report on Form 10-Q within the extended filing deadline.

 

The tables below sets forth the anticipated impacts to the consolidated balance sheets, the consolidated statements of operations, the consolidated statements of comprehensive income and the statement of cash flows for the Relevant Periods. These changes will have no effect on comprehensive income and stockholder’ equity and will have no effect on the Company’s reported liquidity or cash flows from operating activities, financing activities or investing activities for the Relevant Periods.

  

 

 

 

The tables below set forth the anticipated impacts to the consolidated balance sheets (unaudited):

  

   June 30, 2016 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $767,812,906 for June 30, 2016)  $754,352,044   $-   $754,352,044 
Mortgage loans held-for-sale, at fair value (includes pledged loans of $11,787,050 for June 30, 2016)   12,909,597    -    12,909,597 
Multi-family loans held in securitization trusts, at fair value   1,305,586,768    -    1,305,586,768 
Residential loans held in securitization trusts, at fair value   174,269,940    -    174,269,940 
Mortgage servicing rights, at fair value   3,229,937    -    3,229,937 
Cash and cash equivalents   25,536,658    -    25,536,658 
Restricted cash   14,454,208    -    14,454,208 
Accrued interest receivable   7,661,978    -    7,661,978 
Dividends receivable   2,014    -    2,014 
Investment related receivable   3,566,968    -    3,566,968 
FHLB stock   11,300    -    11,300 
Other assets   1,104,520    -    1,104,520 
                
Total assets  $2,302,685,932   $-   $2,302,685,932 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $677,197,000   $-   $677,197,000 
Mortgage loans held-for-sale   10,406,770    -    10,406,770 
Multi-family securitized debt obligations   1,288,578,921    -    1,288,578,921 
Residential securitized debt obligations   159,799,323    -    159,799,323 
Derivative liabilities, at fair value   7,954,588    -    7,954,588 
Accrued interest payable   5,498,559    -    5,498,559 
Dividends payable   29,349    -    29,349 
Fees and expenses payable to Manager   686,187    -    686,187 
Other accounts payable and accrued expenses   335,972    -    335,972 
                
Total liabilities   2,150,486,669    -    2,150,486,669 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at June 30, 2016   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 14,597,894 shares issued and outstanding, at June 30, 2016   145,979    -    145,979 
Additional paid-in capital   188,780,121    -    188,780,121 
Accumulated other comprehensive income (loss)   2,599,743    3,723,524    6,323,267 
Cumulative distributions to stockholders   (62,812,117)   -    (62,812,117)
Accumulated earnings (deficit)   (13,671,435)   (3,723,524)   (17,394,959)
                
Total stockholders' equity   152,199,263    -    152,199,263 
                
Total liabilities and stockholders' equity  $2,302,685,932   $-   $2,302,685,932 

 

 

 

  

   September 30, 2016 
   As previously reported   Restatement adjustments   As restated 
ASSETS            
Available-for-sale securities, at fair value (includes pledged securities of $822,403,355 for September 30, 2016)  $817,394,805   $-   $817,394,805 
Mortgage loans held-for-sale, at fair value (includes pledged loans of $8,754,039 for September 30, 2016)   9,274,002    -    9,274,002 
Multi-family loans held in securitization trusts, at fair value   1,267,101,902    -    1,267,101,902 
Residential loans held in securitization trusts, at fair value   153,356,678    -    153,356,678 
Mortgage servicing rights, at fair value   3,025,433    -    3,025,433 
Cash and cash equivalents   28,590,557    -    28,590,557 
Restricted cash   14,083,241    -    14,083,241 
Accrued interest receivable   7,650,823    -    7,650,823 
Dividends receivable   123    -    123 
Investment related receivable   4,131,073    -    4,131,073 
FHLB stock   11,300    -    11,300 
Other assets   954,507    -    954,507 
                
Total assets  $2,305,574,444   $-   $2,305,574,444 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $739,500,000   $-   $739,500,000 
Mortgage loans held-for-sale   7,125,821    -    7,125,821 
Multi-family securitized debt obligations   1,249,163,769    -    1,249,163,769 
Residential securitized debt obligations   147,407,885    -    147,407,885 
Derivative liabilities, at fair value   4,613,988    -    4,613,988 
Accrued interest payable   5,363,603    -    5,363,603 
Dividends payable   29,349    -    29,349 
Deferred income   6,905    -    6,905 
Fees and expenses payable to Manager   691,187    -    691,187 
Other accounts payable and accrued expenses   2,062,910    -    2,062,910 
                
Total liabilities   2,155,965,417    -    2,155,965,417 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at September 30, 2016   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 14,602,394 shares issued and outstanding, at September 30, 2016   145,979    -    145,979 
Additional paid-in capital   188,783,581    -    188,783,581 
Accumulated other comprehensive income (loss)   2,018,361    3,369,190    5,387,551 
Cumulative distributions to stockholders   (66,320,787)   -    (66,320,787)
Accumulated earnings (deficit)   (12,175,079)   (3,369,190)   (15,544,269)
                
Total stockholders' equity   149,609,027    -    149,609,027 
                
Total liabilities and stockholders' equity  $2,305,574,444   $-   $2,305,574,444 

 

 

 

  

   December 31, 2016 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $876,121,505 for December 31, 2016  $870,929,601   $-   $870,929,601 
Mortgage loans held-for-sale, at fair value   2,849,536    -    2,849,536 
Multi-family loans held in securitization trusts, at fair value   1,222,905,433    -    1,222,905,433 
Residential loans held in securitization trusts, at fair value   141,126,720    -    141,126,720 
Mortgage servicing rights, at fair value   3,440,809    -    3,440,809 
Cash and cash equivalents   27,534,374    -    27,534,374 
Restricted cash   10,355,222    -    10,355,222 
Deferred offering costs   96,489    -    96,489 
Accrued interest receivable   7,619,717    -    7,619,717 
Dividends receivable   122    -    122 
Investment related receivable   3,914,458    -    3,914,458 
Derivative assets, at fair value   8,053,813    -    8,053,813 
Other assets   774,909    -    774,909 
                
Total assets  $2,299,601,203   $-   $2,299,601,203 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $804,811,000   $-   $804,811,000 
Multi-family securitized debt obligations   1,204,583,678    -    1,204,583,678 
Residential securitized debt obligations   134,846,348    -    134,846,348 
Accrued interest payable   5,467,916    -    5,467,916 
Dividends payable   39,132    -    39,132 
Deferred income   203,743    -    203,743 
Due to broker   4,244,678    -    4,244,678 
Fees and expenses payable to Manager   880,000    -    880,000 
Other accounts payable and accrued expenses   2,057,843    -    2,057,843 
                
Total liabilities   2,157,134,338    -    2,157,134,338 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at December 31, 2016   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 17,539,258 shares issued and outstanding, at December 31, 2016   175,348    -    175,348 
Additional paid-in capital   204,264,868    -    204,264,868 
Accumulated other comprehensive income (loss)   (9,268,630)   2,436,690    (6,831,940)
Cumulative distributions to stockholders   (89,224,194)   -    (89,224,194)
Accumulated earnings (deficit)   (637,499)   (2,436,690)   (3,074,189)
                
Total stockholders' equity   142,466,865    -    142,466,865 
                
Total liabilities and stockholders' equity  $2,299,601,203   $-   $2,299,601,203 

 

 

 

  

   March 31, 2017 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $1,040,598,558 for March 31, 2017)  $1,035,720,870   $-   $1,035,720,870 
Mortgage loans held-for-sale, at fair value   2,822,751    -    2,822,751 
Multi-family loans held in securitization trusts, at fair value   1,215,157,038    -    1,215,157,038 
Residential loans held in securitization trusts, at fair value   132,454,523    -    132,454,523 
Mortgage servicing rights, at fair value   3,314,363    -    3,314,363 
Cash and cash equivalents   32,713,356    -    32,713,356 
Restricted cash   7,693,120    -    7,693,120 
Deferred offering costs   96,532    -    96,532 
Accrued interest receivable   8,078,915    -    8,078,915 
Investment related receivable   2,193,766    -    2,193,766 
Derivative assets, at fair value   4,976,938    -    4,976,938 
Other assets   724,267    -    724,267 
                
Total assets  $2,445,946,439   $-   $2,445,946,439 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $971,225,000   $-   $971,225,000 
Multi-family securitized debt obligations   1,195,536,818    -    1,195,536,818 
Residential securitized debt obligations   126,535,978    -    126,535,978 
Accrued interest payable   5,534,935    -    5,534,935 
Dividends payable   39,132    -    39,132 
Deferred income   200,534    -    200,534 
Due to broker   915,590    -    915,590 
Fees and expenses payable to Manager   709,000    -    709,000 
Other accounts payable and accrued expenses   376,632    -    376,632 
                
Total liabilities   2,301,073,619    -    2,301,073,619 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at March 31, 2017   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 17,539,258 shares issued and outstanding, at March 31, 2017   175,348    -    175,348 
Additional paid-in capital   204,262,178    -    204,262,178 
Accumulated other comprehensive income (loss)   (5,717,728)   2,436,690    (3,281,038)
Cumulative distributions to stockholders   (92,735,592)   -    (92,735,592)
Accumulated earnings (deficit)   1,731,642    (2,436,690)   (705,048)
                
Total stockholders' equity   144,872,820    -    144,872,820 
                
Total liabilities and stockholders' equity  $2,445,946,439   $-   $2,445,946,439 

 

 

 

   

   June 30, 2017 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $1,212,027,963 for June 30, 2017)  $1,252,375,950   $-   $1,252,375,950 
Mortgage loans held-for-sale, at fair value   2,795,951    -    2,795,951 
Multi-family loans held in securitization trusts, at fair value   1,175,419,031    -    1,175,419,031 
Residential loans held in securitization trusts, at fair value   128,679,142    -    128,679,142 
Mortgage servicing rights, at fair value   3,096,943    -    3,096,943 
Cash and cash equivalents   41,424,138    -    41,424,138 
Restricted cash   15,816,577    -    15,816,577 
Deferred offering costs   87,482    -    87,482 
Accrued interest receivable   8,280,086    -    8,280,086 
Investment related receivable   4,618,226    -    4,618,226 
Other assets   1,119,584    -    1,119,584 
                
Total assets  $2,633,713,110   $-   $2,633,713,110 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $1,146,628,000   $-   $1,146,628,000 
Multi-family securitized debt obligations   1,154,997,075    -    1,154,997,075 
Residential securitized debt obligations   123,007,454    -    123,007,454 
Accrued interest payable   5,356,244    -    5,356,244 
Derivative liabilities, at fair value   836,338    -    836,338 
Dividends payable   29,349    -    29,349 
Deferred income   188,760    -    188,760 
Due to broker   45,081,053    -    45,081,053 
Fees and expenses payable to Manager   563,000    -    563,000 
Other accounts payable and accrued expenses   143,972    -    143,972 
                
Total liabilities   2,476,831,245    -    2,476,831,245 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at June 30, 2017   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 22,139,258 shares issued and outstanding, at June 30, 2017   221,348    -    221,348 
Additional paid-in capital   224,135,827    -    224,135,827 
Accumulated other comprehensive income (loss)   (7,830,147)   2,436,690    (5,393,457)
Cumulative distributions to stockholders   (96,237,206)   -    (96,237,206)
Accumulated earnings (deficit)   (564,929)   (2,436,690)   (3,001,619)
                
Total stockholders' equity   156,881,865    -    156,881,865 
                
Total liabilities and stockholders' equity  $2,633,713,110   $-   $2,633,713,110 

 

 

 

  

   September 30, 2017 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $1,309,061,643 for September 30, 2017  $1,304,486,040   $-   $1,304,486,040 
Mortgage loans held-for-sale, at fair value   495,486    -    495,486 
Multi-family loans held in securitization trusts, at fair value   1,149,888,917    -    1,149,888,917 
Residential loans held in securitization trusts, at fair value   125,403,499    -    125,403,499 
Mortgage servicing rights, at fair value   2,993,997    -    2,993,997 
Cash and cash equivalents   30,554,867    -    30,554,867 
Restricted cash   15,437,341    -    15,437,341 
Deferred offering costs   78,432    -    78,432 
Accrued interest receivable   8,732,428    -    8,732,428 
Investment related receivable   4,699,021    -    4,699,021 
Other assets   912,719    -    912,719 
                
Total assets  $2,643,682,747   $-   $2,643,682,747 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $1,237,661,000   $-   $1,237,661,000 
Multi-family securitized debt obligations   1,128,773,402    -    1,128,773,402 
Residential securitized debt obligations   119,882,464    -    119,882,464 
Accrued interest payable   5,205,165    -    5,205,165 
Derivative assets, at fair value   529,075    -    529,075 
Dividends payable   29,349    -    29,349 
Deferred income   202,896    -    202,896 
Fees and expenses payable to Manager   587,000    -    587,000 
Other accounts payable and accrued expenses   273,732    -    273,732 
                
Total liabilities   2,493,144,083    -    2,493,144,083 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at September 30, 2017   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 22,139,258 shares issued and outstanding, at September 30, 2017   221,393    -    221,393 
Additional paid-in capital   224,063,268    -    224,063,268 
Accumulated other comprehensive income (loss)   (5,643,099)   2,436,690    (3,206,409)
Cumulative distributions to stockholders   (100,438,604)   -    (100,438,604)
Accumulated earnings (deficit)   (4,821,266)   (2,436,690)   (7,257,956)
                
Total stockholders' equity   150,538,664    -    150,538,664 
                
Total liabilities and stockholders' equity  $2,643,682,747   $-   $2,643,682,747 

  

 

 

 

   December 31, 2017 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $1,295,225,428 for December 31, 2017  $1,290,825,648   $-   $1,290,825,648 
Multi-family loans held in securitization trusts, at fair value   1,130,874,274    -    1,130,874,274 
Residential loans held in securitization trusts, at fair value   119,756,455    -    119,756,455 
Mortgage servicing rights, at fair value   2,963,861    -    2,963,861 
Cash and cash equivalents   34,347,339    -    34,347,339 
Restricted cash   11,275,263    -    11,275,263 
Deferred offering costs   179,382    -    179,382 
Accrued interest receivable   8,852,036    -    8,852,036 
Investment related receivable   7,461,128    -    7,461,128 
Derivative assets, at fair value   5,349,613    -    5,349,613 
Other assets   656,117    -    656,117 
                
Total assets  $2,612,541,116   $-   $2,612,541,116 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $1,234,522,000   $-   $1,234,522,000 
Multi-family securitized debt obligations   1,109,204,743    -    1,109,204,743 
Residential securitized debt obligations   114,418,318    -    114,418,318 
Accrued interest payable   6,194,464    -    6,194,464 
Dividends payable   39,132    -    39,132 
Deferred income   222,518    -    222,518 
Due to broker   1,123,463    -    1,123,463 
Fees and expenses payable to Manager   752,000    -    752,000 
Other accounts payable and accrued expenses   273,201    -    273,201 
                
Total liabilities   2,466,749,839    -    2,466,749,839 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at December 31, 2017   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 22,143,758 shares issued and outstanding, at December 31, 2017   221,393    -    221,393 
Additional paid-in capital   224,048,169    -    224,048,169 
Accumulated other comprehensive income (loss)   (15,054,484)   2,436,690    (12,617,794)
Cumulative distributions to stockholders   (104,650,235)   -    (104,650,235)
Accumulated earnings (deficit)   4,069,462    (2,436,690)   1,632,772 
                
Total stockholders' equity   145,791,277    -    145,791,277 
                
Total liabilities and stockholders' equity  $2,612,541,116   $-   $2,612,541,116 

 

 

 

  

   March 31, 2018 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Available-for-sale securities, at fair value (includes pledged securities of $1,099,341,757 for March 31, 2018  $1,095,189,264   $-   $1,095,189,264 
Multi-family loans held in securitization trusts, at fair value   1,106,592,612    -    1,106,592,612 
Residential loans held in securitization trusts, at fair value   111,764,070    -    111,764,070 
Mortgage servicing rights, at fair value   3,021,549    -    3,021,549 
Cash and cash equivalents   42,257,248    -    42,257,248 
Restricted cash   11,658,225    -    11,658,225 
Deferred offering costs   186,999    -    186,999 
Accrued interest receivable   8,854,367    -    8,854,367 
Investment related receivable (includes pledged securities of $138,262,099 for march 31, 2018)   143,801,279    -    143,801,279 
Derivative assets, at fair value   18,132,700    -    18,132,700 
Other assets   512,358    -    512,358 
                
Total assets  $2,541,970,671   $-   $2,541,970,671 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Repurchase agreements:               
Available-for-sale securities  $1,177,060,000   $-   $1,177,060,000 
Multi-family securitized debt obligations   1,086,279,589    -    1,086,279,589 
Residential securitized debt obligations   106,676,747    -    106,676,747 
Accrued interest payable   6,009,300    -    6,009,300 
Dividends payable   39,132    -    39,132 
Deferred income   273,968    -    273,968 
Due to broker   13,741,125    -    13,741,125 
Fees and expenses payable to Manager   1,319,711    -    1,319,711 
Other accounts payable and accrued expenses   209,976    -    209,976 
                
Total liabilities   2,391,609,548    -    2,391,609,548 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at March 31, 2018   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 23,683,164 shares issued and outstanding, at March 31, 2018   236,787    -    236,787 
Additional paid-in capital   231,348,163    -    231,348,163 
Accumulated other comprehensive income (loss)   (25,919,831)   2,436,690    (23,483,141)
Cumulative distributions to stockholders   (107,845,430)   -    (107,845,430)
Accumulated earnings (deficit)   15,384,462    (2,436,690)   12,947,772 
                
Total stockholders' equity   150,361,123    -    150,361,123 
                
Total liabilities and stockholders' equity  $2,541,970,671   $-   $2,541,970,671 

  

 

 

 

   June 30, 2018 
   As previously reported   Restatement adjustments   As restated 
ASSETS               
Commercial mortgage loans held-for-investment, at amortized cost  $326,883,547   $-   $326,883,547 
Multi-family loans held in securitization trusts, at fair value   23,842,162    -    23,842,162 
Mortgage servicing rights, at fair value   4,105,613    -    4,105,613 
Cash and cash equivalents   73,380,534    -    73,380,534 
Restricted cash   7,932,233    -    7,932,233 
Deferred offering costs   154,616    -    154,616 
Accrued interest receivable   1,856,506    -    1,856,506 
Investment related receivable   20,505,834    -    20,505,834 
Other assets   871,239    -    871,239 
                
Total assets  $459,532,284   $-   $459,532,284 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
                
LIABILITIES:               
Collateralized loan obligations  $287,738,948   $-   $287,738,948 
Multi-family securitized debt obligations   19,481,546    -    19,481,546 
Accrued interest payable   526,251    -    526,251 
Dividends payable   29,349    -    29,349 
Deferred income   310,250    -    310,250 
Fees and expenses payable to Manager   1,185,000    -    1,185,000 
Other accounts payable and accrued expenses   225,980    -    225,980 
                
Total liabilities   309,497,324    -    309,497,324 
                
STOCKHOLDERS' EQUITY:               
Preferred Stock: par value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A cumulative redeemable, $25 liquidation preference, 1,610,000 issued and outstanding at June 30, 2018   37,156,972    -    37,156,972 
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 23,683,164 shares issued and outstanding, at June 30, 2018   236,787    -    236,787 
Additional paid-in capital   231,320,638    -    231,320,638 
Accumulated other comprehensive income (loss)   (2,436,690)   2,436,690    - 
Cumulative distributions to stockholders   (110,137,146)   -    (110,137,146)
Accumulated earnings (deficit)   (6,105,601)   (2,436,690)   (8,542,291)
                
Total stockholders' equity   150,034,960    -    150,034,960 
                
Total liabilities and stockholders' equity  $459,532,284   $-   $459,532,284 

  

 

 

 

The tables below set forth the anticipated impacts to the consolidated statements of operations (unaudited): 

 

   Three Months Ended June 30, 2016   Six Months Ended June 30, 2016 
   As previously reported   Restatement adjustments   As restated   As previously reported   Restatement adjustments   As restated 
Revenues:                              
Interest income:                              
Available-for-sale securities  $5,331,794   $-   $5,331,794   $10,230,832   $-   $10,230,832 
Mortgage loans held-for-sale   167,070    -    167,070    289,307    -    289,307 
Multi-family loans held in securitization trusts   14,692,902    -    14,692,902    30,130,706    -    30,130,706 
Residential loans held in securitization trusts   3,408,847    -    3,408,847    7,561,253    -    7,561,253 
Cash and cash equivalents   8,945    -    8,945    14,655    -    14,655 
Interest expense:                              
Repurchase agreements - available-for-sale securities   (1,338,815)   -    (1,338,815)   (2,828,228)   -    (2,828,228)
Repurchase agreements - mortgage loans held-for-sale   (94,084)   -    (94,084)   (170,284)   -    (170,284)
Multi-family securitized debt obligations   (13,814,743)   -    (13,814,743)   (27,927,452)   -    (27,927,452)
Residential securitized debt obligations   (2,589,846)   -    (2,589,846)   (5,768,288)   -    (5,768,288)
Net interest income   5,772,070    -    5,772,070    11,532,501    -    11,532,501 
                               
Other-than-temporary impairments                              
(Increase) decrease in credit reserves   (146,224)   -    (146,224)   (167,218)   -    (167,218)
Additional other-than-temporary credit impairment losses   -    -    -    -    -    - 
Total impairment losses recognized in earnings   (146,224)   -    (146,224)   (167,218)   -    (167,218)
                               
Other income:                              
Realized gain (loss) on sale of investments, net   3,771,148    -    3,771,148    (2,612,005)   -    (2,612,005)
Change in unrealized gain (loss) on fair value option securities   (2,239,654)   (3,723,524)   (5,963,178)   (2,610,749)   (3,723,524)   (6,334,273)
Realized gain (loss) on derivative contracts, net   (761,362)   -    (761,362)   (2,346,903)   -    (2,346,903)
Change in unrealized gain (loss) on derivative contracts, net   (2,050,538)   -    (2,050,538)   (10,512,938)   -    (10,512,938)
Realized gain (loss) on mortgage loans held-for-sale   69,734    -    69,734    68,748    -    68,748 
Change in unrealized gain (loss) on mortgage loans held-for-sale   (62,002)   -    (62,002)   135,900    -    135,900 
Change in unrealized gain (loss) on mortgage service rights   (138,447)   -    (138,447)   (1,038,735)   -    (1,038,735)
Change in unrealized gain (loss) on multi-family loans held in securitization trusts   (8,071,468)   -    (8,071,468)   (6,535,151)   -    (6,535,151)
Change in unrealized gain (loss) on residential loans held in securitization trusts   3,399,187    -    3,399,187    845,110    -    845,110 
Servicing income   243,875    -    243,875    467,553    -    467,553 
Other income   1,826    -    1,826    26,808    -    26,808 
Total other income (loss)   (5,837,701)   (3,723,524)   (9,561,225)   (24,112,362)   (3,723,524)   (27,835,886)
                               
Expenses:                              
Management fee   626,738    -    626,738    1,249,961    -    1,249,961 
General and administrative expenses   1,679,132    -    1,679,132    3,311,643    -    3,311,643 
Operating expenses reimbursable to Manager   1,184,243    -    1,184,243    2,389,054    -    2,389,054 
Other operating expenses   350,061    -    350,061    1,232,267    -    1,232,267 
Compensation expense   24,248    -    24,248    93,887    -    93,887 
Total expenses   3,864,422    -    3,864,422    8,276,812    -    8,276,812 
Net income (loss)   (4,076,277)   (3,723,524)   (7,799,801)   (21,023,891)   (3,723,524)   (24,747,415)
Dividends to preferred stockholders   (870,726)   -    (870,726)   (1,751,235)   -    (1,751,235)
Net income (loss) attributable to common stockholders  $(4,947,003)  $(3,723,524)  $(8,670,527)  $(22,775,126)  $(3,723,524)  $(26,498,650)
                               
Earnings (loss) per share:                              
Net income attributable to common stockholders (basic and diluted)  $(4,947,003)  $(3,723,524)  $(8,670,527)  $(22,775,126)  $(3,723,524)  $(26,498,650)
Weighted average number of shares of common stock outstanding   14,597,894    14,597,894    14,597,894    14,604,540    14,604,540    14,604,540 
Basic and diluted income per share  $(0.34)  $(0.26)  $(0.59)  $(1.56)  $(0.25)  $(1.81)
Dividends declared per share of common stock  $0.18   $-   $0.18   $0.36   $-   $0.36 

 

 

 

  

   Three Months Ended September 30, 2016   Nine Months Ended September 30, 2016 
   As previously reported   Restatement adjustments   As restated   As previously reported   Restatement adjustments   As restated 
Revenues:                              
Interest income:                              
Available-for-sale securities  $6,549,869   $-   $6,549,869   $16,780,701   $-   $16,780,701 
Mortgage loans held-for-sale   121,892    -    121,892    411,199    -    411,199 
Multi-family loans held in securitization trusts   14,466,946    -    14,466,946    44,597,652    -    44,597,652 
Residential loans held in securitization trusts   1,582,090    -    1,582,090    9,143,343    -    9,143,343 
Cash and cash equivalents   11,754    -    11,754    26,409    -    26,409 
Interest expense:                              
Repurchase agreements - available-for-sale securities   (1,572,062)   -    (1,572,062)   (4,400,290)   -    (4,400,290)
Repurchase agreements - mortgage loans held-for-sale   (57,449)   -    (57,449)   (227,733)   -    (227,733)
Multi-family securitized debt obligations   (13,740,005)   -    (13,740,005)   (41,667,457)   -    (41,667,457)
Residential securitized debt obligations   (1,210,186)   -    (1,210,186)   (6,978,474)   -    (6,978,474)
Net interest income   6,152,849    -    6,152,849    17,685,350    -    17,685,350 
                               
Other-than-temporary impairments                              
Increase in credit reserves   (374,124)   354,334    (19,790)   (541,342)   354,334    (187,008)
Additional other-than-temporary credit impairment losses   (183,790)   -    (183,790)   (183,790)   -    (183,790)
Total impairment losses recognized in earnings   (557,914)   354,334    (203,580)   (725,132)   354,334    (370,798)
                               
Other income:                              
Realized gain (loss) on sale of investments, net   (749,604)   -    (749,604)   (3,361,609)   -    (3,361,609)
Change in unrealized gain (loss) on fair value option securities   (958,995)   -    (958,995)   (3,569,744)   (3,723,524)   (7,293,268)
Realized gain (loss) on derivative contracts, net   (820,974)   -    (820,974)   (3,167,877)   -    (3,167,877)
Change in unrealized gain (loss) on derivative contracts, net   3,340,600    -    3,340,600    (7,172,338)   -    (7,172,338)
Realized gain (loss) on mortgage loans held-for-sale   60,427    -    60,427    129,175    -    129,175 
Change in unrealized gain (loss) on mortgage loans held-for-sale   (138,785)   -    (138,785)   (2,885)   -    (2,885)
Change in unrealized gain (loss) on mortgage service rights   (204,505)   -    (204,505)   (1,243,240)   -    (1,243,240)
Change in unrealized gain (loss) on multi-family loans held in securitization trusts   930,312    -    930,312    (5,604,839)   -    (5,604,839)
Change in unrealized gain (loss) on residential loans held in securitization trusts   (764,599)   -    (764,599)   80,511    -    80,511 
Tax interest expense   (1,860,000)   -    (1,860,000)   (1,860,000)   -    (1,860,000)
Servicing income   258,458    -    258,458    726,011    -    726,011 
Other income   3    -    3    26,811    -    26,811 
Total other income (loss)   (907,662)   -    (907,662)   (25,020,024)   (3,723,524)   (28,743,548)
                               
Expenses:                              
Management fee   623,525    -    623,525    1,873,486    -    1,873,486 
General and administrative expenses   1,171,421    -    1,171,421    4,483,064    -    4,483,064 
Operating expenses reimbursable to Manager   1,184,391    -    1,184,391    3,573,445    -    3,573,445 
Other operating expenses   161,036    -    161,036    1,393,303    -    1,393,303 
Compensation expense   50,544    -    50,544    144,431    -    144,431 
Total expenses   3,190,917    -    3,190,917    11,467,729    -    11,467,729 
Net income (loss)   1,496,356    354,334    1,850,690    (19,527,535)   (3,369,190)   (22,896,725)
Dividends to preferred stockholders   (880,509)   -    (880,509)   (2,631,744)   -    (2,631,744)
Net income (loss) attributable to common stockholders  $615,847   $354,334   $970,181   $(22,159,279)  $(3,369,190)  $(25,528,469)
                               
Earnings (loss) per share:                              
Net income attributable to common stockholders (basic and diluted)  $615,847   $354,334   $970,181   $(22,159,279)  $(3,369,190)  $(25,528,469)
Weighted average number of shares of common stock outstanding   14,600,193    14,600,193    14,600,193    14,601,306    14,601,306    14,601,306 
Basic and diluted income per share  $0.04   $0.02   $0.07   $(1.52)  $(0.23)  $(1.75)
Dividends declared per share of common stock  $0.18   $-   $0.18   $0.54   $-   $0.54 

 

 

 

 

   Year Ended December 31, 2016 
   As previously reported   Restatement adjustments   As restated 
Revenues:               
Interest income:               
Available-for-sale securities  $23,475,765   $-   $23,475,765 
Mortgage loans held-for-sale   430,986    -    430,986 
Multi-family loans held in securitization trusts   58,587,780    -    58,587,780 
Residential loans held in securitization trusts   10,585,191    -    10,585,191 
Cash and cash equivalents   41,994    -    41,994 
Interest expense:               
Repurchase agreements - available-for-sale securities   (6,237,777)   -    (6,237,777)
Repurchase agreements - mortgage loans held-for-sale   (237,807)   -    (237,807)
Multi-family securitized debt obligations   (54,940,386)   -    (54,940,386)
Residential securitized debt obligations   (8,117,402)   -    (8,117,402)
Net interest income   23,588,344    -    23,588,344 
                
Other-than-temporary impairments               
Increase in credit reserves   (541,342)   1,286,834    745,492 
Additional other-than-temporary credit impairment losses   (183,790)   -    (183,790)
Total impairment losses recognized in earnings   (725,132)   1,286,834    561,702 
                
Other income:               
Realized gain (loss) on sale of investments, net   (7,216,137)   -    (7,216,137)
Change in unrealized gain (loss) on fair value option securities   (4,683,410)   (3,723,524)   (8,406,934)
Realized gain (loss) on derivative contracts, net   (3,089,001)   -    (3,089,001)
Change in unrealized gain (loss) on derivative contracts, net   5,495,463    -    5,495,463 
Realized gain (loss) on mortgage loans held-for-sale   94,187    -    94,187 
Change in unrealized gain (loss) on mortgage loans held-for-sale   (151,023)   -    (151,023)
Change in unrealized gain (loss) on mortgage service rights   (827,864)   -    (827,864)
Change in unrealized gain (loss) on multi-family loans held in securitization trusts   (5,219,530)   -    (5,219,530)
Change in unrealized gain (loss) on residential loans held in securitization trusts   404,720    -    404,720 
Tax interest expense   (1,860,000)   -    (1,860,000)
Servicing income   932,424    -    932,424 
Other income   32,276    -    32,276 
Total other income (loss)   (16,087,895)   (3,723,524)   (19,811,419)
                
Expenses:               
Management fee   2,472,353    -    2,472,353 
General and administrative expenses   5,867,851    -    5,867,851 
Operating expenses reimbursable to Manager   4,747,275    -    4,747,275 
Other operating expenses   1,480,341    -    1,480,341 
Compensation expense   197,452    -    197,452 
Total expenses   14,765,272    -    14,765,272 
Net income (loss)   (7,989,955)   (2,436,690)   (10,426,645)
Dividends to preferred stockholders   (3,522,036)   -    (3,522,036)
Net income (loss) attributable to common stockholders  $(11,511,991)  $(2,436,690)  $(13,948,681)
                
Earnings (loss) per share:               
Net income attributable to common stockholders (basic and diluted)  $(11,511,991)  $(2,436,690)  $(13,948,681)
Weighted average number of shares of common stock outstanding   14,641,701    14,641,701    14,641,701 
Basic and diluted income per share  $(0.79)  $(0.17)  $(0.95)
Dividends declared per share of common stock  $2.04   $-   $2.04 

 

 

 

 

The tables below set forth the anticipated impacts to the consolidated statements of comprehensive income (unaudited):

  

   Three Months Ended June 30, 2016   Six Months Ended June 30, 2016 
   As previously reported   Restatement adjustments   As restated   As previously reported   Restatement adjustments   As restated 
Net income (loss)  $(4,076,277)  $(3,723,524)  $(7,799,801)  $(21,023,891)  $(3,723,524)  $(24,747,415)
                               
Other comprehensive income (loss):                              
Increase (decrease) in net unrealized gain on available-for-sale securities, net   11,621,634    3,723,524    15,345,158    9,375,621    3,723,524    13,099,145 
Reclassification adjustment for net gain (loss) included in net income (loss)   (7,671,018)   -    (7,671,018)   (6,547,325)   -    (6,547,325)
Reclassification adjustment for other-than-temporary impairments included in net income (loss)   146,224    -    146,224    167,218    -    167,218 
Total other comprehensive income (loss)   4,096,840    3,723,524    7,820,364    2,995,514    3,723,524    6,719,038 
Less: Dividends to preferred stockholders   (870,726)   -    (870,726)   (1,751,235)   -    (1,751,235)
Comprehensive income (loss) attributable to common stockholders  $(850,163)  $-   $(850,163)  $(19,779,612)  $-   $(19,779,612)

 

   Three Months Ended September 30, 2016   Nine Months Ended September 30, 2016 
   As previously reported   Restatement adjustments   As restated   As previously reported   Restatement adjustments   As restated 
Net income (loss)  $1,496,356   $354,334   $1,850,690   $(19,527,535)  $(3,369,190)  $(22,896,725)
                               
Other comprehensive income (loss):                              
Increase (decrease) in net unrealized gain on available-for-sale securities, net   (979,421)   -    (979,421)   8,396,200    3,723,524    12,119,724 
Reclassification adjustment for net gain (loss) included in net income   23,914    -    23,914    (6,523,410)   -    (6,523,410)
Reclassification adjustment for other-than-temporary impairments included in net income   374,124    (354,334)   19,790    541,342    (354,334)   187,008 
Total other comprehensive income (loss)   (581,383)   (354,334)   (935,717)   2,414,132    3,369,190    5,783,322 
Less: Dividends to preferred stockholders   (880,509)   -    (880,509)   (2,631,744)   -    (2,631,744)
Comprehensive income (loss) attributable to common stockholders  $34,464   $-   $34,464   $(19,745,147)  $-   $(19,745,147)

 

   Year Ended December 31, 2016 
   As previously reported   Restatement adjustments   As restated 
Net income (loss)  $(7,989,955)  $(2,436,690)  $(10,426,645)
                
Other comprehensive income (loss):               
Increase (decrease) in net unrealized gain on available-for-sale securities, net   (3,824,461)   3,723,524    (100,937)
Reclassification adjustment for net gain (loss) included in net income   (5,589,740)   -    (5,589,740)
Reclassification adjustment for other-than-temporary impairments included in net income   541,342    (1,286,834)   (745,492)
Total other comprehensive income (loss)   (8,872,859)   2,436,690    (6,436,169)
Less: Dividends to preferred stockholders   (3,522,036)   -    (3,522,036)
Comprehensive income (loss) attributable to common stockholders  $(20,384,850)  $-   $(20,384,850)

   

 

 

   

The tables below set forth the anticipated impacts to the consolidated statements of cash flow (unaudited):

 

   Six Months Ended June 30, 2016 
   As previously reported   Restatement adjustments   As restated 
Cash flows from operating activities:               
Net income (loss)  $(21,023,891)  $(3,723,524)  $(24,747,415)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:               
Other-than-temporary impairment charges   167,218    -    167,218 
Amortization/accretion of available-for-sale securities premiums and discounts, net   (3,534,745)   -    (3,534,745)
Realized (gain) loss on sale of investments, net   2,612,005    -    2,612,005 
Realized (gain) loss on derivative contracts   2,346,903    -    2,346,903 
Realized (gain) loss on mortgage loans held-for-sale   (68,748)   -    (68,748)
Unrealized (gain) loss on fair value option securities   2,610,749    3,723,524    6,334,273 
Unrealized (gain) loss on derivative contracts   10,512,938    -    10,512,938 
Unrealized (gain) on mortgage loans held-for-sale   (135,900)   -    (135,900)
Unrealized (gain) loss on mortgage service rights   1,038,735    -    1,038,735 
Unrealized (gain) loss on multi-family loans held in securitization trusts   6,535,151    -    6,535,151 
Unrealized (gain) loss on residential loans held in securitization trusts   (845,110)   -    (845,110)
Restricted stock compensation expense   25,554    -    25,554 
Net change in:               
Accrued interest receivable   (510,671)   -    (510,671)
Dividends receivable   24,008    -    24,008 
Other assets   (574,052)   -    (574,052)
Accrued interest payable   (31,814)   -    (31,814)
Deferred income   (156,716)   -    (156,716)
Fees and expenses payable to Manager   68,465    -    68,465 
Net cash (used in) operating activities   (939,921)   -    (939,921)
                
Cash flows from investing activities:               
Purchase of available-for-sale securities   (324,629,196)   -    (324,629,196)
Purchase of mortgage loans held-for-sale   (11,573,408)   -    (11,573,408)
Proceeds from sales of available-for-sale securities   189,273,268    -    189,273,268 
Proceeds from mortgage loans held-for-sale   9,586,465    -    9,586,465 
Proceeds from FHLBI stock   2,391,700    -    2,391,700 
Net proceeds from (payments for) derivative contracts   (2,346,903)   -    (2,346,903)
Principal payments from available-for-sale securities   33,837,646    -    33,837,646 
Principal payments from mortgage loans held-for-sale   182,396    -    182,396 
Investment related receivable   (1,975,625)   -    (1,975,625)
Restricted cash   (6,279,570)   -    (6,279,570)
Net cash used in investing activities   (111,533,227)   -    (111,533,227)
                
Cash flows from financing activities:               
Purchase of treasury stock   (283,565)   -    (283,565)
Dividends paid on common stock   (5,257,642)   -    (5,257,642)
Dividends paid on preferred stock   (1,761,018)   -    (1,761,018)
Proceeds from repurchase agreements - available-for-sale securities   3,093,465,000    -    3,093,465,000 
Proceeds from repurchase agreements - mortgage loans held-for-sale   13,548,045    -    13,548,045 
Payments for FHLBI advances   (49,697,000)   -    (49,697,000)
Principal repayments of repurchase agreements - available-for-sale securities   (2,925,499,000)   -    (2,925,499,000)
Principal repayments of repurchase agreements - mortgage loans held-for-sale   (12,645,732)   -    (12,645,732)
Net cash provided by financing activities   111,869,088    -    111,869,088 
Net increase (decrease) in cash and cash equivalents   (604,060)   -    (604,060)
Cash and cash equivalents, beginning of period   26,140,718    -    26,140,718 
Cash and cash equivalents, end of period  $25,536,658   $-   $23,536,658 
                
Supplemental disclosure of cash flow information               
Cash paid for interest  $3,030,326   $-   $3,030,326 
                
Non-cash investing and financing activities information               
Restricted stock compensation expense  $25,554   $-   $25,554 
Dividends declared but not paid at end of period  $29,349   $-   $29,349 
Net change in unrealized gain (loss) on available-for-sale securities  $2,995,514   $3,723,524   $6,719,038 
Consolidation of multi-family loans held in securitization trusts  $1,310,347,394   $-   $1,310,347,394 
Consolidation of residential loans held in securitization trusts  $174,836,711   $-   $174,836,711 
Consolidation of multi-family securitized debt obligations  $1,293,320,974   $-   $1,293,320,974 
Consolidation of residential securitized debt obligations  $160,213,774   $-   $160,213,774 

 

 

 

  

   Nine Months Ended September 30, 2016 
   As previously reported   Restatement adjustments   As restated 
Cash flows from operating activities:               
Net income (loss)  $(19,527,535)  $(3,369,190)  $(22,896,725)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:               
Other-than-temporary impairment charges   725,132    (354,334)   370,798 
Amortization/accretion of available-for-sale securities premiums and discounts, net   (5,257,442)   -    (5,257,442)
Realized (gain) loss on sale of investments, net   3,361,609    -    3,361,609 
Realized (gain) loss on derivative contracts   3,167,877    -    3,167,877 
Realized (gain) loss on mortgage loans held-for-sale   (129,175)   -    (129,175)
Unrealized (gain) loss on fair value option securities   3,569,744    3,723,524    7,293,268 
Unrealized (gain) loss on derivative contracts   7,172,338    -    7,172,338 
Unrealized (gain) loss on mortgage loans held-for-sale   2,885    -    2,885 
Unrealized (gain) loss on mortgage service rights   1,243,240    -    1,243,240 
Unrealized (gain) loss on multi-family loans held in securitization trusts   5,604,839    -    5,604,839 
Unrealized (gain) loss on residential loans held in securitization trusts   (80,511)   -    (80,511)
Restricted stock compensation expense   29,014    -    29,014 
Net change in:               
Accrued interest receivable   (672,852)   -    (672,852)
Dividends receivable   25,899    -    25,899 
Other assets   (424,039)   -    (424,039)
Accrued interest payable   (43,909)   -    (43,909)
Deferred income   6,905    -    6,905 
Fees and expenses payable to Manager   (151,716)   -    (151,716)
Other accounts payable and accrued expenses   1,795,403    -    1,795,403 
Net cash provided by operating activities   417,706    -    417,706 
                
Cash flows from investing activities:               
Purchase of available-for-sale securities   (454,443,440)   -    (454,443,440)
Purchase of mortgage loans held-for-sale   (14,772,535)   -    (14,772,535)
Proceeds from sales of available-for-sale securities   230,557,084    -    230,557,084 
Proceeds from mortgage loans held-for-sale   16,289,603    -    16,289,603 
Proceeds from FHLBI stock   2,391,700    -    2,391,700 
Net proceeds from (payments for) derivative contracts   (3,167,877)   -    (3,167,877)
Principal payments from available-for-sale securities   66,007,840    -    66,007,840 
Principal payments from mortgage loans held-for-sale   235,622    -    235,622 
Investment related receivable   (2,539,730)   -    (2,539,730)
Restricted cash   (5,908,603)   -    (5,908,603
Net cash used in investing activities   (165,350,336)   -    (165,350,336)
                
Cash flows from financing activities:               
Net proceeds from issuance of common stock   (283,565)   -    (283,565)
Dividends paid on common stock   (7,885,803)   -    (7,885,803)
Dividends paid on preferred stock   (2,641,527)   -    (2,641,527)
Proceeds from repurchase agreements - available-for-sale securities   5,603,428,000    -    5,603,428,000 
Proceeds from repurchase agreements - mortgage loans held-for-sale   16,405,081    -    16,405,081 
Payments for FHLBI advances   (49,697,000)   -    (49,697,000)
Principal repayments of repurchase agreements - available-for-sale securities   (5,373,159,000)   -    (5,373,159,000)
Principal repayments of repurchase agreements - mortgage loans held-for-sale   (18,783,717)   -    (18,783,717)
Net cash provided by financing activities   167,382,469    -    167,382,469 
Net increase (decrease) in cash and cash equivalents   2,449,839    -    2,449,839 
Cash and cash equivalents, beginning of period   26,140,718    -    26,140,718 
Cash and cash equivalents, end of period  $28,590,557   $-   $28,590,557 
                
Supplemental disclosure of cash flow information               
Cash paid for interest  $4,671,932   $-   $4,671,932 
                
Non-cash investing and financing activities information               
Restricted stock compensation expense  $29,014   $-   $29,014 
Dividends declared but not paid at end of period  $29,349   $-   $29,349 
Net change in unrealized gain (loss) on available-for-sale securities  $2,414,131   $3,369,190   $5,783,321 
Consolidation of multi-family loans held in securitization trusts  $1,271,754,540   $-   $1,271,754,540 
Consolidation of residential loans held in securitization trusts  $153,858,101   $-   $153,858,101 
Consolidation of multi-family securitized debt obligations  $1,253,797,808   $-   $1,253,797,808 
Consolidation of residential securitized debt obligations  $147,807,489   $-   $147,807,489 

  

 

 

 

   Year Ended December 31, 2016 
   As previously reported   Restatement adjustments   As restated 
Cash flows from operating activities:               
Net income (loss)  $(7,989,955)  $(2,436,690)  $(10,426,645)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:               
Other-than-temporary impairment charges   725,132    (1,286,834)   (561,702)
Amortization/accretion of available-for-sale securities premiums and discounts, net   (6,751,667)   -    (6,751,667)
Realized (gain) loss on sale of investments, net   7,216,137    -    7,216,137 
Realized (gain) loss on derivative contracts   3,089,001    -    3,089,001 
Realized (gain) loss on mortgage loans held-for-sale   (94,187)   -    (94,187)
Unrealized (gain) loss on fair value option securities   4,683,410    3,723,524    8,406,934 
Unrealized (gain) loss on derivative contracts   (5,495,463)   -    (5,495,463)
Unrealized (gain) loss on mortgage loans held-for-sale   151,023    -    151,023 
Unrealized (gain) loss on mortgage service rights   827,864    -    827,864 
Unrealized (gain) loss on multi-family loans held in securitization trusts   5,219,530    -    5,219,530 
Unrealized (gain) loss on residential loans held in securitization trusts   (404,720)   -    (404,720)
Restricted stock compensation expense   35,785    -    35,785 
Net change in:               
Accrued interest receivable   (707,019)   -    (707,019)
Deferred offering costs   (96,489)   -    (96,489)
Dividends receivable   25,900    -    25,900 
Other assets   (244,441)   -    (244,441)
Accrued interest payable   119,993    -    119,993 
Deferred income   203,743    -    203,743 
Fees and expenses payable to Manager   37,097    -    37,097 
Other accounts payable and accrued expenses   1,790,336    -    1,790,336 
Net cash provided by operating activities   2,341,010    -    2,341,010 
                
Cash flows from investing activities:               
Purchase of available-for-sale securities   (585,984,081)   -    (585,984,081)
Purchase of mortgage loans held-for-sale   (14,772,535)   -    (14,772,535)
Proceeds from sales of available-for-sale securities   263,153,843    -    263,153,843 
Proceeds from mortgage loans held-for-sale   22,490,929    -    22,490,929 
Proceeds from FHLBI stock   2,403,000    -    2,403,000 
Net proceeds from (payments for) derivative contracts   (3,089,001)   -    (3,089,001)
Principal payments from available-for-sale securities   96,655,967    -    96,655,967 
Principal payments from mortgage loans held-for-sale   275,636    -    275,636 
Investment related receivable   (2,323,115)   -    (2,323,115)
Restricted cash   (2,180,584)   -    (2,180,584)
Due to broker   4,244,678    -    4,244,678 
Net cash used in investing activities   (219,125,263)   -    (219,125,263)
                
Cash flows from financing activities:               
Net proceeds from issuance of common stock   15,503,885    -    15,503,885 
Purchase of treasury stock   (283,565)   -    (283,565)
Dividends paid on common stock   (29,898,918)   -    (29,898,918)
Dividends paid on preferred stock   (3,522,036)   -    (3,522,036)
Proceeds from repurchase agreements - available-for-sale securities   7,940,492,000    -    7,940,492,000 
Proceeds from repurchase agreements - mortgage loans held-for-sale   16,405,081    -    16,405,081 
Payments for FHLBI advances   (49,697,000)   -    (49,697,000)
Principal repayments of repurchase agreements - available-for-sale securities   (7,644,912,000)   -    (7,644,912,000)
Principal repayments of repurchase agreements - mortgage loans held-for-sale   (25,909,538)   -    (25,909,538)
Net cash provided by financing activities   218,177,909    -    218,177,909 
Net increase (decrease) in cash and cash equivalents   1,393,656    -    1,393,656 
Cash and cash equivalents, beginning of period   26,140,718    -    26,140,718 
Cash and cash equivalents, end of period  $27,534,374   $-   $27,534,374 
                
Supplemental disclosure of cash flow information               
Cash paid for interest  $6,355,591   $-   $6,355,591 
                
Non-cash investing and financing activities information               
Dividends declared but not paid at end of period  $39,132   $-   $39,132 
Net change in unrealized gain (loss) on available-for-sale securities  $(8,872,859)  $2,436,690   $(6,436,169)
Consolidation of multi-family loans held in securitization trusts  $1,227,523,075   $-   $1,227,523,075 
Consolidation of residential loans held in securitization trusts  $141,597,866   $-   $141,597,866 
Consolidation of multi-family securitized debt obligations  $1,209,181,035   $-   $1,209,181,035 
Consolidation of residential securitized debt obligations  $135,223,045   $-   $135,223,045 

  

 

 

 

In connection with the restatement, the Company evaluated its conclusion regarding the effectiveness of the Company’s disclosure controls and procedures and internal controls over financial reporting for the Relevant Periods and determined that the occurrence of accounting errors giving rise to this restatement was a further instance of a failure of the Company’s control over the depth and timeliness review of account balances, as previously disclosed in the Company’s Annual Reports for fiscal years ended December 31, 2016 and 2017 and Quarterly Reports for the Relevant Periods, which had not yet been remediated as of June 30, 2018.

 

The Audit Committee has discussed the matters disclosed in this Item 4.02(a) with the Company’s management and Grant Thornton LLP.

 

Forward-Looking Statements

 

This current report on Form 8-K includes “forward-looking statements” within the meaning of the U.S. securities laws that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of the Company’s business, financial condition, liquidity, results of operations, plans and objectives. You can identify forward-looking statements by use of words such as “believe,” “expect,” “anticipate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions or other comparable terms, or by discussions of strategy, plans or intentions. Forward-looking statements are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward looking statements as predictions of future events. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. Additional information concerning these and other risk factors are contained in the Company’s most recent filings with the Securities and Exchange Commission, which are available on the Securities and Exchange Commission’s website at www.sec.gov.

 

All subsequent written and oral forward-looking statements that the Company makes, or that are attributable to the Company, are expressly qualified in their entirety by this cautionary notice. Any forward-looking statement speaks only as of the date on which it is made. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 9.01 Exhibits.

 

(d)Exhibits.

 

99.1Press Release of Hunt Companies Finance Trust, Inc., dated November 6, 2018.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Hunt Companies Finance Trust, Inc.
   
     
Date: November 6, 2018 By:   /s/ James A. Briggs
    James A. Briggs
    Interim Chief Financial Officer