Business Context and Reporting Period
This Form 8-K Current Report is filed by New York Mortgage Trust, Inc. (the "Company") on December 30, 2011. The filing reports the termination of a material definitive agreement with Harvest Capital Strategies LLC ("HCS") and the associated departure of the Company's Chairman and Director.
Key Financial Metrics and Agreements
The filing details a specific financial obligation arising from the termination of the Advisory Agreement:
- Total Termination Fee: $2,235,000 (the "Agreed Fee").
- Fee Composition: Includes the standard termination fee under the Advisory Agreement plus $500,000 representing fees otherwise payable through the end of the term.
- Payment Schedule:
- First Installment: $1,735,000 payable on December 30, 2011.
- Second Installment: $250,000 payable on March 31, 2012.
- Third Installment: $250,000 payable upon termination of transitional consulting services.
- Assets Under Management: As of September 30, 2011, HCS managed approximately $36.7 million of assets ("Incentive Tail Assets").
The filing text does not provide clear values for the Company's overall revenue, profit, cash flow, margins, debt, or liquidity for the reporting period.
Material Changes
The primary material change is the termination of the Amended and Restated Advisory Agreement with HCS, effective December 31, 2011. Key changes include:
- Waiver of Notice: HCS waived the 180-day advance notice requirement originally stipulated in the Advisory Agreement.
- Leadership Transition: James J. Fowler, an employee of HCS and the current Chairman of the Board, will continue to serve until the earlier of the 2012 Annual Meeting, the appointment of a successor, or his voluntary resignation.
- Transitional Services: HCS will provide transitional consulting services regarding finance, capital markets, and strategy until the 2012 Annual Meeting or until terminated by a majority vote of independent directors.
Outlook, Risks, and Contingencies
- Future Compensation: The Company will continue to pay incentive compensation to HCS regarding the "Incentive Tail Assets" until those assets are disposed of or mature.
- Board Search: The Company expects to commence a search for a new director to fill the opening created by Mr. Fowler's departure during the first quarter of 2012.
- Regulatory Disclosure: The Company issued a press release regarding these events on December 30, 2011, under Regulation FD.
Investor Verification Checklist
- Verify the impact of the $2,235,000 termination fee on the Company's immediate cash position and Q4 2011 financial statements.
- Confirm the timeline for the appointment of a new Chairman and independent director to replace James J. Fowler.
- Review the status and expected maturity of the $36.7 million in "Incentive Tail Assets" to understand future incentive compensation obligations to HCS.
- Assess the Company's strategy for managing finance and capital markets activities post-termination of the Advisory Agreement.