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Item 8. Financial Statements and Supplementary Data

2024-03-07 compared with 2023-03-30 · 336 added, 387 removed, 786 unchanged (48% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID 49 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 199 )

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2022 and 2021

Consolidated Statements of Equity for the years ended December 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Equity (Deficit) for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Altisource Portfolio Solutions S.A.

and subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Altisource Portfolio Solutions S.A.

and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, equity (deficit), and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of a Matter

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Income Taxes

As described in Notes 2 and Note 20 to the financial statements, the Company is subject to income taxes in the United States and a number of foreign jurisdictions.

As described in Notes 2 and 20 to the financial statements, the Company is subject to income taxes in the United States and a number of foreign jurisdictions.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities.

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March 7, 2024

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Shareholders of Altisource Portfolio Solutions S.A.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Altisource Portfolio Solutions S.A.

and subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows for the year in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements, present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America (“U.S.

Emphasis of Concentration of Revenue and Uncertainties

As discussed in Note 3 to the financial statements, Ocwen Financial Corporation (together with its subsidiaries, “Ocwen”) is the Company’s largest customer.

Ocwen purchases certain mortgage services from the Company under the terms of services agreements with terms extending through August 2030.

Ocwen has disclosed that Rithm Capital Corp.

(“Rithm”, formerly New Residential Investment Corp., or “NRZ” is its largest client.

In July 2017 and January 2018, Ocwen and Rithm entered into a series of agreements pursuant to which the parties agreed, among other things, to undertake certain actions to facilitate the transfer from Ocwen to Rithm of Ocwen’s legal title to certain mortgage servicing rights (“MSRs”) and under which Ocwen will subservice mortgage loans underlying these MSRs for an initial term of five years, subject to early termination rights.

As discussed in Note 22 to the financial statements, NRZ can terminate its sub-servicing agreement with Ocwen in exchange for the payment of a termination fee.

During the second quarter of 2020, Ocwen informed the Company that an MSR investor instructed Ocwen to use a field services provider other than the Company on properties associated with certain MSRs.

Ocwen also communicated to the Company in the fourth quarter of 2020 that the same investor instructed Ocwen to use a provider for default valuations and certain default title services other than the Company on properties associated with certain MSRs and commenced moving these referrals to other providers in the fourth quarter of 2020.

Ocwen has disclosed that it is subject to a number of regulatory matters and may become subject to future adverse regulatory or other actions.

The existence or outcome of Ocwen regulatory matters or the termination of the NRZ sub-servicing agreement with Ocwen may have significant adverse effects on Ocwen’s business and/or the Company’s continuing relationship with Ocwen.

Note 22 also discusses potential events that could further significantly reduce the Company’s revenue.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Mayer Hoffman McCann P.C.

We have served as the Company’s auditor from 2016 through 2022.

March 3, 2022, except for Note 23, as to which the date is December 12, 2022

Petersburg, Florida

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

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Cash and cash equivalents $ 32,522 $ 51,025

Accounts receivable, net 12,989 18,008

Accounts receivable, net of allowance for doubtful accounts of $ 3,123 and $ 4,363 , respectively

11,682 12,989

Prepaid expenses and other current assets 11,336 23,544

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Commitments, contingencies and regulatory matters (Note 22)

Equity (deficit):

Common stock ($ 1.00 par value;

100,000 shares authorized, 29,963 issued and 26,496 outstanding as of December 31, 2023 ;

15,911 outstanding as of December 31, 2021)

25,413 issued and 16,129 outstanding as of December 31, 2022 )

29,963 25,413

Additional paid-in capital 177,278 149,348

Retained earnings 118,948 186,592

(Accumulated deficit) retained earnings ( 180,162 ) 118,948

Treasury stock, at cost ( 3,467 shares as of December 31, 2023 and 9,284 shares as of December 31, 2022)

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

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Selling, general and administrative expenses 46,420 54,755

Loss (gain) on sale of business 242 ( 88,930 )

(Loss) income from operations ( 33,182 ) 28,968

Loss on sale of business — 242

Loss from operations ( 16,768 ) ( 33,182 )

Other income (expense), net:

Interest expense ( 36,103 ) ( 16,639 )

Other income, net 2,254 864

Change in fair value of warrant liability

Debt amendment costs

Other income (expense), net 2,788 2,254

Total other income (expense), net ( 35,580 ) ( 14,385 )

(Loss) income before income taxes and non-controlling interests ( 47,567 ) 15,285

Loss before income taxes and non-controlling interests ( 52,348 ) ( 47,567 )

Income tax provision ( 3,714 ) ( 5,266 )

Net (loss) income ( 52,833 ) 12,053

Net loss ( 56,062 ) ( 52,833 )

Net income attributable to non-controlling interests

Net (loss) income attributable to Altisource $ ( 53,418 ) $ 11,812

(Loss) earnings per share:

( 228 ) ( 585 )

Net loss attributable to Altisource $ ( 56,290 ) $ ( 53,418 )

Loss per share:

Basic $ ( 2.51 ) $ ( 3.32 )

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Diluted 22,418 16,070

Comprehensive (loss) income:

Comprehensive (loss) income, net of tax ( 52,833 ) 12,053

Comprehensive loss:

Comprehensive loss, net of tax ( 56,062 ) ( 52,833 )

Comprehensive income attributable to non-controlling interests ( 228 ) ( 585 )

Comprehensive (loss) income attributable to Altisource $ ( 53,418 ) $ 11,812

Comprehensive loss attributable to Altisource $ ( 56,290 ) $ ( 53,418 )

See accompanying notes to consolidated financial statements .

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Consolidated Statements of Equity

Consolidated Statements of Equity (Deficit)

(in thousands)

Altisource Equity (Deficit)

Common stock Additional paid-in capital Retained earnings Treasury stock, at cost Non-controlling interests Total

Altisource Deficit

Common stock Additional paid-in capital (Accumulated deficit) retained earnings Treasury stock, at cost Non-controlling interests Total

Balance, January 1, 2022 25,413 $ 25,413 $ 144,298 $ 186,592 $ ( 426,445 ) $ 1,272 $ ( 68,870 )

Net income — — — 11,812 — 241 12,053

Non-controlling interests eliminated on deconsolidation (Note 2)

— — — — — 1,781 1,781

Net loss — — — ( 53,418 ) — 585 ( 52,833 )

Distributions to non-controlling interest holders — — — — — ( 1,082 ) ( 1,082 )

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Distributions to non-controlling interest holders — — — — — ( 388 ) ( 388 )

Reclassification of warrant liability to equity — — 6,951 — — — 6,951

Share-based compensation expense — — 5,068 — — — 5,068

Issuance of common stock, net of issuance costs 4,550 4,550 15,911 — — — 20,461

Sale of treasury stock, net of transaction costs — — — ( 228,322 ) 246,643 — 18,321

Issuance of restricted share units and restricted shares — — — ( 10,071 ) 10,071 — —

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Cash flows from operating activities:

Net (loss) income $ ( 52,833 ) $ 12,053

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Net loss $ ( 56,062 ) $ ( 52,833 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 2,392 3,440

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Loss on disposal of fixed assets 121 10

Loss (gain) on sale of business 242 ( 88,930 )

Other non-cash items — 137

Loss on sale of business — 242

Change in fair value of warrant liability ( 1,145 ) —

Changes in operating assets and liabilities:

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Additions to premises and equipment — ( 863 )

Proceeds from the sale of businesses 346 104,141

Proceeds from the sale of business

Other investing activities — ( 250 )

Net cash (used in) provided by investing activities ( 767 ) 102,762

Net cash used in investing activities — ( 767 )

Cash flows from financing activities:

Proceeds from revolving credit facility — 20,000

Repayments of long-term debt and revolving credit facility — ( 20,000 )

Debt issuance costs — ( 531 )

Proceeds from convertible debt payable to related parties (Note 2)

Proceeds from issuance of common stock, net of issuance costs 20,461 —

Proceeds from sale of treasury stock, net of transaction costs 18,321 —

Debt issuance and amendment costs ( 4,886 ) —

Repayments of long-term debt

Distributions to non-controlling interests ( 388 ) ( 1,082 )

Payments of tax withholding on issuance of restricted share units and restricted shares ( 532 ) ( 1,139 )

Net cash used in financing activities ( 2,221 ) ( 2,304 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 47,876 ) 40,053

Net cash provided by (used in) financing activities 2,976 ( 2,221 )

Net decrease in cash, cash equivalents and restricted cash ( 18,857 ) ( 47,876 )

Cash, cash equivalents and restricted cash at the beginning of the period 54,273 102,149

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Interest paid $ 22,876 $ 14,962

Income taxes paid, net 3,299 2,455

Income taxes (refunded) paid, net

( 3,775 ) 3,299

Acquisition of right-of-use assets with operating lease liabilities 500 920

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Net decrease in payables for purchases of premises and equipment $ — $ ( 64 )

Warrants issued in connection with Amended Credit Agreement 8,096 —

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets and the consolidated statements of cash flows as of December 31:

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Restricted cash 2,894 3,248

Total cash, cash equivalents and restricted cash reported in the statements of cash flow $ 54,273 $ 102,149

Total cash, cash equivalents and restricted cash reported in the statements of cash flows $ 35,416 $ 54,273

See accompanying notes to consolidated financial statements.

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Intercompany transactions and accounts have been eliminated in consolidation.

Certain amounts disclosed in prior period statements have been reclassified to conform to the current period presentation.

Principles of Consolidation

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As of December 31, 2022, Lenders One had total assets of $ 1.2 million and total liabilities of $ 1.1 million.

In 2019, Altisource created Pointillist, Inc.

(“Pointillist”) and contributed the Pointillist ® customer journey analytics business and $ 8.5 million to it.

On May 27, 2021, Pointillist issued $ 1.3 million in principal of convertible notes to related parties with a maturity date of January 1, 2023.

The notes bore interest at a rate of 7 % per annum.

The principal and unpaid accrued interest then outstanding under the notes (1) would automatically convert to Pointillist equity at the earlier of the time Pointillist receives proceeds of $ 5.0 million or more from the sale of its equity or January 1, 2023, or (2) are repaid in cash or converted into Pointillist common stock equity based on a $ 13.1 million Pointillist valuation (at the Lenders’ option) in the event of a corporate transaction or initial public offering of Pointillist.

On December 1, 2021, the notes were converted to Pointillist equity and Altisource and other shareholders of Pointillist sold all of the equity interests in Pointillist (See Note 4 for additional information).

Prior to the sale, Pointillist was owned by Altisource and management of Pointillist, with management of Pointillist owning a non-controlling interest representing 12.1 % of the outstanding equity of Pointillist.

Through December 1, 2021 Pointillist is presented in the accompanying consolidated financial statements on a consolidated basis and the portion of Pointillist owned by Pointillist management is reported as non-controlling interests as of December 31, 2021.

Use of Estimates

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We classify all highly liquid instruments with an original maturity of three months or less at the time of purchase as cash equivalents.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Accounts Receivable, Net

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The carrying value of accounts receivable, net, approximates fair value.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Premises and Equipment, Net

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Forecasts of future cash flows are based on our estimate of future sales and operating expenses, based primarily on estimated pricing, sales volumes, market segment share, cost trends and general economic conditions.

The estimated cash flows are discounted using a rate that represents our weighted average cost of capital.

The estimated cash flows are discounted using a rate that represents our estimated weighted average cost of capital.

The market comparisons include an analysis of revenue and earnings multiples of guideline public companies compared to the Company.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Intangible Assets, Net

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We amortize intangible assets that we deem to have definite lives in proportion to actual and expected customer revenues or on a straight-line basis over their useful lives, generally ranging from 4 to 20 years.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

We perform tests for impairment if conditions exist that indicate the carrying value may not be recoverable.

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We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized.

When there is a timing difference between when we invoice customers and when revenues

When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred revenue or other current liabilities), as appropriate.

A description of our principal revenue generating activities are as follows:

Servicer and Real Estate

• For property preservation and inspection services and payment management technologies, we recognize transactional revenue when the service is provided.

• For vendor management transactions, we recognize revenue over the period during which we perform the services.

We use judgment to determine the period over which we recognize revenue for certain of these services

• For loan disbursement review services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred revenue or other current liabilities), as appropriate.

See Note 23 for descriptions of our principal revenue generating activities.

• For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed.

We use judgment to determine the period over which we recognize revenue for certain of these services.

• For the real estate auction platform, real estate auction and real estate brokerage services, we recognize revenue on a net basis (i.e., the commission on the sale) at the closing of the sale of the REO as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount.

• For SaaS based technology to manage REO, we recognize revenue over the estimated average number of months the REO are on the platform or ratably over the contract period.

We generally recognize revenue for professional services as services are provided.

We use judgment to determine the period over which we recognize revenue for certain of these services

• For loan servicing technologies, we generally recognize revenue based on the number of loans on the system.

We generally recognized revenue from professional services as services are provided.

We use judgment to determine the period over which we recognize revenue for certain of these services

• Reimbursable expenses revenue related to property preservation and inspection services, real estate sales title services and foreclosure trustee services is included in revenue with an equal amount recognized in cost of revenue.

These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationships are with us, rather than with our customers.

• For the majority of the services we provide, we recognize transactional revenue when the service is provided.

We recognize membership fees from Lender One members ratably over the term of membership.

• For vendor management oversight software-as-a-service (“SaaS”), we recognize revenue over the period during which we perform the services.

We use judgment to determine the period over which we recognize revenue for certain of these services

Share-Based Compensation

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Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on our results of operations.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Earnings Per Share

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Diluted net income per share reflects the assumed conversion of all dilutive securities using the treasury stock method.

Future Adoption of New Accounting Pronouncement

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This standard updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are part of an entity’s segment measure of profit or loss and regularly provided to the chief operating decision maker.

In addition, it adds or makes clarifications to other segment-related disclosures, such as clarifying that the disclosure requirements in ASC 280 are required for entities with a single reportable segment and that an entity may disclose multiple measures of segment profit and loss.

This standard will be effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption of this standard is permitted.

The Company is currently evaluating the impact this guidance may have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This standard amends the Codification to enhance the transparency and decision usefulness of income tax disclosures, to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

This standard will be effective for annual periods beginning after December 15, 2024.

Early adoption of this standard is permitted.

The Company is currently evaluating the impact this guidance may have on its consolidated financial statements.

NOTE 3 — CUSTOMER CONCENTRATION

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For the years ended December 31, 2023 and 2022, we recognized revenue from Ocwen of $ 63.2 million and $ 63.5 million, respectively.

Revenue from Ocwen as a percentage of consolidated revenue was 41 % and 31 % for the years ended December 31, 2022 and 2021, respectively.

Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows for the years ended December 31:

Servicer and Real Estate

Corporate and Others

Consolidated revenue 44 % 41 %

We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider.

For both the years ended December 31, 2022 and 2021, we recognized $ 9.5 million of such revenue.

For the years ended December 31, 2023 and 2022, we recognized $ 9.2 million and $ 9.5 million, respectively, of such revenue.

These amounts are not included in deriving revenue from Ocwen and revenue from Ocwen as a percentage of revenue discussed above.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

As of December 31, 2023, accounts receivable from Ocwen totaled $ 3.4 million, $ 2.2 million of which was billed and $ 1.2 million of which was unbilled.

As of December 31, 2022, accounts receivable from Ocwen totaled $ 4.0 million, $ 3.2 million of which was billed and $ 0.8 million of which was unbilled.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Rithm Capital Corp.

(individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “Rithm”) (formerly New Residential Investment Corp., or “NRZ”) is a real estate investment trust that invests in and manages investments primarily related to residential real estate, including MSRs and excess MSRs.

Ocwen has disclosed that Rithm is its largest client.

As of December 31, 2022, approximately 17 % of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)) were related to Rithm MSRs or rights to MSRs (the “Subject MSRs”).

(individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “Rithm”) (formerly New Residential Investment Corp.) is an asset manager focused on the real estate and financial services industries.

Ocwen has disclosed that Rithm is a significant client of Ocwen’s.

As of December 31, 2023, Ocwen reported that approximately 16 % of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)) and approximately 67 % of all delinquent loans that Ocwen services were related to Rithm MSRs or rights to MSRs (the “Subject MSRs”).

Rithm purchases brokerage services for real estate owned (“REO”) exclusively from us, irrespective of the subservicer, subject to certain limitations, for certain MSRs set forth in and pursuant to the terms of a Cooperative Brokerage Agreement, as amended, and related letter agreement (collectively, the “Brokerage Agreement”) with terms extending through August 2025.

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For the years ended December 31, 2023 and 2022, we recognized additional revenue of $ 12.6 million and $ 13.0 million, respectively, relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider.

NOTE 4 — SALE OF BUSINESSES

Pointillist Business

On October 6, 2021 Altisource and other shareholders of Pointillist entered into a definitive Stock Purchase Agreement to sell all of the equity interests in Pointillist to Genesys Cloud Services, Inc.

(“Genesys”) for $ 150.0 million (the “Purchase Price”) (the “Transaction”).

The Purchase Price consisted of (1) an up-front payment of $ 144.5 million, subject to certain adjustments, (2) $ 0.5 million deposited into an escrow account to be used to satisfy potential deficits between estimated closing date working capital and actual closing date working capital (the “Working Capital Escrow”), with excess amounts remaining after satisfying such deficits (if any) being paid to the sellers, and (3) $ 5.0 million deposited into an escrow account to satisfy certain Genesys indemnification claims that may arise on or prior to the first anniversary of the sale closing and, at Genesys’ election, any working capital deficits that exceed the Working Capital Escrow (the “Indemnification Escrow”), with the balance to be paid to the sellers thereafter.

The Transaction closed on December 1, 2021.

On a fully diluted basis, Altisource owned approximately 69 % of the equity of Pointillist.

After working capital and other applicable adjustments, Altisource received approximately $ 106.0 million from the sale of its Pointillist equity and the collection of outstanding receivables, with $ 102.2 million received at closing, approximately $ 0.3 million deposited into the Working Capital Escrow and approximately $ 3.5 million deposited into the Indemnification Escrow.

Altisource received the working Capital Escrow in May 2022.

The Indemnification Escrow funds have not yet been received.

During the year ended December 31, 2022, the Company recognized a loss of $( 0.2 ) million based on estimated losses from claims expected to be made against the Indemnification Escrow account.

The present value of the amounts in escrow is included in other current assets in the accompanying consolidated balance sheets at a discounted value of $ 3.2 million and $ 3.6 million as of December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, the Company recognized a pre-tax and after-tax gain of $ 88.9 million from the sale of Pointillist.

Rental Property Management Business

In August 2018, Altisource entered into an amendment to its agreements with Front Yard Residential Corporation (“RESI”) to sell Altisource’s rental property management business to RESI and permit RESI to internalize certain services that had been provided by Altisource.

The proceeds from the transaction totaled $ 18.0 million, payable in two installments.

The first installment of $ 15.0 million was received in August 2018 and the second installment of $ 3.0 million was received in January 2021.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

NOTE 4 — ACCOUNTS RECEIVABLE, NET

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There can be no assurance that actual results will not differ from estimates or that consideration of these factors in the future will not result in an increase or decrease to our allowance for credit losses.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Changes in the allowance for expected credit losses consist of the following:

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(in thousands) 2023 2022

Income taxes receivable $ 7,031 $ 8,403

Prepaid expenses $ 3,722 $ 5,165

Income taxes receivable 325 7,031

Indemnity escrow receivable from Pointillist sale

Maintenance agreements, current portion 1,327 1,498

Surety bond collateral — 4,000

Restricted cash

Other current assets 2,738 2,627

Total $ 11,336 $ 23,544

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

NOTE 6 — PREMISES AND EQUIPMENT, NET

8 unchanged sentences

Total $ 1,709 $ 4,222

Depreciation and amortization expense amounted to $ 3.4 million and $ 4.6 million for the years ended December 31, 2022 and 2021, respectively, and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the consolidated statements of operations and comprehensive (loss) income.

Depreciation and amortization expense amounted to $ 2.4 million and $ 3.4 million for the years ended December 31, 2023 and 2022, respectively, and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying consolidated statements of operations and comprehensive loss.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Premises and equipment, net consist of the following by country as of December 31:

1 unchanged sentence

Luxembourg $ 1,131 $ 2,455

United States 586 1,932

India 492 1,129

United States 64 586

Uruguay 22 52

6 unchanged sentences

Total $ 3,379 $ 5,321

Amortization of operating leases was $ 2.7 million and $ 7.9 million for the years ended December 31, 2022 and 2021, respectively, and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the consolidated statements of operations and comprehensive (loss) income.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Amortization of operating leases was $ 1.8 million and $ 2.7 million for the years ended December 31, 2023 and 2022, respectively, and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying consolidated statements of operations and comprehensive loss.

NOTE 8 — GOODWILL AND INTANGIBLE ASSETS, NET

Changes in goodwill during the years ended December 31, 2022 and 2021 are summarized below:

(in thousands) Total

Balance as of January 1, 2021 $ 73,849

Write-off (1)

The following is a summary of goodwill by segment:

(in thousands) Servicer and Real Estate

Corporate and Others

Balance as of December 31, 2023 and 2022

$ 30,681 $ 25,279 $ — $ 55,960

(1) During 2021, the Company sold its equity interest in Pointillist (See Note 4 for additional information) which had $ 17.9 million of goodwill attributed to it.

The amount of goodwill attributable to Pointillist was based on the relative fair values of Pointillist and the Company excluding Pointillist.

Pointillist was determined to be a business within the Company’s existing reporting unit.

We determined that each reportable segment represents a reporting unit.

10 unchanged sentences

Total $ 259,016 $ 259,016 $ ( 232,468 ) $ ( 227,286 ) $ 26,548 $ 31,730

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Amortization expense for definite lived intangible assets was $ 5.2 million and $ 5.1 million for the years ended December 31, 2023 and 2022, respectively .

5 unchanged sentences

Security deposits 397 596

Surety bond collateral

Other 1,462 1,585

Total $ 6,730 $ 5,429

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

NOTE 10 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

15 unchanged sentences

Senior secured term loans $ 224,085 $ 247,204

Debt issuance costs, net ( 878 ) ( 1,632 )

Debt issuance and amendment costs, net

( 3,318 ) ( 878 )

Unamortized discount, net ( 5,152 ) ( 833 )

Total Senior secured term loans 245,493 244,078

Credit Facility — —

Debt issuance costs, net ( 263 ) ( 441 )

Total Credit facility ( 263 ) ( 441 )

Net Senior secured term loans

215,615 245,493

Total Long-term debt $ 215,615 $ 245,493

Credit Agreement

Altisource Portfolio Solutions S.A.

and its wholly-owned subsidiary, Altisource S.à r.l., entered into a credit agreement (the “Credit Agreement”) in April 2018 with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain lenders.

Under the Credit Agreement, Altisource borrowed $ 412.0 million in the form of Term B Loans and obtained a $ 15.0 million revolving credit facility.

The Term B Loans mature in April 2024.

Altisource terminated the revolving credit facility on December 1, 2021.

Altisource Portfolio Solutions S.A.

and certain subsidiaries are guarantors of the Term B Loans (collectively, the “Guarantors”).

There are no mandatory repayments of the Term B Loans except as set forth below until the April 2024 maturity when the balance is due.

All amounts outstanding under the Term B Loans will become due on the earlier of (i) April 3, 2024, and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders (as defined in the Credit Agreement;

other capitalized terms, unless defined herein, are defined in the Credit Agreement) or as otherwise provided in the Credit Agreement upon the occurrence of any event of default.

In addition to the scheduled principal payments, subject to certain exceptions, the Term B Loans are subject to mandatory prepayment upon issuances of debt, certain casualty and condemnation events and sales of assets, as well as from a percentage of Consolidated Excess Cash Flow if our leverage ratio as of each year-end computation date is greater than 3.00 to 1.00, as calculated in accordance with the provisions of the Credit Agreement (the percentage increases if our leverage ratio exceeds

Senior Secured Term Loans

In April 2018, Altisource Portfolio Solutions S.A.

and its wholly-owned subsidiary, Altisource S.à r.l., entered into a credit agreement with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain lenders (the “Credit Agreement”).

Under the Credit Agreement, Altisource borrowed $ 412 million in the form of senior secured term loans (“SSTL”).

Effective February 14, 2023, Altisource Portfolio Solutions S.A.

and Altisource S.à r.l.

entered into Amendment No.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

3.50 to 1.00).

Our leverage ratio exceeded 3.50 to 1.00 during the year ended December 31, 2022.

However, because the Company did not generate any Consolidated Excess Cash Flow in 2022, no amounts were due under this provision.

Altisource may incur incremental indebtedness under the Credit Agreement from one or more incremental lenders, which may include existing lenders, in an aggregate incremental principal amount not to exceed $ 125.0 million, subject to certain conditions set forth in the Credit Agreement, including a sublimit of $ 80.0 million with respect to incremental revolving credit commitments and, after giving effect to the incremental borrowing, the Company’s leverage ratio does not exceed 3.00 to 1.00.

2 to the Credit Agreement (as amended by Amendment No.

2, the “Amended Credit Agreement”).

Altisource Portfolio Solutions S.A.

and its subsidiaries, subject to the applicable exclusions in the Amended Credit Agreement, are guarantors on the SSTL (collectively, the “Guarantors”).

Effective June 1, 2023, the administrative agent and collateral agent of the Amended Credit Agreement changed to Wilmington Trust, N.A.

The maturity date of the SSTL under the Amended Credit Agreement is April 30, 2025.

If the aggregate amount of par paydowns on the SSTL made prior to February 14, 2024 using proceeds from issuances of equity interests or from junior indebtedness (“Aggregate Paydowns”) are equal to or greater than $ 30 million, then the maturity date of the SSTL may be extended at the Company’s option to April 30, 2026.

Such extension is conditioned upon the Company’s payment of a 2 % payment-in-kind extension fee on or before April 30, 2025 and subject to the representations and warranties being true and correct as of such date and there being no default or event of default being in existence as of such date.

During 2023, Company made $ 30 million of Aggregate Paydowns.

All amounts outstanding under the SSTL will become due on the earlier of (i) the maturity date, and (ii) the date on which the loans are declared to be due and owing by the administrative agent at the request (or with the consent) of the Required Lenders (as defined in the Amended Credit Agreement;

other capitalized terms, unless defined herein, are defined in the Amended Credit Agreement) or as otherwise provided in the Amended Credit Agreement upon the occurrence of any event of default.

There are no mandatory repayments of the SSTL, except as set forth herein, until the April 30, 2025 maturity when the balance is due.

If the maturity date is extended to April 30, 2026, the Company is required to make mandatory repayments of $ 5.2 million in the first quarter of 2026 with the remaining balance due at the April 2026 maturity.

In addition to the scheduled principal payments, subject to certain exceptions, the SSTL is subject to mandatory prepayment upon issuances of debt, certain casualty and condemnation events and sales of assets, as well as 50 % of Consolidated Excess Cash Flow, as calculated in accordance with the provisions of the Amended Credit Agreement.

Altisource may incur incremental indebtedness under the Amended Credit Agreement from one or more incremental lenders, which may include existing lenders, in an aggregate incremental principal amount not to exceed $ 50 million, subject to certain conditions set forth in the Amended Credit Agreement.

The lenders have no obligation to provide any incremental indebtedness.

The Term B Loans bear interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate.

Adjusted Eurodollar Rate term loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for a three month interest period and (y) 1.00 % plus (ii) 4.00 %.

Through March 29, 2023, the SSTL’s interest rate was the Adjusted Eurodollar Rate plus 4.00 %.

Beginning March 30, 2023, the SSTL bears interest at rates based upon, at our option, the Secured Overnight Financing Rate (“SOFR”) or the Base Rate, as defined in the Amended Credit Agreement.

If the Company selects SOFR, the term loans initially bear interest at a rate per annum equal to SOFR plus 5.00 % payable in cash plus 5.00 % payable in kind (“PIK”).

If the Company selects Base Rate, the loans initially bear interest at a rate per annum equal to the Base Rate plus 4.00 % payable in cash plus 5.00 % PIK.

Base Rate term loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Base Rate and (y) 2.00 % plus (ii) 4.00 %.

The interest rate as of December 31, 2022 was 7.67 %.

The payment of all amounts owing by Altisource under the Credit Agreement is guaranteed by the Guarantors and is secured by a pledge of all equity interests of certain subsidiaries of Altisource, as well as a lien on substantially all of the assets of Altisource S.à r.l.

The PIK component of the interest rate is subject to adjustment based on the amount of Aggregate Paydowns as set forth in the table below.

The PIK component of the interest rate was 3.75 % for the six months ended December 31, 2023 and 4.50 % for the three months ended June 30, 2023.

The interest rate as of December 31, 2023, including the PIK component, was 14.24 %.

Aggregate Paydowns PIK Component of Interest Rate

Less than $20 million 5.00 %

$20 million+ but less than below 4.50 %

$30 million+ but less than below 3.75 %

$40 million+ but less than below 3.50 %

$45 million+ but less than below 3.00 %

$50 million+ but less than below 2.50 %

$55 million+ but less than below 2.00 %

$60 million+ but less than below 1.00 %

$65 million+ but less than below 0.50 %

$70 million+ 0.00 %

If, as of the end of any calendar quarter, (i) the amount of unencumbered cash and cash equivalents of Altisource S.à r.l.

and its direct and indirect subsidiaries on a consolidated basis plus (ii) the undrawn commitment amount under the Revolver is, or is forecast as of the end of the immediately subsequent calendar quarter to be, less than $ 35 million, then up to 2.00 % in interest otherwise payable in cash in the following quarter may be paid in kind at the Company’s election.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

The payment of all amounts owing by Altisource under the Amended Credit Agreement is guaranteed by the Guarantors and is secured by a pledge of all equity interests of certain subsidiaries of Altisource, as well as a lien on substantially all of the assets of Altisource S.à r.l.

and the Guarantors, subject to certain exceptions.

The Credit Agreement includes covenants that restrict or limit, among other things, our ability, subject to certain exceptions and baskets, to incur indebtedness;

The Amended Credit Agreement includes covenants that restrict or limit, among other things, our ability, subject to certain exceptions and baskets, to incur indebtedness;

incur liens on our assets;

10 unchanged sentences

and engage in mergers and consolidations.

The Credit Agreement contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Credit Agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of certain other covenants, subject to cure periods described in the Credit Agreement, (iv) failure to pay principal or interest on any other debt that equals or exceeds $ 40.0 million when due, (v) default on any other debt that equals or exceeds $ 40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an amount in excess of $ 40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect.

If any event of default occurs and is not cured within applicable grace periods set forth in the Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of December 31, 2022, debt issuance costs were $ 0.9 million, net of $ 3.6 million of accumulated amortization.

The Amended Credit Agreement contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Amended Credit Agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of certain other covenants, subject to cure periods described in the Amended Credit Agreement, (iv) failure to pay principal or interest on any other debt that equals or exceeds $ 5 million when due, (v) default on any other debt that equals or exceeds $ 5 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an aggregate amount in excess of $ 10 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events, (x) the failure of certain Loan Documents to be in full force and effect and (xi) failure to comply in any material respects with the terms of the Warrants or the Warrant Purchase Agreement.

If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

The lenders under the Amended Credit Agreement received Warrants to purchase shares of Altisource common stock.

The number of Warrant Shares is subject to reduction based on the amount of Aggregate Paydowns (see Note 12 for additional information).

The fair value of the Warrants on February 14, 2023 was $ 8.1 million and was recorded as an increase in debt discount.

In connection with Amendment No.

2, the Company paid $ 4.9 million to the lenders and to third parties on behalf of the lenders.

The $ 4.9 million payment was recorded as an increase in debt issuance and amendment costs.

In connection with Amendment No.

2, the Company paid $ 3.4 million to advisors and recorded these payments as other expense in the consolidated statements of operations and comprehensive loss.

Deer Park Road Management Company, LP (“Deer Park”), a related party, owns approximately 16 % and 24 % of Altisource’s common stock as of December 31, 2023 and 2022, respectively, and $ 40.6 million of Altisource debt under the Amended Credit Agreement as of December 31, 2023 (no comparative amount as of December 31, 2022).

Deer Park’s Chief Investment Officer and managing partner was a member of Altisource’s Board of Directors until his resignation on March 1, 2022.

The replacement director appointed by the Board of Directors and subsequently elected by shareholders is a current employee of Deer Park.

In connection with the Amended Credit Agreement, Deer Park received 292 thousand Warrants.

During the year ended December 31, 2023, Deer Park received interest of $ 4.1 million from the Altisource SSTL (no comparative amount for the year ended December 31, 2022).

As of December 31, 2023, debt issuance and amendment costs were $ 3.3 million, net of $ 6.1 million of accumulated amortization.

As of December 31, 2022, debt issuance costs were $ 0.9 million, net of $ 3.6 million of accumulated amortization.

Interest expense on the senior secured term loans, including amortization of debt issuance costs and the net debt discount, totaled $ 16.4 million and $ 13.9 million for the years ended December 31, 2022 and 2021, respectively.

Interest expense on the SSTL, including amortization of debt issuance costs and the net debt discount, totaled $ 32.6 million and $ 16.4 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, maturities of our long-term debt are as follows:

(in thousands) Maturities

Altisource entered into an amendment to the Credit Agreement effective February 14, 2023.

See Note 24, Subsequent Events.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

On June 22, 2021 Altisource S.à r.l, a subsidiary of Altisource Portfolio Solutions S.A., entered into a revolving credit facility with a related party, STS Master Fund, Ltd.

On June 22, 2021 Altisource S.à r.l, a subsidiary of Altisource Portfolio Solutions S.A., entered into a revolving credit facility with STS Master Fund, Ltd.

(“STS”) (the “Revolver”).

STS is an investment fund managed by Deer Park Road Management Company, LP (“Deer Park”).

Deer Park owns approximately 24 % of Altisource’s common stock as of December 31, 2022.

Deer Park’s Chief Investment Officer and managing partner was a member of Altisource’s Board of Directors until his resignation on March 1, 2022.

The replacement director appointed by the Board of Directors is a current employee of Deer Park.

Under the terms of the Revolver, STS will make loans to Altisource from time to time, in amounts requested by Altisource and Altisource may voluntarily prepay all or any portion of the outstanding loans at any time.

The Revolver provides Altisource the ability to borrow a maximum amount of $ 20.0 million through June 22, 2022, $ 15.0 million through June 22, 2023, and $ 10.0 million until the end of the term.

STS is an investment fund managed by Deer Park.

The Revolver was amended effective February 14, 2023 (the “Amended Revolver”).

Under the terms of the Amended Revolver, STS will make loans to Altisource from time to time, in amounts requested by Altisource and Altisource may voluntarily prepay all or any portion of the outstanding loans at any time.

The Amended Revolver provides Altisource the ability to borrow a maximum amount of $ 15.0 million.

Amounts that are repaid may be re-borrowed in accordance with the limitations set forth below.

Outstanding amounts borrowed pursuant to the Revolver will amortize over the three-year term as follows:

on June 22, 2022, the difference between the then outstanding balance above $ 15.0 million and $ 15.0 million, on June 22, 2023, the difference between the then outstanding balance above $ 10.0 million and $ 10.0 million, and on June 22, 2024, the then outstanding balance of the loan will be due and payable by Altisource.

Borrowings under the Revolver bear interest at 9.00 % per annum and are payable quarterly on the last business day of each March, June, September and December.

In connection with the Revolver, Altisource is required to pay customary fees, including an upfront fee equal to $ 0.5 million at the initial extension of credit pursuant to the facility, an unused line fee of 0.5 % and, an early termination fee in the event of a refinancing transaction.

Altisource’s obligations under the Revolver are secured by a lien on all equity in Altisource’s subsidiary incorporated in India, Altisource Business Solutions Private Limited, pursuant to a pledge agreement entered into by Altisource Asia Holdings Ltd I, a wholly owned Altisource subsidiary.

The Revolver contains additional representations, warranties, covenants, terms and conditions customary for transactions of this type, that restrict or limit, among other things, our ability to use the proceeds of credit only for general corporate purposes.

The Revolver contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Revolver within three business days of becoming due, (ii) failure to perform or observe any material provisions of the Revolver Documents to be performed or complied with, (iii) material incorrectness of representations and warranties when made, (iv) default on any other debt that equals or exceeds $ 40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (v) entry by a court of one or more judgments against us in an amount in excess of $ 40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events.

If any event of default occurs and is not cured within applicable grace periods set forth in the Revolver or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of December 31, 2022 and 2021, there was no outstanding debt under the Revolver.

The maturity date of the Amended Revolver coincides with the maturity date of the SSTL under the Amended Credit Agreement, as it may be extended.

The outstanding balance on the Amended Revolver is due and payable on such maturity date.

Borrowings under the Amended Revolver bear interest of 10.00 % per annum in cash and 3.00 % per annum PIK and are payable quarterly on the last business day of each March, June, September and December.

In connection with the Amended Revolver, Altisource is required to pay a usage fee equal to $ 0.75 million at the initial extension of credit pursuant to the Amended Revolver.

Altisource’s obligations under the Amended Revolver are secured by a first-priority lien on substantially all of the assets of the Company, which lien will be pari passu with liens securing the SSTL under the Amended Credit Agreement.

The Amended Revolver contains additional representations, warranties, covenants, terms and conditions customary for transactions of this type, that restrict or limit, among other things, our ability to use the proceeds of credit only for general corporate purposes.

The Amended Revolver contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Amended Revolver within three business days of becoming due, (ii) failure to perform or observe any material provisions of the Amended Revolver Documents to be performed or complied with and such failure continues for a period of 30 days after written notice is given by the Lender to the Borrower, (iii) material incorrectness of representations and warranties when made, (iv) default on any other debt that equals or exceeds $ 40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (v) entry by a court of one or more judgments against us in an aggregate amount in excess of $ 40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events.

If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Revolver or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of December 31, 2023 and 2022, there was no outstanding debt under the Amended Revolver and Revolver, respectively.

As of December 31, 2023, debt issuance costs were $ 0.2 million, net of $ 0.4 million of accumulated amortization.

As of December 31, 2022, debt issuance costs were $ 0.3 million, net of $ 0.3 million of accumulated amortization.

Altisource entered into an amendment to the Revolver effective February 14, 2023.

See Note 24, Subsequent Events.

Debt issuance costs for the Amended Revolver and Revolver are included in other assets in the accompanying consolidated balance sheet.

NOTE 12 — WARRANTS

On February 14, 2023, the lenders under the Amended Credit Agreement (see Note 11 for additional information) received warrants (the “Warrants”) to purchase 3,223,851 shares of Altisource common stock (the “Warrant Shares”).

The number of Warrant Shares is subject to reduction based on the amount of Aggregate Paydowns as set forth in the table below.

Aggregate Paydowns Warrant Shares

Less than $20 million 3,223,851

$20 million+ but less than below 2,578,743

$30 million+ 1,612,705

During 2023, the Company made $ 30 million of Aggregate Paydowns.

As a result, the number of Warrant Shares as of December 31, 2023 is 1,612,705 .

The exercise price per share of common stock under each Warrant is equal to $ 0.01 .

The Warrants may be exercised at any time on and after February 14, 2024 and prior to their expiration date.

The Warrants are exercisable on a cashless basis and are subject to customary anti-dilution provisions.

The Warrants, if not previously exercised or terminated, will be automatically

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

exercised on May 22, 2027.

The Warrants are subject to a lock-up agreement, subject to customary exceptions, ending on February 16, 2024.

The Warrants are free standing financial instruments that are legally detachable and separately exercisable from the term loans under the Amended Credit Agreement.

At inception, the Warrants were not considered to be indexed to the Company’s stock because the number of Warrant Shares varied based on Aggregate Paydowns.

Pursuant to ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity, the outstanding Warrants were recognized as a warrant liability on the balance sheet based on their inception date fair value and subsequently re-measured at each reporting period with changes recorded as a component of other income (expense) in the statement of operations.

On September 18, 2023, the Company reached the $ 30 million in Aggregate Paydowns threshold and the number of Warrant Shares was no longer variable.

As a result, the Warrants are considered to be indexed to the Company’s stock and the Warrant Liability was reclassified to equity.

The fair value of the warrant liability was based on the number of Warrant Shares that were expected to be exercisable on and after February 14, 2024 and the Altisource share price less $ 0.01 at the measurement date.

The fair value of the warrant liability at each of the respective valuation dates is summarized below:

Warrant Liability Warrant Shares based on Aggregate Paydowns Expected Warrant Shares that will be exercisable on February 14, 2024 Fair Value per Warrant Share Fair Value

(in thousands)

Fair value at initial measurement date of February 14, 2023 3,223,851 1,612,705 $ 5.02 $ 8,096

Gain on change in fair value of warrant liability ( 1,145 )

Fair value at September 18, 2023 1,612,705 1,612,705 $ 4.31 $ 6,951

During the year ended December 31, 2023, the Company recorded a gain on changes in fair value of warrant liability of $ 1.1 million.

During the year ended December 31, 2022, there were no warrant liabilities outstanding.

NOTE 13 — OTHER NON-CURRENT LIABILITIES

1 unchanged sentence

(in thousands) 2023 2022

Operating lease liabilities $ 3,371 $ 5,029

Income tax liabilities $ 17,506 $ 16,079

Operating lease liabilities 1,950 3,371

Deferred revenue 9 82

1 unchanged sentence

Total $ 19,510 $ 19,536

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

NOTE 14 — FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

8 unchanged sentences

Senior secured term loan 224,085 — 177,027 — 247,204 — 200,235 —

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Fair Value Measurements on a Recurring Basis

Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair values due to the highly liquid nature of these instruments and were measured using Level 1 inputs.

The fair value of our senior secured term loan is based on quoted market prices.

Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair values due to the highly liquid nature of these instruments and are measured using Level 1 inputs.

The fair value of our SSTL is based on quoted market prices.

Based on the frequency of trading, we do not believe that there is an active market for our debt.

Therefore, the quoted prices are considered Level 2 inputs.

In connection with the sale of Pointillist on December 1, 2021, $ 3.5 million was deposited into the Indemnification Escrow and $ 0.3 million was deposited into the Working Capital Escrow.

These amounts were recorded as short-term receivables.

Altisource received the Working Capital Escrow in May 2022.

The Indemnification Escrow funds have not yet been received.

(See Note 4 for additional information).

In connection with the sale of Pointillist on December 1, 2021, $ 3.5 million was deposited into an escrow account to satisfy certain indemnification claims that may arise on or prior to the first anniversary of the sale closing.

The deposit was recorded as a short-term receivable.

We measure short-term receivables without a stated interest rate based on the present value of the future payments.

14 unchanged sentences

Expired and forfeited awards are available for reissuance.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Share Repurchase Program

On May 15, 2018, our shareholders approved the renewal and replacement of the share repurchase program previously approved by the shareholders on May 17, 2017.

On May 16, 2023, our shareholders approved the renewal and amendment of the share repurchase program previously approved by the shareholders on May 15, 2018.

Under the program, we are authorized to purchase up to 3.1 million shares of our common stock, based on a limit of 15 % of the outstanding shares of common stock on the date of approval, at a minimum price of $ 1.00 per share and a maximum price of $ 25.00 per share, for a period of five years from the date of approval.

4 unchanged sentences

As of December 31, 2023, we can repurchase up to approximately $ 116 million of our common stock under Luxembourg law.

Our Credit Agreement also limits the amount we can spend on share repurchases and may prevent repurchases in certain circumstances, including if our leverage ratio exceeds 3.50 to 1.00.

Our leverage ratio exceeded 3.50 to 1.00 during the year ended December 31, 2022.

Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Public offerings of Common Stock

On February 14, 2023, Altisource closed on an underwritten public offering to sell 4,550,000 shares of its common stock, at a price of $ 5.00 per share, generating net proceeds of $ 20.5 million, after deducting the underwriting discounts and commissions and other offering expenses.

On September 7, 2023, Altisource closed on an underwritten public offering to sell 5,590,277 shares of its common stock, at a price of $ 3.60 per share, generating net proceeds of $ 18.4 million, after deducting the underwriting discounts and commissions and other offering expenses.

Share-Based Compensation

11 unchanged sentences

The remaining third of the market-based options, which we refer to as “extraordinary performance” grants, generally begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25 % over the exercise price.

Market-based options vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in equal annual installments.

Market-based options generally vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in equal annual installments.

Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement.

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The award of performance-based options is adjusted based on the level of achievement specified in the award agreements.

If the performance criteria achieved is above threshold performance levels, participants have the opportunity to vest in 50 % to 200 % of the option grants, depending upon performance achieved.

If the performance criteria achieved is above threshold performance levels, participants generally have the opportunity to vest in 50 % to 200 % of the option grants, depending upon performance achieved.

If the performance criteria achieved is below a certain threshold, the options are canceled.

1 unchanged sentence

There were 461 thousand performance-based options outstanding as of December 31, 2023.

The Company granted 120 thousand stock options (at a weighted average exercise price of $ 11.86 per share) for the year ended December 31, 2022 ( no comparative amount for the year ended December 31, 2021).

There were no stock option grants during the year ended December 31, 2023.

The Company granted 120 thousand stock options (at a weighted average exercise price of $ 11.86 per share) for the year ended December 31, 2022.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

10 unchanged sentences

We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.

The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the years ended December 31:

The following table summarizes the grant date fair value of stock options that vested during the years ended December 31:

(in thousands, except per share data) 2023 2022

6 unchanged sentences

Outstanding as of December 31, 2022 745,277 $ 27.03 4.83 $ —

Granted 120,000 11.86

Forfeited ( 6,088 ) 25.26

36 unchanged sentences

The Company’s other share-based and similar types of awards are comprised of restricted shares and restricted share units.

The restricted shares and restricted share units are comprised of a combination of service-based awards, performance-based awards and market-based awards.

The restricted shares and restricted share units are comprised of a combination of service-based awards, performance-based awards, market-based awards and performance and market-based awards.

Service-Based Awards.

These awards generally vest over two to four year periods.

These awards generally vest over one -to- four year periods.

A total of 884 thousand service-based awards were outstanding as of December 31, 2023.

12 unchanged sentences

These awards generally vest if certain specific financial measures are achieved and if certain specific market conditions are achieved.

If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the

If the performance criteria achieved is above certain

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

opportunity to vest in up to 300 % of the restricted share unit award for certain awards.

financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 300 % of the restricted share unit award for certain awards.

If the performance criteria or the market criteria is below certain thresholds, the award is canceled.

2 unchanged sentences

The Company granted 891 thousand restricted share units (at a weighted average grant date fair value of $ 4.82 per share) during the year ended December 31, 2023.

These grants include 46 thousand performance-based awards that include both a performance condition and a market condition, and 46 thousand performance-based awards for the year ended December 31, 2022.

These grants include 57 thousand performance-based awards and 57 thousand awards that include both a performance condition and a market condition.

The Company granted 501 thousand restricted share units (at a weighted average grant date fair value of $ 10.33 per share) during the year ended December 31, 2022.

These grants include 46 thousand performance-based awards and 46 thousand awards that include both a performance condition and a market condition.

The following table summarizes the activity related to our restricted shares and restricted share units:

5 unchanged sentences

Outstanding as of December 31, 2023 1,262,742

The following assumptions were used to determine the fair values for the performance-based awards that include both a performance condition and a market condition, and fair values for market-based awards as of the grant date for the years ended December 31:

Monte Carlo Binomial Monte Carlo Binomial

The following assumptions were used to determine the fair values for the awards that include both a performance condition and a market condition for the years ended December 31:

Risk-free interest rate (%) 4.18 1.04

21 unchanged sentences

Disaggregation of Revenue

Disaggregation of total revenues by major source was as follows:

Disaggregation of total revenue by segment and major source was as follows for the years ended December 31:

(in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue

For the year ended December 31, 2022 $ 134,631 $ 10,450 $ 8,039 $ 153,120

For the year ended December 31, 2021 157,855 14,043 6,555 178,453

Servicer and Real Estate

$ 95,643 $ 12,136 $ 7,688 $ 115,467

28,379 635 585 29,599

Total revenue

$ 124,022 $ 12,771 $ 8,273 $ 145,066

(in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue

Servicer and Real Estate $ 100,477 $ 11,655 $ 7,529 $ 119,661

Origination 32,223 726 510 33,459

Total revenue

$ 132,700 $ 12,381 $ 8,039 $ 153,120

Transactions with Related Parties

In May 2022, John G.

Aldridge, Jr., the Managing Partner of Aldridge Pite LLP (“Aldridge Pite”), joined the Board of Directors of Altisource.

Aldridge Pite provides eviction and other real estate related services to the Company.

The Company recognized less than $ 0.1 million for both the years ended December 31, 2023 and 2022, of service revenue relating to services provided to Aldridge Pite.

Contract Balances

6 unchanged sentences

(in thousands) 2023 2022

Compensation and benefits $ 48,064 $ 69,990

Outside fees and services $ 55,858 $ 55,979

Compensation and benefits 35,396 48,064

Technology and telecommunications 14,196 16,937

2 unchanged sentences

Total $ 115,414 $ 131,305

Transactions with Related Parties

In May 2022, John G.

Aldridge, Jr., the Managing Partner of Aldridge Pite LLP (“Aldridge Pite”), joined the Board of Directors of Altisource.

Aldridge Pite provides eviction and other real estate related services to the Company.

Between May 2022 and December 2022, the Company recognized $ 0.5 million of reimbursable expenses relating to services provided to Aldridge Pite.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Transactions with Related Parties

The Company recognized $ 0.7 million and $ 0.5 million for the years ended December 31, 2023 and 2022, respectively of reimbursable expenses relating to services provided to Aldridge Pite.

As of December 31, 2023, the Company had no payable to Aldridge Pite .

NOTE 18 — SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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(in thousands) 2023 2022

Interest income $ 665 $ 4

Interest income (expense) $ 1,314 $ 665

Other, net 1,474 1,589

1 unchanged sentence

NOTE 20 — INCOME TAXES

The components of (loss) income before income taxes and non-controlling interests consist of the following for the years ended December 31:

The components of loss before income taxes and non-controlling interests consist of the following for the years ended December 31:

(in thousands) 2023 2022

1 unchanged sentence

Foreign - U.S.

912 ( 9,536 )

Foreign - non-U.S.

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The tax holiday is conditioned upon our meeting certain employment and investment thresholds.

The impact of these tax holidays decreased foreign taxes by $ 0.1 million ($ 0.01 per diluted share) and $ 0.1 million ($ 0.01 per diluted share) for the years ended December 31, 2022 and 2021, respectively.

The impact of these tax holidays decreased foreign taxes by $ 0.1 million (less than $ 0.01 per diluted share) and $ 0.1 million ($ 0.01 per diluted share) for the years ended December 31, 2023 and 2022, respectively.

The Company accounts for certain income and expense items differently for financial reporting purposes and income tax purposes.

10 unchanged sentences

Accrued expenses 1,931 1,369

Unrealized losses 10,112 10,397

Capital loss carryforward

10,046 10,112

Depreciation 8 144

8 unchanged sentences

A valuation allowance is provided when it is deemed more likely than not that some portion or all of a deferred tax asset will not be realized.

In determining whether a valuation allowance is needed requires an extensive analysis of positive and negative evidence regarding realization of the deferred tax assets and, inherent in that, an assessment of the likelihood of sufficient future

In determining whether a valuation allowance is needed requires an extensive analysis of positive and negative

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

taxable income.

evidence regarding realization of the deferred tax assets and, inherent in that, an assessment of the likelihood of sufficient future taxable income.

When there is a cumulative pretax loss for financial reporting for the current and two preceding years (i.e., a three year cumulative loss), this is a significant element of negative evidence that would be difficult to overcome on a more likely than not or any other basis.

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subsidiaries because the Company intends for those earnings to be indefinitely reinvested.

As of January 1, 2021, approximately $ 15 million of earnings in India were deemed to be indefinitely reinvested.

During 2021, the Company recognized income tax expense on the $ 15 million as the Company no longer intended for India earnings to be indefinitely reinvested.

The other non-Luxembourg earnings that are indefinitely reinvested as of December 31, 2023 were approximately $ 4.2 million, which if distributed would result in no additional tax due.

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The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act signed into law on March 27, 2020 allowed the Company to utilize a five year carryback of the full $ 14.8 million net operating loss generated in the U.S.

The Company’s income tax receivable related to such carryback was $ 5.1 million and $ 6.0 million as of December 31, 2022 and 2021, respectively.

The Company received $ 5.1 million related to such receivable in the first quarter of 2023.

The effective tax rate differs from the Luxembourg statutory tax rate due to tax rate differences on foreign earnings, increases in uncertain tax positions, state taxes, a decrease in unrecognized tax benefits, tax exempt income primarily from the sale of Pointillist (see Note 4) and a valuation allowance against deferred tax assets the Company believes it is more likely than not will not be realized

The Company’s income tax receivable related to such carryback was $ 5.1 million as of December 31, 2022.

The Company received the full receivable in the first quarter of 2023.

The effective tax rate differs from the Luxembourg statutory tax rate due to tax rate differences on foreign earnings, increases in uncertain tax positions, state taxes, a decrease in unrecognized tax benefits, tax exempt income primarily from the sale of Pointillist and a valuation allowance against deferred tax assets the Company believes it is more likely than not will not be realized

The following table reconciles the Luxembourg statutory tax rate to our effective tax rate for the years ended December 31:

2 unchanged sentences

State tax expense ( 0.33 ) ( 0.01 )

Tax credits — 0.36

Uncertain tax positions ( 2.98 ) ( 6.80 )

2 unchanged sentences

Provision to return

Loss on treasury shares

Other ( 0.54 ) ( 3.40 )

3 unchanged sentences

The Company has open tax years in the United States (2016 through 2022), India (2011 through 2023) and Luxembourg (2016 through 2022).

Under Luxembourg legal and regulatory requirements, the public offering of common stock and the share-based compensation are issued out of treasury shares.

The difference between the cost of the own shares when acquired and when reissued results in tax deductible losses on owned shares of $ 336.0 million and $ 7.9 million for the years ended December 31, 2023 and 2022, respectively.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

10 unchanged sentences

As of December 31, 2023 and 2022, the Company had recorded accrued interest and penalties related to unrecognized tax benefits of $ 8.9 million and $ 7.6 million, respectively.

NOTE 21 — (LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share is computed by dividing (loss) earnings available to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted (loss) earnings per share reflects the assumed conversion of all dilutive securities using the treasury stock method.

Diluted net (loss) earnings per share excludes all dilutive securities because their impact would be anti-dilutive, as described below.

Basic and diluted (loss) earnings per share are calculated as follows for the years ended December 31:

NOTE 21 — LOSS PER SHARE

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding for the period.

In accordance with ASC 260, penny warrants are included in the calculation of weighted average basic and diluted loss per share for the period that they are classified as equity.

For the twelve months ended December 31, 2023, 0.5 million penny warrants have been included in the calculation of weighted average basic and diluted loss per share.

Diluted net loss per share excludes all dilutive securities because their impact would be anti-dilutive, as described below.

Basic and diluted loss per share are calculated as follows for the years ended December 31:

(in thousands, except per share data) 2023 2022

Net (loss) income attributable to Altisource $ ( 53,418 ) $ 11,812

Net loss attributable to Altisource $ ( 56,290 ) $ ( 53,418 )

Weighted average common shares outstanding, basic 22,418 16,070

Dilutive effect of stock options, restricted shares and

restricted share units

Weighted average common shares outstanding, diluted 22,418 16,070

(Loss) earnings per share:

Loss per share:

Basic $ ( 2.51 ) $ ( 3.32 )

Diluted $ ( 2.51 ) $ ( 3.32 )

For the years ended December 31, 2022 and 2021, 1.3 million and 1.2 million, respectively, of stock options, restricted shares and restricted share units were excluded from the computation of (loss) earnings per share, as a result of the following:

• For the year ended December 31, 2022, 0.2 million stock options, restricted shares and restricted share units were anti-dilutive and have been excluded from the computation of diluted (loss) earnings per share as a result of the net (loss) income attributable to Altisource for the year ended December 31, 2022.

• For the years ended December 31, 2022 and 2021, 0.2 million and 0.3 million, respectively, of stock options were anti-dilutive and have been excluded from the computation of diluted (loss) earnings per share because their exercise price was greater than the average market price of our common stock.

• For the years ended December 31, 2022 and 2021, 0.9 million and 0.9 million, respectively, of stock options, restricted shares and restricted share units, which begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and a total shareholder return compared to the market benchmark that have not yet been met in each period have been excluded from the computation of diluted (loss) earnings per share.

For the years ended December 31, 2023 and 2022, 1.6 million and 1.3 million, respectively, stock options, restricted shares and restricted share units were excluded from the computation of loss per share, as a result of the following:

• For the year ended December 31, 2023, and 2022, 0.4 million and 0.2 million, respectively, stock options, restricted shares and restricted share units were anti-dilutive and have been excluded from the computation of diluted loss per share because the Company incurred a net loss

• For the years ended December 31, 2023 and 2022, 0.3 million and 0.2 million, respectively, stock options were anti-dilutive and have been excluded from the computation of diluted loss per share because their exercise price was greater than the average market price of our common stock.

• For the years ended December 31, 2023 and 2022, 0.9 million and 0.9 million, respectively, stock options, restricted shares and restricted share units, which begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and a total shareholder return compared to the market benchmark, that have not yet been met in each period have been excluded from the computation of diluted loss per share.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

NOTE 22 — COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

1 unchanged sentence

For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

We are currently involved in legal actions in the course of our business, some of which seek monetary damages.

We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows.

We are currently involved in legal actions in the course of our business, most of which seek monetary damages.

Although the outcome of these proceedings cannot be predicted with certainty, we currently believe that their outcome, both individually and in the aggregate, will not have a material impact on our financial condition, results of operations or cash flows.

Regulatory Matters

Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority.

Periodically, we are subject to audits, examinations and investigations by governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority.

We are currently responding to such inquiries from governmental authorities relating to certain aspects of our business.

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Additionally, 6 % of our revenue for the year ended December 31, 2023 was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the MSRs owner selected Altisource as the service provider.

Ocwen has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions and is subject to pending and threatened legal proceedings, some of which include claims against Ocwen for substantial monetary damages.

Previous regulatory actions against Ocwen have subjected Ocwen to independent oversight of its operations and placed certain restrictions on its ability to acquire servicing rights.

Ocwen has disclosed that it is subject to a number of ongoing regulatory examinations, consent orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions and is subject to pending and threatened legal proceedings, some of which include claims against Ocwen for substantial monetary damages.

Previous regulatory actions against Ocwen have subjected Ocwen to independent oversight of its operations and placed certain restrictions on its ability to acquire servicing rights or proceed with default-related actions on the loans it services.

Existing or future similar matters could result in adverse regulatory or other actions against Ocwen.

In addition to the above, Ocwen may become subject to future adverse regulatory or other actions.

Ocwen has disclosed that Rithm is its largest client.

As of December 31, 2022, approximately 17 % of loans serviced and subserviced by Ocwen (measured in UPB) were related to Rithm MSRs or rights to MSRs.

The existence or outcome of Ocwen regulatory matters or the termination of the Rithm sub-servicing agreement with Ocwen may have significant adverse effects on Ocwen’s business.

Ocwen has disclosed that Rithm is a significant client of Ocwen’s.

As of December 31, 2023, Ocwen reported that approximately 16 % of loans serviced and subserviced by Ocwen (measured in UPB) and approximately 67 % of all delinquent loans that Ocwen services were related to Rithm MSRs or rights to MSRs.

The existence or outcome of Ocwen regulatory matters or the termination of Ocwen’s sub-servicing agreements with Rithm, or other significant Ocwen clients may have significant adverse effects on Ocwen’s business.

For example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services, it may be required to seek changes to its existing pricing structure with us, it may lose its non-government-sponsored enterprise (“GSE”) servicing rights or subservicing arrangements or may lose one or more of its state servicing or origination licenses.

Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Ocwen’s business that could require it to sell assets or change its business operations.

Any or all of these effects and others could result in our eventual loss of Ocwen as a customer or a reduction in the number and/or volume of services they purchase from us or the loss of other customers.

Any or all of these effects and others could result in our eventual loss of Ocwen as a customer or a reduction in the number and/or volume of services it purchases from us or the loss of other customers.

If any of the following events occurred, Altisource’s revenue could be significantly reduced and our results of operations could be materially adversely affected, including from the possible impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable:

• Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us

• Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services it purchases from us

• Ocwen loses, sells or transfers a significant portion of its GSE or Federal Housing Administration servicing rights or subservicing arrangements or remaining other servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider

1 unchanged sentence

• Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio

• The contractual relationship between Ocwen and Altisource changes significantly or there are significant changes to our pricing to Ocwen for services from which we generate material revenue

• Altisource otherwise fails to be retained as a service provider

Management cannot predict whether any of these events will occur or the amount of any impact they may have on Altisource.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

• Ocwen is subject to stays, moratoriums, suspensions or other restrictions that limit or delay default-related actions on the loans it services

• The contractual relationship between Ocwen and Altisource changes significantly or there are significant changes to our pricing to Ocwen for services from which we generate material revenue

• Altisource otherwise fails to be retained as a service provider.

The foregoing list is not intended to be exhaustive.

Management cannot predict whether any of these events or other events will occur or the amount of any impact they may have on Altisource.

We lease certain premises and equipment, primarily consisting of office space and information technology equipment.

6 unchanged sentences

Our leases generally have expected lease terms at adoption of one to six years .

Information about our lease terms and our discount rate assumption was as follows as of December 31:

Information about our lease terms and our discount rate assumption were as follows as of December 31:

Weighted average remaining lease term (in years) 2.27 2.99

15 unchanged sentences

We hold customers’ assets in escrow accounts at various financial institutions pending completion of certain real estate activities.

These amounts are held in escrow accounts for limited periods of time and are not included in the consolidated balance sheets.

Amounts held in escrow accounts were $ 13.2 million and $ 27.5 million as of December 31, 2022 and 2021, respectively.

These amounts are held in escrow accounts for limited periods of time and are not included in the accompanying

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

consolidated balance sheets.

Amounts held in escrow accounts were $ 21.6 million and $ 13.2 million as of December 31, 2023 and 2022, respectively.

NOTE 23 — SEGMENT REPORTING

Our business segments are based upon our organizational structure, which focuses primarily on the services offered, and are consistent with the internal reporting used by our Chief Executive Officer (our chief operating decision maker) to evaluate operating performance and to assess the allocation of our resources.

Effective January 1, 2022, our reportable segments changed as a result of a change in the way our Chief Executive Officer (our chief operating decision maker) manages our businesses, allocates resources and evaluates performance, and the related changes in our internal organization.

We now report our operations through two reportable segments:

We conduct our operations through two reportable segments:

Servicer and Real Estate and Origination .

In addition, we report Corporate and Others separately.

Prior to the January 1, 2022 change in reportable segments, the Company operated with one reportable segment (total Company).

Prior year comparable period segment disclosures have been restated to conform to the current year presentation.

The Servicer and Real Estate segment provides loan servicers and real estate investors with solutions and technologies that span the mortgage and real estate lifecycle.

The Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle.

Corporate and Others includes Pointillist (sold on December 1, 2021), interest expense and costs related to corporate functions including executive, infrastructure and certain technology groups, finance, law, compliance, human resources, vendor management, facilities, risk management, as well as eliminations between reportable segments.

Descriptions of our principal revenue generating activities are as follows:

Servicer and Real Estate

• For property preservation and inspection services and payment management technologies, we recognize transactional revenue when the service is provided.

• For vendor management transactions, we recognize revenue over the period during which we perform the services.

• For loan disbursement review services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements.

We use judgment to determine the period over which we recognize revenue for certain of these services.

• For the real estate auction platform, real estate auction and real estate brokerage services, we recognize revenue on a net basis (i.e., the commission on the sale) as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount.

• For SaaS based technology to manage REO, we recognize revenue over the estimated average number of months the REO are on the platform or ratably over the contract period.

We generally recognize revenue for professional services as services are provided.

• For loan servicing technologies, we recognized revenue based on the number of loans on the system.

We generally recognize revenue from professional services over the contract period.

These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationships are with us, rather than with our customers.

• For the majority of the services we provide, we recognize transactional revenue when the service is provided.

We recognize membership fees from Lender One members ratably over the term of membership.

• For vendor management oversight software-as-a-service (“SaaS”), we recognize revenue over the period during which we perform the services.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Corporate and Others

• For our customer journey analytics platform (sold on December 1, 2021), we recognized revenue primarily based on subscription fees.

We recognized revenue associated with implementation services and maintenance services ratably over the contract term.

During the years ended December 31, 2022 and 2021, Ocwen was our largest customer.

Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows:

Servicer and Real Estate 53 % 49 %

Origination — % — %

Corporate and Others — % — %

Consolidated revenue 41 % 31 %

Disaggregation of Revenue

Disaggregation of total revenues by segment and major source was as follows for the years ended December 31:

(in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue

Servicer and Real Estate $ 101,716 $ 10,416 $ 7,529 $ 119,661

Originations 32,915 34 510 33,459

For the year ended December 31, 2022 $ 134,631 $ 10,450 $ 8,039 $ 153,120

(in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue

Servicer and Real Estate $ 98,610 $ 9,180 $ 5,846 $ 113,636

Originations 59,245 42 709 59,996

Corporate and Others — 4,821 — 4,821

For the year ended December 31, 2021 $ 157,855 $ 14,043 $ 6,555 $ 178,453

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Corporate and Others includes interest expense and costs related to corporate functions including executive, infrastructure and certain technology groups, finance, law, compliance, human resources, vendor management, facilities, risk management, and eliminations between reportable segments.

Financial Information

6 unchanged sentences

Selling, general and administrative expenses 9,622 7,693 29,105 46,420

Loss on sale of businesses — — 242 242

Income (loss) from operations 32,099 ( 6,040 ) ( 42,827 ) ( 16,768 )

1 unchanged sentence

Income (loss) before income taxes and non-controlling interests $ 32,099 $ ( 6,040 ) $ ( 78,407 ) $ ( 52,348 )

$ 26,460 $ ( 7,418 ) $ ( 66,609 ) $ ( 47,567 )

For the year ended December 31, 2022

4 unchanged sentences

Selling, general and administrative expenses 12,057 8,825 33,873 54,755

Gain on sale of businesses — — ( 88,930 ) ( 88,930 )

Income from operations 13,652 5,282 10,034 28,968

Gain on sale of business

Income (loss) from operations 26,456 ( 7,418 ) ( 52,220 ) ( 33,182 )

Total other income (expense), net 4 — ( 14,389 ) ( 14,385 )

Income (loss) before income taxes and non-controlling interests $ 26,460 $ ( 7,418 ) $ ( 66,609 ) $ ( 47,567 )

$ 13,660 $ 5,282 $ ( 3,657 ) $ 15,285

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Total assets for our segments are as follows:

3 unchanged sentences

December 31, 2022 63,696 53,984 77,588 195,268

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Changes in goodwill during the years ended December 31, 2022 and 2021 are summarized below:

(in thousands) Servicer and Real Estate Origination Corporate and Others Total

Balance as of January 1, 2021 $ 30,681 $ 25,279 $ 17,889 $ 73,849

Write-off (1)

— — ( 17,889 ) ( 17,889 )

Balance as of December 31, 2021 and 2022

$ 30,681 $ 25,279 $ — $ 55,960

______________________________________

(1) During 2021, the Company sold its equity interest in Pointillist (See Note 4 for additional information) which had $ 17.9 million of goodwill attributed to it.

The amount of goodwill attributable to Pointillist was based on the relative fair values of Pointillist and the Company excluding Pointillist.

Pointillist was determined to be a business within the Company’s existing reporting unit.

We determined that each reportable segment represents a reporting unit.

Goodwill was allocated to each reporting unit based on the relative fair value of each of our reporting units.

NOTE 24 — SUBSEQUENT EVENTS

Public offering of Common Stock

On February 14, 2023, Altisource closed on an underwritten public offering to sell 4,550,000 shares of its common stock, at a price of $ 5.00 per share, generating net proceeds of approximately $ 21 million, after deducting the underwriting discounts and commissions and other offering expenses.

On February 22, 2023, Altisource used $ 20 million of the net proceeds of the offering to repay its term loans.

Term Loan Amendment

Altisource Portfolio Solutions S.A.

and its wholly-owned subsidiary, Altisource S.a.r.l., executed Amendment No.

2 (the “Second Amendment”) to the Credit Agreement effective February 14, 2023 (as amended by the Second Amendment, the “Amended Credit Agreement”).

The following is a summary of certain key terms of the Second Amendment and the Amended Credit Agreement.

• The maturity date of the term loans under the Amended Credit Agreement is April 30, 2025

• If the amount of par paydown that the Company makes on the term loans (excluding amortization and other required payments) in the aggregate using proceeds of junior capital raises (the “Par Paydown”) prior to February 14, 2024 (the “Paydown Measurement Date”) is equal to or greater than $ 30 million, then (subject to the representations and warranties being true and correct as of such date and there being no default or event of default being in existence as of such date) the maturity date of the term loans will be extended to April 30, 2026.

Such extension is conditioned upon the Company’s payment of a 2 % payment-in-kind extension fee

• The principal amortization of the term loans under the Amended Credit Agreement is 1.00 % per year through April 30, 2025 and, if applicable, 12 % per year for the year ended April 30, 2026

• The interest rate on the term loans will initially be Secured Overnight Financing Rate (“SOFR”) plus 5.00 % per annum payable in cash plus 5.00 % per annum payable in kind (“PIK”).

The PIK component of the interest rate will be subject to adjustment based on the amount of Par Paydown prior to the Paydown Measurement Date as set forth in the table below:

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Consolidated Financial Statements ( Continued )

Par Paydown PIK Component of Interest Rate

Less than $20 million 5.00 %

$20 million+ but less than below 4.50 %

$30 million+ but less than below 3.75 %

$40 million+ but less than below 3.50 %

$45 million+ but less than below 3.00 %

$50 million+ but less than below 2.50 %

$55 million+ but less than below 2.00 %

$60 million+ but less than below 1.00 %

$65 million+ but less than below 0.50 %

$70 million+ 0.00 %

• If, as of the end of any calendar quarter, (i) the amount of unencumbered cash and cash equivalents of Altisource S.à r.l.

• The lenders under the Amended Credit Agreement received warrants (the “Warrants”) to purchase 3,223,851 shares of Altisource common stock (the “Warrant Shares”).

The number of Warrant Shares is subject to reduction based on the amount of Par Paydown by the Paydown Measurement Date as set forth in the table below.

Par Paydown Warrant Shares

Less than $20 million 3,223,851

$20 million+ but less than below 2,578,743

$30 million+ 1,612,705

• The exercise price per share of common stock under each Warrant is equal to $ 0.01 .

The Warrants may be exercised at any time on and after the Paydown Measurement Date and prior to their expiration date.

The Warrants are exercisable on a cashless basis and will be subject to customary anti-dilution provisions.

The Warrants, if not previously exercised or terminated, will be automatically exercised on May 22, 2027.

The Warrants are subject to a lock-up agreement, subject to customary exceptions, ending two business days after the Paydown Measurement Date

• The lenders under the Amended Credit Agreement were paid an amendment fee equal to 1.0 %, substantially all of which was paid in cash at closing

• Various of the affirmative and negative covenants, mandatory prepayments, events of default and other terms to which the Company is subject under the Amended Credit Agreement have been modified including in many cases to be more restrictive or to reduce certain permissions previously available to the Company.

Revolver Amendment

The Company entered into Amendment No.

1 (the “First Revolver Amendment”) to the Revolver effective February 14, 2023.

The First Revolver Amendment establishes the credit available under the Revolver at $ 15 million, extends the facility termination and maturity date to coincide with the maturity date of the term loans under the Amended Credit Agreement, and increases the interest rate under the Revolver to 10 % per annum payable in cash and 3 % per annum PIK.

A usage fee of $ 750,000 will be payable upon the initial drawing under the Revolver following the effectiveness of the First Revolver Amendment.

The Revolver is secured by a first-priority lien on substantially all of the assets of the Company, which lien will be pari passu with liens securing the term loans under the Amended Credit Agreement, and the Revolver will continue to be guaranteed by Altisource and substantially all of the material subsidiaries of the Borrower.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data