As of December 31, 2014 and 2013, we had approximately $51.2 million and $43.2 million, respectively, in combined available cash and available borrowing base surplus capacity under our revolving credit facility for the purpose of purchasing additional life insurance policies, paying premiums on existing policies, paying portfolio servicing expenses, and paying principal and interest on our outstanding financing obligations.
(6) We must maintain a total adjusted non-GAAP tangible net worth of $15 million to maintain compliance with our revolving credit facility with DZ Bank/Autobahn.
(5) Calculated as the weighted average expected IRR (1) minus the weighted average interest rate on indebtedness for borrowed money (4).
Life settlements - ASC 325-30, Investments in Insurance Contracts, allows a reporting entity the election to account for its investments in life settlements using either the investment method or the fair value method. The election shall be made on an instrument-by-instrument basis and is irrevocable. Under the investment method, an investor shall recognize the initial investment at the purchase price plus all initial direct costs. Continuing costs (policy premiums and direct external costs, if any) to keep the policy in force shall be capitalized. Under the fair value method, an investor shall recognize the initial investment at the purchase price. In subsequent periods, the investor shall re- measure the investment at fair value in its entirety at each reporting period and shall recognize the change in fair value in current period income net of premiums paid. The Company uses the fair value method to account for all life settlements.
Earnings (loss) per share - Basic per share earnings (loss) attributable to non-redeemable interests is calculated using the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated based on the potential dilutive impact, if any, of the Company’s convertible preferred stock, and outstanding warrants, and stock options. Due to the net loss reported for the years ended December 31, 2014 and 2013, all preferred stock, stock options and warrants are anti-dilutive.
Future contractual maturities of L Bonds and future amortization of their deferred financing costs at December 31, 2014 are as follows:
At December 31, 2014 and 2013, the Company had federal net operating loss (NOL) carryforwards of $11,163,000 and $4,182,000, respectively, and aggregate state NOL carryforwards of approximately $7,334,000 and $2,748,000, respectively. The NOL carryforwards will begin to expire in 2031. Future utilization of NOL carryforwards is subject to limitations under Section 382 of the Internal Revenue Code. This section generally relates to a more than 50 percent change in ownership over a three-year period. We currently do not believe that any issuance of common stock has resulted in an ownership change under Section 382.
On July 11, 2011, GWG entered into a Purchase and Sale Agreement with Athena Securities Group, Ltd. and Athena Structured Funds PLC. Under this agreement, GWG issued to Athena Securities Group, Ltd. (Athena) 494,500 shares of common stock, which was equal to 9.9% of GWG’s outstanding shares, in exchange for shares equal to 9.9% of the outstanding shares in Athena Structured Funds, PLC and cash of $5,000. This 2011 agreement had contemplated cooperative efforts by the parties aimed at developing a security and related offering in Europe or Ireland, the proceeds of which would be used to finance the acquisition of life-insurance related assets in the United States. In 2013, GWG sought to terminate the 2011 agreement due to a changing regulatory environment in Europe that negatively affected the likelihood of consummating the contemplated offering of securities, and the Company’s dissatisfaction with Athena’s performance under the 2011 agreement. As a result, in June 2013 GWG entered into a second Purchase and Sale Agreement with Athena Securities Ltd. and Athena. This agreement effected the termination of the 2011 agreement. The June 2013 agreement contained mutual general releases of claims and substantially unwound certain capital stock transactions that had been effected under the 2011 agreement. In particular, Athena returned to GWG for redemption 432,500 shares of the Company’s common stock, and retained 62,000 common shares in recognition of their earlier efforts under the 2011 agreement. For GWG’s part, the Company sold back to Athena all of its ownership in Athena Structured Funds, PLC that it had originally acquired under the 2011 agreement. Presently, GWG has no ongoing business relationship with Athena.
The Company entered into an office lease with U.S. Bank National Association as the landlord. The lease was effective April 22, 2012 with a term through August 31, 2015. The lease is for 11,695 square feet of office space located at 220 South Sixth Street, Minneapolis, Minnesota. The Company is obligated to pay base rent plus common area maintenance and a share of the building operating costs. Rent expenses under this agreement were $211,000 and $200,000 during 2014 and 2013, respectively. The minimum lease payments for 2015 under the lease agreement are $70,000.