Document

Filed Pursuant to Rule 424(b)(1)
Registration No. 333-279347
Prospectus
10,000,000 Shares
https://cdn.kscope.io/cc7c7f19580c73070df38ea8babffedd-abacuslifelogo.jpg
Common Stock
This is an offering of common stock by Abacus Life, Inc. (the “Company”). We are offering 10,000,000 shares of the Company’s common stock. You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities.
Our common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “ABL.” The last reported sale price of our common stock on June 20, 2024, was $9.76.
Per ShareTotal
Public offering price$8.00 $80,000,000 
Underwriting discounts and commissions(1)
$0.48 $4,800,000 
Proceeds, before expenses to us$7.52 $75,200,000 
__________________
(1)See the section titled “Underwriting” for a description of the compensation payable to the underwriters.
We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional 1,500,000 shares of our common stock from us at the public offering price, less the underwriting discounts and commissions.
Investing in our shares of common stock involves risks. See “Risk Factors” beginning on page 8.
Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about June 24, 2024.
Piper SandlerTD SecuritiesB. Riley SecuritiesKKR
June 20, 2024



TABLE OF CONTENTS
Prospectus
Neither we nor the underwriters have authorized any other person to provide you with any information other than that contained or incorporated by reference in this prospectus. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may give you.
We are not, and the underwriters are not, making an offer to sell the shares of common stock in any jurisdiction where the offer or sale is not permitted. This prospectus does not constitute an offer of, or an invitation on our behalf or on behalf of the underwriters to subscribe for and purchase, any securities, and this prospectus may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. You should assume that the information contained in this prospectus is accurate only as of the date on the front of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
i

Table of Contents
INFORMATION ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 (File No. 333-279347). As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement. For further information, we refer you to the registration statement, including its exhibits. Statements contained in this prospectus about the provisions or contents of any agreement or other document are not necessarily complete. If the SEC’s rules and regulations require that an agreement or document be filed as an exhibit to the registration statement, please see that agreement or document for a complete description of these matters.
You should read this prospectus together with any additional information you may need to make your investment decision. You should also read and carefully consider the information in the documents we have referred you to in “Where You Can Find Additional Information” below. Neither we nor the underwriters have authorized any other person to provide you with any information other than that contained in this prospectus. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may give you.
References in this prospectus to “Abacus,” “the Company,” “we,” “us,” and “our” refer to Abacus Life, Inc. (formerly known as East Resources Acquisition Company) and not to any of its consolidated subsidiaries, unless otherwise specified or as the context otherwise requires.
ii

Table of Contents
INDUSTRY AND MARKET DATA
The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. Some data is also based on our good-faith estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any third-party publications or our good-faith estimates.
iii

Table of Contents
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believe(s),” “estimate(s),” “expect(s),” “predict(s),” “project(s),” “forecast(s),” “may,” “might,” “will,” “could,” “should,” “would,” “seek(s),” “plan(s),” “scheduled,” “possible,” “continue,” “potential,” “anticipate(s)” or “intend(s)” or similar expressions; provided that the absence of these does not means that a statement is not forward-looking. Forward-looking statements contained in this prospectus include, but are not limited to, statements about the ability of the Company to:
realize the benefits expected from the business combination and related transactions consummated by the Company on June 30, 2023 (the “Business Combination”);
maintain the listing of the Company on a securities exchange;
achieve projections and anticipate uncertainties relating to the business, operations and financial performance of the Company, including:
expectations with respect to financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder;
expectations regarding product development and pipeline;
expectations regarding market size;
expectations regarding the competitive landscape;
expectations regarding future acquisitions, partnerships or other relationships with third parties; and
future capital requirements and sources and uses of cash, including the ability to obtain additional capital in the future.
develop, design and sell services that are differentiated from those of competitors;
retain and hire necessary employees;
attract, train and retain effective officers, key employees or directors;
enhance future operating and financial results;
comply with laws and regulations applicable to its business;
stay abreast of modified or new laws and regulations applying to its business, including privacy regulations;
anticipate the impact of, and response to, new accounting standards;
anticipate the significance and timing of contractual obligations; and
maintain key strategic relationships with partners and customers.
iv

Table of Contents
SUMMARY
This summary highlights selected information included in this prospectus and does not contain all of the information that may be important to you. You should read the entire prospectus and the other documents to which we refer before you decide to invest.
Our Mission
The Company’s mission is to educate all life insurance policy owners that their life insurance policy is personal property and to educate investors about alternatives to traditional investments using lifespan-based products as a core strategy.
Abacus Overview
Abacus is a leading vertically integrated alternative asset manager and market maker specializing in longevity and actuarial technology and investing in in-force life insurance products throughout the lifecycle of a life insurance policy. The Company is democratizing the life insurance space through groundbreaking new channels: ABL Tech, ABL Wealth and ABL Longevity Growth and Income Funds.
Traditionally, life insurance policies are owned by individuals to insure their lives. Consistent with our mission, we educate policyholders regarding the potential to sell their policies to investors, often at a significant premium to the current cash surrender value. As an alternative asset manager since 2004, we purchase life insurance policies from consumers seeking liquidity and actively manage these policies over time via trading, holding and/or servicing. To date, we have purchased over $5 billion in face value of policies and have helped thousands of clients maximize the value of their life insurance.
Over the past 20 years, the Company has built an institutionalized origination and portfolio management process that is supported by a 100+ person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company complies with applicable privacy laws to maintain and protect the confidentiality of financial, health and medical information. Abacus is also proud to be a Better Business Bureau Accredited Business with an A+ rating.
As one of the leading buyers of life insurance policies in the United States for the last 18 years, we sit at the heart of the life settlements industry. We leverage our strong market position, highly efficient origination platform and proprietary technology to drive our revenue and profitability. The Company and its executive team have deep experience in the life settlement industry. Using this experience, the Company has established policies and guidelines with respect to its purchase of universal life, whole life and convertible term life insurance policies. These guidelines focus on the age and health of the insured, whether the insured is a man or a woman, the duration of the underlying life insurance policy, the expected mortality risk and face value of the underlying life insurance policy, the projected internal rate of return of the investment in the underlying life insurance policy after taking into account the cost of making continued premium payments, and the ultimate amount and timing of the death benefit of the underlying life insurance policy. The Company excludes making investments in life insurance policies based on certain types of the primary health impairment associated with the underlying insured to ensure that all policies are purchased in accordance with established industry standards and state law requirements. The Company’s guidelines are designed to allow the Company to target the life insurance policies that it believes have the most upside potential to generate attractive risk-adjusted returns to the Company through either its hold or trade portfolio. Currently, the Company principally invests in non-variable universal life insurance policies and retains the discretion to invest in whole life or convertible term life insurance policies.
Origination
Our proven policy origination process first locates policies and screens them for eligibility for a life settlement. This process includes verifying that the policy is in force, obtaining consents and disclosures and submitting cases for life expectancy estimates, which is a process known as origination services. We generate fees on the policies we originate, which we source from three channels: (i) a large and growing network of financial advisors and agents, (ii)
1

Table of Contents
an ongoing direct-to-consumer marketing campaign and (iii) a number of traditional life settlements intermediaries that submit policies to us on behalf of a financial advisor, agent or other client.
Portfolio Management
Once identified, we utilize our proprietary “heat-map” technology platform to determine the initial risk and viability of policies. Thereafter, a purchased policy is “actively managed,” whereby we consistently monitor the policy risk to optimize revenue by choosing to either (i) trade the policy to a third-party institutional investor (i.e., receive a trade spread) or (ii) hold the policy over time (i.e., pay premiums and receive a payout). Additionally, we service policies on behalf of third parties for which we receive fees as a percentage of the values of the policies. Our multifaceted and dynamic revenue model is made possible by the fact that we sit at the heart of the entire life settlements industry.
Our revenue generation platform and economic model is best summarized below:
(1)Origination Fees (paid as a percentage of face value of acquired policies)
(2)Active Management (spreads for traded policies and realized returns for held policies)
(3)Third-Party Portfolio Servicing (paid as a percentage of total asset value)
We are currently a leader in the life settlements industry. The Company has approximately a 20% market share based on our 2022 capital invested/total industry capital invested and data compiled in a 2022 report by The Deal and Life Settlements Report, a U.S. life settlements industry news source. Data for the report was aggregated from each state based on 2022 annual reporting. We have a proven track record of growth and strong asset returns. We are currently operational in 49 states, which is a key differentiator in an industry with high barriers to entry given the significant regulatory requirements. Our business is supported by in excess of 100 employees and an innovative leadership team, with an average of over 20 years of experience in the industry.
Our outstanding operations and execution team are led by a seasoned management team. Jay Jackson (our CEO) has worked in the investment industry for over 25 years (including at a family office, major investment firms and alternative asset managers) and pioneered the origination process and trading platform for our firm. William McCauley (our CFO) has over 20 years of experience and has held Senior Finance positions for some of the largest insurance carriers (including Transamerica, MassMutual and John Hancock). In addition, we have three Managing Partners (Todd “Sean” McNealy, Kevin “Scott” Kirby and Matthew Ganovsky) who co-founded Abacus in 2004 and helped build the institutional and broker market for the entire industry. In summary, our leaders are innovators who have directly contributed to the development of the broader life settlements industry.
The Company, a Delaware corporation, was formed in 2004. We operate through our two principal subsidiaries, Abacus Settlements, LLC (“Abacus Settlements”), which was formed as a New York limited liability company in 2004, and Longevity Market Assets, LLC (“LMA”), which was formed in 2017 as a Florida limited liability company. In 2016, Abacus Settlements became licensed in Florida as a life settlement broker and converted into a Florida limited liability company. After the Business Combination, Abacus Settlements and LMA converted into Delaware limited liability companies. We are not an insurance company, are not licensed or regulated as an insurance company and therefore do not underwrite insurable risks for our own account.
2

Table of Contents
Summary of Historical Financial Data for Abacus Life, Inc.
The summary of historical statements of income data of the Company for the fiscal years ended December 31, 2023 and December 31, 2022 and the historical balance sheet data as of December 31, 2023 and December 31, 2022 are derived from Abacus’s audited financial statements included elsewhere in this prospectus. The summary of historical statements of income data of the Company for the three months ended March 31, 2024 and March 31, 2023 and the historical balance sheet data as of March 31, 2024 are derived from the Company’s unaudited financial statements included elsewhere in this prospectus.
Abacus’s historical results are not necessarily indicative of the results that may be expected in the future. The information below is only a summary and should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this prospectus.
As of and for the three months ended
March 31, 2024
As of and for the three months ended
March 31, 2023(1)
As of and for the year ended December 31, 2023
As of and for the year ended December 31, 2022
Statement of Income Data:
Total revenues
$21,487,184 $10,273,389 $66,401,451 $44,713,552 
Total cost of revenues
2,720,897 489,550 6,490,377 5,884,669 
Gross profit
18,766,287 9,783,839 59,911,074 38,828,883 
Operating Expenses
Sales and marketing
1,929,944 729,004 4,905,747 2,596,140 
General and administrative (including stock-based compensation)
11,353,499 696,892 26,482,571 1,426,865 
Loss on change in fair value of debt
2,712,627 953,433 2,356,058 90,719 
Unrealized loss (gain) on investments
(1,164,966)(125,220)(1,369,112)1,045,623 
Depreciation and amortization expense
1,682,054 1,043 3,409,928 4,282 
Operating Income
2,253,129 7,528,687 24,125,882 33,665,254 
Other income (expense)
(53,028)(210,432)(146,443)(347,013)
Interest expense(3,670,445)(357,383)(9,866,821)(42,798)
Interest income
421,426 7,457 594,764 1,474 
Gain/Loss on change in fair value of warrant liability
946,960 — (4,204,360)— 
Total other income (expense)
(2,355,087)(560,358)(13,622,860)(388,337)
Net (loss) income before provision for income taxes
(101,958)6,968,329 10,503,022 33,276,917 
Income tax expense (benefit)1,173,513 (656,467)1,468,535 889,943 
Net (loss) income
(1,275,471)7,624,796 9,034,487 32,386,974 
Less: Net Income (Loss) attributable to Noncontrolling Interest
73,274 (460,707)(482,139)704,699 
Net income attributable to common stockholders
$(1,348,745)$8,085,503 $9,516,626 $31,682,275 
(Loss) earnings per share
(Loss) earnings per share-basic$(0.02)$0.16 $0.17 $0.63 
(Loss) earnings per share-diluted$(0.02)$0.16 $0.16 $0.63 
Balance Sheet Data:
Total assets
$376,719,400 $90,449,415 $331,826,067 $59,094,847 
Total liabilities
211,378,628 54,787,235 167,755,991 30,945,150 
Total stockholders’ equity
165,340,772 35,662,180 164,070,076 28,149,697 
3

Table of Contents
__________________
(1)The balance sheet data as of and for the three months ended March 31, 2023 are balances of Longevity Market Assets, LLC.
Summary of Historical Financial Data for Abacus Settlements
The summary historical statements of income data of Abacus Settlements for the six months ended June 30, 2023 and the year ended December 31, 2022 are derived from Abacus Settlements’ audited financial statements included elsewhere in this prospectus. The summary historical statements of income data of Abacus Settlements for the three months ended March 31, 2023 are derived from Abacus Settlements’ unaudited financial statements included elsewhere in this prospectus.
Abacus Settlements’ historical results are not necessarily indicative of the results that may be expected in the future. The information below is only a summary and should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this prospectus.
As of and for the three months ended March 31, 2023
As of and for the sixth months ended June 30, 2023
As of and for the year ended December 31, 2022
Statement of Income Data: 
Total revenue
$6,299,986 $13,184,676 $25,203,463 
Cost of revenue
1,229,616 2,734,949 5,538,470 
Related party cost of revenue
3,165,707 6,558,354 11,022,535 
Gross profit
1,904,663 3,891,373 8,642,458 
Total operating expenses
2,554,039 4,854,177 8,686,590 
Loss from operations
(649,376)(962,804)(44,132)
Other (expense) income
Interest income
724 1,917 2,199 
Interest (expense)
(5,862)(11,725)(8,817)
Other income
— — 273 
Total other (expense)
(5,138)(9,808)(6,345)
Loss before income taxes
(654,514)(972,612)(50,477)
Provision for Income taxes
2,289 2,289 2,018 
Net loss and comprehensive loss
$(656,803)$(974,901)$(52,495)
4

Table of Contents
RISK FACTORS SUMMARY
Below is a summary of principal risks to our business and risks associated with ownership of our stock. It is only a summary. You should read the more detailed discussion of risks set forth below and elsewhere in this prospectus for a more complete discussion of the risks listed below and other risks.
The Company’s valuation of life insurance policies is uncertain as many life insurance policies’ values are tied to their actual maturity date and any erroneous valuations could have a material adverse impact on the Company’s business.
The Company could fail to accurately forecast life expectancies. There may also be changes to life expectancies generally, resulting in people living longer in the future, which could result in a lower return on the Company’s life settlement policies.
The Company’s policy acquisitions are limited by the market availability of life insurance policies that meet the Company’s eligibility criteria and purchase parameters, and failure to secure a sufficient number of quality life insurance policies could have a material adverse effect on the Company’s business.
The Company may experience increased competition from originating life insurance companies, life insurance brokers, and investment funds which could have a material adverse effect on the Company’s business.
The Company’s revenue is concentrated in a limited number of customers, some of which are related parties, and the Company’s revenue, results of operations, cash flows, and reputation may suffer upon the loss of a significant customer.
Historically, there has been a negative public perception of the life settlement industry that could affect the value and/or liquidity of the Company’s investments, and the life settlement industry faces political opposition from life insurance companies which could have a material adverse effect on the Company’s business.
There is a risk of fraud in the origination of the original life insurance policy or in subsequent sales of the life insurance policy that could adversely affect the Company’s returns, which could have a material adverse impact on the Company’s business.
The Company may become subject to claims by life insurance companies, individuals and their families, or regulatory authorities, which could have a material adverse impact on the Company’s business.
Life settlements in which we invest are not currently regulated under federal securities laws, but if deemed to be securities would require further compliance with federal and state securities laws, which could result in significant additional regulatory burdens on the Company and limit the Company’s investments, which could have an adverse impact on the Company’s business and results of operations.
The Company faces privacy and cybersecurity risks related to its maintenance of proprietary information, including information regarding life settlement policies and the related insureds, and any adverse impact related to such risks could have a material adverse impact on the Company’s business.
The Company is subject to U.S. privacy laws and regulations. Failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
There have been lawsuits in various states questioning whether a purchaser of a life insurance policy has the requisite “insurable interest” in the policy that would permit the purchaser to collect the insurance benefits, and an adverse finding in any of these lawsuits could have a material adverse effect on the Company’s business.
5

Table of Contents
The failure of the Company to accurately and timely track and pay premium payments on the life insurance policies it holds could result in the lapse of such policies, which would have a material adverse impact on the Company’s business.
The originating life insurance company may increase the cost of insurance premiums, which would adversely affect the Company’s returns.
The Company may not be able to liquidate its life insurance policies which could have a material adverse effect on the Company’s business.
The Company assumes the credit risk associated with life insurance companies and may not be able to realize the full value of insurance company payouts, which could have a material adverse effect on the Company’s profits.
The Company’s success is dependent upon the services of its experienced management and talented employees. If the Company is unable to retain management and/or key employees, its ability to compete could be harmed.
The Company’s intellectual property rights may not adequately protect the Company’s business.
The Company may become subject to intellectual property disputes, which are costly and may subject the Company to significant liability and increased costs of doing business.
In the past, we have identified material weaknesses in our internal control over financial reporting that existed as of December 31, 2022, which were remediated as of December 31, 2023. 
If we do not develop and implement all required accounting practices and policies, we may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner.
Our management has limited experience in operating a public company.
Our indebtedness may restrict our operations.
If we are unable to comply with our debt agreements, or to raise additional capital when needed, our business, cash flow, liquidity and results of operations could be harmed.
We may incur substantially more debt, which could exacerbate further the risks associated with our leverage.
6

Table of Contents
THE OFFERING
The following is a brief summary of certain terms of this offering. For a more complete description of the terms of the securities, see “Description of Capital Stock” in this prospectus.
IssuerAbacus Life, Inc., a Delaware corporation.
Common stock offered by us
10,000,000 shares (or 11,500,000 shares if the underwriters exercise their option to purchase additional shares in full).
Common stock outstanding immediately after this offering73,984,567 shares (or 75,484,567 shares if the underwriters exercise their option to purchase additional shares in full).
Option to purchase additional shares of common stock
The Company has granted the underwriters the right to purchase an additional 1,500,000 shares of common stock within 30 days from the date of this prospectus.
Use of proceeds
The net proceeds from the offering will be approximately $74,200,000, after deducting discounts and commissions payable to the underwriters and estimated offering expenses payable by us. The Company intends to use these proceeds for our operations, including the purchase of life settlement policies, to support our overall business strategy, for working capital purposes and for general corporate purposes, which may include repayment and refinancing of our indebtedness. For further information, see “Use of Proceeds” in this prospectus.
Voting rightsOne vote per share.
Listing and trading symbolShares of our common stock trade on Nasdaq under the symbol “ABL.”
Risk factors
You should carefully read and consider the information set forth under the heading “Risk Factors” and all other information set forth.
7

Table of Contents
RISK FACTORS
You should carefully consider the risks and uncertainties described below and the other information in this prospectus before making an investment in our common stock. Our business, financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks occur, and as a result, the market price of our common stock could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below.
Risks Related to the Business of the Company
The Company’s valuation of life insurance policies is uncertain as many life insurance policies’ values are tied to their actual maturity date and any erroneous valuations could have a material adverse impact on the Company’s business.
The valuation of life insurance policies involves inherent uncertainty (including, without limitation, the life expectancies of insureds and future increases in premium costs to keep the policies in force). There is no guarantee that the value determined with respect to a particular life settlement policy by the Company will represent the value that will be realized by the Company on the eventual disposition of the related investment or that would, in fact, be realized upon an immediate disposition of the investment. In addition, there can be no guarantee that such valuation accurately reflects the current present value of such life insurance policy at its actual maturity. Uncertainties as to the valuation of life insurance policies held by the Company could require adjustments to reported net asset values and could have a material adverse impact on the Company’s business. Uncertainties as to the valuation may also result in the Company being less competitive in the market for originating new life settlement policies and could adversely affect the profits the Company realizes on life settlements purchased and sold.
The Company could fail to accurately forecast life expectancies. There may also be changes to life expectancies generally, resulting in people living longer in the future, which could result in a lower return on the Company’s life settlement policies.
Prices for life insurance policies and annuities that may be obtained by the Company depend, in large measure, upon the life expectancy of the underlying insureds. The returns of the Company’s hold portfolio is almost entirely dependent upon how accurate the actual longevity of an insured is as compared to the Company’s expectation for that insured. Life expectancies are estimates of the expected longevity or mortality of an insured. In determining the life expectancy of an insured, the Company relies on medical underwriting conducted by various medical underwriting firms. The medical underwriting process underlying life expectancy estimates is highly subjective, and mortality and longevity estimates are inherently uncertain. In addition, there can be no assurance that the applicable medical underwriting firm received accurate or complete information regarding the health of an insured under a life insurance policy or that such insured’s health has not changed since the information was received. Different medical underwriting firms use different methods and may arrive at materially different mortality estimates for the same individual based on the same information, thus causing a life insurance policy’s value to vary. Moreover, as methods of calculating mortality estimates change over time, a mortality estimate prepared by any medical underwriting firm in connection with the acquisition of a life insurance policy may be different from a mortality estimate prepared by the same person at a later time. The valuation of the life insurance policies will vary depending on the dates of the related mortality estimates and the medical underwriting firms that provide the supporting information.
Other factors, including, but not limited to, better access to health care, better adherence to treatment plans, improved nutritional habits, improved lifestyle, an improved economic environment and a higher standard of living, could also lead to increases in the longevity of the insureds under the life insurance policies. In addition to other factors affecting the accuracy of life expectancy estimates, improvements in medicine, disease treatment, pharmaceuticals and other medical and health services may enable insureds to live longer.
The actual longevity of an insured may be materially different than the predicted mortality estimate. If the actual maturity date of life insurance policies is longer than projected, it would delay when the Company could expect to receive a return on its investment, and the Company may be unable to meet its investment objectives and goals. For
8

Table of Contents
example, a term life insurance policy in which the Company may invest has a stated expiration date on the date at which the underlying insured reaches a certain attained age and, beyond such date, the issuing insurance company may not be obligated to pay the face value but rather only the cash surrender value which is usually maintained at a low value by investors, if any, in accordance with the terms of such life insurance policy. Therefore, if the underlying insured survives to the stated maturity date set forth in the terms of the life insurance policy, the issuing insurance company may only be obligated to pay an amount substantially less than the face value, which could have an adverse effect on the performance of the Company.
The medical underwriting and other firms that provide information for the Company’s forecasts of life expectancies are generally not regulated by the federal and state governments, with the exception of the states of Florida and Texas, both of which require life expectancy providers to register with their respective offices of insurance regulation. There can be no assurance that this business will not become more broadly regulated and, if so, that any such regulation would not have a material adverse effect on the ability of the Company to establish appropriate life expectancies in connection with the purchase or sale of policies.
The Company’s policy acquisitions are limited by the market availability of life insurance policies that meet the Company’s eligibility criteria and purchase parameters, and failure to secure a sufficient number of quality life insurance policies could have a material adverse effect on the Company’s business.
The life insurance policy secondary market continues to grow, but as to whether and how it will continue to develop is uncertain. There are only a limited number of life insurance policies available in the market from time to time. There can be no assurance that the Company will be able to source life insurance policies on terms acceptable to the Company. As more investment funds flow into the market for life insurance policies, margins may be squeezed, and the value of the collateral may become comparatively more expensive to purchase or subject to greater competition on the purchase side. There can be no assurance that secondary market life insurance policies will be available to the Company on satisfactory or competitive terms.
The supply of life insurance policies available in the market may be reduced by, among other things: (i) improvement in the economy, resulting in higher investment returns to insureds and other owners of life insurance policies from their investment portfolios; (ii) improvements in health insurance coverage, limiting the need of insureds to obtain funds to pay the cost of their medical treatment by selling their life insurance policies; (iii) the entry into the market of less reputable third-party brokers who submit inaccurate or false life insurance policy information to the Company; (iv) the establishment of new licensing requirements for market participants and a delay in complying or an inability to comply with such new requirements; or (v) refusal of the carrier that issued a life insurance policy to consent to its transfer. A change in the availability of life insurance policies could adversely affect the Company’s ability to execute its strategy and meet its objectives.
The Company may experience increased competition from originating life insurance companies, life insurance brokers and investment funds, which could have a material adverse effect on the Company’s business.
Life insurance companies have begun offering to repurchase their own in-force life insurance policies from their current policyholders by offering “enhanced cash surrender value payments” above the amount of the net cash surrender value provided under the life insurance contracts’ terms and thus compete directly with the Company and other life settlement providers. The life settlements industry has challenged the legal validity of the life insurance companies’ actions, and some state insurance regulators have declared that these repurchase offers are unlawful while other state insurance regulators have approved them. The Company has begun working with carriers in buying back their policies from institutional asset managers and collects as revenue a percent of the face value of the policies sold back to the carriers. However, to the extent that life insurance companies can seek to repurchase their own in-force life insurance policies, they present competition to the Company in acquiring policies.
In addition, the Company is subject to significant competition from other life settlement brokers and investment funds for the purchase of life settlement policies. Increased competition for life settlement policies may result in the Company being unable to access the number of life settlement policies that it desires for its business at prices that it deems acceptable.
9

Table of Contents
Our revenue is concentrated in a limited number of customers, some of which are related parties, and our revenue, results of operations, cash flows and reputation may suffer upon the loss of a significant customer.
We have derived, and may continue to derive, a significant portion of our revenue from a limited number of large customers. One financing entity, a company in which Abacus Settlements’ members own interests, represented 23% and 60% of Abacus Settlements’ revenues in six months ended June 30, 2023 and year ended December 31, 2022, respectively. Additionally, two brokers represented the sellers for over 10% of Abacus Settlements’ life settlement commission expense during the period six months ended June 30, 2023. For the year ended December 31, 2023, two related party customers accounted for 59% and 33% of the total balance of related party receivables, and three customers accounted for 49%, 14%, and 12%, of Active management revenue of the Company, respectively. The loss of any of these customers, or the loss of any other significant customer, would adversely affect our revenue, results of operations, cash flows and reputation in the marketplace. Our customer concentration also increases the concentration of our accounts receivable and our exposure to payment defaults by key customers, which could expose us to substantial and potentially unrecoverable costs if we do not receive payment from key customers. Given the materiality of purchases by these key customers, the discontinuation of these purchases could disrupt our ability to reinvest capital and adversely affect our liquidity unless substitute purchasers were found. Additionally, the loss of any significant customer could pose reputational harm to us and make it more challenging to acquire new customers.
Historically, there has been a negative public perception of the life settlement industry that could affect the value and/or liquidity of the Company’s investments, and the life settlement industry faces political opposition from life insurance companies which could have a material adverse effect on the Company’s business.
Many regulators, lawmakers and other governmental authorities, as well as many insurance companies and insurance industry organizations, are hostile to or otherwise concerned about certain aspects of the longevity- contingent asset markets. The life settlement industry and some of its participants have also been, and may continue to be, portrayed negatively in a number of widely read publications and other forms of media. These opponents regularly contend that life settlement transactions are contrary to public policy by promoting financial speculation on human life and often involve elements of fraud and other wrongdoing. High-profile cases of “Stranger-Originated Life Insurance” or “STOLI,” in which some insureds did commit fraud, have contributed to this negative perception in the public and undermined the confidence of investors in the secondary market. Continued public opposition to the life settlement industry, as well as actual or alleged wrongdoing by participants in the industry, could have a material adverse effect on the Company and its investors, including on the value and/or liquidity of the Company’s investments.
In March 2010, the American Council of Life Insurers, an insurance carrier trade association, issued a press release calling for a complete ban on life settlement securitization. While that effort was not successful, any such federal or state legislation, if passed, could have the effect of severely limiting or potentially prohibiting the continued operation of the Company’s life settlement purchasing operations. All of the foregoing could adversely affect the Company’s ability to execute its investment strategy and meet its investment objective.
The Company or third parties the Company relies upon could fail to accurately evaluate, acquire, maintain, track or collect on life settlement policies, which could have a material adverse impact on the Company’s revenues.
The Company relies on third-party data for tracking and servicing its life settlement policies. This includes the origination and servicing of life settlement policies by the servicing and tracking agent, market counterparties and other service providers, and the Company may not be in a position to verify the risks or reliability of such third-party data and systems. Failures in the systems employed by the Company and other service providers, counterparties, and other parties could result in mistakes made in the evaluation, acquisition, maintenance, tracking and collection of life settlement policies and other longevity-linked investments. This could result in the Company overpaying for life settlement policies it acquires or underpricing life settlement policies it sells. In addition, disruptions in the Company’s operations as a result of a failure in a third-party system may cause the Company to suffer, among other things, financial loss, the disruption of its business, liability to third parties, regulatory intervention or reputational damage. Any of the foregoing failures or disruptions could have a material adverse effect on the Company.
10

Table of Contents
There is a risk of fraud in the origination of the original life insurance policy or in subsequent sales of the life insurance policy that could adversely affect the Company’s returns, which could have a material adverse impact on the Company’s business.
The Company faces the risk that an original owner of a life insurance policy, the related insured, the insurance agent involved in the issuance of such life insurance policy or other party may have committed fraud by misstating or failing to provide material information in connection with the origination or subsequent sale of that life insurance policy. While most life insurance policies may not be challenged for fraud after the end of the two-year contestability period, there may be situations where such fraud in connection with the issuance of a life insurance policy may survive the contestability period. If an issuing insurance company successfully challenges a life insurance policy acquired by the Company on the grounds of fraud, the Company may lose its entire investment in that life insurance policy. Furthermore, if the age of an insured was misstated, the Company may receive lower death benefits than expected. In addition, there may be information directly relevant to the value of a life insurance policy, including, but not limited to, information relating to the insured’s medical or financial condition, to which the Company will not have access. It is not possible to verify the accuracy or completeness of each piece of information or the completeness of the overall information supplied by such parties. Any such misstatement or omission could cause the Company to rely on assumptions which turn out to be inaccurate. Additionally, there can be no assurance that the seller of a life insurance policy in the tertiary market properly acquired that policy from the former owner, or that a former beneficiary or other interested party will not attempt to challenge the validity of the transfer. The occurrence of any one or more of these factors could adversely affect the Company’s performance and returns.
The Company may become subject to claims by life insurance companies, individuals and their families or regulatory authorities, which could have a material adverse impact on the Company’s business.
The secondary market for life insurance policies has been subjected to allegations of fraud and misconduct as reflected in certain litigated cases. Some of these cases, some of which have been brought by regulatory authorities, involve allegations of fraud, breaches of fiduciary duty, bid rigging, nondisclosure of material facts and associated misconduct in life settlement transactions. Cases have also been brought by the life insurance companies that challenge the legality of the original issuance of the life insurance policies based on lack of insurable interest, fraud and misrepresentation grounds.
Further, both federal and state statutes safeguard an insured’s private health information. In addition, insureds frequently have an expectation of confidentiality even if they are not legally entitled to it. If the Company properly obtains and uses otherwise private health information but fails to maintain the confidentiality of such information, the Company may be the subject of complaints from the affected individuals, their families and relatives and, potentially, interested regulatory authorities. Because of the uncertainty of applicable laws, it is not possible to predict the outcome of those disputes. It is also possible that due to a misunderstanding regarding the scope of consents that a transaction party possesses, the Company may request and receive information from health care providers that the Company did not have a right to request or receive. If the Company finds itself to be the recipient of complaints for these acts, it is not possible to predict what the results will be. This uncertainty also increases the likelihood that a transaction party may sell, or cause to be sold, life insurance policies in violation of applicable law, which could potentially result in additional costs related to defending claims or enduring regulatory inquiries, rescinding such transactions, possible legal damages and penalties and probable reduced market value of the affected life insurance policies. Each of the foregoing factors may delay or reduce the return on the policies and adversely affect the Company’s business and results of operations.
Life settlements in which we invest are not currently regulated under federal securities laws but if deemed to be securities would require further compliance with federal and state securities laws, which could result in significant additional regulatory burdens on the Company and limit the Company’s investments, which could have an adverse impact on the Company’s business and results of operations.
The origination and trading in whole, non-variable life insurance policies has historically been understood to not involve transactions in securities. However, on February 22, 2019, the United States Court of Appeals for the Fifth Circuit concluded that whole non-variable life insurance policies, when offered for sale to an investor, were
11

Table of Contents
investment contracts, and thus securities, for purposes of the Investment Company Act. See In re Living Benefits Asset Management, L.L.C., 916 F.3d 528, 543 (5th Cir. 2019). If this same conclusion were to be reached in other federal circuit courts or at the Supreme Court and extended to the Securities Act, there would be significant changes to our industry, and it would materially impact the Company’s ability to conduct its business.
In 2002, the United States Court of Appeals for the Eleventh Circuit reached a similar conclusion with respect to fractionalized death benefits payable under non-variable policies in SEC v. Mutual Benefits Corp., 408 F.3d 737, 745 (11th Cir. 2005),but the United States Court of Appeals for the District of Columbia Circuit reached a contrary result with respect to fractionalized death benefits in SEC v. Life Partners, Inc., 87 F.3d 536, 549 (D.C. Cir. 1996). The Company does not presently transact in fractionalized death benefits, i.e., buying or selling a part of, but not all of, a life settlement policy, nor does it currently plan to transact in fractionalized death benefits.
On July 22, 2010, the SEC released a staff report that recommended that the U.S. Congress clearly define life settlements to be securities so that the investors in life settlements transactions would be protected under the federal securities laws. To date, the SEC has not made another such recommendation to Congress nor has Congress acted on the SEC staff’s report. If the statutory definitions of “security” were to be amended to encompass life settlements involving non-variable life insurance policies, or if the Supreme Court or other circuit courts were to conclude that non-variable life insurance policies are securities for purposes of the Securities Act, the Company could become subject to additional extensive regulatory requirements under the federal securities laws. Those regulatory requirements would include the obligation to register the Company’s sales and offerings of life settlements with the SEC as public offerings under the Securities Act. Also, if the resale of non-variable life insurance policies were to be considered securities, the Company’s ownership of those policies as a percentage of its assets or source of income could be limited as it would likely manage its business to avoid being required to register as an “investment company” pursuant to the Investment Company Act. Those limitations could have an adverse effect on the Company’s business and results of operations. Any legislation or court or regulatory interpretations leading to that regulatory change or a change in the transactions that are characterized as life settlement transactions could lead to significantly increased compliance costs and increased liability risk to the Company and could adversely affect the Company’s ability to acquire or sell life insurance policies in the future. This could materially and adversely affect the Company’s business, financial condition and results of operations, which in turn could materially and adversely affect the performance of the Company.
The Company cannot assure you as to the ultimate content, timing or effect of changes, nor is it possible at this time to estimate the impact of any such potential change in administration or new legislation on the Company’s business, financial condition, or results of operations and consequently, any potential material and adverse effect on the performance of the Company.
The Company may be subject to certain U.S. state securities laws, and failure to comply with applicable requirements may result in fines, sanctions and rescission of purchase or sale transactions.
Certain U.S. state laws specifically characterize life settlements as securities transactions. Thus, in some U.S. states, purchases and sales of life insurance policies by the Company may be subject to applicable U.S. state blue sky laws or other U.S. state securities laws. The Company intends to comply with all applicable federal and state securities laws. However, this will not necessarily exempt the Company from compliance with U.S. federal or state broker-dealer laws. The failure to comply with applicable securities laws in connection with the purchase or sale of life settlement policies could result in the Company being subject to fines, administrative and civil sanctions and rescission of life settlement policy purchase or sales transactions. Each of the foregoing factors could materially and adversely affect the performance of the Company.
The Company could in the future be required to register as an investment company under the Investment Company Act or could have to substantively change its business model in order to fit within an applicable exemption from such registration requirement.
The Company’s sales of life insurance policies and investment and financing programs of which the purchase or sale of a life insurance policy is a part are subject to an evolving regulatory landscape. Depending on the facts and circumstances attending such sales or programs, state and federal securities laws, including the Investment Company
12

Table of Contents
Act, could be implicated, and it is possible that the Company could in the future be required to register as an investment company under the Investment Company Act. The Company would not be able to continue to operate its business as it does today if required to register as an investment company. In such event, the Company would have to substantively change its business model to avoid registration as an investment company under the Investment Company Act. If the Company were required to change its business model in order to fit within an exemption from registration, it would have a material adverse effect on the performance of the Company.
The Company faces privacy and cyber security risks related to its maintenance of proprietary information, including information regarding life settlement policies and the related insureds, and any adverse impact related to such risks could have a material adverse impact on the Company’s business.
The Company relies on data processing systems to price and close transactions, to evaluate investments, to monitor its portfolio and capital, and to generate risk management and other reports that are critical to oversight of the Company’s activities. Further, the Company relies on information systems to store sensitive information about the Company, its affiliates, and its investments, including life settlement policies and information about the related insured individuals and others. Additionally, the Company collects information related to life insurance, including nonpublic personal information (“NPI”) and protected health information (“PHI”), and information from its website, such as contact information and high-level policy information. The Company also collects information from its employees, such as standard HR information, and business contact information from third-party employees. The Company shares information with its service providers, and has entered into nondisclosure and business association agreements, where appropriate. Our information systems, the information systems of any third-party vendors or suppliers we may use, and the information that is processed by such systems, face various and evolving risks from diverse threat actors, such as state-sponsored organizations and opportunistic hackers and hacktivists, that threaten the confidentiality, integrity and availability of such systems and information. These include damage or interruption from power outages, computer and telecommunication failures, computer viruses, cybersecurity incidents or attacks (including malware, phishing attacks, ransomware attacks, social engineering and phishing attacks, denial-of-service attacks, negligence or intentional misuse by our employees or third parties) and other related risks.
There has been an increase in the frequency, sophistication and ingenuity of the threats we and our service providers face, with threat actors becoming increasingly sophisticated in using techniques and tools – including artificial intelligence (“AI”) – that circumvent security controls, evade detection and obfuscate forensic evidence. For example, hardware or software acquired from third parties may contain defects in design or other problems that could unexpectedly compromise information security. Network connected services provided by third parties to the Company may be susceptible to compromise, leading to a breach of the Company’s network and/or business interruptions. The Company’s systems or facilities may be susceptible to employee error or malfeasance, government surveillance, or other security threats.
Additionally, the Company’s future use of blockchain or ABL Tech (the Company’s proprietary technology which does not rely on blockchain) may include undetected errors, bugs or failures. Moreover, due to the decentralized nature of blockchain, any use of blockchain is prone to specialized vulnerabilities. For example, blockchain users and their digital assets are susceptible to security breaches, which in turn creates more points of vulnerability on blockchain. These types of attacks could allow bad actors to obtain users’ credentials (e.g., the users’ private keys), which can result in damages for the user as any loss of private keys relating to, or hack or other compromise of, digital wallets used to store users’ digital assets could adversely affect the ability of users to access or use their digital assets. This risk could increase with the use of certain decentralized apps that make use of a “family” hierarchy. For example, a bad actor could use a parent wallet to gain access to, and control, various children’s wallets.
Finally, cybersecurity has become a top priority for regulators around the world. For example, the SEC has adopted rules on the cybersecurity risk management, strategy, governance and incident disclosure by public companies that enhances and standardizes disclosures for public companies with regards to their cybersecurity risk strategy, management and governance reporting.
Although the Company has procedures and systems in place that it believes are reasonably designed to protect such information and prevent data loss and security breaches, such measures cannot guarantee absolute security. Like
13

Table of Contents
many companies, we and our service providers experience, and may continue to experience, security incidents. While the Company is not aware of security incidents that have had a materially adverse effect on our operations or business, we cannot guarantee such an incident will not happen in the future.
Any circumvention or failure of our or our service providers’ cybersecurity measures and risk management program could potentially jeopardize our, our employees’ or our clients’ or counterparties’ sensitive, confidential, personal, proprietary and other information processed and stored in, and transmitted through, our information systems and those of our providers, or otherwise cause interruption or malfunctions in our, our employees’, our clients’, our counterparties’ or third parties’ operations. This could result in material financial losses, increased costs, disruption of our business, liability to clients and other counterparties, regulatory intervention, proceedings, order, litigation (including class actions), indemnity obligations, damages for contract breach or fines or penalties for violation of applicable laws or regulation, or reputational damage, which, in turn, could cause a decline in our earning and/or stock price. Furthermore, if we experience a cybersecurity incident or attack, it could result in regulatory investigations and material penalties, which could lead to negative publicity and may cause our clients to lose confidence in the effectiveness of our security measures.
Although we maintain error or omissions and cyber liability insurance, the costs related to a cybersecurity incident or other cybersecurity security threat or disruption may not be fully insured or indemnified by other means, and insurance and other safeguards might only partially reimburse us for our losses, if at all. We also cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all.
The Company is subject to U.S. privacy laws and regulations. Failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of operations; reputational harm; loss of revenue or profits; and other adverse business consequences.
Due to the type of information the Company collects, including personal, medical, and financial information on the underlying insureds, and the nature of its services, the Company is subject to privacy laws. In the United States, federal, state and local governments have enacted numerous data privacy and security laws to address privacy, data protection and collection, and the processing and disclosure of certain types of information. Obligations related to these laws are quickly changing, becoming increasingly stringent and creating regulatory uncertainty. In addition, these obligations may be subject to differing applications and interpretations, which can result in inconsistency or conflict among jurisdictions. Among these laws, the Company is likely subject to the Telephone Consumer Protection Act (“TCPA”), Controlling Assault of Non-Solicited Pornography and Marketing Act of 2003, and the Gramm-Leach Bliley Act (“GLBA”).
The Company is considered a financial institution under the GLBA and is subject to the GLBA through NPI it collects. The GLBA regulates, among other things, the use of NPI in the context of the provision of financial services and includes both a “Privacy Rule,” which imposes obligations on financial institutions relating to the use or disclosure of NPI, and a “Safeguards Rule,” which imposes obligations on financial institutions, and indirectly, their service providers, to implement and maintain physical, administrative and technological measures to protect the security of NPI.
In addition, we use AI, machine learning and automated decision-making technologies, including proprietary AI and machine algorithms and models (collectively, “AI Technologies”) in our business and are making significant investments in this area. For example, we use AI technologies internally to perform mortality verification for both internal purposes and in connection with services we provide to third parties. The overall regulatory framework for AI Technologies is rapidly evolving as many federal, state and local government bodies and agencies have introduced, or are currently considering, additional laws and regulations. Additionally, existing laws and regulations may be interpreted in ways that would affect the operation of our AI Technologies. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
For example, the Biden Administration issued a broad Executive Order on the Safe, Secure and Trustworthy Development and Use of Artificial Intelligence (the “2023 AI Order”) that sets out principles intended to guide AI design and deployment for the public and private sector and signals the increase in governmental involvement and regulations over AI Technologies. The 2023 AI Order established certain new requirements for the training, testing
14

Table of Contents
and cybersecurity of sophisticated AI models and large scale compute centers used to train AI models and instructed several other federal agencies to promulgate additional regulations. Already agencies such as the Department of Commerce and the Federal Trade Commission have issued proposed rules. Legislation related to AI Technologies has also been introduced at the federal level and is advancing at the state level. In addition, the SEC has proposed rules that apply to registered investment advisors and funds that would, among other things, require investment advisors to eliminate or neutralize the effect of certain conflicts of interest associated with their use of artificial intelligence and other technologies that optimize for, predict, guide, forecast or direct investment-related behaviors or outcomes. The developing landscape, and the uncertain interpretation of such landscape, may affect our use of AI Technologies.
Further, laws and regulations related to privacy, data security, and data protection related to information stored or contained on blockchain may be applied to and imposed on us by U.S. federal, state and local courts and regulators. Such enforcement or regulation, if applied to us, would be difficult or impossible for us to comply with the decentralized nature of blockchain as these frameworks were not created to apply to the novel technology underlying the digital assets industry.
Because of the complexity of the various data privacy laws the Company may be subject to, compliance can be costly. The Company has taken general steps to comply with data privacy and security laws. For example, the Company has implemented a number of policies, including policies regarding access controls, customer data privacy, secure data disposal, and incident response and risk assessments. Despite these efforts, the Company cannot guarantee that regulators or consumers will agree with our approach to compliance due to the complexity and evolving nature of these laws. Failure to comply with relevant data privacy laws could negatively impact the Company’s operations, including subjecting the Company to possible government enforcement actions which could result in investigations, fines, penalties, audits, inspection, litigation, additional reporting requirements and/or oversight.
The Company’s business may be subject to additional or different government regulation in the future, which could have a material adverse impact on the Company’s business.
The Company is currently licensed and operating in 49 states. Increased regulation (whether promulgated under insurance laws or any other applicable law) and regulatory oversight of and changes in law applicable to life settlements may restrict the ability of the Company to carry on its business as currently conducted. This could also impose additional administrative burdens on the Company, including responding to examinations and other regulatory inquiries and implementing policies and procedures. Regulatory inquiries often are confidential in nature, may involve a review of an individual’s or a firm’s activities or may involve studies of the industry or industry practices, as well as the practices of a particular institution.
The Company’s business is heavily scrutinized by regulators.
As noted above, many regulators have a hostile view towards the life settlement industry, and the Company acquires the vast majority of its life settlements from senior citizens, who are typically seen as a vulnerable community by regulators.
Sellers of life insurance policies are strongly protected by applicable insurance laws, and the Company has a robust compliance program aimed at ensuring every transaction complies with all applicable laws. Nevertheless, the Company cannot guarantee that complaints about any given transaction may arise, either from the sellers, their family members and heirs, or other market participants. Insurance regulators have broad powers to initiate investigations into transactions and to determine if violations of applicable law occurred. Further, insurance regulators often collaborate with other insurance regulators. Therefore, if the Company were to be sanctioned by one regulator, it is very likely that other regulators would take notice, and the Company would be under significant pressure to demonstrate a breach was an isolated incident.
15

Table of Contents
There is currently no direct legal authority regarding the proper federal tax treatment of life settlements and potential future rulings from the IRS may have significant tax consequences on the Company.
There is no direct legal authority regarding the proper U.S. federal income tax treatment of life settlements, and the Company does not plan to request a ruling from the Internal Revenue Service (the “IRS”). Consequently, significant aspects of the tax treatment of the Company’s assets are uncertain, and the IRS or a court might not agree with the Company’s treatment of life settlements as prepaid financial contracts that are not debt. If the IRS were successful in asserting an alternative treatment, the tax consequences of ownership and disposition of life settlements could be materially and adversely affected. In addition, in 2007, the U.S. Treasury Department and the IRS released a notice requesting public comments on various issues regarding the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. Any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in life settlements, possibly with retroactive effect.
There have been lawsuits in various states questioning whether a purchaser of a life insurance policy has the requisite “insurable interest” in the policy that would permit the purchaser to collect the insurance benefits, and an adverse finding in any of these lawsuits could have a material adverse effect on the Company’s business.
All states require that the initial purchaser of a new life insurance policy insuring the life of another individual have an insurable interest in that individual’s life at the time of the original issuance of the policy. An “insurable interest” is an economic stake in an event for which a person or entity purchases an insurance policy. An insurance policy may only be initially purchased by a person or entity who has an insurable interest in the insured (e.g., a spouse purchases an insurance policy on his or her spouse or a company purchases an insurance policy on an employee). In addition, some states may require that the Company have an insurable interest in the insured. Whether an insurable interest exists in the context of the purchase of a life insurance policy is critical because in the absence of a valid insurable interest, life insurance policies are unenforceable under the laws of most states. Where a life insurance policy has been issued to a policy holder without an insurable interest in the life of the insured, the life insurance company may not be required to pay the face value under the policy and may also be entitled to retain the premiums paid. Generally, there are two forms of insurable interest in the life of an individual, familial and financial. Additionally, an individual is deemed to have an insurable interest in his or her own life. Insurable interest is determined at the inception of the policy. The definition of exactly what constitutes “insurable interest” tends to vary by state. Some cases have also been initiated by life insurance companies, challenging the legality of the original issuance of policies on insurable interest grounds and asserting that such policies constitute “Stranger-Originated Life Insurance” or “STOLI,” which is defined as a practice or plan to initiate a life insurance policy for a third-party investor who, at the time of policy origination, has no insurable interest in the insured. Some states (such as Utah and New York) permit the heirs and beneficiaries of an insured to recover the face value under such STOLI policies rather than the policy owner which lacked insurable interest.
While the Company does not believe it has invested in any STOLI polices, and has policies and procedures in place to identify potential STOLI policies, there can be no guarantee that the Company will identify all STOLI policies. As such, the Company may acquire certain life insurance policies that may be deemed by an issuing insurance company to be STOLI policies, whether purposefully, if the Company deems such life insurance policy to be an attractive investment even after taking into account the insurable interest risk, or inadvertently, where the true nature of such life insurance policy is not discovered prior to its acquisition by the Company. Should an issuing insurance company successfully challenge the validity of a life insurance policy acquired by the Company, the Company will lose its investment in such life insurance policy.
Furthermore, the Company will also suffer losses if a family member of an insured is successful in asserting a claim that he or she, and not the Company, is entitled to the face value payable under a life insurance policy. Recent case law in Delaware has heightened the particular risk of successful challenges where family members assert that the policy was a STOLI policy and therefore void ab initio. If such cases are sustained on appeal, it is likely that there will be an increase in such challenges. However, such challenges are highly fact-specific, and not all states share Delaware’s approach as a matter of law, e.g., cases with similar facts could arrive at different results depending on the applicable state. The Company will continue to monitor its portfolio of policies and developments in these cases as appeals continue.
16

Table of Contents
The failure of the Company to accurately and timely track and pay premium payments on the life insurance policies it holds could result in the lapse of such policies, which would have a material adverse impact on the Company’s business.
In order to realize on its investment in life insurance policies, the Company must ensure that the life insurance policies remain in force until they mature or are sold by the Company. Failure by the Company to pay premiums on the life insurance policies when due will result in termination or “lapse” of the life insurance policies and will result in the loss of the Company’s investment in such life insurance policies.
The originating life insurance company may increase the cost of insurance premiums, which would adversely affect the Company’s returns.
For any life insurance policies that may be obtained by the Company, the Company will be responsible for maintaining the policies, including paying insurance premiums. If a life insurance company increases the cost of insurance charged for any of the life insurance policies held by the Company, the amounts required to be paid for insurance premiums due for these life insurance policies may increase, requiring the Company to incur additional costs for the life insurance policies which may reduce the value of such life insurance policies and consequently affect the returns available on such policies.
Life insurance companies have in the past materially increased the cost of insurance charges. There can be no assurance that life insurance policies acquired by the Company will not be subject to cost of insurance increases. If any such life insurance policies are affected by a cost of insurance increase, the value of such life insurance policy may be materially reduced and the Company may decide or may be forced to allow such life insurance policy to lapse, resulting in a loss to the Company.
In the event an insurance company experiences significantly higher than anticipated expenses associated with operation and/or policy administration, or, in some instances, lower investment returns, the insurance company may have the right to increase the charges to each of its policy owners, but not beyond guaranteed maximums. While the insurance companies did not specify the reason for the increases, it is generally believed that the low interest rate environment was a significant contributing factor in the decision to raise the cost of insurance.
The Company may not be able to liquidate its life insurance policies, which could have a material adverse effect on the Company’s business.
In the ordinary course of its business, the Company engages in the purchase and sale of life insurance policies. The liquidation value of these life insurance policies is important where, for example, it becomes necessary to sell life insurance policies from the Company’s hold portfolio in order to meet the Company’s cash flow needs, including the payment of future premiums.
In many cases, liquidations may not be a viable option to meet the Company’s liquidity because of, among other things: (1) the lack of a market for such life insurance policies at the time; (2) the uncertainties surrounding the liquidation value of an individual life insurance policy; (3) the extensive amount of time and effort it might take to sell a life insurance policy; (4) the effect excessive sales of life insurance policies may have on transactions and future cash flows; and (5) the tax consequences.
The Company assumes the credit risk associated with life insurance companies and may not be able to realize the full value of insurance company payouts, which could have a material adverse effect on the Company’s profits.
The Company will assume the credit risk associated with life insurance policies issued by various life insurance companies. The failure or bankruptcy of any such life insurance company could have a material adverse impact on the Company’s ability to achieve its investment objectives. A life insurance company’s business tends to track general economic and market conditions that are beyond its control, including extended economic recessions, interest rate changes, the subprime lending market crisis or changes in investor perceptions regarding the strength of insurers generally and the life insurance policies or annuities they offer. Adverse economic factors and volatility in the financial markets may have a material adverse effect on a life insurance company’s business obligation to pay the face value of policies.
17

Table of Contents
The insolvency of any insurance company or a downgrade in the ratings of an insurance company could have a material adverse impact on the value of the related life insurance policies, the collectability of the related face value, cash surrender value or other amounts agreed to be paid by such insurance company. In the event that a life insurance carrier becomes insolvent or is placed into receivership, most state guaranty associations place a $300,000 or lower cap on face value for policies per insured. In addition to the limitations on the amount of coverage, which vary by state, there are limitations on who may make claims under such coverage and the Company may not be eligible to make claims under U.S. state guarantee funds as most U.S. state guarantee fund laws were enacted with the stated goal of assisting policyholders residing in such states. Even if available to the Company, guarantee fund coverage limits are typically smaller than the face values of some of the life insurance policies that the Company will acquire. There can be no assurance that as more life settlement transactions are undertaken, legislators will not adopt additional restrictions on the availability of U.S. state guaranty funds.
The Company’s success is dependent upon the services of its experienced management and talented employees. If the Company is unable to retain management and/or key employees, its ability to compete could be harmed.
The success of the Company is dependent upon the talents and efforts of highly skilled individuals employed by the Company, and the Company’s ability to identify and willingness to provide acceptable compensation to attract, retain and motivate experienced management, talented investment professionals and other employees.
There can be no assurance that the Company’s management and professionals will continue to be associated with the Company, and the failure to attract or retain such professionals could have a material adverse effect on the Company’s ability to execute on its business plan. Competition in the financial services industry for qualified management and employees is intense and there is no guarantee that, if lost, the talents of the Company’s professionals could be replaced.
The Company’s intellectual property rights may not adequately protect the Company’s business.
To be successful, the Company must protect its intellectual property, including its technology, know-how and branding through means, such as trademarks, trade secrets, patents, copyrights, service marks, contractual restrictions, and other intellectual property rights and confidentiality procedures. Despite the Company’s efforts to implement these protections, they may not adequately protect its business for a variety of reasons, including:
inability to successfully register or obtain patents and other intellectual property rights for important innovations that sufficiently protect the full scope of such innovations;
inability to maintain appropriate confidentiality and other protective measures to establish and maintain the Company’s trade secrets;
uncertainty in, and evolution of, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights;
potential invalidation of the Company’s intellectual property rights through administrative processes or litigation; and
other practical, resource, or business limitations on the Company’s ability to detect and prevent infringement or misappropriation of our rights and to enforce our rights.
Litigation may be necessary to enforce the Company’s intellectual property or proprietary rights, protect the Company’s trade secrets, or determine the validity and scope of proprietary rights claimed by others. Any litigation, whether or not resolved in the Company’s favor, could result in significant expense to the Company, and divert the time and efforts of the Company’s technical and management personnel. If the Company is unable to prevent third parties from infringing upon, violating or misappropriating the Company’s intellectual property or is required to incur substantial expenses defending the Company’s intellectual property rights, the Company’s business, financial condition and results of operations may be materially adversely affected.
18

Table of Contents
The Company may become subject to intellectual property disputes, which are costly and may subject the Company to significant liability and increased costs of doing business.
The Company may in the future become subject to intellectual property disputes. The Company’s success depends, in part, on the Company’s ability to operate without infringing, misappropriating or otherwise violating the intellectual property rights of third parties. However, the Company may not be aware that its practices are infringing, misappropriating or otherwise violating third-party intellectual property rights, and such third parties may bring claims against the Company or its business partners alleging such infringement, misappropriation or violation.
Any claims of intellectual property infringement, even those without merit, may be time-consuming and expensive to resolve, divert management’s time and attention, cause the Company to cease using or incorporating the asserted challenged intellectual property rights, expose it to other legal liabilities, or require it to enter into licensing agreements to obtain the right to use a third party’s intellectual property. Although the Company carries general liability insurance, it may not cover potential claims of this type or may not be adequate to indemnify the Company for all liability that may be imposed. The Company cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on the Company’s business, financial condition, or results of operations.
Even if the claims do not result in litigation or are resolved in the Company’s favor, these claims, and the time and resources necessary to resolve them, could divert the resources of the Company’s management and harm the Company’s business and results of operations. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, this could have a substantial adverse effect on the price of securities. The Company expects that the probability of infringement claims is likely to grow as its business grows. Accordingly, the Company’s exposure to damages resulting from infringement claims could increase, and this could further exhaust the Company’s financial and management resources.
The Company’s ability to adapt and respond effectively to rapidly changing technology may have a material adverse impact on its competitiveness.
Recent technological advancements in the insurance industry and information technology industry present new and fast-evolving competitive risks as participants seek to increase transaction speeds, lower costs, and create new opportunities. Advancements in technology are occurring in at a pace that may quicken, including as companies increase use of data analytics, artificial intelligence and other technology as part of their business strategy. To remain competitive, the Company will need to continuously adapt to changes and innovation in existing and new technologies, which may require significant Company resources. The Company will be at a competitive disadvantage if, over time, its competitors are more effective in their utilization of technology and evolving data analytics. If the Company does not anticipate or keep pace with these technological and other changes impacting the insurance industry, the Company’s ability to compete in desired markets could be limited, and its business, financial condition, and results of operations could be adversely affected.
Pandemics, along with rising interest rates and inflation, may disrupt the ability of the Company and its providers to originate life settlement policies which could have a material adverse impact on the Company’s financial position.
Pandemics, particularly in the United States, could have a material and adverse effect on our business operations. These could include disruptions or restrictions on our ability to source life settlement policies, as well as temporary closures of our facilities and the facilities of our third-party service providers. Any disruption or delay of our third-party service providers would likely impact our operating results. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of the United States and throughout the world, resulting in an economic downturn that could affect demand for the life insurance policies and significantly impact the Company’s operating results. Adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels, inflation, and recession may shift the timing and volume of transactions, or the number of customers using our services for a prolonged period.
19

Table of Contents
In the past, we have identified material weaknesses in our internal control over financial reporting that existed as of December 31, 2022, which were remediated as of December 31, 2023. 
If we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations.
In the future, we may discover additional material weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
On or about July 5, 2023, the Company entered into each of the SPV Purchase and Sale, the Policy APA and the SPV Investment Facility. Each of these agreements limits the Company’s ability to enter into further credit facilities or take on additional debt which could result in additional financial strain on the Company.
SPV Purchase and Sale
On or about July 5, 2023 the Company entered into the Abacus Investment SPV, LLC (“SPV”) Purchase and Sale, including the Asset Purchase Agreement (“Policy APA”). The Company and the SPV are parties to the Policy APA. The payable obligation owing by the Company to the SPV in connection with the SPV Purchase and Sale is evidenced by a note issued by the Company under the SPV Investment Facility in an original principal amount equal to the aggregate fair market value of the acquired insurance policies. The aforementioned note has the same material terms and conditions as the other credit extensions under the SPV Investment Facility (as defined below).
Relationships
East Sponsor, LLC (the “Sponsor”), members of the Company’s founding team, directors or officers of Abacus Settlements and Abacus or its or their affiliates are members of the SPV and thereby indirectly receive economic or other benefits from the Policy APA.
SPV Investment Facility
On July 5, 2023, the Company entered into a SPV Investment Facility (the “SPV Investment Facility”), between the Company, as borrower, and the SPV, as lender.
The SPV Investment Facility, among other things:
is unsecured without collateral security expected to be provided in favor of the SPV;
evidenced or provided for certain credit extensions to include: (i) an initial credit extension in an original principal amount of $15.0 million that is expected to be funded upon the closing of the SPV Investment Facility, (ii) a note in favor of the SPV in an original principal amount of $10.0 million to finance the purchase of the insurance policies under the Policy APA and (iii) a delayed draw credit extension in an original principal amount of $25.0 million, with the delayed draw credit extension drawn in a period between 90 and 120 days after the closing of the SPV Investment Facility upon satisfaction of certain conditions precedent;
provided proceeds from the SPV Investment Facility for payment of certain transaction expenses, general corporate purposes and any other purposes not prohibited by law (it being expected that a significant portion of the proceeds from the SPV Investment Facility will be used by the Company for purchasing insurance policies, among other purposes);
is subordinated in right of payment to the Company’s obligations under the Owl Rock Credit Facility, subject to limited specified exceptions and circumstances for permitting early payment;
20

Table of Contents
required Abacus Settlements and Abacus and certain subsidiaries of Abacus Settlements and Abacus to guarantee the credit extensions to be provided under the SPV Investment Facility pursuant to separate documentation;
contained a maturity date that is at least three years after the closing of the SPV Investment Facility, subject to two automatic extensions of one year each without any amendment of the relevant documentation;
provided for interest to accrue on the SPV Investment Facility at a rate of 12.00% per annum, payable quarterly, all of which is expected be paid in-kind by the Company by increasing the principal amount of the SPV Investment Facility owing to the SPV on each interest payment date;
provided a default rate that will accrue at 2.00% per annum (subject to applicable subordination restrictions) over the rate otherwise applicable. If cash payment is not permitted due to applicable subordination restrictions or otherwise, such default interest shall be paid in-kind;
provided that no amortization payments shall be required prior to maturity;
provided for financial and other covenants no worse than those contained in the Owl Rock Credit Facility from the perspective of the Company; and
provided for certain specified events of default (including certain events of default which are expected to be subject to grace or cure periods), with the occurrence and continuance of such events of default enabling the lender under the SPV Investment Facility to accelerate the obligations under the SPV Investment Facility, among other potential rights or remedies; and contain certain specified closing conditions. The SPV’s investment resulting from credit extensions under the SPV Investment Facility is expected to be treated by the Company as debt for U.S. Generally Accepted Accounting Principles (“GAAP”) accounting purposes. To the extent that multiple notes are issued under the SPV Investment Facility, it is expected that the documentation will provide flexibility for the SPV to request such notes be reissued as a single note under such facility.
Relationships
Directors and officers of the Company and significant shareholders of the Company are members of the SPV and thereby indirectly receive economic or other benefits from the SPV Investment Facility.
Risks Related to the Offering and Ownership of our Common Stock
Our stock repurchase program may not enhance long-term stockholder value and could increase the volatility of the market price of our common stock and diminish our cash.
Our stock repurchase program does not obligate us to repurchase any shares of our common stock. The timing and amount of any repurchases depend upon several factors, including market conditions, business conditions, statutory and contractual restrictions, the trading price of our common stock and the nature of other investment opportunities available to us. In addition, repurchases of our common stock could affect our stock price and increase its volatility. The existence of a stock repurchase program could cause our stock price to be higher than it would be absent the program and could reduce market liquidity for our stock. Use of our funds to repurchase stock could diminish our cash reserves, which may impact our ability to finance growth, pursue strategic opportunities, and discharge liabilities. Our stock repurchases may not enhance stockholder value because the market price of our common stock may decline below the prices at which we repurchased stock and short-term stock price fluctuations could reduce the program’s effectiveness.
21

Table of Contents
Upon the expiration of the lock-up agreements, a substantial number of shares of common stock will be eligible for resale into the public market. The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our common stock.
In connection with this offering, we, our directors and executive officers and holders of 5% or more of our common stock prior to this offering have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their shares of common stock from the date hereof for a period of 90 days. Upon the expiration of the lock-up agreements, 61,867,518 shares of common stock held by the stockholders and insiders will be eligible for resale unless such shares are subject to certain transfer restrictions described under the subsection “Transfer Restrictions” in “Description of Capital Stock.” The resale of these shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also may make it more difficult for us to sell equity securities in the future at a time and at a price we deem appropriate.
Piper Sandler & Co. and KKR Capital Markets LLC may, at any time and without notice, release all or any portion of the shares of our common stock subject to the lock-up agreements entered into in connection with this offering. If the restrictions under the lock-up agreements are waived, 61,867,518 shares of common stock will be available for resale into the public market (unless such shares are subject to certain transfer restrictions described under the subsection “Transfer Restrictions” in “Description of Capital Stock”), which could reduce the market value for our common stock.
Our Board has broad discretion to issue additional securities, and in order to raise sufficient funds to expand our operations, we may have to issue securities at prices which may result in substantial dilution to our stockholders.
We are entitled under the second amended and restated articles of incorporation of the Company (the “Charter”) to issue up to 200,000,000 shares of common stock and 1,000,000 shares of preferred stock, although these amounts may change in the future subject to stockholder approval. Shares of our preferred stock provide our board of directors broad authority to determine voting, dividend, conversion and other rights. Any additional stock issuances could be made at a price that reflects a discount or premium to the then-current market price of our common stock. In addition, in order to raise capital, we may need to issue securities that are convertible into or exchangeable for a significant amount of our common stock. Our board of directors may generally issue those shares of common stock and preferred stock, or convertible securities to purchase those shares, without further approval by our stockholders. Any preferred stock we may issue could have such rights, preferences, privileges and restrictions as may be designated from time-to-time by our board of directors, including preferential dividend rights, voting rights, conversion rights, redemption rights and liquidation provisions. We may also issue additional securities to our directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock incentive plans. The issuance of additional securities may cause substantial dilution to our stockholders.
If we issue debt securities, our operations may be restricted, we will be exposed to additional risk and the market price of our common stock could be adversely affected.
If we decide to issue debt securities in the future, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock. Holders of debt securities may also be granted specific rights, including, but not limited to, the right to hold a perfected security interest in certain of our assets, the right to accelerate payments due under the indenture, rights to restrict dividend payments and rights to approve the sale of assets. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock.
22

Table of Contents
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our operating results do not meet their expectations, our stock price could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our Company downgrades our common stock or if our operating results do not meet their expectations, our stock price could decline.
The trading price of our common stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.
The market price of our common stock may be volatile because of numerous factors, including:
quarterly variations in operating results;
changes in financial estimates by us or securities analysts who may cover our stock or by our failure to meet the estimates made by securities analysts;
changes in market valuations of other similar companies;
changes in laws or regulations applicable to our business;
additions or departures of key personnel;
changes in our capital structure, such as future issuances of debt or equity securities;
short sales, hedging and other derivative transactions involving our capital stock;
our limited public float and the relatively thin trading market for our common stock;
transactions in our common stock, by directors, officers, affiliates and other major investors; and
the other factors described under “Risk Factors” and “Forward-Looking Statements” included in this prospectus.
Furthermore, from time to time, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
These broad market and industry fluctuations, as well as general economic, political and market conditions, such as recessions or interest rate changes, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. Any future securities litigation against us could result in substantial costs and divert our management’s attention and resources, and harm our business, financial condition, and results of operations.
Future sales of our common stock, or the perception that such future sales may occur, may cause our stock price to decline.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. In addition, the sale of such shares, or the perception that such sales may occur, could impair our ability to raise capital through the sale of additional common stock or preferred stock. Except for any shares purchased by our affiliates, all of the shares of common stock sold in this offering will be freely tradable.
23

Table of Contents
We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on your investment may be limited to increases in the market price of our common stock.
We have not paid any cash dividends on our common stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the board may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future indebtedness we or our subsidiaries incur.
Investing in our common stock may involve a significant degree of risk.
The investments we make in accordance with our investment objectives may result in a higher amount of risk when compared to alternative investment options and volatility or loss of principal. Our investments may be highly speculative and aggressive, and therefore an investment in our common stock may not be suitable for someone with lower risk tolerance and investors in our common stock may experience losses and volatility.
General Risk Factors
If we do not develop and implement all required accounting practices and policies, we may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner.
The implementation of all required accounting practices and policies and the hiring of additional financial staff has increased and may continue to increase our operating costs and requires our management to devote significant time and resources to such implementation. If we fail to develop and maintain effective internal controls and procedures and disclosure procedures and controls, we may be unable to provide financial information and required SEC reports that are timely and reliable. Any such delays or deficiencies could harm us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and damaging our reputation, which in either cause could impede our ability to implement our growth strategy. In addition, any such delays or deficiencies could result in our failure to meet the requirements for continued listing of our common stock on Nasdaq.
Our management has limited experience in operating a public company.
Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the Company. We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the Company to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that the Company will be required to expand its employee base and hire additional employees to support its operations as a public company, which will increase its operating costs in future periods.
Changes in tax regulations or their interpretation could negatively impact our cash flows and results of operations.
Changes in tax and other revenue raising laws, regulations and policies in the jurisdictions where we do business could impose new restrictions, costs or prohibitions on our practices and negatively impact our results of operations. In addition, interpretation of tax regulations requires us to exercise our judgment and taxing authorities or our independent registered public accounting firm may reach conclusions about the application of such regulations that differ from our conclusions. Changes to U.S. tax laws, regulations, or interpretations could impact the tax treatment of our earnings and adversely affect our cash flows and financial results.
24

Table of Contents
We are subject to audit in various jurisdictions, and these jurisdictions may assess additional taxes against us. Developments in an audit, litigation, or laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows. The final outcome of tax audits, investigations, and any related litigation could be materially different from our historical tax provisions and accruals.
Our use of different estimates and assumptions in the application of our accounting policies could result in material changes to our reported financial condition and results of operations, and changes in accounting standards or their interpretation could significantly impact our reported results of operations.
Our accounting policies are critical to the manner in which we present our results of operations and financial condition. Many of these policies, including policies relating to the recognition of revenue, are highly complex and involve many assumptions, estimates and judgments. We are required to review these assumptions, estimates and judgments regularly and revise them when necessary. Our actual results of operations vary from period to period based on revisions to these estimates. In addition, the regulatory bodies that establish accounting and reporting standards, including the SEC and the Financial Accounting Standards Board, periodically revise or issue new financial accounting and reporting standards that govern the preparation of our consolidated financial statements. Changes to these standards or their interpretation could significantly impact our reported results in future periods.
Our indebtedness may restrict our operations.
As of March 31, 2024, we had $185,809,135 of total debt outstanding, at fair value net of $2,724,708 deferred issuance costs and discounts. This indebtedness could restrict our flexibility to react to changes in our businesses, industry, economic conditions, and increase borrowing costs. We must dedicate a portion of our cash flow from operations to debt servicing and repayment of debt, which reduces funds available for strategic initiatives and opportunities, share repurchases, working capital, and other general corporate needs. It also increases our vulnerability to the impact of adverse economic and industry conditions.
If we are unable to comply with our debt agreements, or to raise additional capital when needed, our business, cash flow, liquidity, and results of operations could be harmed.
Our ability to make scheduled cash payments on and to refinance our indebtedness depends on our ability to generate significant operating cash flow in the future, which, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, and interest on our indebtedness.
In addition, our credit ratings will impact the cost and availability of future borrowings and, accordingly, our cost of capital. Downgrades in our ratings could adversely affect our businesses, cash flows, financial condition, operating results and share and debt prices, as well as our ability to acquired life settlement policies. Failure to make scheduled cash payments on our existing debt, or to comply with the restrictive covenants and other requirements in our debt agreements, could result in an event of default, which, if not cured or waived, could result in acceleration of our debt repayment obligations. We may not have sufficient cash to repay any accelerated debt obligations, which would immediately and materially harm our business, results of operations and financial condition.
We may be required to raise additional capital to refinance our existing debt, or to expand or support our operations. Our access to and cost of financing will depend on, among other things, economic conditions, conditions in the financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings, and the outlook for our industry as a whole. The terms of future debt agreements could include more restrictive covenants or require incremental collateral, which may further restrict our business operations or adversely affect our ability to obtain additional financing. There is no guarantee that debt or equity financings will be available in the future on terms favorable to us or at all. If we are unable to access additional funds on acceptable terms, we may have to adjust our business operations, and our ability to acquire additional life settlement policies, or make other investments in our business could be impaired, any of which may adversely affect our cash flows and results of operations.
25

Table of Contents
We may incur substantially more debt, which could exacerbate further the risks associated with our leverage.
We and our subsidiaries may incur substantial additional indebtedness in the future. To the extent that we and our subsidiaries incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above will increase.
26

Table of Contents
USE OF PROCEEDS
We estimate that the net proceeds to us from this offering, after deducting current underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $74.2 million (or approximately $85.5 million if the underwriters exercise their full option to purchase additional shares of common stock from us).
We intend to use the net proceeds for our operations, including the purchase of life settlement policies, supporting our overall business strategy, working capital purposes and general corporate purposes, which may include repayment and refinancing of our indebtedness. We have not yet determined the manner in which we will allocate the net proceeds from this offering, and as a result, management will have broad discretion in the allocation and use of the net proceeds. We may temporarily invest the net proceeds from this offering in cash and cash equivalents or short-term marketable securities until they are used for their stated purpose.
The Company reserves the right to change the use of proceeds, provided that such reservation is due to certain contingencies that are discussed specifically and the alternatives to such use in that event are indicated.
27

Table of Contents
DILUTION
If you invest in our common stock in this offering, your ownership interest in us will be diluted to the extent of the difference between the public offering price per share of our common stock and the as-adjusted net tangible book value per share of our common stock after this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the shares of common stock held by existing stockholders.
Our net tangible book value as of March 31, 2024 was approximately $(2,994,256), or $(0.05) per share of common stock. Net tangible book value per share represents our total tangible assets less total liabilities, divided by 63,984,567 shares of common stock outstanding as of June 7, 2024. After giving effect to the sales of shares in this offering at the public offering price of $8.00 and after deducting estimated discounts, commissions and offering expenses, our adjusted net tangible book value as of June 7, 2024 would have been approximately $71,205,624, or $0.96 per share. This represents an immediate increase in the net tangible book value of $1.01 per share to our existing stockholders and an immediate dilution (i.e., the difference between the public offering price and the adjusted net tangible book value after this offering) to new investors purchasing shares in this offering at a price of $7.04 per share. The following table illustrates the per share dilution to new investors purchasing shares in this offering.
Public offering price per share$8.00 
Net tangible book value per share as of March 31, 2024$0.05 
Increase per share attributable to new investors in this offering$1.01 
Adjusted net tangible book value per share$0.96 
Dilution in adjusted net tangible book value per share to new investors in this offering$7.04 
If the underwriters exercise in full their option to purchase additional shares of common stock from us, the adjusted net tangible book value per share after giving effect to the offering and the use of proceeds therefrom would be $1.09 per share. This represents an increase in adjusted net tangible book value of $1.14 per share to existing stockholders and results in dilution in adjusted net tangible book value of $6.91 per share to investors purchasing shares in this offering at the public offering price.
The following table summarizes, on an as-adjusted basis as of June 7, 2024, the total number of shares of common stock owned by existing stockholders and to be owned by the new investors in this offering, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by the new investors in this offering at the public offering price of $8.00, calculated before deducting discounts, commissions and offering expenses.
Shares acquiredTotal considerationAverage price per share
NumberPercentAmountPercent
Existing stockholders63,984,567 86 %
New investors in this offering10,000,000 14 %$80,000,000 100 %$8.00 
Total73,984,567 100 %$80,000,000 100 %
If the underwriters were to fully exercise their option to purchase additional shares of our common stock, the percentage of shares of our common stock held by existing stockholders as of March 31, 2024 would be 85% and the percentage of shares of our common stock held by new investors would be 15%.
28

Table of Contents
CAPITALIZATION OF ABACUS AND ITS CONSOLIDATED SUBSIDIARIES
The following table sets forth the unaudited capitalization of Abacus and its consolidated subsidiaries as of March 31, 2024 on an actual basis and as adjusted to give effect to this offering at the public offering price of $8.00 per share, and assuming no exercise of the underwriters’ option to purchase additional shares. This table should be read in conjunction with the financial statements of Abacus and its subsidiaries included in this prospectus.
As of March 31, 2024
Actual
As adjusted for the offering
(Dollars in thousands-unaudited)
Cash, cash equivalents, and marketable securities$68,900 $143,100 
LONG-TERM DEBT(1)
109,511 109,511 
9.875% Fixed Rate Senior Notes due 2028
60,650 60,650 
TOTAL LONG-TERM DEBT
170,161 170,161 
STOCKHOLDERS’ EQUITY
Common stock, par value $0.0001 per share; 200,000,000 authorized shares; 63,776,058 and 62,997,292 issued and outstanding, respectively
$$
Treasury stock, at cost; 778,766 shares repurchased(8,807)(8,807)
Additional paid-in capital
209,889 $284,088 
Retained deficit
(36,075)$(36,075)
Accumulated other comprehensive income
120 120 
Non-Controlling interest
207
207
TOTAL SHAREHOLDERS’ EQUITY(2)
165,341 239,541 
TOTAL CAPITALIZATION(2)
$335,501 $409,701 
__________________
(1)Long-term debt consists of debt with a maturity of one year or more at the time it is incurred. These amounts are presented at fair value net of unamortized debt issuance costs and discounts and exclude debt due in less than one year.
(2)Numbers displayed in the unaudited capitalization of Abacus and its consolidated subsidiaries may vary by approximately $1.00 due to rounding.
29

Table of Contents
MARKET INFORMATION FOR COMMON STOCK
Market Information
Our common stock is currently listed on Nasdaq under the symbol “ABL”.
As of June 7, 2024, the Company had 63,984,567 shares of common stock outstanding held of record by eleven holders. Such amounts do not include DTC participants or beneficial owners holding shares through nominee names.
Dividend Policy
The Company has not paid any cash dividends on its common stock to date. The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition, as well as the applicable provisions of the Charter the amended and restated bylaws of the Company (the “Amended and Restated Bylaws”) and applicable law. The payment of any cash dividends will be within the discretion of the Company’s board of directors at such time. The Company’s ability to declare dividends will also be limited by restrictive covenants pursuant to any debt financing agreements. In addition, the Company’s board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Plans
In connection with the Business Combination, the Company adopted the Abacus Life, Inc. 2023 Long-Term Equity Compensation Incentive Plan (“Incentive Plan”) in order to facilitate the grant of cash and equity incentives to directors, employees, including named executive officers, and consultants to help attract and retain the services of these individuals. To date, we have granted 3,164,991 restricted stock units and 345,263 options to purchase common stock under the Incentive Plan.
Plan categoryNumber of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted-average exercise price of outstanding options, warrants and rightsNumber of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a)(b)(c)
Equity compensation plans approved by security holders:— — — 
Incentive Plan
3,164,991 — 243,228 
Equity compensation plans not approved by security holders
— — — 
Total
3,164,991 — 243,228 
30

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the Company’s financial condition and results of operations. This discussion should be read in conjunction with the Company’s financial statements and related notes thereto that appear elsewhere in this Form S-1.
Unless the context otherwise requires, references in this “Abacus Life, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “Company” are intended to mean the business and operations of Abacus Life, Inc.
The Company is composed of two principal, wholly-owned operating subsidiaries, Abacus Settlements and LMA, which are Delaware limited liability companies and headquartered in Orlando, Florida. The following sets forth management’s discussion and analysis of financial condition and results of operations of the Company and its operating subsidiaries.
Overview
The Company was formerly known as East Resources Acquisition Company, a blank check company incorporated in Delaware on May 22, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. The Company conducts its business through Abacus Settlements and LMA.
The Company directly acquires life insurance policies in a mutually beneficial transaction for both us and the underlying insured. With meaningful support from our proprietary risk rating heat map, we consistently evaluate policies (at origination and throughout the lifecycle) to generate essentially uncorrelated risk adjusted returns. Additionally, we provide a range of services for owners of life settlement assets.
Upon acquiring a policy, we have the option to either (i) trade that policy to a third-party institutional investor (i.e., generating a spread on each trade) or (ii) hold that policy on our balance sheet until maturity (i.e., paying the premiums over time and receiving the final claim/payout). This process is predicated on driving the best economics for us and we categorize this revenue as “Trading” or “Active management revenue.”
Additionally, we provide a wide range of services to owners and purchasers of life settlements assets (i.e., acquired policies). More specifically, we provide consulting, valuation, actuarial services, and perform administrative work involved in keeping a policy in force and at the premium level most advantageous to the owner. We have experience servicing a large number of policies for highly sophisticated institutions, including policies for large institutional life settlement funds. We generate revenue on these services by charging a base servicing fee of approximately 0.5% of total asset value of the portfolio or flat rate per policy. We categorize this revenue as “Servicing” or “Portfolio servicing revenue.”
The Company, through Abacus Settlements, originates life insurance policy settlement contracts as a licensed life settlement provider on behalf of third-party institutional investors (“Financing Entities”) and for the Company to invest in the life settlement asset class. Specifically, the Company originates policies through three primary origination channels (agents/financial advisors, direct-to-consumers, life settlement brokers) and third-party intermediaries, screens them for eligibility by verifying that the policy is in force, obtains consents and disclosures, and submits cases for life expectancy estimates. This process is characterized as our origination services, which averages a fee of approximately 2% of the life insurance policy’s face value (“Company Origination Revenue”).
Our Business Model
As mentioned in the above Overview section, we generate revenue in three main ways. The first channel is through our Active management revenue, whereby we can (i) generate a spread on traded policies, (ii) hold policies on our balance sheet (paying premiums over time and receiving the payout/claim), or (iii) generate unrealized gains or losses on policies purchased by our Structured Note Offerings (LMATT Series 2024, Inc., LMATT Growth Series
31

Table of Contents
2.2024, Inc., and LMATT Growth and Income Series 1.2026, Inc.) and Income Funds (LMA Income Series, LP, and the LMA Income Series II, LP). The second channel is from Portfolio servicing revenue, whereby we provide a range of services to life settlement asset owners. The third channel is from origination services rendered by serving as a life settlement provider when purchasing outstanding life insurance policies.
Active management revenue derives from buying and selling policies, and the receipt of death benefits proceeds on policies we hold where the insured dies. Of the purchased policies, some are purchased with the intent to hold to maturity while others are held for trading to be sold for a gain. We historically elected to account for each investment in life settlement contracts using either the investment method or the fair value method. Once the accounting method is elected for each policy, it cannot be changed. The Company accounts for life settlement policies purchased through the structured note and fund offerings on a fair value basis, and investment method basis at cost plus premiums paid. For all policies purchased after June 30, 2023, the Company accounts for these under the fair value method. For policies purchased before June 30, 2023, the Company elected to use either the fair value method or the investment method (cost plus premiums paid). The valuation method is chosen upon contract acquisition and is irrevocable. For the life settlement policies accounted for under the fair value method, these policies are part of the collateral consideration for the market linked structured notes issued under LMX Series, LLC and LMA Series, LLC subsidiaries where quarterly valuations are a condition of the private placement memorandum. Given that there is a valuation requirement stipulated in the notes, management has elected to use the fair value method for these policies, which are valued based on Level 3 inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability, such as life expectancies and cash flow discount rates. The inputs are developed based on the best available information, including our own data. Policies carried at fair value method capture the change in fair value within the income statement when those changes occur as opposed to when the policies are sold or mature. For policies held at fair value, changes in fair value are reflected in operations in the period the change is calculated. Under the investment method, investments in contracts are recorded at investment price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest and direct external costs, if any) to keep the policy in force are capitalized. Gains or losses on sales of policies carried using the investment method are recorded at the time of sale or maturity. For policies carried under the fair value method, we record the initial investment of the transaction price and remeasure the investment at fair value at each subsequent reporting period. Changes in fair value are reported in revenue when they occur, including those related to life insurance proceeds (policy maturities) and premium payments. Upon the sale of a life settlement contract, we record gains or losses for the difference between the agreed-upon purchase price with the buyer and the carrying value of the policy.
Generating Portfolio servicing revenue involves the provision of services to one affiliate by common ownership, and third parties, which own life insurance policies. Portfolio servicing revenue is derived from services related to maintaining these settled policies pursuant to agreement with investors in settled policies (“Service Agreement(s)”). Additionally, also included in servicing revenue are fees for limited consulting services related to the evaluation of policies that we perform for third parties. Portfolio servicing revenue is recognized ratably over the life of the Service Agreements, which range from one month to ten years. The duties performed by the Company under these arrangements are considered a single performance obligation that is satisfied ratably as the customer simultaneously receives and consumes the benefit provided by us. As such, revenue is recognized for services provided for the corresponding month.
Portfolio servicing revenue also consists of revenue related to consulting engagements. We provide consulting services for the owners of life settlement contracts who are often customers of the servicing business line, or customers of the origination channel. These consulting engagements are comprised of valuation, actuarial services, and overall policy assessments related to life settlement contracts and are short-term in nature. The performance obligations are typically identified as separate services with a specific deliverable or a group of deliverables to be provided in tandem, as agreed to in the engagement letter or contract. Each service provided under a contract is considered as a performance obligation and revenue is recognized at a point in time when the deliverable or group of deliverables is transferred to the customer.
As a life settlement provider, the Company serves as a purchaser of outstanding life insurance policies. When serving as a purchaser, the Company’s primary purpose in the transaction is to connect buyers and sellers through an origination process. The origination process is core to the Company’s business and drives its economics. The
32

Table of Contents
Company averages approximately 2% of face value of the life insurance policy in origination fees and has developed three high quality origination channels which include agents and financial advisors, direct-to-consumer and life settlement brokers. The Company also originates policies with third-party intermediaries. Generally, diversification across multiple origination channels lowers average policy acquisition costs and increases estimated returns. The Company finds sellers through its origination channels using strategic marketing practices in its core markets, with the purpose of finding policy owners who want to capitalize on their investments prior to death by extracting value from their policies through the sale of such policies to Financing Entities.
Business Combination
On August 30, 2022, East Resource Acquisition Company entered into the Merger Agreement with the Merger Subs, pursuant to which, among other things and subject to the terms and conditions contained in the Merger Agreement, Abacus Merger Sub merged with and into Abacus Settlements, with Abacus Settlements surviving the Abacus Merger as a wholly owned subsidiary of East Resource Acquisition Company, and LMA Merger Sub merged with and into LMA, with LMA surviving the LMA Merger as a wholly owned subsidiary of East Resource Acquisition Company. In connection with the closing of the Business Combination, East Resource Acquisition Company was renamed Abacus Life, Inc.
Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, on June 30, 2023, the Business Combination was consummated.
Key Factors Affecting Our Performance
The markets for our consulting and portfolio servicing are affected by economic, regulatory, and legislative changes, technological developments, and increased competition from established and new competitors. We believe that the primary factors in clients selecting the Company include our reputation, the ability to provide measurable increases to stockholder value and return on investment, global scale, quality of service and the ability to tailor services to each client’s specific needs. In that regard, with our ability to leverage the technology developed by the Company, Abacus Settlements and LMA, we are focused on developing and implementing data and analytic solutions for both internal operations and for maintaining industry standards and meeting client needs.
Results of Operations
The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not indicative of future results:
Three Months Ended March 31,
Years Ended December 31,
2024
2023
20232022
Portfolio servicing revenue
Related party servicing revenue
$185,185 $213,447 $778,678 $818,300 
Portfolio servicing revenue
32,750 89,424 223,496 652,672 
Total portfolio servicing revenue 
217,935 302,871 1,002,174 1,470,972 
Active management revenue
19,796,999 9,970,518 
Investment Income from life insurance policies held using investment method
17,980,987 37,828,829 
Change in fair value of life insurance policies (policies held using fair value method)
43,214,390 5,413,751 
Total active management revenue 
19,796,999 9,970,518 61,195,377 43,242,580 
Origination revenue
Related Party origination revenue
— — 494,972 — 
Origination Revenue
1,472,250 3,708,928 — 
Total origination revenue 
1,472,250  4,203,900 — 
Total revenues 
21,487,184 10,273,389 66,401,451 44,713,552 
33

Table of Contents
Cost of revenue (excluding depreciation and amortization stated below)
Related party cost of revenue
685 — 99,456 — 
Cost of revenues (including stock based compensation)
2,720,212 489,550 6,390,921 5,884,669 
Total cost of revenues 
2,720,897 489,550 6,490,377 5,884,669 
Portfolio servicing revenue
Gross Profit
18,766,287 9,783,839 59,911,074 38,828,883 
Operating expenses
Sales and marketing
1,929,944 729,004 4,905,747 2,596,140 
General, administrative and other (including stock based compensation)
11,353,499 696,892 26,482,571 1,426,865 
Unrealized loss (gain) on investments
(1,164,966)(125,220)(1,369,112)1,045,623 
(Gain) loss on change in fair value of debt
2,712,627 953,433 2,356,058 90,719 
Depreciation and amortization expense
1,682,054 1,043 3,409,928 4,282 
Total operating expenses 
16,513,158 2,255,152 35,785,192 5,163,629 
Operating Income
2,253,129 7,528,687 24,125,882 33,665,254 
Other income (expense)
Loss on change in fair value of warrant liability
946,960 — (4,204,360)— 
Other income (expense)
(53,028)(210,432)(146,443)(347,013)
Interest expense
(3,670,445)(357,383)(9,866,821)(42,798)
Interest income
421,426 7,457 594,764 1,474 
Net (loss) income before provision for income taxes
(101,958)6,968,329 10,503,022 33,276,917 
Income tax expense (benefit)
1,173,513 (656,467)1,468,535 889,943 
Net (loss) income
(1,275,471)7,624,796 9,034,487 32,386,974 
Less: Net income (loss) attributable to noncontrolling interest
73,274 (460,707)(482,139)704,699 
Net (loss) income attributable to common stockholders
$(1,348,745)$8,085,503 $9,516,626 $31,682,275 
Comparison of the Three Months Ended March 31, 2024 and March 31, 2023
Revenue
Related Party Services
We have a related-party relationship with Nova Trading (US), LLC (“Nova Trading”), a Delaware limited liability company and Nova Holding (US) LP, a Delaware limited partnership (“Nova Holding” and collectively with Nova Trading, the “Nova Funds”) as some of the owners of the Company and certain members of management jointly own 11% of the Nova Funds. We enter into Service Agreements with the owners of life settlement contracts and are responsible for maintaining the policies, managing processing of claims in the event of death of the insured and ensuring timely payment of optimized premiums computed to derive maximum return on maturity of the policy. We neither assume the ownership of the contracts nor undertake the responsibility to make the associated premium payments. The duties that we perform under these arrangements are considered a single performance obligation that is satisfied over time and revenue is recognized for services provided for the corresponding time period. We earn servicing revenue related to policy and administrative services on behalf of Nova Funds portfolio (the “Nova
34

Table of Contents
Portfolio”). The servicing fee is equal to 50 basis points (0.50%) times the monthly invested amount in policies held by Nova Funds divided by 12.
Three Months Ended March 31,
2024
2023
$ Change% Change
Related party servicing revenue
$185,185 $213,447 $(28,262)(13.2)%
Related party servicing revenue decreased by $28,262, or 13.2%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is mainly due to a decrease in policies serviced for the Nova Funds.
Three Months Ended March 31,
2024
2023
$ Change% Change
Portfolio servicing revenue
$32,750 $89,424 $(56,674)(63.4)%
Portfolio servicing revenue decreased by $56,674, or 63.4%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is mainly due to non-recurring consulting projects not reoccurring.
Active Management Revenue
Three Months Ended March 31,
2024
2023
$ Change% Change
Active management revenue
$19,796,999 $9,970,518 $9,826,481 98.6 %
Active management revenue is generated by buying, selling, and trading policies and maintaining policies through to receipt of maturity or death benefits. Policies are accounted for under both the investment method and fair value method. We have elected on an instrument-by-instrument basis to account for these policies under the investment method, pursuant to Accounting Standards Codification (“ASC”) 323-30-25-2. The Company engages in direct buying and selling of life settlement policies whereby each potential policy is independently researched to determine if it would be a profitable investment. Policies purchased under the Company are typically purchased with the intention to sell within twelve months and are measured for under the investment method given that the purchase dates are recent, and policies turn fairly quickly. Policies purchased under LMATT Series 2024, Inc. or LMATT Growth Series 2.2024, Inc. are measured under the fair value method and will either be sold or held until the policies mature. Upon sale of a life settlement contract, the Company will record revenue (gain/loss) for the difference between the agreed-upon purchase price with the buyer, and the carrying value of the contract.
Total active management revenue increased by $9,826,481, or 98.6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is mainly due to a net increase of $10,759,542 related to policies accounted for under the fair value method (comprised of $8,876,956 realized gains, $4,097,689 unrealized gains and offset by $2,215,003 in premiums paid) and $6,959,273 fee-based revenue, offset by a decrease of $7,892,334 in trading activity related to policies accounted for under the investment method.
The aggregate face value of policies accounted for using the investment method is $30,900,000 as of March 31, 2024, with a corresponding carrying value of $1,434,444. Additional information regarding policies accounted for under the investment method is as follows:
35

Table of Contents
Three Months Ended March 31,
2024
2023
Investment method
Policies bought
— 86 
Policies sold
— 39 
Policies matured
Average realized gain (loss) on policies sold
44.1 %15.3 %
Number of external counter parties that purchased policies
— 
Realized gains
$220,256 $8,392,334 
Revenue from maturities
$500,000 $4,000,000 
The aggregate face value of policies held at fair value is $506,955,702 as of March 31, 2024 with a corresponding fair value of $125,488,525. Additional information regarding policies accounted for under the fair value method is as follows:
Three Months Ended March 31,
2024
2023
Fair value method
Policies bought
122 15 
Policies sold
93 
Policies matured
— 
Average realized gain (loss) on policies sold
16.0 %8.4 
Number of external counter parties that purchased policies
Realized gains, net of premiums paid
$7,047,172 $796,361 
Revenue from maturities
$201,006 $— 
Origination Revenue
Through the origination segment, the Company originates life insurance policy settlement contracts as a licensed life settlement provider on behalf of third-party institutional investors interested in investing in the life settlement asset class. Specifically, the Company originates policies through three primary origination channels (agents/financial advisors, direct-to-consumers, life settlement brokers and third-party intermediaries), screens them for eligibility by verifying that the policy is in force, obtains consents and disclosures, and submits cases for life expectancy estimates. The Company has a related party relationship with Nova Trading and Nova Holding as the owners of the Company jointly own 11% of the Nova Funds. The pricing for origination fees is governed by origination contracts that have been negotiated by both parties and are considered to be arms-length and consistent with origination fees charged to third-party customers. For its origination services to the Nova Funds, the Company earns origination fees equal to the lesser of (i) 2% of the net death benefit for the policy or (ii) $20,000.
The Company did not generate related party origination revenue from Nova Funds for the three months ended March 31, 2024 and three months ended March 31, 2023. The related party origination revenue is related to Abacus Settlements, which was acquired on June 30, 2023.
Three Months Ended March 31,
2024
2023
$ Change% Change
Origination Revenue
$1,472,250 $— $1,472,250 — %
Company Origination Revenue increased to $1,472,250 from $— for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The origination revenue is related to Abacus Settlements, which was acquired on June 30, 2023.
36

Table of Contents
Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit
Cost of revenues (excluding depreciation and amortization) primarily consists of servicing fees, commissions expense, escrow fees, servicing and active management payroll costs, stock-based compensation for active management and servicing employees, life expectancy fees, lead generation expenses, and active management consulting expenses. The payroll costs related to policy servicing are for recurring and non-recurring projects where the time incurred for servicing policies is measurable and directly correlates to revenue earned. Similarly, consulting expenses are for discretionary commissions earned directly related to revenue generated as part of the Active management revenue stream.
Three Months Ended March 31,
2024
2023
$ Change% Change
Cost of revenue (excluding depreciation and amortization)
$2,720,212 $489,550 $2,230,662 455.7 %
Cost of revenues (excluding depreciation and amortization) increased by $2,230,662, or 455.7%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in cost of revenues is primarily due to increase in payroll expense related to growth in active management activity, $1,400,033 increase of commissions for origination activity related to the increase in insurance policy purchase activity during 2024, and $322,607 non-cash stock-based compensation expense.
Related party cost of revenue of $685 is associated with third-party commission expense for related party origination activity, which is now included within the Consolidated Financial Statements for the Company subsequent to the acquisition of Abacus Settlements that took place on June 30, 2023.
Three Months Ended March 31,
2024
2023
$ Change% Change
Gross Profit
$18,766,287 $9,783,839 $8,982,448 91.8 %
Gross profit increased by $8,982,448, or 91.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in gross profit is primarily due to an increase in active management revenue.
Operating Expenses
Sales and Marketing Expenses
Sales and marketing expenses primarily consist of advertising and marketing related expenses.
Three Months Ended March 31,
2024
2023
$ Change% Change
Sales and marketing expenses
$1,929,944 $729,004 $1,200,940 164.7 %
Sales and marketing expenses increased by $1,200,940, or 164.7%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily related to an increase in advertising costs to support our active management growth strategy.
General, Administrative, and Other
General, administrative, and other primarily consists of compensation and benefits related costs associated with our finance, legal, human resources, information technology, and administrative functions. General, administrative and
37

Table of Contents
other costs also consist of third-party professional service fees for external legal, accounting and other consulting services, rent and lease charges, insurance costs, and software expense.
Three Months Ended March 31,
2024
2023
$ Change% Change
General and administrative (including stock-based compensation)
$11,353,499 $696,892 $10,656,607 1,529.2 %
General, administrative, and other increased by $10,656,607, or 1,529.2%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in general, administrative, and other expenses is primarily related to non-cash stock based compensation expense of $5,770,764, payroll expense of $2,893,723, accounting and auditing fees of $618,560, legal and professional fees of $98,332, and an increase in other expenses general and administrative expenses of $1,275,228 to support the Company’s public company compliance costs post the Business Combination.
Depreciation and Amortization Expense
Depreciation and amortization expense consists primarily of depreciation on property and equipment purchased and leasehold improvements and amortization of intangible assets. The property at the Company currently consists of furniture, fixtures and leasehold improvements for the office and are not directly used to support the servicing or trading of life settlement policies. The intangible assets at the Company consist of customer relationships, internally developed and used technology, and non-compete agreements.
Three Months Ended March 31,
2024
2023
$ Change% Change
Depreciation and amortization
$1,682,054 $1,043 $1,681,011 161,170.8 %
The increase of $1,681,011, or 161,170.8%, in depreciation and amortization expense is related to the amortization of acquired Abacus Settlements intangible assets.
Unrealized Loss (Gain) on Investments
Three Months Ended March 31,
2024
2023
$ Change% Change
Unrealized (gain) on investments
$(1,164,966)$(125,220)$(1,039,746)830.3 %
Unrealized gain on investments increased by $1,039,746 or 830.3% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The primary cause of this increase pertains to the change in fair value of S&P 500 options.
(Gain) Loss on Change in Fair Value of Debt
Three Months Ended March 31,
2024
2023
$ Change% Change
Loss on change in fair value of debt
$2,712,627 $953,433 $1,759,194 184.5 %
Loss in the fair value of debt increased by $1,759,194, or 184.5%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily attributable to changes in the risk-free fair value of our market-indexed notes.
38

Table of Contents
Other Income (Expenses)
Three Months Ended March 31,
2024
2023
$ Change% Change
Other income (expense)
$(53,028)$(210,432)$157,404 (74.8)%
Interest (expense)
(3,670,445)(357,383)(3,313,062)927.0 %
Interest income
421,426 7,457 413,969 5,551.4 %
Gain on change in fair value of warrant liability
946,960 — 946,960 — %
Other income (expense) decreased by $157,404, or 74.8%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The decrease is primarily related to other expense activities.
Interest expense was $3,670,445 for the three months ended March 31, 2024, compared to $357,383 for the three months ended March 31, 2023. The increase in interest expense is primarily related to the Fixed Unsecured Notes interest expense of $1,195,860, the LMA Income Series II LP interest expense of $838,944, the LMA Income Series LP interest expense of $12,577, the SPV Purchase and Sale Note non-cash interest expense $803,828, and the Sponsor PIK Note non-cash interest of $336,822.
Interest income was 421,426 for the three months ended March 31, 2024 compared to $7,457 for the three months ended March 31, 2023. The increase in interest income is related to interest earned on our bank deposits.
Gain on change in fair value of warrant liability was $946,960 for the three months ended March 31, 2024 compared to $— for the three months ended March 31, 2023. The change is primarily attributable to the decrease in the price for the public warrants from December 31, 2023 to March 31, 2024, which is a determining factor for measuring the fair value of the private warrants.
Income Tax Expense
Prior to the Business Combination, the Company elected to file as an S-corporation for federal and Florida state income tax purposes. As such, the Company incurred no federal or Florida state income taxes, except for income taxes recorded related to LMATT Series 2024, Inc., a Delaware C-corporation and wholly owned subsidiary of LMX Series, LLC, both of which are consolidated by the Company. Accordingly, the income tax expense has historically been attributable to income tax expense for LMATT Series 2024, Inc. However, the Business Combination resulted in changes to the tax status of certain entities which impacted the provision for income taxes.
Three Months Ended March 31,
2024
2023
$ Change% Change
Income tax expense (benefit)
$1,173,513 $(656,467)$1,829,980 278.8 %
Income tax expense increased by $1,829,980, or 278.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Our effective income tax rate for the three months ended March 31, 2024 and three months March 31, 2023 was 1151.0% and (9.4)%, respectively. The increase was primarily driven by the portion of the stock-based compensation expense deduction limited by IRC Section 162(m).
Results of Operations—Segment Results
The Company organizes its business into three reportable segments: (i) portfolio servicing, (ii) active management, and (iii) originations, all three of which generate revenue in different manners. During 2021, we primarily focused on the portfolio servicing business. At the end of June 2021, we underwent a change in our business to focus on active management services in addition to portfolio servicing. Finally, the Company originates life insurance policies as a result of the Business Combination.
This segment structure reflects the financial information and reports used by the Company's management, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business,
39

Table of Contents
including resource allocations and performance assessments as well as the current operating focus in accordance with ASC 280, Segment Reporting. The Company's CODM is the Chief Executive Officer of the Company.
The portfolio servicing segment generates revenues by providing policy services to customers on a contract basis. The active management segment generates revenues by buying, selling and trading policies and maintaining policies through to death benefit. The origination segment generates revenue by originating life insurance policy settlement contracts as a licensed life settlement provider on behalf of third-party institutional investors interested in investing in the life settlement asset class. The Company's reportable segments are not aggregated.
The following tables provides supplemental information of revenue and profitability by operating segment:
Portfolio Servicing
Three Months Ended March 31,
2024
2023
$ Change% Change
Total revenue
$217,935 $302,871 $(84,936)(28.0)%
Gross loss
(144,457)(22,243)(122,214)549.4 %
Total revenue for the portfolio servicing segment decreased by $84,936, or 28.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease in portfolio servicing revenue is primarily attributable to a decrease in the non-recurring consulting projects.
Gross loss from our portfolio servicing segment increased by $122,214, or 549.4%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to increases in related cost of revenue.
Active Management
Three Months Ended March 31,
2024
2023
$ Change% Change
Total revenue
$19,796,999 $9,970,518 $9,826,481 98.6 %
Gross profit
18,838,527 9,806,082 9,032,445 92.1 %
Total revenue for the active management segment increased by $9,826,481, or 98.6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Gross profit from our active management segment increased by $9,032,445, or 92.1%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in active management revenue and gross profit was primarily attributable to $6,959,273 in fee-based revenue and a $4,097,689 increase in unrealized gains in policies accounted for under the fair method, offset by a $1,921,267 decrease in realized gains in total life settlement policy sales and maturities and an increase in cost of revenue from 2% of revenue for the three months ended March 31, 2023 to 5% of revenue for the three months ended March 31, 2024.
Originations
Three Months Ended March 31,
2024
2023
$ Change% Change
Total revenue
$5,024,204 $— $5,024,204 100.0 %
Gross profit
72,217 — 72,217 100.0 %
Total revenue for the originations segment increased by $5,024,204 for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Among the total originations revenue, the majority of the balance is related to the eliminated intercompany activity of $3,551,954 that is related to policies that Abacus Settlements originated for LMA or other subsidiaries. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
40

Table of Contents
Comparison of Fiscal Year 2023 and Fiscal Year 2022
Revenue
Related Party Services

Years Ended December 31,
20232022$ Change% Change
Related party servicing revenue
$778,678 $818,300 $(39,622)(4.8 %)
Related party servicing revenue decreased by $39,622, or 4.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in related party servicing revenue is primarily due to servicing less policies owned by the Nova Portfolio for the year ended at December 31, 2023.
Years Ended December 31,
20232022$ Change% Change
Portfolio servicing revenue
$223,496 $652,672 $(429,176)(65.8 %)
Portfolio servicing revenue decreased by $429,176 or 65.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in portfolio servicing revenue is primarily attributable to a reduction in the non-recurring consulting projects during the year ended December 31, 2023 compared to the year ended December 31, 2022. There were no new non-recurring consulting projects initiated during the year ended 2023 to servicing more external funds.
Active Management Revenue

Years Ended December 31,
20232022$ Change% Change
Active management revenue
Policies accounted for under the investment method
$17,980,987 $37,828,829 $(19,847,842)(52.5 %)
Policies accounted for under the fair value method
43,214,390 5,413,751 37,800,639 698.2 %
Total active management revenue 
$61,195,377 $43,242,580 $17,952,797 41.5 %
Total Active management revenue increased by $17,952,797, or 41.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in Active management revenue was primarily attributable to an increase of $22,475,355 in unrealized gains on held policies accounted under the fair value method due to increase in held policies, $1,849,216 increase in total realized gains, and offset by a decrease of $6,371,774 in total maturities on held policies, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Revenue for policies accounted for under the investment method decreased by $19,847,842 or 52.5% for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease is primarily due to decrease in realized gains of $12,847,842 due to a shift to electing the fair value method of accounting on all policies purchased after June 30, 2023 and a decrease of $7,000,000 in maturities on held policies, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
41

Table of Contents
The aggregate face value of policies accounted for using the investment method was $33,900,000 as of December 31, 2023, with a corresponding carrying value of $1,697,178. Additional information regarding policies accounted for under the investment method is as follows:
Years Ended December 31,
20232022
Investment method
Policies bought
165 145 
Policies sold
164 127 
Policies matured
Average realized gain (loss) on policies sold
19 %17 %
Number of external counter parties that purchased policies
15 25 
Realized gains
$13,980,987 $26,828,829 
Revenue from maturities
$4,000,000 $11,000,000 
Revenue for policies accounted for under the fair value method resulted in an increase in revenue of $37,800,639 or 698.2% for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase is driven primarily by an increases in unrealized gain on life settlement policies of $22,475,355 and in realized gains and maturities of $19,272,794, offset by $4,281,610 premiums paid, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
The aggregate face value of policies held at fair value was $520,503,710 as of December 31, 2023, with a corresponding fair value of $122,296,559. For the policies held at fair value, the unrealized gain recorded on 382 purchased policies as of $27,889,106 represents a change in fair value of the aforementioned policies. The Company realized a gain of $19,606,894, including maturities of $828,226, for the year ended December 31, 2023 for 196 sold policies that were included in the change in fair value of life insurance policies held using the fair value method and made premium payments of $4,281,610, which were also included in the total realized gains. Additional information regarding policies accounted for under the fair value method is as follows:
Years Ended December 31,
20232022
Fair value method
Policies bought
382 35 
Policies sold
196 — 
Policies matured
Average realized gain (loss) on policies sold
17 %— 
Number of external counter parties that purchased policies
10 — 
Realized gains, net of $(4,281,610) of premiums paid
$14,497,058 $134,100 
Revenue from maturities
$828,266 $200,000 
Origination Revenue
Years Ended December 31,
20232022$ Change% Change
Related Party origination revenue
$494,972 $— $494,972 — %
42

Table of Contents
Related party origination revenue increased to $494,972 from $—, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Revenue from originations arose due to the Business Combination of LMA and Abacus Settlements on June 30, 2023 as this stream of revenue comes from the Abacus Settlements business.
Years Ended December 31,
20232022$ Change% Change
Origination Revenue
$3,708,928 $— $3,708,928 — %
Company Origination Revenue increased to $3,708,928 from $—, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Company Origination Revenue occurred due to the Business Combination of LMA and Abacus Settlements on June 30, 2023 as this stream of revenue comes from the Abacus Settlements business.
Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit
Years Ended December 31,
20232022$ Change% Change
Cost of revenue (excluding depreciation and amortization)
$6,390,921 $5,884,669 $506,252 8.6 %
Cost of revenues (excluding depreciation and amortization) increased by $506,252, or 8.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in cost of revenues is primarily due to an increase of payroll expenses related to increased headcount, stock-based compensation expense, and increase of commissions for origination activity related to the increase in insurance policy purchase and sale activity during 2023. Related party cost of revenue of $99,456 is associated with third-party commission expense for related party origination activity, which is now included within the Consolidated Financial Statements for the Company subsequent to the Business Combination that took place on June 30, 2023.
Years Ended December 31,
20232022$ Change% Change
Gross profit
$59,911,074 $38,828,883 $21,082,191 54.3 %
Gross profit increased by $21,082,191, or 54.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in gross profit is primarily due to an increase in active management services, offset by an increase in cost of revenues.
Operating Expenses
Sales and Marketing Expenses
Years Ended December 31,
20232022$ Change% Change
Sales and marketing expenses
$4,905,747 $2,596,140 $2,309,607 89.0 %
Sales and marketing expenses increased by $2,309,607, or 89.0%, for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in sales and marketing expense was attributable to an increase in television advertising costs related to the increase in insurance policy purchase and sale activity during 2023.
43

Table of Contents
General, Administrative, and Other
Years Ended December 31,
20232022$ Change% Change
General, administrative and other (including stock based compensation of $10,455,417 and $— in 2023 and 2022, respectively)
$26,482,571 $1,426,865 $25,055,706 1756.0 %
General, administrative, and other increased by $25,055,706, or 1,756.0%, for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in general, administrative, and other expenses is primarily related to stock-based compensation of $10,445,417, payroll expense of $7,653,559, accounting and auditing fees of $1,790,765, legal and professional fees of $1,321,712, and an increase in other expenses general and administrative expenses of $3,844,253 due to the increase in active management activity post the Business Combination.
Depreciation and Amortization Expense
Years Ended December 31, 
20232022$ Change% Change
Depreciation and amortization
$3,409,928 $4,282 $3,405,646 79,534.0 %
The increase of $3,405,646, or 79,534.0%, in depreciation and amortization expense is primarily related to amortization of intangible assets.
Unrealized Gain (Loss) on Investments
Years Ended December 31,
20232022$ Change% Change
Unrealized loss (gain) on investments
$(1,369,112)$1,045,623 $(2,414,735)(230.9)%
Unrealized loss (gain) on investments decreased by $2,414,735 or 230.9% for the year ended December 31, 2023, compared to the year ended December 31, 2022. During the first and third quarters of 2022, the Company, through three subsidiaries, LMATT Series 2024, Inc., LMATT Growth Series, Inc., and LMATT Growth and Income Series, Inc. purchased S&P 500 call options and sold S&P 500 put options through a broker as an economic hedge related to the market-indexed instruments described below. The primary cause of this decrease pertains to the change in fair value of those options and is classified as an unrealized loss on investments within the results of operations.
(Gain) Loss on Change in Fair Value of Debt
Years Ended December 31,
20232022$ Change% Change
(Gain) loss on change in fair value of debt
$2,356,058 $90,719 $2,265,339 2497.1 %
Change in gain on fair value of debt increased by $2,265,339, or 2497.1% for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase is primarily attributable to changes in the risk-free fair value of LMATT Series 2024, Inc., LMATT Growth Series, Inc., and LMATT Growth and Income Series, Inc. related debt.
On March 31, 2022, LMATT Series 2024, Inc., a 70% owned subsidiary which the Company consolidates for financial reporting, issued $10,166,900 in market-indexed private placement notes. The note, titled the Longevity Market Assets Target-Term Series (LMATTS) 2024, is a market-indexed instrument designed to provide upside performance exposure of the S&P 500 Index, while limiting downward exposure. Upon maturity of the note in 2024, the principal, plus the return based upon the S&P 500 Index must be paid. The note has a feature to protect debt holders from market downturns, up to 40%. Any subsequent losses below the 40% threshold will reduce the note on
44

Table of Contents
a one-to-one basis. As of December 31, 2023, $8,816,900 of the principal amount remained outstanding. The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of December 31, 2023, the fair value of the LMATT Series 2024, Inc. notes was $9,477,780. The notes are secured by the assets of the issuing entities, which include cash, S&P 500 options, and life settlement policies that totaled $5,152,589 as of December 31, 2023. The note agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing companies are considered as collateral. There are also no restrictive covenants associated with the notes with which the entities must comply.
On September 16, 2022, LMATT Growth Series 2.2024, Inc., a 100% owned subsidiary which the Company consolidates for financial reporting, issued $2,333,391 in market-indexed private placement notes. The note, titled the Longevity Market Assets Target-Term Growth Series 2.2024, Inc., is a market-indexed instrument designed to provide upside performance exposure of the S&P 500 Index, while limiting downward exposure. Upon maturity of the note in 2024, the principal, plus the return based upon the S&P 500 Index, must be paid. The note has a feature to provide upside performance participation that is capped at 120% of the performance of the S&P 500. A separate layer of the note has a feature to protect debt holders from market downturns by up to 20% if the index price experiences a loss during the investment period. After the underlying index has decreased in value by more than 20%, the investment will experience all subsequent losses on a one-to-one basis. As of December 31, 2023, the entire principal amount remained outstanding. The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of December 31, 2023, the fair value of the LMATT Series 2.2024, Inc. notes was $3,551,852. The notes are secured by the assets of the issuing entity, LMATT Series 2.2024, Inc., which include cash, S&P 500 options, and life settlement policies that totaled $1,086,735 as of December 31, 2023. The note agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing company are considered as collateral. There are also no restrictive covenants associated with the note with which the entity must comply.
Additionally, on September 16, 2022, LMATTS Growth and Income Series 1.2026, Inc., a 100% owned subsidiary which the Company consolidates for financial reporting, issued $400,000 in market-indexed private placement notes. The note, titled the Longevity Market Assets Target-Term Growth and Income Series 1.2026, Inc., is a market-indexed instrument designed to provide upside performance exposure of the S&P 500 Index while limiting downward exposure. Upon maturity of the note in 2026, the principal, plus the return based upon the S&P 500 Index, must be paid. The note has a feature to provide upside performance participation that is capped at 140% of the performance of the S&P 500. A separate layer of the note has a feature to protect debt holders from market downturns by up to 10% if the index price experiences a loss during the investment period. After the underlying index has decreased in value by more than 10%, the investment will experience all subsequent losses on a one-to-one basis. This note also includes a 4% dividend feature that will be paid annually. As of December 31, 2023, the entire principal amount remained outstanding. The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of December 31, 2023, the fair value of the LMATT Growth and Income Series 1.2026, Inc., notes was $569,862. The notes are secured by the assets of the issuing entity, LMATTS Growth and Income Series 1.2026, Inc., which include cash, S&P 500 options, and life settlement policies that totaled $242,488 as of December 31, 2023. The note agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing company are considered as collateral. There are also no restrictive covenants associated with the note with which the entity must comply. See additional fair value considerations within Note 12 to the Company’s Consolidated Financial Statements, which is included in this prospectus.
Other Income (Expense)
Other income (expense) consists of working capital support that the Company provides to two commonly owned full-service origination, servicing, and investment life settlement providers (the “Providers”) through the Strategic Services and Expenses Support Agreement (the “SSES”) further discussed in Note 11, Commitments and Contingencies, to the Company’s Consolidated Financial Statements, which is included in this prospectus. The Company entered into the SSES with the Providers and simultaneously acquired an option to purchase the outstanding equity ownership of the Providers, upon the achievement by the Providers of certain financial targets. For the years ended December 31, 2023 and 2022, the Providers were considered to be variable interest entities
45

Table of Contents
(“VIE” or “VIEs,” as the context provides) but were not consolidated in our Consolidated Financial Statements as we do not hold a controlling financial interest in the Providers.
Years Ended December 31,
20232022$ Change% Change
Other income (expense)
$(146,443)$(347,013)$200,570 (57.8)%
Interest (expense)
(9,866,821)(42,798)(9,824,023)22954.4 
Interest income
594,764 1,474 593,290 100 %
Loss on change in fair value of warrant liability
(4,204,360)— (4,204,360)100 %
Other income (expense) decreased by $200,570, or 57.8%, for the year ended December 31, 2023, compared to the year ended December 31, 2022. The decrease is primarily related to financial assistance provided to the Providers. Refer to Note 2, Summary of Significant Accounting Policies, to the Company’s Consolidated Financial Statements, which is included in this prospectus.
Interest expense was $9,866,821 for the year ended December 31, 2023, compared to $42,798 for the year ended December 31, 2022. The increase in interest expense is primarily related to the Owl Rock Credit Facility (including $3,327,418 of loss on extinguishment), the SPV Purchase and Sale Note (non-cash interest expense of $1,538,004), and the Sponsor PIK Note (non-cash interest of $644,217), and the launch of two Income funds, LMA Income Series, LP and LMA Income Series II, LP for the year ended December 31, 2023.
Interest income was $594,764, for the year ended December 31, 2023, compared to $1,474 for the year ended December 31, 2022. The increase in interest income is primarily due to money market sweeps during 2023.
Loss on change in fair value of warrant liability was $4,204,360, for the year ended December 31, 2023, compared to $- for the year ended December 31, 2022. The loss is primarily attributable to the increase in the price for the public warrants from June 30, 2023 to December 31, 2023, which is a determining factor for measuring the fair value of the private warrants.
Income Tax Expense
Years Ended December 31,
20232022$ Change% Change
Income tax expense
$1,468,535 $889,943 $578,592 65.0 %
Income tax expense increased by $578,592, or 65.0% for the year ended December 31, 2023 compared to the year ended December 31, 2022. Our effective income tax rate for the years ended December 31, 2023 and 2022 was 14.0% and 22%, respectively. The Company’s effective tax rate as of December 31, 2022 differed from the statutory rate of 21% due to the impact of state income taxes and valuation allowance released, as there was sufficient evidence of the Company’s ability to generate future taxable income at December 31, 2022. The existence of non-taxable flow-through entities within the Company as well as a change in tax status of certain entities upon the Business Combination caused the effective tax rate to be significantly lower than the statutory rate for the year ended December 31, 2023. The income tax expense for the year ended December 31, 2023 is mainly related to the unfavorable adjustment related to restricted stock award deductions limited by IRC 162(m).
46

Table of Contents
Results of Operations—Segment Results
The following tables provides supplemental information of revenue and profitability by operating segment:
Portfolio Servicing
Years Ended December 31,
20232022$ Change% Change
Total revenue 
$1,002,174 $1,470,972 $(468,798)(31.9)%
Gross profit (Loss)
278,115 300,235 (22,120)(7.4)%
Total revenue for the portfolio servicing segment decreased by $468,798 or 31.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in Portfolio servicing revenue is primarily attributable to a decrease in the non-recurring consulting projects in Portfolio servicing revenue. Gross profit from our portfolio servicing segment decreased by $22,120, or 7.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increases in cost of revenue.
Active Management
Years Ended December 31,
20232022$ Change% Change
Total revenue 
$61,195,377 $43,242,580 $17,952,797 41.5 %
Gross profit
59,020,991 38,528,648 20,492,343 53.2 %
Total revenue for the active management segment increased by $17,952,797, or 41.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Gross profit from our active management segment increased $20,492,343, or 53.2% for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in active management revenue and gross profit was primarily attributable to the increase in revenue of $17,952,797, or 41.5%, and decrease in cost of revenue from 10.9% of revenue in 2022 to 3.6% of revenue in 2023. The decrease in cost of revenue was related to decrease in discretionary commissions for individuals directly related to active management trading revenue.
Originations
Years Ended December 31,
20232022$ Change% Change
Total revenue 
$19,247,972 $— $19,247,972 — %
Gross profit
611,968 — 611,968 — %
Total revenue for the originations segment increased by $19,247,972 for the year ended December 31, 2023 compared to the year ended December 31, 2022. Among the total originations revenue, the majority of the balance is related to the eliminated intercompany activity of $(15,044,072) that is related to policies that Abacus Settlements originated for LMA. No originations revenue was recorded prior to Business Combination.
Key Business Metrics and Non-GAAP Financial Measures
The Consolidated Financial Statements and Interim Financial Statements of the Company have been prepared in accordance with the rules and regulations of the SEC and are prepared in accordance with U.S. GAAP. We monitor key business metrics and non-GAAP financial measures that assist us in evaluating our business, measuring our
47

Table of Contents
performance, identifying trends and making strategic decisions. We have presented the following non-GAAP measures, their most directly comparable GAAP measure, and key business metrics:
Non-GAAP Measure
Comparable GAAP Measure
Adjusted Net Income, Adjusted EPS
Net Income attributable to common stockholders and EPS
Adjusted EBITDA
Net Income
Adjusted Net Income, Adjusted EPS, Adjusted EBITDA and Adjusted EBITDA Margin are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin), net income (loss) attributable to common stockholders (for Adjusted Net Income) or earnings (loss) per share (for Adjusted EPS), which are considered to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing Company’s operating performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for net income (loss), net income (loss) attributable to common stockholders, earnings (loss) per share or other consolidated statements of operations and comprehensive income data prepared in accordance with GAAP.
Adjusted Net Income is presented for the purpose of calculating Adjusted EPS. The Company defines Adjusted Net Income as net income (loss) attributable to common stockholders adjusted for non-controlling interest income, amortization, change in fair value of warrants and non-cash stock-based compensation and the related tax effect of those adjustments. Management believes that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance.
Adjusted EPS measures our per share earnings and is calculated as Adjusted Net Income divided by adjusted weighted-average shares outstanding. We believe Adjusted EPS is useful to investors because it enables them to better evaluate per share operating performance across reporting periods, and management believes that Adjusted EPS is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance.
Adjusted Net Income and Adjusted EPS
The following table presents a reconciliation of Adjusted Net Income to the most comparable GAAP financial measure, net income (loss) attributable to common stockholders and Adjusted EPS to the most comparable GAAP financial measure, earnings per share, on a historical basis for the periods indicated below:
Three Months Ended
Years Ended December 31,
2024
2023
20232022
Net income attributable to Abacus Life, Inc.
$(1,348,745)$8,085,503 $9,516,626 $31,682,275 
Net income attributable to non-controlling interests
73,274 (460,707)(482,139)704,699 
Amortization expense
1,667,109 — 3,364,167 — 
Stock based compensation
6,093,371 — 10,768,024 — 
(Gain)/Loss on change in fair value of warrant liability
(946,960)— 4,204,360 — 
Tax impact(1)
1,165,902 — 2,069,993 — 
Adjusted Net Income
$6,703,951 $7,624,796 $29,441,031 32,386,974 
Weighted-average shares of Class A common stock outstanding ‒ basic(2)
63,027,246 50,369,350 56,951,414 50,369,350 
Weighted-average shares of Class A common stock outstanding ‒ diluted(2)
63,027,246 50,369,350 57,767,898 50,369,350 
Proforma Adjusted EPS ‒ basic
$0.11 $0.15 $0.52 $0.64 
Proforma Adjusted EPS ‒ diluted
$0.11 $0.15 $0.51 $0.64 
48

Table of Contents
__________________
(1)Tax impact represents the permanent difference in tax expense related to the restricted stock awards granted to the CEO due to IRC 162(m) limitations.
(2)The number of shares outstanding have been retrospectively recast for prior period presented to reflect the outstanding stock of Abacus Life, Inc. as a result of the Business Combination.
Adjusted Net Income for the year ended December 31, 2023 was $29,441,031 compared to $32,386,974 for the year ended December 31, 2022. The decrease of $2,945,943, or 9.1%, in Adjusted Net Income is primarily due to increases in general and administrative expenses and sales and marketing expenses to support the increase in active management activity. Adjusted basic EPS for the year ended December 31, 2023 was $0.52 compared to $0.64 for the year ended December 31, 2022. Adjusted Diluted EPS for the year ended December 31, 2023 was $0.51 compared to $0.64 for the year ended December 31, 2022.
The change in Adjusted Net Income for the three months ended March 31, 2024 was $6,703,951 compared to $7,624,796 for the three months ended March 31, 2023. The decrease of $920,845, or 12.1%, in Adjusted Net Income was primarily a result of the factors described above in connection with Operating Revenues and Operating Expenses and the items listed above in the section titled “Comparison of the Three Months Ended March 31, 2024 and March 31, 2023.”
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is net income adjusted for depreciation expense, amortization, interest expense, income tax and other non-cash and certain non-recurring items that in our judgement significantly impact the period-over-period assessment of performance and operating results that do not directly relate to business performance within the Company’s control. These items may include payments made as part of the Company’s expense support commitment, (gain) loss on change in fair value of debt, loss on change in fair value of warrant liability, S&P 500 put and call options that were entered into as an economic hedge related to the debt (described as the unrealized loss on investments), non-cash stock based compensation, and certain non-recurring items. Adjusted EBITDA should not be determined as substitution for net income (loss), cash flows provided (used in) operating, investing, and financing activities, operating income (loss), or other metrics prepared in accordance with U.S. GAAP.
Management believes the use of Adjusted EBITDA assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. We believe that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain non-recurring items that are highly variable from year to year, Adjusted EBITDA provides our investors with performance measures that reflect the impact to operations from trends in changes in revenue, policy values and operating expenses, providing a perspective not immediately apparent from net income and operating income. The adjustments we make to derive the non-GAAP measure of Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income and which we do not consider to be the fundamental attributes or primary drivers of our business.
49

Table of Contents
The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to the most comparable GAAP financial measure, net income (loss), on a historical basis for the years ended December 31, 2023 and 2022 and the three months ended March 31, 2024 and 2023, as indicated below:
Three Months Ended March 31,
Years Ended December 31,
2024
2023
20232022
Net (loss) income
$(1,275,471)$7,624,796 $9,034,487 $32,386,974 
Depreciation and amortization expense
1,682,054 1,043 3,409,928 4,282 
Income Tax
1,173,513 (656,467)1,468,535 889,943 
Interest expense
3,670,445 357,383 9,866,821 42,798 
Other expense
53,028 210,432 146,443 347,013 
Interest Income
(421,426)(7,457)(594,764)(1,474)
(Gain)/loss on change in fair value of warrant liability
(946,960)— 4,204,360 — 
Stock based compensation
6,093,371 — 10,768,024 — 
Unrealized (gain)/loss on investments
(1,164,966)(125,220)(1,369,112)1,045,623 
Loss on change in fair value of debt
2,712,627 953,433 2,356,058 90,719 
Adjusted EBITDA
$11,576,215 $8,357,943 $39,290,780 $34,805,878 
Adjusted EBITDA Margin
53.9 %81.4 %59.2 %77.8 %
Net Income Margin
(5.9)%74.2 %13.6 %72.4 %
Adjusted EBITDA for the year ended December 31, 2023 was $39,290,780 compared to $34,805,878 for the year ended December 31, 2022. The increase of $4,484,902, or 13%, in Adjusted EBITDA is primarily due to stock-based compensation of $10,768,024, $9,866,821 in interest expense, $4,204,360 loss on change in fair value of warrant liability, an increase in depreciation and amortization expense of $3,405,646, and an increase $2,265,339 in gain on change in fair value of debt, partially offset by an increase in General and administrative expense not including stock-compensation of $14,600,289 and an increase in sales and marketing expense of $2,309,607 to support the increase in active management activity.
Adjusted EBITDA for the three months ended March 31, 2024 was $11,576,215 compared to $8,357,943 for the three months ended March 31, 2023. The increase of $3,218,272, or 38.5%, was primarily a result of the factors described in connection with Operating Revenues and Operating Expenses and the items listed above in the section titled “Comparison of the Three Months Ended March 31, 2024 and March 31, 2023.”
For active management revenue, we monitor the following key business metrics: (i) policies sold and purchased, (ii) realized gains on sold and matured policies, (iii) unrealized gains on held policies, and (iv) face value of policies held. The number of policies sold and purchased helps us measure the level of active management activity for the period that leads to realized and unrealized gains, respectively. Realized gains on sold and matured policies is used to measure the level of profit optimization. Unrealized gains on held policies is used to measure our policy optimization. The face value of policies represents the maximum potential revenue realization on policies held. Refer to the section titled “Results from Operations” in “Comparison of the Three Months Ended March 31, 2024 and March 31, 2023” above for a summary of active management key business metrics for investment and fair value method policies.
For servicing revenue, we monitor the following key business metrics: (i) number of policies serviced, (ii) value of policies serviced, and (iii) total invested dollars. Servicing revenue involves the provision of services to one affiliate by common ownership and third parties which own life insurance policies. The number of policies and the value of policies serviced represents the volume and dollar value of policies over which the above services are performed. Total invested dollars represent the acquisition cost plus premiums paid by the policy. We use the aforementioned metrics to assess business operations and provide concrete benchmarks that provide a clear snapshot of growth between the periods under consideration.
50

Table of Contents
For origination revenue, we monitor the following key business metric: the number of policies originated year-over-year in measuring our performance. Origination revenues represent fees negotiated for each purchase and sale of a policy to an investor. The number of policy originations represents the volume of policies over which the above origination services are performed. The number of policy originations directly correlates with origination revenues, allowing management to evaluate fees earned upon each transaction. There are no estimates, assumptions, or limitations specific to the number of policy originations.
Please refer to the following key business metrics below for servicing and origination revenue:
Three Months Ended March 31,
2024
2023
$ Change% Change
Key business metric
Number of policies serviced
746 533 213 40.0 %
Value of policies serviced
$1,055,267,630 $844,688,642 $210,578,988 24.9 %
Total invested dollars ($)
$220,875,215 $221,817,427 $(942,212)(0.4)%
Number of policy originations to external parties
24— 24 — %
Number of policy originations to subsidiaries eliminated in consolidation
95— 95 — %
Years Ended December 31,
20232022$ Change% Change
Key business metric
Number of policies serviced
722 473 249 52.6 %
Value of policies serviced
$1,143,584,088 $732,264,245 $411,319,843 56.2 %
Total invested dollars 
$257,129,186 $180,788,244 $76,340,842 42.2 %
Non-GAAP Measure
Comparable GAAP Measure
Proforma Adjusted Net Income,
Net Income attributable to Abacus Life, Inc. and Net Income for
Proforma Adjusted EPS
Abacus Settlements, LLC and EPS for Abacus Life, Inc.
Proforma Adjusted EBITDA
Net Income for Abacus Life, Inc. and Net Income for Abacus Settlements, LLC
Proforma Adjusted Net Income and Proforma Adjusted EPS
Proforma Adjusted Net Income, Proforma Adjusted EPS, Proforma Adjusted EBITDA, and Proforma Adjusted EBITDA Margin are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, net income (loss) for the Company and Abacus Settlements (for Proforma Adjusted EBITDA and Proforma Adjusted EBITDA Margin), net income (loss) attributable to the Company and net income for Abacus Settlements (for Proforma Adjusted Net Income) or earnings (loss) per share (for Proforma Adjusted EPS), which are considered to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for net income (loss) for the Company and Abacus Settlements, net income (loss) attributable to the Company and Abacus Settlements, earnings (loss) per share or other consolidated statements of operations and comprehensive income data prepared in accordance with GAAP.
Proforma Adjusted Net Income is presented for the purpose of calculating Proforma Adjusted EPS. The Company defines Proforma Adjusted Net Income as net income (loss) attributable to the Company plus historical net income for Abacus Settlements prior to the Business Combination adjusted for non-controlling interest, amortization, stock based compensation, change in fair value of warrants, and the related tax effect of those adjustments. Management believes that Proforma Adjusted Net Income is an appropriate measure of operating performance because it represents the combined results for the two legacy operating companies, Abacus Settlements and LMA, year-over-
51

Table of Contents
year as if the Business Combination had occurred at the beginning of the years shown and eliminates the impact of expenses that do not relate to business performance.
The following table presents a reconciliation of Proforma Adjusted Net Income to the most comparable GAAP financial measure, net income (loss) attributable to the Company and net income for the Company and Proforma Adjusted EPS to the most comparable GAAP financial measure, earnings per share, on a historical basis for the periods indicated below:
Years Ended December 31,
20232022
Net income attributable to Abacus Life, Inc..
$9,516,628 $31,682,276 
Net loss for Abacus Settlements, LLC(1)
(974,901)(52,495)
Net income attributable to Abacus Life, Inc.
8,541,727 31,629,781 
Net income attributable to non-controlling interests
(482,139)704,699 
Amortization expense
3,364,167 — 
Stock compensation expense
10,768,024 — 
Loss on change in fair value of warrant liability
4,204,360 — 
Tax impact(2)
2,069,993 — 
Proforma Adjusted Net Income
$28,466,132 $32,334,480 
Weighted-average shares of Class A common stock outstanding ‒ basic
56,951,414 50,369,350 
Weighted-average shares of Class A common stock outstanding ‒ diluted
57,767,898 50,369,350 
Proforma Adjusted EPS ‒ basic
$0.50 $0.64 
Proforma Adjusted EPS ‒ diluted
$0.49 $0.64 
__________________
(1)Net loss attributable to Abacus Settlements, which includes all of 2023 activity.
(2)Tax impact represents the permanent difference in tax expense related to the restricted stock awards granted to certain executives due to IRC 162(m) limitations.
Proforma Adjusted Net Income for the year ended December 31, 2023 was $28,466,132 compared to $32,334,480 for the year ended December 31, 2022. The decrease of $3,868,348, or 12.0%, in Proforma Adjusted Net Income is primarily due to the increase in proforma general and administrative expenses offset by increase in revenues. Proforma Adjusted EPS for the year ended December 31, 2023 was $0.50 compared to $0.64 for the year ended December 31, 2022.
Proforma Adjusted EBITDA
Proforma Adjusted EBITDA is net income for the Company plus historical net income for Abacus Settlements prior to the Business Combination and adjusted for depreciation expense, amortization expense, interest expense, income tax and other non-cash and certain non-recurring items that in our judgement significantly impact the period-over-period assessment of performance and operating results that do not directly relate to business performance within the Company’s control. These unusual items may include payments made as part of the Company’s expense support commitment, (gain) loss on change in fair value of debt, loss on change in fair value of warrant liability, S&P 500 put and call options that were entered into as an economic hedge related to the debt (described as the unrealized loss on investments), non-cash stock based compensation, and certain non-recurring items. Proforma Adjusted EBITDA should not be determined as substitution for net income (loss), cash flows provided (used in) operating, investing, and financing activities, operating income (loss), or other metrics prepared in accordance with U.S. GAAP.
Management believes the use of Proforma Adjusted EBITDA assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods and represents the combined results for the two legacy operating companies, Abacus Settlements and LMA year-over-year as if the Business Combination had occurred at the beginning of the years shown. We believe that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain non-recurring charges that are highly variable from year to year, Proforma Adjusted EBITDA provides our
52

Table of Contents
investors with performance measures that reflect the impact to operations from trends in changes in revenue, policy values and operating expenses, providing a perspective not immediately apparent from net income and operating income. The adjustments we make to derive the non-GAAP measure of Proforma Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income and which we do not consider to be the fundamental attributes or primary drivers of our business.
The following table presents a reconciliation of Proforma Adjusted EBITDA and Proforma Adjusted EBITDA margin to the most comparable GAAP financial measure, net income (loss) for the Company and net income (loss) for Abacus Settlements, on a historical basis for the periods indicated below:
Years Ended December 31,
2023
2022
Net Income for Abacus Life, Inc..
$9,034,489 $32,386,975 
Net Loss for Abacus Settlements, LLC
(974,901)(52,495)
Proforma Net Income
8,059,588 32,334,480 
Depreciation and amortization expense
3,481,174 109,604 
Interest expense
9,866,657 51,615 
Interest income
(596,681)(3,673)
Income Tax
1,471,721 891,961 
Stock compensation
10,768,024 — 
Other (Income) / Expenses
(108,200)346,740 
Loss on change in fair value of warrant liability
4,204,360 — 
Expense support agreement
— — 
Loss on change in fair value of debt
2,356,058 90,719 
Unrealized (gain) / loss on investments
(1,369,112)1,045,623 
Proforma Adjusted EBITDA
$38,133,589 $34,867,069 
Revenue
79,588,733 69,917,016 
Proforma Adjusted EBITDA Margin
47.91 %49.87 %
Proforma Net Income Margin
10.13 %46.25 %
Proforma Adjusted EBITDA for the year ended December 31, 2023 was $38,133,589 compared to $34,867,069 for the year ended December 31, 2022. The increase of $3,266,520, or 9.4%, in Proforma Adjusted EBITDA is primarily due to the increase in proforma revenue and interest expense, partially offset by increases in operating expenses. While operating expenses also increased, many of these increases in expenses are being reflected in the non-recurring and non-cash adjustments shown herein as a result of the Business Combination.
Proforma Segment Revenue
Proforma Segment Revenue is not a measure of financial performance under GAAP and should not be considered substitutes for GAAP measures, such as segment revenue for the Company and Abacus Settlements, which are considered to be the most directly comparable GAAP measures. This non-GAAP financial measure has limitations as analytical tools, and when assessing the Company’s operating performance, this non-GAAP financial measure should not be considered in isolation or as substitutes for segment revenue for the Company and Abacus Settlements or other consolidated statements of operations and comprehensive income data prepared in accordance with GAAP.
The Company defines Proforma Segment Revenue as segment revenue for the Company plus historical revenue for Abacus Settlements prior to the Business Combination adjusted for intersegment activity for policies that Abacus Settlements has originated on behalf of LMA. Management believes that Proforma Segment Revenue is an appropriate measure of operating performance because it represents the combined results for the two legacy
53

Table of Contents
operating companies, Abacus Settlements and LMA, year-over-year as if the Business Combination had occurred at the beginning of the years shown and eliminates intersegment revenue.
Years Ended December 31,
2023
2022
Portfolio Servicing
$1,002,174 $1,470,972 
Proforma Active Management
61,195,377 43,242,580 
Proforma Originations
32,435,254 25,203,463 
Total Proforma Revenue (including intersegment)
94,632,805 69,917,015 
Intersegment elimination
(15,044,072)— 
Total Proforma Revenue
$79,588,733 $69,917,015 
Proforma Segment Revenue for the year ended December 31, 2023 was $79,588,733 compared to $69,917,015 for the year ended December 31, 2022. The increase of $9,671,718 or 13.8% in Proforma Segment Revenue is primarily due to an increase in Active Management revenue and Originations revenue, prior to the intersegment elimination.
Liquidity and Capital Resources
Overview
The Company finances its operations primarily through cash generated from operations and net proceeds from debt or equity financing. The Company actively manages its working capital and the associated cash requirements when servicing and originating policies while also effectively utilizing cash and other sources of liquidity to purchase additional life settlement policies. As of March 31, 2024 and December 31, 2023, our principal source of liquidity was cash and cash equivalents totaling $65,386,512 and $25,588,668, respectively. During the three months ended March 31, 2024, the Company had net loss attributable to common stockholders of $1,348,745. During the three months ended March 31, 2023, the Company had net income attributable to common stockholders of $8,085,503. During the year ended December 31, 2023, the Company had net income attributable to common stockholders of $9,516,626. During the year ended December 31, 2022, the Company had net income attributable to the Company of $31,682,275.
The Company is obligated to provide financial support to the Providers as described in Note 2, Summary of Significant Accounting Policies, and Note 11, Commitments and Contingencies, to the Company’s Consolidated Financial Statements and Note 12, Commitments and Contingencies, to the Company’s Interim Financial Statements, which are included in this prospectus. At inception of the SSES on January 1, 2021 through December 31, 2021, the Company had incurred $120,000 related to the initial funding of operations, and $— related to expenses. For the year ended December 31, 2023, the Company incurred expense of $163,338 to fund the Providers’ deficits. In 2022, the Providers reimbursed the Company for the initial funding of $120,000. For the year ended December 31, 2023, the Providers were considered to be VIEs but were not consolidated in our Consolidated Financial Statements due to a lack of the power criterion or the losses/benefits criterion. For the three months ended March 31, 2024 and March 31, 2023, the Company incurred $— and $29,721 of expenses related to the SSES, which is included in the Other (expense) line of the Company’s Interim Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income and have not been reimbursed by the Providers.
On November 10, 2023, the Company issued $35,650,000 in fixed rate senior unsecured notes (“Fixed Unsecured Notes”). The net proceeds after related debt issue costs were used by the Company to repay the Owl Rock Credit Facility, with the remaining to be used for general corporate purposes. The Fixed Unsecured Notes are based on a fixed interest rate of 9.875% to be paid in quarterly interest payments beginning on February 15, 2024 and mature on November 15, 2028. The Company has the option to redeem the Fixed Unsecured Notes in whole or in part at a price of 100% of the outstanding principal balance on or after November 15, 2027. The notes are senior unsecured obligations of the Company and rank equal in right of payment to all of the Company’s other senior unsecured indebtedness from time to time outstanding.
54

Table of Contents
On February 15, 2024, the Company completed a registered offering of the Additional Notes. The Additional Notes have the same terms (except with respect to issue date and the date from which interest will accrue) as, are fully fungible with and are treated as a single series of debt securities as the Existing Notes. The Company received approximately $24,212,500 in proceeds, before expenses, from the sale of the Additional Notes.
Our future capital requirements will depend on many factors, including our revenue growth rate and the expansion of our active management, portfolio activities, and origination activities. The Company may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies. The Company may be required to seek additional equity or debt financing.
Refer to Note 4, Life Insurance Settlement Policies, Note 13, Long-Term Debt, and Note 19, Leases, to the Company’s Consolidated Financial Statements and Note 5, Life Settlement Policies, Note 14, Long-Term Debt, and Note 20, Leases, to the Company’s Interim Financial Statements, which are included in this prospectus, for further discussion on rights and obligations that impact liquidity.
In December 2023, the Company’s board of directors approved a $15 million share repurchase plan that will expire in May 2025. As of March 31, 2024, $6,192,546 remains available for repurchases under the approved plan. Refer to Note 15, Stockholders’ Equity, of the Interim Financial Statements of the Company, for additional information. As of December 31, 2023, $13.7 million remained available for repurchases under the authorized approved by the board of directors. Refer to Note 14, Stockholders’ Equity, to the Company’s Consolidated Financial Statements, for additional information.
We believe that our current cash and cash equivalents as well as planned life settlement policy trading activity will be sufficient to support our operating and debt service needs for the 12 months following the filing of this registration statement on Form S-1.
Cash Flows from Our Operations
The following table summarizes our cash flows for the periods presented:
Three Months Ended March 31,
Years Ended December 31,
2024
2023
2023
2022
Net cash provided/(used) in operating activities
$2,267,124 $(17,380,815)$(64,523,149)$10,693,254 
Net cash provided/(used) in investing activities
(6,629)(998,337)2,241,502 (3,704,646)
Net cash provided by financing activities
37,537,349 8,048,481 57,817,492 22,961,795 
Operating Activities
During the year ended December 31, 2023, our operating activities used $64,523,149 of net cash as compared to $10,693,254 of net cash provided from operating activities during the year ended December 31, 2022. The increase in net cash used from operating activities during the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to $80,598,101 net cash used to purchase life settlement policies accounted for at fair value and $7,018,933 net cash provided to sell life settlement policies accounted for at cost during the year ended December 31, 2023, partially offset by $7,188,332 in higher operational expense accruals and $10,768,024 of non-cash stock-based compensation, compared to purchases of $8,066,975 of life settlement policies accounted for at fair value and $8,716,111 of life settlement policies accounted for at cost during the year ended in December 31, 2022.
During the three months ended March 31, 2024, our operating activities provided $2,267,124 of net cash as compared to $17,380,815 of net cash used from operating activities during the three months ended March 31, 2023. The increase of $19,647,939 in net cash provided from operating activities was primarily due to $41,635,508 change in life settlement purchase and sale activity and $6,093,371 non-cash stock-compensation expense, partially offset by $18,636,526 increase in working capital liabilities and $4,097,689 increase in unrealized gains on life settlement policies.
55

Table of Contents
Investing Activities
During the year ended December 31, 2023, investing activities provided $2,241,502 of net cash as compared to (3,704,646) net cash used during the year ended December 31, 2022. $2,241,502 of net cash provided in investing activities during the year ended December 31, 2023 was related to receipts of $2,781,176 from affiliates, $350,000 used to purchase other investments, and $189,674 used to purchase equipment. Net cash used in investing activities during the year ended December 31, 2022 was related to the purchase of available-for-sale investments of $750,000, other investments of $50,000, and the increase in the amounts due from affiliates during the year of $2,904,646.
During the three months ended March 31, 2024, investing activities used $6,629 of net cash as compared to $998,337 net cash used during the three months ended March 31, 2023. The decrease of $991,708 in net cash used in investing activities was primarily related to the decrease of $1,095,501 due from affiliates.
Financing Activities
During the year ended December 31, 2023, financing activities generated $57,817,492 of net cash as compared to $22,961,795 of net cash generated during the year ended December 31, 2022. The increase of $34,855,697 in net cash generated in financing activities during the year ended December 31, 2023 compared to December 31, 2022 was mainly related to proceeds of $124,672,976 from the issuance of debt offset by $26,250,000 of repayment of debt, $23,533,073 of capital distributions to members, $11,397,402 in transaction costs, $5,547,943 payment of discounts and financing costs, and $1,283,062 of repurchase of common stock during December 31, 2023. Net cash generated in financing activities during the year ended December 31, 2022 was related to the increase in amount for issuance of debt securities of $30,028,640, partially offset by amounts due to affiliates of $666,845 and distributions to former members of $6,400,000.
During the three months ended March 31, 2024, financing activities provided $37,537,349 of net cash as compared to $8,048,481 of net cash provided during the three months ended March 31, 2023. The increase of $29,488,868 in net cash provided is primarily due to $34,872,714 in debt issuance proceeds and $3,610,253 in public warrant conversions, partially offset by $7,524,392 in share repurchases related to a share repurchased plan approved by the board of directors in December 2023.
See Note 12, Fair Value Measurements, Note 13, Long-Term Debt, and Note 14, Stockholders’ Equity, to the Company’s Consolidated Financial Statements and Note 13, Fair Value Measurements, Note 14, Long-Term Debt, and Note 15, Stockholders’ Equity, to the Company’s Interim Financial Statements, which are included in this prospectus, for additional information related to our financing sources.
Contractual Obligations and Commitments
Our significant contractual obligations as of March 31, 2024, include three notes: LMATT Series 2024, Inc., LMATT Growth Series 2.2024, Inc., and LMATT Growth and Income Series 1.2026, Inc. The $10,166,900 LMATT Series 2024, Inc. notes are a market-indexed instrument designed to provide upside performance exposure of the S&P 500 Index, while limiting downward exposure. Upon maturity of the notes in 2024, the principal, plus the return based upon the S&P 500 Index must be paid. The notes have a feature to protect debt holders from market downturns, up to 40%. Any subsequent losses below the 40% threshold will reduce the notes. The notes do not pay interest to the holders. As of March 31, 2024, $8,816,900 of the principal amount remains outstanding, of which $200,000 is owed to LMA. LMA’s investment is eliminated in consolidation. The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of March 31, 2024, the fair value of the LMATT Series 2024, Inc. notes is $11,221,852. The notes are secured by the assets of the issuing entities, which includes cash, S&P 500 call options, and life settlement policies totaling $12,413,273 as of March 31, 2024. The notes’ agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing companies are considered as collateral. There are also no restrictive covenants associated with the notes with which the entities must comply.
The $2,333,391 LMATT Growth Series 2.2024, Inc. notes are market-indexed instruments designed to provide upside performance exposure of the S&P 500 Index, while limiting downward exposure. Upon maturity of the notes
56

Table of Contents
in 2024, the principal, plus the return based upon the S&P 500 Index must be paid. The notes have a feature to protect debt holders from market downturns, up to 20%. Any subsequent losses below the 20% threshold will reduce the notes. The notes do not pay interest to the holders. As of March 31, 2024, the $2,333,391 principal amount remains outstanding. The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of March 31, 2024, the fair value of the LMATT Series 2.2024, Inc. notes is $4,426,776. The notes are secured by the assets of the issuing entity, LMATT Series 2.2024, Inc., which includes cash, S&P 500 call options, and life settlement policies totaling $3,903,470 as of March 31, 2024. The note agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing company are considered as collateral. There are also no restrictive covenants associated with the note with which the entity must comply.
The $400,000 LMATT Growth and Income Series 1.2026, Inc. notes are market-indexed instruments designed to provide upside performance exposure of the S&P 500 Index, while limiting downward exposure. Upon maturity of the notes in 2026, the principal, plus the return based upon the S&P 500 Index must be paid. The note has a feature to provide upside performance participation that is capped at 140% of the performance of the S&P 500. A separate layer of the note has a feature to protect debt holders from market downturns by up to 10% if the index price experiences a loss during the investment period. After the underlying index has decreased in value by more than 10%, the investment will experience all subsequent losses on a one-to-one basis. This note also includes a 4% dividend feature that will be paid annually. As of March 31, 2024, the entire principal amount remains outstanding.
The notes are held at fair value, which represents the exit price, or anticipated price to transfer the liability to a third party. As of March 31, 2024, the fair value of the LMATT Growth and Income Series 1.2026, Inc., notes is $631,377. The notes are secured by the assets of the issuing entity, LMATTS Growth and Income Series 1.2026, Inc., which includes cash, S&P 500 call options, and life settlement policies totaling $515,297 as of March 31, 2024. The note agreements do not restrict the trading of life settlement contracts prior to maturity of the note, as total assets of the issuing company are considered as collateral. There are also no restrictive covenants associated with the note with which the entity must comply.
Additionally, LMA Income Series, GP, LLC, wholly owned and controlled by LMA Series, LLC, formed a limited partnership, LMA Income Series, LP, and issued partnership interests to limited partners in a private placement offering. The initial term of the offering is three years with the ability to extend for two additional one-year periods at the discretion of the general partner, LMA Income Series, GP, LLC. The limited partners will receive an annual dividend of 6.5% paid quarterly and 25% of returns in excess of a 6.5% internal rate of return capped at a 15% net internal rate of return. The general partner will receive 75% of returns in excess of a 6.5% internal rate of return to limited partners then 100% in excess of a 15% net internal rate of return. It was determined that LMA Series, LLC is the primary beneficiary of LMA Income Series, LP and thus has fully consolidated the limited partnership in its Consolidated Financial Statements for the years ended December 31, 2023 and December 31, 2022 and in the Company’s Interim Financial Statements for the three months ended March 31, 2024.
During the three months ended March 31, 2023, LMA Income Series II, GP, LLC, wholly owned and controlled by LMA Series, LLC, formed a limited partnership, LMA Income Series II, LP, and issued partnership interests to limited partners in a private placement offering. The initial term of the offering is three years with the ability to extend for two additional one-year periods at the discretion of the general partner, LMA Income Series II, GP, LLC. The limited partners will receive annual dividends equal to the Preferred Return Amounts as follows: Capital commitment less than $500,000, 7.5%; between $500,000 and $1,000,000, 7.8%; over $1,000,000, 8%. Thereafter, 100% of the excess to be paid to the general partner. It was determined that LMA Series, LLC is the primary beneficiary of LMA Income Series, LP and thus has fully consolidated the limited partnership in its Consolidated Financial Statements for the years ended December 31, 2023 and December 31, 2022 and in the Company’s Interim Financial Statements for the three months ended March 31, 2024.
The private placement offerings proceeds for both LMA Income Series, LP and LMA Income Series II, LP will be used to acquire an actively managed large and diversified portfolio of financial assets. The Company elected to account for the secured borrowings at fair value under the collateralized financing entity guidance within ASC 810, Consolidations. As of March 31, 2024, the fair value of the LMA Income Series, LP secured borrowing is $22,485,826; as of December 31, 2023, the fair value of the LMA Income Series, LP secured borrowing was
57

Table of Contents
$22,368,209. As of March 31, 2024, the fair value of the LMA Income Series, LP secured borrowing is $50,323,493; as of December 31, 2023, the fair value of the LMA Income Series II, LP secured borrowing was $32,380,852.
On November 10, 2023, the Company issued the Fixed Unsecured Notes. The net proceeds after related debt issue costs were used by the Company to repay the Owl Rock Credit Facility, with the remaining to be used for general corporate purposes. The Fixed Unsecured Notes are based on a fixed interest rate of 9.875% to be paid in quarterly interest payments beginning on February 15, 2024 and mature on November 15, 2028. The Company has the option to redeem the Fixed Unsecured Notes in whole or in part at a price of 100% of the outstanding principal balance on or after November 15, 2027. The notes are senior unsecured obligations of the Company and rank equal in right of payment to all of the Company’s other senior unsecured indebtedness from time to time outstanding.
On February 15, 2024, the Company completed a registered offering of the Additional Notes. The Additional Notes have the same terms (except with respect to issue date and the date from which interest will accrue) as, are fully fungible with and are treated as a single series of debt securities as the Existing Notes. The Company received approximately $24,212,500 in proceeds, before expenses, from the sale of the Additional Notes.
Additionally, the Company has operating lease obligations, which are included as liabilities on our balance sheet, for our office space. As of March 31, 2024, operating lease obligations are $2,261,097. For more information, refer to Note 20, Leases, to the Company’s Interim Financial Statements, which is included in this prospectus. As of December 31, 2023, operating lease obligations were $1,914,785 with $118,058 due in less than one year and $1,074,699 due within one to three years, which are comprised of the minimum commitments for our office space. For more information, refer to Note 19, Leases, to the Company’s Consolidated Financial Statements, which is included in this prospectus.
Recent Accounting Pronouncement
See Note 2, Summary of Significant Accounting Policies, to our Consolidated Financial Statements and Note 2, Significant Accounting Policies and Recent Accounting Standards, to the Company’s Interim Financial Statements, which are included in this prospectus, for a discussion of recently issued accounting pronouncements, including information about new accounting standards and the future adoption of such standards.
Critical Accounting Policies and Estimates
The Company prepared its Consolidated Financial Statements and its Interim Financial Statements in accordance with GAAP. Our preparation of these financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements, as well as revenue and expense recorded during the reporting periods. The Company evaluates our estimates and judgments on an ongoing basis.
The Company bases its estimates on historical experience and or other relevant assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ materially from management’s estimates.
See Note 2, Summary of Significant Accounting Policies, to our Consolidated Financial Statements, and Note 2, Significant Accounting Policies and Recent Accounting Standards, to the Company’s Interim Financial Statements, which are included in this prospectus, for further information related to our critical accounting policies and estimates, which are as follows:
Valuation of Goodwill and Other Intangible Assets
The Company completed the Business Combination on June 30, 2023 where it acquired 100% of the ownership interest of Abacus Settlements. The enterprise value for Abacus Settlements was estimated to be $165,361,332 of which 140,287,000 and $32,900,000 was recognized as goodwill and intangible assets, respectively. Refer to Note 2, Summary of Significant Accounting Policies, and Note 6, Goodwill and Other Intangible Assets, to the Company’s Consolidated Financial Statements and Note 2, Significant Accounting Policies and Recent Accounting Standards,