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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____  to _____
Commission file number 001-39403
https://cdn.kscope.io/043771362b8592bcae3e61d711cda387-ABL Logo.jpg
Abacus Life, Inc.
(Exact name of registrant as specified in its charter)
Delaware
85-1210472
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2101 Park Center Drive, Suite 200
Orlando Florida
32835
(Address of Principal Executive Offices)
(Zip Code)
(800) 561-4148
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per share
ABLThe NASDAQ Stock Market LLC
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per shareABLLWThe NASDAQ Stock Market LLC
9.875% Fixed Rate Senior Notes due 2028
ABLLL
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x   No  o 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer  
x
Smaller reporting company
x
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   o     No  x
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
o  Yes o No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The registrant had 63,925,316 shares of common stock, $0.0001 par value per share, outstanding as of May 3, 2024.


ABACUS LIFE, INC.
TABLE OF CONTENTS
Page
938


Part I - Financial Information

ABACUS LIFE, INC.
CONSOLIDATED BALANCE SHEETS
March 31,
2024
(unaudited)
December 31,
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$65,386,512 $25,588,668 
Equity securities, at fair value3,403,897 2,252,891 
Accounts receivable2,520,869 2,149,111 
Accounts receivable, related party215,033 79,509 
Due from affiliates760,364 1,007,528 
Prepaid expenses and other current assets2,037,753 699,127 
Total current assets74,324,428 31,776,834 
Property and equipment, net547,561 400,720 
Intangible assets, net28,048,028 29,623,130 
Goodwill140,287,000 140,287,000 
Operating right-of-use assets2,182,681 1,893,659 
Life settlement policies, at cost1,434,444 1,697,178 
Life settlement policies, at fair value125,488,525 122,296,559 
Available-for-sale securities, at fair value1,145,630 1,105,935 
Other investments, at cost1,650,000 1,650,000 
Other assets1,501,036 998,945 
Equity securities, at fair value110,067 96,107 
TOTAL ASSETS$376,719,400 $331,826,067 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt$15,648,628 $13,029,632 
Accrued expenses707,159 4,354,225 
Operating lease liabilities232,138 118,058 
Due to affiliates5,236 5,236 
Due to former members1,159,712 1,159,712 
Contract liabilities, deposits on pending settlements667,500 507,000 
Other current liabilities3,797,808 3,400,734 
2

ABACUS LIFE, INC.
CONSOLIDATED BALANCE SHEETS (CONT.)
March 31,
2024
(unaudited)
December 31,
2023
Income taxes payable1,617,171 751,734 
Total current liabilities23,835,352 23,326,331 
 Long-term debt, related party 38,794,519 37,653,869 
Long-term debt131,365,988 89,137,013 
Operating lease liabilities2,028,959 1,796,727 
Deferred tax liability9,657,810 9,199,091 
Warrant liability5,696,000 6,642,960 
TOTAL LIABILITIES211,378,628 167,755,991 
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding
  
Class A common stock, $0.0001 par value; 200,000,000 authorized shares; 63,776,058 and 63,388,823 shares issued at March 31, 2024 and December 31, 2023, respectively
6,378 6,339 
Treasury stock - at cost; 778,766 and 146,650 shares repurchased at March 31, 2024 and December 31, 2023, respectively
(8,807,454)(1,283,062)
Additional paid-in capital209,889,362 199,826,278 
Accumulated deficit(36,074,880)(34,726,135)
Accumulated other comprehensive income120,323 108,373 
Noncontrolling interest207,043 138,283 
Total stockholders' equity165,340,772 164,070,076 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$376,719,400 $331,826,067 
See condensed notes to consolidated financial statements.
3

ABACUS LIFE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
Three Months Ended
March 31,
20242023
REVENUES:
Portfolio servicing revenue$217,935 $302,871 
Active management revenue19,796,999 9,970,518 
Origination revenue1,472,250  
Total revenues21,487,184 10,273,389 
COST OF REVENUES (excluding depreciation and amortization stated below)
Cost of revenue (including stock-based compensation)2,720,212 489,550 
Related party cost of revenue685  
Total cost of revenue 2,720,897 489,550 
Gross Profit18,766,287 9,783,839 
OPERATING EXPENSES:
Sales and marketing1,929,944 729,004 
General and administrative (including stock-based compensation)11,353,499 696,892 
Loss on change in fair value of debt2,712,627 953,433 
Unrealized gain on investments(1,164,966)(125,220)
Depreciation and amortization expense1,682,054 1,043 
Total operating expenses16,513,158 2,255,152 
Operating Income$2,253,129 $7,528,687 
OTHER INCOME (EXPENSE):
Gain on change in fair value of warrant liability946,960  
Interest expense(3,670,445)(357,383)
Interest income421,426 7,457 
Other expense(53,028)(210,432)
Total other (expense)(2,355,087)(560,358)
Net (loss) income before provision for income taxes(101,958)6,968,329 
Income tax expense (benefit)1,173,513 (656,467)
NET (LOSS) INCOME(1,275,471)7,624,796 
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST73,274 (460,707)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(1,348,745)$8,085,503 
(LOSS) EARNINGS PER SHARE:
(Loss) earnings per share - basic and diluted(0.02)0.16 
Weighted-average stock outstanding—basic and diluted [1]
63,027,246 50,369,350 
NET (LOSS) INCOME(1,275,471)7,624,796 
Other comprehensive income (loss), net of tax or tax benefit:
Change in fair value of debt (risk adjusted)7,436 (112,313)
Comprehensive (loss) income before non-controlling interests(1,268,035)7,512,483 
4

ABACUS LIFE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (CONT.)
Three Months Ended
March 31,
20242023
Net and comprehensive income (loss) attributable to non-controlling interests68,760 (487,638)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(1,336,795)$8,000,121 
(1) The 2023 number of shares outstanding and their par value have been retrospectively recast for all prior periods presented to reflect the par value of the outstanding stock of Abacus Life, Inc. as a result of the Business Combination.
See condensed notes to consolidated financial statements.
5

ABACUS LIFE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Class A Common StockTreasury StockAdditional
Paid-In
Capital
Retained EarningsAccumulated
Other Comprehensive
Income
Non-
Controlling
Interests
Total
Stockholders’
Equity
SharesAmountSharesAmount
BALANCE AS OF December 31, 2022 (1)
50,369,350 $5,037  $ $704,963 $25,487,323 $1,052,836 $899,538 $28,149,697 
Other Comprehensive Income— — — — — — (85,382)(26,931)(112,313)
Net Income (loss)— — — — — 8,085,503 — (460,707)7,624,796 
BALANCE AS OF March 31, 2023 (1)
50,369,350 $5,037  $ $704,963 $33,572,826 $967,454 $411,900 $35,662,180 

Class A Common StockTreasury StockAdditional
Paid-In
Capital
Accumulated DeficitAccumulated Other Comprehensive Income (Loss)Non-
Controlling
Interests
Total
Stockholders’
Equity
SharesAmountSharesAmount
BALANCE AS OF December 31, 2023
63,388,823 $6,339 (146,650)$(1,283,062)$199,826,278 $(34,726,135)$108,373 $138,283 $164,070,076 
Deferred transaction costs— — — — (483,451)— — — (483,451)
Repurchase of common stock— — (632,116)(7,524,392)— — — — (7,524,392)
Stock-based compensation— — — — 6,093,371 — — — 6,093,371 
Warrant Conversions387,235 39 — — 4,453,164 — — — 4,453,203 
Other Comprehensive Income— — — — — — 11,950 (4,514)7,436 
Net (loss) income— — — — — (1,348,745)— 73,274 (1,275,471)
BALANCE AS OF MARCH 31, 202463,776,058 $6,378 (778,766)$(8,807,454)$209,889,362 $(36,074,880)$120,323 $207,043 $165,340,772 
(1) The 2023 number of shares outstanding and their par value have been retrospectively recast for all prior periods presented to reflect the par value of the outstanding stock of Abacus Life, Inc. as a result of the successful Business Combination.

See condensed notes to consolidated financial statements.
6

ABACUS LIFE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income$(1,275,471)$7,624,796 
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization1,682,054 1,043 
Stock-based compensation6,093,371  
Amortization of debt issuance costs92,750  
Unrealized gain on investments(1,164,966)(125,220)
Unrealized gain on policies(5,290,554)(1,192,865)
Loss on change in fair value of debt2,712,627 953,433 
Gain on change in fair value of warrant liability(946,960) 
Non-cash interest income on available for sale security(39,695) 
Deferred income taxes456,194 (656,468)
Non-cash interest expense1,258,266  
Non-cash lease expense57,290 192 
Changes in operating assets and liabilities:
Accounts receivable(371,758)10,448 
Accounts receivable, related party(135,524)112,477 
Prepaid expenses and other current assets(495,676)(196,117)
Other assets(502,091)(34,371)
Accounts payable 14,989,460 
Accrued expenses(3,647,066) 
Accrued transaction costs 397,806 
Contract liabilities, deposits on pending settlement160,500  
Other current liabilities397,074 8,757 
Income tax payable865,437  
Net change in life settlement policies, at fair value2,098,588 (12,091,256)
Net change in life settlement policies, at cost262,734 (27,182,930)
Net cash provided (used) in operating activities2,267,124 (17,380,815)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(161,787) 
7

ABACUS LIFE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
Three Months Ended March 31,
20242023
Purchase of intangible assets(92,006) 
Purchase of other investments (150,000)
Change in due from affiliates247,164 (848,337)
Net cash used in investing activities(6,629)(998,337)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long term-debt42,920,873 8,048,159 
Payment of discounts and financing costs(985,934) 
Repurchase of common stock(7,524,392) 
Transaction costs(483,451) 
Warrant conversions3,610,253  
Due to affiliates 322 
Net cash provided by financing activities37,537,349 8,048,481 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS39,797,844 (10,330,671)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD25,588,668 30,052,823 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD$65,386,512 $19,722,152 
SUPPLEMENTAL DISCLOSURES:
Interest paid$1,691,205 $ 
Income taxes paid, net of refunds1,842  
See condensed notes to consolidated financial statements.

8


ABACUS LIFE, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.BASIS OF PRESENTATION
The accompanying consolidated financial statements (“Interim Financial Statements”) are presented in accordance with the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”) as contained in the Company’s Annual Report on Form 10-K. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Accordingly, the consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Annual Report”). Refer to Note 2 in the Company’s 2023 Annual Report for the full list of the Company’s significant accounting policies. The details in those notes have not changed, except as discussed in Note 2 to the Interim Financial Statements and as a result of normal adjustments in the interim periods. Capitalized terms used and not specifically defined herein have the same meanings given those terms in our 2023 Annual Report. We also may use certain other terms that are defined within these Interim Financial Statements.
The Interim Financial Statements presented herein and discussed below include 100% of the assets, liabilities, revenues, expenses, and cash flows of Abacus Life, Inc., (the “Company”) all entities in which the Company has a controlling voting interest (“subsidiaries”), and variable interest entities (“VIEs”) for which the Company is the primary beneficiary, as determined in accordance with consolidation accounting guidance. References in these Interim Financial Statements to net income or loss attributable to common stockholders and stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entity and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.
The Interim Financial Statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended December 31, 2023, and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2024, and the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2024 and 2023, respectively, and the consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, respectively. The consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024, or any other period. All references to financial information as of and for the periods ended March 31, 2024, and 2023 in the condensed notes to consolidated financial statements are unaudited.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, cost of revenue, life settlement policy valuation, goodwill and intangibles valuation, market-indexed note valuation, and income taxes. The uncertainties in the broader macroeconomic environment have made it more challenging to make these estimates. Actual results could differ from our estimates, and such differences may be material.
9


2.SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS
New Accounting Standards—The Company’s management reviews recent accounting standards to determine the impact to the Company’s financial statements. Below we discuss the impact of new accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board’s (“FASB”) to the Interim Financial Statements.
ASU 2023-07—“Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures”, was intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. We early adopted ASU 2023-07 in the first quarter of 2024, by including significant segment expenses reviewed by the Company’s CODM. Refer to Note 11, Segment Reporting, for our updated presentation.
ASU 2024-01—”Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards”. In March 2024, the FASB issued ASU 2024-01 to add an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards (“profits interest awards”) should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Although early adoption of this ASU is permitted, the Company’s management chose to not early adopt this ASU. The amendments in this ASU should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. If the amendments are applied retrospectively, an entity is required to provide the disclosures in paragraphs 250-10-50-1 through 50-3 in the period of adoption. If the amendments are applied prospectively, an entity is required to disclose the nature of and reason for the change in accounting principle. This ASU is not expected to have a significant impact to the Company’s consolidated financial statements when adopted.
ASU 2024-02—”Codification Improvements—Amendments to Remove References to the Concepts Statements”. In March 2024, the FASB issued ASU 2024-02 to remove references to various FASB Concepts Statements. The Board has a standing project on its agenda to address suggestions received from stakeholders on the Accounting Standards Codification and other incremental improvements to GAAP. This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Although early adoption of this ASU is permitted for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance), the Company’s management chose to not early adopt this ASU. The amendments in this ASU should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to all new transactions recognized on or after the date that the entity first applies the amendments. This ASU is not expected to have a significant impact to the Company’s consolidated financial statements when adopted.
Stock Options—The Company awards stock options (“options”) to purchase the Company’s common stock at the market price of the stock on the grant date. Options generally vest over a period of three years and expire no later than 10 years from the grant date. Fair value is estimated using the Black-Scholes option-pricing model by applying certain assumptions. That fair value is reduced when options are forfeited. The fair value of options, net of forfeitures, is recognized in general and administrative expenses on a straight-line basis over the vesting period.
Concentrations—Two customers accounted for 49% and 35% of active management revenue for the three months ended March 31, 2024. One customer accounted for 32% of active management revenue for the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023 zero and two maturities accounted for over 10% of active management revenue, respectively.
10

3.BUSINESS COMBINATION
On June 30, 2023, LMA acquired Abacus through the Abacus Merger, which was accounted for using the acquisition method of accounting based on a business enterprise value of approximately $165.4 million.
The preliminary purchase price was allocated among the identified assets to be acquired. The primary area of the acquisition accounting that is not yet finalized is our estimate of the impact of acquisition accounting on deferred income taxes. An estimate of deferred income taxes has been recorded in the Company’s books based on information available as of March 31, 2024, which has not changed significantly from our initial recognition on June 30, 2023. As the initial acquisition accounting is based on our preliminary assessments, actual values may differ when final information becomes available. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary values of deferred taxes recorded. We will continue to evaluate this item until it is satisfactorily resolved and adjust our acquisition accounting accordingly, which is up to one year from the acquisition date, as defined by ASC Topic 805, Business Combinations, (“ASC 805”). Transaction costs incurred as a result of the Business Combination were recognized within accumulated deficit on the consolidated balance sheet ending March 31, 2024.
All valuation procedures related to existing assets as no new assets were identified as a result of procedures performed. Goodwill was recognized as a result of the acquisition, which represents the excess fair value of consideration over the fair value of the underlying net assets, largely arising from the extensive industry expertise that has been established by Abacus. This was considered appropriate based on the determination that the Abacus Merger would be accounted for as a business acquisition under ASC 805.
Net Assets IdentifiedFair Value
Intangibles$32,900,000 
Goodwill140,287,000 
Current Assets1,280,100 
Non-Current Assets901,337 
Deferred Tax Liabilities(8,310,966)
Accrued Expenses(524,400)
Other Liabilities(1,171,739)
Total Fair Value$165,361,332 
Intangible assets were comprised of the following:
Asset TypeFair ValueUseful LifeValuation Methodology
Customer Relationships-Agents$12,600,000 5 yearsMulti-period excess earnings method
Customer Relationships-Financing Entities11,000,000 8 yearsMulti-period excess earnings method
Internally Developed and Used Technology-APA1,600,000 2 yearsRelief from royalty method
Internally Developed and Used Technology-Marketplace100,000 3 yearsReplacement cost method
Trade Name900,000 IndefiniteRelief from royalty method
Non-Compete Agreements4,000,000 2 yearsWith and without method
State Insurance Licenses2,700,000 IndefiniteReplacement cost method
Total Fair Value$32,900,000 
Useful lives for customer relationships were developed using attrition data for agents and financing entities which resulted in a useful life of 5 years and 8 years, respectively. Estimates over the useful lives of internally developed and used technology contemplates the period in which the Company expects to utilize the technology and the length of time the technology is expected to maintain recognition and
11

value in the market without significant investment. Non-compete agreements have a useful life commensurate with the executed non-compete agreements in place as a result of the Business Combination.
Pro Forma Results of Operations
The supplemental unaudited pro forma financial information in the table below summarizes the combined results of operations for the Business Combination as if the Companies were combined for both reporting periods. There were no acquisition-related costs included in the unaudited pro forma results presented below. The unaudited pro forma financial information as presented below is for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combinations occurred as of the date indicated or what the results would be for any future periods.

Three Months Ended March 31,
2023
Proforma revenue$13,294,318 
Proforma net income7,433,278 

12

4.REVENUES
Disaggregated Revenue—The disaggregation of the Company’s revenue by major sources is as follows:

Three Months Ended
March 31, 2024March 31, 2023
Portfolio servicing revenue:
Related party serving revenue$185,185 $213,447 
Portfolio servicing revenue32,750 89,424 
Total portfolio servicing revenue217,935 302,871 
Active management revenue:
Investment income from life insurance policies
held using the investment method500,000 8,392,334 
Revenue from fee-based services and realized and unrealized gains
from life insurance policies held using the fair value method19,296,999 1,578,184 
Total active management revenue19,796,999 9,970,518 
Origination revenue:
Agent557,500 $ 
Broker883,250  
Client direct31,500  
Total origination revenue1,472,250  
Total revenue$21,487,184 $10,273,389 
Contract Balances—We had no contract assets at March 31, 2024 and December 31, 2023. The balances of contract liabilities arising from originated contracts with customers were as follows:

March 31, 2024December 31, 2023
Contract liabilities, deposits on pending settlements$667,500 $507,000 
Total contract liabilities$667,500 $507,000 

Revenue recognized during the first quarter of 2024 that was included in our contract liabilities balance at December 31, 2023 was $507,000, less $347,000 intercompany revenue that was eliminated in consolidation.
5.LIFE SETTLEMENT POLICIES
As of March 31, 2024, the Company held 322 life settlement policies, of which 314 were accounted for using the fair value method and 8 were accounted for using the investment method (cost, plus premiums paid). Aggregate face value of policies held at fair value was $506,955,702 as of March 31, 2024, with a corresponding fair value of $125,488,525. The aggregate face value of policies accounted for using the investment method was $30,900,000 as of March 31, 2024, with a corresponding carrying value of $1,434,444.
As of December 31, 2023, the Company held 296 life settlement policies, of which 287 were accounted for under the fair value method and 9 were accounted for using the investment method (cost, plus premiums paid). 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. 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.
13

At March 31, 2024, the Company did not have any contractual restrictions on its ability to sell policies, including those held as collateral for the issuance of long-term debt. Refer to Note 14, Long-Term Debt, for further details.
Life expectancy reflects the probable number of years remaining in the life of a class of persons determined statistically, affected by such factors as heredity, physical condition, nutrition, and occupation. It is not an estimate or an indication of the actual expected maturity date or indication of the timing of expected cash flows from death benefits. The following tables summarize the Company’s life insurance policies grouped by remaining life expectancy as of March 31, 2024:
Policies Carried at Fair Value
Remaining Life Expectancy (Years)PoliciesFace ValueFair Value
0-12$5,283,461 $2,691,760 
1-2711,082,062 5,314,074 
2-31827,201,580 10,713,554 
3-44069,698,534 31,456,621 
4-53133,084,969 12,494,075 
Thereafter216360,605,096 62,818,441 
314$506,955,702 $125,488,525 
Policies accounted for using the investment method—
Remaining Life Expectancy (Years)PoliciesFace ValueCarrying Value
1-21500,000 329,714 
2-321,500,000 458,289 
3-418,000,000 86,859 
4-52500,000 325,331 
Thereafter220,400,000 234,251 
8$30,900,000 $1,434,444 
Estimated premiums to be paid by the Company for its portfolio accounted for using the investment method during each of the five succeeding calendar years and thereafter as of March 31, 2024, are as follows:
2024 remaining$66,151 
202592,883 
202672,923 
202750,388 
2027
32,736 
Thereafter366,103 
Total$681,184 
The Company is required to pay premiums to keep its portion of life insurance policies in force. The estimated total future premium payments could increase or decrease significantly to the extent that actual mortalities of insureds differ from the estimated life expectancies.
For policies accounted for under the investment method, the Company has not been made aware of information causing a material change to assumptions relating to the timing of realization of life insurance settlement proceeds. The Company have also not been made aware of information indicating impairment to the carrying value of policies.
14

6.PROPERTY AND EQUIPMENT—NET
Property and equipment—net composed of the following:
March 31,
2024
December 31,
2023
Computer equipment $518,456 $356,939 
Furniture and fixtures91,125 91,125 
Leasehold improvements22,687 22,418 
Property and equipment—gross632,268 470,482 
Less: accumulated depreciation(84,707)(69,762)
Property and equipment—net$547,561 $400,720 
Depreciation expense for the three months ended March 31, 2024 and 2023, was $14,945 and $1,043, respectively.
7.GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill of $140,287,000 was recognized as a result of the Business Combination, which represents the excess fair value of consideration over the fair value of the underlying net assets, largely arising from the extensive industry expertise that has been established by Abacus. This was considered appropriate based on the determination that the Abacus Merger would be accounted for as a business acquisition under ASC 805. The estimates of fair value are based upon preliminary valuation assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. Refer to Note 3, Business Combination, for further discussion.
The changes in the carrying amount of goodwill by reportable segments were as follows:
Portfolio Servicing Active ManagementOriginations
Goodwill at December 31, 2023$ $ $140,287,000 
Additions   
Goodwill at March 31, 2024$ $ $140,287,000 
Intangible Assets acquired comprised of the following:
Asset TypeFair ValueUseful LifeValuation Methodology
Customer Relationships - Agents$12,600,000 5 yearsMulti-period excess-earnings method
Customer Relationships - Financial Relationships11,000,000 8 yearsMulti-period excess-earnings method
Internally Developed and Used Technology—APA1,600,000 2 yearsRelief from Royalty Method
Internally Developed and Used Technology—Market Place100,000 3 yearsReplacement Cost Method
Trade Name900,000 IndefiniteRelief from Royalty Method
Non-Compete Agreements4,000,000 2 yearsWith or Without Method
State Insurance Licenses2,700,000 IndefiniteReplacement Cost Method
$32,900,000 
Intangible assets and related accumulated amortization as of March 31, 2024 are as follows:
15

Definite Lived Intangible Assets:Gross Value Accumulated AmortizationNet Book Value
Customer Relationships - Agents$12,600,000 $(1,890,000)$10,710,000 
Customer Relationships - Financial Relationships11,000,000 (1,031,250)9,968,750 
Internally Developed and Used Technology—APA1,600,000 (600,000)1,000,000 
Internally Developed and Used Technology—Market Place100,000 (25,000)75,000 
Non-Compete Agreements4,000,000 (1,500,000)2,500,000 
Balance at March 31, 2024$29,300,000 $(5,046,250)$24,253,750 
Indefinite Lived Intangible Assets:
Trade Name900,000 — 900,000 
State Insurance Licenses2,700,000 — 2,700,000 
Total Intangible Asset Balance at March 31, 2024$32,900,000 $(5,046,250)$27,853,750 
Substantially all intangible assets with finite useful lives are subject to amortization when they are available for their intended use. Amortization expense for definite lived intangible assets was $1,667,109 and $ for the three months ended March 31, 2024 and 2023, respectively.
Estimated annual amortization of intangible assets for the next five years ending December 31 and thereafter is as follows:
2024 remaining$5,046,250 
20255,328,333 
20263,911,667 
20273,895,000 
20282,635,000 
Thereafter3,437,500 
Total$24,253,750 
The Company also had other insignificant intangible assets of $194,278 and $87,297, net of related amortization, as of March 31, 2024 and December 31, 2023, respectively.
8.AVAILABLE-FOR-SALE SECURITIES, AT FAIR VALUE
Convertible Promissory Note—The Company holds a convertible promissory note in a separate unrelated insurance technology company. This unrelated insurance technology company is a producer of life expectancy reports. The Company purchases life expectancy reports and uses them as an input into the valuation methodology for policies held at fair value. In November 2021, the Company purchased a $250,000 note and then purchased an additional note in January 2022 for $250,000 as part of the Tranche 5 offering (“Tranche 5 Promissory Note”). On October 3, 2023, the unrelated insurance technology company’ management, their board of directors, as well as the Company’s management approved a change to the Tranche 5 Notes. The terms where changed as follows: a) Promissory Note pays 8% interest per annum (the original interest rate was 6%), b) The Tranche 5 Promissory Note matures on September 30, 2025 (“Maturity Date”) and will be paid in full as to outstanding principal and accrued interest on the Maturity Date unless the Tranche 5 Promissory Note converts prior to the 2025 Maturity Date (the original maturity date was in November 2023), and c) conversion into preferred stock occurs if the technology company engages in an additional equity financing event that yields gross cash proceeds in excess of $5,000,000 (“Next Equity Financing”) (the original conversion trigger was $1,000,000).
In October 2022, the Company purchased an additional convertible promissory note in the same unrelated insurance technology company for $500,000 as part of the Tranche 6 offering (“Tranche 6 Promissory Note” and collectively, the “Convertible Promissory Notes”). The Tranche 6 Promissory Note pays 8% interest per annum and matures September 30, 2024 (“2024 Maturity Date”) and will be paid in
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full as to outstanding principal and accrued interest on the 2024 Maturity Date unless the Tranche 6 Promissory Note converts prior to the 2024 Maturity Date. Conversion into preferred stock occurs if the technology company engages in an additional equity financing event that yields gross cash proceeds in excess of $5,000,000 (“Next Round Securities”). We evaluated our relationship with the unrelated insurance technology company, including our CEO membership in the unrelated insurance technology company’s board of directors, and determined that the Company does not have control over the unrelated insurance technology company’s decision-making process.
The Company applies the available-for-sale method of accounting for its investment in the Convertible Promissory Note, which is a debt investment. The Convertible Promissory Note does not qualify for either the held-to-maturity method due to the Convertible Promissory Note’s conversion rights or the trading securities method because the Company holds the Convertible Promissory Note as a long-term investment. The Convertible Promissory Notes are measured at fair value at each reporting period-end. Unrealized gains and losses are reported in other comprehensive income until realized. As of March 31, 2024 and December 31, 2023, the Company evaluated the fair value of its investment and determined that the fair value approximates the carrying value of $1,145,630, which includes accrued accumulated interest income of $145,630, and there was no unrealized gain or loss recorded.
9.OTHER INVESTMENTS AND OTHER NONCURRENT ASSETS
Other Investments, at Cost:
Convertible Preferred Stock Ownership—The Company owns convertible preferred stock in two entities, further described below.
On July 22, 2020, the Company purchased 224,551 units of an unrelated insurance technology company’s Series Seed Preferred units for $750,000 (“Seed Units”). During December 2022, the Company agreed to purchase 119,760 Series Seed Preferred Units for $400,000 in cash consideration by way of eight monthly payments of $50,000 starting December 15, 2022, resulting in a total of $950,000 investment as of March 31, 2023, $1,100,000 investment as of June 30, 2023 and $1,150,000 investment at September 30, 2023. Upon conversion, the Seed Units held by the Company would represent 8.6% control in the technology company.
On December 21, 2020, the Company purchased 207,476 shares of a separate unrelated insurance technology company’s Series B-1 preferred stock for $500,000 (“Preferred Stock”). The Preferred Stock are convertible into voting common stock of insured consent at the option of the Company. Upon conversion, the Preferred Stock would represent less than 1% control in the technology company.
The Company applies the measurement alternative for its investments in the Seed Units and Preferred Stock because these investments are of an equity nature, and the Company does not have the ability to exercise significant influence over operating and financial policies of entities even in the event of conversion of the Seed Units or Preferred Stock. Under the measurement alternative, the Company records the investment based on original cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the investee. The Company’s share of income or loss of such companies is not included in the Company’s consolidated statements of operations and comprehensive (loss) income. The Company tests its investments for impairment whenever circumstances indicate that the carrying value of the investment may not be recoverable. No impairment of investments occurred for the three months ended March 31, 2024 and 2023.
Other Assets:
Other AssetsThe Company’s other assets are mainly composed of cash deposits in compliance requirements in various states. As of March 31, 2024 and December 31, 2023, the balance of other assets was $1,501,036 and $998,945, respectively.
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Equity Securities, at Fair Value:
S&P OptionsThe Company invested in S&P 500 call options, which were purchased through a broker as an economic hedge related to the market-indexed debt instruments included in the long-term debt note. The value is based on stock owned and quoted market prices in active markets. Changes in fair value are recorded in the unrealized gain on investments line item on the consolidated statements of operations and comprehensive (loss) income. As of March 31, 2024 and December 31, 2023, the value of the S&P 500 options was $3,513,964 and $2,348,998, respectively, recorded in the following accounts on the consolidated balance sheets:
March 31, 2024December 31, 2023
Current assets:
Equity securities, at fair value$3,403,897 $2,252,891 
Noncurrent assets:
Equity securities, at fair value110,067 96,107 
Total$3,513,964 $2,348,998 
10.CONSOLIDATION OF VARIABLE INTEREST ENTITIES
The Company consolidates VIEs for which it is the primary beneficiary or VOEs for which it controls through a majority voting interest or other arrangement. See Note 2, Summary of Significant Accounting Policies of our 2023 Annual Report, for more information on how the Company evaluates an entity for consolidation.
The Company evaluated any entity in which it had a variable interest upon formation to determine whether the entity should be consolidated. The Company also evaluated the consolidation conclusion during each reconsideration event, such as changes in the governing documents or additional equity contributions to the entity. During the three months ended March 31, 2024, the Company’s consolidated VIEs, LMA Income Series II LP, LMX Series LLC (LMATT Series 2024, Inc.), and LMA Income Series, LP, had total assets of $104,415,574 and liabilities of $85,530,346. For the year ended December 31, 2023, the Company’s consolidated VIEs, LMA Income Series II LP, LMX Series LLC (LMATT Series 2024, Inc.), and LMA Income Series, LP, had total assets and liabilities of $77,132,592 and $65,031,207, respectively. The Company did not deconsolidate any entities during the period ended March 31, 2024, or during the year ended December 31, 2023.
11.SEGMENT REPORTING
Segment Information—The Business Combination that took place on June 30, 2023, where ERES, LMA and Abacus Settlements consummated the combining of the Companies, triggered a re-organization of Abacus Life Inc., where the legacy Abacus Settlements business and legacy LMA business would both operate under Abacus Life, Inc. subsequent to the Business Combination date. Abacus Settlements historically had one operating and reportable segment, Originations. LMA historically had two operating and reportable segments, (1) Portfolio Servicing and (2) Active Management. As the Business Combination did not occur until the last day of the second quarter of 2023, income activity related to Abacus Settlements had not yet been reported by Abacus Life, Inc. as the businesses did not begin operating as a combined Company until July 1, 2023. As such, beginning in the third quarter of 2023, the Company organizes its business into three reportable segments (1) Portfolio Servicing, (2) Active Management, and (3) Originations, which all generate revenue and incur expenses in different manners.
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, including resource allocations and performance assessments, as well as the current
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operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM is the President and Chief Executive Officer. The Company’s reportable segments are not aggregated.
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 until receipt of death benefits.
The Originations segment generates revenue by originating life insurance policy settlements between investors or buyers, and the sellers, who are often the original policy owner. The policies are purchased from owners or other providers through advisors, brokers or directly through the owner.
The Company’s method for measuring profitability on a reportable segment basis is gross profit. The CODM does not review disaggregated assets by segment. The Company adopted ASU 2023-07 in March 2024. The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the CODM. The Company’s CODM periodically reviews cost of revenues by segment and treats it as a significant segment expense.
Revenue related to the Company’s reporting segments is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$217,935 $302,871 
Active management19,796,999 9,970,518 
Originations
5,024,204  
Segment revenue (including inter-segment)
25,039,138 10,273,389 
Intersegment elimination(3,551,954) 
Total revenue$21,487,184 $10,273,389 
Cost of revenue related to the Company’s reporting segments is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$362,392 $325,114 
Active management (including stock-compensation)958,472 164,436 
Originations4,951,987  
Total expenses (including inter-segment)6,272,851 489,550 
Intersegment elimination(3,551,954) 
Total cost of revenue$2,720,897 $489,550 
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Information related to the Company’s reporting segments for the three-month ended March 31, 2024 and 2023 is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$(144,457)$(22,243)
Active management18,838,527 9,806,082 
Originations72,217  
Total gross profit18,766,287 9,783,839 
Sales and marketing(1,929,944)(729,004)
General and administrative (including stock-based compensation)(11,353,499)(696,892)
Depreciation and amortization expense(1,682,054)(1,043)
Other (expense) income(53,028)(210,432)
Loss on change in fair value of warrant liability 946,960  
Interest expense(3,670,445)(357,383)
Interest income421,426 7,457 
Gain (Loss) on change in fair value of debt(2,712,627)(953,433)
Unrealized (loss) gain on investments1,164,966 125,220 
Provision for income taxes(1,173,513)656,467 
Net income (loss) attributable to non-controlling interests(73,274)460,707 
Net income attributable to common stockholders$(1,348,745)$8,085,503 
Segment gross profit is defined as revenues less cost of sales, excluding depreciation and amortization. Expenses below the gross profit line are not allocated across operating segments, as they relate primarily to the overall management of the consolidated entity.
As of March 31, 2024 and March 31, 2023, our operations are confined to the United States.
12.COMMITMENTS AND CONTINGENCIES
Legal Proceedings—Occasionally, the Company may be subject to various proceedings such as lawsuits, disputes, or claims. The Company assesses these proceedings as they arise and accrues a liability when losses are probable and reasonably estimable. Although legal proceedings are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually, or taken together, have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows.
Commitment—The Company has entered into a Strategic Services and Expenses Support Agreement (“SSES” or “Expense Support Agreement”) with the Providers in exchange for an option to purchase the outstanding equity ownership of the Providers. Pursuant to the Expense Support Agreement, the Company provides financial support and advice for the expenses of the Providers incurred in connection with their life settlement transactions businesses and the Providers are required to hire a life settlement transactions operations employee of an affiliate of the Company. No later than December 1 of each calendar year, the Company provides a budget for the Providers, in which the Company commits to extend financial support for all operating expenses up to the budgeted amount. “Operating Expenses” for purposes of the Expense Support Agreement means all annual operating expenses of the Providers incurred in the ordinary course of business, excluding the premiums paid for the Providers insurance coverages that are allocable to the insurance coverage provided to the Providers, which owns all the outstanding membership interests of the Providers if unrelated to the Providers settlement business.
For the three months ended March 31, 2024 and 2023, Abacus Life, Inc. incurred $, and $29,721 of expenses related to the Expense Support Agreement, which is included in the Other (expense) line of the
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consolidated statements of operations and comprehensive (loss) income and have not been reimbursed by the Providers.
13.FAIR VALUE MEASUREMENTS
The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 inputs: Other than quoted prices in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Recurring Fair Value MeasurementsThe assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy are presented in the tables below.
Fair Value Hierarchy
As of March 31, 2024Level 1Level 2Level 3Total
Assets:
Life settlement policies$ $ $125,488,525 $125,488,525 
Available-for-sale securities, at fair value  1,145,630 1,145,630 
Equity securities, at fair value3,513,964   3,513,964 
Total assets held at fair value$3,513,964 $ $126,634,155 $130,148,119 
Liabilities:
Debt maturing within one year$ $ $15,648,628 $15,648,628 
Long-term debt  $73,440,696 $73,440,696 
Private placement warrants  5,696,000 5,696,000 
Total liabilities held at fair value:$ $ $94,785,324 $94,785,324 
Fair Value Hierarchy
As of December 31, 2023Level 1Level 2Level 3Total
Assets:
Life settlement policies$ $ $122,296,559 $122,296,559 
Available-for-sale securities, at fair value  1,105,935 1,105,935 
Equity securities, at fair value2,348,998   2,348,998 
Other assets    
Total assets held at fair value$2,348,998 $ $123,402,494 $125,751,492 
Liabilities:
Debt maturing within one year$ $ $13,029,632 $13,029,632 
Long-term debt  $55,318,924 $55,318,924 
Private placement warrants  $6,642,960 $6,642,960 
Total liabilities held at fair value:$ $ $74,991,516 $74,991,516 
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Life Settlement PoliciesFor all policies purchased after June 30, 2023, the Company accounts for owned life settlement policies using the fair value method. Prior to 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 policies carried at fair value, the valuation 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. The valuation model is based on a discounted cash flow analysis and is sensitive to changes in the discount rate used. The Company utilized a blended average discount rate of 20% and 21% for policy valuations at March 31, 2024 and at December 31, 2023, respectively, which is based on economic and company-specific factors. The Company re-evaluates its discount rates at the end of every reporting period in order to reflect the estimated discount rates that could reasonably be used in a market transaction involving the Company’s portfolio of life settlements.
For life settlement policies carried using the investment method, the Company measures these at the cost of the policy plus premiums paid. The policies accounted for using the investment method totaled $1,434,444 and $1,697,178 at March 31, 2024 and at December 31, 2023, respectively.
Discount Rate Sensitivity20% was determined to be the weighted average discount rate used to estimate the fair value of policies held by LMA and its investment funds. If the discount rate increased or decreased by two percentage points and the other assumptions used to estimate fair value remained the same, the change in estimated fair value as of March 31, 2024, would be as follows:
As of March 31, 2024Fair ValueChange in
Fair Value
Rate Adjustment
+2%$114,667,471 $(10,821,054)
No change125,488,525 
-2%136,252,710 10,764,185 
Credit Exposure to Insurance CompaniesThe following table provides information about the life insurance issuer concentrations that exceed 10% of total face value or 10% of total fair value of the Company’s life insurance policies as of March 31, 2024:
CarrierPercentage of
Face Value
Percentage of
Fair Value
Carrier
Rating
John Hancock Life Insurance Company (U.S.A.)26.0 %16.0 %A+
Lincoln National Life Insurance Company7.0 %10.0 %A
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The following table provides a roll forward of the fair value of life insurance policies for the three months-ended March 31, 2024:
Fair value at December 31, 2023$122,296,559 
Policies purchased40,440,083 
Matured/sold policies(42,538,671)
Realized gain on matured/sold policies9,478,212 
Premiums paid(2,431,040)
Unrealized gain on held policies5,290,554 
Change in estimated fair value12,337,726 
Realized gain on matured/sold policies(9,478,212)
Premiums paid2,431,040 
Fair value at March 31, 2024$125,488,525 
Long-Term Debt—See Note 14, Long-Term Debt, for background information on the market-indexed debt. The Company has elected the fair value option in accounting for the instruments. Fair value is determined using Level 3 inputs. The valuation methodology is based on the Black-Scholes-Merton option-pricing formula and a discounted cash flow analysis. Inputs to the Black-Scholes-Merton model include (i) the S&P 500 Index price, (ii) S&P 500 Index volatility, (iii) a risk-free rate based on data published by the US Treasury, and (iv) a term assumption based on the contractual term of the LMATT Notes. The discounted cash flow analysis includes a discount rate that is based on the implied discount rate developed by calibrating a valuation model to the purchase price on the initial investment date. The implied discount rate is evaluated for reasonableness by benchmarking it to yields on actively traded comparable securities.
The total change in fair value of the debt resulted in a loss of $2,702,666. This loss is comprised of $7,436, net of tax, which is included within accumulated other comprehensive income and $4,514 net of tax, which is included in equity of noncontrolling interests resulting from risk-adjusted valuation scenarios. The Company recognized a loss of $2,712,627 on the change in fair value of the debt resulting from risk-free valuation scenarios, which is included within loss on change in fair value of debt within the consolidated statement of operations and comprehensive loss for the three months ended March 31, 2024.
The following table provides a roll forward of the fair value of the outstanding debt for the three months ended March 31, 2024:
Fair value at December 31, 2023$68,348,556 
Unrealized loss on change in fair value (risk-free)2,712,627 
Unrealized loss on change in fair value (credit-adjusted) included in OCI(16,007)
Unrealized gain on change in fair value (credit-adjusted) included in equity of NCI6,046 
Change in estimated fair value of debt2,702,666 
Other$(22,155)
Fair value at March 31, 2024$89,089,324 
Private Placement Warrants—The Company had 8,900,000 Private Placement Warrants outstanding as of March 31, 2024 and December 31, 2023. Each Private Placement Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share, subject to adjustment. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (x) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (z) the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private
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Placement Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Private Placement Warrants were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented separately in the consolidated statements of operations and comprehensive (loss) income.
The Private Placement Warrants were considered a Level 3 fair value measurement using a binomial lattice model in a risk-neutral framework. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock. The implied volatility as of the reporting date was derived from observable public warrant traded price provided by Bloomberg LP.
The following table presents the key assumptions in the analysis:
Private Placement Warrants
Expected implied volatilityde minimis
Risk-free interest rate4.09%
Term to expiration5.0 years
Exercise price$11.50
Common Stock Price$10.03
Dividend Yield%
Equity Securities, at Fair Value: S&P 500 Options—In February 2022, LMATT Series 2024, Inc., which the Company consolidates for financial reporting, purchased and sold S&P 500 call and put options through a broker. The Company purchased and sold additional S&P 500 call options through a broker in September 2022 through their 100% owned and fully consolidated subsidiaries LMATT Growth Series 2.2024, Inc. and LMATT Growth and Income Series 1.2026, Inc. The options are exchange traded, and fair value is determined using Level 1 inputs of quoted market prices as of the consolidated balance sheets dates. Changes in fair value are classified as unrealized (gain)/loss on investments within the consolidated statements of operations and comprehensive (loss) income.
Available-for-Sale Investment—The Convertible Promissory Note is classified as an available-for-sale security. Available-for-sale investments are subsequently measured at fair value. Unrealized holding gains and losses are excluded from earnings and reported in other comprehensive income until realized. The Company determines fair value of its available-for-sale investments using unobservable inputs by considering the initial investment value, next round financing, and the likelihood of conversion or settlement based on the contractual terms in the agreement. The Company initially purchased a convertible promissory note from the issuer in 2022 and then on January 7, 2022, the Company purchased an additional $250,000 convertible promissory note from the same issuer and then an additional $500,000 in October 2022. As of March 31, 2024 and December 31, 2023, the Company evaluated the fair value of its Promissory Note and determined that the fair value approximates the carrying value of $1,145,630 and $1,105,935, respectively.
Financial Instruments Where Carrying Value Approximates Fair Value—The carrying value of cash, cash equivalents, accounts receivables, and due to affiliates approximates fair value due to the short-term nature of their maturities.
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14.LONG-TERM DEBT
Outstanding principal balances of Long-term debt comprises of the following:
March 31, 2024December 31, 2023
CostFair valueCostFair value
Market-indexed notes:
LMATT Series 2024, Inc.$10,031,919 $11,221,852 $9,124,944 $9,477,780 
LMATT Growth Series 2.2024, Inc.3,331,744 4,426,776 2,981,480 3,551,852 
LMATT Growth & Income Series 1.2026, Inc542,618 631,377 492,582 569,862 
Secured borrowing:
LMA Income Series, LP22,485,826 22,485,826 22,368,209 22,368,209 
LMA Income Series II, LP50,323,493 50,323,493 32,380,852 32,380,852 
Unsecured borrowing:
Fixed Rate Senior Unsecured Notes60,650,000 60,650,000 35,650,000 35,650,000 
SPV Purchase and Sale Note27,341,832 27,341,832 26,538,004 26,538,004 
Sponsor PIK Note11,452,687 11,452,687 11,115,865 11,115,865 
Deferred issuance costs and discounts(2,724,708)(2,724,708)(1,831,910)(1,831,910)
Total debt$183,435,411 $185,809,135 $138,820,026 $139,820,514 
Less current portion of
long-term debt$(13,363,663)$(15,648,628)$(11,440,236)$(13,029,632)
Total long-term debt$170,071,748 $170,160,507 $127,379,790 $126,790,882 
Fixed Rate Senior Unsecured Notes
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 and 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 will be senior unsecured obligations of the Company and will 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 issued an additional $25,000,000 as part of the previously issued Fixed Unsecured Notes. The net proceeds, after related debt issue costs, were used by the Company for general corporate purposes. The Fixed Rate Senior Unsecured Notes are based on a fixed interest rate of 9.875% to be paid in quarterly interest payments beginning on May 15, 2024 and mature on November 15, 2028.
LMATT Series 2024, Inc. Market-Indexed Notes:
On March 31, 2022, LMATT Series 2024, Inc., 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 at the end of 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 a one-to-one basis. As of March 31, 2024, $8,816,900 of the principal amount remained outstanding of which $200,000 is owed to LMA. LMA’s investment is eliminated in consolidation.
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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 and December 31, 2023, the fair value of the LMATT Series 2024, Inc. notes was $11,221,852 and $9,477,780, respectively.
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.
LMATT Growth Series 2.2024, Inc. Market-Indexed Notes:
On September 16, 2022, LMATTS 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. (“LMATTSTM 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 July of 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 March 31, 2024, 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 March 31, 2024 and December 31, 2023, the fair value of the LMATT Series 2.2024, Inc. notes were $4,426,776 and $3,551,852, respectively.
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.
LMATT Growth and Income Series 1.2026, Inc. Market-Indexed Notes:
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 (“LMATTSTM 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 July of 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 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 March 31, 2024 and December 31, 2023, the fair value of the LMATT Growth and Income Series 1.2026, Inc., notes were $631,377 and 569,862, respectively.
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,
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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.
LMA Income Series, LP and LMA Income Series, GP LLC Secured Borrowing
On September 2, 2022, LMA Income Series, GP, LLC, wholly owned and controlled by that LMA Series, LLC, formed a limited partnership, LMA Income Series, LP and subsequently 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 9% which would require 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 three months ended March 31, 2024.
The private placement offerings proceeds are used to acquire and actively manage a large and diversified portfolio of financial assets. LMA, through its consolidated subsidiaries, serves as the portfolio manager for the financial asset portfolio, which includes investment sourcing and monitoring. In this role, LMA has the unilateral ability to acquire and dispose of any of the above investments. As the partnership does not represent a business in accordance with ASC 810 and is a consolidated subsidiary that only holds financial assets, this represents a transfer subject to ASC 860-10. As the financial assets are not transferred outside the consolidated group, the proceeds from the offering shall be classified as a liability unless it meets the definition of a participating interest and the derecognition criteria in ASC 860 are met. The transferred interest did not meet the definition of a participating interest as LMA possesses the unilateral ability to direct the sale of the financial assets (ASC 860-10-50-6A(d)). In accordance with ASC 860-30-25-2, as the transfer of the financial assets did not meet the definition of a participating interest, LMA shall recognize the proceeds received from the offering as a secured borrowing.
Dividends paid and accrued are included in interest expense. The excess dividend returns will not be paid by LMA Income Series, LP until termination, are considered non-cash interest expense, and are included in the principal balance outstanding. As of March 31, 2024 and December 31, 2023, $596,381 and $478,765 in non-cash interest expense was added to the outstanding principal balance, respectively.
LMA elected to account for the secured borrowing at fair value under the collateralized financing entity guidance within ASC 810-10-30. As of March 31, 2024 and December 31, 2023, the fair value of the secured borrowing was $22,485,826 and $22,368,209, respectively.
LMA Income Series II, LP and LMA Income Series II, GP LLC Secured Borrowing
On January 31, 2023, LMA Income Series II, GP, LLC, wholly owned and controlled by that LMA Series, LLC, formed a limited partnership, LMA Income Series II, LP and subsequently issued partnership interests to limited partners in a private placement offering. The initial term of the offering was 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 received 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, 7.75%; 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 three months ended March 31, 2024.
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The private placement offerings proceeds are used to acquire and actively manage a large and diversified portfolio of financial assets. LMA, through its consolidated subsidiaries, serves as the portfolio manager for the financial asset portfolio, which includes investment sourcing and monitoring. In this role, LMA has the unilateral ability to acquire and dispose of any of the above investments. As the partnership does not represent a business in accordance with ASC 810 and is a consolidated subsidiary that only holds financial assets, this represents a transfer subject to ASC 860-10. As the financial assets are not transferred outside the consolidated group, the proceeds from the offering shall be classified as a liability unless it meets the definition of a participating interest and the derecognition criteria in ASC 860 are met. The transferred interest did not meet the definition of a participating interest as LMA possesses the unilateral ability to direct the sale of the financial assets (ASC 860-10-50-6A(d)). In accordance with ASC 860-30-25-2, as the transfer of the financial assets did not meet the definition of a participating interest, LMA shall recognize the proceeds received from the offering as a secured borrowing.
During the first quarter of 2024, LMA Income Series II, GP, LLC through the LMA Income Series II, LP admitted additional limited partners into the fund. The additional limited partnership interests amounted to $17,942,641 as of March 31, 2024. LMA Income Series II, GP plans to continue admitting new limited partners. In addition to new partnership interests, an amendment to the limited partnership was signed to add redemption opportunities for limited partners and extend the maturity date of the fund. The first redemption date is March 31, 2026, but limited partners can elect to stay in the fund at the same terms. If a limited partners elect to stay invested, the next redemption date would be June 30, 2027 with a final maturity date of December 31, 2028. Along with these redemption windows, the amendment also increased the Preferred Return Amount by fifty basis points annually across all tiers. The amendment will become effective April 01, 2024.
LMA elected to account for the secured borrowing at fair value under the collateralized financing entity guidance within ASC 810-10-30. As of March 31, 2024 and December 31, 2023, the fair value of the secured borrowing was $50,323,493 and $32,380,852, respectively.
Sponsor PIK Note
On the June 30, 2023, in connection with the Merger Agreement, East Sponsor, LLC, a Delaware limited liability company (“Sponsor”), made an unsecured loan to the Company in the aggregate amount of $10,471,648 (the “Sponsor PIK Note”) with an interest rate of 12.00% per year compounding semi-annually. Accrued interest is payable in arrears quarterly starting on September 30, 2023 by adding it to the outstanding principal balance. As of March 31, 2024 and December 31, 2023, $981,039 and $644,217 in non-cash interest expense was added to the outstanding principal balance, respectively. The Sponsor PIK Note matures on June 30, 2028 (the “Maturity Date”) and may be prepaid at any time in accordance with its terms without any premium or penalty.
SPV Purchase and Sale Note
On July 5, 2023, the Company entered into an Asset Purchase Agreement (the “Policy APA”) to acquire certain insurance policies with an aggregate fair market value of $10,000,000 from Abacus Investment SPV, LLC, a Delaware limited liability company (“SPV”), in exchange for a payable obligation owed by the Company to SPV (such acquisition transaction under the Policy APA, the “SPV Purchase and Sale”). SPV is jointly owned by the Sponsor and former members of LMA and Abacus.
SPV extended an additional principal amount of $15,000,000 bringing the total SPV Purchase and Sale Note to $25,000,000. The Company is able to borrow additional funds from SPV. The interest accrues at a rate of 12% per year, payable quarterly, all of which is to be paid in-kind by the Company by increasing the principal amount of the SPV Purchase and Sale Note on each interest payment date and is not required to be paid until maturity on July 5, 2026, three years after the closing of the SPV Purchase and Sale Note, subject to two automatic extensions of one-year each without any amendment of the relevant documentation.
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As of March 31, 2024 and December 31, 2023, $2,341,832 and $1,538,004 in non-cash interest expense was added to the outstanding principal balance, respectively.