Abacus Life Inc
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
ABX$8.78+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001814287-24-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001814287-24-000051
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 147 previous paragraphs and 189 current paragraphs.
94 unchanged; 50 reworded; 22 added; 3 removed; 0 previous and 23 current paragraphs rearranged.
Tables are not compared: 36 previous and 62 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Portfolio servicing revenue increased by $59,481 or 240.5%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase is mainly due to an increase in policies serviced.
Current report
Portfolio servicing revenue increased by $69,987 or 149.0%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase is mainly due to an increase in policies serviced for external funds.
Current report
Origination revenue increased to $3,329,707 from $—, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The origination revenue is related to Abacus, which was acquired on June 30, 2023.
Current report
Gross profit increased by $24,976,831, or 124.1%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase in gross profit is primarily due to an increase in active management revenue driven by an increase in policies purchased.
Current report
Sales and marketing expenses increased by $3,069,900 or 217.3%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase was primarily related to an increase in advertising costs to support our origination and active management growth strategy.
Current report
Unrealized loss on investments increased by $1,035,418 or 153.9% for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023. The primary cause of this increase pertains to the change in fair value of S&P 500 options.
Current report
Realized Loss (Gain) on Investments
Current report
Realized gain on investments increased by $856,744 or NM for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023. The primary cause of this increase pertains to the sale of S&P 500 options related to LMATT Growth 2.2024 and LMATT Growth and Income 1.2026 market-indexed notes as discussed in Note 22, Subsequent Events.
Current report
Realized gain on investments increased by $856,744 or NM for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. The primary cause of this increase pertains to the sale of S&P 500 options related to LMATT Growth 2.2024 and LMATT Growth and Income 1.2026 market-indexed notes as discussed in Note 22, Subsequent Events.
Current report
Other income (expense) decreased by $164,093, or 757.9%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease is primarily related to other expense activities.
Current report
Results of Operations—Segment Results, Net of Intersegment Eliminations
Current report
Gross loss from our portfolio servicing segment decreased by $57,888 or 34.8%, for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023, primarily due to a net decrease in policies serviced.
Current report
Total revenue for the active management segment increased by$25,815,839, or 123.0% for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. Gross profit from our active management segment increased by$24,711,714, or 121.8% for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. The increase in active management revenue and gross profit was primarily attributable to growth in the active management revenue as described in the Results of Operations section and an increase of cost of revenue from 3.4% of revenue for thesix months ended June 30, 2023 to 3.9% of revenue for thesix months ended June 30, 2024.
Current report
Gross profit from our originations segment increased by $135,012, for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
Current report
Total revenue for the originations segment increased by $3,329,707 for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
Current report
Gross profit from our originations segment increased by $207,229, for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
Current report
[1] For thesix months ended June 30, 2024, LMA and LMA subsidiaries comprised 458 of the policies serviced, $747,942,758 value of the policies serviced, and $170,008,843 of the total invested dollars. For thesix months ended June 30, 2023, LMA and LMA subsidiaries comprised 190 of the policies serviced, $270,464,058 value of the policies serviced, and $66,449,953 of the total invested dollars. All servicing revenues related to LMA or LMA subsidiaries are eliminated in consolidation.
Current report
Refer to the Company’s management’s discussion and analysis of financial condition and results of operations.
Current report
Recent Accounting Pronouncements
Current report
Refer to the Company’s management’s discussion and analysis of financial condition and results of operations.
Current report
Gross profit for the six months ended June 30, 2023 was$3,891,373. Gross margin for the six months ended June 30, 2023 was 30%.
Current report
During the three months ended June 30, 2023, our operating activities used $24,292, primarily due to net loss partially offset by cash received from contract deposits and repayment of related party receivables.
Removed paragraphs (3)
Previous report
Results of Operations—Segment Results
Previous report
We have prepared our financial statements in accordance with GAAP. Our significant accounting policies are described in more detail in Note 2 to our condensed notes to unaudited financial statements included in this quarterly filing statement and our 2023 Annual Report. While our preparation of these financial statements requires us to make estimates, assumptions and judgments from time to time that may affect the reported amounts of assets, liabilities and related disclosures, as of the date of these financial statements, we have not identified any estimates made in accordance with GAAP that involve a significant level of estimation uncertainty which have had or are reasonably likely to have a material impact on the financial condition or results of operations.
Previous report
During the three months ended March 31, 2023, our operating activities used $773,912, primarily due to Merger Agreement execution costs reimbursed at the time of the Merger Agreement.
Reworded paragraphs (50)
Previous wording
The Company is composed of two principal operating subsidiaries. Abacus and LMA comprise a leading vertically integrated alternative asset manager specializing in investing in inforce life insurance products throughout the lifecycle of a life insurance policy. As an alternative asset manager, the Company focuses on originating, holding and servicing life insurance policies. The Company purchases life insurance policies from consumers seeking liquidity and actively manages those policies over time (via trading, holding and/or servicing).
Current wording
The Company is composed of two principal operating subsidiaries. Abacus and LMA comprise a leading vertically integrated alternative asset manager specializing in investing in inforce life insurance products throughout the lifecycle of a life insurance policy. As an alternative asset manager, the Company focuses on originating, holding, and servicing life insurance policies. The Company purchases life insurance policies from consumers seeking liquidity and actively manages those policies over time (via trading, holding, and servicing).
Previous wording
Abacus conducts business in 49 states and the District of Columbia, except Alaska and there are no current plans to procure a license in Alaska. The company holds viatical settlement and or life settlement provider licenses in 43 of those jurisdictions. Abacus also conducts business in seven (7) jurisdictions which do not currently have life and or viatical settlement provider licensing requirements.
Current wording
Abacus conducts business in 49 states and the District of Columbia. Abacus is not licensed to operate in Alaska and there are no current plans to procure a license in Alaska. The company holds viatical settlement and or life settlement provider licenses in 43 of those jurisdictions. Abacus also conducts business in seven (7) jurisdictions which do not currently have life and or viatical settlement provider licensing requirements.
Previous wording
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.
Current wording
Related party servicing revenue decreased by $208,959, or 63.4%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The decrease is mainly due to a decrease in policies serviced for the Nova Funds.
Previous wording
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.
Current wording
Related party servicing revenue decreased by $237,221, or 43.7%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The decrease is mainly due to a decrease in policies serviced for the Nova Funds.
Previous wording
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:
Current wording
The aggregate face value of policies accounted for using the investment method is $3,725,000 as of June 30, 2024, with a corresponding carrying value of $1,140,497. Additional information regarding policies accounted for under the investment method is as follows:
Previous wording
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:
Current wording
The aggregate face value of policies held at fair value is $744,204,632 as of June 30, 2024 with a corresponding fair value of $207,571,413. Additional information regarding policies accounted for under the fair value method is as follows:
Previous wording
Total active management revenue incre ased by $9,826,481, or 98.6%, for thethree months ended March 31, 2024 compared to thethree 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.
Current wording
Total active management revenue incre ased by $25,815,839, or 123.0%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase is mainly due to a net increase of $35,005,006 related to policies accounted for under the fair value method (comprised of $21,650,515 realized gains, $18,022,115 unrealized gains and offset by $(4,667,624) in premiums paid) and $6,959,273 fee-based revenue, offset by a decrease of $(16,148,440) in trading activity related to policies accounted for under the investment method.
Previous wording
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, which was acquired on June 30, 2023.
Current wording
The Company did not generate related party origination revenue from Nova Funds for thethree orsix months ended June 30, 2024 and 2023. The related party origination revenue is related to Abacus, which was acquired on June 30, 2023.
Previous wording
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, which was acquired on June 30, 2023.
Current wording
Origination revenue increased to $1,857,457 from$—, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The origination revenue is related to Abacus, which was acquired on June 30, 2023.
Previous wording
Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit
Current wording
Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit, Net of Intersegment Eliminations
Previous wording
Cost of revenues (excluding depreciation and amortization) increased by $2,230,662, or 455.7%, for thethree months ended March 31, 2024 compared to thethree 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.
Current wording
Cost of revenues (excluding depreciation and amortization) increased by $1,768,681, or 181.7%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase in cost of revenues is primarily due to increase in payroll expense related to growth in active management activity, $1,722,445 increase of commissions for origination activity related to the increase in insurance policy purchase activity during 2024, and $322,606 non-cash stock-based compensation expense.
Previous wording
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 that took place on June 30, 2023.
Current wording
Related party cost of revenue of $1,453 is associated with a third party underwriting reimbursement for related party origination activity, which is now included within the consolidated financial statements for the Company subsequent to the acquisition of Abacus that took place on June 30, 2023.
Previous wording
Gross profit increased by $8,982,448, or 91.8%, for thethree months ended March 31, 2024 compared to thethree months ended March 31, 2023. The increase in gross profit is primarily due to an increase in active management revenue.
Current wording
Gross profit increased by $15,927,203, or 153.1%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase in gross profit is primarily due to an increase in active management revenue driven by an increase in policies purchased.
Previous wording
Sales and marketing expenses increased by $1,200,940 or 164.7%, for thethree months ended March 31, 2024 compared to thethree months ended March 31, 2023. The increase was primarily related to an increase in advertising costs to support our active management growth strategy.
Current wording
Sales and marketing expenses increased by $1,868,960 or 273.3%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase was primarily related to an increase in advertising costs to support our origination and active management growth strategy.
Previous wording
General, administrative, and other increased by $10,656,607, or 1,529.2%, for thethree months ended March 31, 2024 compared to thethree 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 Merger.
Current wording
General, administrative, and other increased by $13,975,805, or 2,419.9%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase in general, administrative, and other expenses is primarily related to non-cash stock based compensation expense of $5,842,853, payroll expense of $4,581,684, accounting and auditing fees of $1,919,467 legal and professional fees of $412,007, and an increase in other expenses general and administrative expenses of $1,219,794 to support the Company’s public company compliance costs post the Merger.
Previous wording
The increase of $1,681,011, or 161,170.8%, in depreciation and amortization expense is related to the amortization of acquired Abacus intangible assets.
Current wording
The increase of $1,749,354, or 159,321.9%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023 in depreciation and amortization expense is primarily related to the amortization of acquired Abacus intangible assets.
Previous wording
Unrealized gain on investments increased by $1,039,746 or 830.3% for thethree months ended March 31, 2024, compared to thethree months ended March 31, 2023. The primary cause of this increase pertains to the change in fair value of S&P 500 options.
Current wording
Unrealized gain on investments increased by $4,328 or 0.5% for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. The primary cause of this increase pertains to the change in fair value of S&P 500 options.
Previous wording
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.
Current wording
Loss in the fair value of debt increased by $1,513,428, or 63.1% for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase is primarily attributable to changes in the risk-free fair value of our market-indexed notes.
Previous wording
Other 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.
Current wording
Other income (expense) decreased by $73,869, or 60.7%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease is primarily related to other expense activities.
Previous wording
Interest expense was $3,670,445 for thethree months ended March 31, 2024, compared to $357,383 thethree months ended March 31, 2023. The increase in interest expense is primarily related to the Fixed Rate Senior 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.
Current wording
Interest expense was $4,529,187 for thethree months ended June 30, 2024, compared to $584,075 for thethree months ended June 30, 2023. The increase in interest expense is primarily related to the Fixed Rate Senior Unsecured Notes interest expense of $1,480,661, the LMA Income Series II LP interest expense of $838,944, the LMA Income Series LP interest expense of $12,419, the SPV Purchase and Sale Note non-cash interest expense $828,494, and the Sponsor PIK Note non-cash interest of $347,028.
Previous wording
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.
Current wording
Interest income was 639,906, for the three months ended June 30, 2024, compared to $— for the three months ended June 30, 2023. The increase in interest income is related to interest earned on our bank deposits.
Previous wording
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.
Current wording
(Loss) gain on change in fair value of warrant liability was $(667,500) for the three months ended June 30, 2024, compared to $— for the three months ended June 30, 2023. The change is primarily attributable to the change in the price for the public warrants, which is a determining factor for measuring the fair value of the private warrants.
Previous wording
Income tax expense increased by $1,829,980, or 278.8% for thethree months ended March 31, 2024, compared to the three months ended March 31, 2023. Our effective income tax rate for thethree 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).
Current wording
Income tax expense increased by $573,139, or 48.4% for thethree months ended June 30, 2024, compared to the three months ended June 30, 2023. Our effective income tax rate for thethree months ended June 30, 2024 and three months June 30, 2023, was 73.0% and 15.0%, respectively. The increase was primarily driven by the portion of the stock-based compensation expense deduction limited by IRC Section 162(m).
Previous wording
Total revenue for the portfolio servicing segment decreased by $84,936, or 28.0%, for thethree months ended March 31, 2024 compared to thethree months ended March 31, 2023. The decrease in portfolio servicing revenue is primarily attributable to a decrease in the non-recurring consulting projects.
Current wording
Total revenue for the portfolio servicing segment decreased by $149,478, or 42.2%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The decrease in portfolio servicing revenue is primarily attributable to a decrease in policies serviced.
Previous wording
Gross loss from our portfolio servicing segment increased by $122,214 or 549.4%, for thethree months ended March 31, 2024, compared to thethree months ended March 31, 2023, primarily due to increases in related cost of revenue.
Current wording
Gross profit from our portfolio servicing segment increased by $112,922 or (147.2)%, for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023, primarily due to decrease in servicing costs.
Previous wording
Total revenue for the active management segment increased by$9,826,481, or 98.6% for thethree months ended March 31, 2024, compared to thethree months ended March 31, 2023. Gross profit from our active management segment increased by $9,032,445, or 92.1% for thethree months ended March 31, 2024, compared to thethree 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 thethree months ended March 31, 2023 to 5% of revenue for thethree months ended March 31, 2024.
Current wording
Total revenue for the active management segment increased by$15,989,358, or 145.0% for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023. Gross profit from our active management segment increased by $15,679,269, or 149.6% for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023. The increase in active management revenue and gross profit was primarily attributable to growth in the active management revenue as described in the Results of Operations section and a decrease in cost of revenue from 4.9% of revenue for thethree months ended June 30, 2023 to 3.2% of revenue for thethree months ended June 30, 2024.
Previous wording
Total revenue for the originations segment increased by $5,024,204 for thethree months ended March 31, 2024 compared to thethree 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 originated for LMA or other subsidiaries. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
Current wording
Total revenue for the originations segment increased by $1,857,457 for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. No originations revenue was recorded prior to the June 30, 2023 Business Combination.
Previous wording
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.
Current wording
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 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.
Previous wording
We monitor the following key business metrics for active management revenue: (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 Results from Operations section above for a summary of active management key business metrics for investment and fair value method policies.
Current wording
We monitor the following key business metrics for active management revenue: (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 or net death benefit of policies represents the maximum potential revenue realization on policies held. Refer to the Results from Operations section above for a summary of active management key business metrics for investment and fair value method policies.
Previous wording
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.
Current wording
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.
Previous wording
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, to the Interim Financial Statements for additional information.
Current wording
In December 2023, the Company’s board of directors approved a $15,000,000 share repurchase plan that will expire in May 2025. As of June 30, 2024, $2,974,863 remains available for repurchases under the approved plan. Refer to Note 15, Stockholders’ Equity, to the Interim Financial Statements for additional information.
Previous wording
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. Theincrease 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.
Current wording
During thesix months ended June 30, 2024, our operating activities used$64,542,510 of net cash as compared to $38,364,171 of net cash used from operating activities during thesix months ended June 30, 2023. Theincrease of
Previous wording
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.
Current wording
During thesix months ended June 30, 2024, investing activities used $716,113 of net cash as compared to$7,060,627 net cash used during thesix months ended June 30, 2023. The decrease of $6,344,514 in net cash used in investing activities was primarily related to the decrease of $6,597,566 in due from affiliates.
Previous wording
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.
Current wording
During thesix months ended June 30, 2024, financing activities provided $130,993,784 of net cash as compared to $35,983,097 of net cash provided during thesix months ended June 30, 2023. The increase of $95,010,687 in net cash providedby financing activitiesis primarily due to net proceeds received from our follow-on stock issuance of $86,270,000, decrease in amounts due to former owners of $12,221,991, decrease in transaction costs paid related to the Merger Agreement of $10,358,100, and $6,851,057 in cash received from public warrant conversions, partially offset by $(10,742,075) in share repurchases and $(9,948,386) decrease in net debt issuance proceeds.
Previous wording
In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions, as described under the heading “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this quarterly statement 2023 Annual Report on Form 10-K. Unless the context otherwise requires, references in this “Abacus Settlements, LLC Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “Abacus” are intended to mean the business and operations of Abacus Settlements, LLC.
Current wording
In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this quarterly statement and in the Company’s 2023 Annual Report on Form 10-K. Unless the context otherwise requires, references in this “Abacus Settlements, LLC Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “Abacus” are intended to mean the business and operations of Abacus Settlements, LLC.
Previous wording
Abacus conducts business in 49 states and the District of Columbia, except Alaska and there are no current plans to procure a license in Alaska. The company holds viatical settlement and or life settlement provider licenses in 43 of those jurisdictions. Abacus also conducts business in seven (7) jurisdictions which do not currently have life and or viatical settlement provider licensing requirements.
Current wording
Abacus conducts business in 49 states and the District of Columbia. Abacus is not licensed to operate in Alaska and there are no current plans to procure a license in Alaska. The company holds viatical settlement and or life settlement provider licenses in 43 of those jurisdictions. Abacus also conducts business in seven (7) jurisdictions which do not currently have life and or viatical settlement provider licensing requirements.
Previous wording
Revenue for the three months ended March 31, 2023 $1,563,650, and is comprised of sales commission, origination fees revenue, services revenue, and transaction fees reimbursements.
Current wording
Revenue for the three months ended June 30, 2023 $1,689,088, and is comprised of sales commission, origination fees revenue, services revenue, and transaction fees reimbursements.
Previous wording
Related Party Revenue for the three months ended March 31, 2023 was $4,736,336. For the three months ended March 31, 2023, Abacus had originated 34 for the Nova funds with a total value of $39,985,400 and also comprised of origination services to LMA and transaction fees reimbursed by the related party. Further, Abacus originated 34 policies for LMA with a total value of $77,685,810 for the three months ended March 31, 2023.
Current wording
Related Party Revenue for the three months ended June 30, 2023 was $5,195,602. For the three months ended June 30, 2023, Abacus had originated 38 for the Nova funds with a total value of $56,688,680 that generated $1,579,864 in revenue and also comprised of $3,615,738 in origination services to LMA and transaction fees reimbursed by the related party. Further, Abacus originated 69 policies for LMA with a total value of $114,999,768 for the three months ended June 30, 2023.
Previous wording
Cost of revenue for the three months ended March 31, 2023 was $1,229,616, and is comprised ofsales agent commission, professional and consulting fees.
Current wording
Cost of revenue for the three months ended June 30, 2023 was $1,505,333, and is comprised ofsales agent commission, professional and consulting fees.
Previous wording
Related party cost of revenue for the three months ended March 31, 2023 was $3,165,707 and is comprised of LMA agent commission expenses and originations of policies sold to Nova Funds.
Current wording
Related party cost of revenue for the three months ended June 30, 2023 was $3,392,647 and is comprised of $2,623,201 in LMA agent commission expenses and originations of policies sold to Nova Funds.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (23)
Current report — wording carried from elsewhere
Total active management revenue incre ased by $15,989,358, or 145.0%, for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase is mainly due to a net increase of $24,245,464 related to policies accounted for under the fair value method (comprised of $12,773,659 realized gains, $13,924,426 unrealized gains and offset by $(2,452,621) in premiums paid) and offset by a decrease of $(8,256,106) in trading activity related to policies accounted for under the investment method.
Current report — wording carried from elsewhere
Additional information regarding policies accounted for under the investment method is as follows:
Current report — wording carried from elsewhere
Additional information regarding policies accounted for under the fair value method is as follows:
Current report — wording carried from elsewhere
Cost of revenues (excluding depreciation and amortization) increased by $4,001,481, or 273.5%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase in cost of revenues is primarily due to increase in payroll expense related to growth in active management activity, $3,122,478 increase of commissions for origination activity related to the increase in insurance policy purchase activity during 2024, and $645,213 non-cash stock-based compensation expense.
Current report — wording carried from elsewhere
Related party cost of revenue of $2,138 is associated with a third party underwriting reimbursement for related party origination activity, which is now included within the consolidated financial statements for the Company subsequent to the acquisition of Abacus that took place on June 30, 2023.
Current report — wording carried from elsewhere
General, administrative, and other increased by $24,632,412, or 1,932.8%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The increase in general, administrative, and other expenses is primarily related to non-cash stock based compensation expense of $11,613,617, payroll expense of $7,475,407, accounting and auditing fees of $2,538,027 legal and professional fees of $510,338, and an increase in other expenses general and administrative expenses of $2,495,023 to support the Company’s public company compliance costs post the Merger.
Current report — wording carried from elsewhere
The increase of $3,430,365, or 160,222.6%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023 in depreciation and amortization expense is primarily related to the amortization of acquired Abacus intangible assets.
Current report — wording carried from elsewhere
Loss in the fair value of debt decreased by $245,766, or 17.0% for thethree months ended June 30, 2024 compared to thethree months ended June 30, 2023. The increase is primarily attributable to changes in the risk-free fair value of our market-indexed notes.
Current report — wording carried from elsewhere
Interest expense was $8,199,632 for thesix months ended June 30, 2024, compared to $941,458 for thesix months ended June 30, 2023. The increase in interest expense is primarily related to the Fixed Rate Senior Unsecured Notes interest expense of$2,676,521, the LMA Income Series II LP interest expense of$1,797,836, the LMA Income Series LP interest expense of$18,613, the SPV Purchase and Sale Note non-cash interest expense$1,632,322, and the Sponsor PIK Note non-cash interest of$683,850.
Current report — wording carried from elsewhere
Interest income increased by $1,061,332, for the six months ended June 30, 2024, compared to $7,457 for the six months ended June 30, 2023. The increase in interest income is related to interest earned on our bank deposits.
Current report — wording carried from elsewhere
(Loss) gain on change in fair value of warrant liability was$279,460 for the six months ended June 30, 2024, compared to $— for the six months ended June 30, 2023. The change is primarily attributable to the change in the price for the public warrants, which is a determining factor for measuring the fair value of the private warrants.
Current report — wording carried from elsewhere
Income tax expense increased by $2,403,119, or 455.0% for thesix months ended June 30, 2024, compared to thesix months ended June 30, 2023. Our effective income tax rate for thesix months ended June 30, 2024 and for thesix months June 30, 2023, was 127.0% and 3.5%, respectively. The increase was primarily driven by the portion of the stock-based compensation expense deduction limited by IRC Section 162(m).
Current report — wording carried from elsewhere
Total revenue for the portfolio servicing segment decreased by $167,234, or 28.3%, for thesix months ended June 30, 2024 compared to thesix months ended June 30, 2023. The decrease in portfolio servicing revenue is primarily attributable to a net decrease in policies serviced.
Current report — wording carried from elsewhere
$26,178,339 in net cash used from operating activities was primarily due to $12,445,188 increase in net life settlement purchases and $18,022,115 increase in unrealized gains on life settlement policies, at fair value.
Current report — wording carried from elsewhere
Revenue for the six months ended June 30, 2023 $3,252,738, and is comprised of sales commission, origination fees revenue, services revenue, and transaction fees reimbursements.
Current report — wording carried from elsewhere
Related Party Revenue for the six months ended June 30, 2023 was $9,931,938. For the six months ended June 30, 2023, Abacus had originated 72 for the Nova funds with a total value of $96,674,080 that generated $3,093,797 in revenues and also comprised of $6,794,641 in origination services to LMA and transaction fees reimbursed by the related party. Further, Abacus originated 103 policies for LMA with a total value of $192,685,578 for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Cost of revenue for the six months ended June 30, 2023 was$2,734,949, and is comprised ofsales agent commission, professional and consulting fees.
Current report — wording carried from elsewhere
Related party cost of revenue for the six months ended June 30, 2023 was$6,558,354 and is comprised of $5,012,103 in LMA agent commission expenses and originations of policies sold to Nova Funds.
Current report — wording carried from elsewhere
General and administrative expenses for the six months ended June 30, 2023 was$4,848,580 and is comprised of payroll expenses for administration support and for sales departments, marketing expenses, sponsorship costs, rent costs, office expenses, escrow fees, professional fees, and legal fees.
Current report — wording carried from elsewhere
Depreciation expense for the six months ended June 30, 2023 was$5,597. The depreciation expense for both the periods were computed on property and equipment (i.e., computer equipment, office furniture, and leasehold improvements).
Current report — wording carried from elsewhere
Interest income for the six months ended June 30, 2023 was$1,917. The interest income represents interest earned on Abacus certificate of deposit.
Current report — wording carried from elsewhere
Interest expense for the six months ended June 30, 2023 was$(11,725) and is comprised of amortization of the deferred financing fees and certificate of deposit fees.
Current report — wording carried from elsewhere
Provision for income taxes for the three months ended June 30, 2023 was$—.