Abacus Global Management, Inc.: Form 10-Q for the period ended Jun 30, 2026

Cautionary Note Regarding Forward-Looking Statements

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, hopes, intentions or strategies regarding the future. 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.” ." These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “expect,” ”intend,” “anticipate,” “goals,” “prospects,” “will,” “would,” “will continue,” “will likely result,” and similar expressions (including the negative versions of such words or expressions). All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Forward looking statements include, but are not limited to: our financial and operational outlook; our operational and financial strategies, including planned growth initiatives and the benefits thereof; our ability to successfully effect those strategies, and the expected results therefrom; projections of future earnings and expected capital; our ability to generate future cash flows; securitization schedules and timing; future demand for our products and services; the reliability our fund structures and corresponding market confidence and expectations; and the volume and rate of our policy acquisitions.

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, but not limited to: the potential impact of our business relationships, including with our employees, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; political instability both in the U.S. and abroad, to include political violence, terrorism, and war; weakness or adverse changes in the level of activity in our sector or the sectors of our affiliated companies, which may be caused by, among other things, high or increasing interest rates, or a weak U.S. economy; significant competition that our operating subsidiaries face; compliance with extensive government regulation; and other risks detailed in the those set forth under “Risk Factors” or elsewhere in this quarterly statement and in our 2025 Annual Report on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, references in this “Abacus Global Management, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” , “Abacus”, and “Company” are intended to mean the business and operations of Abacus Global Management, Inc.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the Company’s financial condition and results of operations. This discussion should be read in conjunction with the Company’s financial statements and related notes thereto that appear elsewhere in this Quarterly Report on Form 10-Q and our 2025 Annual Report on Form 10-K.

Business Overview

The Company is a financial services company specializing in alternative asset management, data-driven wealth solutions, technology innovations, and institutional services. With a focus on longevity-based assets and personalized financial planning, Abacus leverages proprietary data analytics and decades of industry expertise to deliver innovative solutions that optimize financial outcomes for individuals and institutions worldwide. We serve as the originator and market maker of the assets we purchase and manage, providing a distinct advantage for consumers seeking to monetize insurance policies and for investors seeking to deploy capital. In a highly regulated and difficult-to-access insurance marketplace, we provide consumers with the maximum opportunity for their insurance assets and we also provide investors with a high-quality class of assets.

Performance Measures

NM - Not Meaningful.

Results of Operations for the Three and Six Months Ended June 30, 2026 and June 30, 2025

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not indicative of future results:

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Revenue

Asset Management

Asset management revenue decreased by $1,546,223, or 17.6%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease is mainly due to a decrease in management fee revenue driven by decreases in the assets under management in the Carlisle Funds and ETF Funds, partially offset by the increase in assets under management in the LP Funds. The Company did not record significant performance fees during the three months ended June 30, 2026. Refer to the Assets Under Management section below for the change in total assets managed and refer to the Key Business Metrics below for the average management fees charged.

Asset management revenue decreased by $860,156, or 5.2%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease is mainly due to a decrease in management fee revenue driven by decreases in assets under management in the Carlisle Funds and ETF Funds, partially offset by the increase in assets under management in the LP Funds. The Company did not record significant performance fees during the six months ended June 30, 2026. Refer to the Assets Under Management section below for the change in total assets managed and refer to the Key Business Metrics below for the average management fees charged.

Life Solutions

Total life solutions revenue increased by $18,124,216 or 38.3% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is mainly due to an increase in total gains recognized on life settlement policies. Life settlement policy sales and maturities generated an increase of $12,987,480 in total realized gains on sold and matured life settlement policies, coupled with an increase of $2,392,406 in total unrealized gains, an increase in insurance commissions of $1,881,126 and a decrease of $409,850 in total premiums paid. Refer to the Key Business Metrics section for the corresponding life settlement policy statistics.

Total life solutions revenue increased by $32,392,847 or 38.7% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase is mainly due to an increase in total gains recognized on life settlement policies. Life settlement policy sales and maturities generated an increase of $90,751,429 in total realized gains on sold and matured life settlement policies, insurance commissions increased by $3,511,802 partially offset by a decrease of $59,825,397 in total unrealized gains, a decrease in originations of $903,730, and an increase of $958,825 in total premiums paid. Refer to the Key Business Metrics section for the corresponding life settlement policy statistics.

The realized and unrealized gain activity is mainly due to the Company’s expanded available capital in 2026 compared to early 2025 and deployment capacity following the launching of Abacus managed funds in March 2025 and the $50 million delayed draw financing in September 2025. Refer to Note 4, Revenues and Note 13, Fair Value Measurements for additional information on the composition of revenue from life insurance policies. The combination of realized gains (loss) (sale price or maturity less purchase price) less premiums paid on sold/matured policies during the corresponding period and the reversal of the prior period unrealized gain on sold/matured policies represents the incremental gain (loss) on policies held using the fair value method for the corresponding reporting period from sales or maturities to related and unrelated parties (maturity gains are part of unrelated revenues).

The decrease to origination revenue is primarily due to the Company’s focus on originating policies for LMA and LMAIS II, rather than for third parties. Origination fees charged to LMA and LMAIS II are eliminated in consolidation.

The Company began generating insurance commissions revenue after April 2025 after acquiring NIB and AccuQuote in August 2025. Refer to Note 3, Business Combinations for additional information.

Technology Services

Technology services revenue increased by $217,377 for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is due to increases in the number of lives tracked.

Technology services revenue increased by $513,621 for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase is due to increases in the number of lives tracked.

Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit

Cost of revenues (including stock-based compensation) increased by $3,009,807, or 49.7%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase in cost of revenues is primarily due to an increase in payroll and stock-based compensation expense of $2,795,490 related to an increase in total employees partially offset by a decrease of $548,002 in asset management retrocession fees mainly due to a decrease in the AUM of the Carlisle and ETF Funds.

Cost of revenues (including stock-based compensation) increased by $2,208,785, or 16.8%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase in cost of revenues is due to increase of $3,950,691 related to compensation expenses due to an increase in total employees partially offset by a decrease of $772,848 in asset management retrocession fees mainly due to a decrease in the AUM of the Carlisle and ETF Funds.

Operating Expenses

Sales and marketing expenses increased by $2,290,745 or 70.1%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily related to an increase in advertising costs to support our life solutions growth strategy.

General and administrative (including stock-based compensation) increased by $14,029,745, or 74.1%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is primarily related to increases in legal and professional fees of $8,461,035 incurred in connection with various projects, increases in payroll expense of $2,357,717 mainly due to increase in staffing due to acquisitions, an increase in non-cash stock-based compensation expense of $2,892,265, and other general and administrative expenses of $318,728.

There was no gain on change in fair value of debt for the three months ended June 30, 2026 or 2025.

Gain on equity securities, at fair value decreased by $272,254 or 100.0% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The Company no longer invests in S&P 500 options. There was no gain on equity securities, at fair value for the three months ended June 30, 2026.

Depreciation and amortization expense decreased by $1,221,638, or 23.6%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily related to certain intangible assets reaching the end of their estimated useful lives.

Sales and marketing expenses increased by $4,622,655 or 78.6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily related to an increase in advertising costs to support our life solutions growth strategy.

General and administrative (including stock-based compensation) increased by $27,638,084, or 88.6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase is primarily related to increases in legal and professional fees of $14,165,497 incurred in connection with various projects, increases in payroll expense of $5,653,226 mainly due to increase in staffing due to acquisitions, an increase in non-cash stock-based compensation expense of $6,693,921, and increases in other general and administrative expenses of $1,125,440.

Gain on change in fair value of debt decreased by $3,362,103 or 100.0% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The Company paid off its market-indexed notes in 2025. There was no gain on change in fair value of debt for the six months ended June 30, 2026.

There was no gain on equity securities, at fair value for the six months ended June 30, 2026 or 2025.

Depreciation and amortization expense decreased by $2,046,098, or 20.6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily related to certain intangible assets reaching the end of their estimated useful lives.

Other Income (Expense)

Other income decreased by $5,579,719 or 205.3%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The change is primarily related to non-cash stock consideration $2,205,337 issued during the three months ended June 30, 2026 (see Note 3, Business Combinations) and current period unrealized losses of $660,511 for investments compared to paid in kind lender fees of $1,750,000 charged in 2025, which did not recur in 2026. See Note 9, Other Investments and Other Assets.

Interest expense decreased by $440,241 or 5.0% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in interest expense is primarily related to the reduction in the balance of LMA Income Series II, LP offset by the $50,000,000 delayed draw borrowed in September 2025 that was available under the Senior Secured Credit Facility.

Interest income decreased by $341,495 or 33.7% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in interest income is related to lower bank deposits from which interest is earned.

The loss on change in fair value of warrant liability decreased by $4,183,000 or 100.0% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The change is primarily attributable to the redemption of all the Private Placement Warrants offset by the issuance of common stock in 2025.

Other income decreased by $3,016,602 or 112.8%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change is primarily related to a unrealized gains of $4,739,489 on equity investments, partially offset by a $3,050,000 impairment on a separate equity investment and non-cash stock consideration $2,205,337 issued during the six months ended June 30, 2026 (see Note 3, Business Combinations) compared to paid in kind lender fees of $1,500,000 charged in 2025, which did not recur in 2026. See Note 9, Other Investments and Other Assets.

Interest expense decreased by $395,021 or 2.2% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in interest expense is primarily related to the reduction in the balance of LMA Income Series II, LP offset by the $50,000,000 delayed draw borrowed in September 2025 that was available under the Senior Secured Credit Facility.

Interest income decreased by $853,273 or 39.0% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in interest income is related to interest earned on our bank deposits.

The loss on change in fair value of warrant liability decreased by $623,000 or 100.0% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change is primarily attributable to the redemption of all the Private Placement Warrants offset by the issuance of common stock in 2025.

Income Tax Expense

Income tax expense increased by $278,879, or 6.9% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The change was primarily driven by the impact of various permanent differences with the larger of these permanent differences being related to compensation related expenses partially offset by decrease in statutory tax provision due to an increase in taxable income. Our effective income tax rate for the three months ended June 30, 2026 and for the three months ended June 30, 2025, was 39.6% and 18.8%, respectively.

Income tax expense increased by $1,735,608, or 27.1% for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The change was primarily driven by the impact of various permanent differences with the larger of these permanent differences being related to compensation related expenses partially offset by decrease in statutory tax provision due to an increase in taxable income. Our effective income tax rate for the six months ended June 30, 2026 and for the six months ended June 30, 2025, was 36.9% and 21.8%, respectively.

Results of Operations—Segment Results

Asset Management

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our asset management segment increased by $316,846, or 10.4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to increases in compensation related expenses.

The change in gross profit is a product of the change of revenue and cost of revenue.

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our asset management segment increased by $170,806, or 3.0%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, mainly due to increases in compensation related expenses.

The change in gross profit is a product of the change of revenue and cost of revenue.

[1] Recurring revenues generated are eliminated in consolidation.

[1] Recurring revenues generated are eliminated in consolidation.

[1] Recurring revenues generated are eliminated in consolidation.

[1] Recurring revenues generated are eliminated in consolidation.

Life Solutions

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our life solutions segment increased by $2,522,693, or 100.5%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, mainly due to increases in compensation related expenses.

The change in gross profit is a product of the change of revenue and cost of revenue.

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our life solutions segment increased by $1,707,515, or 26.6%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, mainly due to increases in compensation related expenses.

The change in gross profit is a product of the change of revenue and cost of revenue.

Technology Services

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our technology services segment increased by $170,268, or 34.3%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly due to an increase in compensation related expenses.

The change in gross loss is a product of the change of revenue and cost of revenue.

The change in revenue is explained above under Revenue. The composition of cost of revenue is described in Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Cost of revenue from our technology services segment increased by $330,464, or 34.3%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, mainly due to an increase in compensation related expenses.

The change in gross loss is a product of the change of revenue and cost of revenue.

Non-GAAP Financial Measures and Key Business Metrics

The consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and are prepared in accordance with U.S. GAAP. We monitor key business metrics and non-GAAP financial measures that assist us in evaluating our business, measuring our performance, identifying trends and making strategic decisions. We have presented the following non-GAAP measures, their most directly comparable GAAP measure, and key business metrics:

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Adjusted Net Income, Adjusted EPS, Adjusted EBITDA and Adjusted EBITDA Margin, are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin), net income (loss) attributable to common stockholders (for Adjusted Net Income) or earnings (loss) per share (for Adjusted EPS), which are considered to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing Company’s operating performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for net income (loss), net income (loss) attributable to common stockholders, earnings (loss) per share or other consolidated statements of operations and comprehensive income (loss) data prepared in accordance with GAAP.

Adjusted Net Income is presented for the purpose of calculating Adjusted EPS. The Company defines Adjusted Net Income as net income (loss) attributable to common stockholders adjusted for non-controlling interest income, amortization, change in fair value of warrants, business acquisition costs and non-recurring legal costs, and non-cash stock-based compensation and the related stock-based limitation tax effect before the estimated tax effect. The estimated tax effect to adjusted net income is based on the Company’s U.S. based federal and state statutory tax rates. We believe that Adjusted Net Income provides an additional measure of operating performance that eliminates the impact of expenses that do not relate to business performance.

Adjusted EPS measures our per share earnings and is calculated as Adjusted Net Income divided by adjusted weighted-average shares outstanding. We believe that Adjusted EPS may be useful to investors because it enables them to better evaluate per share operating performance across reporting periods by eliminating the impact of expenses that do not relate to the Company’s business performance.

Adjusted Net Income and Adjusted EPS

The following table presents a reconciliation of Adjusted Net Income to the most comparable GAAP financial measure, net income attributable to common stockholders and Adjusted EPS to the most comparable GAAP financial measure, earnings per share, on a historical basis for the periods indicated below:

[1] Tax impact mainly represents the permanent difference in tax expense related to the restricted stock awards granted to certain executives due to IRC 162(m) limitations.

[2] The estimated tax is based on the net federal and state statutory rate.

Note: Totals may not add up due to rounding.

The change in adjusted net Income was primarily a result of the factors described in connection with operating revenues and operating expenses and the items listed above.

[1] Tax impact mainly represents the permanent difference in tax expense related to the restricted stock awards granted to certain executives due to IRC 162(m) limitations.

[2] The estimated tax is based on the net federal and state statutory rate.

Note: Totals may not add up due to rounding.

The change in adjusted net income was primarily a result of the factors described in connection with operating revenues and operating expenses and the items listed above.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is net income adjusted for depreciation expense, amortization, interest expense, income tax, business acquisition costs and non-recurring legal costs, non-cash expenses, and certain other items that in our judgment significantly impact the period-over-period assessment of performance and operating results that do not directly relate to business performance within the Company's control. These items may include payments made as part of the Company's expense support commitment, change in fair value of debt, change in fair value of warrant liability, S&P 500 options that were entered into as an economic hedge related to the debt (described as the realized and unrealized gain on equity securities, at fair value), non-cash stock based compensation, and other items. Adjusted EBITDA should not be determined as substitution for net income (loss), cash flows from operating, investing, and financing activities, operating income (loss), or other metrics prepared in accordance with U.S. GAAP.

We believe that Adjusted EBITDA assists investors in understanding the Company’s ongoing operating performance by presenting comparable financial results between periods. We believe that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are variable from year to year. We believe that

Adjusted EBITDA provides our investors with performance measures that reflect the impact to operations from trends in changes in revenue, policy values, and operating expenses that provides a perspective not immediately apparent from net income (loss) and operating income (loss). Adjusted EBITDA excludes items which we believe may cause short-term fluctuations in net income (loss) and operating income (loss) which we do not consider to be the primary drivers of the Company’s business.

Adjusted EBITDA margin, a non-GAAP financial measure, is defined as Adjusted EBITDA divided by Total revenues. A reconciliation of Adjusted EBITDA margin to Net income margin, the most directly comparable GAAP measure, appears below.

The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to the most comparable GAAP financial measure, net income, on a historical basis:

The change in adjusted EBITDA was primarily a result of the factors described in connection with operating revenues and operating expenses and the items listed above.

Key Business Metrics

We monitor the following key business metrics:

• Revenue generated from life policies: (i) policies sold, matured, and bought, (ii) realized gains, (iii) revenues from maturities, (iv) net death benefit value of policies held, (v) turnover ratio, and (vi) holding period. The number of policies sold and purchased helps us measure the level of trading activity for the period that leads to realized and unrealized gains, respectively. Realized gains on sold policies and revenues from maturities is used to measure our profit optimization. The net death benefit of policies represents the maximum potential maturity revenue realization on policies held.

The turnover ratio measures our capital efficiency with a higher number generally correlating to growth in realized gains. The holding period is based on the weighted average age of life settlement policies, which tracks our ability to make hold or trade decisions that enhance realized gains.

• Asset management revenue: (i) assets under management also referred to as the net asset value of funds (“AUM” or “NAV”). AUM drives management fees and performance fees generated by the Company.
• Servicing revenue: (i) number of policies serviced, (ii) face value of policies serviced, and (iii) total invested dollars. Servicing revenue involves the provision of services for maintaining the policy, managing processing of claims in the event of death of the insured, and ensuring timely payment of optimized premiums computed to derive maximum return on maturity of the policy. The number of policies and the face value of policies serviced represents the volume and dollar face value of policies over which the above services are performed. Total invested dollars represent the acquisition cost plus premiums paid for serviced policies and is used to determine servicing fees.
• Origination revenue: Origination revenues represent fees negotiated for each purchase and sale of a policy with an investor. The number of policy originations (i) represents the volume of policies over which the above origination services are performed. The number of policy originations directly correlates with origination revenues allowing management to evaluate fees earned upon each transaction.

Information regarding policies accounted for under the fair value method is as follows:

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[1] - 2026 includes 4 policies and 2025 includes 4 policies within the rescission period that are recorded in contract liabilities on the Company’s consolidated balances sheets. Refer to Note 4, Revenue for additional information.

[2] - The Company will report the turnover ratio and holding periods on a prospective basis.

[3] - The weighted average realized gain percentage on policies sold is not annualized and can vary materially from an annualized return depending on the holding period. Two transactions with the same realized gain percentage may reflect materially different annualized returns due to differences in time held.

Note 1: Policy count reconciliations may not add up due to a small number of policy rescissions.

Note 2: Realized gains represent the difference between the sale price of life insurance policies or the net death benefit of matured life insurance policies, net of the original cost of the corresponding life settlement policy plus related lifetime continuing costs (e.g., premium costs) (together all costs associated with life insurance policies are “Lifetime Carrying Costs”). There were no significant differences in the weighted average realized gains from life settlement policies sold to external- versus related-parties for the three months ended June 30, 2026 and 2025. Refer to Note 19, Related-Party Transactions for additional information.

The increase in total lifetime realized gains is mainly due to the increase in total policies sold compared to the same period in 2025.

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[1] - 2026 includes 4 policies and 2025 includes 4 policies within the rescission period that are recorded in contract liabilities on the Company’s consolidated balances sheets. Refer to Note 4, Revenue for additional information.

[2] - The Company will report the turnover ratio and holding periods on a prospective basis.

[3] - The weighted average realized gain percentage on policies sold is not annualized and can vary materially from an annualized return depending on the holding period. Two transactions with the same realized gain percentage may reflect materially different annualized returns due to differences in time held.

Note 1: Policy count reconciliations may not add up due to a small number of policy rescissions.

Note 2: Realized gains represent the difference between the sale price of life insurance policies or the net death benefit of matured life insurance policies, net of the original cost of the corresponding life settlement policy plus related lifetime continuing costs (e.g., premium costs) (together all costs associated with life insurance policies are “Lifetime Carrying Costs”). There were no significant differences in the weighted average realized gains from life settlement policies sold to external- versus related-parties for the six months ended June 30, 2026 and 2025. Refer to Note 19, Related-Party Transactions for additional information.

The increase in total lifetime realized gains is mainly due to the increase in total policies sold compared to the same period in 2025.

Information regarding policies accounted for under the investment method is as follows:

[1] - The weighted average realized gain percentage on policies sold is not annualized and can vary materially from an annualized return depending on the holding period. Two transactions with the same realized gain percentage may reflect materially different annualized returns due to differences in time held.

Note: Realized gains represent the difference between the sale price of life insurance policies or the net death benefit of matured life insurance policies, net of the original cost of the corresponding life settlement policy plus related lifetime continuing costs (e.g., premium costs) (together all costs associated with life insurance policies are “Lifetime Carrying Costs”). The average realized gain on policies sold represents realized gains as a percentage of related Lifetime Carrying Costs of sold life insurance policies

. Sales to related parties resulted in average realized gains of 17.7% (ranging from 4% to 31%) during the six months ended June 30, 2026. There were no sales to external parties during the three months ended June 30, 2026. There were no sales of policies valued using the investment method for the three months ended June 30, 2025. Refer to Note 19, Related-Party Transactions for additional information.

[1] - The weighted average realized gain percentage on policies sold is not annualized and can vary materially from an annualized return depending on the holding period. Two transactions with the same realized gain percentage may reflect materially different annualized returns due to differences in time held.

Note: Realized gains represent the difference between the sale price of life insurance policies or the net death benefit of matured life insurance policies, net of the original cost of the corresponding life settlement policy plus related lifetime continuing costs (e.g., premium costs) (together all costs associated with life insurance policies are “Lifetime Carrying Costs”). The average realized gain on policies sold represents realized gains as a percentage of related Lifetime Carrying Costs of sold life insurance policies. Sales to related parties resulted in average realized gains of 17.7% (ranging from 4% to 31%) during the six months ended June 30, 2026. There were no sales to external parties during the six months ended June 30, 2026. There were no sales of policies valued using the investment method for the six months ended June 30, 2025. Refer to Note 19, Related-Party Transactions for additional information.

Information regarding originations revenue, management fees, and servicing revenue is as follows:

[1] For the six months ended June 30, 2026, LMA and LMA subsidiaries comprised 600 of the policies serviced, $664,310,843 face value of the policies serviced, and $312,846,859 of the total invested dollars. For the six months ended June 30, 2025, LMA and LMA subsidiaries comprised 627 of the policies serviced, $1,027,006,147 face value of the policies serviced, and $292,823,428 of the total invested dollars. All servicing revenues related to LMA or LMA subsidiaries are eliminated in consolidation. Total invested dollars represent the acquisition cost plus premiums paid for serviced policies and is used to determine servicing fees.

[2] Number of policy originations to subsidiaries eliminated in consolidation shows the level of policies acquired by the Company in the secondary market. Refer to Note 13, Fair Value Measurements for definition of the secondary market.

Refer to the Results of Operations—Segment Results—Asset Management section above for the change related to change in assets under management (external fee paying).

Liquidity and Capital Resources

Sources of Liquidity - The Company finances its operations through cash generated from operating activities and net proceeds from debt or equity financings. The Company’s principal source of liquidity is cash and cash equivalents, which totaled $23,388,190 and $38,112,332 as of June 30, 2026 and December 31, 2025, respectively.

Material Cash Obligations and Maturities - The Company's outstanding long-term debt and the related interest rates, maturity dates, and scheduled maturities are presented in Note 14, Long-Term Debt to the Interim Financial Statements. The Company has a material near-term debt maturity in 2027, when the secured borrowing of LMA Income Series II, LP matures on June 30, 2027. The Company expects to satisfy this obligation through the cash flows generated by the LMA Income Series II, LP collateral pool and intends to evaluate refinancing alternatives in advance of the maturity date. The Company also has material long-term debt maturities in 2028, when the Sponsor PIK Note and the Fixed Rate Senior Unsecured Notes mature. The Company evaluates refinancing and capital allocation alternatives on an ongoing basis. The Company's ability to refinance or repay its outstanding indebtedness depends on a number of factors, including general capital markets conditions, the Company's results of operations and financial position, and the level of interest rates at the time of any refinancing.

Financial Covenants - The SSCF requires the Company to maintain financial maintenance covenants, as described in Note 14, Long-Term Debt. The Company monitors covenant headroom each quarter and does not currently expect non-compliance with any covenant in the foreseeable future.

Twelve-Month Sufficiency Assessment - Based on the Company's cash and cash equivalents on hand, expected cash flows from operating activities, and other available sources of liquidity, the Company believes that its existing sources of liquidity will be sufficient to fund its operating, debt service, and capital requirements for the twelve-month period following the filing date of the Interim Financial Statements.

Cash Flows from our Operations

The following table summarizes our cash flows for the periods presented:

Operating Activities

During the six months ended June 30, 2026, net cash provided by operating activities was $130,946,310 compared to $14,511,602 for the six months ended June 30, 2025. The increase of $116,434,708 in net cash provided from operating activities was primarily due to an increase in net life policy settlement sales by $42,667,696, a decrease in the fair value of held life policy settlements of $59,836,371, and increase in the related party payable of $21,473,912.

Investing Activities

During the six months ended June 30, 2026, net cash used in investing activities was $41,723,685 compared to $13,743,342 for the six months ended June 30, 2025. The increase of $27,980,343 in net cash used in investing activities was primarily related to an increase of $35,689,750 for purchases of investments that did not occur in the prior comparable period.

Financing Activities

During the six months ended June 30, 2026, net cash used in financing activities was $103,946,767 compared to $57,875,671 for the six months ended June 30, 2025. The increase of $46,071,096 in net cash used by financing activities is primarily due to an increase in debt repayments of $31,626,141 and a decrease in proceeds from issued debt of $23,739,866, offset by a decrease in share repurchases of $10,692,408.

Contractual Obligations and Commitments

Refer to Note 12, Commitments and Contingencies, Note 14, Long-Term Debt, Note 20, Leases, to the Interim Financial Statements for additional information regarding the Company’s material commitments and contingencies, outstanding debt and related maturity dates, and lease obligations, respectively.

Critical Accounting Policies and Estimates

The Company prepared its consolidated financial statements in accordance with GAAP. Our preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements, as well as revenue and expense recorded during the reporting periods. The Company evaluates its estimates and judgments on an ongoing basis. The Company bases its estimates on historical experience and or other relevant assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ materially from management’s estimates. Refer to Note 2, Summary of Significant Accounting Policies, within the 2025 Annual Report.

The Company adopted the Historical Return Method to determine the fair value of life settlement policies as a change in valuation technique resulting in a measurement that is equally or more representative of fair value. This change is accounted for prospectively as a change in accounting estimate. Refer to Note 13, Fair Value Measurements, for our current period change in valuation technique.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, to the Interim Financial Statements and within the 2025 Annual Report for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(e) or Rule 15d-15(e) promulgated by the SEC under the Securities Exchange Act of 1934, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the three and six months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our 2025 Annual Report on Form 10-K filed with the SEC on March 13, 2026. As of the date of this Report, there have been no material changes to the risk factors disclosed in our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025.