Abacus Global Management, Inc.

Previous wording

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section27A 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.”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. 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; 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 thethose set forth under “Risk Factors” or elsewhere in this quarterly statement and in our 2023 Annual Report on Form 10-K. Unless the context otherwise requires, references in this “Abacus Life, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “Company” are intended to mean the business and operations of Abacus Life, Inc.

Current wording

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section27A 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.”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. 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; 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 thethose set forth under “Risk Factors” or elsewhere in this quarterly statement and in our 2024 Annual Report on Form 10-K. 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,” and “Company” are intended to mean the business and operations of Abacus Global Management, Inc.

Previous wording

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 2023 Annual Report on Form 10-K.

Current wording

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 andour 2024 Annual Report on Form 10-K.

Previous wording

Cost of Revenues (Excluding Depreciation and Amortization) and Gross Profit, Net of Intersegment Eliminations

Current wording

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

Previous wording

Cost of revenues (excluding depreciation and amortization) increased by $2,829,918, or 58.7%, for thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023. The increase in cost of revenues is primarily due to $1,954,072 increase in life expectancy fees, $1,417,790 increase of commissions for origination activity related to the increase in insurance policy purchase activity during 2024, and $967,820 non-cash stock-based compensation expense, partially offset by $(1,361,075) decrease in consulting charges related to active management activity.

Current wording

Cost of revenues (excluding depreciation and amortization) increased by $4,388,195, or 161.3%, for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024. The increase in cost of revenues is primarily due to increase in payroll expense related to growth in life policy acquisition and sale activity, $2,117,349 asset management retrocession fees, and $1,208,138 increase of commissions for origination activity.

Previous wording

Gross profit increased by $8,204,537, or 46.2%, for thethree months ended September 30, 2024 compared to thethree months ended September 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 wording

Gross profit increased by $18,264,652, or 97.3%, for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024. The increase in gross profit is primarily due to an increase in active management revenue.

Previous wording

Sales and marketing expenses increased by $465,043 or 27.3%, for thethree months ended September 30, 2024 compared to thethree months ended September 30, 2023. The increase was primarily related to an increase in advertising costs to support our origination and active management growth strategy.

Current wording

Sales and marketing expenses increased by $686,056 or 35.5%, for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024. The increase was primarily related to an increase in advertising costs to support our life policy revenue growth strategy.

Previous wording

General, administrative, and other increased by $30,282,964, or 272.5%, for thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023. The increase in general, administrative, and other expenses is primarily related to non-cash stock based compensation expense of $13,123,756, payroll expense of $10,178,892, accounting and auditing fees of $2,759,900, legal and professional fees of $2,211,209, and an increase in other expenses general and administrative expenses of $2,009,207 to support the Company’s public company compliance costs post the Merger.

Current wording

General and administrative (including stock-based compensation) increased by $910,287, or 8.0%, for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024. The increase is primarily related to payroll expense of $2,583,886 in connection with the 2024 business acquisitions, legal and professional fees of $1,477,121, and an increase in other expenses general and administrative expenses of $1,246,315, partially offset by decrease in non-cash stock based compensation expense of $(3,900,688) related to CEO stock-based expenses offset by a quarter of employee RSU expenses.

Previous wording

The increase of $50,426, or 3.0%, for thethree months ended September 30, 2024 compared to thethree months ended September 30, 2023 in depreciation and amortization expense is primarily related to the amortization of acquired Abacus intangible assets.

Current wording

The increase of $3,076,492, or 182.9% for thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024 in depreciation and amortization expense is related to the amortization of acquired Carlisle and FCF intangible assets.

Previous wording

Other expense increased by $29,918, or 148.9%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease is primarily related to other expense activities.

Current wording

Other expense decreased by $8,504, or 16.0%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease is primarily related to other expense activities.

Previous wording

Interest income was 609,496, for the three months ended September 30, 2024, compared to $63,826 for the three months ended September 30, 2023. The increase in interest income is related to interest earned on our bank deposits.

Current wording

Interest income was 1,175,001, for the three months ended March 31, 2025, compared to $421,426 for the three months ended March 31, 2024. The increase in interest income is related to interest earned on our bank deposits.

Previous wording

Loss on change in fair value of warrant liability was$(8,766,500) for the three months ended September 30, 2024, compared to$(943,400) for the three months ended September 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 wording

Change in fair value of warrant liability was $(4,806,000) for the three months ended March 31, 2025, compared to 946,960 for the three months ended March 31, 2024. The change is primarily attributable to the increase in the price for the public warrants from March 31, 2024 to March 31, 2025, which is a determining factor for measuring the fair value of the private warrants.

Previous wording

Income tax expense decreased by $1,960,683, or 114.6% for thethree months ended September 30, 2024, compared to the three months ended September 30, 2023. Our effective income tax rate for thethree months ended September 30, 2024 and three months September 30, 2023, was 4.5% and 61.9%, respectively. The decrease was primarily driven by the decrease in income before income taxes partially offset by the portion of the stock-based compensation expense deduction limited by IRC Section 162(m).

Current wording

Income tax expense increased by $1,160,572, or 98.9% for thethree months ended March 31, 2025, compared to the three months ended March 31, 2024. Our effective income tax rate for thethree months ended March 31, 2025 and three months March 31, 2024, was 30.2% and 1151.0%, respectively. The increase was primarily driven by the increase in net income, offset by a decrease in stock-based compensation expense deduction limited by IRC Section 162(m).

Previous wording

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 (loss) income data prepared in accordance with GAAP.

Current wording

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.

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 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 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Adjusted EBITDA is net income adjusted for depreciation expense, amortization, interest expense, income tax, business acquisition costs, non-cash expenses, and certain other items that in our judgement significantly impact the period-over-period assessment of performance and operating results thatdo 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 loss on investments), 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.

Previous wording

Management believes the use of Adjusted EBITDA assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. We believe that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other special items that are highly variable from year to year, Adjusted EBITDA provides our investors with performance measures that reflect the impact to operations from trends in changes in revenue, policy values and operating expenses, providing a perspective not immediately apparent from net income and operating income. The adjustments we make to derive the non-GAAP measure of Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income and which we do not consider to be the fundamental attributes or primary drivers of our business.

Current wording

Management believes the use of Adjusted EBITDA assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. We believe that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are variable from year to year, Adjusted EBITDA provides our investors with performance measures that reflect the impact to operations from trends in changes in revenue, policy values and operating expenses, providing a perspective not immediately apparent from net income (loss) and operating income (loss). The adjustments we make to derive the non-GAAP measure of Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating income (loss) and which we do not consider to be the fundamental attributes or primary drivers of our business.

Previous wording

The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to the most comparable GAAP financial measure, net income (loss), on a historical basis for thethree months ended September 30, 2024, and 2023 indicated below:

Current wording

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

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 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.

Current wording

▪Revenue generated from life policies: (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

We monitor the following key business metrics for servicing revenue: (i) number of policies serviced, (ii) value of policies serviced, and (iii) total invested dollars. Servicing revenue involves the provision of services to one affiliate by common ownership and third parties which own life insurance policies. The number of policies and the value of policies serviced represents the volume and dollar value of policies over which the above services are performed. Total invested dollars represent the acquisition cost plus premiums paid by the policy. We use the aforementioned metrics to assess business operations and provide concrete benchmarks that provide a clear snapshot of growth between the periods under consideration.

Current wording

▪Servicing revenue: (i) number of policies serviced, (ii) value of policies serviced, and (iii) total invested dollars. Servicing revenue involves the provision of services to one affiliate by common ownership and third parties which own life insurance policies. The number of policies and the value of policies serviced represents the volume and dollar value of policies over which the above services are performed. Total invested dollars represent the acquisition cost plus premiums paid by the policy.

Previous wording

We monitor the following key business metric for origination revenue: the number of policies originated year-over-year in measuring our performance. Origination revenues represent fees negotiated for each purchase and sale of a policy to an investor. The number of policy originations represents the volume of policies over which the above origination services are performed. The number of policy originations directly correlates with origination revenues allowing management to evaluate fees earned upon each transaction. There are no estimates, assumptions, or limitations specific to the number of policy originations.

Current wording

▪Origination revenue: the number of policies originated year-over-year in measuring our performance. Origination revenues represent fees negotiated for each purchase and sale of a policy to an investor. The number of policy originations represents the volume of policies over which the above origination services are performed. The number of policy originations directly correlates with origination revenues allowing management to evaluate fees earned upon each transaction. There are no estimates, assumptions, or limitations specific to the number of policy originations.

Previous wording

The aggregate face value of policies held at fair value is $976,761,831 as of September 30, 2024 with a corresponding fair value of $273,249,493. 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 $1,430,721,703 as of March 31, 2025 with a corresponding fair value of $446,207,963. Additional information regarding policies accounted for under the fair value method is as follows:

Previous wording

The aggregate face value of policies accounted for using the investment method is $2,225,000 as of September 30, 2024, with a corresponding carrying value of $1,071,172. 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 $2,225,000 as of March 31, 2025, with a corresponding carrying value of $1,096,866. Additional information regarding policies accounted for under the investment method is as follows:

Previous wording

Our key business metrics are summarized below for servicing and origination revenue:

Current wording

Our key business metrics are summarized below for revenues derived from asset management, portfolio servicing, and originations:

Previous wording

[1] For thenine months ended September 30, 2024, LMA and LMA subsidiaries comprised 530 of the policies serviced, $974,986,831 value of the policies serviced, and $221,368,597 of the total invested dollars. For thenine months ended September 30, 2023, LMA and LMA subsidiaries comprised 236 of the policies serviced, $308,852,605 value of the policies serviced, and $77,251,214 of the total invested dollars. All servicing revenues related to LMA or LMA subsidiaries are eliminated in consolidation.

Current wording

[1] For the three months ended March 31, 2025, LMA and LMA subsidiaries comprised 736 of the policies serviced, $1,379,845,928 value of the policies serviced, and $334,557,381 of the total invested dollars. For the three months ended March 31, 2024, LMA and LMA subsidiaries comprised 323 of the policies serviced, $537,855,702 value of the policies serviced, and $103,405,908 of the total invested dollars. All servicing revenues related to LMA or LMA subsidiaries are eliminated in consolidation.

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.

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. As of March 31, 2025 and December 31, 2024, our principal source of liquidity was cash and cash equivalents totaling $43,761,731 and $131,944,282, respectively.

Previous 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 September 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.

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 March 31, 2025, $2,974,863 remains available for repurchases under the approved plan. Refer to Note 15, Convertible Preferred Stock and Stockholders’ Equity, to the Interim Financial Statements for additional information.

Previous wording

We believe that our current cash and cash equivalents as well as planned life settlement policy trading activity will be sufficient to support our operating and debt service needs for the 12 months following the filing of this Quarterly Report on From 10-Q.

Current wording

We believe that our current cash and cash equivalents as well as cash generated from operations will be sufficient to support our operating and debt service needs for the 12 months following the filing of this Quarterly Report on From 10-Q.

Previous wording

During thenine months ended September 30, 2024, our operating activities used $(116,827,478) of net cash as compared to $(50,232,674) of net cash used from operating activities during thenine months ended September 30, 2023. The increase of $66,594,804 in net cash used from operating activities was primarily due to $47,958,758 increase in net life settlement purchases, $(23,880,373) increase in unrealized gains on life settlement policies, at fair value, $(21,307,850) decrease in net income, partially offset by $14,091,576 increase in stock-compensation expense, $7,543,640 change in the fair market value of warrant liability, and $3,726,462 change in the fair value of debt.

Current wording

During the three months ended March 31, 2025 our operating activities used$(61,590,694) of net cash as compared to $2,514,288 of net cash provided from operating activities during the three months ended March 31, 2024. The increase of $(64,104,982) in net cash used from operating activities was primarily due to $(51,171,210) change in life settlement purchase and sale activity and $(21,721,963) increase in unrealized gains on life settlement policies, partially offset by $9,906,246 decrease in accounts receivable.

Previous wording

During thenine months ended September 30, 2024, investing activities used $(1,167,166) of net cash as compared to $2,569,437 net cash provided during thenine months ended September 30, 2023. The decrease of $(3,736,603) in net cash provided in investing activities was primarily related to the decrease of $(3,287,729) in due from affiliates.

Current wording

During the three months ended March 31, 2025 investing activities used $(3,739,403) of net cash as compared to$(253,793) net cash used during the three months ended March 31, 2024. The increase of $(3,485,610) in net cash used in investing activities was primarily related to the $(3,000,000) purchase of other investments.

Previous wording

During thenine months ended September 30, 2024, financing activities provided $111,815,591 of net cash as compared to $54,259,604 of net cash provided during thenine months ended September 30, 2023. The increase of $57,555,987 in net cash provided by financing activities is primarily due to net proceeds received from our follow-on stock issuance of $84,786,373, decrease in amounts due to former owners of $23,786,386, decrease in transaction costs paid related to the Merger Agreement of $10,358,100, and $6,852,207 in cash received from public warrant conversions, partially offset by $(28,189,406) repayment of related party debt, $(22,680,583) decrease in net debt issuance proceeds, $(10,742,075) in share repurchases, and $(4,040,758) repayment of market-indexed notes.

Current wording

During the three months ended March 31, 2025 financing activities used $(22,852,454) of net cash as compared to $37,537,349 of net cash provided during the three months ended March 31, 2024. The increase of $(60,389,803) in net cash used in financing activities is primarily due to $(38,415,464) repayment of long-term debt, $(26,731,002) decrease in debt issuance proceeds, and $(3,610,253) decrease in public warrant conversions for cash, partially offset by $7,524,392 decrease in share repurchases.