MSPR 10-K & 10-Q changes, risk factors and insider trading

Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business. The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability realize the anticipated benefits of the Business Combination, and may have an adverse effect on our business, cash flows, financial condition, and results of operations. Such risks include, but are not limited to:

To the extent that we act as servicing agent, our clients may terminate or materially breachesbreach their agreement with us.

The data healthcare data analytics and healthcare payment markets are relatively new and unpenetrated, and may not develop, develop slowermore slowly than expected,we expect, or sustain negative publicity.publicity, which may adversely affect our business.

Our quiQui tam litigation may be subject to Government Intervention and Dismissal pursuant to 31federal U.S.C. § 3730(c)(2)(A).law.

We will be required to pay the Tax Receivable Agreement (“TRA”) Parties (as defined in the TRA).Parties.

If our shares are delisted from Nasdaq ,Nasdaq, it will become more difficult to trade our shares.

We cannot predict the impact that our dual class capital structure may have on the market price of the shares of our stock.

OnceWhile wethe issue aYorkville Convertible Note,Notes are outstanding, we do not exercise absolute control over the timing and amount of the issuanceissuances of our stock upon conversion of such Convertible Note.stock.

An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with all of the other information included in this Annual Report on Form 10-K (“Annual Report”) before making an investment decision. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstancescircumstances, may have an adverse effect on our business, cash flows, financial condition, and results of operations. You should also carefully consider the following risk factors in addition to the other information included in this Annual Report, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

In this section “we,” “us,” “our,” and otherthe similar terms“Company” refer to Legacy MSP prior to the Business Combination and to the Company following the Business Combination.

We have a history of net losses and no substantial revenue to date, and we may not achieve recoveries, generate significant revenue, or achieve profitability. Our relatively limited operating history makes it difficult to evaluate our current business and future prospectsprospects, and increases the risk of your investment.

Our relatively limited operating history makes it difficult to evaluate our current business and plan for our future growth. The Company started in 2014 with its first assignment from a health plan headquartered in Miami, Florida. To date, we have achieved no substantial revenue and limited actual recoveries from our assigned Claims, and there is no guarantee that we will achieve recoveries, revenue, or profitability as projected. We have encountered, and will continue to encounter, significant risks and uncertainties frequently experienced by new and growing companies in rapidly changing industries, such as determining appropriate investments for our limited resources, competition from other data analytics companies, acquiring and retaining Assignors, hiring, integrating, trainingtraining, and retaining skilled personnel, unforeseen expenses, challenges in forecasting accuracyaccuracy, and successfully integrating new strategies. If we are unable to achieve meaningful recoveries, increase our Assignor base, successfully manage our recovery efforts from third-party payers or successfully expand, our revenue and our ability to achieve and sustain profitability would be impaired. If our assumptions regarding these and other similar risks and uncertainties, which we use to plan our business, are incorrect or change as we gain more experience operating our business or due to changes in our industry, or if we do not address these challenges successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

The achievement of multiples above the Paid Amount of a given Claim; and The length (and cost) of litigation required to achieve recoveries.

Any of these assumptions may prove over time to be materially inaccurate. If our estimates of revenues are materially inaccurate, it could impact the timing and the amount of our revenue recognition and have a material adverse impact on our business, results of operations, financial conditioncondition, and cash flows.

In manysome instances, we pay our Assignors an upfrontup-front purchase price for assignment of their recovery rights to healthcare Claims. Accordingly, there is a risk that we may not successfully recapture the upfrontup-front purchase price if we fail to make recoveries with respect to the assigned Claims. Further, our ability to identify and recover on future Claims includes risks such as:

maintaining current customers and securing future customers of the combined businesses;

assumption of liabilities; and litigation-related charges.costs.

Finally, our potential ability to achieve recovery revenues is based largely on the Paid Value of Potentially Recoverable Claims of our portfolio and our ability to discover, quantify, and settle the gap between Billed Amount and Paid Amount on a large scale. Failure to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the Recoveryrecovery Multiple,multiple, or perfect our recovery rights are not appropriately perfected,rights, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Typically, we must file actions in court to recover monies related to those paid byon our Assignorscompensible andClaims. aA substantial portion of our recoveries are dependent on the courts. As such, we may beare subject to adverse court rulings, significant delays, differing damages calculations or other limitations, each of which can negatively impact our recovery efforts, potential to generate revenue, and the financial condition of our business.

For example, from time to time, the courts dismiss our cases, or Claims pursued in our cases, with or without prejudice. When dismissal is without prejudice, we can refile the action. Accordingly, we retain the ability to bring those Claims in a recovery action. When dismissal is with prejudice, we cannot refile the action to pursue recoveries using the dismissed cause of action. We cannot guarantee that we will not receive adverse rulings in court. Historically, we have received adverse rulings or dismissal for reasons such as:

Dismissal for failureFailure to file within the applicable statute of limitations. For example, on August 10, 2022, thea Unitedfederal Statesappellate Courtcourt ofapplied Appeals, Eleventh Circuit held thata four-year statute of limitations period for civil actions arising under an Act of Congress enacted after December 1, 1990 applies to certain claims brought under the MedicareMSP SecondaryLaws, Payerrunning private cause of action, and that the limitations period begins to run onfrom the date that the cause of action accrued. This opinion may render certain Claims held by the Company unrecoverable and may substantially reduce PVPRC and BVPRC as calculated. As our cases were filed at different times and in various jurisdictions, and prior to data matching with a defendant we are not able to accurately calculate the entirety of damages specific to a given defendant, we cannot calculate with certainty the impact of this ruling at this time. Although this opinion is binding only on federal courts in the Eleventh Circuit, if the application of this statute of limitations as determined by the Eleventh Circuit wasis applied to all Claims assigned to us, we estimate that the effect would be a reduction of PVPRC by approximately $7.02$9.8 billion. As set forth in our Risk Factors, PVPRC is based on a variety of factors. As such, this estimate is subject to change based on the variety of legal claims being litigated and statute of limitations tolling theories that apply.

Dismissal because anAn assignment did not include the Claim that was brought in court (or such assignment was found to be invalid).

Dismissal for lackLack of standing to assert Claims.

Dismissal for lackLack of personal jurisdiction.

Dismissal for pleadingPleading deficiencies.

Additionally, in certain of our cases, our recoveries may be limited as a function of a courts’ damages calculations. Adverse court rulings could also occur from:

For example,Moreover, in certain antitrust matters, recoveriesdamages mayare begenerally limited to the difference between the price that a drug manufacturer charged for the drug and the price of the drug absent anti-competitive conduct. The list above is not exhaustive of potentially unfavorable rulings, damages calculations, or other limitations which we have encountered or may encounter.

We generate, and expect to generate, a significant portion of our revenue by collecting on settlements and/or judgments that are granted by courts in lawsuits filed against insurers, tortfeasors, and other liable parties. A decrease in the willingness of courts to grant these judgments, a change in the requirements for filing these cases or obtaining these judgments, or a decrease in our ability to collect on these judgments could have an adverse effect on our revenue, operating results, and the financial condition of our business. As we increase our use of the legal channels for collections, there could be an increase in upfrontup-front court costs and costs related to counterclaims. We may not be able to collect on certain aged Claims because of applicable statutes of limitations, and we may be subject to adverse effects of regulatory changes.

Our recoveries may be limited if courts decline to compel our counterparties to data match with us, or we are otherwise unable to force responsible parties to produce data they storestore, thatwhich would identifyidentifies the proper party to make a given payment. Among the ways we identify the proper payer for a given claim is by comparing our member data to that of propertyour and casualty or no-fault insurerscounterparties in a process called data matching. Members found in both data sets are scrutinizedidentified and analyzed to determine if a primary payer was responsible in the first instance to pay or reimburse the cost of care relating to an accident. Should a court decline to compel data matching, our recoveries against a given insurer would be limited to those representativemembers beneficiaries identified, and all matches that could be identified through a data matching exercise.identified.

The lawsuits we file in pursuit of recoveries often involve causes of action that are entirely novel, or novel as applied to the facts alleged in our complaints. For example, while the MSP LawAct was enacted in 1980, its use by an assignee to pursue recoveries on its own behalf is novel. As such, courts deciding litigated issues in our cases often have limited binding precedent on which to base an opinion, and often review our cases as a matter of first impression. As a result, litigation outcomes are unpredictable, and our cases may be delayed as courts require more time to analyze the legal issues, and outcomes are difficult to accurately predict.

Our lawsuits are brought in a diverse range of judicial venues across many jurisdictions, which may result in differentinconsistent outcomes on similar issues, adversely affect our recovery efforts, and limit our ability to generate revenue.

Our counterparties employ strategies to delay proceedings and the ultimate resolution of our cases. Dilatory tactics include, but are not limited to, frivolous court filings, extended and improper discovery objections and disputes, delayed negotiations for data matching protocols, and protracted settlement negotiations that may or may not yield a settlement. While these delays do not adversely affect the value of the underlying assets, and in some casecases, statutory interest continues to accrue, the costs associated with recoveries increase substantially, and our ability to successfully resolve our cases may be limited. As a result, our ability to recognize revenue is delayed and our ultimate recovery may be diminished or eliminated as a result.

We enter into legal services agreements with the Law Firm and the various entities that hold Claims. The Law Firm is engaged to act as counsel to represent the Company and each of its subsidiaries and affiliates (or other applicable entity) on a contingency basis as it pertains to the assigned Claims. The Law Firm engages outside litigation counsel from around the U.S. as co-counsel and these arrangements are made directly between the Law Firm and other counsel. For the services provided, the Law Firm typically collects a fee equal to 40% of our 50% portion of the Net Proceeds (i.e., 20% of the total Net Proceeds), which is paid from our portion of the Net Proceeds. Co-counsel is paid from the Law Firm’s portion of the Net Proceeds. The Law Firm is also entitled to attorney’s fees that are awarded to the Law Firm pursuant to any fee shifting statute, by agreement, or court award. Any increase in attorneys’ fees and costs wouldmay reduce our potential net recoveries. For more information about our fee sharing arrangement, see Item 1. Business and “ —Fee Sharing Arrangements.”

Assignors may pursue recovery on Claims directly or may use other recovery agents other than us in connection with the Assignor’s efforts to recover on Claims.

With respect to the Assignors of the assigned Claims, some of our agreements exclude from the assignment of Claims those Claims that are assigned to or being pursued by other recovery vendors of the Assignor at the time of the assignment. We have identified instances where the Assignor did not filter its data provided to us to account forremove such exclusions.Claims. This resulted in some Claims being identified by us for purposes of our recovery estimates. This also has resulted in other recovery agents of the Assignor making collections on Claims that were assigned to us. Although we endeavor to seek appropriate clarification from Assignors to properly identify Claims that are being pursued by other recovery vendors, due to the nature and volume of data, it may not be possible to identify with precision all such Claims. While we do not believe that there is material overlap with other recovery vendors with respect to assigned Claims to be material, there can be no assurance as to the ultimate impact on our recoveries or our business. That notwithstanding, where other recovery vendors have made recoveries, the recoveries may not be the full amount of the potential recovery because it was not processed properly or against the correct responsible parties.

Our business and future growth depend on our ability to successfully expand the volume of our healthcareportfolio of assigned Claims and obtain data from new Assignors and healthcare Claims from our existing Assignor base.

We expect a significant portion of our future revenue growth to come from expanding the volumeportfolio of Claims that we are assigned; this includes obtaining Claims and data from new Assignors as well as our existing Assignors. Our efforts to do so may not be successful. If we are unable to successfully expand the scope of healthcare Claims assigned from potential and existing Assignors, it could have a material adverse effect on our growth and on our business, financial condition, and results of operations.

The positions we will typically acquire in connection with our acquisition of Claims are unsecuredunsecured, and may be effectively subordinated to other obligations andor areduplicated at riskdue to mistake, negligence, or fraud on the part of the Assignor of the Claim.

Further, Assignors may misrepresent or omit material information, such as the underlying beneficiary or other counterparty. For example, an Assignor may misrepresent the quality, validity, or existence of a Claim or other information provided to us, or provide duplicate Claim data, either due to unintentional negligence or intentional fraud. ThereAlthough we have procedures in place to identify duplicate Claims, there is no assurance we will detect such error. Any inaccuracy, duplication, or incompleteness, if undetected, may adversely affect the valuation of one or more Claims and adversely affect our business and performance. Under certain circumstances, recoveries may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Annual Report on Form 10-K (the “Annual Report”). Unless the context otherwise requires, all references in this subsection to “we,” or “the Company,” or “MSPCompany” refers to Legacy MSP prior to the Business Combination and the Company after the Business Combination. This discussion may contain forward-looking statements based upon the Company’s current expectations, estimates, and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

WeMSP areRecovery is a leading healthcare reimbursement recovery and data analytics company.company, providing historical and Near Real-Time solutions for payers, providers, and patients. We focus on thediscovering losses and recovering improper payments for Medicare, Medicaid, and commercial insurancehealth spaces. We areinsurers, disrupting the antiquated healthcare reimbursement system,system. usingWe dataalso provide innovative technology and analyticscomprehensive toservices identifyfor multiple industries including healthcare and recover improper payments made by Medicare, Medicaid, and commercial health insurers.legal.

Medicare and Medicaid are payers of last resort. Too often, they end up being the first and only payers, because the responsible payer is not identified or billed. As Medicare and Medicaid pay a far lower rate than what other insurers are often billed, this costs the healthcare system (and the supporting taxpayers) tens of billions of dollars a year inattributable to improper billing and lost recoveries. By discovering, quantifying, and settling the billed-to-paid gap on a large-scale basis, the Company is positioned to generate meaningful annual recovery revenue at high profit margins.

Our access to large volumes of data, sophisticated data analytics,analytics platforms, and a leadingadvanced technology platform provide a unique opportunity to discover and recover onimproper Claims.healthcare Claims payments. We have developed Algorithms to identify waste, fraud, and abuse in the Medicare, Medicaid, and commercial health insurance segments.sectors. Our team of experienced data scientists and medical professionals analyze historical medical Claims data to identify recoverable opportunities. Once potential recoveries are reviewed by our team, they are aggregated and pursued. Through statutory law and case law, we believe we have an established basis for future recoveries.

We differ from our competitors as we receive our recovery rights through irrevocable assignments of Claims. When we are assigned these rights by our clients, we assume risk that our competitors do not. Rather than provide services under a third-party vendor services contract, we receive the rights to certain recovery proceeds from our Assignors.Assignors’ AsClaims assignees,(and, wein havemost controlcases, overtake the directionassignment of the litigationClaims andthemselves, takeallowing onus ato riskstep thatinto ourthe competitorsAssignor doclients’ not.shoes). We,As we, or our affiliated entities, are assigned the recovery rights associated with Claims, we are the plaintiff in any action filed and havetherefore exercise control over the direction of the lawsuit.litigation. By receiving Claims through assignment, we can pursue additional recoveries under numerous legal theories that our competitors cannot. Although we typicallyown ownthe assigned Claims, for a significant portion of assigned Claims, our ability to pursue recoveries depends on our ongoing access to data associated with those Claims through data access rights granted to us. In these cases,The termination of suchsaid data access rights would substantially impair our ability to generate recoveries on those Claims.

Our current Claims portfolio has scaled significantly. We are entitled to a portion of any recovery rights associated with approximately $1,544$1,591 billion in Billed Amount (and approximately $370$380 billion in Paid Amount), which contains approximately $88.9$87.7 billion in Paid Value of Potentially Recoverable Claims, as of December 31, 2023.2024. We believe it would take any competitor significant time to amass the portfolio of Claims rights currently owned by us due to, among things, the volume of our Claims data retained and strength of our data analytics, which we believe are key to attracting new clients that are willing to assign Claims to us.

Our potentially serviceable market is impacted by the expansion or contraction of healthcare coverage and spending, which directly affects the number of Claims available. The Centers for Medicare & Medicaid Services (“CMS”) has projected that health spending will continue to grow at an average rate of 5.4%5.6% a year between 20222023 and 2031.2032. We also believe reimbursement models may become more complex as healthcare payers accommodate new markets and lines of business and as advancements in medical care increase the number of testing and treatment options available. As reimbursement models grow more complex and healthcare coverage increases, the complexity and number of Claims may also increase, which could impact the demand for our solutions. Such changes could have a further impact on our results of operations.

In our current business model, weWe receive irrevocable assignments of health ClaimClaims recovery rights through CCRAs from a variety of sources including, but not limited to, MAOs, MSOs, HMOs, hospitals, and other at-risk entities. Prior to executing a CCRA, weWe utilize our proprietary internal data analytics platformplatforms to review the set ofhealthcare Claims and identify Claims with probable recovery paths.

Once Claims have been assigned, our data analysts use ourrun proprietary Algorithms to identify potential recoveries. Results are then quality checked by our internal medical team. We contract with the Law Firm and various other law firms across the country to pursue recoveries through the legal system. Where appropriate, the Law Firm reachescontacts outprimary to the liable partiespayers to demand payment of amounts that are owed. Prior to litigation, there may be an incentive for the primary insurer to settle.settle Ifas, legalpursuant to the Medicare Secondary Payer Act, an action isfor requireddamages in the case of a primary plan which fails to pursueprovide recovery fromfor primary insurers,payment we(or seekappropriate “reimbursement) shall be in an amount double damages” under the MSPamount Act.otherwise provided.

We engage with each Assignor independently. We are typicallygenerally entitled to 100% of recoveries pursuant to our CCRA.CCRAs; Fromfrom those recoveries, we are typically contractually obligated to pay 50% of Net Proceeds to the Assignor. In certain cases, we have purchased the Assignor’s rights to recovery proceeds in advance of any collection; therefore, entitling the Company to retain 100% of the Net Proceeds. The “Net Proceeds” of any assigned Claim is defined as the gross amount recovered on an assigned Claim, minus any costs directly traceable to such assigned Claim(s) for which recovery was made. In some instances, we may purchase outright an Assignor’s recovery rights; in suchthis instances,instance, we are entitled to the entire recovery. In some cases, we have entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. Such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries or based on a percentage of actual recoveries. In other cases, the Company has pledged proceeds which are due to the Company to repay certain obligations, such as the Purchase Money Loan, the Working Capital Credit Facility, and the MTA. We have yet to generate substantial revenue from the recovery model.

We may also recognize Claims recovery service revenue from our services to customersclients, to assist thoseassisting entities with the pursuit of Claims recovery rights.rights Weby provide services to other parties to identifyidentifying recoverable Claims and provideproviding data matching and legal services. Under our Claims recovery services model, we do not own the rights to Claims but provide our services for a fee based on budgeted expenses for the month with an adjustment for the variance between budget and actual expense from the prior month. The fees received pursuant to a Claims recovery service agreement are related to expenses incurred and are not tied to the Billed Amount or potential recovery amounts. Although we believe our future business to be highly tied to the Recovery model and Chase to Pay, we may enter into these contracts as the market dictates. The Company did not recognize any Claims recovery service income during the year ended December 31, 2024.

TheEffective 11:59 PM EDT on November 15, 2024, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware that became effective at 11:59 PM EDT on October 12, 2023 to effect a 1-for-25 reverse stock split of the Company’s commonCommon stockStock (the “2024 Reverse Split”). The stock began trading post split on OctoberNovember 13,18, 20232024 under the same symbol, LIFW.symbol. As a result of the 2024 Reverse Split, every 25 shares of the Company’s oldCommon common stockStock were converted into one share of the Company’s new commonCommon stock.Stock. Fractional shares resulting from the 2024 Reverse Split were rounded up to the nearest whole number. The 2024 Reverse Split automatically and proportionately adjusted, based on the 1-for-25 split ratio, all issued and outstanding shares of the Company’s commonCommon stock,Stock, as well as the terms of warrants and other derivative securities outstanding at the time of the effectiveness of the 2024 Reverse Split. Proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of commonCommon stock. Share and per share data (except par value) for the periods presented reflect the effects of the Reverse Split. References to numbers of shares of common stock and per share data in the accompanying financial statements and notes thereto for periods ended prior to October 13, 2023 have been adjusted to reflect the Reverse Split on a retroactive basis. Unless otherwise noted, the share and per share information in this Quarterly Report have been adjusted to give effect to the one-for-twenty-five (1-for-25) Reverse Split.Stock.

The Company had 45 calendar days from April 24, 2025, or through Monday, June 9, 2025, to submit a plan to regain compliance with Listing Rule 5550(b)(1). The Company submitted its plan on June 5, 2025, and iswas awaiting a response from the Nasdaq. If Nasdaq accepts the Company’s plan, Nasdaq may grantgranted an extension of up to 180 calendar days from April 24, 2025,days, or through Tuesday, October 21, 2025, to regain compliance. Nasdaq may provide us insufficient time to implement our compliance plan or at the end of the compliance period, we may not be able to demonstrate compliance for any number of reasons. If any of these events occur, we could be delisted.

As an early-stage growth company, theThe Company has incurred substantial net losses since inception. The Company’s liquidity remains extremely limited, resulting in the payment of only priority obligations on a monthly basis. Further, substantial outstanding payables owed to the Company’s professional advisors have significantly restricted, and in certain cases, precluded, the Company’s ability to access their services. As of JuneSeptember 30, 2025, the Company had unrestricted cash totaling $4.0$1.8 million, out of which $1.1 million is due to assignors andand, $1.1of which $0.8 million is due to Law Firm for collected legal fees and litigation costs. As of JulyNovember 31,17, 2025, the Company had unrestricted cash of $2.1$2.7 million. The Company anticipates sources of liquidity for 2025 to include: (i) the Yorkville SEPA, which is currently the Company’s sole source of liquidity to meet short termshort-term obligations, as described in more detail in Note 7,3, ClaimsMaterial Financing Obligations and Notes Payable,Agreements, to the condensed consolidated financial statements, (ii) funding to the Company for working capital under the Operational Collection Floor facility, which, as discussed in more detail in Note 3, Material Agreements is fully utilized and has no remaining capacity, and (iii) revenue from Claims recovery income and Claims recovery services income. If Yorkville is unwilling or unable to provide liquidity, the Company may be forced to initiate an insolvency proceedingproceedings or seek protection under U.S. bankruptcy laws, which could include a court-supervised reorganization or a liquidation of the Company’s assets. The Company is seeking to address liquidity concerns; however, as discussed further below, the Company has concluded management’s plans were not sufficient to alleviate the substantial doubt about the Company’s ability to continue as a going concern:

TheThere is no guarantee that Yorkville SEPA.will Onprovide Juneadditional 26, 2025, the Company and Yorkville entered into a Supplemental Agreementliquidity to the Yorkville SEPA, increasing the amount of advances by up to $3.0 million, to be advanced in multiple tranches. On June 27, 2025, July 16, 2025, and August 8, 2025, Yorkville agreed to fund principal amounts of $0.75 million pursuant to Convertible Notes issued by the Company under the Yorkville SEPA, resulting in a combined working capital funding of $2.1 million, of which $0.36 million remains unfunded as of the date hereof. On April 10, 2025, Yorkville agreed to: (i) extend the due date for the first Monthly Payment to November 30, 2026, (ii) extend the maturity date of the Convertible Notes to November 30, 2026, and (iii) to waive Volume Threshold and Maximum Advance Amount limitations set forth in the Yorkville SEPA.Company. As we have sold substantially all of the 2.0 million shares currently registered for resale to Yorkville, we need to file with the SEC one or more additional registration statements to register under the Securities Act the resale by Yorkville of any additional shares of our common stock, and the SEC would have to declare such registration statement or statements effective before we could sell additional shares.shares under the Yorkville SEPA. There can be no assurances of such events occurring or the timing of such events occurring. For more information on the Yorkville SEPA, see Note 7,3, ClaimsMaterial Financing Obligations and Notes Payable,Agreements, to the condensed consolidated financial statements.

The Working Capital Credit Facility. As of the date of this filing, no funding capacity remains under the Working Capital Credit Facility or Operational Collection Floor. On March 29, 2023, the Company’s subsidiary, Subrogation Holdings, LLC and its parent, MSP Recovery, and HPH entered into the Working Capital Credit Facility consisting of a commitment to fund up to $48 million in proceeds. On August 2, 2024, HPH agreed to, among other things, (i) extend the period for the Company to draw up to $14 million for working capital, accessible in eight tranches of $1.75 million, that can be drawn at least one month apart, until September 2025 and (ii) provide for a $2.0 million loan to be funded by August 31, 2024 for the purpose of acquiring additional Claims (the “Operational Collection Floor”). Pursuant to the Working Capital Credit Facility, HPH had the discretion to increase the Operational Collection Floor and, during quarter ending June 30, 2025, HPH exercised that discretion, funding $1.5 million on April 4, 2025, $0.55 million on April 11, 2025, and $0.75 million on May 2, 2025, May 16, 2025, and June 2, 2025, with a combined principal amount of $6.8 million. For more information on the Working Capital Credit Facility and Operational Collection Floor, see “Hazel Working Capital Credit Facility and Hazel Purchase Money Loan” in Note 7, Claims Financing Obligations and Notes Payable, to the condensed consolidated financial statements.

The Company has incurred recurring losses and negative operating cash flows since inception and has an accumulated deficit of $710.8$878.6 million as of JuneSeptember 30, 2025. For the sixnine months ended JuneSeptember 30, 2025, the Company used approximately $15.7$19.1 million of cash in operations. The Company’s liquidity is dependent on its ability to raise additional funds or generate substantial revenue in the near term, the timing and amount of which are uncertain, and on its ability to obtain financing from additional third-party capital sources. The Company’s primary liquidity requirements have been for working capital, debt service, and Claims financing obligations. If the Company is unable to raise sufficient capital or generate substantial revenue, it may be forced to initiate an insolvency proceedingproceedings or seek protection under U.S. bankruptcy laws, which could include a court-supervised reorganization or a liquidation of the Company’s assets.

We differ from our competitors as we receive our recovery rights through irrevocable assignments of Claims. When we are assigned these rights by our clients, we assume risk that our competitors do not. Rather than provide services under a third-party vendor services contract, we receive the rights to certain recovery proceeds from our Assignors’ Claims (and, in most cases, take assignment of the Claims themselves, allowing us to step into the Assignor clients’ shoes). As we, or our affiliated entities, are assigned the recovery rights associated with Claims, we are the plaintiff in any action filed and therefore exercise control over the direction of the litigation. By receiving Claims through assignment, we can pursue additional recoveries under numerous legal theories that our competitors cannot. Although we own the assigned Claims, for a significant portion of assigned Claims, our ability to pursue recoveries depends on our ongoing access to data associated with those Claims through data access rights granted to us. The termination of said data access rights would substantially impair our ability to generate recoveries on those Claims.

We are entitled to a portion of any recovery rights associated with approximately $1,592 billion in Billed Amount (and approximately $381 billion in Paid Amount), which contains approximately $87.8 billion in Paid Value of Potentially Recoverable Claims, as of JuneSeptember 30, 2025. We believe it would take any competitor significant time to amass the portfolio of Claims rights currently owned by us due to, among things, the volume of our Claims data retained and strength of our data analytics, which we believe are key to attracting new clients that are willing to assign Claims to us.

As of JuneSeptember 30, 2025, approximately 95.9% of our expected recoveries arise from Claims being brought under the Medicare Secondary Payer Act. While we believe the MSP Act has bipartisan support, changes to the laws on which we base our recoveries, particularly the MSP Act, can adversely affect our business. Our ability to generate future revenue is therefore significantly dependent on factors outside our control.

We may also recognize Claims recovery service revenue from our services to clients, assisting entities with the pursuit of Claims recovery rights by identifying recoverable Claims and providing data matching and legal services. Under our Claims recovery services model, we do not own the rights to Claims but provide our services for a fee based on budgeted expenses for the month with an adjustment for the variance between budget and actual expense from the prior month. The fees received pursuant to a Claims recovery service agreement are related to expenses incurred and are not tied to the Billed Amount or potential recovery amounts. Although we believe our future business to be highly tied to the Recovery model and Chase to Pay, we may enter into these contracts as the market dictates. The Company did not recognize any Claims recovery service income during the sixnine months ended JuneSeptember 30, 2025 or 2024.

On June 26, 2025, the Company and Yorkville entered into a Supplemental Agreement to the Yorkville SEPA, whereby Yorkville agreed to increase the amount of pre-paid advances by up to $3.0 million, to be advanced in multiple tranches. On June 27,26, 2025, July 16, 2025, and August 8, 2025, Yorkville funded principal amounts of $0.75 million pursuant to additional Convertible Promissory Notes for $0.75 million each, with terms substantially the same as the previous Convertible Promissory Notes, issued pursuant to the Yorkville SEPA.SEPA, resulting in a combined working capital funding of $2.1 million. On September 18, 2025, Yorkville agreed to fund a principal amount of $0.38 million, resulting in working capital funding of $0.36 million, and on September 29, 2025, Yorkville agreed to fund a principal amount of $0.38 million, resulting in working capital funding of $0.34 million. Yorkville may convert the Convertible Promissory Notes into shares of the Company’s common stock at a conversion price equal to the lower of the Fixed Price (as defined in each Convertible Promissory Note) or 95% of the lowest daily VWAP during the five consecutive trading days immediately preceding the date of the conversion (the “Conversion Price”), which in no event may the Conversion Price be lower than the Floor Price of $0.50,Price, provided that the number of shares issued does not cause Yorkville to exceed the 9.99% ownership limitation.

Pursuant to the first Amendment to the Master Transaction Agreement, dated April 11, 2023 (the “First Amendment”), for each calendar month beginning with January 31, 2024 and ending when the VRM Full Return (as defined in the Master Transaction Agreement dated March 9, 2022 (as amended, the “MTA”)) is paid in full, the Company is required to either: (i) pay in cash or (ii) issue a warrant to purchase a number of shares of Class A Common Stock of the Company, or some combination thereof, to Virage Recovery Master LP (“VRM”) equal to the quotient of 1% of the calendar month-end balance of the Unpaid Base Amount (as defined in the MTA) (the “Required Monthly Issuance”). On April 14, 2025, the Company issued VRM Monthly Warrants for November 2024 and December 2024, for 3,277,808 and 6,332,792 shares respectively, exercisable at a purchase price of $0.0001 per share for a period of two years from the original issuance date, exercisable on a cashless basis only. To date, the Company has issued 12 warrants to VRM pursuant to the First Amendment, entitling Virage to purchase 19,361,9392,765,996 shares of Class A Common Stock.

We differ from our competitors because we obtain our recovery rights through irrevocable assignments. When we are assigned these rights, we take on the risk that such Claims may not be recoverable. We are entitled to pursue a portion of any recovery rights associated with approximately $1,592 billion in Billed Amount (and approximately $381 billion in Paid Amount), which contained approximately $87.8 billion in Paid Value of Potentially Recoverable Claims, as of JuneSeptember 30, 2025. We are typically entitled to 100% of recovery rights pursuant to our CCRAs, but contractually obligated to pay 50% of gross recoveries to the Assignor. In certain cases, we have purchased from our Assignors the rights to 100% of the recovery. By discovering, quantifying, and settling the gap between Billed Amount and Paid Amount on a large scale, we believe we are positioned to generate substantial annual recovery revenue at high profit margins for our assigned Claims. In litigation, our experienced management and legal teams provide us with a competitive advantage. While our model of being assigned the Claim rights allows us the flexibility to direct the litigation and potentially generate higher margins, we have, on an opportunistic basis, paid the Assignor an up-front purchase price for these rights.

Our Claims recovery revenue is typically recognized upon reaching a binding settlement or arbitration with a counterparty or when the legal proceedings, including any appellate process, are resolved. A decrease in the willingness of courts to grant these judgments, a change in the requirements for filing these cases or obtaining these judgments, or a decrease in our ability to collect on these judgments could have an adverse effect on our business, financial condition, and operating results. Of the Claims identified as potentially recoverable, relating to our accident-related cases as of JuneSeptember 30, 2025, approximately 86.8%86.5% of claims are already in the recovery process, which are claims where either the recovery process has been initiated, data has been collected and matched, or resolution discussions are in process.

As of JuneSeptember 30, 2025, the Company has obtained settlements where the Recovery Multiple was or would be in excess of the Paid Amount, settlements at or below the paid amount, and settlements where the Recovery Multiple cannot be calculated with certainty on the settlement date, as these settlements include, in addition to cash payments, non-cash consideration, including, but not limited to agreements: (i) to assign Claims for the Company to pursue recoveries against plaintiffs’ attorneys and medical providers, (ii) to provide historical data and assistance in reconciling current and future Medicare claims; (iii) to implement the clearinghouse platform; and (iv) to resolve cooperatively, or through binding mediation, recoverable Medicare Claims that the Company owns today and/or obtains in the future.

During the sixnine months ended JuneSeptember 30, 2025, the Company has received total recoveries of $1.4$1.6 million of which the Recovery Multiple for recoveries obtained pursuant to the MSP Laws was 0.800.86 times the Paid Amount, and the Recovery Multiple for recoveries obtained pursuant to non-MSP Laws, including antitrust and unfair trade practice laws, was 0.06 times the Paid Amount. During the year ended December 31, 2024, the Company received gross recoveries of $18.1 million, of which the Recovery Multiple for recoveries obtained pursuant to the MSP Laws was 1.32 times the Paid Amount, and the Recovery Multiple for recoveries obtained pursuant to non-MSP Laws, including antitrust and unfair trade practice laws, was 0.04 times the Paid Amount. During the year ended December 31, 2023, recoveries were not meaningful, and so no multiple is provided.

The Company did not recognize any claims recovery service income during the three and sixnine months ended JuneSeptember 30, 2025 and 2024.

Other revenue consists of fee revenue generated by the Company’s new electronic health records (“EHR”) platform, which went live in the second quarter of 2024. Other revenue was not significant for the three and sixnine months ended JuneSeptember 30, 2025.

Other Income (Expense) Income

Net (Income) Loss Attributable to Non-Controlling Members

Three months ended JuneSeptember 30, 2025 versus three months ended JuneSeptember 30, 2024

The following table sets forth a summary of our condensed consolidated results of operations for the three months ended JuneSeptember 30, 2025 to three months ended JuneSeptember 30, 2024 indicated.

Claims recovery income. Claims recovery income increaseddecreased by $0.2$3.4 million to $0.5$0.2 million for the three months ended JuneSeptember 30, 2025, compared to the same period in the prior year, driven by increaseddecreased settlements during the period.

Other revenue. Other revenue decreased $36$91 thousand to zero for the three months ended JuneSeptember 30, 2025 compared to the same period in the prior year as no other revenue was earned from new services.