Filed Pursuant to Rule 424(b)(3)

Registration No. 333-265953

 

PROSPECTUS SUPPLEMENT NO. 6

(to Prospectus dated August 5, 2022)

 

 

MSP RECOVERY, INC.

 

Up to 159,246,370 Shares of Class A Common Stock

Up to 755,200,000 Warrants to Purchase Shares of Class A Common Stock

Up to 41,303,150 Shares of Class A Common Stock Underlying Warrants

 

This prospectus supplement amends and supplements the prospectus dated August 5, 2022 (as supplemented or amended from time to time, the “Prospectus”), which forms a part of our Registration Statement on Form S-1 (No. 333-265953). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Quarterly Report on Form 10-Q for the period ending September 30, 2023, filed with the Securities and Exchange Commission (the “SEC”) on November 14, 2023 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

 

The Prospectus and this prospectus supplement relate to the offer and sale, from time to time, by the selling securityholders named in the Prospectus (the “Selling Securityholders”), or any of their permitted transferees, of (i) up to an aggregate of 30,221,000 shares of Common Stock (as defined in the Prospectus) otherwise held by the Selling Securityholders; (ii) up to an aggregate of 13,000 shares of Common Stock that may be issued upon exercise of Private Warrants (as defined in the Prospectus); (iii) up to an aggregate of 30,208,000 shares of Common Stock that may be issued upon exercise of New Warrants (as defined in the Prospectus); (iv) up to an aggregate of 230,000 shares of Common Stock that were issued to certain investors, including the Sponsor (as defined in the Prospectus) in a private placement in connection with the closing of the Business Combination (as defined in the Prospectus); (v) up to an aggregate of 26,000 shares of Common Stock that were issued to certain investors in a private placement of Private Units (as defined in the Prospectus) in connection with the Business Combination; (vi) up to an aggregate of 126,718,716 shares of Common Stock exchangeable for Up-C Units (as defined in the Prospectus) originally issued to certain Selling Securityholders, including the Members (as defined in the Prospectus), as consideration in the Business Combination for their membership interests in the MSP Purchased Companies (as defined in the Prospectus) or issuable pursuant to the terms of existing contracts; (vii) up to an aggregate of 2,000,880 shares of Common Stock issued to certain Selling Securityholders upon exchange of Up-C Units designated by the Members and issued in a private placement by the Company in lieu of a corresponding number of Up-C Units to which such Members were otherwise entitled but designated back to the Company and Opco (as defined in the Prospectus) pursuant to the terms of the Business Combination; (viii) up to an aggregate of 47,774 shares of Common Stock issued to certain Selling Securityholders in a private placement by the Company pursuant to the terms of existing contracts; (ix) up to an aggregate of 181,297 shares of Common Stock issuable upon the exercise of up to 4,532,405 Public Warrants (as defined in the Prospectus); and (x) up to an aggregate of 41,121,854 shares of Common Stock issuable upon the exercise of up to 1,028,046,326 New Warrants. The Prospectus and this prospectus supplement also cover any additional securities that may become issuable by reason of share splits, share dividends or other similar transactions.

 

 

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Effective at 11:59 PM EDT on October 12, 2023, the Company amended its Second Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware to effect a 1-for-25 reverse stock split of the Company’s common stock (the “Reverse Split”). Unless otherwise noted, the share and per share information in this Prospectus Supplement No. 6 have been adjusted to give effect to the Reverse Split.

 

Our Common Stock, Public Warrants and New Warrants are listed on Nasdaq under the symbols “LIFW,” “LIFWZ,” and “LIFWW”. On November 14, 2023, the closing price of Common Stock was $6.86 per share, the closing price of our Public Warrants was $0.31 per warrant and the closing price of our New Warrants was $0.065 per warrant.

 

Investing in our securities involves risks. Before you invest in our securities, please carefully read the information provided in the “Risk Factors” section beginning on page 9 of the Prospectus and any in any applicable prospectus supplement, and Item IA of our Annual Report on Form 10-K for the fiscal year ending December 31, 2022, filed with the SEC on July 27, 2023, incorporated herein by reference.

 

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus supplement is November 15, 2023.

 

 

 

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39445

 

MSP Recovery, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware	84-4117825
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2710 Le Jeune Road Floor 10 Coral Gables, Florida	33134
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (305) 614-2222

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, $0.0001 par value per share		LIFW		The Nasdaq Global Market
Redeemable warrants, each lot of 25 warrants is exercisable for one share of Class A common stock at an exercise price of $287.50 per share		LIFWW		The Nasdaq Global Market
Redeemable warrants, each lot of 25 warrants is exercisable for one share of Class A common stock at an exercise price of $0.0025 per share		LIFWZ		The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
Emerging growth company		☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2023, the registrant had 14,323,764 shares of Class A common stock, $0.0001 par value per share, and 124,253,176 shares of Class V common stock, $0.0001 par value per share, outstanding.

 

 

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Explanatory Note

As previously reported, MSP Recovery, Inc., d/b/a LifeWallet, identified errors in the accounting for the indemnification asset, various intangible assets and rights to cash flows, and consolidation of an entity in connection with our business combination. As a result of these errors, management and the audit committee of our board of directors concluded that our previously issued unaudited condensed consolidated financial statements for the periods ended June 30, 2022, and September 30, 2022, were materially misstated. Accordingly, our unaudited condensed consolidated financial statements for the foregoing periods require restatement and should no longer be relied upon. The financial information that was previously filed or otherwise reported as of and for the periods ended June 30, 2022 and September 30, 2022 was superseded by the information in our Annual Report on Form 10-K filed with the SEC on July 27, 2023 and this Quarterly Report on Form 10-Q. See Note 2, Basis of Presentation And Summary of Significant Accounting Policies, to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the restatement and the related financial information impacts.

 

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Table of Contents

 

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (as restated)	5
	Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2023 and 2022 (as restated)	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (as restated)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	49
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
Signatures		52

 

 

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DEFINITIONS

 

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company,” and “LifeWallet” refer to MSP Recovery, Inc. d/b/a LifeWallet. As used in this Quarterly Report on Form 10-Q, unless otherwise noted or the context otherwise requires, the terms below are defined as follows:

 

“2022 Form 10-K” means the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed by the Company on July 27, 2023;

 

“Algorithm” refers to a set of instructions that perform a particular action. Our team of data scientists and medical professionals create proprietary instruction sets, or “Algorithms,” to identify recovery opportunities within the data sets of our Assignors’ Claims. Our proprietary algorithms incorporate various data points within the data sets of our Assignors’ Claims, which may include, but are not limited to, medical coding classification systems such as diagnosis codes (e.g., ICD-8/ICD-9/ICD-10 codes), procedure codes (e.g., CPT codes), and drug codes (e.g., NDC codes); non-medical data such as demographics and date ranges; and data from public sources such as crash reports, offense incident reports, and other reports that provide details as to an occurrence. These Algorithms are then applied to our Assignors’ aggregated Claims data, filtering through the billions of lines of data from our Assignors to identify recoverable opportunities consistent with a given Algorithm’s criteria. Identified potential recoveries are then further quality reviewed by our medical team;

“Billed Amount” (a/k/a the charged amount or retail price) is the full commercial value of services billed by the provider, or the full charge that the provider would ordinarily bill for the service provided. The Billed Amount for a specific procedure code is based on the provider and may vary from location to location. Where a Billed Amount is not provided in the data received from the Assignor, the Company may use paid amount or paid adjusted values, where available, to extrapolate a Billed Amount value. Where we have to extrapolate a Billed Amount to establish damages, the calculated amount may be contested by opposing parties;

“Board of Directors” or “Board” means the board of directors of the Company;

“Business Combination” means the business combination pursuant to the MIPA, as defined herein;

 

“CCRA” mean Claims Cost Recovery Agreement;

“CF” means Cantor Fitzgerald, L.P., a New York based investment bank;

 

“Claim” means the right, title to, and/or interest in, any and all claims or potential claims, including all related reimbursement and recovery rights, which the Company has, may have had, or may have in the future assigned to it (whether or not asserted), including all rights to causes of action and remedies against any third-party, whether a primary payer or responsible party, at law or in equity. The term “Claim” includes but is not limited to: (i) claims arising under consumer protection statutes and laws; (ii) claims arising under the Medicare and Medicare Advantage secondary payer statutes, whether based in contract, tort, statutory right, or otherwise, in connection with the payment to provide healthcare services or supplies; (iii) claims arising under any state statutes and common laws irrespective of the rights that are conferred to MSP through assignment or otherwise; and (iv) all right, title, and interest to any recovery rights that may exist for any potential cause of action where a responsible party or primary payer is liable, even where it has not been established because liability is not yet proven as of the date that the Claim is identified or discovered, together with all receivables, general intangibles, payment intangibles, and other rights to payment now existing or hereafter arising and all products and proceeds of the foregoing;

“Class A Common Stock” means the Company’s Class A common stock, par value $0.0001 per share;

“Class V Common Stock” means the Company’s Class V common stock, par value $0.0001 per share;

“Class B Unit” means the non-voting economic Class B Units of Opco, as described in more detail in Note 3, Business Combination, of this Form 10-Q;

“Closing” means the closing of the Business Combination, as described in more detail in Note 3, Business Combination, of this Form 10-Q;

“Company” means the registrant, MSP Recovery, Inc. d/b/a LifeWallet, a Delaware corporation;

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended;

i

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“Existing Warrant Agreement” means the Warrant Agreement dated as of August 13, 2020, by and between the Company and Continental Stock Transfer & Trust Company;

“GAAP” means generally accepted accounting principles in the United States of America, as applied on a consistent basis;

 

“Hazel” means Hazel Holdings I LLC, a Delaware limited liability company, together with its affiliates;

 

“HPH” means Hazel Partners Holdings LLC, a Delaware limited liability company;

 

“HMO” means health maintenance organization;

“IPO” means the August 14, 2020 initial public offering of Lionheart Acquisition Corporation II.

 

“Law Firm” means La Ley con John H. Ruiz P.A. d/b/a MSP Recovery Law Firm;

 

“Legacy MSP” means MSP Recovery as it was organized in 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist;

 

“LLC Agreement” means the first amended and restated limited liability company agreement of Opco;

“MAO” means Medicare Advantage organization;

 

“Members’ Representative” means John H. Ruiz, solely in his capacity as the representative of the Members;

“MIPA” means the Membership Interest Purchase Agreement, dated as of July 11, 2021, as amended, and as described in more detail in Note 3, Business Combination, of this Form 10-Q;

“MSO” means management service organization;

 

“MSP Recovery” means MSP Recovery, LLC, a Florida limited liability company;

“MSP RH Series 01” means MSP Recovery Holdings Series 01, LLC, a Delaware limited liability company;

“MSP RH Series 01 Recovery Services Agreement” means the Recovery Services Agreement dated as of October 23, 2020 by and between MSP RH Series 01 and MSP Recovery;

“New Warrants” means 1,029,000,000 warrants, each exercisable to purchase 1/25 of one share, post Reverse Stock Split, of Class A Common Stock (but only exercisable in lots of 25 to purchase whole shares), which were issued as a dividend to the holders of record of Class A Common Stock as of the close of business on the date of Closing;

“Nomura” means Nomura Securities International, Inc.;

“Opco” means Lionheart II Holdings, LLC, a wholly owned subsidiary of the Company;

 

“OTC Equity Prepaid Forward Transaction” means an agreement between the Company and CF in which CF agreed to (a) transfer to the Company for cancellation any warrants to purchase shares received as a result of being the stockholder of record of a share as of the close of business on the closing date of the Business Combination, pursuant to the previously announced and declared LCAP dividend and (b) waive any redemption right that would require the redemption of the Subject Shares (as defined below) in exchange for a pro rata amount of the funds held in LCAP’s trust account;

“Paid Amount” (a/k/a Medicare Paid Rate or wholesale price) means the amount paid to a provider by a health plan or insurer. This amount varies based on the party making payment. For example, Medicare typically pays a lower fee for service rate than commercial insurers. The Paid Amount is derived from the Claims data we receive from our Assignors. In the limited instances where the data received lacks a paid amount value, our team calculates the Paid Amount with a formula. The formula used provides rates for outpatient services and is derived from the customary rate at the 95th percentile as it appears from standard industry commercial rates or, where that data is unavailable, the billed amount if present in the data. These amounts are then adjusted to account for the customary Medicare adjustment to arrive at the calculated Paid Amount. Management believes that this formula provides a conservative estimate for the

ii

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Medicare paid amount rate, based on industry studies which show the range of differences between private insurers and Medicare rates for outpatient services;

 

We periodically update this formula to enhance the calculated paid amount where that information is not provided in the Assignor data. Management believes this measure provides a useful baseline for potential recoveries, but it is not a measure of the total amount that may be recovered in respect of potentially recoverable Claims, which in turn may be influenced by any applicable potential statutory recoveries such as double damages or fines, as described below. This calculation accounts for an approximate 7% increase in the total Paid Amount. Where we have to extrapolate a Paid Amount to establish damages, the calculated amount may be contested by opposing parties;

“Public Units” means units comprised of one share of Class A Common Stock and one-half of one Public Warrant issued at the IPO;

“Public Warrants” means warrants included in the Public Units issued in the IPO, each exercisable to purchase 1/25 of one share, post Reverse Stock Split, of Class A Common Stock (but only exercisable in lots of 25 to purchase whole shares), in accordance with its terms, as described in more detail in Note 3, Business Combination, of this Form 10-Q;

“PVPRC” means the cumulative Paid Amount value of potentially recoverable Claims. We use Algorithms to comb through historical paid Claims data and search for potential recoveries. The PVPRC is a measure of the Paid Amount in respect of those potentially recoverable Claims. In the limited instances where the data received from our Assignors lacks a paid value, the adjustment formula described in the definition of Paid Amount is applied and increases PVPRC by approximately 7%. As non-compliance with Section 111 reporting requirements is commonplace, responsible reporting entities (RRE) routinely fail to report their responsibility to make primary payments; for this reason, data matching is often required to determine which reporting entity is responsible to reimburse a given potentially recoverable Claim;

 

“Recovery Proceeds” means, with respect to any Claim, any and all gross proceeds recovered, including compensation, interest, penalties, and fees which may be paid or payable with respect to such Claim (including any and all cash, securities, instruments or other property which may be paid or issued by defendants or third parties in litigation proceedings in satisfaction of such Claim);

 

“SEC” means the U.S. Securities and Exchange Commission;

 

“Series” means Delaware series limited liability companies, formed pursuant to the Delaware law, that are used by the Company to own and segregate assets, including CCRAs;

“Securities Act” means the Securities Act of 1933, as amended;

“Series MRCS” means Series MRCS, a series of MDA, Series LLC, a Delaware series limited liability company;

“Trust Account” means the trust account established by the Company for the benefit of its stockholders with Continental Stock Transfer & Trust Company;

“Up-C Unit” means each pair consisting of one share of Class V Common Stock and one Class B Unit, as described in more detail in Note 3, Business Combination, of this Form 10-Q;

“Virage” means Virage Capital Management LP, a Delaware limited partnership;

“VRM” means Virage Recovery Master LP, a Delaware limited partnership and affiliate of Virage; and

“VRM MSP” means VRM MSP Recovery Partners LLC, a Delaware limited liability company and joint investment vehicle of VRM and Series MRCS;

 

“Working Capital Credit Facility” means the credit agreement as described in more detail in Note 10, Claims Financing Obligations and Notes Payable, of this Form 10-Q.
 

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Table of Contents

Part I – Financial Information

Item 1. Financial Statements

MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

		September 30,				December 31,
(In thousands except per share amounts)		2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	6,659			$	3,661
Restricted cash			—				11,420
Accounts receivable			706				6,195
Affiliate receivable (1)			831				2,425
Prepaid expenses and other current assets (1)			14,874				27,656
Total current assets			23,070				51,357
Property, plant and equipment, net			4,890				3,432
Intangible assets, net (2)			3,253,707				3,363,156
Right-of-use assets			368				—
Total assets		$	3,282,035			$	3,417,945
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	6,643			$	8,422
Affiliate payable (1)			19,822				19,822
Commission payable			829				545
Derivative liability			—				9,613
Warrant liability			662				5,311
Other current liabilities			14,588				72,002
Total current liabilities			42,544				115,715
Guaranty obligation (1)			900,455				787,945
Claims financing obligation and notes payable (1)			513,450				198,489
Lease liabilities			264				—
Loan from related parties (1)			130,709				125,759
Interest payable (1)			50,951				2,765
Total liabilities		$	1,638,373			$	1,230,673
Commitments and contingencies (Note 12)
Class A common stock subject to possible redemption, 45,183 shares at redemption value as of December 31, 2022 (None as of September 30, 2023)		$	—			$	1,807
Stockholders’ Equity (Deficit):
Class A common stock, $0.0001 par value; 5,500,000,000 shares authorized; 13,799,230 and 2,984,212 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		$	1			$	—
Class V common stock, $0.0001 par value; 130,000,000 shares authorized; 124,264,645 and 125,919,180 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively			12				13
Additional paid-in capital			347,376				137,069
Accumulated deficit			(62,094	)			(29,203	)
Total Stockholders’ Equity (Deficit)			285,295				107,879
Non-controlling interest			1,358,367				2,077,586
Total equity		$	1,643,662			$	2,185,465
Total liabilities and equity		$	3,282,035			$	3,417,945

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Table of Contents

MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Statements of Operations (As Restated)

(Unaudited)

 

		Three months ended September 30,								Nine months ended September 30,
(In thousands except per share amounts)		2023				2022				2023				2022
						As Restated								As Restated
Claims recovery income		$	440			$	2,759			$	6,479			$	4,225
Claims recovery service income (1)			—				5,748				498				17,795
Total Claims Recovery		$	440			$	8,507			$	6,977			$	22,020
Operating expenses
Cost of claim recoveries (2)			574				1,198				1,972				1,906
Claims amortization expense			121,008				111,851				355,481				153,560
General and administrative (3)			6,130				6,621				20,691				17,049
Professional fees			2,466				5,904				15,611				10,973
Professional fees – legal (4)			6,871				8,014				25,889				34,251
Allowance for credit losses			—				—				5,000				—
Depreciation and amortization			85				103				182				254
Total operating expenses			137,134				133,691				424,826				217,993
Operating Loss		$	(136,694	)		$	(125,184	)		$	(417,849	)		$	(195,973	)
Interest expense (5)			(88,279	)			(46,180	)			(204,287	)			(80,947	)
Other income, net			408				63,138				8,697				63,175
Change in fair value of warrant and derivative liabilities			348				2,670				4,247				(11,683	)
Net loss before provision for income taxes		$	(224,217	)		$	(105,556	)		$	(609,192	)		$	(225,428	)
Provision for income tax expense			—				—				—				—
Net loss		$	(224,217	)		$	(105,556	)		$	(609,192	)		$	(225,428	)
Less: Net loss attributable to non-controlling members			204,462				103,484				576,301				221,476
Net loss attributable to controlling members		$	(19,755	)		$	(2,072	)		$	(32,891	)		$	(3,952	)
Basic and diluted weighted average shares outstanding, Class A Common Stock			12,703,472				2,761,476				7,097,032				2,125,539
Basic and diluted net loss per share, Class A Common Stock		$	(1.56	)		$	(0.75	)		$	(4.63	)		$	(1.86	)

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

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Table of Contents

MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (As Restated)

(Unaudited)

 

Three Months Ended September 30, 2023

 

		Class A Common Stock								Class V Stock
(In thousands except shares)		Shares				Amount				Shares				Amount				Additional Paid-in Capital				Accumulated Deficit				Non- Controlling Interests				Total Equity
Balance at June 30, 2023			5,289,434			$	—				124,264,645			$	12			$	176,643			$	(42,339	)		$	1,669,169			$	1,803,485
Conversion of Warrants			125				—				—				—				2				—				1				3
Class A Issuances			8,509,671				1				—				—				170,731				—				(106,341	)			64,391
Net loss			—				—				—				—				—				(19,755	)			(204,462	)			(224,217	)
Balance at September 30, 2023			13,799,230			$	1				124,264,645			$	12			$	347,376			$	(62,094	)		$	1,358,367			$	1,643,662

 

Three Months Ended September 30, 2022 (As Restated)

 

(In thousands)		Class A Common Stock								Class V Stock
		Shares				Amount				Shares				Amount				Additional Paid-in Capital				Member’s Deficit				Accumulated Deficit				Non- Controlling Interests				Total Equity
																		(As Restated)								(As Restated)				(As Restated)				(As Restated)
Balance at June 30, 2022			2,642,042			$	—				126,178,932			$	13			$	127,099			$	—			$	(23,666	)		$	2,360,520			$	2,463,966
Contributions prior to recapitalization transaction			—				—				—				—				—				—				—				—				—
Distributions prior to recapitalization transaction			—				—				—				—				—				—				—				—				—
Net loss prior to recapitalization transaction			—				—				—				—				—				—				—				—				—
Cumulative effect of recapitalization transaction			—				—				—				—				—				—				—				—				—
Opening net assets of Lionheart II Holdings, LLC acquired			—				—				—				—				—				—				—				—				—
Adjustment for value of derivative on temporary equity			—				—				—				—				1,062				—				—				—				1,062
Conversion of Warrants			28,247				—				—				—				1,805				—				—				(1,157	)			648
Class A Issuances			246,096				—				(230,123	)			—				5,310				—				—				(10,272	)			(4,962	)
Net loss			—				—				—				—				—				—				(2,072	)			(97,273	)			(99,345	)
Balance at September 30, 2022			2,916,385			$	—				125,948,809			$	13			$	135,276			$	—			$	(25,738	)		$	2,251,818			$	2,361,369

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6

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Table of Contents

MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (As Restated)

(Unaudited)

 

Nine Months Ended September 30, 2023

 

		Class A Common Stock								Class V Stock
(In thousands except shares)		Shares				Amount				Shares				Amount				Additional Paid-in Capital				Accumulated Deficit				Non- Controlling Interests				Total Equity
Balance at December 31, 2022			2,984,212			$	—				125,919,180			$	13			$	137,069			$	(29,203	)		$	2,077,586			$	2,185,465
Conversion of Warrants			9,523				—				—				—				388				—				(169	)			219
Class A Issuances			10,805,495				1				(1,654,535	)			(1	)			209,919				—				(142,749	)			67,170
Net loss			—				—				—				—				—				(32,891	)			(576,301	)			(609,192	)
Balance at September 30, 2023			13,799,230			$	1				124,264,645			$	12			$	347,376			$	(62,094	)		$	1,358,367			$	1,643,662

 

Nine Months Ended September 30, 2022 (As Restated)

 

(In thousands)		Class A Common Stock								Class V Stock
		Shares				Amount				Shares				Amount				Additional Paid-in Capital				Member’s Deficit				Accumulated Deficit				Non- Controlling Interests				Total Equity
																		(As Restated)								(As Restated)				(As Restated)				(As Restated)
Balance at December 31, 2021			—			$	—				—			$	—			$	—			$	(155,756	)		$	—			$	4,348			$	(151,408	)
Contributions prior to recapitalization transaction			—				—				—				—				—				15				—				—				15
Distributions prior to recapitalization transaction			—				—				—				—				—				(147	)			—				—				(147	)
Net loss prior to recapitalization transaction			—				—				—				—				—				(28,640	)			—				—				(28,640	)
Cumulative effect of recapitalization transaction			303,307				—				126,178,932				13				41,579				184,528				—				2,490,751				2,716,871
Opening net assets of Lionheart II Holdings, LLC acquired			—				—				—				—				—				—				(21,786	)			—				(21,786	)
Adjustment for value of derivative on temporary equity			—				—				—				—				10,065				—				—				—				10,065
Conversion of Warrants			316,328				—				—				—				15,641				—				—				(13,444	)			2,197
Class A Issuances			2,296,750				—				(230,123	)			—				67,991				—				—				(96,144	)			(28,153	)
Net loss			—				—				—				—				—				—				(3,952	)			(133,693	)			(137,645	)
Balance at September 30, 2022			2,916,385			$	—				125,948,809			$	13			$	135,276			$	—			$	(25,738	)		$	2,251,818			$	2,361,369

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

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Table of Contents

MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (As Restated)

(Unaudited)

 

		Nine months ended September 30,
(In thousands)		2023				2022
						(As Restated)
Cash flows from operating activities:
Net loss (1)		$	(609,192	)		$	(225,428	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			182				254
Claims amortization expense			355,481				153,560
Paid in kind interest (1)			204,263