Filed pursuant to Rule 424(b)(3)
Registration Nos. 333-237458 and
333-237458-01
PROSPECTUS SUPPLEMENT NO. 6
to Prospectus dated
June 3, 2020
GWG HOLDINGS, INC.
The information contained in this prospectus supplement supplements and amends our prospectus dated June 3, 2020 (the “Prospectus”), and should be read in conjunction therewith. This prospectus supplement may not be delivered or utilized without the Prospectus. This prospectus supplement is qualified by reference to the Prospectus, except to the extent that the information in this prospectus supplement updates and supersedes the information contained in the Prospectus. Capitalized terms contained in this prospectus supplement have the same meanings as in the Prospectus or the Annual Report (as defined below), which is incorporated by reference in the Prospectus, unless otherwise stated herein.
RECENT EVENTS
On November 19, 2021, GWG Holdings, Inc. (“GWG Holdings,” the “Company,” “we,” “us,” or “our”) filed our Quarterly Report on Form 10-Q for the period ended September 30, 2021 (the “Quarterly Report”). This prospectus supplement has been prepared primarily to set forth certain information contained in the Quarterly Report.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus supplement is part of the Prospectus and either it or its contents must accompany the Prospectus to satisfy the prospectus-delivery requirements under the Securities Act of 1933.
The date of this prospectus supplement is November 24, 2021
TABLE OF CONTENTS
Page | |
RISK RELATING TO FORWARD-LOOKING STATEMENTS | 1 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION | 3 |
FINANCIAL INFORMATION | F-1 |
GWG Holdings, Inc.
325 North St. Paul Street, Suite 2650
Dallas, TX 75201
Fax: (651) 925-0555
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RISKS RELATING TO FORWARD-LOOKING STATEMENTS
This prospectus supplement and the Prospectus contain or incorporate by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and portfolio management and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “seeks,” “anticipates,” “will,” “should,” “could,” “may,” “designed to,” “foreseeable future,” “believe,” “scheduled” and similar expressions. Our actual results or outcomes may differ materially from any results expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
A summary of the principal risk factors that make investing in our securities risky and might cause our actual results to differ is set forth in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”). The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. This summary should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in the section entitled “Risk Factors” in the Annual Report.
Risks Related to Our Operations and Organizational Structure
● | Our current inability to raise capital, recurring losses from operations, and potential negative implications of the ongoing SEC non-public, fact-finding investigation raise substantial doubt regarding our ability to continue as a going concern. Our report from our independent registered public accounting firm for the year ended December 31, 2020 included in the Annual Report includes an explanatory paragraph stating that these factors raise substantial doubt about our ability to continue as a going concern. | |
● | A failure to establish and maintain effective internal controls over financial reporting, including our identified material weaknesses, could adversely affect our financial results. We identified a material weakness in internal controls over financial reporting in the quarterly income tax provision process, which included the measurement of the valuation allowance against our deferred tax assets, which was reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. In addition, in connection with matters related to the restatement of our financial statements described in the Annual Report, we determined that a material weakness existed in our internal control over financial reporting for all periods from December 31, 2019 to December 31, 2020. As of December 31, 2020, the design and operating effectiveness of controls over the selection, application and review of the implementation of accounting policies were not sufficient to ensure amounts recorded and disclosed were fairly stated in accordance with GAAP. |
● | We have a relatively limited history of operations and a history of net losses. |
● | Our operations and financial results may be adversely affected by the ongoing COVID-19 pandemic. |
● | We may be unable to capitalize on the anticipated benefits of the Beneficient Transactions. |
● | GWG Holdings’ ability to control the activities of Beneficient is subject to certain rights of others set forth in the limited liability company agreement for the general partner of Ben LP, and GWG Holdings has entered into a non-binding term sheet to relinquish certain rights with respect to Beneficient, including GWG Holdings’ ability to appoint a majority of the board of directors of the general partner of Ben LP and control the activities of Beneficient. |
● | Ben LP’s partnership agreement eliminates fiduciary duties that might otherwise be owed to GWG Holdings under Delaware law. |
● | If certain events occur, GWG Holdings will lose its right to appoint a majority of the board of directors of the general partner of Ben LP and therefore its ability to exercise control over Ben LP and consolidate its financial results. |
● | GWG Holdings’ percentage ownership in Ben LP may be diluted significantly. |
● | We may not realize a return on GWG Holdings’ investment in FOXO Technologies Inc. |
● | The resale of GWG Holdings’ common stock issued in the Exchange Transaction could result in a reduction to the market price of GWG Holdings’ common stock and result in a destabilized trading market for GWG Holdings’ common stock. |
● | The Seller Trusts, collectively, have the power to control the vote of a majority of GWG Holdings’ outstanding common stock. |
● | We are currently relying on the “controlled company” exemption under Nasdaq Stock Market Listing Rules. |
Risks Related to Our Liquidity Products Business
● | Beneficient may be unable to operate its business successfully. |
● | Beneficient has experienced significant delays in obtaining, and may not obtain, its TEFFI trust company charter. |
● | Beneficient may not be able to grow, effectively manage its growth, or achieve profitability. |
● | Beneficient is subject to repayment risk in connection with its liquidity transactions. |
● | Beneficient may incur significant losses as a result of ineffective risk management processes and strategies. |
● | Difficult market conditions can cause investors to reduce or suspend their investments in alternative assets or their desire to liquidate alternative assets they hold, which could adversely affect Beneficient’s business. |
● | Beneficient’s business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, the ExAlt Trusts that owe Beneficient money, securities or other assets or whose obligations collateralizes the loans made by certain of Beneficient’s operating subsidiaries to certain of the ExAlt Trusts. |
● | Beneficient uses hedging transactions to manage certain market risks; Beneficient’s business, profitability and liquidity may be adversely affected by unanticipated market conditions including interest rates, currency exchange rates, equity market behavior, and other relevant market factors that generate losses not covered or offset by a hedge. |
● | Beneficient’s fair value estimates of illiquid assets may not accurately estimate prices obtained at the time of sale. |
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● | Notwithstanding its diversification strategies, Beneficient’s liquidity, profitability and business may be adversely affected by concentrations of assets. |
● | The due diligence process that Beneficient undertakes in connection with liquidity transactions may or may not reveal all facts that may be relevant in connection with such liquidity transaction. |
Risks Related to Our Secondary Life Insurance Business
● | The valuation of our life insurance policy assets requires us to make material assumptions that may ultimately prove to be incorrect. |
● | Actual results from our life insurance portfolio may not match our projected results. |
● | Our investments in life insurance policies have inherent risks, including fraud and legal challenges to the validity of the policies. |
● | If actuarial assumptions related to our investments in life insurance policies change, our operating results and cash flow could be adversely affected, as well as the value of our collateral and our ability to service our debt obligations. |
● | We rely on estimated rates of mortality when valuing life insurance policies and forecasting the performance of our life insurance portfolio. |
● | Cost-of-insurance (premium) increases could materially and adversely affect our profitability and financial condition. |
Risks Related to Our Proposed Insurance Business
● | We have no experience in operating an insurance business and our entry into the insurance market may not be successful. |
● | We may not be able to obtain or maintain approval of insurance regulators and other regulatory authorities. |
● | The operation of our proposed insurance business will subject us to additional costs and economic, political, currency, and other risks. |
Risks Related to Our Indebtedness and Financing Arrangements
● | Our indebtedness could adversely affect our financial condition and may otherwise adversely impact our business operations. |
● | We critically rely on debt financing for our business. |
● | We may not be able to raise the capital that we are seeking from our securities offerings. |
● | GWG Holdings depends upon cash distributions from its subsidiaries, and contractual restrictions on distributions to it or adverse events at one of its operating subsidiaries could materially and adversely affect its ability to pay its debts. |
● | The collateral granted as security for our obligations under our various debt obligations may be insufficient to repay all such debt obligations. |
● | If a significant number of holders of GWG Holdings’ L Bonds demand repayment of those instruments upon maturity instead of renewing them, GWG Holdings may be forced to liquidate some of its life insurance policies investments in Beneficient or other assets. Substantially all of our life insurance policies are pledged as collateral under our LNV Credit Facility and our NF Credit Facility and we would not be able to dispose of them without compliance with the terms of those credit facilities. |
● | Subordination provisions contained in the indenture governing the L Bonds, including any supplemental indentures, will place restrictions on the ability of the trustee or the L Bond holders to enforce certain rights against us under the indenture. |
● | A failure to maintain compliance with our debt covenants, including the indenture governing the L Bonds, may have a material adverse effect on our ability to continue our business operations. |
Legal and Regulatory Risks
● | A determination that we are an unregistered investment company would have material adverse consequences. |
● | We will be subject to comprehensive governmental regulation and supervision. |
● | Our life insurance business will be subject to state or foreign government regulation. |
● | We are currently subject to a non-public, fact-finding investigation into the Company by the SEC, and we are unable to predict the outcome of this matter. |
General Risk Factors
● | Our success depends on certain key executives and the ability to attract, retain, and develop new professionals. |
● | Business disruptions and interruptions and adverse economic conditions due to natural disasters and other external events beyond our control can adversely affect our business, financial condition and results of operations. |
● | Changes in general economic conditions could adversely impact our business. |
● | A failure in our operational systems as well as human error or malfeasance could impair our liquidity, disrupt our business, result in the disclosure of confidential information, damage our reputation, and cause losses. |
● | We rely on other companies to provide key components of our business infrastructure. |
We caution you that the foregoing list of factors is not exhaustive. Forward-looking statements are only estimates and predictions, or statements of current intent. Actual results, outcomes or actions that we ultimately undertake could differ materially from those anticipated in the forward-looking statements due to risks, uncertainties or actual events differing from the assumptions underlying these statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note: The following discussion and analysis of the financial condition and results of operations of GWG Holdings are derived from the Quarterly Report. We have not materially updated this discussion in any way, although it may be presented in a different order than in the Quarterly Report. As indicated in the Quarterly Report, this discussion and analysis is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The statements in this discussion and analysis concerning expectations regarding our future performance, liquidity and capital resources, as well as other non-historical statements in this discussion and analysis, are forward-looking statements. See “Risks Relating to Forward-Looking Statements” above and in the Prospectus. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results could differ materially from those suggested or implied by any forward-looking statements.
You should read the following discussion in conjunction with the condensed consolidated financial statements and accompanying notes filed as part of the Quarterly Report, which are reproduced beginning at page F-1 of this prospectus supplement, and the information contained in other sections of the Quarterly Report, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations from our Annual Report.
Overview
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Exposure Type | Value | Percent of Total | ||||||||||||
Near-Duration Life Insurance Policies (1) | $ | 334,450 | 33.7 | % | ||||||||||
Intermediate-Duration Life Insurance Policies (1) | 288,996 | 29.3 | % | |||||||||||
Long-Duration Life Insurance Policies (1) | 138,114 | 14.0 | % | |||||||||||
Growth Stage Private (2) | 84,039 | 8.5 | % | |||||||||||
Late Stage Venture Backed (2) | 72,316 | 7.3 | % | |||||||||||
Early Stage Venture Backed (2) | 30,141 | 3.1 | % | |||||||||||
Other (2) | 24,317 | 2.5 | % | |||||||||||
Corporate Buyouts (2) | 15,325 | 1.6 | % | |||||||||||
Total | $ | 987,698 | 100.0 | % |
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Total life insurance portfolio face value of policy benefits (in thousands) | $ | 1,801,306 | ||||||
Average face value per policy (in thousands) | $ | 1,831 | ||||||
Average face value per insured life (in thousands) | $ | 1,984 | ||||||
Weighted average age of insured (years) | 83.6 | |||||||
Weighted average life expectancy estimate (years) | 6.4 | |||||||
Total number of policies | 984 | |||||||
Number of unique lives | 908 | |||||||
Demographics | 74% Male; 26% Female | |||||||
Number of smokers | 36 | |||||||
Largest policy as % of total portfolio face value | 0.7 | % | ||||||
Average policy as % of total portfolio | 0.1 | % | ||||||
Average annual premium as % of face value | 4.1 | % |
Percentage of Total | ||||||||||||||||||||||||||||||||||||||
Min Age | Max Age | Number of Policies | Policy Benefits (in thousands) | Number of Policies | Policy Benefits | Weighted Average LE (Years) | ||||||||||||||||||||||||||||||||
64 | 69 | 23 | $ | 22,735 | 2.3 | % | 1.2 | % | 11.4 | |||||||||||||||||||||||||||||
70 | 74 | 168 | 198,473 | 17.1 | % | 11.0 | % | 10.1 | ||||||||||||||||||||||||||||||
75 | 79 | 197 | 340,040 | 20.0 | % | 18.9 | % | 9.3 | ||||||||||||||||||||||||||||||
80 | 84 | 197 | 350,391 | 20.0 | % | 19.5 | % | 7.5 | ||||||||||||||||||||||||||||||
85 | 89 | 210 | 489,899 | 21.3 | % | 27.2 | % | 4.8 | ||||||||||||||||||||||||||||||
90 | 94 | 155 | 334,534 | 15.8 | % | 18.6 | % | 3.1 | ||||||||||||||||||||||||||||||
95 | 101 | 34 | 65,234 | 3.5 | % | 3.6 | % | 2.2 | ||||||||||||||||||||||||||||||
Total | 984 | $ | 1,801,306 | 100.0 | % | 100.0 | % | 6.4 |
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Percentage of Total | ||||||||||||||||||||||||||||||||
Min LE (Months) | Max LE (Months) | Number of Policies | Policy Benefits (in Thousands) | Number of Policies | Policy Benefits | |||||||||||||||||||||||||||
0 | 47 | 295 | $ | 531,585 | 30.1 | % | 29.6 | % | ||||||||||||||||||||||||
48 | 71 | 213 | 380,621 | 21.6 | % | 21.1 | % | |||||||||||||||||||||||||
72 | 95 | 178 | 334,664 | 18.1 | % | 18.6 | % | |||||||||||||||||||||||||
96 | 119 | 140 | 248,971 | 14.2 | % | 13.8 | % | |||||||||||||||||||||||||
120 | 143 | 92 | 133,992 | 9.3 | % | 7.4 | % | |||||||||||||||||||||||||
144 | 179 | 58 | 149,198 | 5.9 | % | 8.3 | % | |||||||||||||||||||||||||
180 | 240 | 8 | 22,275 | 0.8 | % | 1.2 | % | |||||||||||||||||||||||||
Total | 984 | $ | 1,801,306 | 100.0 | % | 100.0 | % |
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Rank | Policy Benefits (in Thousands) | Percentage of Policy Benefit Amount | Insurance Company | S&P Insurer Financial Strength Rating | ||||||||||||||||||||||
1 | $ | 240,132 | 13.3 | % | John Hancock Life Insurance Company | AA- | ||||||||||||||||||||
2 | 207,917 | 11.5 | % | Lincoln National Life Insurance Company | AA- | |||||||||||||||||||||
3 | 198,091 | 11.0 | % | Equitable Financial Life Insurance Company | A+ | |||||||||||||||||||||
4 | 156,976 | 8.7 | % | Transamerica Life Insurance Company | A+ | |||||||||||||||||||||
5 | 150,789 | 8.4 | % | Brighthouse Life Insurance Company | AA- | |||||||||||||||||||||
6 | 84,081 | 4.7 | % | Pacific Life Insurance Company | AA- | |||||||||||||||||||||
7 | 81,389 | 4.5 | % | American General Life Insurance Company | A+ | |||||||||||||||||||||
8 | 63,876 | 3.5 | % | ReliaStar Life Insurance Company | A+ | |||||||||||||||||||||
9 | 56,732 | 3.1 | % | Security Life of Denver Insurance Company | A- | |||||||||||||||||||||
10 | 53,419 | 3.0 | % | Protective Life Insurance Company | AA- | |||||||||||||||||||||
$ | 1,293,402 | 71.7 | % |
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September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Industry Sector | Value | Percent of Total | Value | Percent of Total | ||||||||||||||||||||||
Software and Services | $ | 30,700 | 13.6 | % | $ | 23,310 | 10.5 | % | ||||||||||||||||||
Semiconductors and Semiconductor Equipment | 29,656 | 13.1 | % | 21,271 | 9.6 | % | ||||||||||||||||||||
Diversified Financials | 29,051 | 12.8 | % | 28,462 | 12.8 | % | ||||||||||||||||||||
Food and Staples Retailing | 26,986 | 11.9 | % | 24,450 | 11.0 | % | ||||||||||||||||||||
Telecommunication Services | 24,859 | 11.0 | % | 27,401 | 12.3 | % | ||||||||||||||||||||
Utilities | 23,208 | 10.3 | % | 21,740 | 9.8 | % | ||||||||||||||||||||
Not Applicable (e.g., Escrow, Earnouts)(1) | 15,524 | 6.9 | % | 18,138 | 8.2 | % | ||||||||||||||||||||
Health Care Equipment and Services | 12,056 | 5.3 | % | 14,682 | 6.6 | % | ||||||||||||||||||||
Other(1) | 34,098 | 15.1 | % | 42,440 | 19.2 | % | ||||||||||||||||||||
Total | $ | 226,138 | 100.0 | % | $ | 221,894 | 100.0 | % |
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Geography | Value | Percent of Total | Value | Percent of Total | ||||||||||||||||||||||
North America | $ | 97,182 | 43.0 | % | $ | 96,056 | 43.3 | % | ||||||||||||||||||
Asia | 48,421 | 21.4 | % | 42,475 | 19.1 | % | ||||||||||||||||||||
Southern Europe | 30,912 | 13.7 | % | 36,229 | 16.3 | % | ||||||||||||||||||||
South America | 27,248 | 12.0 | % | 24,767 | 11.2 | % | ||||||||||||||||||||
Western Europe | 20,773 | 9.2 | % | 21,064 | 9.5 | % | ||||||||||||||||||||
Other(2) | 1,602 | 0.7 | % | 1,303 | 0.6 | % | ||||||||||||||||||||
Total | $ | 226,138 | 100.0 | % | $ | 221,894 | 100.0 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue realized from maturities of life insurance policies | $ | 30,891 | $ | 26,336 | $ | 73,688 | $ | 72,939 | |||||||||||||||
Revenue recognized from change in fair value of life insurance policies | 3,860 | 6,021 | 623 | 23,476 | |||||||||||||||||||
Premiums and other annual fees paid | (19,267) | (18,235) | (56,388) | (53,060) | |||||||||||||||||||
Gain on life insurance policies, net | $ | 15,484 | $ | 14,122 | $ | 17,923 | $ | 43,355 | |||||||||||||||
Attribution of gain on life insurance policies, net: | |||||||||||||||||||||||
Change in estimated probabilistic cash flows, net of premium and other annual fees paid | $ | (6,147) | $ | (3,512) | $ | (16,158) | $ | (5,137) | |||||||||||||||
Change in life expectancy evaluation | — | — | 2,337 | — | |||||||||||||||||||
Change in PMM | — | — | (16,386) | — | |||||||||||||||||||
Net revenue recognized at maturity | 21,631 | 17,634 | 48,130 | 48,492 | |||||||||||||||||||
Gain on life insurance policies, net | $ | 15,484 | $ | 14,122 | $ | 17,923 | $ | 43,355 | |||||||||||||||
Number of policies matured | 26 | 21 | 74 | 70 | |||||||||||||||||||
Face value of matured policies | $ | 43,217 | $ | 39,803 | $ | 104,662 | $ | 105,194 | |||||||||||||||
Net revenue recognized at maturity event (% of face value matured) | 50.1 | % | 44.3 | % | 46.0 | % | 46.1 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | ||||||||||||||||||||||||||||||
Investment income (loss) | $ | 17,554 | $ | 56,705 | $ | (39,151) | $ | 21,417 | $ | 41,590 | $ | (20,173) | |||||||||||||||||||||||
Interest income | 213 | 278 | (65) | 835 | 1,293 | (458) | |||||||||||||||||||||||||||||
Other (loss) income | 535 | (3,093) | 3,628 | (2,916) | 33,504 | (36,420) | |||||||||||||||||||||||||||||
Total | $ | 18,302 | $ | 53,890 | $ | (35,588) | $ | 19,336 | $ | 76,387 | $ | (57,051) |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||||||||||||||||
Interest expense (including amortization of deferred financing costs) | $ | 45,096 | $ | 40,792 | $ | 4,304 | $ | 128,605 | $ | 113,805 | $ | 14,800 | ||||||||||||||||||||||||||
Employee compensation and benefits | 14,871 | 33,777 | (18,906) | 43,977 | 123,321 | (79,344) | ||||||||||||||||||||||||||||||||
Legal and professional fees | 6,650 | 7,830 | (1,180) | 20,832 | 21,636 | (804) | ||||||||||||||||||||||||||||||||
Other expenses | 9,652 | 4,712 | 4,940 | 23,050 | 13,387 | 9,663 | ||||||||||||||||||||||||||||||||
Total expenses | $ | 76,269 | $ | 87,111 | $ | (10,842) | $ | 216,464 | $ | 272,149 | $ | (55,685) |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Revenue: | 2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||||||||||||
Secondary Life Insurance | $ | 15,856 | $ | 14,422 | $ | 1,434 | 18,955 | $ | 44,800 | $ | (25,845) | ||||||||||||||||||||||||
Beneficient | 17,867 | 53,589 | (35,722) | 18,235 | 74,925 | (56,690) | |||||||||||||||||||||||||||||
Corporate & Other | 63 | 1 | 62 | 69 | 17 | 52 | |||||||||||||||||||||||||||||
Total | $ | 33,786 | $ | 68,012 | $ | (34,226) | $ | 37,259 | $ | 119,742 | $ | (82,483) |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Segment Loss Before Tax | 2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||||||||||||
Secondary Life Insurance | $ | (28,142) | $ | (12,147) | $ | (15,995) | $ | (86,730) | $ | (39,314) | $ | (47,416) | |||||||||||||||||||||||
Beneficient | (6,576) | 532 | (7,108) | (67,450) | (94,880) | 27,430 | |||||||||||||||||||||||||||||
Corporate & Other(1) | (12,714) | (8,915) | (3,799) | (36,923) | (22,492) | (14,431) | |||||||||||||||||||||||||||||
Total | $ | (47,432) | $ | (20,530) | $ | (26,902) | $ | (191,103) | $ | (156,686) | $ | (34,417) |
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September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Issuer/Borrower | Principal Amount Outstanding | Weighted Average Interest Rate | Principal Amount Outstanding | Weighted Average Interest Rate | ||||||||||||||||||||||
GWG DLP Funding IV, LLC – LNV senior credit facility | $ | 229,862 | 9.00 | % | $ | 202,611 | 9.12 | % | ||||||||||||||||||
GWG DLP Funding VI, LLC - NF senior credit facility | 107,604 | 5.61 | % | — | — | % | ||||||||||||||||||||
GWG Holdings, Inc. – L Bonds | 1,311,104 | 7.25 | % | 1,277,881 | 7.21 | % | ||||||||||||||||||||
GWG Holdings, Inc. – Seller Trust L Bonds | 272,104 | 7.50 | % | 272,104 | 7.50 | % | ||||||||||||||||||||
Beneficient – Debt due to related parties | 79,803 | 7.91 | % | 77,176 | 6.50 | % | ||||||||||||||||||||
Total | $ | 2,000,477 | 7.42 | % | $ | 1,829,772 | 7.43 | % |
September 30, 2021 | December 31, 2020 | ||||||||||
Senior credit facility with LNV Corporation: | |||||||||||
Face amount outstanding | $ | 229,862 | $ | 202,611 | |||||||
Unamortized deferred financing costs | (7,894) | (8,881) | |||||||||
Carrying amount | $ | 221,968 | $ | 193,730 | |||||||
Senior credit facility with National Founders LP: | |||||||||||
Face amount outstanding | $ | 107,604 | $ | — | |||||||
Unamortized deferred financing costs | (1,870) | — | |||||||||
Carrying amount | $ | 105,734 | $ | — | |||||||
L Bonds and Seller Trust L Bonds: | |||||||||||
Face amount outstanding | $ | 1,583,208 | $ | 1,549,985 | |||||||
Redemptions and subscriptions in process(1) | 12,726 | 17,978 | |||||||||
Unamortized selling costs | (44,022) | (48,957) | |||||||||
Carrying amount | $ | 1,551,912 | $ | 1,519,006 | |||||||
Debt due to related parties: | |||||||||||
Face amount outstanding | $ | 79,803 | $ | 77,176 | |||||||
Unamortized discount | (2,441) | (916) | |||||||||
Carrying amount | $ | 77,362 | $ | 76,260 |
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Years Ending December 31, | ||||||||
Three months ending 2021(1) | $ | 320,919 | ||||||
2022 | 288,968 | |||||||
2023 | 248,168 | |||||||
2024 | 171,306 | |||||||
2025 | 164,645 | |||||||
Thereafter | 389,202 | |||||||
$ | 1,583,208 |
22
23
Life Insurance Portfolio Discount Rate | 8.25%(1) | 8.49% | ||||||||||||||||||||||||||||||
Value of life insurance portfolio | $ | 761,560 | $ | 753,160 | ||||||||||||||||||||||||||||
Common Units | 437,573 | 437,573 | ||||||||||||||||||||||||||||||
Preferred Series A Subclass 1 Unit Account of BCH | 319,030 | 319,030 | ||||||||||||||||||||||||||||||
Preferred Series C Unit Account of BCH | 210,624 | 210,624 | ||||||||||||||||||||||||||||||
Commercial Loan Agreement | 189,957 | 189,957 | ||||||||||||||||||||||||||||||
Cash, cash equivalents and policy benefits receivable | 91,080 | 91,080 | ||||||||||||||||||||||||||||||
Other assets | 14,037 | 14,037 | ||||||||||||||||||||||||||||||
Total assets | 2,023,861 | 2,015,461 | ||||||||||||||||||||||||||||||
Less: Senior credit facilities(2) | 337,466 | 337,466 | ||||||||||||||||||||||||||||||
Net after senior credit facilities | 1,686,395 | 1,677,995 | ||||||||||||||||||||||||||||||
Less: L Bonds(3) | 1,677,996 | 1,677,996 | ||||||||||||||||||||||||||||||
Net remaining | $ | 8,399 | $ | (1) | ||||||||||||||||||||||||||||
Impairment to L Bonds | No impairment | Impairment |
24
25
Years Ending December 31, | Premiums | Servicing | Total | |||||||||||||||||
Three months ending 2021 | $ | 13,847 | $ | 457 | $ | 14,304 | ||||||||||||||
2022 | 81,839 | 1,828 | 83,667 | |||||||||||||||||
2023 | 93,037 | 1,828 | 94,865 | |||||||||||||||||
2024 | 101,998 | 1,828 | 103,826 | |||||||||||||||||
2025 | 113,722 | 1,828 | 115,550 | |||||||||||||||||
2026 | 125,911 | 1,828 | 127,739 | |||||||||||||||||
$ | 530,354 | $ | 9,597 | $ | 539,951 |
Quarter End Date | Portfolio Face Amount (in thousands) | 12-Month Trailing Benefits Realized (in thousands) | 12-Month Trailing Premiums Paid (in thousands) | 12-Month Trailing Benefits/Premiums Coverage Ratio | ||||||||||||||||||||||
September 30, 2017 | 1,622,627 | 53,742 | 46,559 | 115.4 | % | |||||||||||||||||||||
December 31, 2017 | 1,676,148 | 64,719 | 52,263 | 123.8 | % | |||||||||||||||||||||
March 31, 2018 | 1,758,066 | 60,248 | 53,169 | 113.3 | % | |||||||||||||||||||||
June 30, 2018 | 1,849,079 | 76,936 | 53,886 | 142.8 | % | |||||||||||||||||||||
September 30, 2018 | 1,961,598 | 75,161 | 55,365 | 135.8 | % | |||||||||||||||||||||
December 31, 2018 | 2,047,992 | 71,090 | 52,675 | 135.0 | % | |||||||||||||||||||||
March 31, 2019 | 2,098,428 | 87,045 | 56,227 | 154.8 | % | |||||||||||||||||||||
June 30, 2019 | 2,088,445 | 82,421 | 59,454 | 138.6 | % | |||||||||||||||||||||
September 30, 2019 | 2,064,156 | 101,918 | 61,805 | 164.9 | % | |||||||||||||||||||||
December 31, 2019 | 2,020,973 | 125,148 | 63,851 | 196.0 | % | |||||||||||||||||||||
March 31, 2020 | 2,000,680 | 120,191 | 65,224 | 184.3 | % | |||||||||||||||||||||
June 30, 2020 | 1,960,826 | 137,082 | 66,846 | 205.1 | % | |||||||||||||||||||||
September 30, 2020 | 1,921,067 | 149,415 | 67,931 | 220.0 | % | |||||||||||||||||||||
December 31, 2020 | 1,900,715 | 125,109 | 69,734 | 179.4 | % | |||||||||||||||||||||
March 31, 2021 | 1,879,895 | 125,566 | 71,206 | 176.3 | % | |||||||||||||||||||||
June 30, 2021 | 1,844,466 | 121,163 | 61,301 | 197.7 | % | |||||||||||||||||||||
September 30, 2021 | 1,801,306 | 124,577 | 72,846 | 171.0 | % |
26
27
28
September 30, 2021 | December 31, 2020 | ||||||||||
Assets(1) | |||||||||||
Cash, cash equivalents and restricted cash | $ | 36,720 | $ | 65,556 | |||||||
Other assets | 4,130 | 6,366 | |||||||||
Total assets | $ | 40,850 | $ | 71,922 | |||||||
Liabilities | |||||||||||
L Bonds | $ | 1,279,808 | $ | 1,246,902 | |||||||
Seller Trust L Bonds | 366,892 | 366,892 | |||||||||
Interest and dividends payable | 11,402 | 12,086 | |||||||||
Accounts payable and accrued expenses | 7,067 | 7,347 | |||||||||
Deferred tax liabilities | 51,328 | 51,469 | |||||||||
Total liabilities | $ | 1,716,497 | $ | 1,684,696 | |||||||
Equity | |||||||||||
Redeemable preferred stock and Series 2 redeemable preferred stock | $ | 98,478 | $ | 156,833 |
Nine Months Ended September 30, 2021 | ||||||||
Total revenues | $ | 19,928 | ||||||
Interest expense | 109,535 | |||||||
Other expenses | 27,020 | |||||||
Total expenses | 136,555 | |||||||
Loss before income taxes and preferred dividends | (116,627) | |||||||
Income tax benefit | 173 | |||||||
Preferred dividends | 8,371 | |||||||
Net loss | $ | (125,171) |
29
September 30, 2021 | December 31, 2020 | |||||||||||||
Life insurance portfolio policy benefits | $ | 1,801,306 | $ | 1,900,715 | ||||||||||
Discount rate of future cash flows(1) | 7.39 | % | 7.46 | % | ||||||||||
Net present value of life insurance portfolio policy benefits | $ | 792,575 | $ | 822,859 | ||||||||||
All cash and cash equivalents (including restricted cash) | 57,975 | 106,282 | ||||||||||||
Life insurance policy benefits receivable, net | 33,105 | 14,334 | ||||||||||||
Financing receivables from affiliates | 189,957 | 180,080 | ||||||||||||
Investments in Common Units(3) | 437,573 | 438,194 | ||||||||||||
Investments in Preferred Series A Subclass 1 Unit Account(3) | 319,030 | 319,030 | ||||||||||||
Investments in Preferred Series C Unit Account(3) | 210,624 | 195,578 | ||||||||||||
Other Assets | 14,037 | 20,082 | ||||||||||||
Total Coverage(2) | $ | 2,054,876 | $ | 2,096,439 | ||||||||||
Total Indebtedness(2) | $ | 1,684,698 | $ | 1,519,107 | ||||||||||
Debt Coverage Ratio | 81.99 | % | 72.46 | % |
30
GWG HOLDINGS, INC.
Set forth below are our condensed consolidated financial statements and the notes thereto that were included in the Quarterly Report. References to “this report” in the notes to our condensed consolidated financial statements refer to the Quarterly Report.
F-2 | ||||||||
F-3 | ||||||||
F-4 | ||||||||
F-6 | ||||||||
F-9 |
F-1
September 30, 2021 (Unaudited) | December 31, 2020 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 42,207 | $ | 85,249 | |||||||
Restricted cash | 25,516 | 38,911 | |||||||||
Investment in life insurance policies, at fair value | 761,560 | 791,911 | |||||||||
Life insurance policy benefits receivable, net | 33,105 | 14,334 | |||||||||
Investment in alternative assets, at fair value | 226,138 | 221,894 | |||||||||
Equity method investments | 664 | 8,582 | |||||||||
Other assets | 33,256 | 36,326 | |||||||||
Goodwill | 2,367,750 | 2,367,750 | |||||||||
TOTAL ASSETS | $ | 3,490,196 | $ | 3,564,957 | |||||||
LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||||||
LIABILITIES | |||||||||||
Senior credit facilities with LNV Corporation and National Founders LP | $ | 327,702 | $ | 193,730 | |||||||
L Bonds | 1,279,808 | 1,246,902 | |||||||||
Seller Trust L Bonds | 272,104 | 272,104 | |||||||||
Debt due to related parties | 77,362 | 76,260 | |||||||||
Interest and dividends payable | 24,440 | 24,080 | |||||||||
Accounts payable and accrued expenses | 30,448 | 26,505 | |||||||||
Deferred tax liability, net | 51,328 | 51,469 | |||||||||
TOTAL LIABILITIES | 2,063,192 | 1,891,050 | |||||||||
Redeemable noncontrolling interests | 1,226,020 | 1,233,093 | |||||||||
STOCKHOLDERS’ EQUITY | |||||||||||
Redeemable preferred stock | |||||||||||
(par value $0.001; shares authorized 100,000; shares outstanding 41,681 and 56,855; liquidation preference of $41,925 and $57,187 as of September 30, 2021 and December 31, 2020, respectively) | 31,069 | 46,241 | |||||||||
Series 2 redeemable preferred stock | |||||||||||
(par value $0.001; shares authorized 150,000; shares outstanding 86,707 and 129,887; liquidation preference of $87,212 and $130,645 as of September 30, 2021 and December 31, 2020, respectively) | 67,410 | 110,592 | |||||||||
Common stock | |||||||||||
(par value $0.001; shares authorized 210,000,000; shares issued and outstanding, 33,097,118 and 33,094,664 as of September 30, 2021 and December 31, 2020, respectively) | 33 | 33 | |||||||||
Common stock in treasury, at cost (12,337,264 shares as of both September 30, 2021 and December 31, 2020) | (67,406) | (67,406) | |||||||||
Additional paid-in capital | 265,812 | 274,023 | |||||||||
Accumulated deficit | (412,621) | (251,111) | |||||||||
TOTAL GWG HOLDINGS STOCKHOLDERS’ (DEFICIT) EQUITY | (115,703) | 112,372 | |||||||||
Noncontrolling interests | 316,687 | 328,442 | |||||||||
TOTAL STOCKHOLDERS’ EQUITY | 200,984 | 440,814 | |||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 3,490,196 | $ | 3,564,957 |
F-2
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||
Gain on life insurance policies, net | $ | 15,484 | $ | 14,122 | $ | 17,923 | $ | 43,355 | |||||||||||||||
Investment income, net | 17,554 | 56,705 | 21,417 | 41,590 | |||||||||||||||||||
Interest income | 213 | 278 | 835 | 1,293 | |||||||||||||||||||
Other income (loss) | 535 | (3,093) | (2,916) | 33,504 | |||||||||||||||||||
TOTAL REVENUE | 33,786 | 68,012 | 37,259 | 119,742 | |||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Interest expense | 45,096 | 40,792 | 128,605 | 113,805 | |||||||||||||||||||
Employee compensation and benefits | 14,871 | 33,777 | 43,977 | 123,321 | |||||||||||||||||||
Legal and professional fees | 6,650 | 7,830 | 20,832 | 21,636 | |||||||||||||||||||
Other expenses | 9,652 | 4,712 | 23,050 | 13,387 | |||||||||||||||||||
TOTAL EXPENSES | 76,269 | 87,111 | 216,464 | 272,149 | |||||||||||||||||||
LOSS BEFORE INCOME TAXES | (42,483) | (19,099) | (179,205) | (152,407) | |||||||||||||||||||
INCOME TAX EXPENSE (BENEFIT) | 655 | 3,618 | 173 | (14,545) | |||||||||||||||||||
NET LOSS BEFORE LOSS FROM EQUITY METHOD INVESTMENT | (43,138) | (22,717) | (179,378) | (137,862) | |||||||||||||||||||
Loss from equity method investment | (4,949) | (1,431) | (11,898) | (4,279) | |||||||||||||||||||
NET LOSS | (48,087) | (24,148) | (191,276) | (142,141) | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (87) | (21,181) | 29,766 | 32,901 | |||||||||||||||||||
Less: Preferred stock dividends | 2,404 | 3,569 | 8,371 | 11,235 | |||||||||||||||||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (50,578) | $ | (48,898) | $ | (169,881) | $ | (120,475) | |||||||||||||||
NET LOSS PER COMMON SHARE | |||||||||||||||||||||||
Basic | $ | (2.44) | $ | (1.60) | $ | (8.18) | $ | (3.95) | |||||||||||||||
Diluted | $ | (2.44) | $ | (1.60) | $ | (8.18) | $ | (3.95) | |||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
Basic | 20,759,854 | 30,477,792 | 20,758,910 | 30,516,331 | |||||||||||||||||||
Diluted | 20,759,854 | 30,477,792 | 20,758,910 | 30,516,331 |
F-3
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
Net loss | $ | (191,276) | $ | (142,141) | ||||||||||
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||||||||
Change in fair value of life insurance policies | (623) | (23,476) | ||||||||||||
Investment income, net | (21,417) | (41,590) | ||||||||||||
Amortization of deferred financing and issuance costs | 19,594 | 13,619 | ||||||||||||
Amortization and depreciation on long-lived assets | 1,552 | 827 | ||||||||||||
Return on investments in alternative assets | 3,043 | 1,577 | ||||||||||||
Non-cash interest income | (214) | (215) | ||||||||||||
Non-cash interest expense | 3,149 | 1,795 | ||||||||||||
Loss from equity method investment | 11,898 | 4,279 | ||||||||||||
Loss on change in fair value of put options | 4,022 | 3,191 | ||||||||||||
Deferred income tax | (141) | (18,553) | ||||||||||||
Write-off of other equity investment | 2,037 | — | ||||||||||||
Equity-based compensation | 14,252 | 96,618 | ||||||||||||
Forfeiture of vested equity-based compensation | — | (36,267) | ||||||||||||
Change in operating assets and liabilities | ||||||||||||||
Life insurance policy benefits receivable | (18,771) | (13,387) | ||||||||||||
Other assets | (1,369) | (2,450) | ||||||||||||
Accounts payable and other accrued expenses | (2,022) | 8,364 | ||||||||||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (176,286) | (147,809) | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Return of investment for matured life insurance policies | 30,974 | 32,255 | ||||||||||||
Purchases of fixed assets | (2,477) | (2,498) | ||||||||||||
Equity method investments | (3,750) | (10,144) | ||||||||||||
Investments in alternative assets | (4,470) | (226) | ||||||||||||
Return of investments in alternative assets | 19,692 | 5,752 | ||||||||||||
Investment in put options | — | (14,775) | ||||||||||||
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES | 39,969 | 10,364 | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Borrowings on senior debt | 215,959 | 28,530 | ||||||||||||
Repayments of senior debt and debt due to related parties | (81,105) | (50,000) | ||||||||||||
Payments for deferred financing costs for senior debt and debt due to related parties | (3,285) | (3,307) | ||||||||||||
Purchase of noncontrolling interest | — | (1,195) | ||||||||||||
Proceeds from issuance of L Bonds | 155,170 | 317,302 | ||||||||||||
Payments for issuance costs of L Bonds | (10,007) | (20,203) | ||||||||||||
Payments for redemption of L Bonds | (127,961) | (82,206) | ||||||||||||
Issuance of common stock | — | 8 | ||||||||||||
Payments for redemption of preferred stock | (58,354) | (34,779) | ||||||||||||
Payment for equity issuance costs | (778) | — | ||||||||||||
Preferred stock dividends | (8,371) | (11,235) | ||||||||||||
Payment of employee taxes on equity based awards | (1,388) | — | ||||||||||||
Tax distribution to noncontrolling interest | — | (5,592) | ||||||||||||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 79,880 | 137,323 | ||||||||||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (56,437) | (122) | ||||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||||||||
BEGINNING OF PERIOD | 124,160 | 115,790 | ||||||||||||
END OF PERIOD | $ | 67,723 | $ | 115,668 |
F-4
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||
Interest paid | $ | 105,464 | $ | 97,098 | ||||||||||
Premiums paid, including prepaid | 54,885 | 52,136 | ||||||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||||||||
L Bonds: Conversion of accrued interest and commissions payable to principal | $ | 436 | $ | 1,296 | ||||||||||
Liquidity Bonds, net of financing costs (see Note 9) | 246 | — | ||||||||||||
Employee payroll tax liability on restricted equity units | — | 1,555 | ||||||||||||
Debt due to related parties: Capitalization of deferred financing costs to principal | 1,014 | — | ||||||||||||
Debt due to related parties: Deferred financing costs payable (see Note 9) | 2,334 | — | ||||||||||||
Noncash issuance of noncontrolling interest (Note 10) | 374 | — | ||||||||||||
Distribution payable to noncontrolling interest (Note 10) | 1,120 | 165 | ||||||||||||
Collateral Swap (see Note 1): | ||||||||||||||
Exchange of alternative assets for GWG Holdings’ Seller Trust L Bonds | — | 94,788 | ||||||||||||
Exchange of alternative assets for GWG Holdings’ common stock | — | 42,856 | ||||||||||||
Deemed capital contribution from related party | — | 46,770 | ||||||||||||
Adjustment to noncontrolling interest | — | 3,444 |
F-5
Redeemable Preferred Stock Shares | Redeemable Preferred Stock | Common Shares | Common Stock (par) | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total GWG Holdings Stockholders’ Equity (Deficit) | Noncontrolling Interests | Total Stockholders’ Equity | Redeemable noncontrolling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 (unaudited) | 151,094 | $ | 121,184 | 20,759,854 | $ | 33 | $ | 268,190 | $ | (364,447) | $ | (67,406) | $ | (42,446) | $ | 310,177 | $ | 267,731 | $ | 1,228,599 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (48,174) | — | (48,174) | 2,666 | (45,508) | (2,579) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of redeemable preferred stock | (22,706) | (22,705) | — | — | — | — | — | (22,705) | — | (22,705) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | (2,404) | — | — | (2,404) | — | (2,404) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | 26 | — | — | 26 | 4,091 | 4,117 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding on employee restricted equity units | — | — | — | — | — | — | — | — | (86) | (86) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions payable to noncontrolling interest | — | — | — | — | — | — | — | — | (161) | (161) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 (unaudited) | 128,388 | $ | 98,479 | 20,759,854 | $ | 33 | $ | 265,812 | $ | (412,621) | $ | (67,406) | $ | (115,703) | $ | 316,687 | $ | 200,984 | $ | 1,226,020 |
Redeemable Preferred Stock Shares | Redeemable Preferred Stock | Common Shares | Common Stock (par) | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total GWG Holdings Stockholders’ Equity (Deficit) | Noncontrolling Interests | Total Stockholders’ Equity | Redeemable noncontrolling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 (audited) | 186,742 | $ | 156,833 | 20,757,400 | $ | 33 | $ | 274,023 | $ | (251,111) | $ | (67,406) | $ | 112,372 | $ | 328,442 | $ | 440,814 | $ | 1,233,093 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (161,510) | — | (161,510) | (22,693) | (184,203) | (7,073) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 2,454 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of redeemable preferred stock | (58,354) | (58,354) | — | — | 27 | — | — | (58,327) | — | (58,327) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | (8,371) | — | — | (8,371) | — | (8,371) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | 133 | — | — | 133 | 13,072 | 13,205 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding on employee restricted equity units | — | — | — | — | — | — | — | — | (1,388) | (1,388) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions payable to noncontrolling interest | — | — | — | — | — | — | — | — | (1,120) | (1,120) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncash issuance of noncontrolling interest | — | — | — | — | — | — | — | — | 374 | 374 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 (unaudited) | 128,388 | $ | 98,479 | 20,759,854 | $ | 33 | $ | 265,812 | $ | (412,621) | $ | (67,406) | $ | (115,703) | $ | 316,687 | $ | 200,984 | $ | 1,226,020 |
F-6
Redeemable Preferred Stock Shares | Redeemable Preferred Stock | Common Shares | Common Stock (par) | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total GWG Holdings Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | Redeemable noncontrolling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 (unaudited) | 207,311 | $ | 177,402 | 30,537,481 | $ | 33 | $ | 225,537 | $ | (161,107) | $ | (24,550) | $ | 217,315 | $ | 281,881 | $ | 499,196 | $ | 1,264,031 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (45,329) | — | (45,329) | 32,867 | (12,462) | (11,686) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 57,183 | — | 524 | — | — | 524 | — | 524 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock in treasury (Note 1) | — | — | (9,837,264) | — | — | — | (42,856) | (42,856) | — | (42,856) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of redeemable preferred stock | (10,289) | (10,289) | — | — | — | — | — | (10,289) | — | (10,289) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | (3,569) | — | — | (3,569) | — | (3,569) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | 53 | — | — | 53 | 23,222 | 23,275 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding for employee restricted equity units | — | — | — | — | — | — | — | — | (1,554) | (1,554) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax distribution to noncontrolling interest | — | — | — | — | — | — | — | — | — | — | (5,592) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of noncontrolling interest | — | — | — | — | — | — | — | — | (935) | (935) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deemed capital contribution from related party (Note 1) | — | — | — | — | 46,770 | — | — | 46,770 | — | 46,770 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to noncontrolling interest for change in ownership of Common Units (Note 1) | — | — | — | — | 8,039 | — | — | 8,039 | (8,039) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction to noncontrolling interest for Beneficient treasury (Note 1) | — | — | — | — | — | — | — | — | (3,444) | (3,444) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 (unaudited) | 197,022 | $ | 167,113 | 20,757,400 | $ | 33 | $ | 277,354 | $ | (206,436) | $ | (67,406) | $ | 170,658 | $ | 323,998 | $ | 494,656 | $ | 1,246,753 |
F-7
Redeemable Preferred Stock Shares | Redeemable Preferred Stock | Common Shares | Common Stock (par) | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total GWG Holdings Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | Redeemable noncontrolling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 (audited) | 231,800 | $ | 201,891 | 30,533,793 | $ | 33 | $ | 233,106 | $ | (97,196) | $ | (24,550) | $ | 313,284 | $ | 293,910 | $ | 607,194 | $ | 1,269,654 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (109,240) | — | (109,240) | (15,593) | (124,833) | (17,309) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 60,871 | — | 534 | — | — | 534 | — | 534 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock in treasury (Note 1) | — | — | (9,837,264) | — | — | — | (42,856) | (42,856) | — | (42,856) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of redeemable preferred stock | (34,778) | (34,778) | — | — | — | — | — | (34,778) | — | (34,778) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | (11,235) | — | — | (11,235) | — | (11,235) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | 140 | — | — | 140 | 96,345 | 96,485 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of equity-based compensation | — | — | — | — | — | — | — | — | (36,267) | (36,267) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding for employee restricted equity units | — | — | — | — | — | — | — | — | (1,554) | (1,554) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax distribution to noncontrolling interest | — | — | — | — | — | — | — | — | — | — | (5,592) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of noncontrolling interest | — | — | — | — | — | — | — | — | (1,195) | (1,195) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions payable to noncontrolling interest | — | — | — | — | — | — | — | — | (165) | (165) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deemed capital contribution from related party (Note 1) | — | — | — | — | 46,770 | — | — | 46,770 | — | 46,770 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to noncontrolling interest for change in ownership of Common Units (Note 1) | — | — | — | — | 8,039 | — | — | 8,039 | (8,039) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction to noncontrolling interest for Beneficient treasury (Note 1) | — | — | — | — | — | — | — | — | (3,444) | (3,444) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 (unaudited) | 197,022 | $ | 167,113 | 20,757,400 | $ | 33 | $ | 277,354 | $ | (206,436) | $ | (67,406) | $ | 170,658 | $ | 323,998 | $ | 494,656 | $ | 1,246,753 |
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
Total life insurance portfolio face value of policy benefits (in thousands) | $ | 1,801,306 | ||||||
Average face value per insured life (in thousands) | $ | 1,984 | ||||||
Average life expectancy estimate (years)* | 6.4 | |||||||
Total number of policies | 984 | |||||||
Number of unique lives | 908 | |||||||
Demographics | 74% Male; 26% Female | |||||||
Number of smokers | 36 | |||||||
Largest policy as % of total portfolio face value | 0.7 | % | ||||||
Average policy as % of total portfolio face value | 0.1 | % | ||||||
Average annual premium as % of face value | 4.1 | % |
F-20
As of September 30, 2021 | As of December 31, 2020 | |||||||||||||||||||||||||||||||||||||
Years Ending December 31, | Number of Policies | Estimated Fair Value | Face Value | Number of Policies | Estimated Fair Value | Face Value | ||||||||||||||||||||||||||||||||
Three months ending December 31, 2021 | 2 | $ | 3,226 | $ | 3,250 | 15 | $ | 19,429 | $ | 22,298 | ||||||||||||||||||||||||||||
2022 | 21 | 23,530 | 27,611 | 62 | 66,657 | 88,698 | ||||||||||||||||||||||||||||||||
2023 | 79 | 100,355 | 141,376 | 106 | 113,926 | 178,983 | ||||||||||||||||||||||||||||||||
2024 | 112 | 127,746 | 207,890 | 119 | 130,280 | 229,815 | ||||||||||||||||||||||||||||||||
2025 | 113 | 110,159 | 217,082 | 111 | 85,842 | 187,042 | ||||||||||||||||||||||||||||||||
2026 | 105 | 80,135 | 171,025 | 115 | 100,280 | 237,632 | ||||||||||||||||||||||||||||||||
Thereafter | 552 | 316,409 | 1,033,072 | 530 | 275,497 | 956,247 | ||||||||||||||||||||||||||||||||
Totals | 984 | $ | 761,560 | $ | 1,801,306 | 1,058 | $ | 791,911 | $ | 1,900,715 |
F-21
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Change in estimated probabilistic cash flows(1) | $ | 13,120 | $ | 14,723 | $ | 40,230 | $ | 47,923 | |||||||||||||||
Premiums and other annual fees | (19,267) | (18,235) | (56,388) | (53,060) | |||||||||||||||||||
Change in life expectancy evaluation | — | — | 2,337 | — | |||||||||||||||||||
Change in PMM | — | — | (16,386) | — | |||||||||||||||||||
Face value of matured policies | 43,217 | 39,803 | 104,662 | 105,194 | |||||||||||||||||||
Fair value of matured policies | (21,586) | (22,169) | (56,532) | (56,702) | |||||||||||||||||||
Gain on life insurance policies, net | $ | 15,484 | $ | 14,122 | $ | 17,923 | $ | 43,355 |
Years Ending December 31, | Premiums | Servicing | Total | |||||||||||||||||
Three months ending December 31, 2021 | $ | 13,847 | $ | 457 | $ | 14,304 | ||||||||||||||
2022 | 81,839 | 1,828 | 83,667 | |||||||||||||||||
2023 | 93,037 | 1,828 | 94,865 | |||||||||||||||||
2024 | 101,998 | 1,828 | 103,826 | |||||||||||||||||
2025 | 113,722 | 1,828 | 115,550 | |||||||||||||||||
2026 | 125,911 | 1,828 | 127,739 | |||||||||||||||||
$ | 530,354 | $ | 9,597 | $ | 539,951 |
F-22
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Asset Class | Value | Unfunded Commitments | Value | Unfunded Commitments | ||||||||||||||||||||||
Venture Capital | $ | 123,694 | $ | 1,519 | $ | 123,021 | $ | 1,659 | ||||||||||||||||||
Private Equity | 97,616 | 33,386 | 92,316 | 33,387 | ||||||||||||||||||||||
Private Real Estate | 1,960 | 269 | 2,118 | 269 | ||||||||||||||||||||||
Other(2) | 2,868 | 289 | 4,439 | 294 | ||||||||||||||||||||||
Total | $ | 226,138 | $ | 35,463 | $ | 221,894 | $ | 35,609 |
F-23
As of September 30, 2021 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Investments in put options | $ | 2,995 | $ | — | $ | — | $ | 2,995 | |||||||||||||||
Investments in life insurance policies | — | — | 761,560 | 761,560 | |||||||||||||||||||
As of December 31, 2020 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Investments in put options | $ | 7,017 | $ | — | $ | — | $ | 7,017 | |||||||||||||||
Investments in life insurance policies | — | — | 791,911 | 791,911 | |||||||||||||||||||
F-24
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||
Beginning balance | $ | 56,660 | $ | 61,664 | |||||||
Total gain in earnings(1) | (55,930) | (60,934) | |||||||||
Purchases | — | — | |||||||||
Settlements | — | — | |||||||||
Ending balance | $ | 730 | $ | 730 |
Valuation Date | Fair Value | Valuation Methodology | Unobservable Inputs | Range of Targets | ||||||||||
September 30, 2020 | $ | 730 | Option Pricing Model | Alternative asset market discount rate | 0.085 | |||||||||
Dividend yield | .10 - .53 | |||||||||||||
Net asset value growth rates | 0.085 | |||||||||||||
Net asset value volatilities | 0.24 - 0.45 | |||||||||||||
Restricted exercise period | 1 year |
F-25
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Beginning balance | $ | 770,026 | $ | 794,706 | $ | 791,911 | $ | 796,039 | |||||||||||||||
Total gain in earnings(1) | 3,860 | 6,021 | 623 | 23,476 | |||||||||||||||||||
Settlements(2) | (12,326) | (13,467) | (30,974) | (32,255) | |||||||||||||||||||
Ending balance | $ | 761,560 | $ | 787,260 | $ | 761,560 | $ | 787,260 |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||||||||
Weighted-average age of insured, years* | 83.6 | 83.1 | |||||||||||||||
Age of insured range, years | 64-101 | 63-100 | |||||||||||||||
Weighted-average life expectancy, months* | 77.3 | 83.0 | |||||||||||||||
Life expectancy range, months | 0-240 | 0-240 | |||||||||||||||
Average face amount per policy (in thousands) | $ | 1,831 | $ | 1,797 | |||||||||||||
Discount rate | 8.25 | % | 8.25 | % |
F-26
Change in Life Expectancy Estimates | |||||||||||||||||||||||
Minus 8 Months | Minus 4 Months | Plus 4 Months | Plus 8 Months | ||||||||||||||||||||
September 30, 2021 | $ | 101,300 | $ | 50,567 | $ | (50,412) | $ | (100,637) | |||||||||||||||
December 31, 2020 | $ | 97,837 | $ | 45,536 | $ | (61,713) | $ | (114,099) | |||||||||||||||
Change in Discount Rate | |||||||||||||||||||||||
Minus 2% | Minus 1% | Plus 1% | Plus 2% | ||||||||||||||||||||
September 30, 2021 | $ | 76,055 | $ | 36,295 | $ | (33,232) | $ | (63,747) | |||||||||||||||
December 31, 2020 | $ | 82,983 | $ | 39,560 | $ | (36,151) | $ | (69,284) |
As of September 30, 2021 | |||||||||||||||||
Level in Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | |||||||||||||||
Financial assets: | |||||||||||||||||
Cash, cash equivalents and restricted cash | 1 | $ | 67,723 | $ | 67,723 | ||||||||||||
Life insurance policy benefits receivable, net | 1 | 33,105 | 33,105 | ||||||||||||||
Financial liabilities: | |||||||||||||||||
Senior credit facility with LNV Corporation | 2 | $ | 327,702 | $ | 229,862 | ||||||||||||
L Bonds and Seller Trust L Bonds | 1 | 1,551,912 | 1,551,912 | ||||||||||||||
Debt due to related parties | 2 | 77,362 | 76,519 | ||||||||||||||
Other liabilities | 1 | 54,888 | 54,888 |
F-27
As of December 31, 2020 | |||||||||||||||||
Level in Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | |||||||||||||||
Financial assets: | |||||||||||||||||
Cash, cash equivalents and restricted cash | 1 | $ | 124,160 | $ | 124,160 | ||||||||||||
Life insurance policy benefits receivable, net | 1 | 14,334 | 14,334 | ||||||||||||||
Financial liabilities: | |||||||||||||||||
Senior credit facility with LNV Corporation | 2 | $ | 193,730 | $ | 202,611 | ||||||||||||
L Bonds and Seller Trust L Bonds | 1 | 1,519,006 | 1,519,006 | ||||||||||||||
Debt due to related parties | 2 | 76,260 | 78,081 | ||||||||||||||
Other liabilities | 1 | 50,585 | 50,585 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Beginning balance | $ | 4,363 | $ | 7,773 | $ | 8,582 | $ | 1,761 | ||||||||||||||||||
Contributions | 1,250 | 3,884 | 3,750 | 13,051 | ||||||||||||||||||||||
Loss on equity method investment | (4,949) | (1,431) | (11,898) | (4,279) | ||||||||||||||||||||||
Other | — | 10 | 230 | (297) | ||||||||||||||||||||||
Ending balance | $ | 664 | $ | 10,236 | $ | 664 | $ | 10,236 |
F-28
September 30, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 2,240 | $ | 5,965 | |||||||
Restricted cash | 4,469 | 5,386 | |||||||||
Investments in alternative assets, at NAV | 226,138 | 221,894 | |||||||||
Other assets | 1,278 | 1,273 | |||||||||
Total Assets of VIE | $ | 234,125 | $ | 234,518 | |||||||
Liabilities: | |||||||||||
Accounts payable and accrued expense | $ | 2,065 | $ | 2,029 | |||||||
Total Liabilities of VIE | $ | 2,065 | $ | 2,029 | |||||||
Equity (Deficit): | |||||||||||
Noncontrolling interest | $ | (14,469) | $ | 7,208 | |||||||
Total Equity of VIE | $ | (14,469) | $ | 7,208 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||
Investment income, net | $ | 17,554 | $ | 56,705 | $ | 21,417 | $ | 41,590 | |||||||||||||||
Interest income | — | — | — | 20 | |||||||||||||||||||
TOTAL REVENUE | 17,554 | 56,705 | 21,417 | 41,610 | |||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Other expenses | 215 | 162 | 572 | 330 | |||||||||||||||||||
TOTAL EXPENSES | 215 | 162 | 572 | 330 | |||||||||||||||||||
NET INCOME | 17,339 | 56,543 | 20,845 | 41,280 | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (2,936) | (33,926) | (20,931) | 9,795 | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 14,403 | $ | 22,617 | (86) | 51,075 |
F-29
September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||
Carrying Value | Maximum Exposure to Loss | Carrying Value | Maximum Exposure to Loss | ||||||||||||||||||||
Total equity method investment | $ | 664 | $ | 664 | $ | 8,582 | $ | 12,332 | |||||||||||||||
F-30
F-31
F-32
F-33
September 30, 2021 | December 31, 2020 | |||||||||||||
First Lien Credit Agreement | $ | 2,366 | $ | 2,288 | ||||||||||
Second Lien Credit Agreement | 74,738 | 72,260 | ||||||||||||
Other borrowings | 2,699 | 2,628 | ||||||||||||
Unamortized debt discounts | (2,441) | (916) | ||||||||||||
Total debt due to related parties | $ | 77,362 | $ | 76,260 |
F-34
F-35
F-36
F-37
F-38
F-39
F-40
F-41
F-42
Balance at December 31, 2020 | Granted | Vested | Exercised | Forfeited/Cancelled | Balance at September 30, 2021 | ||||||||||||||||||||||||||||||
Vested | |||||||||||||||||||||||||||||||||||
Stock Options | 629,530 | — | 50,169 | (20,082) | (2,334) | 657,283 | |||||||||||||||||||||||||||||
SAR | 293,455 | 19,837 | 63,167 | — | — | 376,459 | |||||||||||||||||||||||||||||
RSU | — | — | — | — | — | — | |||||||||||||||||||||||||||||
BMP Equity Units | 11,144,016 | 40,776 | 746,238 | — | (321,986) | 11,609,044 | |||||||||||||||||||||||||||||
REUs | 5,078,796 | 40,776 | 576,031 | — | (208,816) | 5,486,787 | |||||||||||||||||||||||||||||
Unvested | |||||||||||||||||||||||||||||||||||
Stock Options | 65,587 | — | (50,169) | 250 | — | 15,668 | |||||||||||||||||||||||||||||
SAR | 242,202 | 140,163 | (63,167) | — | — | 319,198 | |||||||||||||||||||||||||||||
RSU | 129,717 | 3,189 | — | — | (3,189) | 129,717 | |||||||||||||||||||||||||||||
BMP Equity Units | 2,230,097 | 163,104 | (746,238) | — | (167,837) | 1,479,126 | |||||||||||||||||||||||||||||
REUs | 2,268,574 | 163,104 | (576,031) | — | (127,574) | 1,728,073 | |||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Stock Options | 695,117 | — | — | (19,832) | (2,334) | 672,951 | |||||||||||||||||||||||||||||
SAR | 535,657 | 160,000 | — | — | — | 695,657 | |||||||||||||||||||||||||||||
RSU | 129,717 | 3,189 | — | — | (3,189) | 129,717 | |||||||||||||||||||||||||||||
BMP Equity Units | 13,374,113 | 203,880 | — | — | (489,823) | 13,088,170 | |||||||||||||||||||||||||||||
REUs | 7,347,370 | 203,880 | — | — | (336,390) | 7,214,860 |
F-43
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Stock options | $ | 26 | $ | 53 | $ | 102 | $ | 140 | |||||||||||||||
Stock appreciation rights | 889 | 282 | 1,047 | 171 | |||||||||||||||||||
Restricted stock units | — | — | 31 | (38) | |||||||||||||||||||
BMP equity units | 2,033 | 12,392 | 6,002 | 51,515 | |||||||||||||||||||
REUs | 2,058 | 10,831 | 7,070 | 44,830 | |||||||||||||||||||
Total equity-based compensation | $ | 5,006 | $ | 23,558 | $ | 14,252 | $ | 96,618 |
Stock Options | SAR | REUs | BMP Equity Units | Total | |||||||||||||||||||||||||||||||
Three months ending 2021 | $ | 6 | $ | 148 | $ | 1,895 | $ | 1,937 | $ | 3,986 | |||||||||||||||||||||||||
2022 | 19 | 299 | 5,685 | 5,819 | 11,822 | ||||||||||||||||||||||||||||||
2023 | — | 199 | 3,275 | 2,620 | 6,094 | ||||||||||||||||||||||||||||||
2024 | — | 37 | 1,096 | 883 | 2,016 | ||||||||||||||||||||||||||||||
2025 | — | — | 191 | 163 | 354 | ||||||||||||||||||||||||||||||
2026 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total | $ | 25 | $ | 683 | $ | 12,142 | $ | 11,422 | $ | 24,272 |
F-44
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss attributable to common shareholders | $ | (50,578) | $ | (48,898) | $ | (169,881) | $ | (120,475) | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic – weighted average common shares outstanding | 20,759,854 | 30,477,792 | 20,758,910 | 30,516,331 | |||||||||||||||||||
Effect of dilutive securities | — | — | — | — | |||||||||||||||||||
Diluted – weighted average common shares outstanding | 20,759,854 | 30,477,792 | 20,758,910 | 30,516,331 | |||||||||||||||||||
Basic loss per common share | $ | (2.44) | $ | (1.60) | $ | (8.18) | $ | (3.95) | |||||||||||||||
Diluted loss per common share | $ | (2.44) | $ | (1.60) | $ | (8.18) | $ | (3.95) |
F-45
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Revenue: | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Secondary Life Insurance | $ | 15,856 | $ | 14,422 | $ | 18,955 | $ | 44,800 | |||||||||||||||
Beneficient | 17,867 | 53,589 | 18,235 | 74,925 | |||||||||||||||||||
Corporate & Other | 63 | 1 | 69 | 17 | |||||||||||||||||||
Total | $ | 33,786 | $ | 68,012 | $ | 37,259 | $ | 119,742 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Interest Expense: | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Secondary Life Insurance | $ | 37,635 | $ | 24,983 | $ | 95,713 | $ | 72,022 | |||||||||||||||
Beneficient | 7,461 | 15,809 | 32,892 | 41,783 | |||||||||||||||||||
Total | $ | 45,096 | $ | 40,792 | $ | 128,605 | $ | 113,805 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Segment EBT: | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Secondary Life Insurance | $ | (28,142) | $ | (12,147) | $ | (86,730) | $ | (39,314) | |||||||||||||||
Beneficient | (6,576) | 532 | (67,450) | (94,880) | |||||||||||||||||||
Corporate & Other | (12,714) | (8,915) | (36,923) | (22,492) | |||||||||||||||||||
Total Segment EBT | (47,432) | (20,530) | (191,103) | (156,686) | |||||||||||||||||||
Income tax expense (benefit) | 655 | 3,618 | 173 | (14,545) | |||||||||||||||||||
Net loss | $ | (48,087) | $ | (24,148) | $ | (191,276) | $ | (142,141) |
Total Assets: | September 30, 2021 | December 31, 2020 | |||||||||
Secondary Life Insurance | $ | 857,166 | $ | 886,739 | |||||||
Beneficient | 2,627,976 | 2,662,630 | |||||||||
Corporate & Other | 5,054 | 15,588 | |||||||||
Total | $ | 3,490,196 | $ | 3,564,957 |
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Life Insurance Company | September 30, 2021 | December 31, 2020 | ||||||||||||
John Hancock Life Insurance Company | 13.33 | % | 14.72 | % | ||||||||||
The Lincoln National Life Insurance Company | 11.54 | % | 11.20 | % | ||||||||||
Equitable Financial Life Insurance Company | 11.00 | % | 10.57 | % |
State of Residence | September 30, 2021 | December 31, 2020 | ||||||||||||
California | 18.09 | % | 18.05 | % | ||||||||||
Florida | 15.24 | % | 14.93 | % |
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F-48
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2,000,000 Units
($2,000,000,000)
GWG HOLDINGS, INC.
L Bonds
PROSPECTUS SUPPLEMENT
November 24, 2021