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Item 1A. Risk Factors

2025-04-16 compared with 2024-04-15 · 469 added, 408 removed, 791 unchanged (53% of the section changed)

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Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business.

The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability realize the anticipated benefits of the Business Combination, and may have an adverse effect on our business, cash flows, financial condition, and results of operations.

The occurrence of one or more of the events or circumstances described in the section entitled “Risk Factors,” alone or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition, and results of operations.

Such risks include, but are not limited to:

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there are risks associated with estimating the revenue that we recognize.

• We have concluded there is a substantial doubt about our ability to continue as a going concern.

• We assume the risk of failure to recover on the assigned Claims, and we may fail to make recoveries.

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• Counterparties in our lawsuits employ dilatory tactics that delay the resolution of litigation or settlement negotiations.

• Our recoveries may be limited due to legal restrictions.

• Our fee sharing arrangement with Law Firm materially reduces our recoveries.

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• We may be unable to develop new Assignor relationships.

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

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

• We have long sales cycles for our data-driven solutions and may fail to close sales or experience implementation delays.

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• We may fail to comply with those privacy regulations or adequately secure the information in our possession.

• Our systems and networks may be subject to cybersecurity breaches and other disruptions that could compromise our information.

• Increased cybersecurity vulnerabilities, threats, and targeted computer crime could pose a risk to our systems, solutions, and data.

• We may fail to innovate and develop new solutions, or new solutions may not be adopted by existing and potential Assignors.

• Certain of our activities present the potential for identity theft or illegal behavior by employees, contractors, or third parties.

• We may fail to comply with applicable privacy, security and data laws, regulations and standards.

• Adverse changes could occur in the U.S.

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• The inability of Assignors to maintain contracts with CMS could adversely affect our business.

• The healthcare data analytics and payment markets may not develop, develop slower than expected, or sustain negative publicity.

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

• Negative publicity concerning the healthcare data analytics and payment accuracy could limit the future growth of the market.

• We face significant competition, and we expect competition to increase.

• If we are unable to protect our proprietary technology, information, and processes, the value of our solutions may be diminished.

• Our success depends on our ability to protect our intellectual property rights.

• If we are unable to protect our proprietary technology, information, and processes, the value of our solutions may be diminished.

• Our ability to obtain, protect, and enforce our intellectual property rights is uncertain.

• Our qui tam litigation may be subject to Government Intervention and Dismissal pursuant to 31 U.S.C.

§ 3730(c)(2)(A).

• Qui tam litigation may be subject to Government Intervention and Dismissal pursuant to federal law.

• Any violation of the laws and regulations or a negative audit or investigation finding could adversely affect our business.

• Our business depends on the integrity of our HIPAA compliant information processing systems.

• We may fail to maintain certifications that could result in a breach of our obligations under our contract.

• We have substantial indebtedness and payment obligations and may incur future indebtedness or payment obligations.

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• Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

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

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

• Payments under the TRA may impair our ability to consummate change of control transactions.

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• Our stockholders may lack corporate governance protections available to those of companies that are not controlled companies.

• The Company’s management has limited experience in operating a public company.

• There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

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• We may be unable to obtain additional financing to fund the operations and growth of the Company.

• Our recoveries may be limited due to legal restrictions.

• Anti-takeover provisions contained in our Charter and Bylaws, as well as Delaware law, could impair a takeover attempt.

• The Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities.

• We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders.

Risks Related to Ownership of our Common Stock:

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• A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.

• If the Company’s operating results do not meet investor expectations, the market price of our securities may decline.

• If securities analysts publish negative reports or stop publishing reports about our business, the price of our stock could decline.

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

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

• We may amend the terms of the Public Warrants in a manner that may be adverse to holders.

• We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders.

• Our stockholders may experience significant dilution as a result of future equity offerings or the exercise of options and warrants.

• The Company’s management has limited experience in operating a public company.

• Our Charter identifying Delaware courts as an exclusive forum may discourage certain lawsuits against our directors and officers.

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• The sale and issuance of our shares of our Class A Common Stock to Yorkville will cause dilution to our existing shareholders.

• Once we issue a Convertible Note, we do not control the timing and amount of the issuance of our stock upon conversion of such Convertible Note.

• While the Yorkville Convertible Notes are outstanding, we do not exercise absolute control over the issuances of our stock.

• Upon a trigger event, we may be required to make payments that could cause us financial hardship.

Risks Related to IT Systems and Cybersecurity

• Our systems and networks may be subject to cybersecurity breaches and other disruptions that could compromise our information.

• Increased cybersecurity vulnerabilities, threats, and targeted computer crime could pose a risk to our systems, solutions, and data.

• Certain of our activities present the potential for identity theft or illegal behavior by employees, contractors, or third parties.

• We may fail to comply with applicable privacy, security and data laws, regulations and standards.

• We may fail to maintain certifications that could result in a breach of our obligations under our contract.

• If we fail to anticipate and adapt to the growing use of artificial intelligence in our industry could lead to decreased demand.

• The use of new technologies in our business may result in spending material resources and presents risks and challenges.

An investment in our securities involves a high degree of risk.

You should carefully consider the following risk factors, together with all of the other information included in this Annual Report on Form 10-K (“Annual Report”) before making an investment decision.

You should carefully consider the following risk factors, together with all of the other information included in this Annual Report before making an investment decision.

The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition, and results of operations.

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Risks Related to the Company’s Business and Industry

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

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

We have a history of net losses and no substantial revenue to date, and we may not achieve recoveries, generate significant revenue, or achieve profitability.

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Our relatively limited operating history makes it difficult to evaluate our current business and plan for our future growth.

The Company started in 2014 with its first assignment from a health plan in Miami, Florida.

The Company started in 2014 with its first assignment from a health plan headquartered in Miami, Florida.

To date, we have achieved no substantial revenue and limited actual recoveries from our assigned Claims, and there is no guarantee that we will achieve recoveries, revenue, or profitability as projected.

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• Our assessment that the assigned Claims are potentially recoverable Claims;

• The achievement of multiples above the PVPRC;

• The achievement of multiples above the Paid Amount of a given Claim;

• The length (and cost) of litigation required to achieve recoveries.

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If our estimates of revenues are materially inaccurate, it could impact the timing and the amount of our revenue recognition and have a material adverse impact on our business, results of operations, financial condition, and cash flows.

We have concluded there is a substantial doubt about our ability to continue as a going concern.

As described under Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, Going Concern , the Company has evaluated its financial condition as of the date the accompanying consolidated financial statements are being issued (the “Filing Date”) and, based on this evaluation, the Company has determined that, as of the Filing Date, the existence of certain conditions and events raise substantial doubt about the Company’s ability to continue as a going concern within one year following the Filing Date.

The Company’s ability to meet its liquidity needs for one year following the Filing Date will largely depend on its ability to raise additional capital or generate future revenue.

As of December 31, 2024, the Company had an accumulated deficit of $446.1 million and $12.3 million in cash and cash equivalents.

The Company’s ability to raise cash in the future is subject to general economic, financial, legal, legislative, regulatory, and other factors, many of which are outside of the Company’s control, including, but not limited to:

(i) the execution of definitive documents to implement the Restructuring Plan, as described in more detail in Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, Recent Updates, Restructuring Plan , (ii) the ability of the

Company to secure additional funding from lenders, if any, (iii) the Company’s ability to realize recoveries from the settlement of its claims, which to date have not been sufficient to cover the Company’s cost of operations on a yearly basis, (iv) the Company’s ability to secure new Assignor relationships and retain and obtain additional Claim assignments from existing Assignors, (v) the Company’s ability to execute on its strategic plans, (vi) the ability of the Company to manage expenses and grow the business to generate future cash flows from its operations, and (vi) the availability and terms of future financings.

Based on the Company’s financial projections as of the Filing Date,the Company does not believe that it will have adequate liquidity to meet its obligations for at least one year following the Filing Date.

If the Company is unable to manage these risks and uncertainties, and is unable to meet its liquidity needs, its business would be jeopardized and may not be able to continue to operate.

For more information, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, Going Concern .

The Company’s determination of the existence of substantial doubt as to its ability to continue as a going concern itself may have adverse consequences.

In addition, the report issued by our independent registered public accounting firm in connection with the audited financial statements for the year ended December 31, 2024, included in this Annual Report includes a going concern explanatory paragraph.

The public announcement of this declaration may cause or result in:

• harm to the Company’s reputation, investor confidence, relationships with the Company’s Assignors, business partners, and Lenders, and may adversely affect the willingness for third parties to do business with the Company on favorable terms, or at all, in the future;

• disruption of the Company’s business;

• distraction of the Company’s management and employees;

• difficulty in recruiting, hiring, motivating, and retaining talented and skilled employees;

• difficulty in maintaining or negotiating and consummating new business or strategic relationships or transactions;

• increased volatility in the price of the Company’s shares of Class A Common Stock;

• increased costs and advisory fees.

If the Company is unable to mitigate these or other potential risks related to the uncertainty caused by the Company’s determination that substantial doubt exists as to the Company’s ability to continue as a going concern, it may disrupt the Company’s business or adversely impact the Company’s prospects, reputation, revenue, operating results, and financial condition.

Under most of our agreements with Assignors, we assume the risk of failure to recover on the assigned Claims, and if we fail to make recoveries with respect to the assigned Claim receivables and therefore, are unable to generate recovery proceeds greater than or equal to the amounts paid by us to purchase the assigned Claims, it can adversely affect our business.

In many instances, we pay our Assignors an upfront purchase price for assignment of their recovery rights to healthcare Claims.

Accordingly, there is a risk that we may not successfully recapture the upfront purchase price if we fail to make recoveries with respect to the assigned Claims.

In some instances, we pay our Assignors an up-front purchase price for assignment of their recovery rights to healthcare Claims.

Accordingly, there is a risk that we may not successfully recapture the up-front purchase price if we fail to make recoveries with respect to the assigned Claims.

Further, our ability to identify and recover on future Claims includes risks such as:

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• difficulty in integrating personnel, operations, and systems;

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

• maintaining current customers and securing future customers;

• assumption of liabilities;

• litigation-related charges.

• litigation-related costs.

Finally, our potential ability to achieve recovery revenues is based largely on the Paid Value of Potentially Recoverable Claims of our portfolio and our ability to discover, quantify, and settle the gap between Billed Amount and Paid Amount on a large scale.

Failure to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the Recovery Multiple, or our recovery rights are not appropriately perfected, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Failure to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the recovery multiple, or perfect our recovery rights, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Litigation outcomes are inherently risky;

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If we do not succeed in the litigation, if the damages awarded in our favor are less than what we expected, or if it is not possible to successfully enforce a favorable judgment, we could suffer a variety of adverse consequences, including the complete loss of potential revenue expected from that matter and, in some jurisdictions, liability for the adverse costs of the successful party to the litigation.

Unfavorable litigation outcomes could, individually or in the aggregate, have a material adverse effect on our business, revenue, results of operations, and financial condition.

Typically, we must file actions in court to recover monies related to those paid by our Assignors and a substantial portion of our recoveries are dependent on the courts.

As such, we may be subject to adverse court rulings, significant delays, damages calculations or other limitations, each of which can negatively impact our recovery efforts, potential to generate revenue, and the financial condition of our business.

litigation outcomes could, individually or in the aggregate, have a material adverse effect on our business, revenue, results of operations, and financial condition.

Typically, we must file actions in court to recover on our compensible Claims.

A substantial portion of our recoveries are dependent on the courts.

As such, we are subject to adverse court rulings, significant delays, differing damages calculations or other limitations, each of which can negatively impact our recovery efforts, potential to generate revenue, and the financial condition of our business.

For example, from time to time, the courts dismiss our cases, or Claims pursued in our cases, with or without prejudice.

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We cannot guarantee that we will not receive adverse rulings in court.

Historically, we have received adverse rulings such as:

• Dismissal for failure to file within the applicable statute of limitations.

For example, on August 10, 2022, the United States Court of Appeals, Eleventh Circuit held that four-year statute of limitations period for civil actions arising under an Act of Congress enacted after December 1, 1990 applies to certain claims brought under the Medicare Secondary Payer private cause of action, and that the limitations period begins to run on the date that the cause of action accrued.

Historically, we have received adverse rulings or dismissal for reasons such as:

• Failure to file within the applicable statute of limitations.

For example, on August 10, 2022, a federal appellate court applied a four-year statute of limitations to certain claims brought under the MSP Laws, running from the date that the action accrued.

This opinion may render certain Claims held by the Company unrecoverable and may substantially reduce PVPRC and BVPRC as calculated.

As our cases were filed at different times and in various jurisdictions, and prior to data matching with a defendant we are not able to accurately calculate the entirety of damages specific to a given defendant, we cannot calculate with certainty the impact of this ruling at this time.

Although this opinion is binding only on courts in the Eleventh Circuit, if the application of this statute of limitations as determined by the Eleventh Circuit was applied to all Claims assigned to us, we estimate that the effect would be a reduction of PVPRC by approximately $7.02 billion.

As our cases were filed at different times and jurisdictions, and prior to data matching with a defendant we are not able to accurately calculate the entirety of damages specific to a given defendant, we cannot calculate with certainty the impact of this ruling at this time.

Although this opinion is binding only on federal courts in the Eleventh Circuit, if the application of this statute of limitations is applied to all Claims assigned to us, we estimate that the effect would be a reduction of PVPRC by approximately $9.8 billion.

As set forth in our Risk Factors, PVPRC is based on a variety of factors.

As such, this estimate is subject to change based on the variety of legal claims being litigated and statute of limitations tolling theories that apply.

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

• Dismissal for lack of standing to assert Claims.

• Dismissal for lack of personal jurisdiction.

• Dismissal for pleading deficiencies.

Additionally, in certain of our cases, our recoveries may be limited as a function of courts’ damages calculations.

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

• Lack of standing to assert Claims.

• Lack of personal jurisdiction.

• Pleading deficiencies.

Additionally, in certain of our cases, our recoveries may be limited as a function of a courts’ damages calculations.

Adverse court rulings could also occur from:

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• Our Claims may be subject to different interpretations of the applicable statutes of limitations.

For example, in certain antitrust matters, recoveries may be limited to the difference between the price that a drug manufacturer charged for the drug and the price of the drug absent anti-competitive conduct.

Moreover, in antitrust matters, damages are generally limited to the difference between the price that a drug manufacturer charged for the drug and the price of the drug absent anti-competitive conduct.

The list above is not exhaustive of potentially unfavorable rulings, damages calculations, or other limitations which we have encountered or may encounter.

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A decrease in the willingness of courts to grant these judgments, a change in the requirements for filing these cases or obtaining these judgments, or a decrease in our ability to collect on these judgments could have an adverse effect on our revenue, operating results, and the financial condition of our business.

As we increase our use of the legal channels for collections, there could be an increase in upfront court costs and costs related to counterclaims.

As we increase our use of the legal channels for collections, there could be an increase in up-front court costs and costs related to counterclaims.

We may not be able to collect on certain aged Claims because of applicable statutes of limitations, and we may be subject to adverse effects of regulatory changes.

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Such unfavorable rulings, damages calculations, or other limitations can negatively affect our business, results of operations, financial condition, and cash flows.

Our recoveries may be limited if courts decline to compel our counterparties to data match with us, or we are otherwise unable to force responsible parties to produce data they store that would identify the proper party to make a given payment.

Among the ways we identify the proper payer for a given claim is by comparing our member data to that of property and casualty or no-fault insurers in a process called data matching.

Members found in both data sets are scrutinized to determine if a primary payer was responsible in the first instance to pay or reimburse the cost of care relating to an accident.

Should a court decline to compel data matching, our recoveries against a given insurer would be limited to those representative beneficiaries identified, and all matches that could be identified through a data matching exercise.

Our recoveries may be limited if courts decline to compel our counterparties to data match with us, or we are otherwise unable to force responsible parties to produce data they store, which identifies the proper party to make a given payment.

Among the ways we identify the proper payer for a given claim is by comparing our member data to that of our counterparties in a process called data matching.

Members found in both data sets are identified and analyzed to determine if a primary payer was responsible in the first

instance to pay or reimburse the cost of care relating to an accident.

Should a court decline to compel data matching, our recoveries against a given insurer would be limited to those members identified.

Our litigation often involves complex, novel legal theories with little or no precedent on which courts can rely, which may adversely affect our ability to generate revenue and negatively impact our business.

The lawsuits we file in pursuit of recoveries often involve causes of action that are entirely novel, or novel as applied to the facts alleged in our complaints.

For example, while the MSP Law was enacted in 1980, its use by an assignee to pursue recoveries on its own behalf is novel.

For example, while the MSP Act was enacted in 1980, its use by an assignee to pursue recoveries on its own behalf is novel.

As such, courts deciding litigated issues in our cases often have limited binding precedent on which to base an opinion, and often review our cases as a matter of first impression.

As a result, our cases may be delayed as courts require more time to analyze the legal issues, and outcomes are difficult to accurately predict.

As a result, litigation outcomes are unpredictable, and our cases may be delayed as courts require more time to analyze the legal issues, and outcomes are difficult to accurately predict.

We may employ rarely used causes of action, such as Florida’s equitable pure bill of discovery.

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The success of these defenses is difficult to predict and could result in partial or the entire dismissal of a given case, reducing or eliminating potential recoveries, and any associated recognition of revenue.

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

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

Favorable opinions from state and federal appellate courts are binding only in the jurisdiction where the opinion was published.

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Dilatory tactics include, but are not limited to, frivolous court filings, extended and improper discovery objections and disputes, delayed negotiations for data matching protocols, and protracted settlement negotiations that may or may not yield a settlement.

While these delays do not adversely affect the

value of the underlying assets, and in some case statutory interest continues to accrue, the costs associated with recoveries increase substantially, and our ability to successfully resolve our cases may be limited.

As a result, our ability to recognize revenue is delayed and our ultimate recovery may be diminished as a result.

While these delays do not adversely affect the value of the underlying assets, and in some cases, statutory interest continues to accrue, the costs associated with recoveries increase substantially, and our ability to successfully resolve our cases may be limited.

As a result, our ability to recognize revenue is delayed and our ultimate recovery may be diminished or eliminated as a result.

In some jurisdictions, our recoveries may be limited due to legal restrictions, which may have negative consequences for the value or enforcement of our contractual agreements with our counterparties, for our ability to do business in certain jurisdictions, or for our cost of doing business.

There exists in various jurisdictions prohibitions or restrictions in connection with purchasing Claims from plaintiffs (known as maintenance, and a form of maintenance, called champerty), assignment of certain kinds of Claims, and/or participation in a lawyer’s contingent fee interests.

Such prohibitions and restrictions, to the extent they exist, are governed by the rules and regulations of each state and jurisdiction in the United States and vary in degrees of strength and enforcement in different states and federal jurisdictions.

Some jurisdictions in the U.S.

and other jurisdictions may not, for legal and professional ethics reasons, permit us to pursue certain recoveries, or the law and regulations in those jurisdictions may be uncertain, and accordingly we may not have the ability or the desire to pursue recoveries in these jurisdictions, thereby limiting the size of the potential market.

If we, our counterparties, or the lawyers handling the underlying matters, were found to have violated the relevant prohibitions or restrictions in connection with certain matters, there could be a materially adverse effect on the value of the affected assets, our ability to enforce the relevant contractual agreements with our counterparties, and the amounts we would be able to recover with respect to such matters, or our costs for such matters.

Our fee sharing arrangement with the Law Firm materially reduces our recoveries.

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The Law Firm is also entitled to attorney’s fees that are awarded to the Law Firm pursuant to any fee shifting statute, by agreement, or court award.

Any increase in attorneys’ fees and costs would reduce our potential net recoveries.

Any increase in attorneys’ fees and costs

may reduce our potential net recoveries.

For more information about our fee sharing arrangement, see Item 1.

Business and “ —Fee Sharing Arrangements.”

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

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

With respect to the Assignors of the assigned Claims, some of our agreements exclude from the assignment of Claims those Claims that are assigned to or being pursued by other recovery vendors of the Assignor at the time of the assignment.

We have identified instances where the Assignor did not filter its data provided to us to account for such exclusions.

We have identified instances where the Assignor did not filter its data provided to us to remove such Claims.

This resulted in some Claims being identified by us for purposes of our recovery estimates.

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We may have limited experience or no prior dealings with such lawyers and there can be no guarantee that the outcome of a case will be in line with our or the lawyers’ assessment of the case or that such lawyers will perform with the expected skill and care.

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

We expect a significant portion of our future revenue growth to come from expanding the volume of Claims we are assigned;

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

We expect a significant portion of our future revenue growth to come from expanding the portfolio of Claims that we are assigned;

this includes obtaining Claims and data from new Assignors as well as our existing Assignors.

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If we are unable to successfully expand the scope of healthcare Claims assigned from potential and existing Assignors, it could have a material adverse effect on our growth and on our business, financial condition, and results of operations.

The positions we will typically acquire in connection with our acquisition of Claims are unsecured and may be effectively subordinated to other obligations and are at risk to fraud on the part of the Assignor of the Claim.

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

The types of Claims we invest in are typically unsecured, and therefore will be subordinated to existing or future secured obligations and may be subordinated to other unsecured obligations of the parties against which we seek recoveries.

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For example, an Assignor may misrepresent the quality, validity, or existence of a Claim or other information provided to us, or provide duplicate Claim data, either due to unintentional negligence or intentional fraud.

There is no assurance we will detect such error.

Any inaccuracy, duplication, or incompleteness, if undetected, may adversely affect the valuation of one or more Claims and adversely affect

our business and performance.

Although we have procedures in place to identify duplicate Claims, there is no assurance we will detect such error.

Any inaccuracy, duplication, or incompleteness, if undetected, may adversely affect the valuation of one or more Claims and adversely affect our business and performance.

Under certain circumstances, recoveries may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance.

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As the skills, experience, and resources of such technology, systems, and personnel improve, they may be able to identify payment inaccuracies before using our services, which would reduce the payment inaccuracies identified by our solutions and our ability to generate revenue, which could have a material adverse effect on our business, financial condition, and results of operations.

Moreover, the current administration has tasked the Department of Government Efficiency subcommittee (“DOGE”) with launching a “War on Waste,” to identify and eliminate fraud, waste, and abuse in governmental spending programs, including Medicare.

DOGE has committed to, among other things, improve identity verification and refine payment tracking mechanisms at the federal and

state level to ensure that federal payments systems are protected from future abuses.

Although such measures will likely have minimal impact on payments already made, they may reduce the fraud, waste, and abuse associated with future Claims assigned to the Company, thus reducing the need for our existing solutions, which could have a material adverse effect on our growth and results of operations.

Healthcare spending fluctuations, simplification of the healthcare delivery and reimbursement system, and programmatic changes to the scope of benefits and limitations to payment integrity initiatives could reduce the need for our data-driven solutions, which could have a material adverse effect on our business, financial condition, and results of operations.

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• the business environment of our Assignors.

Pursuant to the CCRAs with our Assignors, the Assignors may choose to discontinue one or more services under an existing contract, may exercise flexibilities within their contracts to adjust service volumes, and may breach or terminate the contract prior to its

agreed upon completion date.

A material breach by either party to the agreement may also result in the termination of receiving future data transmissions or Claim assignments.

A material breach by either party to our agreements may result in the termination of receiving future data transmissions or Claim assignments.

Any such occurrences could reduce our revenue from these Assignors.

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Pursuant to the CCRAs with our Assignors, we receive historical claims data, and may receive updated claims data and ongoing data transfers at agreed upon intervals.

If, for any reason, a CCRA is terminated, the BAA requires us to return and/or destroy all PHI associated with that CCRA, which may substantially impair our ability to recover on that Assignor’s Claims.

If, for any reason, a CCRA is terminated, the BAA requires us to return and/or destroy all protected health information (“PHI”) associated with that CCRA, which may substantially impair our ability to recover on that Assignor’s Claims.

If we are unable to develop new Assignor relationships, it could have a material adverse effect on our business, financial condition, and results of operations.

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If our Assignors’ risk agreements change, it can have a material adverse effect on our business, financial condition, and results of operations.

Many of our Assignors are First-Tier entities, as defined in 42 C.F.R.

Many of our Assignors are Medicare first-tier entities, as defined federal regulations.

A first-tier entity is a party that enters into a written arrangement, acceptable to CMS, with an MAO or applicant to provide administrative services or healthcare services for a Medicare eligible individual under the Medicare Advantage program.

These entities enter into risk agreements with Downstream Entities, as defined under 42 C.F.R.

These entities enter into risk agreements with downstream entities, as defined by federal regulations.

If these agreements change or include any restrictions on the assignability of Claims, it can have a material adverse effect on our recoveries, business, financial condition, and results of operations.

Our use and disclosure of personal identifiable information, including PHI, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.

State and federal laws and regulations, including HIPAA, govern the collection, dissemination, use, disclosure, creation, receipt, maintenance, transmission, privacy, confidentiality, security, availability, and integrity of personal identifiable information, including PHI.

Our use and disclosure of personally identifiable information, including PHI, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.

HIPAA establishes basic national privacy and security standards for protection of PHI by covered entities such as our Assignors, and the business associates with whom such entities contract for services, including us.

As a business associate, we are also directly

liable for HIPAA compliance.

As a business associate, we are also directly responsible for HIPAA compliance.

In addition to HIPAA, we must adhere to state patient confidentiality and other laws that are not preempted by HIPAA, including those that are more stringent than HIPAA.

In the event of a breach of our obligations under HIPAA or other state laws, we could be subject to enforcement actions and lawsuits brought by the U.S.

Department of Health and Human Services Office for Civil Rights (“OCR”) and state regulators, and class action lawsuits brought by private plaintiffs.

Department of Health and Human Services Office for Civil Rights (“OCR”), state regulators, and/or class action lawsuits brought by private plaintiffs.

Mandatory penalties for HIPAA violations can be significant and OCR and state regulators may require businesses to enter into settlement or resolution agreements and corrective action plans that impose ongoing compliance requirements.

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Courts can award damages, costs, and attorneys’ fees related to violations of HIPAA or state laws in such cases.

While we maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI and other personal identifiable information consistent with applicable law and our contractual obligations, we cannot provide assurances regarding how these laws, regulations, and contracts will be interpreted, enforced, or applied to our operations.

We obtain and process a large amount of sensitive data.

Our systems and networks may be subject to cybersecurity breaches and other disruptions that could compromise our information.

Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business, financial condition, and results of operations.

We rely on information technology networks and systems to process and store electronic information.

We collect and store sensitive data, including personally identifiable information on our information technology networks.

Our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches or incidents.

We may not be able to prevent incidents of inappropriate use or disclosure or unauthorized access to or acquisition.

Despite the implementation of security measures, our information technology networks and systems have been, and in the future may be, vulnerable to disruptions and shutdowns due to attacks by hackers or breaches due to malfeasance by contractors, employees, and others who have access to our networks and systems.

The occurrence of any of these cybersecurity events could compromise our networks and the information stored on our networks could be accessed.

Any such access could disrupt our operations, adversely affect the willingness of existing or potential Assignors to do business with us or result in legal claims, liability, reputational damage, or regulatory penalties under laws protecting the privacy of personal information, any of which could adversely affect our business, financial condition, and operating results.

We rely heavily on technology to communicate internally and efficiently perform our services.

We have implemented measures that are designed to mitigate the potential adverse effects of a disruption, relocation, or change in operating environment;

however, we cannot provide assurance that the situations we plan for and the amount of insurance coverage that we maintain will be adequate in any particular case.

In addition, despite system redundancy and security measures, our systems and operations are vulnerable to damage or interruption from, among other sources:

• power loss, transmission cable cuts and telecommunications failures;

• damage or interruption caused by fire, earthquakes and other natural disasters;

• attacks by hackers or nefarious actors;

• human error;

• computer viruses and other malware or software defects;

• physical break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.

If we encounter a business interruption, if we fail to effectively maintain our information systems, if it takes longer than we anticipate to complete required upgrades, enhancements, or integrations or if our business continuity plans and business interruption insurance do not effectively compensate on a timely basis, we could suffer operational disruptions, disputes with Assignors, civil or criminal penalties, regulatory problems, increases in administrative expenses, loss of our ability to produce timely and accurate financial and other reports or other adverse consequences, any of which could have a material adverse effect on our business, financial condition, and results of operations.

As we collect and manage large amounts of data, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our partners regard as significant.

If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may hinder our ability to provide services, establish appropriate pricing for services, retain and attract Assignors, establish reserves, timely report financial results, and accurately and maintain regulatory compliance, among other things.

Additionally, as Assignors maintain their own supporting documentation, data, and records, it is possible that they may provide us with erroneous or inaccurate data.

The occurrence of any of these events could cause our solutions to be perceived as vulnerable, cause our Assignors to lose confidence in our solutions, negatively affect our ability to attract new Assignors and cause existing Assignors to terminate or not renew

our solutions.

If the information is lost, improperly disclosed, or threatened to be disclosed, we could incur significant liability and be subject to regulatory scrutiny and penalties.

Furthermore, we could be forced to expend significant resources in response to a security breach, including investigating the cause of the breach, repairing system damage, increasing cyber-security protection costs by deploying additional personnel and protection technologies, notifying and providing credit monitoring to affected individuals, paying regulatory fines and litigating and resolving legal Claims and regulatory actions, all of which could increase our expenses and divert the attention of our management and key personnel away from our business operations.

In addition, if our own confidential business information were improperly disclosed, our business could be materially adversely affected.

A core aspect of our business is the reliability and security of our technology platform.

Any perceived or actual breach of security could have a significant impact on our reputation as a trusted brand, cause us to lose existing Assignors, prevent us from obtaining new Assignors, require us to expend significant funds to remedy problems caused by breaches and to implement measures to prevent further breaches and expose us to legal risk and potential liability.

Any security breach at a third-party vendor providing services to us could have similar effects.

Any breach or disruption of any systems or networks on which we rely could have a material adverse effect on our business, financial condition, and results of operations.

Our information technology strategy and execution are critical to our continued success.

We expect to continue to invest in long-term solutions that will enable us to continue being a differentiator in the market and to protect against cybersecurity risks and threats.

Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver and enhance technology systems that support our business processes in a cost-efficient and resource-efficient manner.

Increasing regulatory and legislative changes will place additional demands on our information technology infrastructure that could have a direct impact on resources available for other projects tied to our strategic initiatives.

In addition, recent trends toward greater patient engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices.

Connectivity among technologies is becoming increasingly important.

We must continue to develop our systems to meet market standards and keep pace with continuing changes in information processing technology, evolving industry and regulatory standards and patient needs.

Failure to do so may present compliance challenges and impede our ability to deliver services in a competitive manner.

Further, because system development projects are long-term in nature, they may be more costly than expected to complete and may not deliver the expected benefits upon completion.

Our failure to effectively invest in, implement improvements to, and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems could adversely affect our results of operations, financial position, and cash flow.

If any of our employees or contractors take, convert, or misuse such information, or we experience a data breach creating a risk of identity theft, we could be liable for damages and our business reputation could be damaged.

In addition, we could be perceived to have facilitated or participated in illegal misappropriation of documents or data and, therefore, be subject to civil or criminal liability.

In addition, federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice.

We also may be required to notify individuals affected by any data breaches.

Further, a data breach or similar incident could impact the ability of our Assignors that are creditors to comply with the federal “red flags” rules, which require the implementation of identity theft prevention programs to detect, prevent, and mitigate identity theft in connection with Assignor accounts, which could be costly.

If data utilized in our solutions are misappropriated for the purposes of identity theft or similar illegal behavior, it could have a material adverse effect on our reputation, business, financial condition, and results of operations.

Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions, services, and data.

As the perpetrators of cyber attacks become more capable, as cybercrime becomes commoditized, and as critical infrastructure is increasingly becoming digitized, the risks in this area continue to grow.

While we attempt to mitigate these risks by employing certain physical, administrative, and technical measures, including, but not limited to, employee training, logical access controls, monitoring and testing, and maintenance of protective systems and contingency plans, we remain potentially vulnerable to additional known or unknown threats, and we cannot assure that the impact from such threats will not be material.

We regularly assess external and internal cybersecurity-related risks and identify potential improvements to our cybersecurity program, including its staffing, processes, and technology.

When potential improvements are identified, we weigh the costs and benefits of such improvements and, if selected, the improvements are added to an agenda for possible implementation.

Additionally, we have incurred and expect to continue to incur significant costs implementing additional security measures to protect against existing and emerging cybersecurity threats.

While we maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI and other personally identifiable information consistent with applicable law and our contractual obligations, we cannot provide assurances regarding how these laws, regulations, and contracts will be interpreted, enforced, or applied to our operations.

If we fail to innovate and develop new solutions, or if these new solutions are not adopted by existing and potential Assignors or other users, it could have a material adverse effect on our business, financial condition, and results of operations.

Our results of operations and continued growth will depend on our ability to successfully develop and market new solutions that our existing and potential Assignors or other users are willing to adopt.

For example, as part of our “Chase to Pay” model, we launched LifeWallet in January 2022, a platform designed to organize and facilitate access to users’ medical records.

We cannot provide assurance that our proposed solutions will be fully developed or released, or that new or modified solutions will be responsive to Assignor or

preferences or industry changes, or that the product and service development initiatives we prioritize will yield the return on investment that we anticipate, if any.

We cannot provide assurance that our proposed solutions will be fully developed or released, or that new or modified solutions will be responsive to Assignor or preferences or industry changes, or that the product and service development initiatives we prioritize will yield the return on investment that we anticipate, if any.

If we are unable to predict market preferences or if our industry changes, or if we are unable to implement or modify our solutions on a timely basis, we may lose Assignors or fail to attract new ones.

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Although we have invested, and will continue to invest, significant resources in developing and enhancing our solutions and platforms, any failure to keep up with technological advances or to integrate upgraded operational platforms and solutions into our existing technology infrastructure could result in a negative return on investment, and have a material adverse effect on our business, financial condition, and results of operations.

Certain of our activities present the potential for identity theft or similar illegal behavior by employees, contractors, or third parties, which could have a material adverse effect on our business, financial condition, and results of operations.

Our solutions involve the use and disclosure of personal information that in some cases could be used to impersonate third parties or otherwise improperly gain access to their data or funds.

If an employee or contractor were to take, convert, or misuse such information, or we experience a data breach creating a risk of identity theft, we could be liable for damages and our business reputation could be damaged.

In addition, we could be perceived to have facilitated or participated in illegal misappropriation of documents or data and, therefore, be subject to civil or criminal liability.

In addition, federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice.

We also may be required to notify individuals affected by any data breaches.

Further, a data breach or similar incident could impact the ability of our Assignors, those of whom are creditors, to comply with the federal “red flags” rules, which require the implementation of identity theft prevention programs to detect, prevent and mitigate identity theft in connection with Assignor accounts, which could be costly.

If we fail to comply with applicable privacy, security and data laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf, it could have a material adverse effect on our reputation, business, financial condition, and results of operations.

We have Assignors throughout the United States and our solutions may contain healthcare information of patients located across all 50 states and Puerto Rico.

Therefore, we may be subject to the privacy laws of each such jurisdiction, which may vary and, in some cases, can impose more restrictive requirements than federal law.

Where state laws are more protective, we have to comply with the stricter provisions.

In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused.

California’s patient privacy laws, for example, provide for penalties of up to $250,000 and permit injured parties to sue for damages.

The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and our Assignors and potentially exposing us to additional expense, adverse publicity, and liability.

Further, as regulatory focus on privacy issues continues to increase, and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify.

Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as PHI or PII, along with increased customer demands for enhanced data security infrastructure, could greatly increase the cost of providing our services, decrease demand for our services, reduce our revenue, and/or subject us to additional liabilities.

The following legal and regulatory developments also could have a material adverse effect on our business, financial condition, and results of operations:

• amendment, enactment, or interpretation of laws and regulations that restrict the access and use of personal information and reduce the supply of data available to Assignors;

• changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our solutions;

• failure of our solutions to comply with current laws and regulations;

• failure of our solutions to adapt to changes in the regulatory environment in an efficient, cost-effective manner.

Changes in the United States healthcare environment, or in laws relating to healthcare programs and policies, and steps we take in anticipation of such changes or a failure to comply with such laws, particularly as they relate to the Affordable Care Act and Medicare and Medicaid programs, could have a material adverse effect on our business, financial condition, and results of operations.

Approximately 93.1% of our expected recoveries arise from Claims being brought under the Medicare Secondary Payer Act private cause of action, codified at 42 U.S.C.

§ 1395y(b)(3)(A).

Approximately 95.9% of our expected recoveries arise from Claims being brought under the MSP Act private cause of action.

This law allows us to pursue recoveries against primary payers for reimbursement of medical expenses that our Assignors paid for when primary payers (i.e., liability insurers) were responsible for payment.

While we believe we have been successful at both the federal and state level in establishing a legal basis for our recoveries, changes to the laws on which we base our recoveries, particularly the Medicare Secondary Payer Act, can adversely affect our business.

For example, on May 16, 2023, Senators Tim Scott (R-SC) and Maggie Hassan (D-NH) and Representatives Brad Schneider (D-IL) and Gus Bilirakis (R-FL) introduced the Repair Abuses of MSP Payments Act (S.1607/H.R.3388) (the “RAMP Act”) in the U.S.

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§ 1395y(b)(1)(A)(v)).

The 118th Congress ended on January 3, 2025 without further action on the proposal, and the RAMP Act was not enacted into law.

The Medicare Secondary Payer Act’s private cause of action—a fundamental component of how the Company is able to calculate damages—incentivizes private parties, such as MSP Recovery, to pursue reimbursement of conditional payments by rewarding them with double damages.

If the Medicare Secondary Payer Act is changed, or if the RAMP Act were enacted to apply retroactively, it could significantly reduce the Company’s potential recoveries and have a material adverse effect on its business, financial condition, and results of operations.

If the MSP Act is changed, it could significantly reduce the Company’s potential recoveries and have a material adverse effect on its business, financial condition, and results of operations.

The healthcare industry in the United States is subject to a multitude of changing political, economic, and regulatory influences that affect every aspect of our healthcare system.

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If efforts to waive, modify, or otherwise change the Affordable Care Act, in whole or in part, are successful, if we are unable to adapt our solutions to meet changing requirements or expand service delivery into new areas, or the demand for our solutions is reduced as a result of healthcare organizations’ reactions to changed circumstances and financial pressures, it could have a material adverse effect on our business, financial condition, and results of operations.

The current administration has stated its intent to evaluate overall government spending, which could impact our business, results of operations, financial condition, and growth prospects.

Future healthcare spending and program authorizations may not increase or may decrease or shift to non-healthcare related programs.

Such changes in spending authorizations and budgetary priorities may occur as a result of shifts in spending priorities from healthcare-related programs as a result of competing demands for federal funds.

significant decline in overall U.S.

government spending, a significant shift in spending priorities, or the substantial reduction or elimination of particular healthcare-related programs could adversely affect our future revenue and limit our growth prospects.

Healthcare organizations may react to such changed circumstances and financial pressures, including those surrounding the implementation of the Affordable Care Act, by taking actions such as curtailing or deferring their retention of service providers, which could reduce the demand for our data driven solutions and, in turn, have a material adverse effect on our business, financial condition, and results of operations.

A significant portion of our Claims comes from a limited number of Assignors who have relationships with key existing payers, and the loss of one or more of these Assignors or disruptions in Assignor-payer relationships could have a material adverse effect on our business, financial condition, and results of operations.

A significant portion of our Claims comes from a limited number of Assignors who have relationships with key existing payers;

the loss of one or more of these Assignors or disruptions in Assignor-payer relationships could have a material adverse effect on our business, financial condition, and results of operations.

We have acquired a significant portion of our Claims from and entered into agreements for new services with a limited number of large Assignors.

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Our revenues and operations are dependent upon a limited number of key existing payers and our Assignors’ continued relationship with those payers;

disruptions in those relationships (including renegotiation, non-renewal, or termination of capitation agreements) or the inability of such payers to maintain their contracts with the Centers for Medicare & Medicaid Services, or CMS, could adversely affect our business.

Our operations are dependent on a concentrated number of payers with whom our Assignors contract to provide services.

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• in-house payment accuracy capabilities;

• Medicare RACs;

• Medicare Recovery Audit Contractors;

• healthcare consulting firms and other third-party liability service providers.

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Any inability to compete effectively could have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to protect our proprietary technology, information, processes, and know-how, the value of our solutions may be diminished, which could have a material adverse effect on our business, financial condition, and results of operations.

We rely significantly on proprietary technology, information, processes, and know-how that are not subject to patent or copyright protection.

We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures.

These agreements and security measures may be inadequate to deter misappropriation of intellectual property and may be insufficient to protect our proprietary information.

Misappropriation of our intellectual property by third parties, or any disclosure or dissemination of our business intelligence, queries, Algorithms, and other similar information by any means, could undermine competitive advantages we currently derive or may derive therefrom.

Any of these situations could result in our expending significant time and incurring expense to enforce our intellectual property rights.

Although we have taken measures to protect our proprietary rights, others may compete with our business by offering solutions or services that are substantially similar to ours.

If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties or our employees, the value of our solutions, brand, and other intangible assets may be diminished and competitors may be able to more effectively offer solutions that have the same or similar functionality as our solutions, which could have a material adverse effect on our business, financial condition, and results of operations.

Our success depends, in part, on our ability to protect our intellectual property rights.

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We rely on our trademarks, service marks, trade names, and brand names to distinguish our services from the services of our competitors and have registered or applied to register many of these trademarks.

We cannot provide assurance that our trademark applications will be approved.

We cannot provide assurance that trademark applications filed by the Company will be approved.

Third parties may also oppose our trademark applications or otherwise challenge our use of the trademarks.

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Additionally, if we expand our focus to the international payment accuracy market, there is no guarantee that our trademarks, service marks, trade names, and brand names will be adequately protected.

We rely significantly on proprietary technology, information, processes, and know-how that are not subject to patent or copyright protection.

We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures.

These agreements and security measures may be inadequate to deter misappropriation of intellectual property and may be insufficient to protect our proprietary information.

Any of these situations could result in our expending significant time and incurring expense to enforce our intellectual property rights.

Although we have taken measures to protect our proprietary rights, others may compete with our business by offering solutions or services that are substantially similar to ours.

Our ability to obtain, protect, and enforce our intellectual property rights is subject to uncertainty as to the scope of protection, registrability, patentability, validity, and enforceability of our intellectual property rights in each applicable jurisdiction, as well as the risk of general litigation or third-party oppositions.

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Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our solutions, impair the functionality of our solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our solutions, or have a material adverse effect on our business, financial condition, and results of operations.

Our qui tam litigation may be subject to Government Intervention and Dismissal pursuant to 31 U.S.C.

§ 3730(c)(2)(A).

We file qui tam (whistleblower) actions on behalf of the federal government under the False Claims Act, 31 U.S.C.

§ 3729 et seq.

These actions give the federal government the opportunity to intervene and participate in the action.

The False Claims Act authorizes the Attorney General to dismiss a qui tam action over the relator’s objection.

The action can be dismissed if the federal government determines their best interests are not served with the litigation.

This can be the case if the litigation does not advance their interests, preserve their limited resources or avoid adverse precedent.

The federal government may dismiss an action notwithstanding the objections of the relator if the relator has received notice from the federal government and the person is afforded an opportunity to be heard on the federal government’s motion to dismiss.

Qui tam litigation is subject to intervention and dismissal by the federal and state governments.

We may file qui tam (whistleblower) actions on behalf of the federal government pursuant to the False Claims Act, and the states that have laws that modeled after the False Claims Act.

These actions give the federal and state governments the opportunity to:

(i) intervene and participate in the action, and (ii) to dismiss the action over a relator’s objection, if it is determined that the litigation does not advance the governmental interests, to preserve the government’s limited resources, or to avoid adverse precedent.

Courts have stated that the federal government has an “unfettered” right to dismiss a qui tam action.

United States , 318 F.3d 250, 252 (D.C.

Federal government intervention, as well as dismissal pursuant to 31 U.S.C.

§ 3730(c)(2)(A), can negatively affect our business and our recovery efforts.

As such, the Company may commit substantial resources to investigate, file, and litigate a qui tam action on behalf of a state or federal government that either opts to intervene in case or dismiss it entirely, either of which could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to extensive government regulation.

Any violation of the laws and regulations applicable to us or a negative audit or investigation finding, could have a material adverse effect on our business.

Much of our business is regulated by the federal government and the states in which we operate.

Much of our business is regulated by the jurisdictions in which we operate.

The laws and regulations governing our operations generally are intended to benefit and protect individual citizens, including government program beneficiaries, health plan members, and providers, rather than stockholders.

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Increased involvement by us in analytic or audit work that can have an impact on the eligibility of individuals for medical coverage or specific benefits could increase the likelihood and incidence of us being subjected to scrutiny or legal actions by parties other than our Assignors, based on alleged mistakes or deficiencies in our work, with significant resulting costs and strain on our resources.

In addition, because we may receive payments from federal and state governmental agencies, we may become subject to various laws, including the Federal False Claims Act and similar state statutes, which permit government law enforcement agencies to institute suits against us for violations and, in some cases, to seek double or treble damages, penalties, and assessments.

In addition, as we may receive payments from federal and state governmental agencies, we may become subject to various laws, including the federal False Claims Act and similar state statutes, which permit government law enforcement agencies to institute suits against us for violations and, in some cases, to seek double or treble damages, penalties, and assessments.

In addition, private citizens, acting as whistleblowers, can sue on behalf of the federal government under the qui tam provisions of the federal False Claims Act and similar statutory provisions in many states.

The expansion of our operations into new products and services may further expose us to requirements and potential liabilities under additional statutes and legislative schemes that previously have not been relevant to our business, such as banking statutes, that may both increase demands on our resources for compliance activities and subject us to potential penalties for noncompliance with statutory and regulatory standards.

If the government discovers improper or illegal activities in the course of audits or investigations, we may be subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions, and debarment from doing business with the government.

The expansion of our operations into new products, services, or jurisdictions may further expose us to requirements and potential liabilities under additional statutes and legislative schemes that previously have not been relevant to our business, such as banking statutes, that may both increase demands on our resources for compliance activities and subject us to potential penalties for noncompliance with statutory and regulatory standards.

If a governmental inquiry discovers improper or illegal activities in the course of audits or investigations, we may be subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions, and debarment from doing business with the government.

Such risks, particularly under the Federal False Claims Act and similar state fraud statutes, have increased in recent years due to legislative changes that have (among other amendments) expanded the definition of a false claim to include, potentially, any unreimbursed overpayment received from, or other monetary debt owed to, a government agency.

reputation in the industry, impair our ability to compete for new contracts and have a material adverse effect on our business, financial condition, and results of operations.

We are also subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq.

If we are found to be in violation of any applicable law or regulation, or if we receive an adverse review, audit or investigation, any resulting negative publicity, penalties or sanctions could have an adverse effect on our reputation in the industry, impair our ability to compete for new contracts and have a material adverse effect on our business, financial condition, and results of operations.

We are also subject to laws, regulations and rules enacted by foreign, national, regional, and local governments and Nasdaq.

In particular, we are required to comply with certain SEC, Nasdaq, and other legal or regulatory requirements.

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Our ability to conduct our operations and accurately report our financial results depends on the integrity of the data in our information systems and the integrity of the processes performed by those systems.

These information systems and applications require continual maintenance, upgrading, and enhancement to meet our operational needs, satisfy Assignor requests and handle and enable our expansion and growth.

These information systems and applications require continual maintenance, upgrading, and enhancement to meet our operational needs, satisfy Assignor requests, and facilitate our expansion and growth.

Despite our testing and quality control measures, we cannot be certain that errors or system deficiencies will not be found, and that remediation can be done in a timeframe that is acceptable to our Assignors or that Assignor relationships will not be impaired by the occurrence of errors or the need for remediation.

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Since October 1, 2015, health plans, commercial payers, and healthcare providers have been required to transition to the new ICD-10 coding system, which greatly expands the number and detail of diagnosis codes used for inpatient, outpatient, and physician Claims.

The transition to the new transaction and code set standard is expensive, time-consuming, and may initially result in disruptions or delays as we and other stakeholders make necessary system adjustments to be fully compliant and capable of exchanging data.

In addition, we may experience delays in processing Claims and therefore earning our fees if the third parties with whom we work are not in full compliance with these new standards in the required timeframe.

Claims processing systems failures, incapacities, or deficiencies internal to these third parties could significantly delay or obstruct our ability to recover money, and thereby interfere with our performance and our ability to generate revenue in the timeframe we anticipate which, in turn, could have a material adverse effect on our business, financial condition, and results of operations.

In the event we fail to maintain our Security Organization Control 2, HITRUST or other certifications, we could be in breach of our obligations under our contracts;

fines and other penalties could result, we may suffer reputational harm, and our business could be damaged, limiting our ability to generate revenue.

In addition to government regulations and securities laws, we are subject to self-regulatory standards and industry certifications that may legally or contractually apply to us.

These include Security Organization Control 2 (“SOC 2”), with which we are currently compliant.

In the event we fail to maintain our SOC 2 compliance or fail to receive recertification from HITRUST, we could be in breach of our obligations under Assignor and other contracts, fines, and other penalties could result, and we may suffer reputational harm and damage to our business.

Further, our Assignors may expect us to comply with more stringent privacy and data security requirements than those imposed by laws, regulations, or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data.

Any failure or perceived failure by us to comply with federal or state laws or regulations, industry standards or other legal obligations, or any actual or suspected privacy or security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal identifiable information or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties, or adverse publicity and could cause our Assignors to lose trust in us, which could have an adverse effect on our reputation and business.

We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to pursue recoveries could be limited.

Any of these developments could harm our business, financial condition, and results of operations.

Privacy and data security concerns may inhibit retention of our systems by existing Assignors or onboarding onto or, in the case of our Chase to Pay services, adoption of our systems by new Assignors.

For more information on Chase to Pay services, please see the section entitled “Business - Chase to Pay.”

The transition to the new transaction and code set standard is expensive, time-consuming, and may result in disruptions or delays as we and other stakeholders make necessary system adjustments to be fully compliant and capable of exchanging data.

In addition, we may experience delays in processing Claims and therefore generating revenue if the third parties with whom we work are not in full compliance with these new standards in the required timeframe.

Claims processing systems failures, incapacities, or deficiencies internal to these third parties could significantly delay or obstruct our ability to obtain recoveries, and thereby interfere with our performance and our ability to generate revenue in the anticipated timeframe, which could have a material adverse effect on our business, financial condition, and results of operations.

We have a substantial amount of indebtedness and payment obligations which, together with any future indebtedness or payment obligations, could adversely affect our ability to operate our business.

We have substantial amounts of indebtedness and payment obligations, and we may incur substantial additional indebtedness or payment obligations in order to finance acquisitions of additional Claims assets or other costs in connection with financing our operations, and such increased leverage could adversely affect our business.

Our indebtedness carries high interest rates, which, if we are unable to generate revenues and reduce the amount of our indebtedness, will continue to increase over time by a significant amount.

Our indebtedness carries high compounding interest rates, which, if we are unable to generate revenues and reduce the amount of our indebtedness, will continue to increase over time by a significant amount.

In addition, the terms of any of our existing or future indebtedness or payment obligations may restrict or otherwise negatively impact our ability to grow and manage our business.

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Failure to obtain or maintain ongoing financing to fund operations would negatively impact our business.

We are currently dependent on certain limited funding sources, including the Working Capital Credit Facility, the Yorkville SEPA, and beyond July 2025, the MSP Principals’ commitment to pledge $25 million of collateral to backstop additional working capital requirements of the Company.

The Working Capital Credit Facility, a continued source of funding for operations, is contingent on compliance with certain covenants, which we may not meet.

If we fail to comply with these covenants, continued funding may cease, substantially impairing our ability to continue our operations, including the pursuit of recoveries.

On March 6, 2023, Subrogation Holdings entered into a credit agreement (“Initial Credit Agreement”) with HPH, pursuant to which HPH funded an initial $10 million in proceeds to Subrogation Holdings.

On March 29, 2023, the Initial Credit Agreement was fully amended and restated (the “Working Capital Credit Facility”), providing for funding of up to $80 million (with a 40% original issue discount), consisting of a Term Loan A commitment to fund up to $30 million (in multiple installments) in proceeds and a Term Loan B Commitment to fund up to $18 million (in multiple installments) in proceeds.

On March 29, 2023, an additional $5 million was disbursed to Subrogation Holdings under the Term Loan A.

On May 11, 2023 and June 13, 2023, HPH notified us that it would not disburse additional funds under the Working Capital Credit Facility until the Company satisfied certain funding conditions, including the filing of our Annual Report on Form 10-K for the period ending December 31, 2022 (the “2022 Form 10-K”), which was filed on July 27, 2023.

The parties subsequently agreed that $5.5 million will be funded under Term Loan A in accordance with the terms of the Working Capital Credit Facility subsequent to the filing of our 2022 Form 10-K and receipt of funding notices, deeming funding conditions satisfied or waived.

Following such funding, the Term Loan A commitment was terminated, with total funding of $20.5 million.

The parties agreed to increase the Term Loan B commitment from $18 million to $27.5 million, which was funded in multiple installments and in accordance with the terms of the Working Capital Credit Facility.

On August 4, 2023, the Company received funding amounting to $5.5 million from Term Loan A and $2.25 million installment under Term Loan B.

Under Term Loan B, the Company received $2.25 million of funding on August 30, 2023, and Subrogation Holdings received $4.5 million on November 13, 2023 and $4.5 million on January 25, 2024.

Additional funding for fiscal year 2024 under the Working Capital Credit Facility is available at a rate of $1.75 million per month, up to $14.0 million, subject to potential further reductions in the case of certain agreed cost savings and funds availability;

however, no additional funding has been requested as of the date of the filing of this Annual Report.

The amended terms to the Working Capital Credit Facility were memorialized in the Second Amended and Restated First Lien Credit Agreement dated November 10, 2023.

A failure to obtain or maintain financing to fund operations would require us to significantly reduce operations and would have a material adverse effect on future operating prospects.

Moreover, in connection with the Yorkville SEPA, and subject to the condition set forth therein, Yorkville agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of $15.0 million.

On November 14, 2023, we issued a Convertible Note to Yorkville in the principal amount of $5.0 million resulting in net proceeds of $4.73 million.

On December 11, 2023, we issued a Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds of $4.75 million.

On April 8, 2024, we issued a third Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

For more information about the Convertible Notes, see Note 1, Description of the Business - Yorkville Purchase Agreement and Yorkville Standby Equity Purchase Agreement.

During fiscal year 2023, under the Working Capital Credit Facility, HPH disbursed $20.5 million under Term Loan A and $9.0 million under Term Loan B.

Under the Operational Collection Floor, during 2024 the Company received :

(i) $12.3 million for working capital, and (ii) $2.0 million for the purpose of acquiring the New Claims.

To date, the Company received $3.5 million of working capital for 2025.

Pursuant to the Working Capital Credit Facility, HPH may, at its sole discretion, increase the Operational Collection Floor by an amount of up to $6.0 million, to be funded over a period of three to six months.

On February 28, 2025 and April 4, 2025, HPH exercised that discretion and funded $1.75 million and $1.5 million, respectively, from the increase to the Operational Collection Floor.

An additional $2.75 million remains available under the Operational Collection Floor, to be funded at HPH’s sole discretion.

For further information on the Working Capital Credit Facility, please see Note 9, Claims Financing Obligations and Notes Payable .

Furthermore, although the Yorkville SEPA provides that we may sell up to an aggregate of $250 million of our Class A Common Stock to Yorkville, only 2.0 million shares of our common stock were registered for resale under the registration statement, which we may elect to sell to Yorkville, in our sole discretion, from time to time from and after the date of, and pursuant to, the Yorkville SEPA or that Yorkville may require that we sell pursuant to a Yorkville Advance.

Even if we elect to sell to Yorkville all of the shares of Common Stock, depending on the market prices of our Class A Common Stock at the time of such sales, the actual gross proceeds from the sale of all such shares may be less than $250 million, which could materially and adversely affect our liquidity.

As we have sold substantially all of the 2.0 million shares currently registered for resale to Yorkville, we need to file with the SEC one or more additional registration statements to register under the Securities Act the resale by Yorkville of any additional shares of our common stock, and the SEC would have to declare such registration statement or statements effective before we could sell additional shares.

There can be no assurances of such events occurring or the timing of such events occurring.

Moreover, although the MSP Principals committed to pledge $25 million of collateral to backstop additional working capital requirements of the Company beyond July 2025, such financing has not been secured and cannot be guaranteed, or guaranteed on terms favorable to the Company.

Costs associated with, and our ability to obtain and maintain adequate insurance, could adversely affect our profitability and financial condition.

We hold a number of insurance policies to hedge against risks inherent in our business.

We hold a variety of insurance policies to hedge against risks inherent in our business.

If the costs of maintaining adequate insurance coverage should increase significantly in the future, our operating results could be materially adversely affected.

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Similarly, if we exhaust our current insurance coverage for any given policy period, we would be required to operate our business without indemnity from commercial insurance providers for any Claims made that are attributable to that policy period.

Failure to maintain certain insurance policies could constitute a material breach of contract terms with certain Assignors and business partners.

Our services could become subject to new, revised, or enhanced regulatory requirements in the future, which could result in increased costs, could delay or prevent our introduction of new solutions, or could impair the function or value of our existing solutions, which could have a material adverse effect on our business, financial condition, and results of operations.

Failure to maintain certain insurance policies could constitute a material breach of contract terms with certain Assignors and business partners, which may result in the termination of agreements that could have a material adverse effect on our financial condition, results of operations, and cash flows.

Our services could become subject to new, revised, or enhanced regulatory requirements in the future, which could result in increased costs, delay or prevent our introduction of new solutions, or impair the function or value of our existing solutions, which could have a material adverse effect on our business, financial condition, and results of operations.

The healthcare industry is highly regulated at the federal, state, and local levels, and is subject to changing legislative, regulatory, political, and other influences.

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Our ability to earn a profit on a performance-based agreement requires that we accurately estimate the costs involved and outcomes likely to be achieved and assess the probability of completing multiple tasks and transactions within the contracted time period.

We derive a relatively small portion of our revenue on a “fee-for-service” basis whereby billing is based upon a flat fee or a fee per hour.

In the past, we derived a relatively small portion of our revenue on a “fee-for-service” basis whereby billing is based upon a flat fee or a fee per hour.

To earn a profit on these contracts, we must accurately estimate costs involved and assess the probability of achieving certain milestones within the contracted time period.

If we do not accurately estimate the costs and timing for completing projects, or if we encounter increased or unexpected costs, delays, failures, liabilities, or risks, including those outside of our control, our contracts could prove unprofitable for us or yield lower profit margins than anticipated.

Although we believe that we have recorded adequate provisions in our financial statements for losses on our fee-for-service contracts where applicable, as required under GAAP, we cannot provide assurance that our contract provisions will be adequate to cover all actual future losses.

Although we believe that we record adequate provisions in our financial statements for losses on our fee-for-service contracts where applicable, as required under GAAP, we cannot provide assurance that contract provisions will be adequate to cover all actual future losses.

The inability to accurately estimate the factors upon which we base our contract pricing could have a material adverse effect on business, financial condition, and results of operations.

If we fail to cost-effectively develop widespread brand awareness and maintain our reputation, or if we fail to achieve and maintain market acceptance, our business could suffer.

If we fail to cost-effectively develop widespread brand awareness and maintain or defend our reputation, or if we fail to achieve and maintain market acceptance, our business could suffer.

We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with existing Assignors and ability to attract new Assignors.

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In addition, any factor that diminishes our reputation or that of our management, including failing to meet expectations, or any adverse publicity or litigation involving or surrounding us, could make it substantially more difficult for us to attract new Assignors.

In addition, negative publicity resulting from an adverse government audit could injure our reputation.

If we do not successfully maintain and enhance our reputation and brand recognition, our business may not grow and we could lose our relationships with Assignors, which would harm our business, results of operations, and financial condition.

On August 11, 2022, the SEC initiated an investigation of the Company, and on March 10, 2023, the Company received a subpoena from the U.S.

Attorney’s Office in connection with a grand jury investigation of the Company.

See Note 12, Commitments and Contingencies for more information about ongoing governmental investigations.

The existence of these investigations, and any negative publicity resulting from these investigations, or other governmental audits or investigations could injure our reputation.

The registered or unregistered trademarks or trade names that we own or license may be challenged, infringed, circumvented, declared generic, lapsed, or determined to be infringing on or dilutive of other marks.

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Our ability to execute on business plans, maintain high levels of service, or adequately address competitive challenges will be negatively impacted if we fail to properly manage our growth, which could have a material adverse effect on our business, financial condition, and results of operations.

In recent years, our size and the scope of our business operations have expanded rapidly, and we expect that we will continue to grow and expand into new areas within the healthcare industry;

however, such growth and expansion has resulted in nominal revenue to date and carries costs and risks that, if not properly managed, could have a material adverse effect on our business, financial condition, and results of operations.

We expect that our business operations will continue to grow and expand into new areas within the healthcare industry;

however, such growth and expansion carries costs and risks that, if not properly managed, could have a material adverse effect on our business, financial condition, and results of operations.

To effectively manage our business plans, we must continue to improve our operations, while remaining competitive.

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We may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas.

We must effectively increase our headcount and continue to effectively train and manage our employees.

We may need to increase our headcount and must continue to effectively train and manage our employees.

We will need to continue to hire, train and manage additional qualified information technology, operations, and marketing staff, and improve and maintain our technology and information systems to properly manage our growth.

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We may require additional financing to fund our operations or growth.

The failure to secure additional financing on acceptable terms and conditions or at all could have a material adverse effect on our continued development or growth.

Our access to, and the availability of, financing will be impacted by many factors, including, but not limited to, our financial performance, our credit ratings,

our then current level of indebtedness, the liquidity of the overall capital markets and the state of the U.S.

and global economy.

None of our officers, directors, or stockholders will be obligated to provide any financing to us.

See “Risk Factor - Failure to obtain or maintain ongoing financing to fund operations would negatively impact our business.”

We may not be able to obtain additional capital to continue the development of our business.

There can be no assurance that our future proposed operations and Claims recovery will be implemented successfully or that we will ever have profits.

If we are unable to successfully recover on Claims and continue pursuing recoveries, holders of our Common Stock may lose their entire investment.

If we are unable to continue pursuing recoveries or successfully recover on Claims, holders of our Common Stock may lose their entire investment.

We face all of the risks inherent in a new business and a new public company, including the expenses, difficulties, complications, and delays frequently encountered in connection with conducting operations, including the need for significant additional capital requirements and management’s potential underestimation of initial and ongoing costs.

In evaluating our business and future prospects, these difficulties should be considered.

If we are not effective in addressing these risks, we would not be able to implement our business strategy and our results of operations would be adversely affected.

If we are not effective in addressing these risks, we may not be able to implement our business strategy and our results of operations would be adversely affected.

To date, the Company’s sources of liquidity to fund working capital have been through funds from servicing agreements, member contributions, loans, and investments from other third parties.

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The acquisitions we make may be unprofitable or may take some time to achieve profitability.

In addition, we may not successfully operate the businesses that we acquire, or may not successfully integrate these businesses with our own, which may result in our inability to maintain our goals, objectives, standards, controls, policies, culture, or profitability.

In addition, we may not successfully operate the businesses that we acquire, or may not successfully integrate these businesses with our own, which

may result in our inability to maintain our goals, objectives, standards, controls, policies, culture, or profitability.

Through acquisitions, we may enter markets in which we have limited or no experience.

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Adverse judgments or settlements in litigation, regulatory, or other dispute resolution proceedings could have a material adverse effect on our business, financial condition, and results of operations.

We are currently party to, and may in the future become party to, lawsuits and other claims against us that arise from time to time in the ordinary course of our business.

We are currently party to, and may in the future become party to, lawsuits and other claims against us that arise from time to time in the ordinary course of our business, including the governmental investigations disclosed elsewhere in this Annual Report.

See Note 12, Commitments and Contingencies for more information about ongoing governmental investigations.

These may include lawsuits and claims related to, for example, contracts (including CCRAs), subcontracts, protection of confidential information or trade secrets, wage and benefits, employment of our workforce, or compliance with any of a wide array of state and federal statutes, rules and regulations that pertain to different aspects of our business.

We also may be required to initiate expensive litigation or other proceedings to protect our business interests.

In addition, because of the payments we may receive from potential future government Assignors, we may become subject to unexpected inquiries, investigations, legal actions, or enforcement proceedings pursuant to the False Claims Act, healthcare fraud, waste and abuse laws, or similar legislation.

In addition, because of the payments we may receive from potential future governmental Assignors, we may become subject to unexpected inquiries, investigations, legal actions, or enforcement proceedings pursuant to the False Claims Act, healthcare fraud, waste, and abuse laws, or similar legislation.

Any investigations, settlements, or adverse judgments stemming from such legal disputes or other claims may result in significant monetary damages or injunctive relief against us, as well as reputational injury that could adversely affect us.

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If we are unable to successfully identify and recover on future Claims, our results of operations could be adversely affected.

As a part of our business plan, we have acquired the right to pursue recoveries and we intend to continue to pursue acquiring additional Claims to support our business strategy.

As a part of our business plan, we have acquired the right to pursue recoveries and we intend to continue to pursue the acquisition of additional Claims to support our business strategy.

These recoveries can involve a number of risks and challenges, any of which could cause significant operating inefficiencies and adversely affect our growth and profitability.

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• litigation-related charges.

The profits of Claims may take considerable time to recover and certain recoveries may fall short of expected returns.

Profits derived from Claim recoveries may take considerable time, and certain recoveries may fall short of expected returns.

If our recoveries are not successful, we may record impairment charges.

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If we fail to accurately calculate the Paid Amount and Paid Value of Potential Recoverable Claims, it can have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Typically, we identify recoverable Claims using our proprietary Algorithms which screen historical paid Claims data and search for potential recoveries.

Our potential ability to achieve recovery revenues are based largely on the Paid Value of Potentially Recoverable Claims of our portfolio and our ability to discover, quantify, and settle the gap between Billed Amount and Paid Amount on a large scale.

If we fail to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the Recovery Multiple or the recovery rights we are entitled to may not be appropriately captured, which may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Typically, we identify recoverable Claims using our proprietary Algorithms which analyze historical paid Claims data to identify potential recovery opportunities.

Our potential ability to achieve recovery revenues is based largely on our ability to discover, quantify, and settle the gap between Billed Amount and Paid Amount on a large scale.

A failure to accurately calculate the Paid Amount or the Paid Value of Potential Recoverable Claims, the recovery multiple, or the amount we are entitled to pursue for recovery, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Failure of our software vendors, utility providers, network providers, and third-party data providers to perform as expected, changes in our relationships with them, or losing access to data sources may adversely affect our business.

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Unanticipated changes in our tax rates could affect our future financial condition and results of operations.

tax purposes including impairments of goodwill, by changes in GAAP or other applicable accounting standards or by changes in the valuation of our deferred tax assets and liabilities.

Our future effective tax rates could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned and taxed, by changes in, or our interpretation of, tax rules and regulations in the jurisdictions in which we do business, by increases in expenses not deductible for tax purposes including impairments of goodwill, by changes in GAAP or other applicable accounting standards or by changes in the valuation of our deferred tax assets and liabilities.

In addition, we are subject to the continual examination of our income tax returns by the U.S.

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To the extent payments are due to the TRA Parties under the TRA, the payments are generally required to be made within five business days after the tax benefit schedule (which sets forth the Company’s realized tax benefits covered by the TRA for the relevant taxable year) is finalized.

The Company is required to deliver such a tax benefit schedule to the TRA Parties’ Representative (as defined in the TRA), for its review, within 90 calendar days after the due date (including extensions) of the Company’s federal corporate income tax return for the relevant taxable year.

The Company is required to deliver such a tax benefit schedule to the TRA Parties’

Representative (as defined in the TRA), for its review, within 90 calendar days after the due date (including extensions) of the Company’s federal corporate income tax return for the relevant taxable year.

Payments under the TRA may be accelerated and/or significantly exceed the actual tax benefits the Company realizes under the TRA, and such accelerations may impair our ability to consummate change of control transactions.

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Accordingly, it is possible that the actual cash tax benefits realized by the Company may be significantly less than the corresponding TRA payments or that payments under the TRA may be made years in advance of the actual realization, if any, of the anticipated future tax benefits.

There may be a material negative effect on our liquidity if the payments under the TRA exceed the actual cash tax benefits that the Company realizes in respect of the tax attributes subject to the TRA and/or distributions to the Company by Opco are not

sufficient to permit the Company to make payments under the TRA after it has paid taxes and other expenses.

We may need to incur additional indebtedness to finance payments under the TRA to the extent our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise, and these obligations could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.

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Innovative, experienced, and technologically proficient professionals, such as qualified nurses and experienced medical coding professionals, are in great demand and are likely to remain a limited resource.

Our ability to recruit and retain such individuals depends on a number of factors, including the competitive demands for employees having, or able to rapidly develop, the specialized skills we need and the level and structure of compensation required to hire and retain such employees.

Our ability to recruit and retain such individuals

depends on a number of factors, including the competitive demands for employees having, or able to rapidly develop, the specialized skills we need and the level and structure of compensation required to hire and retain such employees.

We may not be able to recruit or retain the personnel necessary to efficiently operate and support our business.

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The demand for our data-driven solutions may be impacted by factors that are beyond our control, including macroeconomic, political, and market conditions, the availability of short-term and long-term funding and capital, the level and volatility of interest rates, currency exchange rates, and inflation.

The United States economy recently experienced periods of contraction and both the future domestic and global economic environments may continue to be less favorable than those of prior years.

Domestic and global economic environments may prove less favorable than those of prior years.

Any one or more of these factors may contribute to reduced activity and prices in the securities markets generally and could result in a reduction in demand for our solutions, which could have a material adverse effect on our business, results of operations, and financial condition.

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Even if our facilities are not directly damaged, we may experience considerable disruptions in our operations due to property damage or electrical outages experienced in storm-affected areas by our employees.

Additionally, long-term adverse weather conditions, whether caused by global climate change or otherwise, could cause an outmigration of people from the communities where our offices are located.

If any of the circumstances described above occurred, there could be a harmful effect on our business and our results of operations could be adversely affected.

Additionally, long-term adverse weather conditions, whether caused by global climate change or otherwise, could cause an out-migration of people from the communities where our offices are located.

If any of the circumstances described above occurs, there could be a harmful effect on our business, and our results of operations could be adversely affected.

Our overall business results may suffer from an economic downturn.

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These budget deficits affect federal, state, and local government entities, and may result in reductions in spending for health and human service programs, including Medicare, Medicaid, and similar programs, which represent significant payer sources for our Assignors.

High inflation may adversely affect our financial results.

economy is currently experiencing increasing levels of inflation, which creates a heightened level of risk for the Company.

Rising inflation may decrease the fair value of the Company’s investment in its portfolio of Claims as the Paid Amount and PVPRC, set at the date of the Claim was paid, become less valuable in relation to the present value of the dollar, leading to an effective decrease in their potential real return.

Furthermore, rising inflation may increase our operating expenses, including the cost to hiring or retaining employees.

government and Federal Reserve may be slow to approve rate changes or adopt measures to attempt to control inflation, which could affect the Company’s ability to generate profits and cash flow.

There can be no assurance that inflation rates will not continue to escalate in the future or that measures adopted or that may be adopted by the U.S.

government or the Federal Reserve to control inflation will be effective or successful.

Significant increases in inflation can have an adverse impact on our business, financial condition, and results of operations.

Risks Related to Our Securities

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

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

We are controlled by the Members, including John H.

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Further, our status as a “controlled company” on Nasdaq removes certain corporate governance protections.

The Members (or their designees) hold all of our issued and outstanding Class V Common Stock, which control approximately 89.44% of the combined voting power of our Common Stock, and John H.

As of April 8, 2025, the Members (or their designees) hold a majority of our issued and outstanding Class V Common Stock, controlling approximately 85.44% of the combined voting power of our outstanding Class V Common Stock, and John H.

Ruiz and Frank C.

Quesada, as a group, control approximately 89.67% of the combined voting power of our Common Stock.

They effectively have the ability to determine all corporate actions requiring stockholder approval, including the election and removal of directors, any amendment to our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.

Quesada (collectively, the “MSP Principals”), as a group, control approximately 47.16% of the combined voting power of our Common Stock.

They effectively have the ability to determine all corporate actions requiring stockholder approval, including the

election and removal of directors, any amendment to our Charter or Amended & Restated Bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.

This could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of the Company, which could cause the market price of our Class A Common Stock to decline or prevent stockholders from realizing a premium over the market price for Class A Common Stock.

The Members’ interests may conflict with our interests as a company or the interests of our other stockholders.

Our stockholders will experience substantial dilution as a consequence of, among other transactions, any future issuances of Common Stock.

Our stockholders will experience substantial dilution as a consequence of, among other transactions, future issuances of Common Stock.

As of April 14, 2025, the following securities are convertible into, or allow the purchase of, our Class A Common Stock, including:

(i) 2,950,157 Public Warrants outstanding, each exercisable to purchase 1/25th of one share of our Class A Common Stock (but only exercisable in lots of 25 to purchase whole shares);

(ii) 894,754,824 New Warrants outstanding, each exercisable to purchase 1/25th of one share of our Class A Common Stock (but only exercisable in lots of 25 to purchase whole shares);

(iii) the CPIA Warrant exercisable to purchase up to 2,666,667 shares of our Class A Common Stock;

and (iv) the VRM Warrant, entitling VRM to purchase 62,073,998 shares of Class A Common Stock at a purchase price of $0.0001 per share for a period of two years from issuance, exercisable on a cashless basis.

In addition, there are outstanding or designated Up-C Units that may be exchanged for 124,067,498 shares of Class A Common Stock.

The Company has the ability to issue up to 3,843,002 shares of Class A Common Stock pursuant to awards under the Incentive Plan.

(i) 3,323,146 outstanding or designated Up-C Units that may each be exchanged for one share of Class A Common Stock;

(ii) 2,950,157 Public Warrants outstanding, each exercisable to purchase 1/625th of one share of our Class A Common Stock (but only exercisable in lots of 625 to purchase whole shares);

(iii) 894,754,824 New Warrants outstanding, each exercisable to purchase 1/625th of one share of our Class A Common Stock (but only exercisable in lots of 625 to purchase whole shares);

(iv) the CPIA Warrant exercisable to purchase up to 106,667 shares of our Class A Common Stock;

(v) the VRM Warrants, entitling VRM to purchase 19,361,939 shares of Class A Common Stock;

each warrant expiring two years from the date of issuance, of which 9,751,339 and 9,610,600 are exercisable for $0.0025 per share and $0.0001 per share, respectively;

and (vi) the VRP Warrant, entitling VRP to purchase 100,000 shares of Class A Common Stock at a purchase price of $0.0025 per shares for a period of two years from issuance, exercisable on a cashless basis.

On February 18, 2025, the Company entered into a binding term sheet agreement with Virage to amend the MTA, as amended, whereby Virage agreed to exercise the VRM Warrants to receive 33 1/3% of the then issued and outstanding Class A Common Stock, and surrender to the Company any remaining unexercised VRM Warrants, or portions thereof, for termination, subject to certain consents and approvals.

Contemporaneous with the warrant exercise, Virage will terminate its agreement to hold no more than 9.99% of the outstanding Common Stock of the Company.

These proposed transactions are subject to, among other things, further negotiation and the execution of definitive agreements, regulatory approvals, certain third-party consents and approvals, and shareholder approvals if required by the Nasdaq Stock Market.

As a result, there can be no guarantee that the transactions thereby will be consummated.

The Company also has the ability to issue up to 153,721 shares of Class A Common Stock pursuant to awards under the Incentive Plan.

The shares of Class A Common Stock reserved for future issuance under the Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.

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Accordingly, shares registered under such registration statements will be available for sale in the open market.

Depending upon market liquidity at the time, sales of shares of our Class A Common Stock under the Yorkville SEPA and the Convertible Notes may cause the trading price of our Class A Common Stock to decline.

Depending upon market liquidity at the time, sales of shares of our Class A Common Stock under the Yorkville SEPA and the Yorkville Convertible Notes may cause the trading price of our Class A Common Stock to decline.

After Yorkville has acquired shares under the Yorkville SEPA, it may sell all, some, or none of those shares.

Sales to Yorkville by us pursuant to the Yorkville SEPA may result in

substantial dilution to the interests of other holders of our Class A Common Stock.

Sales to Yorkville by us pursuant to the Yorkville SEPA may result in substantial dilution to the interests of other holders of our Class A Common Stock.

The sale of a substantial number of shares of our Class A Common Stock to Yorkville, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

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So long as more than 50% of the voting power for the election of directors is held by an individual, group, or another company, we will qualify as a “controlled company” under the Nasdaq listing requirements.

Ruiz controls more than a majority of the voting power of our outstanding capital stock.

Ruiz and Frank C.

Quesada (collectively, the “MSP Principals”) control more than a majority of the voting power of our outstanding capital stock.

As a result, we qualify as a “controlled company” under the Nasdaq listing standards, and will not be subject to the requirements that would otherwise require us to have:

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and (iii) a compensation committee comprised solely of independent directors.

In addition, the Members, including John H.

Ruiz and Frank C.

Quesada have the ability to control matters requiring stockholder approval, including the election and removal of directors, any amendment to our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.

See “We are controlled by the Members, including John H.

Ruiz and Frank C.

Quesada, whose interests may conflict with our interests and the interests of other stockholders.”

The Members, including John H.

Ruiz and Frank C.

Quesada (together, the “MSP Principals”), may have their interest in us diluted due to future equity issuances, repurchases under the LLC Agreement from the MSP Principals in connection with the exercise of New Warrants or Members or their designees selling shares of Class A Common Stock, in each case, which could result in a loss of the “controlled company” exemption under the Nasdaq listing rules.

In addition, the Members, including the MSP Principals, have the ability to control matters requiring stockholder approval, including the election and removal of directors, any amendment to our Charter or Amended & Restated Bylaws, or the approval of any

merger or other significant corporate transaction, including a sale of substantially all of our assets.

See “We are controlled by the Members, including the MSP Principals, whose interests may conflict with our interests and the interests of other stockholders.”

The Members, including the MSP Principals, may have their interest in the Company diluted due to future equity issuances, repurchases under the LLC Agreement from the MSP Principals in connection with the exercise of New Warrants or Members or their designees selling shares of Class A Common Stock, in each case, which could result in a loss of the “controlled company” exemption under the Nasdaq listing rules.

We would then be required to comply with those provisions of the Nasdaq listing requirements.

The Company’s management has limited experience in operating a public company.

The Company’s executive officers have limited experience in the management of a publicly traded company.

The Company is subject to significant regulatory oversight and reporting obligations under federal securities laws.

Management’s limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the Company.

The Company may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of publicly traded companies.

The development and implementation of the standards and controls necessary for the Company to achieve the level of accounting standards required of a publicly traded company may require costs greater than expected.

It is possible that the Company will be required to expand its employee base and hire additional employees to support its operations as a public company, which will increase its operating costs in future periods.

There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.

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Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

See also “Risk Factor - Failure to meet the continued listing requirements of Nasdaq could result in the delisting of our Class A Common Stock, thus negatively impacting the price of our Class A Common Stock and negatively impacting our ability to raise additional capital.”

Failure to meet the continued listing requirements of Nasdaq could result in the delisting of our Class A Common Stock, thus negatively impacting the price value of our Class A Common Stock and negatively impacting our ability to raise additional capital.

On April 24, 2023, the Company was notified by Nasdaq Listing Qualifications staff (the “Staff”) that the Company was non-compliant with Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its 2022 Form 10-K.

The Company was also deemed non-compliant with Nasdaq’s Bid Price Requirement as the closing bid price for the Company’s Class A Common Stock had fallen below $1.00 per share for 30 consecutive business days (March 13, 2023 through April 23, 2023).

Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company was provided with a compliance cure period of 180 calendar days, or until October 23, 2023, to regain compliance with the Bid Price Requirement.

On July 27, 2023, the Company filed its 2022 Form 10-K.

On May 24, 2023, the Company was notified by Nasdaq that it was not in compliance with the requirements of Nasdaq Listing Rule 5250(c) as a result of not having timely filed its Form 10-Q for the period ended March 31, 2023 with the SEC.

On August 7, 2023, Nasdaq granted the Company an extension until August 30, 2023 to file its Quarterly Reports on Form 10-Q for the quarters ending March 31, 2023 and June 30, 2023.

On August 17, 2023, the Company filed its Quarterly Report on Form 10-Q for the period ending March 31, 2023.

On August 16, 2023, the Company was notified by Nasdaq that it was not in compliance with the requirement of Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its Form 10-Q for the period ended June 30, 2023 with the SEC.

The Company has regained compliance with such rule as a result of the filing of the Quarterly Report on Form 10-Q for the period ended June 30, 2023 on August 30, 2023.

On August 31, 2023, the Company was notified by Nasdaq that it regained compliance with Nasdaq Listing Rule 5250(c)(1) after having filed its 2022 Form 10-K, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023.

On September 5, 2023, the Company received a determination from the Staff that the Company’s Class A Common Stock had a closing bid price of $0.10 or less for 10 consecutive trading days during a compliance period and so, pursuant to Listing Rule 5810(3)(A)(iii), the staff determined to delist the Company’s securities from The Nasdaq Capital Market (the “Delisting Determination”).

Pursuant to the procedures set out in the Nasdaq Listing Rules, the Company appealed the Delisting Determination to a hearing panel (the “Hearing”), which suspended the Delisting Determination until the Hearing, which was scheduled for November 2, 2023.

The Company effected the Reverse Stock Split on October 13, 2023, which caused the price of its Class A Common Stock to trade at a level sufficient to regain compliance with Listing Rule 5810(3)(A)(iii), and Listing Rule 5450(a)(1).

On October 27, 2023, the Company was notified by the Staff that it had regained compliance with all applicable listing standards, the Hearing was canceled, and that the Company’s stock will continue to be listed and traded on the Nasdaq Stock Market.

On June 7, 2024, the Company was notified by Nasdaq Listing Qualifications staff (the “Staff”) that the Company was non-compliant with Nasdaq’s Bid Price Requirement as the closing bid price for the Company’s Class A Common Stock had fallen below $1.00 per share for 30 consecutive business days (April 25, 2024 through June 6, 2024).

Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company was provided with a compliance cure period of 180 calendar days, or until December 4, 2024, to regain compliance with the Bid Price Requirement.

On September 25, 2024, stockholders holding at least a majority of our outstanding voting capital stock, including our Class A Common Stock and Class V Common Stock, approved by written consent a resolution authorizing the Board of Directors to amend the Company’s Charter, to effect a reverse stock split (the “2024 Reverse Split”) of the Company’s Common Stock at a reverse stock split ratio ranging from 1:3 to 1:30, and to authorize the Company’s Board of Directors to determine, at its discretion, the timing of the amendment and the specific ratio of the 2024 Reverse Split.

On November 12, 2024, the Board determined to proceed with the 2024 Reverse Split at a ratio of 1:25, which was effectuated on the open of business on November 18, 2024.

On December 3, 2024, the Company received correspondence from Nasdaq stating that the Company’s previously disclosed bid price deficiency had been cured, and that the Company had regained compliance with Listing Rule 5450(a)(1).

The Company’s Class A common stock continued to be listed and traded on Nasdaq, subject to continued compliance with applicable Nasdaq listing standards.

On December 6, 2024, the Company received notification from the Staff that the Company’s application to transfer the listing of its common stock from the Nasdaq Global Market to the Nasdaq Capital Market was approved.

The Company’s securities transferred to the Nasdaq Capital Market at the opening of business on December 10, 2024, and continue to trade under the symbol “MSPR.” The

Nasdaq Capital Market operates in substantially the same manner as the Nasdaq Global Market, and listed companies must meet certain financial requirements and comply with Nasdaq’s corporate governance requirements.

In 2023, the Staff notified the Company of non-compliance with Nasdaq’s Bid Price Requirement and Nasdaq’s Listing Rules as a result of having not timely filed periodic reports;

however, by October 27, 2023, the Company had regained compliance with all applicable listing standards.

If in the future we fail to comply with Nasdaq’s continued listing requirements, including the Reporting Rule and Minimum Bid Requirement, our Class A Common Stock will be subject to delisting.

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These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Class A Common Stock, and therefore stockholders may have difficulty selling their shares.

We may be required to take write-downs or write-offs, or restructuring, impairment, or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could adversely affect the value of our securities.

Although due diligence was conducted on Legacy MSP prior to the Business Combination, we cannot assure you that this diligence surfaced all material issues that may have been present in Legacy MSP’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Legacy MSP’s business and outside of our and Legacy MSP’s control will not later arise.

As a result of these factors, we may be forced to write down or write off assets, restructure operations, or incur impairment or other charges that could result in losses.

We may be required to take write-downs or write-offs, or restructuring, impairment, or other charges that could have a significant negative effect on our financial condition, results of operations, and our stock price, and which could adversely affect the value of our securities.

We cannot assure you that our due diligence will surface all material issues that may be present in our business, and it is likely not possible to uncover all material issues through a customary amount of due diligence, or factors outside of our control which may arise.

As a result of these factors, we may be forced to write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in reporting losses.

Even if our due diligence successfully identifies certain risks, unexpected risks may arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Company or its securities.

Accordingly, any of our stockholders could suffer a reduction in the value of their shares.

In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject to as a result of assuming pre-existing debt held by virtue of our obtaining debt financing to partially finance business operations.

Accordingly, stockholders could suffer a reduction in the value of their shares.

Such stockholders are unlikely to have a remedy for such reduction in value.

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We may be unable to obtain additional financing to fund the operations and growth of the Company.

We may require additional financing to fund the operations or growth of the Company.

The failure to secure additional financing could have a material adverse effect on the continued operations or growth of the Company.

We require financing to fund the operations or growth of the Company.

Failure to secure additional financing would have a material adverse effect on the continued operations or growth of the Company.

None of our officers, directors or stockholders is required to provide any financing to us.

There exist in various jurisdictions prohibitions or restrictions in connection with purchasing Claims from plaintiffs (known as maintenance, and a form of maintenance, called champerty), assignment of certain kinds of Claims, and/or participation in a lawyer’s contingent fee interests.

Some jurisdictions in the U.S.

If we, our counterparties or the lawyers handling the underlying matters, were to be found to have violated the relevant prohibitions or restrictions in connection with certain matters, there could be a materially adverse effect on the value of the affected assets, our ability to enforce the relevant contractual agreements with our counterparties, and the amounts we would be able to recover with respect to such matters, or our costs for such matters.

Anti-takeover provisions contained in our Charter and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our Second Amended and Restated Certificate of Incorporation, as amended, (our “Charter”) contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

See “Risk Factor - Failure to obtain or maintain ongoing financing to fund operations would negatively impact our business.”

Anti-takeover provisions contained in our Charter and Amended & Restated Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our Charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Together, these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

These provisions include:

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• the requirement that special meetings of stockholders may only be called by the Chairperson of the Board, the Chief Executive Officer of the Company or the Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

• the requirement that, from and after the Voting Rights Threshold Date, amendments to certain provisions of the Charter and amendments to the Amended and Restated Bylaws must be approved by the affirmative vote of the holders of at least 66 2/3% in voting power of the then outstanding shares of the Company generally entitled to vote;

• the requirement that, from and after the Voting Rights Threshold Date, amendments to certain provisions of the Charter and Amended & Restated Bylaws must be approved by the affirmative vote of the holders of at least 66 2/3% in voting power of the then outstanding shares of the Company generally entitled to vote;

• our authorized but unissued shares of Common Stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans;

the existence of authorized but unissued and unreserved shares of Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger, or otherwise;

• advance notice procedures set forth in the Amended and Restated Bylaws that stockholders must comply with in order to nominate candidates to the Board or to propose other matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company;

• advance notice procedures set forth in the Amended & Restated Bylaws that stockholders must comply with in order to nominate candidates to the Board or to propose other matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company;

• an exclusive forum provision which provides that, unless the Company consents in writing to the selection of an alternative forum, (i) any derivative action brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim;

• arising pursuant to any provision of the DGCL, the Charter or the Amended and Restated Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, in each case, will be required to be filed in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, then a state court located within the State of Delaware or the federal district court for the District of Delaware).

• arising pursuant to any provision of the DGCL, the Charter or the Amended & Restated Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, in each case, will be required to be filed in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, then a state court located within the State of Delaware or the federal district court for the District of Delaware).

The Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities.

The Charter provides that the Company will have no interests or expectancy in, or being offered an opportunity to participate in any corporate opportunity, to the fullest extent permitted by applicable law, with respect to any lines of business or business activity or business venture conducted by any holder of Common Stock, any affiliate of such holder or any director, officer or stockholder of such holder or any affiliate thereof (“Relevant Persons”) as of the date of the filing of the Charter with the Secretary of State of the State of Delaware or received by, presented to or originated by the Relevant Persons after the date of the filing of the Charter with the Secretary of State of the State of Delaware in such person’s capacity as a Relevant Person (and not in his, her or its capacity as a director, officer or employee of the Company).

of State of the State of Delaware in such person’s capacity as a Relevant Person (and not in his, her or its capacity as a director, officer or employee of the Company).

These provisions of the Charter create the possibility that a corporate opportunity of ours may be used for the benefit of the Relevant Persons.

We may redeem unexpired Public Warrants and New Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such warrants worthless.

We have the ability to redeem outstanding Public Warrants and New Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant;

provided that the last reported sales price of our Class A Common Stock equals or exceeds $11,250.00 per share (or as otherwise adjusted pursuant to the Existing Warrant Agreement or New Warrant Agreement, as applicable) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrant holders and provided certain other conditions are met.

During the most recent 60-day trading period, the price of our Class A Common Stock has remained below the threshold that would allow us to redeem the Public Warrants and New Warrants.

If and when the Public Warrants and New Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of the outstanding Public Warrants and New Warrants could force the warrant holders:

(i) to exercise their Public Warrants or New Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so;

(ii) to sell their Public Warrants or New Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants or New Warrants;

or (iii) to accept the nominal redemption price which, at the time the outstanding New Warrants are called for redemption, is likely to be substantially less than the market value of their New Warrants.

Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants has increased to $0.0625 after giving effect to the issuance of the New Warrants.

The Company has no obligation to notify holders of the Public Warrants or the New Warrants that they have become eligible for redemption.

However, in the event the Company determined to redeem the Public Warrants or the New Warrants, holders of the Public Warrants and the New Warrants, as applicable, would be notified of such redemption as described in the Existing Warrant Agreement and the New Warrant Agreement, as applicable.

Specifically, in the event that the Company elects to redeem all of the redeemable warrants as described above, the Company shall fix a date for the redemption (the “Redemption Date”).

Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than 30 days prior to the Redemption Date to the registered holders of the redeemable warrants to be redeemed at their last addresses as they appear on the registration books.

Any notice mailed in the manner provided in the Existing Warrant Agreement and the New Warrant Agreement shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

In addition, beneficial owners of the redeemable warrants will be notified of such redemption via the Company’s posting of the redemption notice to DTC.

Risks Related to Ownership of Our Common Stock

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• general economic or political conditions in the United States or elsewhere.

In addition, if we fail to reach an important recovery milestone or result by a publicly expected deadline, even if by only a small margin, there could be significant impact on the market price of our Class A Common Stock.

If we fail to reach an important recovery milestone or result by a publicly expected deadline, even if by only a small margin, there could be significant impact on the market price of our Class A Common Stock.

Additionally, as we approach the announcement of anticipated significant information and as we announce such information, we expect the price of our Class A Common Stock to be particularly volatile, and negative results would have a substantial negative impact on the price of our Class A Common Stock.

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You may be unable to sell your securities unless a market can be established or sustained.

If the Business Combination’s benefits do not meet the expectations of investors, stockholders, or financial analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Company’s securities may decline.

If the Company’s operating results do not meet the expectations of investors, stockholders, or financial analysts, the market price of our securities may decline.

Our operating results could fluctuate due to a number of factors, including changes in our accounting estimates;

litigation and claim-related expenditures;

an increase in the number and type of competitors;

changes in competitors’ product offerings;

and other matters.

Similarly, our future operating results may vary significantly from quarter to quarter or year to year due to these and other factors, many of which are beyond our control.

If our operating results or projections of future operating results do not meet the expectations of securities analysts or investors in future periods, our stock price may fall.

The trading price of our Class A Common Stock is highly volatile and is subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume.

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, these factors include:

• the valuation ascribed to Legacy MSP and the Company’s Class A Common Stock in the Business Combination may not be indicative of the price of the Company that will prevail in the current trading market,

• research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors,

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In such circumstances, the trading price of our securities may not recover and may experience a further decline.

If securities analysts publish negative evaluations of our stock or stop publishing research or reports about our business, the price of our stock could decline.

If securities analysts publish negative evaluations of our stock or stop publishing research or reports about the Company, our peers, or our industry, the price of our stock could decline.

The trading market for our Class A Common Stock relies in part on the research and reports that industry or financial analysts publish about us or our business.

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We cannot predict the impact our dual class capital structure may have on the market price of the shares of Class A Common Stock.

We cannot predict whether our dual class structure, combined with the concentrated control of the Company, will result in a lower or more volatile market price of the Class A Common Stock or in adverse publicity or other adverse consequences.

We cannot predict whether our dual class structure, combined with the concentrated control of the Company, will result in a lower or more volatile market price of the Class A Common Stock, adverse publicity, or other adverse consequences.

For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices.

Under any such announced policies or future policies, our dual class capital structure could make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices

will not be investing in our stock.

Under any such announced policies or future policies, our dual class capital structure could make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices will not be investing in our stock.

It is unclear what effect, if any, these policies will have on the valuations of publicly traded companies excluded from such indices, but it is possible that they may depress valuations as compared to similar companies that are included.

As a result, the market price of shares of Class A Common Stock could be adversely affected.

As a result, the market price of shares of the Company’s Class A Common Stock could be adversely affected.

We may amend the terms of the Public Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then-outstanding Public Warrants.

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Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 65% of the then-outstanding Public Warrants approve of such amendment.

Although our ability to amend the terms of the Public Warrants with the consent of at least 65% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Public Warrants, shorten the exercise period or decrease the number of shares of Class A Common Stock purchasable upon exercise of a Public Warrant.

We may redeem unexpired Public Warrants and New Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such warrants worthless.

We have the ability to redeem outstanding Public Warrants and New Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.25 per warrant;

provided that the last reported sales price of our Class A Common Stock equals or exceeds $450.00 per share (or as otherwise adjusted pursuant to the Existing Warrant Agreement or New Warrant Agreement, as applicable) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrant holders and provided certain other conditions are met.

During the most recent 60-day trading period, the price of our Class A Common Stock has remained below the threshold that would allow us to redeem the Public Warrants and New Warrants.

Redemption of the outstanding Public Warrants and New Warrants could force the warrant holders:

(i) to exercise their Public Warrants or New Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so;

(ii) to sell their Public Warrants or New Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants or New Warrants;

Pursuant to the terms of the Existing Warrant Agreement, the exercise price of the Public Warrants has decreased to $0.0025 after giving effect to the issuance of the New Warrants.

The Company has no obligation to notify holders of the Public Warrants or the New Warrants that they have become eligible for redemption.

Specifically, in the event that the Company elects to redeem all of the redeemable warrants as described above, the Company shall fix a date for the redemption (the “Redemption Date”).

In addition, beneficial owners of the redeemable warrants will be notified of such redemption via the Company’s posting of the redemption notice to DTC.

Although our ability to amend the terms of the Public Warrants with the consent of at least 65% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, changes to the exercise price, exercise period, or number of shares of stock purchasable upon exercise of a Public Warrant.

Our stockholders will experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding options and warrants.

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As of April 14, 2025, the following securities are convertible into, or allow the purchase of, our Class A Common Stock, including:

(i) 124,067,498 Up-C Units that may be exchanged for shares of Class A Common Stock;

(i) 3,323,146 Up-C Units that may each be exchanged for one share of Class A Common Stock;

2,950,157 Public Warrants outstanding, which are exercisable in lots of 625 with an exercise price of $0.0625 per whole share;

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(iii) the CPIA Warrant exercisable to purchase up to 106,667 shares of our Class A Common Stock;

and (iv) the VRM Warrants, entitling Virage to purchase 62,073,998 shares of Class A Common

Stock at a purchase price of $0.0001 per share for a period of two years from issuance, exercisable on a cashless basis only.

(iv) the VRM Warrants, entitling VRM to purchase 19,361,939 shares of Class A Common Stock;

each warrant expiring two years from the date of issuance, of which 9,751,339 and 9,610,600 are exercisable on a cashless basis for $0.0025 per share and $0.0001 per share, respectively;

and (v) the VRP Warrant, entitling VRP to purchase 100,000 shares of Class A Common Stock at a purchase price of $0.0025 per share for a period of two years from issuance, exercisable on a cashless basis only.

In addition, 153,721 shares of Class A Common Stock are reserved for future issuance under our stock incentive plan.

Pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price.

Contemporaneous with the warrant exercise, Virage will terminate its agreement to hold no more than 9.99% of the outstanding Common Stock of the Company.

As a result, there can be no guarantee that the transactions thereby will be consummated.

Moreover, pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price.

Notwithstanding the foregoing, the shares of Class A Common Stock issuable upon exercise of our warrants will result in dilution to the then existing holders of Class A Common Stock of the Company and increase the number of shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Class A Common Stock.

The Company’s management has limited experience in operating a public company.

The Company’s executive officers have limited experience in the management of a publicly traded company.

The Company is subject to significant regulatory oversight and reporting obligations under federal securities laws.

The provision of our Charter requiring exclusive forum in the courts in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

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(ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Company to the Company or the Company’s stockholders;

(iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Charter or Amended and Restated Bylaws;

(iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Charter or Amended & Restated Bylaws;

or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, in each case, is to be filed in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, then a state court located within the State of Delaware or the federal district court for the District of Delaware).

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Although we believe that these exclusive forum provisions benefit us by providing greater consistency in the application of Delaware law, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable in disputes with us or any of our directors, officers or stockholders, which may discourage lawsuits with respect to such claims.

Further, in the event a court finds the exclusive forum provision contained in the Charter to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.

We currently qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging

growth company, including:

(i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”);

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Our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which the controls of the Company are documented, designed or operating.

We have identified material weaknesses in internal control as noted within “Part II, Item 9A Controls and Procedures” of this Annual Report:

Any failure to maintain effective internal controls, including the recommendations of the Special Committee, could adversely impact our ability to report our financial results on a timely and accurate basis, or may result in a restatement of our financial statements for prior periods.

Any such failures could have a material adverse effect on our financial results and investor confidence and the market for our Class A Common Stock.

Our internal control over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of SOX, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting.

To comply with the requirements of being a public company, the Company is required to provide the management report on internal controls commencing with this Annual Report on Form 10-K for year ended December 31, 2023, and we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff.

Our internal controls over financial reporting may not be effective, which could have a significant and adverse effect on our business and reputation.

To comply with the requirements of being a public company, the Company is required to provide the management report on internal controls on Form 10-K for year ended December 31, 2024.

The standards required for a public company under Section 404 of SOX are significantly more stringent than those required as a privately held company.

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Testing and maintaining these controls can divert our management’s attention from other matters that are important to the operation of our business.

independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A Common Stock could be negatively affected and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.

If we identify material weaknesses in the internal control over financial reporting of the Company or are unable to comply with the requirements of Section 404 of SOX or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and we could become subject to further investigations by the SEC or other regulatory authorities, which could require additional financial and management resources, and negatively impact the market price of our Class A Common Stock.

Matters relating to or arising from the Special Committee investigation, including governmental investigations, regulatory proceedings, litigation matters, and potential additional expenses, may adversely affect our business and results of operations.

As previously disclosed, on August 11, 2022, the Securities and Exchange Commission (the “SEC”) initiated an investigation of the Company, and requested documents relating to, among other matters, the business combination transaction with Lionheart Acquisition Corporation II consummated on May 23, 2022, certain historical and projected financial results, investor agreements, and data analytic platforms and algorithms.

As previously disclosed, on August 11, 2022, the SEC initiated an investigation of the Company, and requested documents relating to, among other matters, the Business Combination transaction with Lionheart Acquisition Corporation II consummated on May 23, 2022, certain historical and projected financial results, investor agreements, and data analytic platforms and Algorithms.

The Company received a subpoena dated March 1, 2023 from the SEC regarding the aforementioned subject matter, and subsequently received a subpoena on May 10, 2023, in connection with the investigation relating to, among other matters, the Company’s projections and the accounting and valuation of certain assets that were the basis for the Company’s determination that its quarterly financial statements for the periods ended June 30, 2022 and September 30, 2022 require restatements and should no longer be relied upon, as disclosed in the Company’s Form 8-K on April 14, 2023.

On August 16, 2023, the Company received an additional subpoena from the SEC regarding certain funding sources of the Company prior to the Business Combination, various statements and disclosures by the Company in connection with, and following, the Business Combination, certain historical and projected financial results, and data analytic platforms and Algorithms used to identify potential recoveries.

The Company intends to fully cooperate with the SEC in responding to the subpoenas.

In addition, on March 10, 2023, the Company received a subpoena from the U.S.

Attorney’s Office in connection with a grand jury investigation in the U.S.

District Court for the Southern District of Florida requesting certain information concerning the Company, which subpoena requests documents relating to, among other matters, the Company’s proprietary algorithms and other software used to identify potentially recoverable claims, the drop in the price of the Company’s common stock following the Business Combination, and certain marketing materials and investment agreements presented to potential investors.

To the best of the Company’s knowledge, the Department of Justice has not issued any target letters to anyone associated with the Company as a result of this investigation (the United States Attorney’s Manual states that a “target” is a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant).

Attorney’s Office (“USAO”) in connection with a grand jury investigation in the U.S.

District Court for the Southern District of Florida requesting certain information concerning the Company, which requested documents relating to, among other matters, the Company’s proprietary Algorithms and other software used to identify potentially recoverable claims, the drop in the price of the Company’s common stock following the Business Combination, and certain marketing materials and investment agreements presented to potential investors.

On July 18, 2024, the Company received an additional subpoena from the USAO, requesting documents related to a Company press release.

To the best of the Company’s knowledge, the Department of Justice has not issued any target letters to anyone associated with the Company as a result of this investigation.

(The United States Attorney’s Manual states that a “target” is a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant.)

The Company has cooperated, and will continue to cooperate, fully with these inquiries.

In connection with its review of the matters related to the preparation and filing of the 2022 Form 10-K, the Special Committee, along with external advisors retained thereby, reviewed the subject matter of information requests related to the foregoing subpoenas received prior to June 2023.

Based on that review, and the nature of the documents requested in the subsequent subpoena, the Company believes that these investigations will be resolved without any material developments;

On April 16, 2023, a special committee of the Board of Directors was formed, which along with external advisors retained thereby, reviewed matters related to the preparation and

filing of the 2022 Annual Report on Form 10-K and the subject matter of information requests related to the foregoing subpoenas received prior to June 2023.

Based on that review, and the nature of the documents requested in the subsequent subpoena, the Company believes that the investigations will be resolved without any material developments;

however, there can be no assurance as to the outcome or future direction thereof.

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As a result of the matters reported above, we are exposed to greater risks associated with litigation, regulatory proceedings, and government enforcement actions.

Any future investigations or additional lawsuits may adversely affect our business, financial condition, results of operations and cash flows.

Any future investigations or additional lawsuits may adversely affect our business, financial condition, results of operations and cash flows, and negatively impact the market price of our Class A Common Stock.

The Company’s stockholders may be held liable for claims by third parties against the Company to the extent of distributions received by them.

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The Company cannot assure you that claims will not be brought against it for these reasons.

We completed a 1-for-25 reverse stock split of our shares of common stock, which may have adverse effects on the trading of our Class A Common Stock.

On November 12, 2024, the Board determined to proceed with the 2024 Reverse Split at a ratio of 1:25, which was effectuated on the open of business on November 18, 2024.

The effect that the 2024 Reverse Split will have on the market price of our Class A Common Stock cannot be predicted with certainty.

There can be no assurance that the per share price of our Class A Common Stock will continue to meet the price criteria or other requirements for continued listing of our common stock on the Nasdaq.

Risks Related to the Yorkville SEPA

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The price of our common stock could decline if there are substantial sales of shares of our common stock, if there is a large number of shares of our common stock available for sale, or if there is the perception that these sales could occur.

On January 6, 2023, we entered into a purchase agreement with YA II PN, Ltd., a Cayman Island exempted company (“Yorkville”), pursuant to which Yorkville committed to purchase up to $1 billion in shares of Class A Common Stock, subject to certain limitations and conditions set forth therein.

On November 14, 2023, we entered into the Yorkville SEPA, which fully amended and restated the January 6, 2023 agreement.

Under the Yorkville SEPA, the Company agreed to issue and sell to Yorkville, from time to time, and Yorkville agreed to purchase from the Company, up to $250 million of the Company’s Class A Common Stock.

The Company shall not affect any sales under the Yorkville SEPA, and Yorkville shall not have any obligation to purchase shares of our Class A Common Stock under the Yorkville SEPA, to the extent that after giving effect to such purchase and sale:

(i) Yorkville would beneficially own more than 9.99% of the Company’s outstanding voting Common Stock at the time of such issuance (the “Ownership Limitation”), or (ii) the aggregate number of shares of Class A Common Stock issued under the Yorkville SEPA together with any shares of Common Stock issued in connection with any other related transactions that may be considered part of the same series of transactions, would exceed 19.99% of the aggregate number of shares of outstanding voting Common Stock as of November 14, 2023 (the “Exchange Cap”).

Thus, the Company may not have access to the right to sell the full $250 million of shares of Class A Common Stock to Yorkville.

Our shares of Class A Common Stock that may be issued under the Yorkville SEPA may be sold by us to Yorkville at our discretion from time to time over the 36-month period commencing on November 14, 2023.

We generally have the right to control the timing and amount of any sales of our shares of Class A Common Stock to Yorkville under the Yorkville SEPA, except with respect to Class A Common Stock issued upon conversion of Convertible Notes.

On November 14, 2023, we entered into the Yorkville SEPA, pursuant to which the Company agreed to issue and sell to Yorkville, from time to time, and Yorkville agreed to purchase from the Company, up to $250 million of the Company’s Class A Common Stock for a 36-month period.

Sales of our shares of Class A Common Stock, if any, to Yorkville under the Yorkville SEPA will depend upon market conditions and other factors to be determined by us.

We may ultimately decide to sell to Yorkville all, some, or none of the shares of Class A Common Stock that may be available for us to sell to Yorkville pursuant to the Yorkville SEPA.

However, to the extent that there is a balance outstanding pursuant to the Convertible Notes, Yorkville may, at its discretion, deliver a notice under the Yorkville SEPA requiring the issuance and sale of shares of Class A Common Stock to Yorkville at a price per share equivalent to the Conversion Price as determined in accordance with the Convertible Notes in consideration of an offset to the Convertible Notes;

However, to the extent that there is a balance outstanding pursuant to the Yorkville Convertible Notes, Yorkville may, at its discretion, deliver a notice under the Yorkville SEPA requiring the issuance and sale of shares of Class A Common Stock to Yorkville at a price per share equivalent to the Conversion Price as determined

in accordance with the Yorkville Convertible Notes in consideration of an offset to the Yorkville Convertible Notes;

Yorkville, in its sole discretion, may select the amount of any such conversion, provided that the number of shares issued does not cause Yorkville to exceed certain limitations.

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However, because the market prices of our shares of Class A Common Stock may fluctuate from time to time and, as a result, the actual purchase prices to be paid by Yorkville for our shares of Class A Common Stock that we direct it to purchase under the Yorkville SEPA, if any, also may fluctuate because they will be based on such fluctuating market prices of our shares of Class A Common Stock, it is possible that we would need to issue, register, and sell additional shares of our Class A Common Stock to Yorkville under the Yorkville SEPA in order to receive aggregate gross proceeds equal to Yorkville’s $250 million total aggregate purchase commitment under the Yorkville SEPA.

Pursuant to the Yorkville SEPA, the Company shall not affect any sales under the Yorkville SEPA, and Yorkville shall not have any obligation to purchase shares of our Class A Common Stock under the Yorkville SEPA, to the extent that after giving effect to such purchase and sale:

However, on December 6, 2024, stockholders holding at least a majority of our outstanding voting capital stock, including our Class A Common Stock and Class V Common Stock, approved by written consent as required by Nasdaq Rule 5635(d), the issuance of shares of common stock of the Company in excess of the Exchange Cap set forth in the Yorkville SEPA.

Effective January 8, 2025, the Exchange Cap was effectively lifted, allowing the Company to issue shares to Yorkville pursuant to the Yorkville SEPA and the Yorkville Convertible Notes in excess of the Exchange Cap.

We generally have the right to control the timing and amount of any sales of our shares of Class A Common Stock to Yorkville under the Yorkville SEPA, except with respect to a Yorkville Advance (as defined herein).

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We may ultimately decide to sell to Yorkville all, some, or none of the shares of Class A Common Stock that may be available for us to sell to Yorkville pursuant to the Yorkville SEPA.

In addition, to the extent that there is a balance outstanding pursuant to the Convertible Notes, Yorkville may, at its discretion, deliver a notice under the SEPA requiring a Yorkville Advance.

In addition, to the extent that there is a balance outstanding pursuant to the Yorkville Convertible Notes, Yorkville may, at its discretion, deliver a notice under the SEPA requiring a Yorkville Advance.

Yorkville, in its sole discretion, may select the amount of any Yorkville Advance, provided that the number of shares issued does not cause Yorkville to exceed the Ownership Limitation, does not exceed the Exchange Cap, or the number of shares of common stock that are registered.

As a result of a Yorkville Advance, the amounts payable under the Convertible Notes will be offset by such amount subject to each Yorkville Advance.

In connection with the Yorkville SEPA, and subject to the condition set forth therein, Yorkville agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of $15.0 million.

On November 14, 2023, we issued a Convertible Note to Yorkville in the principal amount of $5.0 million resulting in net proceeds to us of $4.73 million.

On December 11, 2023, we issued a second Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

On April 8, 2024, we issued a third Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

Interest shall accrue on the outstanding balance of any Convertible Note at an annual rate equal to 5.0%, subject to an increase to 18% upon an event of default as described in the Convertible Notes.

The maturity date of each Convertible Note will be September 30, 2025 (as extended pursuant to the Yorkville Letter Agreement) and may be extended at the option of the holder.

Yorkville may convert the Convertible Notes into shares of our Class A Common Stock at a conversion price equal to the lower of:

(A)(i) with respect to the initial Convertible Note issued on November 14, 2023, $8.0225, (ii) with respect to the second Convertible Note issued on December 11, 2023, $3.7136, and (iii) with respect to a third Convertible Note issued on April 8, 2024, $1.5050, or (B) 95% of the lowest daily VWAP during the seven consecutive trading days immediately preceding the conversion (the “Conversion Price”), which in no event may the Conversion Price be lower than $1.00 (the “Floor Price”) (as reduced by the Yorkville Letter Agreement).

Yorkville, at its discretion, and providing that there is a balance remaining outstanding under the Convertible Notes, may deliver a notice under the Yorkville SEPA requiring the issuance of shares of Class A Common Stock to Yorkville at a price per share equivalent to the Conversion Price as determined in accordance with the Convertible Notes;

As a result of a Yorkville Advance, the amounts payable under the Yorkville Convertible Notes will be offset by such amount subject to each Yorkville Advance.

In connection with the Yorkville SEPA, and subject to the condition set forth therein, Yorkville agreed to advance to the Company in the form of convertible promissory notes (the “Yorkville Convertible Notes”) an aggregate principal amount of $15.0 million.

In 2023, the Company issued two Convertible Notes to Yorkville for a combined principal amount of $10 million, resulting in net proceeds of $9.48 million, and in 2024 the Company issued a third Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

Yorkville may convert the Yorkville Convertible Notes into shares of our Class A Common Stock at a conversion price equal to the lower of:

(A)(i) with respect to the initial Convertible Note issued on November 15, 2023, $200.5625, (ii) with respect to the second Convertible Note issued on December 11, 2023, $92.84, and (iii) with respect to the third Convertible Note issued on April 8, 2024, $37.625, or (B) 95% of the lowest daily VWAP during the seven consecutive trading days immediately preceding the conversion (the “Conversion Price”), which in no event may the Conversion Price be lower than $3.75 (the “Floor Price”) (as reduced by the Yorkville Letter Agreement).

Yorkville, at its discretion, and providing that there is a balance remaining outstanding under the Yorkville Convertible Notes, may deliver a notice under the Yorkville SEPA requiring the issuance of shares of Class A Common Stock to Yorkville at a price per share equivalent to the Conversion Price as determined in accordance with the Yorkville Convertible Notes;

Yorkville, in its sole discretion, may select the amount of any such conversion, provided that the number of shares issued is subject to certain limitations.

As the purchase price per share to be paid by Yorkville for the shares of Class A Common Stock that we may elect to sell to Yorkville under the Yorkville SEPA, if any, will fluctuate based on the market prices of our shares of Class A Common Stock at the time we elect to sell shares to Yorkville pursuant to the Yorkville SEPA, if any, it is not possible for us to predict the number of shares of Class A Common Stock that we will sell to Yorkville under the Yorkville SEPA, the purchase price per share that Yorkville will pay for shares purchased from us under the Yorkville SEPA, or the aggregate gross proceeds that we will receive from those purchases by Yorkville under the Yorkville SEPA.

In addition, unless we obtain stockholder approval, we will not be able to issue shares of common stock in excess of 19.99% of the aggregate number of shares of outstanding voting Common Stock as of November 14, 2023 (the “Exchange Cap”).

Depending on the market prices of our common stock in the future, this could be a significant limitation on the amount of funds we are able to raise pursuant to the Yorkville SEPA.

Other limitations in the Yorkville SEPA, including the Exchange Cap, and our ability to meet the conditions necessary to deliver a written notice to Yorkville of an Advance (“Advance Notice”), could also prevent us from being able to raise funds up to the $250 million.

Moreover, although the Yorkville SEPA provides that we may sell up to an aggregate of $250 million of our Class A Common Stock to Yorkville, only 50,000,000 shares of our common stock were registered for resale under the registration statement, which we may elect to sell to Yorkville, in our sole discretion, from time to time from and after the date of, and pursuant to, the Yorkville SEPA or that Yorkville may require that we sell pursuant to a Yorkville Advance.

Moreover, although the Yorkville SEPA provides that we may sell up to an aggregate of $250 million of our Class A Common Stock to Yorkville, only 2.0 million shares of our common stock were registered for resale under the registration statement, which we may elect to sell to Yorkville, in our sole discretion, from time to time from and after the date of, and pursuant to, the Yorkville SEPA or that Yorkville may require that we sell pursuant to a Yorkville Advance.

Even if we elect to sell to Yorkville all of the shares of Common Stock, depending on the market prices of our Class A Common Stock at the time of such sales, the actual gross proceeds from the sale of all such shares may be substantially less than $250 million, which could materially and adversely affect our liquidity.

As required pursuant to the Amended and Restated Nomura Promissory Note, 50% of the aggregate proceeds under the Yorkville shall be used to repay amounts outstanding under the Amended and Restated Nomura Promissory Note (first towards accrued and unpaid interest, if any, then towards principal) and the remaining 50% of such proceeds shall be used to repay amounts due under the Convertible Notes, if any, or be paid to the Company after the Convertible Notes are fully repaid.

Pursuant to the Third Virage MTA Amendment, 25% of the Company’s portion of any net proceeds from the Yorkville SEPA would be used to pay down the VRM Full Return after the Convertible Notes are fully satisfied.

If we desire to issue and sell to Yorkville under the Yorkville SEPA more than the 50,000,000 shares registered for resale, and the Exchange Cap provisions and other limitations in the Yorkville SEPA would allow us to do so, we would need to file with the SEC one or more additional registration statements to register under the Securities Act the resale by Yorkville of any such additional shares of our common stock and the SEC would have to declare such registration statement or statements effective before we could sell additional shares.

There can be no assurances of such events occurring or the timing of such events occurring.

Pursuant to the Third Virage MTA Amendment, 25% of the Company’s portion of any net proceeds from the Yorkville SEPA would be used to pay down the VRM Full Return after the Yorkville Convertible Notes are fully satisfied.

Pursuant to a letter agreement dated November 15, 2024, Nomura agreed to forego payments of up to $4.0 million due under the Nomura Note from proceeds from the sale of Class A Common Stock to Yorkville pursuant to the Yorkville SEPA until March 31, 2025.

Moreover, on April 10, 2025, Yorkville agreed to waive Volume Threshold and Maximum Advance Amount limitations set forth in the Yorkville SEPA.

The sale and issuance of our shares of our Class A Common Stock to Yorkville will cause dilution to our existing shareholders, and the sale of the shares acquired by Yorkville, or the perception that such sales may occur, could cause the price of our Class A Common Stock to fall.

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Therefore, sales to Yorkville by us could result in substantial dilution to the interests of other holders of our shares of Common Stock.

Additionally, the

sale of a substantial number of shares of Common Stock to Yorkville, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a desirable time and price.

Additionally, the sale of a substantial number of shares of Common Stock to Yorkville, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a desirable time and price.

The resale of shares of Common Stock by Yorkville in the public market or otherwise, or the perception that such sales could occur, could also harm the prevailing market price of our shares of Common Stock.

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These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our shares of Common Stock.

Once we issue a Convertible Note, we do not have the right to control the timing and amount of the issuance of our Class A Common Stock to Yorkville and, accordingly, it is not possible to predict the actual number of shares we will issue pursuant to the conversion of a Convertible Note at any one time or in total.

Once we issue a Convertible Note, we do not have the right to control the timing and amount of any issuances of our shares of Class A Common Stock to Yorkville upon conversion of a Convertible Notes.

While there is an outstanding remaining balance pursuant to one or more of the Yorkville Convertible Notes, we do not exercise absolute control over the timing and amount of the issuance of our Class A Common Stock to Yorkville and, accordingly, it is not possible to predict the actual number of shares we will issue pursuant to the conversion of a Convertible Note, at any one time or in total.

While there is an outstanding remaining balance pursuant to one or more of the Yorkville Convertible Notes, we do not have absolute control over the timing and amount of any issuances of our shares of Class A Common Stock to Yorkville upon conversion of a Yorkville Convertible Note.

Sales of our shares of Class A Common Stock, if any, to Yorkville under the Yorkville SEPA will depend upon market conditions and other factors, and the discretion of Yorkville.

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Upon a trigger event, we may be required to make payments that could cause us financial hardship.

In connection with the Yorkville SEPA, and subject to the conditions set forth therein, Yorkville has agreed to advance us an amount of up to $15.0 million, evidenced by Convertible Notes to be issued to Yorkville at a purchase price equal to 95.0% of the principal amount of each Convertible Note.

On November 14, 2023, we issued a Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.73 million.

On December 11, 2023, we issued a Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

On April 8, 2024, we issued a third Convertible Note to Yorkville in the principal amount of $5.0 million, resulting in net proceeds to us of $4.75 million.

Interest accrues on the outstanding balance of any Convertible Note at an annual rate equal to 5.0%, subject to an increase to 18% upon an event of default as described in the Convertible Notes.

In connection with the Yorkville SEPA, and subject to the conditions set forth therein, Yorkville has agreed to advance us an amount of up to $15.0 million, evidenced by the Yorkville Convertible Notes to be issued to Yorkville at a purchase price equal to 95.0% of the principal amount of each Convertible Note.

Interest accrues on the outstanding balance of any Convertible Note at an annual rate equal to 5.0%, subject to an increase to 18% upon an event of default as described in the Yorkville Convertible Notes.

The maturity date of each Convertible Note will be September 30, 2025 (as extended pursuant to the Yorkville Letter Agreement, defined below), and may be extended at the option of Yorkville.

Yorkville may convert the Convertible Notes into shares of our Class A Common Stock at a conversion price equal to the lower of:

Yorkville may convert the Yorkville Convertible Notes into shares of our Class A Common Stock at a conversion price equal to the

If any time on or after November 14, 2023, (i) the daily VWAP is less than the Floor Price for ten consecutive trading days (“Floor Price Trigger”), (ii) the Company has issued substantially all of the shares available under the Exchange Cap (as defined below) (“Exchange Cap Trigger”) or (iii) Company is in material breach of the Registration Rights Agreement, dated as of the date hereof, by and between Yorkville and the Company (the “Registration Rights Agreement”) and such breach remains uncured for a period of twenty trading days, or the occurrence of an “Event” (as defined in the Registration Rights Agreement) (“Registration Event Trigger” and collectively with the Floor Price Trigger and the Exchange Cap Trigger, the “Trigger”), are triggered then the Company shall make monthly payments to Yorkville beginning on the seventh trading day after the Trigger and continuing monthly in the amount of $1,500,000 plus an 5.0% premium and accrued and unpaid interest.

Pursuant to the Yorkville SEPA, if any time on or after November 14, 2023, (i) the daily VWAP is less than the Floor Price for ten consecutive trading days (“Floor Price Trigger”), (ii) the Company has issued substantially all of the shares available under the Exchange Cap (as defined below) (“Exchange Cap Trigger”) or (iii) Company is in material breach of the Registration Rights Agreement, dated as of the date hereof, by and between Yorkville and the Company (the “Registration Rights Agreement”) and such breach remains uncured for a period of twenty trading days, or the occurrence of an “Event” (as defined in the Registration Rights Agreement) (“Registration Event Trigger” and collectively with the Floor Price Trigger and the Exchange Cap Trigger, the “Trigger”), are triggered then the Company shall make monthly payments to Yorkville beginning on the seventh trading day after the Trigger and continuing monthly in the amount of $1,500,000 plus an 5.0% premium and accrued and unpaid interest.

On April 8, 2024, the Company and Yorkville reached an agreement (the “Yorkville Letter Agreement”) to:

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(2) waive the first monthly payment due to the Floor Price Trigger, thereby curing the Floor Price Trigger;

and (3) extend the maturity date of the Convertible Notes to September 30, 2025.

and (3) extend the maturity date of the Yorkville Convertible Notes to September 30, 2025.

In addition, the parties agreed that the third Convertible Note for $5.0 million would be issued on April 8, 2024.

On April 12, 2024, Yorkville further agreed that, to the extent that it holds Class A Common Stock in such quantities that would prevent the Company from utilizing the SEPA solely due to the Ownership Limitation, Yorkville commits to fund an additional advance in the principal amount of $13,000,000 on the same terms and conditions as the previous advances pursuant to the Yorkville SEPA.

On April 12, 2024, Yorkville further agreed that, to the extent that it holds Class A Common Stock in such quantities that would prevent the Company from utilizing the SEPA solely due to the Ownership Limitation, Yorkville commits to fund an additional advance in the principal amount of $13.0 million on the same terms and conditions as the previous advances pursuant to the Yorkville SEPA.

On May 2, 2024, the Company and Yorkville reached an agreement to reduce the Floor Price under the Yorkville SEPA from $25.00 to $12.50.

On July 11, 2024, the daily VWAP for our Class A Common Stock had been below the Floor Price for ten consecutive trading days, resulting in a Floor Price Trigger.

On July 12, 2024, Yorkville agreed to extend the due date for the first Monthly Payment, due as a result of a Floor Price Trigger, to September 11, 2024.

On August 13, 2024, the Company and Yorkville reached an agreement to reduce the Floor Price under the Yorkville SEPA from $12.50 to $3.75, thereby curing the Floor Price Trigger pursuant to the terms of the Yorkville SEPA.

On December 6, 2024, stockholders holding at least a majority of our outstanding voting capital stock, including our Class A Common Stock and Class V Common Stock, approved by written consent as required by Nasdaq Rule 5635(d), the issuance of shares of common stock of the Company in excess of the Exchange Cap set forth in the Yorkville SEPA.

On January 24, 2025, the Company and Yorkville agreed that Monthly Payments resulting from a Floor Price Trigger would be due no sooner than April 30, 2025, and that the Company would initiate Advance Notices weekly to issue and sell shares remaining under an existing effective registration statement.

On April 10, 2025, Yorkville further agreed to:

(i) extend the due date for the first Monthly Payment to November 30, 2026, (ii) extend the maturity date of the Convertible Notes to November 30, 2026, and (iii) to waive Volume Threshold and Maximum Advance Amount limitations set forth in the Yorkville SEPA.

Risks Related to IT Systems and Cybersecurity

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

We obtain and process a large amount of sensitive data.

Our systems and networks may be subject to cybersecurity breaches and other disruptions that could compromise our information.

We rely on IT networks and systems to process and store electronic information.

We collect and store sensitive data, including PHI on our IT networks.

Our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches or incidents.

We may not be able to prevent incidents of inappropriate use or disclosure or unauthorized access to or acquisition.

The occurrence of any of these cybersecurity events could compromise our networks and the information stored on our networks could be accessed.

We rely heavily on technology to communicate internally and efficiently perform our services.

We have implemented measures that are designed to mitigate the potential adverse effects of a disruption, relocation, or change in operating environment;

however, we cannot provide assurance that the situations we plan for and the amount of insurance coverage that we maintain will be adequate in any particular case.

In addition, despite system redundancy and security measures, our systems and operations are vulnerable to damage or interruption from, among other sources:

• power loss, transmission cable cuts, and telecommunications failures;

• damage or interruption caused by fire, earthquakes, and other natural disasters;

• attacks by hackers or nefarious actors;

• human error;

• computer viruses and other malware or software defects;

• physical break-ins, sabotage, intentional acts of vandalism, terrorist attacks, and other events beyond our control.

If we encounter a business interruption, if we fail to effectively maintain our information systems, if it takes longer than we anticipate to complete required upgrades, enhancements, or integrations, or if our business continuity plans and business interruption insurance do not effectively compensate on a timely basis, we could suffer operational disruptions, disputes with Assignors, civil or criminal penalties, regulatory problems, increases in administrative expenses, loss of our ability to produce timely and accurate financial and other reports or other adverse consequences, any of which could have a material adverse effect on our business, financial condition, and results of operations.

Additionally, as Assignors maintain their own supporting documentation, data, and records, it is possible that they may provide us with erroneous or inaccurate data.

The occurrence of any of these events could cause our solutions to be perceived as vulnerable, cause our Assignors to lose confidence in our solutions, negatively affect our ability to attract new Assignors, and cause existing Assignors to terminate or not renew our solutions.