Sundance Strategies, Inc. 10-Q

Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations. Forward-looking Statements This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are based on management’s beliefs and assumptions and on information currently available to management. For this purpose, any statement contained in this report that is not a statement of historical fact may be deemed to be forward-looking, including, but not limited to, statements relating to our future actions, intentions, plans, strategies, objectives, results of operations, cash flows and the adequacy of or need to seek additional capital resources and liquidity. Without limiting the foregoing, words such as “ may ”, “ should ”, “ expect ”, “ project ”, “ plan ”, “ anticipate ”, “ believe ”, “ estimate ”, “ intend ”, “ budget ”, “ forecast ”, “ predict ”, “ potential ”, “ continue ”, “ should ”, “ could ”, “ will ” or comparable terminology or the negative of such terms are intended to identify forward-looking statements, however, the absence of these words does not necessarily mean that a statement is not forward-looking. These statements by their nature involve known and unknown risks and uncertainties and other factors that may cause actual results and outcomes to differ materially depending on a variety of factors, many of which are not within our control. Such factors include, but are not limited to, economic conditions generally and in the industry in which we and our customers participate; competition within our industry; legislative requirements or changes which could render our products or services less competitive or obsolete; our failure to successfully develop new products and/or services or to anticipate current or prospective customers’ needs; price increases; employee limitations; or delays, reductions, or cancellations of contracts we have previously entered into; sufficiency of working capital, capital resources and liquidity and other factors detailed herein and in our other filings with the United States Securities and Exchange Commission (the “SEC” or “Commission”). Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking statements are based on current industry, financial and economic information which we have assessed but which by its nature is dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements and we hereby qualify all our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Exchange Act) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise. The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the Commission. Overview Legacy Business (Overview): Our historical business model focused on purchasing or acquiring life insurance policies and related residual interests, such as net insurance benefits (NIBs). These NIBs provided us with the right to receive a portion of settlement proceeds from third-party-held policy portfolios, after associated servicing and financing costs. As of the date of this report, we no longer directly hold NIBs or life insurance policies. Current Focus: During the latter part of the fiscal year ended March 31, 2021, we began developing an additional business offering, providing professional services to specialty structured finance groups, bond issuers and life settlement aggregators. We have assembled an experienced team from the life settlement marketplace, as well as from other areas such as financial services and public financial markets. As a professional services provider, we apply industry best practices to advise on the selection of specific portfolios of life insurance policies that are tailored to meet the needs of its clients. Our clients may include bond issuers, bond investors, or other structured finance product issuers. We develop strategies and methodologies which include the acquisition of life insurance portfolios, then uses common structured finance techniques and proprietary analytics to structure bonds for issuances, including principal protected bonds. Our goal is to deliver long-term value and profitability to shareholders by growing our professional services business and asset base, resulting in the ability to pay dividends to its shareholders. 13 The Company has developed an additional business offering working closely with bond placement agents and aggregators to establish various aspects of a proprietary, investment grade bond offering. In this arrangement, we participate as the sole originator in the role of structuring and advising on the structure of the proprietary bond instrument. Included in the role of structuring financial assets, we use proprietary analytics to establish the makeup of the rated instrument, including but not limited to, life settlement assets (life insurance policies) and managed cash, and implement a process of selective assembly of the underlying assets and cash management that will meet the policy requirements and analytics. We provide current and ongoing resources for all analytics, as well as advisement support for the investment and non-investment grade ratings for the managed asset pool and the managed cash accounts. In our advisory role, we are reimbursed for all expenses associated with the structuring and preparation of any bond offering, will receive an advisory payment upon the closing of any bond offering, and then will hold residual rights on the balance of assets once the bond is retired. Results of Operations Three-Months Ended June 30, 2025, Compared with Three-Months Ended June 30, 2024 Interest Income Due to the Company not holding NIBs, no interest income was recorded for the three months ended June 30, 2025, or 2024. General & Administrative Expenses General and administrative expenses totaled $130,764, and $193,107 during the three months ended June 30, 2025, and 2024, respectively. A significant portion of these expenses were professional fees and payroll costs. Other Income and Expenses During the three months ended June 30, 2025, we recognized $388,511, as a loss on extinguishment of debt in conjunction with related party debt. During the three months ended June 30, 2025, and 2024, interest expense accrued in the amount of $88,719 and $88,322, respectively. During the three months ended June 30, 2025, and 2024, other expenses related to pursuing potential financing alternatives were $0, and $155,000, respectively. These expenses are related to additional consultant fees in pursuit of bonds. Income Taxes During the three months ended June 30, 2025, and 2024, the Company recorded net loss before income taxes of $607,994, and $436,429, respectively, and had no income tax expense or benefit as a result of a full valuation allowance on the net deferred tax asset. The relative increase in net loss before income taxes is due to the loss on extinguishment of debt. Liquidity and Capital Resources Since our inception our operations have been primarily financed through sales of equity instruments, debt financing, lines of credit and notes payable from related parties and the issuance of convertible debentures. As of June 30, 2025, we had $55,266 of cash, compared to $168,648 as of March 31, 2025. As of June 30, 2025, the Company had access to draw an additional $4,265,942 on the notes payable, related party and $3,000,000 on the Convertible Debenture Agreement. Our monthly expenses are anticipated to be approximately $45,000, which includes salaries of our employee, policy servicing expenses, consulting agreements and contract labor, general and administrative expenses, estimated legal and accounting expenses. Outstanding Accounts Payable as of June 30, 2025, totaled $448,988, and other accrued liabilities totaled $2,144,271. We believe that our availability under our existing lines of credit with related parties, our existing capital resources, together with the issuance of additional notes payable and convertible debentures will be sufficient to fund our operating working capital requirements for at least the next 12 months, or through August 2026. 14 Debt At June 30, 2025, we owed $5,443,352, including accrued interest, for debt obligations. We owed $3,290,058 in principal pursuant to notes payable and lines-of-credits from related parties, $300,000 in other notes payable, and had fully paid off the principal owing on the 8% Convertible Debenture. As of June 30, 2025, a line-of-credit to a third party had a balance of $1,159,508 due on November 30, 2026, or when the Company completes a successful equity raise, at which time principal and interest is due in full. A line-of-credit to a second third party had a principal balance of $1,304,550 and is currently extended due on November 30, 2026. As of June 30, 2025, unsecured promissory notes had principal balances totaling $826,000 and are due on November 30, 2025. The convertible debenture agreement, which has no principal balance due as of June 30, 2025, is open through August 31, 2026. As of August 13, 2025, there was $4,265,942 available under the lines-of-credit we currently have with related parties and $3,000,000 available under the 8% convertible debenture agreement. Critical Accounting Policies and Estimates See Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025, which was filed with the SEC on June 30, 2025. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Item 3. Quantitative and Qualitative Disclosure about Market Risk Not Applicable.