Financial Restructuring - The Company anticipates up to $9.75 million in bridge loan funding, with $6.5 million remaining available through July 2025[19] - The Company is undergoing a debt restructuring, converting approximately $144 million of debt into equity, resulting in a 43% equity interest for Virage[23] - The MSP Principals have committed to pledge $25 million of collateral to support additional working capital requirements beyond July 2025[20] - Hazel's existing loans remain unchanged, with a maturity extension to November 30, 2026, and a principal amount of up to $235 million secured against New Servicer proceeds[24] - The Company has received waivers from creditors regarding debt agreements, despite substantial doubt about its ability to continue as a going concern[19] Operational Changes - The Company plans to establish a New Servicer to manage recovery efforts, funded by up to $25 million from an affiliate of Hazel, with a minimum license fee of $1.55 million[16] - The Company has identified annual cost reductions of $5.6 million due to New Servicer operations, funded by the Funder[20] - The 2024 Reverse Split was executed at a ratio of 1-for-25, effective November 15, 2024, adjusting all outstanding shares and derivative securities accordingly[27] - Effective December 9, 2024, the Company will rebrand under the MSP Recovery brand, with Class A Common Stock trading on Nasdaq under the ticker symbol "MSPR"[29] Stock and Securities - The Company executed a 1-for-25 reverse stock split effective October 13, 2023, impacting all share and per share numbers retroactively[28] - The Initial Virage Warrant allows the purchase of 1,131,934 shares of Class A Common Stock at an exercise price of $0.0025 per share, expiring on January 1, 2026[43] - The Monthly Virage Warrants may be issued each month starting January 31, 2024, based on 1.0% of the month-end balance owed to Virage, which can increase daily up to 20% per annum[44] - The company has the option to pay Virage in cash or through the issuance of Monthly Virage Warrants until obligations are fully paid[44] - The Company’s Class A Common Stock has a par value of $0.0001 per share, as detailed in the consolidated financial statements[35] Data and Recovery Operations - The Company utilizes proprietary algorithms to identify recovery opportunities within billions of lines of data from Assignors' Claims[34] - The Company’s algorithms incorporate various data points, including medical coding and non-medical data, to filter through Claims data for recovery opportunities[34] - The Paid Amount, which varies based on the payer, is derived from Claims data and is adjusted to account for customary Medicare adjustments, reflecting an approximate 6.85% increase in the total Paid Amount[39] - The cumulative Paid Amount value of potentially recoverable Claims (PVPRC) is increased by approximately 6.32% when data lacks a paid value[40] Risks and Compliance - The company is subject to substantial indebtedness, including obligations related to the VRM Full Return and the Working Capital Credit Facility[48] - The company faces risks related to insufficient liquidity to meet obligations and the ability to capitalize on assignment agreements[48] - There is inherent uncertainty surrounding settlement negotiations and litigation, affecting the timing and amount of results[48] - The company must comply with Nasdaq listing standards, which is a factor in its operational risks[48] - The company is classified as a smaller reporting company and is not required to provide extensive market risk disclosures[601] Governance and Advisory - The Independent Committee has determined that the Term Sheet is advisable and in the best interests of the Company and its stockholders[25] - The Company has established a trust account for the benefit of its stockholders with Continental Stock Transfer & Trust Company[40] - The Company’s business combination was consummated on May 23, 2022, as per the Membership Interest Purchase Agreement (MIPA)[36]
MSP RECOVERY(LIFWZ) - 2024 Q4 - Annual Report