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SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS | 9 Months Ended
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Sep. 30, 2025
Accounting Policies [Abstract] |
SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS | SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS New Accounting Standards—The Company’s management reviews recent accounting standards to determine the impact to the Company’s financial statements. Below we discuss the impact of new accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board’s (“FASB”) to the Interim Financial Statements. ASU 2025-03—”Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity”. In May 2025, the FASB issued ASU 2025-03 to revise current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity (VIE) that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required in determining which entity is the accounting acquirer in other acquisition transactions. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this ASU require that an entity apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period. Although early adoption of this ASU is permitted, the Company’s management chose to not early adopt this ASU. This ASU is not expected to have a significant impact to the Company’s consolidated financial statements when adopted. ASU 2025-04—”Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer”. In May 2025, the FASB issued ASU 2025-04 to revise the definition of the term performance condition for share-based consideration payable to a customer. The revised definition incorporates conditions (such as vesting conditions) that are based on the volume or monetary amount of a customer’s purchases (or potential purchases) of goods or services from the grantor (including over a specified period of time). The amendments in this ASU are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026. Early adoption is permitted for all entities. Although early adoption of this ASU is permitted, the Company’s management chose to not early adopt this ASU. This ASU is not expected to have a significant impact to the Company’s consolidated financial statements when adopted. ASU 2025-05—”Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. In July 2025, the FASB issued ASU 2025-05 to provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. All entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. Although early adoption of this ASU is permitted, the Company’s management chose to not early adopt this ASU. This ASU is not expected to have a significant impact to the Company’s consolidated financial statements when adopted. Tax Reform—On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB”) was signed into law. The OBBB made several revisions to the U.S. tax code including modifications to fixed asset depreciation, limitation on deductions for interest expense, and international tax provisions. The OBBB is not expected to have a significant impact to the Company’s consolidated financial statements. Net Income (Loss) Per Share Attributable to Common Stockholders—The Company computes net income (loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred stock and common stock are participating securities. The Company considers convertible preferred stock, subject to redemption, to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a cash dividend is declared on common stock. The holders of the redeemable convertible preferred stock would be entitled to dividends in preference to common shareholders, at specified rates, if declared. Then any remaining earnings would be distributed to the holders of common stock and the holders of the redeemable convertible preferred stock on a pro-rata basis assuming conversion of all redeemable convertible preferred stock into common stock. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses. As such, net losses for the periods presented were not allocated to the Company’s participating securities. Refer to Note 15 Convertible Preferred Stock and Stockholders’ Equity for further information. Note Receivable—The Company recorded a note receivable for a term loan made to an external party in April 2025 that was to mature in April 2028. The note receivable represented a term loan guaranteed by all assets of the borrower and was reported in other assets on the consolidated balance sheets. In August 2025, the borrower defaulted and the Company exercised its right to acquire 100% of the borrower’s business in exchange for the forgiveness of the note receivable and related accrued interest. Refer to Note 9 Other Investments and Other Asset for additional information. Concentrations—No customer accounted for 10% of more of total revenue for the three months ended September 30, 2025 and no customer accounted for 10% of more of total revenue for the nine months ended September 30, 2025, respectively. Three customers accounted for 32%, 19%, and 17% of total revenue for the three months ended September 30, 2024 and three customers accounted for 28%, 20% and 15% of total revenue for the nine months ended September 30, 2024, respectively. The Company purchases life insurance policies from various funds, directly from policy holders (“Client Direct”), or from Brokers or Agents representing policy holders (collectively “Seller” or “Sellers”). The Company did not purchase life insurance policies from any Seller that accounted for 10% or more of total policies purchased for the three months ended September 30, 2025 and for the nine months ended September 30, 2025. The Company purchased life insurance policies from three Sellers that accounted for 17%, 15% (related party), and 11% of the total policies purchased for the three months ended September 30, 2024 and two Sellers that accounted for 14%, and 11% of the total policies purchased for the nine months ended September 30, 2024, respectively. Liquidity—The first redemption window for LMAIS II will open on March 31, 2026 at which point the investors of that entity will have the option to (i) redeem their investment (ii) extend their investment for an additional two years, or (iii) roll their investment into one of our newly launched funds. As of September 30, 2025, the related liabilities are included within the current portion of long-term debt, at fair value within our consolidated balance sheet. If all investors were to elect to redeem their investment the Company has determined it has sufficient liquidity available in the form of cash and the ability to sell life settlement policies in an active market to repay the debt. Refer to Note 14 Long-Term Debt for additional information. Non-Controlling Interests—Non-controlling interest represents the share of consolidated entities owned by third parties. At the date of formation or upon acquisition, the Company recognizes non-controlling interest on the Consolidated Balance Sheets at an amount equal to the non-controlling interest’s proportionate share of the relative fair value of any assets and liabilities acquired. Non-controlling interest is subsequently adjusted for the non-controlling shareholder’s additional contributions, distributions, and the shareholder’s share of the net earnings or losses of each respective consolidated entity. Net income of a consolidated entity is allocated to non-controlling interests based on the non-controlling shareholder’s ownership interest during the period. The net income or loss that is not attributable to the Company is reflected in net income (loss) attributable to non-controlling interests in the Consolidated Statement of Operations and Comprehensive Income (Loss). Effective August 31, 2025, LMX, the entity with the non-controlling interest, was dissolved. The Company settled the non-controlling interest in a non-cash transaction. Refer to the Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for additional information. Revenue Recognition, Asset Management Revenue—The Company through its Carlisle subsidiary, recognizes management fee and performance fees. The Company through its ABL Wealth and FCF Advisors subsidiaries, recognizes management fees. Management fees are recognized over time during the periods in which services are performed in accordance with relevant contractual terms. Management fees are generally based on net asset value (“NAV”), also referred to as assets under management (“AUM”), of the funds provided in the respective agreements. Performance fees are earned when the performance of the individual shares classes of the managed funds exceeds contractual thresholds. Performance fees are deemed variable consideration and are only recognized to the extent that there are no significant probable future revenue reversals. Performance fees are recorded in asset management revenue or asset management revenue, related party, in the consolidated statements of operations and comprehensive income (loss). Asset management and performance fees receivable are accrued on a monthly and quarterly basis. The Company receives performance fees from the closed-end funds when they are actually paid. Those that are not expected to be received over the next year are recorded as noncurrent receivables. Receivables due over the next 12 months and after a year are recorded in accounts receivable, related party, and management and performance fee receivable, related party, in the consolidated balances sheets, respectively, except for FCF Advisors. FCF Advisors related management fee receivable are recorded in accounts receivable in the consolidated balances sheets. The Company did not record an allowance for credit losses as of September 30, 2025 on asset management and performance fees receivable. The Company has entered into agreements with various parties to introduce new investors into the funds. The Company has contractually agreed to share a portion of its asset management and performance fees with these introducers for investments placed with the funds as retrocession fees and are paid out when corresponding management and performance fees are received throughout the life of the funds. Retrocession fees payable over the next 12 months and after a year are recorded in other current liabilities and retrocession fees payable in the consolidated balances sheets, respectively, except for FCF Advisors. FCF Advisors related retrocession fees are recorded in other current liabilities in the consolidated balances sheets. Retrocession fees are recorded in cost of revenue in the consolidated statements of operations and comprehensive income (loss). Where the Company’s management has significant influence or control over the significant activities of the unconsolidated managed investment funds through contract but does not have significant economic interest through equity or otherwise, fees charged to unconsolidated managed investment funds are considered related party activities. Revenue Recognition, Life Solutions Revenue—The Company elects to account for each investment in life settlement contracts using either the investment method or the fair value method. Once the accounting method is elected for each policy, it cannot be changed. Under the investment method, investments in contracts are based on the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest and direct external costs, if any) to keep the policy in force are capitalized. Under the fair value method, the company will record the initial investment of the transaction price and remeasures the investment at fair value at each subsequent reporting period. Premiums paid for policies accounted for under the fair value method are recorded in life solutions revenue in the consolidated statement of operations and comprehensive income (loss). Changes in fair value are reported on earnings when they occur. Upon sale of a life settlement contract, the company will record revenue (gain/loss) for the difference between the agreed-upon purchase price with the buyer, and the carrying value of the contract. Refer to Note 4 Revenues and Note 19 Related Parties for additional information. Cost of Revenues (excluding Depreciation and Amortization)—Cost of revenue represents the direct costs associated with fulfilling the Company’s obligations to its customers, origination and insurance commissions expense (refer to cost to obtain and fulfill contracts above), escrow fees, servicing and active management payroll costs, stock-based compensation for active management and servicing employees, life expectancy fees, insurance lead generation expenses, and retrocession fees. Reclassifications—Certain prior period amounts have been reclassified to conform to current presentation to reflect the Company’s change to its reportable segments. Refer to Notes 7 Goodwill and Other Intangible Assets, 11 Segment Reporting, and 19 Related Parties for further information.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/235/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 + Details
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