Risk Factors Update Summary

• The company now analyzes payment data provided by carriers to infer cancellations, improving accuracy.
• Advisor enrollment centers replaced customer care. The federal government operates a website.
• The company now re-computes LTVs quarterly, adjusting revenue based on cash received fluctuations. This may impact revenue significantly.
• Detailed new disclosures on revenue recognition for commission revenue, including estimated and constrained LTVs.
• Material cash requirements include $8.9 million for leases and $6.2 million for service and licensing as of December 31, 2023.
• The company began maintaining a self-insured U.S. employee health insurance plan with a maximum claim liability of $13.6 million.
• The Company appointed a new lead plaintiff and lead plaintiff's counsel, leading to legal proceedings. This change involves significant legal costs and potential reputational impact.
• Proposed rules may limit broker compensation amounts and additional payments for administrative services.
• Employer and individual health insurance plans added. Aetna accounted for 12% of total revenue.
• Payment changes for Medicare Advantage and Part D plans now include prorated fixed commissions.
• Addition of adjustments to revenue for changes in estimated constrained LTVs, impacting revenue recognition.
• Added a Compensation Recovery Policy for Executive Officers to recover Excess Compensation. This could impact executive compensation significantly.
• Issued 2,250,000 shares of Series A convertible preferred stock at $225.0 million, receiving $214.0 million net proceeds.
• Self-insurance programs may expose to unexpected costs. Maintaining U.S. employee health benefits on a self-insured basis.
• A new Credit Agreement provides $70 million in term loans, used to terminate a previous $75 million revolving credit facility.
• The Company must recover Excess Compensation promptly from Executive Officers. Various means include seeking recovery of any gain realized from equity-based awards.
• The Minimum Asset Coverage Ratio increased to 2.5x, impacting compliance and potential financing.
• The company faces significant capital market risks related to investments, affecting financial condition.
• Changes in Medicare product membership could harm business, operating results, and financial condition.
• Enhanced LTV estimation models for Medicare and E & I segments resulted in $33.5 million net adjustment revenue.
• Failure to maintain the Minimum Asset Coverage Ratio or Minimum Liquidity Amount could limit financing.
• The Company entered into a new Credit Agreement, securing a $70 million term loan credit facility. This change impacts the Company's financial structure and interest expenses.
• The company sold 2.25 million Series A convertible preferred stock for $225 million to H.I.G.
• Enhanced disclosure on stock-based compensation, including fair value determination and requisite service periods.
• The Series A Preferred Stock was convertible into 3.4 million shares of common stock as of December 31, 2023.
• New FCC ruling may impact partnerships used for marketing efforts, potentially harming business and financial condition.
• Entered into a $70.0 million secured term loan credit facility, with an interest rate of 13.15% as of December 31, 2023.
• The Company may recover Excess Compensation by requiring repayment through different methods determined by the Committee.
• Defined Excess Compensation as the amount exceeding Clawback Eligible Incentive-Based Compensation. This clarifies recovery thresholds.
• Quarterly credit loss allowance assessment resulted in a $280,000 decrease from $2.398 million to $2.118 million.
• Increased regulatory oversight could reduce fees or commissions payable to brokers under the Medicare program.
• The Company recorded an $11.8 million impairment charge related to operating lease right-of-use assets and property, impacting financial statements.
• Legal proceedings include a securities class action lawsuit seeking compensatory and punitive damages.
• Introduced Covered Period as the three fiscal years preceding the Accounting Restatement Determination Date. This sets a specific timeframe for assessment.
• The company's ability to refinance existing or future indebtedness depends on various factors.
• Net cash used in operating activities decreased from $26.9 million in 2022 to $6.7 million in 2023.
• Limited Exceptions to the Policy allow for impracticability in recovery if expenses exceed the amount to be recovered.
• The Policy will terminate when the Company ceases to be a listed issuer under Section 10D of the Exchange Act.
• Contract assets - commissions receivable increased from $908.262 million to $918.177 million.
• Net cash used in investing activities increased from $12.6 million in 2021 to $15.9 million in 2023.
• The company evaluates credit risk using historical data and external sources to estimate credit loss exposure.
• Net cash used in financing activities decreased from $213.2 million in 2021 to $6.2 million in 2023.
• The company did not adopt any new accounting pronouncements during the year ended December 31, 2023.
• Changes in net operating assets and liabilities led to a net loss of $28.2 million in 2023.