SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

____________________

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT
Under the Securities Act of 1933

____________________

GWG HOLDINGS, INC.

GWG LIFE, LLC

(Exact name of Registrant as specified in its charter)

____________________

Delaware Delaware		26-2222607 20-4356955
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

220 South Sixth Street, Suite 1200
Minneapolis, Minnesota 55402
Tel: (612) 746-1944
Fax: (612) 746-0445

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

____________________

		Copies to:
Paul D. Chestovich Maslon LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Tel: (612) 672-8200		GWG Holdings, Inc. Jon R. Sabes Chief Executive Officer 220 South Sixth Street, Suite 1200 Minneapolis, MN 55402 Tel: (612) 746-1944 (Name, address, including zip code, and telephone number, including area code, of agent for service)		Dominic Baldini Emerson Equity LLC 155 Bovet Road, Suite 725 San Mateo, CA 94402 Tel: (650) 312-0200

____________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the SEC pursuant to Rule 462(e) under the Securities Act, check the following box. ¨

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		¨		Accelerated filer		¨
Non-accelerated filer		¨		Smaller reporting company		x
(Do not check if a smaller reporting company)				Emerging growth company		x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act . ¨

 

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered		Amount to be Registered		Proposed Maximum Offering Price Per Unit				Proposed Maximum Aggregate Offering Price			Amount of Registration Fee
L Bonds		1,000,000		$	1,000	(1)		$	1,000,000,000		$	115,900	(3)
Guarantee by GWG Life, LLC of L Bonds(2)		N/A			N/A				N/A			N/A

____________

(1)      The L Bonds will be issued in “Units” of $1,000 in principal amount, in minimum amounts of 25 Units ($25,000 principal amount) and in any number of whole or fractional Unit amounts in excess of such minimum amount.

(2)      No additional consideration is being received for the guarantee. Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is required in respect of such guarantee.

(3)      Registration Fee previously paid.

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission, of which this prospectus is a part, shall have been declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED OCTOBER 10, 2017

____________________

GWG HOLDINGS, INC.

____________________

1,000,000 Units of L Bonds
($1,000,000,000)

Through its subsidiaries, GWG Holdings, Inc. invests in life insurance assets. Our objective is to earn returns from our investments in life insurance assets that are greater than the costs necessary to purchase, finance and service those assets.

We are offering up to 1,000,000 Units of L Bonds (the “L Bonds”) at $1,000 principal amount per whole Unit, representing $1,000,000,000 in aggregate principal amount of L Bonds. This is a continuous offering and there is no minimum amount of L Bonds that must be sold before we can use any of the proceeds. The proceeds from the sale of the L Bonds will be paid directly to us following each sale and will not be placed in an escrow account. We will use the net proceeds from the offering of the L Bonds primarily to purchase and finance life insurance assets, and to service and retire other outstanding obligations. The minimum investment in L Bonds is 25 Units, or $25,000. Investments in excess of the minimum amount may be made in any number of whole or fractional Units. The L Bonds will be sold with varying maturity terms, interest rates and frequency of interest payments, all as set forth in this prospectus and in supplements we publish from time to time. Depending on our capital needs and the amount of your investment, L Bonds with certain maturity terms may not always be available. Although we will periodically establish and change interest rates on unsold L Bonds offered under this prospectus, once an L Bond is sold, its interest rate will not change during its term (subject, however, to the extension and renewal provisions of the L Bond). Upon maturity, and subject to the terms and conditions described in this prospectus, the L Bonds will be automatically renewed for the same or lesser term at the interest rate we are offering at that time to other investors with similar aggregate L Bond portfolios for L Bonds of the same maturity, unless redeemed upon maturity at our or your election.

Obligations under the L Bonds are secured by substantially all the assets of GWG Holdings (the most significant components of which are cash and investments in subsidiaries), a pledge of all our common stock held individually by our largest stockholders, and by a guarantee and corresponding grant of a security interest in substantially all the assets of our subsidiary, GWG Life, LLC. As a guarantor, GWG Life has fully and unconditionally guaranteed the payment of principal and interest on the L Bonds. Substantially all of our life insurance assets are held by GWG DLP Funding IV, LLC (DLP IV), which is a wholly owned subsidiary of GWG Life. The policies held by DLP IV are not collateral for the L Bond obligations but serve instead as collateral for our senior credit facility. These facts present the risk to investors that the collateral security that we and GWG Life have granted for our obligations under the L Bonds may be insufficient to repay the L Bonds upon an event of default.

We may call and redeem the entire outstanding principal and accrued but unpaid interest of any or all of the L Bonds at any time, and from time to time, without penalty or premium. L Bond holders will have no right to put (that is, require us to redeem) any L Bond prior to its due date unless in the case of a holder’s death, bankruptcy or total permanent disability. In the event we agree to redeem L Bond upon the request of an L Bond holder — other than after death, bankruptcy or total permanent disability of such holder — we will impose a redemption fee of 6% against the outstanding principal balance of the redeemed L Bond. This redemption fee will be subtracted from the amount paid.

We do not intend to list our L Bonds on any securities exchange during the offering period, and we do not expect a secondary market in the L Bonds to develop. As a result, you should not expect to be able to resell your L Bonds regardless of how we perform. Accordingly, an investment in our L Bonds is not suitable for investors that require liquidity in advance of their L Bond’s maturity date.

We maintain senior borrowing arrangements that subordinate to our senior lenders the right to payment on, and the collateral securing, the L Bonds. In addition, these borrowing arrangements restrict our receipt of distributions from our operating subsidiaries, subject to certain exceptions. These provisions will restrict cash flows available for payment of principal and interest on the L Bonds. From time to time we may add or replace senior lenders and the particular arrangements under which we borrow from them.

We are an “emerging growth company” and a “smaller reporting company” under applicable law and are subject to reduced public company reporting requirements. Please read the disclosures on page 1 of this prospectus for more information. Investing in our L Bonds may be considered speculative and involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 12 to read about the risks you should consider before buying our L Bonds. The L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment.

Please read this prospectus before investing and keep it for future reference. We file annual, quarterly and current reports with the SEC. This information will be available free of charge by contacting us at 220 South Sixth Street, Suite 1200, Minneapolis, MN 55402, or by phone at (612) 746-1944. This information may also be accessed on our website at www.gwgh.com, and the SEC maintains a website at www.sec.gov that contains this information.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is       , 2017

 

The L Bonds will be offered and sold on a best-efforts basis by Emerson Equity LLC, a registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”). Emerson Equity will be our dealer manager for the L Bonds in this offering for purposes of the Securities Act of 1933. Our dealer manager will enter into participating dealer agreements with certain other broker-dealers that are members of FINRA, referred to as “selling group members,” to authorize those broker-dealers to sell our L Bonds. We will pay Emerson Equity a selling commission ranging from 0.75% to 5.00% of the principal amount of L Bonds sold, depending on the L Bonds’ maturity date. We will also pay Emerson Equity additional compensation consisting of those items set forth in footnote (1) to the table below. The dealer manager will share its commissions and additional compensation, other than its dealer manager fee, with selling group members pursuant to the terms of each participating dealer agreement. The total amount of the selling commissions and additional compensation (including reimbursements, non-transaction-based and non-cash compensation) paid to Emerson Equity and any other FINRA member in the course of offering and selling L Bonds will not exceed 8.00% of the aggregate gross offering proceeds we receive from the sale of L Bonds. We also may sell L Bonds at a discount through appropriate and designated distribution channels. See “Plan of Distribution” and “Use of Proceeds” for further information.

		Units		Price to Investor			Aggregate Commissions, Fees, and Expense Allowances(1)(2)			Net Proceeds to Company
Minimum Investment		25		$	25,000		$	2,000		$	23,000	(3)
Maximum Offering		1,000,000		$	1,000,000,000		$	80,000,000		$	920,000,000	(4)

____________

(1)      Assumes an average sales commission of 5.00%. As explained above, actual commissions will vary based on the term of the L Bonds sold. Nevertheless, the total amount of selling commissions and additional compensation (consisting of (i) a dealer-manager fee payable to the dealer manager in an amount equal to 0.50% of the principal amount of all L Bonds sold; (ii) an accountable expense allowance payable to the selling group members as described in the “Plan of Distribution,” which may include due-diligence expenses of the dealer manager and selling group members set forth in a detailed and itemized invoice; (iii) wholesaling fees, which may consist of commissions and non-transaction-based compensation of the wholesalers, (iv) non-cash compensation; and (v) up to a 1.00% reallowance to selling group members) will not exceed 8.00% of the aggregate gross offering proceeds we receive from the sale of L Bonds. Accordingly, and assuming the sale of all $1,000,000,000 in principal amount of bonds offered hereby, the maximum amount of selling commissions we can pay is 5.00% of the gross offering proceeds we receive from the sale of the L Bonds (or $50,000,000), and the maximum amount of additional compensation we can pay will not exceed 3.00% of the aggregate gross offering proceeds we receive from the sale of the L Bonds (or $30,000,000). See “Plan of Distribution” for further information.

(2)      Emerson Equity has agreed to offer the L Bonds on a “best efforts” basis.

(3)      Net Proceeds to Company based on the Minimum Investment are calculated after deducting (i) selling commissions and (ii) additional compensation (consisting of the dealer-manager fee, a wholesaling fee, an accountable expense allowance and non-transaction-based and non-cash selling compensation). We expect that our own offering expenses, consisting of legal, accounting, printing, mailing, registration, qualification and associated securities offering filing costs and expenses, will through the course of the offering aggregate to approximately $1,200,000, but for purposes of illustrating the Net Proceeds to Company based on the Minimum Investment, those offering expenses of $1,200,000 are not reflected.

(4)      Net Proceeds to Company based on the Maximum Offering of 1,000,000 L Bond Units (representing $1,000,000,000 in aggregate principal amount) are calculated as described in footnote (3) above, but also before deducting our estimated offering-related expenses of $1,200,000.

L Bonds will be sold as “Units,” with each whole Unit representing $1,000 in principal amount of L Bonds. Throughout this prospectus, we refer to L Bond Units simply as “L Bonds.” We will issue the L Bonds in book-entry form, certificated form, or in the form of a global certificate deposited with a depositary. Depending on the manner in which you purchase L Bonds, you may not receive a physical certificate representing your L Bonds. In all cases, however, we will deliver written confirmation to purchasers of L Bonds. Bank of Utah will act as trustee for the L Bonds.

 

The current interest rates for the L Bonds based on their applicable maturity is set forth in the table below.

Maturity Term		Interest Rate (%)
2 years		5.50
3 years		6.25
5 years		7.50
7 years		8.50

We may change the interest rates applicable to unsold L Bonds from time to time during this offering, in which case the applicable interest rates will be set forth in a supplement to this prospectus. Once an L Bond is sold, the interest rate will not change during its term (subject, however, to the extension and renewal provisions contained in that L Bond).

 

TABLE OF CONTENTS

		Page
ABOUT THIS PROSPECTUS		ii
INDUSTRY AND MARKET DATA		ii
HOW TO PURCHASE L BONDS		iii
COVERED SECURITY		iv
QUESTIONS AND ANSWERS ABOUT THIS OFFERING		v
PROSPECTUS SUMMARY		1
RISK RELATING TO FORWARD-LOOKING STATEMENTS		10
RISK FACTORS		12
USE OF PROCEEDS		20
BUSINESS		22
DESCRIPTION OF THE L BONDS		49
PLAN OF DISTRIBUTION		64
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS		68
STATE, LOCAL AND FOREIGN TAXES		72
ERISA CONSIDERATIONS		72
LEGAL MATTERS		74
EXPERTS		74
WHERE YOU CAN FIND MORE INFORMATION		74
Incorporation of certain documents by reference		75
FINANCIAL STATEMENTS		F-1

GWG Holdings, Inc.
220 South Sixth Street, Suite 1200
Minneapolis, MN 55402
Tel: (612) 746-1944
Fax: (612) 746-0445

i

ABOUT THIS PROSPECTUS

We have prepared this prospectus as part of a registration statement that we filed with the SEC for our continuous offering of L Bonds.

The registration statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this prospectus and certain information that is incorporated by reference. You should read this prospectus, the related exhibits filed with the SEC, and any prospectus supplement(s), together with additional information described below under “Where You Can Find More Information,” and the documents that are incorporated, or deemed to be incorporated, by reference into this prospectus. Any statement that we make in this prospectus will be modified or superseded by any inconsistent statement made by us in a subsequent prospectus supplement (or other disclosure incorporated into this prospectus by reference). This prospectus contains summaries of certain other documents, which summaries contain all material terms of the relevant documents and are believed to be accurate, but reference is hereby made to the full text of the actual documents for full and complete information concerning those documents. All documents relating to this offering, if readily available to us, will be made available to a prospective investor or its representatives upon request.

The L Bonds will be issued under an indenture, as amended, and as it may be further amended or supplemented from time to time (referred to herein collectively as the “indenture”). This prospectus is qualified in its entirety by the terms of that indenture filed with SEC as an exhibit to the registration statement of which this prospectus is a part. All material terms of the indenture are summarized in this prospectus. You may obtain a copy of the indenture upon written request to us or online at www.sec.gov.

The indenture trustee did not participate in the preparation of this prospectus and makes no representations concerning the L Bonds, the collateral, or any other matter stated in this prospectus. The indenture trustee has no duty or obligation to pay the L Bonds from their funds, assets or capital or to make inquiry regarding, or investigate the use of, amounts disbursed from any account.

You should rely only on the information contained in this prospectus, as the same may be supplemented by prospectus supplements or other public disclosure incorporated into this prospectus by reference. Neither we nor the dealer manager have authorized any other person to provide you with any information different from that contained in this prospectus, a supplement, information incorporated into this prospectus by reference, or information furnished by us upon request as described herein. The information contained in this prospectus is complete and accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or sale of our securities.

No information contained herein, nor in any prior, contemporaneous or subsequent communication should be construed by a prospective investor as legal or tax advice. Each prospective investor should consult its, his or her own legal, tax and financial advisors to ascertain the merits and risks of the transactions described herein prior to purchasing the L Bonds. This written communication is not intended to be written advice as defined in Circular 230 published by the U.S. Treasury Department.

In this prospectus, we use the term “day” to refer to a calendar day, and we use the term “business day” to refer to any day other than Saturday, Sunday, a legal holiday or a day on which banks in New York City are authorized or required to close.

INDUSTRY AND MARKET DATA

The industry and market data used throughout this prospectus have been obtained from our own research, surveys or studies conducted by third parties and industry or general publications. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. We believe that each of these studies and publications is reliable.

ii

HOW TO PURCHASE L BONDS

If, after carefully reading this entire prospectus, obtaining any other information requested and available, and being fully satisfied with the results of pre-investment due-diligence activities, you would like to purchase L Bonds, you will have two different ways in which to consummate a purchase: (1) DTC settlement, or (2) direct settlement with the Company.

1. Depositary Trust Company Settlement (DTC settlement). You can place an order for the purchase of L Bonds using DTC Settlement through your selling group member (i.e., your broker-dealer). A selling group member using this service will have an account with a DTC participant in which your funds will be placed to facilitate a closing on our periodic DTC closing cycle (typically, closings will occur on a bi-monthly cycle). Orders may be placed until the cyclical order due date. Orders will be executed by your selling group member electronically and you must coordinate with your selling group member’s registered representative to pay the full purchase price for the L Bonds by the trade date. You will be credited with ownership of an L Bond on the second business day following the periodic DTC closing cycle in which the purchase is made. Nevertheless, interest will accrue for a period of 15 or 30 days for the month in which your purchase is made, depending on when during the DTC closing cycle your purchase is made. Your purchase price for L Bonds purchased in this way will not be held in escrow. This process is different if you purchase L Bonds through direct settlement with the Company as described below.

 

2. Direct Settlement with the Company. If you wish to purchase L Bonds through direct settlement with the Company, then you must complete, execute and return the Subscription Agreement to us together with a certified check or personal check payable to the order of “GWG Holdings, Inc. — Subscription Account” (or wire sent to the Subscription Account) equal to the principal amount of L Bonds you wish to purchase. You will be credited with ownership of an L Bond, and interest will begin to accrue, from the date on which your fully paid subscription is accepted. If you are working with a selling group member, your subscription materials and the wire transfer, certified check or personal check should be delivered to your selling group member, who will deliver it to us at the following address:

GWG Holdings, Inc.
220 South Sixth Street, Suite 1200
Minneapolis, MN 55402

Wire Instructions
GWG Holdings, Inc. — Subscription Account
Account: 500023916
Routing: 091310521
Bank Name: Bell State Bank & Trust

Your purchase is subject to our acceptance. All information provided is confidential and will be disclosed only to our directors, officers and employees who need to know, affiliates, the managing broker-dealer, legal counsel and, if required, to governmental authorities and self-regulatory organizations or as otherwise required by law. For your purchase to be effective as of the first business day of a calendar month, your completed and executed Subscription Agreement, together with your related funds, must be received and accepted by us on or prior to the final settlement date (settlement dates normally occur on a bi-monthly basis).

Upon our receipt of the signed Subscription Agreement and acceptance of your purchase, we will notify you of such acceptance. In our sole discretion, we may accept or reject any purchase, in whole or in part. In the event we do not accept your purchase of L Bonds for any reason, we will promptly return your payment. We may terminate or suspend this offering at any time, for any reason or no reason, in our sole discretion. You may obtain a copy of the Subscription Agreement from our website at www.gwgh.com, from your selling group member (if you are working with one), or by contacting us at 1-877-494-2388.

iii

COVERED SECURITY

Our L Bonds are a “covered security.” The term “covered security” applies to securities exempt from state registration pursuant to Section 18 of the Securities Act of 1933. Generally, securities listed on national exchanges are the most common type of covered security exempt from state registration. A non-traded security also can be a covered security if it has a seniority greater than or equal to other securities from the same issuer that are listed on a national exchange. Our L Bonds are a covered security because they will be senior to our common stock, which is listed on The Nasdaq Capital Market, and therefore our offering of L Bonds is exempt from state registration.

Although the status of our L Bonds as a “covered security” will facilitate their purchase and sale to a broader range of investors than would otherwise be available to us, and although the offer and sale of a “covered security” generally involves fewer issuance costs to the issuer of such securities, our L Bonds are not a suitable purchase for all investors. Investors are urged to read carefully the risk factors relating to our business and our Company contained in the Risk Factors section of this prospectus beginning on page 12. In addition, investors should understand that because our L Bonds are a “covered security” exempt from state securities regulations, neither our Company, the L Bonds, or any other aspects of this offering have been the subject of any merit-based review by state securities regulators.

iv

QUESTIONS AND ANSWERS ABOUT THIS OFFERING

The following questions and answers about this offering highlight material information regarding us and this offering that you may wish to review. Nevertheless, you should read this entire prospectus, including the section entitled “Risk Factors,” before deciding to purchase our L Bonds.

Can you explain and clarify the interplay between GWG Holdings, Inc. and GWG Life, LLC and its subsidiaries in relation to the L Bonds and the registration statement?

GWG Holdings, Inc. will be issuing the L Bonds, receiving all proceeds from the sale of L Bonds, and will be the only entity making regular payments on the L Bonds. Nevertheless, because a significant amount of our consolidated assets are held in our subsidiary GWG Life, LLC (and its own subsidiaries), GWG Life is a guarantor of our obligations under the L Bonds. As guarantor of the L Bonds, SEC rules require that GWG Life be included as a co-registrant under this registration statement. GWG Life will not, however, be otherwise involved in the offering of L Bonds.

It seems as though you are offering several bonds with different interest rates and maturities but calling them all L Bonds. Is this the case?

All bonds we issue in this offering will have identical terms, excepting only (1) the interest rate and (2) the maturity length or “term.” In this regard, we have essentially created multiple classes of L Bonds, similar to how companies may have different classes of stocks with slightly different economic rights. Currently, we are offering four classes of L Bonds, as follows:

•         “Class 2-2” L Bonds will mature two years from their issuance and accrue interest at 5.50% per annum.

•         “Class 3-2” L Bonds will mature three years from their issuance and accrue interest at 6.25% per annum.

•         “Class 5-2” L Bonds will mature five years from their issuance and accrue interest at 7.50% per annum.

•         “Class 7-2” L Bonds will mature seven years from their issuance and accrue interest at 8.50% per annum.

The economic terms for each L Bond in any particular class will be identical to all other L Bonds in the same class (other than the date of maturity). In the event we adjust the interest rate for any class of bonds we offer, we will create a new class of L Bonds. Upon the renewal of any L Bonds we have sold, any new interest rate applied to an L Bond will be applied to all L Bonds in the same class.

Your prospectus states that the interest rate for the L Bonds may be adjusted from time to time during the course of the offering. Will any such adjustment apply retroactively to L Bonds already issued?

No. Once you purchase an L Bond, the interest rate on that L Bond will not change during the entirety of its original term. The interest rate on an issued L Bond may, however, be adjusted upon renewal of that L Bond. In any such case, we will advise you of any different interest rate that may apply to your L Bond upon renewal. In sum, any new interest rates for the L Bonds will apply only to newly issued L Bonds sold or renewed after the date of any interest rate change. Our decision to change interest rates depends on numerous factors, including but not limited to things such as market interest rates, our capitalization, the demand for our L Bonds, the life settlement market in general, our capital requirements, and other factors. Please see “Description of the L Bonds — Interest Rate.”

How do I subscribe for L Bonds, and what is the settlement process?

L Bonds may be purchased either directly from the Company or through your broker-dealer (also referred to in this prospectus as a selling group member), who utilizes a participant in the DTC system and offers “DTC settlement.”

If you purchase directly from the Company, you will send your completed and executed Subscription Agreement, together with your subscription amount to us at the address listed in “How to Purchase L Bonds.” Your subscription amount is the principal amount of L Bonds you wish to purchase, and should be paid through a certified check or personal check payable to the order of “GWG Holdings, Inc. — Subscription Account.” In lieu of paying by check, you may wire your subscription amount to the account referenced in “How to Purchase L Bonds.” If you are working with a broker-dealer or other investment professional, your broker-dealer or professional will gather and send in the required information on your behalf, and may facilitate your payment of the subscription amount.

v

Once we have received your subscription amount and required documentation, we will either reject or accept your subscription. If accepted, you will be credited with ownership of the L Bond, we will have immediate access to your subscription amount and you will start to accrue interest on your investment at the rate applicable to the L Bond you have purchased. If you purchase directly from the Company, your L Bond will ordinarily be issued in book-entry (or, if requested, certificated) form and payments will be made directly into the account you indicate in your Subscription Agreement.

Purchasing through a DTC participant is a slightly different process. In this case, you will provide your order for the purchase of L Bonds to your broker-dealer, together with such other information as your broker-dealer may require. Your broker-dealer will ensure your order is electronically placed with the Company and that the Company timely receives your subscription amount. There is no need to furnish the Company with a Subscription Agreement when you purchase through a broker-dealer that utilizes a participant in the DTC system and offers “DTC settlement,” However, your broker-dealer may require additional documents.

Once we have received your subscription amount, we will either reject or accept your subscription. Once accepted based on our DTC closing cycle, we will have immediate access to your subscription amount and you will start to accrue interest on your investment at the rate applicable to the L Bond you have purchased. Nevertheless, you will be credited with ownership of an L Bond on the second business day after the end of the closing cycle in which your subscription is accepted. Interest will accrue for a period of 15 or 30 days for the month in which your purchase is made, depending on when during the DTC closing cycle your purchase is made. If you purchase through a broker-dealer who utilizes a participant in the DTC system and offers “DTC settlement,” your L Bond will be issued to DTC in the name of Cede & Co, as its nominee. In this sense, DTC will be the legal owner of the L Bond and you will be the beneficial owner. Your ownership of the L Bond should then appear on the brokerage or other investment statements you receive from your broker-dealer or custodian.

For so long as DTC settlement is approved, we intend to issue each class of L Bonds a unique identifying number (CUSIP) each month to facilitate the settlement of L Bonds. Thus, Class 2-2 L Bonds issued in February 2018 (and maturing February 2020) will all have the same CUSIP, which will be different from the CUSIP applicable to Class 2-2 L Bonds issued in September 2018 (and maturing September 2020). In this way, all L Bonds belonging to a single CUSIP will be completely fungible, meaning that they will all mature on the same date and have identical terms so that one L Bond with a particular CUSIP is interchangeable with any other L Bond having the same CUSIP. This process creates a tracking system for the L Bonds to be issued to and transferred through DTC.

What is the role of the trustee?

The Bank of Utah is the trustee for the L Bonds. The role of the trustee is essentially to enforce the terms of the L Bonds on behalf of bondholders, including direct and beneficial holders, and facilitate the relationship between our Company and the bondholders. We must notify the trustee of certain events as required under the indenture, and the trustee will in turn notify bondholders. The trustee has also been granted a security interest in all of the assets of GWG Holdings and GWG Life for the benefit of the bondholders. The trustee has no duty to pay any obligations under L Bonds or to make inquiry regarding, or investigate the use of, amounts disbursed from any account. Upon an event of default under the indenture, and subject to those limitations in the indenture designed to benefit our senior creditors, the trustee may take action against us to enforce the rights of holders of the L Bonds.

What is the role of the paying agent?

The paying agent is the term ascribed to whomever it is that is making the payment to the holders of L Bonds. Presently, the Company itself is the paying agent and therefore responsible for tracking investors’ respective payment dates and ensuring timely payment of principal and interest under the L Bonds. Under the indenture, we may designate a third party, such as a transfer agent registered with the SEC, or a banking institution, to serve as paying agent. The role of the paying agent is essentially mechanical, and does not ordinarily involve the exercise of discretion and judgment in the way that is typical for an indenture trustee.

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Do I need to sign any paperwork in connection with the renewal of my L Bond?

No. The terms of the L Bond allow for the automatic renewal into a new L Bond of an identical (or lesser) maturity, unless we receive notice from you. Upon maturity, the L Bonds will be automatically renewed for the same term at the interest rate we are offering at that time to other investors with similar aggregate L Bond portfolios for L Bonds of the same maturity, unless repaid upon maturity at our or your election. In this regard, we will notify you at least 30 days prior to the maturity date of your L Bonds. In the notice, we will advise you if we intend to repay the L Bonds or else remind you that your L Bonds will be automatically renewed unless you exercise your option, at least 15 days prior to the maturity date, to elect to have your L Bonds repaid. If applicable, a new certificate will be issued. Please see “Prospectus Summary — Renewal or Redemption at Maturity” and “Description of the L Bonds — Renewal or Redemption at Maturity.”

Can I resell or transfer my L Bond after it has been purchased?

Yes. Since these L Bonds are being offered and sold pursuant to an effective registration statement, the L Bonds may be transferred so long as the transfer is documented in a form approved by us. We do not, however, expect a public trading market to develop for the L Bonds in the foreseeable future, if ever. Because of the lack of a trading market for L Bonds, it is unlikely that holders will be able to sell their L Bonds easily. If you wish to transfer your L Bond held in book-entry (or certificated) form, you should contact us. If you wish to transfer your L Bond held through DTC, you should contact your broker-dealer (i.e., your selling group member).

How will I receive interest and principal payments on my L Bonds?

This will depend on how you purchased your L Bond. If you purchased your L Bond directly from us, we will directly deposit our payments of interest and principal into the account indicated in your Subscription Agreement. If you purchased through DTC, all payments of principal and interest will be made to DTC, who will forward such payment to your brokerage account. In this case, all accountings of what you have contributed and what you are owed will be the responsibility of your broker-dealer.

What is GWG Holdings, Inc.?

We are a financial services company committed to finding new ways of disrupting and transforming the life insurance and related industries. We built our business by creating opportunities for consumers to obtain significantly more value for their life insurance policies as compared to the traditional options offered by the insurance industry. We are enhancing and extending these activities through innovation in our products and services, business processes, financing strategies, and investments in advanced epigenetic technologies. At the same time, we are creating opportunities for investors to receive income and capital appreciation from our investment activities in the life insurance and related industries.

Through our principal subsidiary GWG Life, we purchase and finance life insurance policies at a discount to the face value of the policy benefit. While GWG Life began operations in March 2006, we were formed and organized in Delaware in 2008. In September 2014, we consummated an initial public offering of our common stock. In connection with that offering, our common stock was listed on The NASDAQ Capital Market under the ticker symbol “GWGH.” We are based in Minneapolis, Minnesota.

Do you currently own any assets?

Our assets consist primarily of cash and equity interests in our subsidiaries. Nearly all of our life insurance assets are held through our subsidiaries. As of December 31, 2016, our consolidated assets totaled $643.2 million, of which approximately $78.5 million was cash and equivalents, approximately $37.8 million was restricted cash, and approximately $511.2 million was the fair value of our life insurance assets. Those life insurance assets had an aggregate face value of policy benefits approximating $1.36 billion. As of June 30, 2017, our consolidated assets totaled $691.4 million, of which approximately $52.3 million was cash and equivalents, approximately $46.2 million was restricted cash, and approximately $577 million was the fair value of our life insurance assets. Those life insurance assets had an aggregate face value of policy benefits approximating $1.52 billion.

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What is your business strategy?

Our business strategy is to purchase a large and well-diversified portfolio of life insurance policy assets at discounts to the face value of the policy benefits sufficient enough to generate profitable returns. In addition, we seek to create value for consumers owning life insurance through the secondary market for life insurance. In order to meet our goals, we have spent and intend to continue to spend significant resources: (i) developing a robust operational platform and systems for originating and purchasing life insurance policies; (ii) developing financing resources, strategies, and capabilities for servicing a large portfolio of life insurance policies; and (iii) establishing strategic relationships for delivering our products and services. In addition, we are exploring various ways in which we can commercialize, and perhaps transform, certain aspects of the life insurance and related industries through the application of epigenetic technology.

Are there any risks involved in investing in this offering?

Yes. Investing in our L Bonds involves a high degree of risk. You should carefully review the “Risk Factors” section of this prospectus, which contains a detailed discussion of the material risks that you should consider before investing in our L Bonds.

How long will this offering last?

The offering is a continuous offering. The offering under this registration statement expires under SEC rules after three years (i.e.,      ,    ). We may, however, conduct similar or identical offerings of L Bonds or other securities during this same time or afterwards. We may also decide to terminate this offering at any time.

Will I be notified of how my investment is doing?

We will provide you with periodic updates on our performance through periodic filings we make with the SEC. Such filings will include: (i) three quarterly financial reports; (ii) one annual report; (iii) supplements to this prospectus, as appropriate; and (iv) such other reports as required under Section 13 of the Securities Exchange Act of 1934. Such information is also available on our website at www.gwgh.com.

Will I receive annual tax information regarding interest payments from you?

You will receive a Form 1099-INT, which will be mailed by January 31 of each year.

Who can help answer my questions about the offering?

If you have more questions about our offering, you should contact a registered representative of your broker-dealer (i.e., your selling group member) or other investment professional, or else contact:

GWG Holdings, Inc.

220 South Sixth Street, Suite 1200

Minneapolis, MN 55402

(612) 746-1944

Attention: Jacky Junek, Senior Counsel

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RISK FACTORS

An investment in our securities involves a high degree of risk. Before purchasing the securities offered by this prospectus, you should carefully consider the risks, uncertainties and additional information (i) set forth in our most recent Annual Report on Form 10-K filed with the SEC on March 15, 2017, Quarterly Reports on Form 10-Q filed with the SEC on May 12 and August 10, 2017, Currents Reports on Form 8-K filed with SEC on February 9, February 22, March 8, April 3, May 10, June 30 and August 10, 2017, and our definitive proxy statement filed with the SEC on March 30, 2017, all which are incorporated by reference into this prospectus, and (ii) contained herein or in any supplement to this prospectus, including information in any documents subsequently incorporated by reference into this prospectus. The information incorporated by reference into this prospectus specifically includes the risk factors contained in our Annual Report on Form 10-K filed with the SEC on March 15, 2017.

For a description of the above-described reports and documents, and information about where you can find them, see “Where You Can Find More Information” and “Incorporation of Certain Documents By Reference.” The risks and uncertainties in this prospectus and in the documents presently incorporated by reference in this prospectus are those that we currently believe may materially impact the Company. Additional risks not presently known or are currently deemed immaterial could also materially and adversely affect our financial condition, results of operations, business and prospects.

We may be unable to raise the capital we are seeking from our securities offerings, and may be unable to meet our overall business objective of growing a larger, actuarially diverse portfolio of life insurance assets.

Our offer and sale of L Bonds and other securities are the principal means by which we intend to raise funds needed to meet our goal of growing a larger and more statistically diverse portfolio. While we plan to continue financing our business, if we are unable to do so for any reason we may be unable to meet our goal. In addition, if holders of our L Bonds were to fail to renew those securities with the frequency we have historically experienced, and if actual cash flows from our portfolio of life insurance policies do not occur as our actuarial projections have forecasted, we could be forced to sell some or all of our investments in life insurance policies in order to service or satisfy our debt-related obligations. If we are forced to sell some or all of our investments in life insurance policies, or our entire portfolio, we may be unable to sell them at prices we believe are optimal or that approximate the discount rate we have applied to value our portfolio, particularly if our sale of policies occurs at a time when we are (or are perceived to be) in distress. In any such event, our business and the value of our securities would likely be materially and adversely impacted.

We depend upon cash distributions from our subsidiaries, and contractual restrictions on distributions to us or adverse events at one of our operating subsidiaries could materially and adversely affect our ability to pay our debts and continue operating our business.

GWG Holdings, Inc. is a holding company. As a holding company, we conduct our operations through operating subsidiaries, and as such our most significant assets are cash and our ownership interests in our subsidiaries. Accordingly, our ability to meet our obligations, including our obligations under the L Bonds, materially depends upon the ability of our subsidiaries to distribute cash to us. In this regard, the ability of our subsidiaries to distribute cash to us is, and will continue to be, restricted by certain negative covenants in the agreement governing our senior credit facility. If any of these limitations were to materially impede the flow of cash to us, our ability to service and repay our debt, including obligations under the L Bonds, would be materially and adversely affected. In addition, any adverse corporate event at the subsidiary level, such as a declaration of bankruptcy, liquidation or reorganization or an event of default under our senior credit facility, could adversely affect the ability of our subsidiaries to distribute cash to us, and thereby materially and adversely affect our ability to service and repay our debt, including obligations under the L Bonds, and negatively impact our ability to continue operations.

Cost-of-insurance (premium) increases could materially and adversely affect our profitably and financial condition.

We are subject to the risk of increased cost-of-insurance (“COI”) charges (i.e., premium charges) for the universal life insurance policies we own in our portfolio. As of June 30, 2017, approximately 17% of the policies in our portfolio have premium levels that are guaranteed under the terms of the policy to keep the policy’s death benefit in force even in a situation where the policy’s cash account has been wholly depleted. On the remaining 83% of our policies, we pay

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“non-guaranteed COI charges” and are subject to the risk that the insurer could increase the COI charges for the policy. In all cases, the amount of increase is subject to any limits that may be set forth in the insurance policy. Because very few of the policies we own have significant cash account value balances, any COI increase will require us to use more cash to satisfy the minimum premium amount required to keep the related policy in force, and this could materially and adversely affect our profitability.

A COI increase can also be expected to impair the value of the affected policy since extra expense (i.e., additional premium amounts) will be required to keep the policy in force, and such extra expense will diminish the economic value, or return, of the policy upon the mortality of the insured. As a result, any widespread COI increases in policies we own would likely have a material and adverse effect on the value of our portfolio, which in turn would materially and adversely affect our financial condition.

Subordination provisions contained in the indenture will restrict the ability of the trustee or the L Bond holders to enforce their rights against us under the indenture, including the right to payment on the L Bonds, if a default then exists under a senior credit facility.

The L Bonds will be subordinate in right of payment to any claims of our senior lenders under a senior credit facility. In this regard, subordination provisions limiting the right of L Bond holders to enforce their rights are contained in the indenture. These provisions include:

•         a prohibition on challenging any enforcement action taken by a senior lender, or interfering with any legal action or suits undertaken by a senior lender, against us and our affiliates;

•         a 180-day standstill period during which there may not be brought any action against us or our affiliates to enforce rights respecting collateral unless our senior credit facilities have been repaid in full, which period may be extended if the senior lender takes action during such standstill period; and

•         a prohibition on filing a bankruptcy or insolvency case against us or our affiliates for at least one year plus one day after any senior lender has been paid in full.

In the event of a default on a senior credit facility, the indenture prohibits us from making any payment, direct or indirect (whether for interest, principal, as a result of any redemption or repayment at maturity, on default, or otherwise), on the L Bonds and any other indebtedness unless and until: (i) the default respecting the senior credit facility has been cured or waived or has ceased to exist; or (ii) in the case of a non-payment default that permits a senior lender to declare as due and payable all amounts owing under a senior credit facility (but where that senior lender has not yet so declared amounts as being due and payable), the end of the period commencing on the date the trustee receives written notice of default from the senior lender and ending on the earliest of (1) our discharge of the default (or other cure), (2) the trustee’s receipt of a valid waiver of default from the senior lender, or (3) a written notice from the senior lender terminating the payment prohibition.

During any payment prohibition period, neither the holders of the L Bonds nor the trustee will have the right, directly or indirectly, to sue to enforce the indenture or the L Bonds. Other provisions of the indenture do permit the trustee to take action to enforce the payment rights of L Bond holders after 179 days have passed since the trustee’s receipt of notice of default from a senior lender, but in such case any funds paid as a result of any such suit or enforcement action shall be applied toward the senior credit facility until the facility is indefeasibly paid in full before being applied to the L Bonds.

These subordination provisions present the risk that, upon any default by us on obligations owed to our senior lenders, the holders of the L Bonds will be unable to enforce their rights to payment.

If the 180-day standstill period noted above, or any other limitation on the rights of the trustee or L Bond holders to assert their rights to payment of principal or interest under the indenture, is ultimately determined to conflict with provisions of the Trust Indenture Act of 1939 (most notably sections 316(b) and 317(a) of that Act), then the trustee, as well as any holder who shall not have earlier consented to such subordination provisions, will (notwithstanding such provision contained in the indenture) be authorized to institute a lawsuit for the enforcement of any payment of principal or interest after their respective due dates.

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The collateral granted as security for our obligations under the L Bonds may be insufficient to repay the indebtedness upon an event of default.

GWG Holdings (the issuer of the L Bonds) and GWG Life (the guarantor of obligations under the L Bonds, and the wholly owned subsidiary of GWG Holdings) have each granted a security interest in substantially all of their respective assets to serve as collateral security for obligations under the L Bonds. Importantly, DLP IV owns substantially all of our life insurance policies and is the borrower under our senior credit facility with LNV/CLMG. As the borrower under that senior credit facility, all of its assets — including all of its life insurance policy assets — serve as collateral for our obligations under the facility.

The most significant assets of each of GWG Holdings and GWG Life are their cash and investments in their respective subsidiaries. At December 31, 2016, GWG Holdings’ total assets were approximately $462.3 million, of which approximately $28.5 million was cash and approximately $430.0 million was its investment in subsidiaries. On that same date, GWG Life’s total assets were approximately $447.1 million, of which approximately $49.4 million was cash and approximately $352.3 million was its investment in subsidiaries. Approximately $41.2 million in fair value of life insurance policies was directly owned by GWG Life at December 31, 2016.

Because of the fact that substantially all of our life insurance assets are held in our DLP IV subsidiary, and all of those assets serve as collateral security for our obligations under our senior credit facility, L Bond holders risk the possibility that the collateral security that has been granted for our obligations under the L Bonds may be insufficient to repay holders upon an event of default. Furthermore, while the indenture governing the L Bonds limits the amount of debt we and our subsidiaries can incur, the indenture permits us and our subsidiaries to incur additional secured debt (subject to the debt coverage ratio) that may be senior to the L Bonds.

If a significant number of holders of our L Bonds demand repayment upon maturity instead of renewing the bonds, and at such time we do not have sufficient access to capital to fund those repayments (and do not otherwise have access to sufficient capital), we may be forced to liquidate some of our life insurance policies, which could have a material and adverse impact on our results of operations and financial condition.

As of June 30, 2017, we had approximately $407.9 million in principal amount of L Bonds outstanding. Since we first issued our L Bonds through June 30, 2017, we have experienced $341.9 million in maturities, of which $207.8 million has renewed for an additional term. This has provided us with an historical renewal rate of approximately 61%, in principal amount, for L Bond maturities. Future maturities of L Bonds as of June 30, 2017 are as follows:

Years Ending December 31,		L Bonds
Six months ending December 31, 2017		$	47,068,000
2018			108,772,000
2019			116,767,000
2020			49,062,000
2021			28,753,000
2022			24,773,000
Thereafter			32,655,000
		$	407,850,000

In August 2017, we exercised our contractual rights to call for the redemption of all our Series I Secured Notes, the aggregate outstanding principal of which was approximately $6.8 million as of June 30, 2017. In September 2017, we consummated the redemption of all of those debt obligations.

If investors holding existing and maturing indebtedness do not elect to renew their investments and we do not at such time have or have access to sufficient capital, then we may need to liquidate some or all of our investments in life insurance policies earlier than anticipated. In such an event, we may be unable to sell those policies at prices we believe are fair or otherwise appropriate and these sales could have a material and adverse impact on our results of operations and financial condition. See also “We may be unable to raise the capital we are seeking . . . .”

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The debt coverage ratio, designed to provide some assurance that the value of our assets exceeds our obligations to the holders of L Bonds, values our life insurance policy assets in manner that may not be representative of the amount we would actually receive upon a sale of those assets.

Under the indenture governing the L Bonds, the maximum amount of L Bonds we may issue at any time is limited to an amount such that our debt coverage ratio does not exceed 90%. This limitation is designed to provide a basis to ensure that the net present value of policy benefits from our life insurance assets are able to cover the obligations to our L Bond holders. Conceptually, and because we intend to hold our life insurance policies until we receive the related policy benefits, the debt coverage ratio is based on the future receipt our portfolio’s gross expected yield (i.e., our expected gains) as measured against the future interest cost of our total debt obligations to finance the portfolio to maturity. Expressed as a percentage, the debt coverage ratio is calculated as the ratio of (i) the total amounts outstanding on interest-bearing debt, over (ii) the net present asset value of all life insurance assets we own, plus any cash and cash equivalents held in our accounts and policy benefit receivables. For this purpose, the net present asset value of our life insurance assets is calculated as the present value of the life insurance portfolio’s expected future cash flows discounted at the weighted-average interest rate of the interest-bearing indebtedness for the previous month.

Although the debt coverage ratio is designed to provide a basis to ensure that our assets will be sufficient to meet our obligations to the holders of L Bonds, the “net present value” of our life insurance assets used in the debt coverage ratio is not the same as the “fair value” of those assets on our balance sheet. Accordingly, the “net present value” and the “fair value” of our life insurance assets may be different — greater or less — and as a result the debt coverage ratio is not informative of the amount we and holders of L Bonds would actually receive if we were forced to sell or liquidated our life insurance assets. Furthermore, any sale or liquidation of all or a significant portion of our life insurance assets would incur significant transactional costs. As a result, our mere compliance with the debt coverage ratio in the indenture will not guarantee that the value of our life insurance assets, if sold or liquidated, would in all cases exceed the amount of our obligations to the holders of L Bonds.

We have no obligation to redeem L Bonds prior to their maturity date except in very limited circumstances.

We will have no obligation, and L Bond holders will have no right to require us, to redeem any L Bonds prior to their maturity date. The only exceptions will exist for situations in which an individual natural person who holds an L Bond suffers a total permanent disability or a bankruptcy, or dies. In such an event, we will be required to redeem the L Bonds of that person so long as certain procedural requirements are met. We may nonetheless agree, in our sole and absolute discretion, to accommodate requests to redeem L Bonds prior to their maturity in other cases. If, in our discretion, we voluntarily agree to redeem L Bonds that we are not obligated to redeem under the indenture, we will assess a 6% redemption fee for the transaction. For more information, see “Description of the L Bonds — Call and Redemption Prior to Stated Maturity.” As a result, any investment in our L Bonds should be considered illiquid until its stated maturity date.

Inaccuracies in the life expectancy estimates we use for small face policies could have a material and adverse effect on our results of operation and financial condition.

As of June 30, 2017, we owned 427 “small face” life insurance policies (i.e., policies having $1 million in face value of benefits or less) having $232 million in aggregate face value of benefits. We expect that the proportion of our total portfolio of life insurance policies consisting of small face policies will increase in the future.

The underwriting processes we use to evaluate, price and purchase small face policies are different from, and may not be as reliable as, the processes we use for life insurance policies with larger face values of benefits. In particular, the processes we use to develop life expectancy estimates and the related mortality curves for small face policies are less extensive than traditional methods. Although we obtain professional actuarial guidance regarding these processes, they may not be as reliable as the processes we use for policies with larger (greater than $1 million) face value of benefits.

As the face value attributable to our small face policies increases relative to the total face value of our portfolio, the accuracy with which we have estimated life expectancies for these policies will become increasingly material to

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our business. Any shortcomings in the processes we use to evaluate, price, purchase and value our small face policies, or significant inaccuracies in the life expectancy estimates relating to those policies, could have a material and adverse effect on our results of operation and financial condition. Any such outcomes could have a negative and possibly material effect on our ability to satisfy our debts, including obligations under our L Bonds.

We may in the future rely, in part, on new and unproven technology as part of our underwriting processes. If mortality predictions we obtain through use of this technology prove inaccurate, then our results of operation and financial condition could be materially and adversely affected.

We recently exercised our option to license, on an exclusive basis for use in the life insurance industry, new technology (which we call “M-Panel” technology) that we believe may be applied to assist us with mortality predictions in the course of underwriting and valuing life insurance policies. This M-Panel technology, however, has not yet been commercially applied in the manner we envision, and it is possible that we will be unable to obtain more accurate mortality predictions through its use. It is also possible that the mortality predictions we obtain through use of the M-Panel technology will prove inaccurate, and perhaps materially so. In any such a case, our failure to accurately forecast mortalities could have a material and adverse effect on our results of operation and financial condition, which could in turn materially and negatively affect our ability to satisfy our debts, including obligations under our L Bonds.

Although we have entered into a written license agreement for the M-Panel technology, we may have difficulties preventing third parties from using that technology, and we may be required to obtain additional licenses from other parties prior to our commercial use of that technology. We may be forced to develop our own proprietary processes, the success of which would be uncertain. Difficulties we encounter in our efforts to use or develop, and protect, intellectual property may prove costly and affect our results of operations.

The M-Panel technology rights we have licensed are the subject of a provisional patent application, but no patent protection will be afforded those rights unless and until a non-provisional patent application is filed with the U.S. Patent and Trademark Office, which filing is beyond our control. If the patent for the M-Panel technology ultimately were to issue, we would be legally entitled to prevent third parties from using any part of the technology that is both covered by the claims of the patent and licensed to us. If, on the other hand, no patent is ultimately granted with respect to the M-Panel technology (or the scope of claims is too narrow to afford us with meaningful protection), then we may be unable to prevent third parties from using the M-Panel technology. This outcome may severely diminish any competitive advantage we hope to obtain through our use of the M-Panel technology.

We are aware that other patent applications pending in the U.S. Patent and Trademark Office may have scopes of claims that overlap with the claims contained in the provisional patent application filed with respect to the M-Panel technology. If those other patents were to issue with scopes of claims that in fact overlap with the claims in any patent application for the M-Panel technology, we would likely be required to enter into a license agreement with other third parties before we could use processes that are covered by those overlapping claims. Nevertheless, we may be unable to procure such a license, and even if we are able to procure such a license it may prove too costly for us. Alternatively, we would ourselves be required to develop other processes that would not overlap with other patent claims. Our own development of these processes could be costly and time consuming and may ultimately prove unsuccessful.

In sum, any difficulties we encounter in our efforts to use (through a license), or develop, and ultimately protect, intellectual property from which we hope to gain a competitive advantage and enter into new insurance-related markets could prove costly and time-consuming enough to materially and adversely affect our results of operations.

The technology we license may subject us to claims of infringement or invalidity from third parties, and the magnitude of this risk to our business generally rises if and as we become more successful in employing and relying on the technology. Any such claims would be complex and costly, and adverse outcomes could undermine the competitive advantages we seek.

Our reliance on M-Panel technology (or any other technology we own or license) will subject us to the risk that other parties may assert, rightly or wrongly, that our intellectual property rights are invalid or violate the rights of those parties, as well as the risk that our intellectual property rights will be infringed upon by third parties. Any outcome invalidating our intellectual property rights or otherwise diminishing the competitive advantages obtained, at least in part, through the use of those rights could have a material and adverse effect on our competitive position and our prospects.

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Commercializing the M-Panel or other technology may require significant expenses, may cause us to incur losses, and may ultimately prove ineffective in developing value-added products and services for the life insurance and related industries. Our competitors, however, could succeed in commercializing applications of technology in a way that provides them with a competitive advantage, which could materially and adversely affect our prospects.

We intend to pursue new business models and business strategies in the insurance industry with M-Panel or similar technology. The M-Panel technology, however, has not yet been commercially applied in the manner we envision, and it is possible that we will incur losses as a result of these efforts. It is also possible that we will be unable to effectively commercialize M-Panel or similar technology, or unsuccessful in disrupting the life insurance industry. One or more competitors, however, may ultimately succeed in applying technology to the life insurance industry in a manner that provides them with a significant competitive advantage or that disrupts the marketplace. Any such outcome could have a material and adverse effect on our prospects, which could in turn materially and negatively affect our ability to successfully finance our business and satisfy our debts, including obligations under our L Bonds.

Fraudulent transfer statutes may limit your rights under GWG Life’s guarantee of the L Bonds.

Obligations under our L Bonds will be fully and unconditionally guaranteed by our direct wholly owned subsidiary, GWG Life. The guarantee may be subject to review under various laws for the protection of creditors. It is possible that other creditors of GWG Life may challenge the guarantee as a fraudulent transfer under relevant federal and state laws. Under certain circumstances, including a finding that GWG Life was insolvent at the time its guarantee was issued, a court could hold that the obligations of GWG Life under the guarantee may be voided or are subordinate to other obligations of GWG Life, or that the amount for which GWG Life is liable under its guarantee of the L Bonds may be limited. Different jurisdictions define “insolvency” differently, and we cannot assure you as to what standard a court would apply to determine whether GWG Life was insolvent at the time it guaranteed obligations under the L Bonds. If a court were to determine that GWG Life was insolvent on the date on which it guaranteed the L Bonds, or that the guarantee constituted a fraudulent transfer on other grounds, then the claims of creditors of GWG Life would effectively have priority (with respect to GWG Life’s assets and earnings) over the claims of L Bond holders.

Our controlling stockholders and principal executives are involved in litigation “clawback” claims, and it is possible that adverse outcomes from these claims could negatively affect us.

Our Chief Executive Officer, Jon R. Sabes, and our corporate secretary and Executive Vice President, Steven F. Sabes, who together beneficially own or control approximately 75% of our common stock, are subject to clawback litigation relating to loan payments made to Opportunity Finance, LLC. The litigation stems from loan payments received by Opportunity Finance, LLC (owned by Jon R. Sabes and Steve F. Sabes) from a borrower who filed for bankruptcy in 2008. The bankruptcy trustee alleges that loan repayments to Opportunity Finance were voidable transfers under preference or other legal theories and seeks to recover amounts for other creditors of the bankruptcy estate. Case No. 08-45257 (U.S. Bankruptcy Court District of Minnesota). Such loan repayments may ultimately be deemed to be voidable transfers under preference or other legal theories. To date, no claim has been made against us.

While we believe there are numerous meritorious defenses to the claims made by the bankruptcy trustee, and we are advised that the defendants in that action will vigorously defend against the trustee’s claims, the defendants may not prevail. If the bankruptcy trustee were to succeed in any effort to sell or transfer the equity interests of Jon R. Sabes or Steven F. Sabes in our company as a result of the litigation, there could be a change in control of our company. Such an event could adversely affect holders of our L Bonds by reducing the number of shares of common stock of GWG Holdings that have been pledged as collateral security for our obligations under those securities. Finally, regardless of the outcome of this litigation, these matters may distract management and reduce the time and attention that they are able to devote to our business.

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The loss of the services of our current executives or other key employees, or the failure to attract additional key individuals, would materially adversely affect our business operations and prospects.

Our financial success is significantly dependent upon the efforts of our current executive officers and other key employees. We have entered into employment agreements with Messrs. Jon R. Sabes and William B. Acheson. Nevertheless, there can be no assurance that these individuals will continue to provide services to us. A voluntary or involuntary termination of employment could have a materially adverse effect on our business operations if we were not able to attract qualified replacements in a timely manner. At present, we do not maintain key-man life insurance policies for any of these individuals. In addition, our success and viability is also dependent to a significant extent upon our ability to attract and retain qualified personnel in all areas of our business, especially our sales, policy acquisition, and financial management team. If we were to lose the members of these service teams, we would need to replace them with qualified individuals in a timely manner or our business operations and prospects could be adversely impacted.

We have no obligation to contribute to a sinking fund to retire the L Bonds, nor are the L Bonds guaranteed by any governmental agency.

We have no obligation to contribute funds to a sinking fund to repay principal or pay interest on the L Bonds upon maturity or default. The L Bonds are not certificates of deposit or similar obligations of, or guaranteed by, any depository institution. Further, no governmental entity insures or guarantees payment on the L Bonds if we do not have sufficient funds to make principal or interest payments.

We have the discretion to purchase assets, including life insurance assets, through different subsidiaries, and to transfer assets among our subsidiaries. Any decision to purchase or hold title to assets in one subsidiary, as opposed to a different subsidiary, may affect the value of collateral security for our obligation under the L Bonds.

We may at our discretion direct the purchase of policies by, and the sale of policies and other assets amongst, different subsidiaries of GWG Holdings. Purchases of assets in, or movements of assets amongst, different subsidiaries could affect the value of the collateral security for obligations under the L Bonds. For example, purchases through, or transfers of life insurance policies to, DLP IV would cause the policies acquired or transferred to become collateral for our senior credit facility with LNV/CLMG, whereas purchases through, or transfers of life insurance policies to, GWG Life would cause the policies acquired by GWG Life to become collateral for the L Bonds. Accordingly, purchases of assets through, or transfers of assets to, different subsidiaries may affect the value of collateral security for different classes of holders of our debt, including the L Bonds. In the case of a liquidation, any of these discretionary decisions may affect the value of, and amount you may ultimately be entitled to receive with respect to, your L Bonds.

We are an “emerging growth company” under federal securities laws, and the reduced reporting requirements applicable to emerging growth companies may make it more difficult to compare our financial statements to those of other issuers that are not emerging growth companies.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements normally applicable to public companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a non-binding advisory vote on executive compensation, and delayed adoption of new or revised financial accounting standards. We could be an emerging growth company through 2019, although certain circumstances could cause us to lose that status earlier. It is possible that these reduced reporting requirements could make it more difficult for investors to compare our results of operations and financial condition with those of other companies that are not emerging growth companies.

We do not expect a market to exist that will enable you to sell your L Bonds.

Although we are a public reporting company that files information with the SEC, the L Bonds will not be readily resalable or transferable. No public market for the L Bonds exists and none is expected to develop. As a result, the transferability of the L Bonds will be limited. Accordingly, the purchase of L Bonds is not suitable for investors desiring liquidity at any time prior to the maturity of the L Bonds.

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We cannot know the tax implications of an investment in the L Bonds for the L Bond holder.

The section of this prospectus entitled “Material Federal Income Tax Considerations” sets forth a summary of federal income tax consequences to the purchasers of the L Bonds. No information is provided concerning tax consequences under any other federal, state, local or foreign laws that may apply to the purchasers of the L Bonds. Prospective investors or their representatives should read that section very carefully in order to properly evaluate the federal income tax risks of an investment in the L Bonds. Each prospective investor should consult his personal counsel, accountant and other business advisors as to the federal, state, local and foreign tax consequences of an investment in the L Bonds. L Bond holders will receive an IRS Form 1099-INT in connection with their receipt of interest payments.

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USE OF PROCEEDS

If all of the L Bonds are sold, we expect to receive up to approximately $918.8 million of net proceeds from this offering after paying our estimated offering and related expenses and the estimated selling commissions and additional compensation consisting of the following:

•         a dealer-manager fee payable to the dealer manager in an amount equal to 0.50% of the principal amount of all L Bonds sold;

•         an accountable expense allowance to be paid to the selling group members, which may include due diligence expenses of the dealer manager and selling group members set forth in a detailed and itemized invoice and as further described below;

•         wholesaling fees, which may consist of commissions and non-transaction based compensation of the wholesalers;

•         non-cash compensation, which may consist of an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment that is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target, the national and regional sales conferences of our selling group members, training and education meetings for registered representatives of our selling group members, and permissible forms of non-cash compensation to registered representatives of our selling group members, such as gifts that do not exceed an aggregate value of $100 per annum per registered representative and that are not pre-conditioned on achievement of a sales target, including but not limited to seasonal gifts; and

•         up to a 1.00% reallowance to selling group members.

We expect the selling commissions and additional compensation to aggregate approximately $80.0 million based on expected average selling commissions of $60.0 million (5.00%), dealer-manager fees of $5.0 million (0.50%), and additional expenses aggregating to $25.0 million (2.50%), assuming the sale of all of the L Bonds.

Our dealer manager will enter into participating dealer agreements with certain other broker-dealers that are members of FINRA, referred to as “selling group members,” to authorize those broker-dealers to sell our L Bonds. As explained elsewhere in this prospectus, the maximum amount of commissions, dealer manager fees and additional compensation payable to the dealer manager and selling group members is 8.00% of the aggregate principal amount of L Bonds sold. Therefore, if all of the L Bonds were sold and the maximum commissions, dealer manager fees and additional compensation were paid, we estimate that the net proceeds to us, after paying our own estimated offering and related expenses, would be approximately $918.8 million. Nevertheless, because we do not know the total principal amount of L Bonds that will be ultimately sold, we are unable to accurately forecast the total net proceeds that will be generated by this offering.

There is no minimum amount of L Bonds that must be sold before we access investor funds. The exact amount of proceeds we receive may vary considerably depending on a variety of factors, including how long the L Bonds are offered.

Our goal is to use a majority of the net proceeds from the sale of L Bonds to purchase additional life insurance policy assets. The amount of proceeds we apply towards purchasing additional life insurance policy assets will depend, among other things, on how long the L Bonds are offered, the amount of net proceeds that we receive from the sale of L Bonds being offered, the existence and timing of opportunities to expand our portfolio of insurance policy assets, our cash needs for certain other expenditures (summarized below) we anticipate incurring in connection with this offering and in connection with our business, and the availability of other sources of cash (e.g., a senior credit facility). These certain other expenditures, listed in order of priority, include:

•         servicing of life insurance assets (i.e., paying attendant life insurance policy premiums);

•         paying principal at maturity, interest and fees to our lenders, including under a senior credit facility, previously issued L Bonds and the L Bonds offered hereby; and

•         general working capital purposes.

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Our use of funds for general working capital purposes is expected to include, but not be limited to, expenditures such as (i) obtaining life expectancy reports, (ii) mortality tracking and (iii) legal and collections expenses, (iv) sales and marketing expenses, (v) general and administrative salary expenses, as well as (vi) tax liabilities, and (vii) interest rate caps, swaps or hedging instruments for our life insurance policy portfolio or our indebtedness.

As indicated above, the extent to which we will use proceeds from this offering for these other purposes, and the amounts and timing of such expenditures will depend on, among other things, how long the L Bonds are offered, the amount of net proceeds that we receive from the sale of L Bonds being offered, the existence and timing of opportunities to expand our portfolio of insurance policy assets, the availability of funds from other sources, including borrowings from a senior credit facility and cash generated from our life insurance assets, and certain other factors. We currently expect to allocate net offering proceeds (assuming the maximum amount of commissions, fees, allowances and any other items of selling compensation equal to 8.00% of the aggregate principal amount of L Bonds sold) as follows, based upon various assumed amounts of gross proceeds that we receive from the sale of L Bonds:

		Gross Offering Proceeds
		$	1,000,000,000					$	750,000,000					$	500,000,000
Net Offering Proceeds			918,800,000		100	%			688,800,000		100	%			458,800,000		100	%
Purchase Policies			661,536,000		72	%			495,936,000		72	%			330,336,000		72	%
Payment of Premiums			91,880,000		10	%			68,880,000		10	%			45,880,000		10	%
Payment of Principal and Interest			119,444,000		13	%			89,544,000		13	%			59,644,000		13	%
Other Expenditures			45,940,000		5	%			34,440,000		5	%			22,940,000		5	%

Net offering proceeds not immediately applied to the uses summarized above will be invested in short-term investments such as money market funds, commercial paper, U.S. Treasury Bills and similar securities investments pending their use. We may also purchase interest rate hedges to lock in our cost of capital, or longevity hedges to lock in our expected return from our portfolio.

As indicated above, we may use some of the net proceeds from this offering to pay premiums on life insurance assets we own. The amount of payments for anticipated premiums and servicing costs that we will be required to make over the next five years to maintain our current portfolio, assuming no mortalities, is set forth in the table below:

Years Ending December 31,		Premiums			Servicing			Premiums and Servicing Fees
Six months ending December 31, 2017		$	24,455,000		$	654,000		$	25,109,000
2018			52,611,000			654,000			53,265,000
2019			58,206,000			654,000			58,860,000
2020			65,772,000			654,000			66,376,000
2021			74,105,000			654,000			74,759,000
2022			83,310,000			654,000			83,964,000
		$	358,409,000		$	3,924,000		$	362,333,000

Also as indicated above, we may use some of the net proceeds from this offering to pay principal amounts owing under previously issued L Bonds when such amounts become due and payable. The amount of such securities that we would repay with proceeds of this offering will depend on whether the holders of such notes elect repayment rather than renewal of such securities, as well as whether we elect to use other sources of repayment. We believe it is most likely that such payments, if any, would relate to securities that mature within the first three years after the initial effective date of the registration statement of which this prospectus is a part (i.e., the maximum period of time during which we may offer securities under the registration statement). We presently do not intend to use any net proceeds from this offering to repurchase outstanding L Bonds prior to their maturity.

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BUSINESS

Overview

We are a financial services company committed to finding new ways of transforming the life insurance through innovative products and services, business processes, financing strategies, and advanced epigenetic technology. Historically, we have focused on creating opportunities for consumers to maximize the value for their life insurance as compared to the traditional options offered by the insurance industry. As part of our business, we create opportunities for investors to receive income and capital appreciation from our various activities. More recently, we have focused on applying new epigenetic technology to the global life insurance industry.

The life insurance industry provides us with the opportunity to bring value to consumers and earn non-correlated yield by purchasing life insurance policy assets in the secondary market at a discount to the face value of the policy benefits. Once we purchase a life insurance policy asset, we continue to pay the premiums of the policy until we collect the policy benefit. This practice is disruptive to the life insurance industry since insurance carriers rely on consumer lapse and surrender behavior resulting in the forfeiture of policy benefits. From inception through June 30, 2017, we have purchased approximately $2.5 billion in face value of policy benefits from consumers for over $436 million, as compared to the $31 million in surrender value offered by insurance carriers on those same policies. As such, we provide unique and valuable services that help life-insurance-owning consumers 65 years or older maximize their investments in their life insurance and meet their retirement financial needs.

By purchasing life insurance policy assets at a discount to the face value of the policy benefits, we have the opportunity to generate attractive investment returns that are not correlated to traditional financial markets. The potential to earn positive non-correlated yield from a portfolio of life insurance assets results from the positive difference between the (i) the face value of the policy benefits received; less (ii) the purchase price of the life insurance assets, plus the premiums and financing costs to maintain those assets. As of June 30, 2017, we owned a total of $1.5 billion in face value of our life insurance policy benefits; and our total investment in our portfolio of life insurance assets, including the purchase price, attendant premiums and financing costs was $565.2 million.

We seek to build a profitable and large portfolio of life insurance assets that is well diversified in terms of insurance companies and insureds. We believe that diversification is a key factor and risk mitigation strategy to provide consistent cash flows and reliable investment returns. Accordingly, we seek to grow our portfolio and achieve diversification through a variety of financings and securities products offered to investors. In addition, we have built a robust operational platform to work with financial advisors and insurance professionals to originate life insurance policy assets for purchase and assist consumers with the opportunity to maximize their investments in their life insurance.

More recently, we have made investments in technology to more accurately estimate human life expectancy. Our search for increased precision in estimating human life expectancy led us to a mortality predictive technology developed by Dr. Steve Horvath, a Professor of Human Genetics and Biostatistics at the University of California, Los Angeles (UCLA). In May 2017, we exclusively licensed from UCLA Dr. Horvath’s “DNA Methylation Based Predictor of Mortality” technology or “M-Panel” technology. Our M-Panel technology is based upon a revolutionary new field of science known as “epigenetics.” Our investments in M-Panel and related technologies are owned in our wholly owned subsidiary Life Epigenetics, Inc. This “insurtech” division is in the development process of commercializing epigenetic tests based upon the M-Panel Technology.

To grow our portfolio and achieve the diversification we seek, as well as to pursue additional opportunities in the life insurance industry through the use of technology, we offer investors the opportunity to potentially receive income and capital appreciation through a variety of financings and securities offerings.

We are dedicated to finding new ways of transforming the life insurance industry, both as it relates to our historical secondary life insurance business and now with the application of advanced epigenetic technology. Today, we provide consumers with the opportunity to maximize the value of their life insurance by disrupting the status quo of high policy lapse rates and low surrender values that life insurance carriers have enjoyed for years. In the future, we intend to disrupt the industry further by providing consumers with additional innovative products and services that benefit from the use of advanced epigenetic technologies, such as the M-Panel technology license. We believe this advanced epigenetic technology will permit us to reimagine the way in which risk is assessed, selected and priced in the life insurance industry, and possibly also the long-term care and annuity industries.

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Our business was originally organized in February 2006. We added our current parent holding company, GWG Holdings Inc., in March 2008, and in September 2014 we consummated an initial public offering of our common stock on The NASDAQ Capital Market, where our stock trades under the ticker symbol “GWGH.”

GWG Holdings, Inc. conducts its life insurance related business through a wholly owned subsidiary, GWG Life, LLC, and GWG Life’s principal wholly owned subsidiary GWG DLP Funding IV, LLC (DLP IV). Both GWG Life and DLP IV are legally organized in Delaware. Life Epigenetics Inc. is a wholly owned subsidiary of GWG Holdings. Unless the context otherwise requires or we specifically so indicate, all references in this prospectus to “we,” “us,” “our,” “our Company,” “GWG,” or the “Company” refer to these entities collectively. Our headquarters are based in Minneapolis, Minnesota.

Markets

Consumers Owning Life Insurance and the Life Insurance Secondary Market

The market for life insurance is large. According to the American Council of Life Insurers Fact Book 2016 (ACLI), individual consumers in the United States owned over $10.3 trillion in face value of life insurance policy benefits in 2015. In that same year, the ACLI reports individual consumers purchased an aggregate of $1.6 trillion of new life insurance policy benefits. This figure includes all types of life insurance, including term and permanent insurance known as whole life and universal life.

The secondary market for life insurance exists from consumer lapse behaviors and inadequate surrender values offered to consumers by the insurance carriers. The ACLI reports that the lapse and surrender rate for individual life insurance policies is 5.4%, amounting to over $638.5 billion in face value of policy benefits lapsed and surrendered in 2015 alone. According to testimony by Gottlieb & Smetters, it is estimated that nearly 88% of all permanent universal life insurance policies sold in the United States do not result in the payment of a benefit claim.

We offer products and services in the life insurance secondary market to consumers, 65 years and older, who seek to maximize the value of their investment in their life insurance for their retirement financial needs. These consumers represent the fastest growing demographic segment in the United States according to the U.S. Census Bureau. And as these consumers age, they and their families will be faced with a variety of financial needs that can benefit from the value-added products and services we offer. Our life insurance secondary market products and services address the convergence of three major trends: under-saving for retirement, longer life expectancies, and high and rising medical expenses.

In July 2017, the National Association of Insurance Commissioners (“NAIC”) issued a policy bulletin in support of the type of products we seek to provide as “innovative private market solutions for financing Americans’ long-term care needs.” The NAIC, citing our Company, discussed how consumers could exchange the market value of their life insurance policies for products designed to fund long-term care expenses. The use of a life insurance policy to generate resources to fund long-term care was pioneered by our Executive Vice President, Chris Orestis. Today, we are the only company in the life insurance industry that provides this innovative product to pay for long-term care expenses.

Research by Conning Research & Consulting (Conning) reports that the annual net market potential for life insurance policy benefits sold in the secondary market exceeded $141 billion in face value of policy benefits in 2016. Of that market potential, Conning estimates that investors purchased approximately $1.7 billion in face value of life insurance benefits in 2015, indicating that the market is dramatically underserved. With an aging demographic in the United States, Conning expects the net market potential to grow to an annual $170 billion in face value of life insurance benefits by 2025. We share the belief that the life insurance secondary market represents both a dramatically underserved market and a significant long-term growth opportunity. We further believe that we are well positioned to address the market need.

Technology and the Life Insurance Industry

The opportunity to apply technology to transform the life insurance industry is significant. According to industry consultants at KPMG, Accenture, and Ernst & Young, there is a major movement afoot to transform the insurance industry through the use and application of advanced technologies. This movement, commonly referred to as “insurtech,” suggests a new era of disruptive entrants into the traditional insurance marketplace that have the potential to upend the insurance industry’s historical approach to assessing and selecting acceptable risks.

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We intend to participate in the life insurance industry’s insurtech movement through commercial applications using advanced epigenetic technology. Our initiative into the development and use of applications began in 2015 by working with Dr. Steve Horvath after he reported that human cells have an internal “biological age” and “biological clock” at the DNA molecular level that is indicative of the aging process. The study of chemical modifications of methylation levels to the DNA molecule or code (methylation-based bio-markers) that reveal aging, and upon which the M-Panel technology is based, is part of the epigenetics field. Epigenetics is the study of how the DNA molecule’s instructions or code are modified as a result of environmental exposures and experiences. While the human DNA molecular code is essentially permanent throughout our lives, the expression of that code changes based upon numerous environmental factors. Epigenetics seeks to recognize conditions or patterns in methylation-based bio-markers that indicate the code has changed and what those changes mean to human biology. Dr. Horvath’s epigenetic research has focused on looking at specific methylation-based bio-markers in order to study the determinants of aging and mortality.

In 2016, Dr. Horvath reported a discovery upon the completion of a statistical meta-analysis of over 13,000 individual DNA samples that was reported in the September 2016 issue of Aging. His research identified specific sets of DNA methylation-based bio-markers that was predictive of individual risk of all-cause mortality. We believe the implications of this discovery are simple and profound: individual lifespans can now be estimated with significantly greater precision across large groups of people. We have translated Dr. Horvath’s technology into an actuarial underwriting methodology that we believe could prove revolutionary to traditional underwriting practices in the global life insurance industry. We are also seeking the discovery of additional methylation-based bio-markers that may be indicative of other changes in human biology and thereby be predictive of other environmental exposures and experiences. We are currently working to expand the application of predictive methylation-based bio-markers to influence and change traditional underwriting practices in the global life insurance industry.

Investors Seeking Yield from Alternative Assets

Since the credit crisis of 2008, the flow of capital to a variety of alternative asset classes has undergone a structural shift. Alternative assets, broadly defined, are any non-traditional asset with potential economic value that would not be found in a standard investment portfolio. An asset is generally considered “alternative” if it has some or all of the following characteristics: a limited investment history, not commonly found in portfolios, an illiquid market, different performance characteristics, and requires specialized skill to originate and service the asset. Definitions of traditional assets today extend well beyond stocks and bonds, and can include a variety of assets which may have been better classified as “alternative” a decade ago, i.e., real estate, commodities or natural resources. Thus, what is an alternative asset today may largely be considered tomorrow’s mainstream investment asset.

Once dominated by banks, alternative asset markets are in many cases no longer viable for banks to finance due to vast new regulation effected since the crisis, regulation that has in effect reshaped the way in which banks participate in many parts of the economy. At the same time, an increasing number of investors are now turning to alternative asset classes as a means to diversify their investment portfolio and manage risk and volatility, and to obtain greater returns in the low interest rate environment that has persisted since 2008. According to research published by Goldman Sachs, retail investors are expected to shift a significant allocation of their investments towards alternative assess from a current average of 4% to the 20% allocation favored by institutional investors over the next five to ten years (see Goldman Sachs, Retail Liquid Alternatives: The Next Frontier (2013)).

The trend of investors seeking access and exposure to alternative investment products is expected to continue as traditional bank sources of capital for these assets continues to retreat and alternative investment product offering innovations occur within the regulated securities markets. Researchers at McKinsey report that U.S. individual investors are expected to be a primary driver of growth in alternative asset investments. McKinsey reports that high net-worth individuals and the mass affluent are increasingly looking to hedge downside risk, protect principal, manage volatility, and generate income — the same reason institutional investors have favored larger allocations to alternative asset investment classes.

Our Business Model

Our business model is to earn a net profit between the yield generated by the life insurance assets we own and the costs we incur to originate and finance those assets. We believe that we are uniquely positioned to acquire life insurance assets in the secondary market directly from consumers needing our services, and to finance our portfolio’s growth by

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providing investors with the opportunity to participate in the yield we generate from those assets. In addition, upon our implementation of M-Panel or other similar technology, we believe that we will be uniquely positioned to create even more opportunities for capital appreciation by obtaining a competitive edge in our current market space, and bringing innovative products and services to the global life insurance industry.

To participate and compete in, and expand, our markets, we spend significant resources: (i) recruiting and developing a professional management team; (ii) developing a robust operational platform, systems and strategy for originating life insurance policies; (iii) establishing strategic relationships for delivering the services we provide; (iv) creating opportunities for investors to participate in the yield and capital appreciation generated by the life insurance assets we own; (v) creating innovative growth opportunities to participate in the global life insurance industry through the use of epigenetic technology.

Originating Life Insurance Assets

We generally purchase life insurance assets in the secondary market directly from policy owners who purchased their life insurance in the primary market. Historically, we have purchased these life insurance policies through a network of specialized brokers who assist consumers and financial professionals in accessing the secondary market. We maintain membership affiliations and representation within key industry groups, such as the Life Insurance Settlement Association. We typically attend and sponsor trade events where we maintain contacts and visibility among professionals who submit life insurance policies for our potential purchase.

A key strategic initiative of ours has been to expand our origination capabilities by marketing our products and services directly to consumers through financial professionals. Most recently, we focused these efforts towards financial professionals, namely financial advisors and life insurance agents, through our “Appointed Agent Program.” Our Appointed Agent Program is designed to empower financial professionals to bring the life insurance secondary market’s value proposition to their respective markets. Our Appointed Agent Program emphasizes education, training, regulatory compliance, and marketing support. We have built an extensive team capable of marketing our products and services directly to life insurance professionals. We expect to continue allocating considerable resources towards the development and support of our direct origination team. We believe these resources will be of particular value as we seek to expand our business into other, more conventional, insurance-related industries.

Underwriting and Purchasing Life Insurance Assets

We focus on investing in high quality life insurance assets through our origination practices and underwriting procedures. These practices and procedures strive to meet guidelines and methodologies published by rating agency A.M. Best. At the same time, we seek innovative value-added tools, services, and methodologies to improve both the accuracy and efficiency with which we acquire life insurance assets.

Our secondary market underwriting procedures consist of a careful review and analysis of available materials and information related to a life insurance policy and the insured. The goal of our underwriting procedures is to make an informed purchasing decision. We typically purchase life insurance policies from insureds who are 65 years or older and whose life expectancies are less than 120 months (ten years). The life expectancies we use are estimates, stated in months, which indicate the 50% probability of an individual’s mortality (meaning actuarial analysis predicts half of the individuals with similar age, sex, and medical conditions will experience mortality before that number of months, and half will experience mortality after that number of months). Life expectancies are based on actuarial tables that predict statistical probability of individual mortality.

We obtain life expectancies from independent third-party medical-actuarial underwriting firms, unless the life insurance policy benefit has a face value of $1,000,000 or less (which we generally refer to as a “small face policy”). When we obtain life expectancies from independent third-party medical-actuarial firms, we receive a medical underwriter’s report summarizing the health of the insured based on a review of the insured’s historical medical records. For all life insurance policies we purchase, other than small face policies, we average two life expectancies from two independent medical-actuarial underwriting firms to form the life expectancy we use to price and value our life insurance assets. In some cases, we may obtain more than two life expectancy estimates. In those cases, we average the two life expectancy estimates that we believe are the most reliable of those we have received, based on our own analyses and conclusions. In this regard, the two life expectancy estimates we ultimately choose to average may not always be the most conservative. For small face policies, we use modified procedures to estimate a life expectancy that may, or may not, use life expectancies from independent third-party medical-actuarial underwriting firms. As a result,

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our practices and procedures for small face policies may not meet the guidelines and methodologies published by the rating agency A.M. Best. If in the future we believe our business model will benefit from changes in our underwriting process and if such revisions are permitted under our borrowing covenants, we may change our underwriting processes and policies.

Our success with our Appointed Agent Program, and in designing and implementing small face policy underwriting procedures, has presented us with the opportunity to purchase a greater number of small face life insurance policies. We believe this opportunity is meaningful since the majority of life insurance policies outstanding are small face policies, and policy diversification is critical in obtaining normalized actuarial performance. Historically, however, small face policies have not been available to purchasers of life insurance policies because secondary market industry participants have significantly relied on life insurance brokers who are paid a commission determined as a percentage of the face value benefit of the purchased policy, to present purchase opportunities. Not surprisingly, because larger commissions are associated with larger face value life insurance policies, brokers have focused on larger policies and the industry has developed origination practices and underwriting procedures to accommodate such practices. As a result, the industry’s traditional approaches to underwriting and purchasing life insurance assets are ill suited for small face policies. For example, procuring complete medical records, two separate life expectancy reports, and engaging in related activities, can be time consuming and expensive, and these same costs cannot be justified when purchasing smaller life insurance assets. In sum, our method is focused on obtaining enough medical information to generate reliable life expectancy estimates, and thereby make informed purchase decisions. Our streamlined procedures have made it possible to complete a preliminary underwriting in a number of days (as opposed to weeks), and complete the entire purchasing process in a number of weeks (as opposed to months).

We expect to further refine our underwriting processes for large- and small-face policies over time and, to the extent possible, use new technologies to enhance this process and our overall business. In 2015 we began an initiative to re-examine the way in which we approached underwriting. Our initiative included a review of new advanced medical technologies capable of predicting aging and related mortality more accurately than traditional methods.

Value Proposition — Life Insurance as an Alternative Asset

We realize profits from the life insurance assets we own by earning a spread between the investment cost of our life insurance assets and the face value of the policy benefits we receive. Accordingly, if we purchase life insurance assets in the secondary market, and make all the attendant premium payments to maintain those assets in order to receive the policy benefits, the most significant risk factors (among others that we discuss in the “Risk Factors” section of this prospectus) in the performance of those assets are: (i) the predictability of mortality, or longevity risk; and (ii) the creditworthiness of the issuing life insurance company, or credit risk. We believe the value proposition of our investments in the alternative asset of life insurance is our ability to obtain superior risk-adjusted returns.

Longevity Risk. We believe actuarial mortality is the single largest variable affecting the returns on our investments in life insurance assets and impacting our life insurance portfolio’s performance over time. Accurately predicting an individual’s mortality date is impossible, and the best an actuary can do is provide a set of probabilities of survival over time. Nevertheless, predicting mortality among a group of similarly situated individuals is less difficult — in fact, the larger the group, the more accurate actuarial predictions tend to become. The statistical mathematical concept stating that the results of random events tend to become very predictable as the number of events becomes large is the “Central Limit Theorem” (or more commonly known as the “Law of Large Numbers”). “Mean regression” is another statistical mathematical concept used to describe that, on average, observations (in this case, the actual mortality of insureds) tend to cluster around the mean observation (i.e., our estimate of mortality of insureds as described further under “Value Proposition” below). These statistical mathematical concepts are the basis for many business models, ranging from insurance to the lottery. Insurance carriers, for example, can be very certain of the number of insurance claims they can expect when they have spread their risk over a large book of diversified policies. In this way, insurance carriers can price a large number of insurance policies of any type to collect premiums slightly above the level of expected claims, and thereby expect to earn a surplus or profit. Similarly, a lottery can depend on an expected amount of earnings equal to the small advantage built into the odds of the games.

The implications for our business model are two-fold: first, as we accumulate larger numbers of life insurance policies, we should expect our results to increasingly correlate with our expectations; second, over the long run, we should expect that the actual cash flows will converge with the forecasted cash flows from our portfolio of life insurance assets, and the actual return on our portfolio of life insurance assets will converge with our expected return.

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Although medical advances and life expectancy changes may significantly impact the longevity risk we face and our understanding of that risk, these concepts nevertheless serve as guiding principles as we seek to build, manage, and forecast the performance of our portfolio of life insurance assets.

These expectations are affirmed in research published by A.M. Best and others, illustrating that as the number of insured lives increase within a portfolio of life insurance policies, there is a corresponding decrease in the standard deviation of the mortality events within the portfolio — i.e., longevity risk decreases as the number of insureds increases. Standard & Poor’s indicates that 1,000 insured lives are required to reach statistical “significance” (where the relationship, in this context, between mortality projections and actual mortality events is not random). A.M. Best concludes that a portfolio of at least 300 insured lives is statistically significant. Our current portfolio covers 622 insured lives and we believe that both the predictability and actual performance will continue to improve with additional size and diversification. Accordingly, we continue to seek to grow the size and diversification of the portfolio in order to mitigate risk and improve our profitability.

Portfolio Credit Risk Management.  We rely on the payment of policy benefit claims by life insurance companies as our most significant source of cash flows over time. The life insurance assets we own represent obligations of third-party life insurance companies to pay the benefit amount under the relevant policy upon the mortality of the insured. As a result, we manage this credit risk exposure by generally purchasing policies issued by insurance companies with investment-grade ratings from Standard & Poor’s.

Approximately 96.3% of life insurance assets in our portfolio were issued by insurance companies with investment-grade credit ratings from Standard & Poor’s, as of June 30, 2017. Our largest life insurance company credit exposures and the Standard & Poor’s credit rating of their respective financial strength and claims-paying ability is set forth below:

Rank		Policy Benefits			Percentage of Policy Benefit Amount			Insurance Company		Ins. Co. S&P Rating
1		$	215,471,000		14.1	%		John Hancock Life Insurance Company (U.S.A.)		AA-
2		$	193,557,000		12.7	%		AXA Equitable Life Insurance Company		AA-
3		$	165,580,000		10.9	%		Lincoln National Life Insurance Company		AA-
4		$	157,254,000		10.3	%		Transamerica Life Insurance Company		AA-
5		$	103,642,000		6.8	%		Metropolitan Life Insurance Company		AA-
6		$	62,293,000		4.1	%		Massachusetts Mutual Life Insurance Company		AA+
7		$	61,025,000		4.0	%		American General Life Insurance Company		A+
8		$	56,422,000		3.7	%		Pacific Life Insurance Company		AA-
9		$	47,390,000		3.1	%		West Coast Life Insurance Company		AA-
10		$	45,670,000		3.0	%		Reliastar Life Insurance Company		A
			1,108,304,000		72.7	%

The yield to maturity on bonds issued by life insurance carriers reflects, among other things, the credit risk (risk of default) of such insurance carrier. We follow the yields on certain publicly traded life insurance company bonds since this information is part of the data we consider when valuing our portfolio of life insurance policies for our financial statements.

Name of Bond		Maturity		YTM			Duration (Years)		Bond S&P Rating
AXA 1.125%		5/15/2028		1.04	%		10.9		A
Manulife Finl 4.15%		3/4/2026		3.18	%		8.7		A
Lincoln National Corp Ind 3.625%		12/12/2026		3.68	%		9.5		A-
Amer Intl Grp 4.875%		6/1/2022		2.71	%		4.9		BBB+
Protective Life 7.375%		10/15/2019		2.31	%		2.3		A-
Metlife 3.048%		12/15/2022		2.60	%		5.5		A-
Prudential Finl Inc Mtns Book 3.5%		5/15/2024		2.85	%		6.9		A
Average yield on insurance bonds				2.62	%		6.9

27

The table above indicates the current yields to maturity (YTM) for the senior bonds of selected life insurance carriers with durations, on average, that are similar to the weighted-average life expectancy estimates of our life insurance portfolio. As of June 30, 2017, the average yield to maturity of these bonds was 2.62%, which we believe reflects, in part, the financial market’s judgment that credit risk is low with regard to these carriers’ financial obligations. It should be noted that the obligations of life insurance carriers to pay life insurance policy benefits ranks senior to all of their other financial obligations, such as the bonds they issue. This “super senior” priority is not reflected in the yield to maturity in the table and, if considered, would result in a lower yield to maturity all else being equal. Thus, as long as the respective premium payments have been made, it is highly likely that the owner of the insurance policy will collect the insurance policy benefit upon the mortality of the insured.

Value Proposition. We define the value proposition presented by our portfolio of life insurance assets as our ability to earn superior risk-adjusted returns. At any time, we calculate our returns from our life insurance assets based upon (i) our historical results; and (ii) the future cash flows we expect to realize from our statistical forecasts. To forecast our expected future cash flows, we use the probabilistic method of analysis. The actuarial software we use to produce our expected future cash flows and conduct our probabilistic analysis was developed by the actuarial firm Milliman and is now owned by Modeling Actuarial Pricing Systems, Inc. (“MAPS”). The expected internal rate of return of our portfolio is based upon future cash flow forecasts derived from a probabilistic analysis of our policy benefits received in relation to our investment cost basis. As of June 30, 2017, the expected internal rate of return on our portfolio of life insurance assets was 11.05% based on our portfolio benefits of $1.525 billion and our non-GAAP investment cost basis of $565.2 million (including purchase price, premiums paid, and financing costs incurred to date).

We seek to further enhance our understanding of our expected future cash flow forecast by applying a stochastic analysis, sometimes referred to as a “Monte Carlo simulation,” to provide us with a greater understanding of the variability of our future cash flow projections. The stochastic analysis we perform is built within the MAPS actuarial software and provides internal rate of return calculations for different statistical confidence intervals. The results of our stochastic analysis, in which we run 10,000 random mortality scenarios, demonstrates that the scenario ranking at the 50th percentile of all 10,000 results generates an internal rate of return of 11.01%, which is near to our expected internal rate of return of 11.05%. The stochastic analysis results also reveal that our portfolio is expected to generate an internal rate of return of 10.49% or better in 75% of all generated scenarios; and an internal rate of return of 10.04% or better in 90% of all generated scenarios. As the portfolio continues to grow, all else equal, the percentage of observations that result in an internal rate of return at or very near 11.01% (currently our median, or 50th percentile, internal rate of return expectation) is expected to increase, thereby lowering future cash flow volatility and potentially justifying our use of lower discount rates to value our portfolio.

In sum, we believe our statistical analyses show that, if we can continue to grow and maintain our investments in life insurance assets, then, in the absence of significant negative events affecting our most significant risks, including but not limited to longevity and credit risk, and interest rate and financing risk, those investments will provide superior risk-adjusted returns for our company and provide us with the means to generate attractive returns for our investors.

Portfolio Information

Our portfolio of life insurance policies, owned by our subsidiaries as of June 30, 2017, is summarized below:

Total portfolio face value of policy benefits		$	1,525,363,000
Average face value per policy		$	1,924,000
Average face value per insured life		$	2,151,000
Average age of insured (yrs.)*			81.5
Average life expectancy estimate (yrs.)*			6.9
Total number of policies			793
Number of unique lives			709
Demographics			74% Males; 26% Females
Number of smokers			30
Largest policy as % of total portfolio			0.87	%
Average policy as % of total portfolio			0.13	%
Average annual premium as % of face value			3.21	%

28

____________

*         Averages presented in the table are weighted averages.

Our portfolio of life insurance policies, owned by our subsidiaries as of June 30, 2017, organized by the insured’s current age and the associated policy benefits, is summarized below:

									Wtd. Avg. Life		Percentage of Total
Min Age		Max Age		Policies		Policy Benefits			Expectancy (yrs.)		Number of Policies			Policy Benefits
95		99		8		$	12,392,000		1.1		1.0	%		0.8	%
90		94		71		$	135,898,000		2.9		8.9	%		8.9	%
85		89		195		$	393,983,000		4.7		24.6	%		25.8	%
80		84		171		$	401,496,000		6.3		21.6	%		26.3	%
75		79		144		$	270,779,000		9.0		18.2	%		17.8	%
70		74		133		$	210,775,000		10.2		16.8	%		13.8	%
60		69		71		$	100,040,000		11.3		8.9	%		6.6	%
Total				793		$	1,525,363,000		6.9		100.0	%		100.0	%

Our portfolio of life insurance policies, owned by our subsidiaries as of June 30, 2017, organized by the insured’s estimated life expectancy estimates and associated policy benefits, is summarized below:

									Percentage of Total
Min LE (Months)		Max LE (Months)		Policies		Policy Benefits			Number of Policies			Policy Benefits
2		47		212		$	334,511,000		26.7	%			21.9	%
48		71		175			372,072,000		22.1	%			24.4	%
72		95		147			289,037,000		18.5	%			19.0	%
96		119		117			235,105,000		14.8	%			15.4	%
120		143		77			158,601,000		9.7	%			10.4	%
144		199		65			136,037,000		8.2	%			8.9	%
Total				793		$	1,525,363,000		100.0	%		$	100.0	%

We track concentrations of pre-existing medical conditions among insured individuals within our portfolio based on information contained in life expectancy reports. We track these medical conditions within the following ten primary disease categories: (1) cancer, (2) cardiovascular, (3) cerebrovascular, (4) dementia, (5) diabetes, (6) multiple, (7) neurological disorders, (8) no disease, (9) other, and (10) respiratory diseases. Our primary disease categories are summary generalizations based on the ICD-9 codes we track on each insured individuals within our portfolio. ICD-9 codes, published by the World Health Organization, are used worldwide for medical diagnoses and treatment systems, as well as morbidity and mortality statistics. Currently, the primary disease categories within our portfolio that represent a concentration of over 10% are multiple, cardiovascular, and other which constitute 27.6%, 19.9%, and 12.4%, respectively, of the face amount of insured benefits of our portfolio as at June 30, 2017.

29

The complete detail of our portfolio of life insurance policies, owned by our subsidiaries as of June 30, 2017, organized by the current age of the insured and the associated policy benefits, sex, estimated life expectancy, issuing insurance carrier, and the credit rating of the issuing insurance carrier, is set forth below.

Life Insurance Portfolio Detail
(as of June 30, 2017)

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
1		$	8,000,000		F		99		10		Massachusetts Mutual Life Insurance Company		AA+
2		$	184,000		M		96		33		Reliastar Life Insurance Company		A
3		$	219,000		M		96		33		Reliastar Life Insurance Company		A
4		$	1,100,000		M		96		16		Reliastar Life Insurance Company		A
5		$	1,500,000		F		96		19		Accordia Life and Annuity Company		A-
6		$	1,000,000		F		95		20		Transamerica Life Insurance Company		AA-
7		$	264,000		F		95		10		Lincoln Benefit Life Company		BBB+
8		$	125,000		F		95		2		Lincoln National Life Insurance Company		AA-
9		$	250,000		M		94		18		North American Company for Life and Health Insurance		A+
10		$	3,500,000		M		94		25		Reliastar Life Insurance Company		A
11		$	250,000		M		94		5		Transamerica Life Insurance Company		AA-
12		$	572,429		F		93		21		Reliastar Life Insurance Company		A
13		$	3,000,000		M		93		25		West Coast Life Insurance Company		AA-
14		$	500,000		F		93		49		John Hancock Life Insurance Company (U.S.A.)		AA-
15		$	5,000,000		F		93		40		American General Life Insurance Company		A+
16		$	2,000,000		F		93		3		Pruco Life Insurance Company		AA-
17		$	400,000		F		93		52		Principal Life Insurance Company		A+
18		$	500,000		F		93		36		Sun Life Assurance Company of Canada (U.S.)		AA-
19		$	5,000,000		F		93		20		John Hancock Life Insurance Company (U.S.A.)		AA-
20		$	1,000,000		F		93		20		Lincoln National Life Insurance Company		AA-
21		$	300,000		F		93		13		West Coast Life Insurance Company		AA-
22		$	1,682,773		F		92		36		Hartford Life and Annuity Insurance Company		BBB+
23		$	500,000		M		92		34		Massachusetts Mutual Life Insurance Company		AA+
24		$	5,000,000		M		92		19		John Hancock Life Insurance Company (U.S.A.)		AA-
25		$	3,100,000		F		92		20		Lincoln Benefit Life Company		BBB+
26		$	1,500,000		F		92		49		Lincoln National Life Insurance Company		AA-
27		$	3,000,000		F		92		23		Lincoln National Life Insurance Company		AA-
28		$	144,000		M		92		44		Lincoln National Life Insurance Company		AA-
29		$	500,000		M		92		34		Reliastar Life Insurance Company		A
30		$	1,000,000		M		92		6		Voya Retirement Insurance and Annuity Company		A
31		$	1,000,000		F		92		32		Pan-American Assurance Company		N/A
32		$	1,000,000		F		91		35		United of Omaha Life Insurance Company		AA-
33		$	3,500,000		F		91		55		John Hancock Life Insurance Company (U.S.A.)		AA-
34		$	500,000		M		91		33		Allianz Life Insurance Company of North America		AA
35		$	1,200,000		F		91		26		Massachusetts Mutual Life Insurance Company		AA+
36		$	1,200,000		F		91		26		Massachusetts Mutual Life Insurance Company		AA+
37		$	375,000		M		91		26		Lincoln National Life Insurance Company		AA-
38		$	5,000,000		M		91		27		John Hancock Life Insurance Company (U.S.A.)		AA-
39		$	500,000		F		91		22		Lincoln National Life Insurance Company		AA-
40		$	5,000,000		F		91		37		Reliastar Life Insurance Company		A
41		$	5,000,000		F		91		14		Lincoln National Life Insurance Company		AA-
42		$	1,000,000		F		91		56		Lincoln National Life Insurance Company		AA-
43		$	1,203,520		M		91		44		Columbus Life Insurance Company		AA

30

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
44		$	1,350,000		F		91		25		Lincoln National Life Insurance Company		AA-
45		$	3,500,000		F		91		27		Lincoln National Life Insurance Company		AA-
46		$	5,000,000		F		90		33		Massachusetts Mutual Life Insurance Company		AA+
47		$	100,000		M		90		22		American General Life Insurance Company		A+
48		$	2,500,000		F		90		33		American General Life Insurance Company		A+
49		$	2,500,000		M		90		38		Pacific Life Insurance Company		AA-
50		$	4,000,000		F		90		55		Transamerica Life Insurance Company		AA-
51		$	5,000,000		M		90		37		AXA Equitable Life Insurance Company		AA-
52		$	1,103,922		F		90		45		Sun Life Assurance Company of Canada (U.S.)		AA-
53		$	1,000,000		F		90		48		Transamerica Life Insurance Company		AA-
54		$	250,000		F		90		48		Transamerica Life Insurance Company		AA-
55		$	500,000		F		90		27		Transamerica Life Insurance Company		AA-
56		$	1,050,000		M		90		29		John Hancock Life Insurance Company (U.S.A.)		AA-
57		$	5,000,000		M		90		36		AIG Life Insurance Company		A+
58		$	3,000,000		M		90		76		Transamerica Life Insurance Company		AA-
59		$	1,000,000		M		90		27		AXA Equitable Life Insurance Company		AA-
60		$	500,000		M		90		46		Lincoln National Life Insurance Company		AA-
61		$	649,026		F		90		54		Midland National Life Insurance Company		A+
62		$	4,785,380		F		90		28		John Hancock Life Insurance Company (U.S.A.)		AA-
63		$	1,803,455		F		90		54		Metropolitan Life Insurance Company		AA-
64		$	1,529,270		F		90		54		Metropolitan Life Insurance Company		AA-
65		$	800,000		M		90		46		Lincoln National Life Insurance Company		AA-
66		$	400,000		M		90		31		Lincoln National Life Insurance Company		AA-
67		$	977,000		M		90		29		New York Life Insurance Company		AA+
68		$	2,000,000		M		90		26		John Hancock Life Insurance Company (U.S.A.)		AA-
69		$	5,000,000		M		90		36		John Hancock Life Insurance Company (U.S.A.)		AA-
70		$	500,000		F		90		20		Nationwide Life and Annuity Insurance Company		A+
71		$	2,225,000		F		90		67		Transamerica Life Insurance Company		AA-
72		$	3,000,000		F		90		64		Massachusetts Mutual Life Insurance Company		AA+
73		$	1,500,000		M		90		31		Union Central Life Insurance Company		N/A
74		$	300,000		M		90		33		John Hancock Life Insurance Company (U.S.A.)		AA-
75		$	3,000,000		M		90		28		Lincoln National Life Insurance Company		AA-
76		$	2,000,000		M		90		31		John Hancock Life Insurance Company (U.S.A.)		AA-
77		$	396,791		M		90		20		Lincoln National Life Insurance Company		AA-
78		$	1,500,000		M		90		85		Transamerica Life Insurance Company		AA-
79		$	1,000,000		F		90		64		Lincoln National Life Insurance Company		AA-
80		$	1,000,000		F		89		38		Metropolitan Life Insurance Company		AA-
81		$	248,859		F		89		19		Lincoln National Life Insurance Company		AA-
82		$	1,000,000		F		89		46		General American Life Insurance Company		AA-
83		$	500,000		F		89		51		Sun Life Assurance Company of Canada (U.S.)		AA-
84		$	5,000,000		F		89		22		Transamerica Life Insurance Company		AA-
85		$	3,000,000		M		89		30		Transamerica Life Insurance Company		AA-
86		$	1,200,000		M		89		55		Transamerica Life Insurance Company		AA-
87		$	1,000,000		M		89		60		AXA Equitable Life Insurance Company		AA-
88		$	250,000		M		89		61		Metropolitan Life Insurance Company		AA-
89		$	6,000,000		F		89		41		Sun Life Assurance Company of Canada (U.S.)		AA-
90		$	330,000		M		89		52		AXA Equitable Life Insurance Company		AA-
91		$	175,000		M		89		52		Metropolitan Life Insurance Company		AA-
92		$	335,000		M		89		52		Metropolitan Life Insurance Company		AA-

31

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
93		$	3,000,000		M		89		58		AXA Equitable Life Insurance Company		AA-
94		$	2,000,000		F		89		33		Beneficial Life Insurance Company		N/A
95		$	250,000		F		89		33		John Hancock Life Insurance Company (U.S.A.)		AA-
96		$	1,000,000		F		89		24		New York Life Insurance Company		AA+
97		$	1,250,000		M		89		21		Columbus Life Insurance Company		AA
98		$	300,000		M		89		21		Columbus Life Insurance Company		AA
99		$	10,000,000		F		89		71		West Coast Life Insurance Company		AA-
100		$	2,500,000		M		89		47		Transamerica Life Insurance Company		AA-
101		$	1,000,000		F		89		36		West Coast Life Insurance Company		AA-
102		$	2,000,000		F		89		36		West Coast Life Insurance Company		AA-
103		$	5,000,000		M		89		81		West Coast Life Insurance Company		AA-
104		$	800,000		M		89		39		National Western Life Insurance Company		A
105		$	500,000		F		89		34		Transamerica Life Insurance Company		AA-
106		$	400,000		F		89		34		Lincoln Benefit Life Company		BBB+
107		$	1,269,017		M		89		19		Hartford Life and Annuity Insurance Company		BBB+
108		$	1,500,000		F		89		37		Transamerica Life Insurance Company		AA-
109		$	500,000		F		89		37		Transamerica Life Insurance Company		AA-
110		$	1,000,000		M		89		27		Security Life of Denver Insurance Company		A
111		$	200,000		M		89		33		Lincoln Benefit Life Company		BBB+
112		$	4,445,467		M		89		42		Penn Mutual Life Insurance Company		A+
113		$	7,500,000		M		89		34		Lincoln National Life Insurance Company		AA-
114		$	3,600,000		F		89		50		AXA Equitable Life Insurance Company		AA-
115		$	5,000,000		M		89		62		Lincoln National Life Insurance Company		AA-
116		$	4,513,823		F		89		21		Accordia Life and Annuity Company		A-
117		$	309,000		M		89		21		Transamerica Life Insurance Company		AA-
118		$	100,000		F		89		40		American General Life Insurance Company		A+
119		$	100,000		F		89		40		American General Life Insurance Company		A+
120		$	2,000,000		F		89		58		U.S. Financial Life Insurance Company		N/A
121		$	1,000,000		M		89		26		Lincoln National Life Insurance Company		AA-
122		$	1,000,000		M		88		33		John Hancock Life Insurance Company (U.S.A.)		AA-
123		$	2,000,000		M		88		33		John Hancock Life Insurance Company (U.S.A.)		AA-
124		$	5,000,000		M		88		34		Lincoln National Life Insurance Company		AA-
125		$	1,365,000		F		88		75		Transamerica Life Insurance Company		AA-
126		$	5,000,000		F		88		51		Lincoln National Life Insurance Company		AA-
127		$	250,000		M		88		31		Wilton Reassurance Life Insurance Company		N/A
128		$	1,000,000		F		88		69		Security Life of Denver Insurance Company		A
129		$	200,000		F		88		68		Lincoln National Life Insurance Company		AA-
130		$	1,000,000		M		88		31		Sun Life Assurance Company of Canada (U.S.)		AA-
131		$	1,000,000		M		88		25		Massachusetts Mutual Life Insurance Company		AA+
132		$	1,000,000		F		88		16		State Farm Life Insurance Company		AA
133		$	2,000,000		M		88		77		Transamerica Life Insurance Company		AA-
134		$	209,176		M		88		74		Lincoln National Life Insurance Company		AA-
135		$	8,500,000		M		88		69		Massachusetts Mutual Life Insurance Company		AA+
136		$	1,000,000		M		88		19		Transamerica Life Insurance Company		AA-
137		$	500,000		M		88		63		Metropolitan Life Insurance Company		AA-
138		$	750,000		F		88		63		Lincoln National Life Insurance Company		AA-
139		$	1,500,000		F		88		63		Lincoln National Life Insurance Company		AA-
140		$	400,000		F		88		63		Lincoln National Life Insurance Company		AA-
141		$	1,250,000		F		88		63		Lincoln National Life Insurance Company		AA-

32

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
142		$	2,000,000		M		88		34		Lincoln National Life Insurance Company		AA-
143		$	200,000		M		88		54		AIG Life Insurance Company		A+
144		$	500,000		F		88		40		Beneficial Life Insurance Company		N/A
145		$	2,000,000		M		88		64		Lincoln National Life Insurance Company		AA-
146		$	1,800,000		M		88		36		John Hancock Life Insurance Company (U.S.A.)		AA-
147		$	120,500		M		88		23		New England Life Insurance Company		A+
148		$	4,000,000		M		88		34		Metropolitan Life Insurance Company		AA-
149		$	2,000,000		M		88		70		Security Life of Denver Insurance Company		A
150		$	2,000,000		M		88		70		Security Life of Denver Insurance Company		A
151		$	2,000,000		M		88		70		Security Life of Denver Insurance Company		A
152		$	1,500,000		M		88		41		AXA Equitable Life Insurance Company		AA-
153		$	1,500,000		M		87		21		Transamerica Life Insurance Company		AA-
154		$	1,000,000		F		87		55		AXA Equitable Life Insurance Company		AA-
155		$	2,000,000		M		87		37		Metropolitan Life Insurance Company		AA-
156		$	3,000,000		M		87		37		Metropolitan Life Insurance Company		AA-
157		$	1,000,000		M		87		23		John Hancock Life Insurance Company (U.S.A.)		AA-
158		$	2,000,000		F		87		66		AXA Equitable Life Insurance Company		AA-
159		$	5,000,000		F		87		41		Security Life of Denver Insurance Company		A
160		$	3,000,000		F		87		65		Sun Life Assurance Company of Canada (U.S.)		AA-
161		$	125,000		M		87		46		Jackson National Life Insurance Company		AA
162		$	2,500,000		M		87		49		Metropolitan Life Insurance Company		AA-
163		$	1,500,000		M		87		67		AXA Equitable Life Insurance Company		AA-
164		$	1,000,000		M		87		38		AXA Equitable Life Insurance Company		AA-
165		$	2,328,547		M		87		32		Metropolitan Life Insurance Company		AA-
166		$	2,000,000		M		87		32		Metropolitan Life Insurance Company		AA-
167		$	5,000,000		M		87		69		Security Life of Denver Insurance Company		A
168		$	3,000,000		F		87		46		Transamerica Life Insurance Company		AA-
169		$	5,000,000		M		87		54		Security Life of Denver Insurance Company		A
170		$	347,211		F		87		23		Pruco Life Insurance Company		AA-
171		$	1,000,000		M		87		31		John Hancock Life Insurance Company (U.S.A.)		AA-
172		$	500,000		M		87		32		New England Life Insurance Company		A+
173		$	4,000,000		F		87		50		Reliastar Life Insurance Company		A
174		$	284,924		M		87		43		Transamerica Life Insurance Company		AA-
175		$	5,000,000		F		87		73		American General Life Insurance Company		A+
176		$	2,000,000		M		87		45		AXA Equitable Life Insurance Company		AA-
177		$	1,750,000		M		87		45		AXA Equitable Life Insurance Company		AA-
178		$	2,000,000		F		87		69		John Hancock Life Insurance Company (U.S.A.)		AA-
179		$	500,000		F		87		19		Transamerica Life Insurance Company		AA-
180		$	2,000,000		M		87		21		Transamerica Life Insurance Company		AA-
181		$	1,425,000		M		87		40		John Hancock Life Insurance Company (U.S.A.)		AA-
182		$	500,000		M		87		37		Hartford Life and Annuity Insurance Company		BBB+
183		$	800,000		M		87		34		Metropolitan Life Insurance Company		AA-
184		$	5,000,000		F		86		81		AXA Equitable Life Insurance Company		AA-
185		$	1,000,000		F		86		65		John Hancock Life Insurance Company (U.S.A.)		AA-
186		$	694,487		M		86		59		Lincoln National Life Insurance Company		AA-
187		$	6,000,000		F		86		102		American General Life Insurance Company		A+
188		$	1,433,572		M		86		37		Security Mutual Life Insurance Company of NY		N/A
189		$	1,500,000		F		86		109		Lincoln Benefit Life Company		BBB+
190		$	1,000,000		F		86		29		Metropolitan Life Insurance Company		AA-

33

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
191		$	1,000,000		M		86		43		Columbus Life Insurance Company		AA
192		$	750,000		M		86		67		West Coast Life Insurance Company		AA-
193		$	4,000,000		M		86		21		John Hancock Life Insurance Company (U.S.A.)		AA-
194		$	1,000,000		M		86		58		John Hancock Life Insurance Company (U.S.A.)		AA-
195		$	2,000,000		F		86		79		Lincoln Benefit Life Company		BBB+
196		$	1,000,000		M		86		37		Security Life of Denver Insurance Company		A
197		$	2,000,000		F		86		55		New York Life Insurance Company		AA+
198		$	5,000,000		M		86		68		Lincoln National Life Insurance Company		AA-
199		$	2,400,000		M		86		21		Genworth Life Insurance Company		BB-
200		$	3,000,000		M		86		71		Transamerica Life Insurance Company		AA-
201		$	600,000		M		86		80		AXA Equitable Life Insurance Company		AA-
202		$	7,600,000		F		86		79		Transamerica Life Insurance Company		AA-
203		$	250,000		M		86		12		Midland National Life Insurance Company		A+
204		$	1,000,000		M		86		47		Lincoln National Life Insurance Company		AA-
205		$	450,000		M		86		47		American General Life Insurance Company		A+
206		$	2,500,000		F		86		58		American General Life Insurance Company		A+
207		$	2,500,000		M		86		42		AXA Equitable Life Insurance Company		AA-
208		$	3,000,000		M		86		42		Lincoln National Life Insurance Company		AA-
209		$	500,000		M		86		27		Genworth Life Insurance Company		BB-
210		$	1,980,000		M		86		34		New York Life Insurance Company		AA+
211		$	3,000,000		F		86		31		AXA Equitable Life Insurance Company		AA-
212		$	2,000,000		M		86		57		American National Insurance Company		A
213		$	250,000		M		86		60		Voya Retirement Insurance and Annuity Company		A
214		$	1,800,000		F		86		43		Lincoln National Life Insurance Company		AA-
215		$	1,703,959		M		86		52		Lincoln National Life Insurance Company		AA-
216		$	2,000,000		M		86		39		Metropolitan Life Insurance Company		AA-
217		$	500,000		M		86		8		Great Southern Life Insurance Company		N/A
218		$	1,000,000		M		86		41		Hartford Life and Annuity Insurance Company		BBB+
219		$	3,500,000		F		86		82		Lincoln Benefit Life Company		BBB+
220		$	1,000,000		M		86		72		Lincoln National Life Insurance Company		AA-
221		$	1,000,000		M		86		42		Metropolitan Life Insurance Company		AA-
222		$	300,000		M		86		43		New England Life Insurance Company		A+
223		$	200,000		M		85		57		John Hancock Life Insurance Company (U.S.A.)		AA-
224		$	10,000,000		M		85		107		Pacific Life Insurance Company		AA-
225		$	80,000		F		85		40		Protective Life Insurance Company		AA-
226		$	1,000,000		M		85		44		Texas Life Insurance Company		N/A
227		$	500,000		M		85		84		Metropolitan Life Insurance Company		AA-
228		$	2,000,000		M		85		46		National Life Insurance Company		A+
229		$	3,000,000		M		85		26		U.S. Financial Life Insurance Company		N/A
230		$	2,147,816		F		85		99		John Hancock Life Insurance Company (U.S.A.)		AA-
231		$	4,200,000		F		85		98		Transamerica Life Insurance Company		AA-
232		$	325,000		M		85		46		Genworth Life and Annuity Insurance Company		BB-
233		$	175,000		M		85		46		Genworth Life and Annuity Insurance Company		BB-
234		$	850,000		M		85		41		American General Life Insurance Company		A+
235		$	1,900,000		M		85		48		American National Insurance Company		A
236		$	500,000		M		85		30		New York Life Insurance Company		AA+
237		$	500,000		M		85		30		New York Life Insurance Company		AA+
238		$	5,000,000		M		85		39		AXA Equitable Life Insurance Company		AA-
239		$	385,000		M		85		55		Metropolitan Life Insurance Company		AA-

34

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
240		$	500,000		M		85		55		Metropolitan Life Insurance Company		AA-
241		$	75,000		M		85		34		Fidelity and Guaranty Insurance Company		BBB-
242		$	1,500,000		M		85		63		Lincoln National Life Insurance Company		AA-
243		$	250,000		M		85		35		Ohio State Insurance Company		N/A
244		$	5,000,000		M		85		84		Banner Life Insurance Company		AA-
245		$	3,500,000		F		85		70		AXA Equitable Life Insurance Company		AA-
246		$	1,000,000		F		85		82		West Coast Life Insurance Company		AA-
247		$	8,500,000		M		85		84		John Hancock Life Insurance Company (U.S.A.)		AA-
248		$	3,000,000		F		85		50		Metropolitan Life Insurance Company		AA-
249		$	750,000		M		85		59		John Hancock Life Insurance Company (U.S.A.)		AA-
250		$	4,500,000		M		85		55		AXA Equitable Life Insurance Company		AA-
251		$	250,000		M		85		35		Transamerica Life Insurance Company		AA-
252		$	2,275,000		M		85		73		Reliastar Life Insurance Company		A
253		$	120,000		F		85		73		Lincoln National Life Insurance Company		AA-
254		$	77,000		F		85		73		Lincoln National Life Insurance Company		AA-
255		$	10,000,000		M		85		64		AXA Equitable Life Insurance Company		AA-
256		$	5,000,000		M		85		59		Transamerica Life Insurance Company		AA-
257		$	300,000		F		85		87		AXA Equitable Life Insurance Company		AA-
258		$	500,000		F		85		87		AXA Equitable Life Insurance Company		AA-
259		$	900,000		M		85		56		Hartford Life and Annuity Insurance Company		BBB+
260		$	340,000		F		85		68		Jackson National Life Insurance Company		AA
261		$	2,000,000		M		85		75		Pacific Life Insurance Company		AA-
262		$	3,500,000		M		85		62		AXA Equitable Life Insurance Company		AA-
263		$	6,217,200		F		85		103		Phoenix Life Insurance Company		BB-
264		$	7,600,000		M		85		81		Transamerica Life Insurance Company		AA-
265		$	3,000,000		M		85		44		Metropolitan Life Insurance Company		AA-
266		$	1,275,000		M		85		37		General American Life Insurance Company		AA-
267		$	2,000,000		F		85		79		Lincoln National Life Insurance Company		AA-
268		$	2,247,450		F		85		43		Transamerica Life Insurance Company		AA-
269		$	1,000,000		M		85		35		American General Life Insurance Company		A+
270		$	750,000		M		85		70		AXA Equitable Life Insurance Company		AA-
271		$	500,000		F		85		78		Metropolitan Life Insurance Company		AA-
272		$	400,000		M		85		32		Transamerica Life Insurance Company		AA-
273		$	3,500,000		M		85		46		Pacific Life Insurance Company		AA-
274		$	2,500,000		M		85		46		AXA Equitable Life Insurance Company		AA-
275		$	3,000,000		M		84		50		Protective Life Insurance Company		AA-
276		$	1,500,000		M		84		50		American General Life Insurance Company		A+
277		$	2,000,000		F		84		86		Transamerica Life Insurance Company		AA-
278		$	1,000,000		M		84		52		Lincoln National Life Insurance Company		AA-
279		$	1,500,000		M		84		55		Pacific Life Insurance Company		AA-
280		$	600,000		M		84		54		Massachusetts Mutual Life Insurance Company		AA+
281		$	5,000,000		M		84		90		American General Life Insurance Company		A+
282		$	250,000		M		84		123		Reliastar Life Insurance Company		A
283		$	10,000,000		M		84		55		Lincoln National Life Insurance Company		AA-
284		$	1,000,000		M		84		134		Reliastar Life Insurance Company		A
285		$	1,000,000		F		84		59		American General Life Insurance Company		A+
286		$	2,000,000		F		84		69		Lincoln National Life Insurance Company		AA-
287		$	1,995,000		F		84		63		Transamerica Life Insurance Company		AA-
288		$	838,542		M		84		103		Transamerica Life Insurance Company		AA-

35

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
289		$	10,000,000		M		84		62		New York Life Insurance Company		AA+
290		$	1,000,000		M		84		51		Hartford Life and Annuity Insurance Company		BBB+
291		$	1,000,000		M		84		51		Jackson National Life Insurance Company		AA
292		$	417,300		M		84		82		Jackson National Life Insurance Company		AA
293		$	2,300,000		M		84		10		American General Life Insurance Company		A+
294		$	2,500,000		F		84		55		Reliastar Life Insurance Company		A
295		$	5,000,000		F		84		42		Massachusetts Mutual Life Insurance Company		AA+
296		$	5,000,000		M		84		61		Transamerica Life Insurance Company		AA-
297		$	2,000,000		M		84		53		Ohio National Life Assurance Corporation		A+
298		$	1,000,000		M		84		53		Ohio National Life Assurance Corporation		A+
299		$	500,000		F		84		85		AXA Equitable Life Insurance Company		AA-
300		$	2,400,000		M		84		55		Phoenix Life Insurance Company		BB-
301		$	350,000		M		84		22		Jackson National Life Insurance Company		AA
302		$	5,000,000		M		84		74		Lincoln National Life Insurance Company		AA-
303		$	5,000,000		F		83		61		Security Mutual Life Insurance Company of NY		N/A
304		$	5,000,000		M		83		71		AXA Equitable Life Insurance Company		AA-
305		$	6,000,000		M		83		87		Transamerica Life Insurance Company		AA-
306		$	8,000,000		M		83		67		AXA Equitable Life Insurance Company		AA-
307		$	850,000		F		83		81		Zurich Life Insurance Company		A
308		$	550,000		M		83		98		Genworth Life Insurance Company		BB-
309		$	500,000		M		83		47		West Coast Life Insurance Company		AA-
310		$	1,680,000		F		83		53		AXA Equitable Life Insurance Company		AA-
311		$	1,000,000		F		83		74		Lincoln National Life Insurance Company		AA-
312		$	2,000,000		M		83		67		New York Life Insurance Company		AA+
313		$	1,250,000		M		83		83		Metropolitan Life Insurance Company		AA-
314		$	1,000,000		M		83		62		AXA Equitable Life Insurance Company		AA-
315		$	1,000,000		M		83		41		American General Life Insurance Company		A+
316		$	1,600,000		M		83		68		John Hancock Life Insurance Company (U.S.A.)		AA-
317		$	1,700,000		M		83		68		John Hancock Life Insurance Company (U.S.A.)		AA-
318		$	1,000,000		M		83		51		AXA Equitable Life Insurance Company		AA-
319		$	1,500,000		M		83		52		Lincoln Benefit Life Company		BBB+
320		$	10,000,000		F		83		50		Transamerica Life Insurance Company		AA-
321		$	50,000		M		83		69		Transamerica Life Insurance Company		AA-
322		$	3,000,000		M		83		92		John Hancock Life Insurance Company (U.S.A.)		AA-
323		$	10,000,000		M		83		53		Hartford Life and Annuity Insurance Company		BBB+
324		$	1,750,000		M		83		66		AXA Equitable Life Insurance Company		AA-
325		$	5,000,000		M		83		61		AXA Equitable Life Insurance Company		AA-
326		$	300,000		F		83		58		Hartford Life and Annuity Insurance Company		BBB+
327		$	250,000		M		83		80		American General Life Insurance Company		A+
328		$	2,502,000		M		83		128		Transamerica Life Insurance Company		AA-
329		$	170,000		F		83		48		Reliastar Life Insurance Company		A
330		$	240,000		M		83		29		Lincoln National Life Insurance Company		AA-
331		$	10,000,000		M		83		95		John Hancock Life Insurance Company (U.S.A.)		AA-
332		$	10,000,000		M		83		88		Pacific Life Insurance Company		AA-
333		$	1,210,000		M		83		50		Lincoln National Life Insurance Company		AA-
334		$	3,000,000		F		83		89		West Coast Life Insurance Company		AA-
335		$	7,000,000		M		83		69		Genworth Life Insurance Company		BB-
336		$	8,000,000		M		82		109		Metropolitan Life Insurance Company		AA-
337		$	500,000		M		82		39		Genworth Life and Annuity Insurance Company		BB-

36

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
338		$	3,000,000		M		82		127		Metropolitan Life Insurance Company		AA-
339		$	300,000		F		82		83		Metropolitan Life Insurance Company		AA-
340		$	600,000		M		82		38		Lincoln National Life Insurance Company		AA-
341		$	800,000		M		82		63		North American Company for Life And Health Insurance		A+
342		$	8,000,000		F		82		90		John Hancock Life Insurance Company (U.S.A.)		AA-
343		$	2,000,000		M		82		17		Metropolitan Life Insurance Company		AA-
344		$	3,000,000		F		82		52		AXA Equitable Life Insurance Company		AA-
345		$	3,000,000		F		82		52		AXA Equitable Life Insurance Company		AA-
346		$	1,000,000		F		82		73		Lincoln Benefit Life Company		BBB+
347		$	1,000,000		M		82		77		Penn Mutual Life Insurance Company		A+
348		$	6,000,000		M		82		106		AXA Equitable Life Insurance Company		AA-
349		$	320,987		F		82		89		John Hancock Life Insurance Company (U.S.A.)		AA-
350		$	130,000		M		82		38		Genworth Life Insurance Company		BB-
351		$	700,000		M		82		84		Banner Life Insurance Company		AA-
352		$	1,000,000		M		82		84		John Hancock Life Insurance Company (U.S.A.)		AA-
353		$	1,000,000		M		82		117		Protective Life Insurance Company		AA-
354		$	2,000,000		F		82		74		Pacific Life Insurance Company		AA-
355		$	2,000,000		M		82		66		Metropolitan Life Insurance Company		AA-
356		$	2,000,000		M		82		66		Metropolitan Life Insurance Company		AA-
357		$	218,362		M		82		113		Lincoln National Life Insurance Company		AA-
358		$	100,000		M		82		69		Prudential Insurance Company of America		AA-
359		$	1,029,871		M		82		124		Principal Life Insurance Company		A+
360		$	2,000,000		F		82		60		Transamerica Life Insurance Company		AA-
361		$	1,500,000		F		82		61		Protective Life Insurance Company		AA-
362		$	3,500,000		M		82		68		Metropolitan Life Insurance Company		AA-
363		$	687,006		M		82		66		The State Life Insurance Company		AA-
364		$	250,000		F		82		86		Accordia Life and Annuity Company		A-
365		$	3,000,000		M		82		106		Principal Life Insurance Company		A+
366		$	200,000		M		82		35		Pruco Life Insurance Company		AA-
367		$	1,700,000		M		82		47		Lincoln National Life Insurance Company		AA-
368		$	180,000		F		82		78		Midland National Life Insurance Company		A+
369		$	500,000		M		82		35		Transamerica Life Insurance Company		AA-
370		$	3,000,000		M		81		30		Pacific Life Insurance Company		AA-
371		$	3,000,000		M		81		30		Minnesota Life Insurance Company		A+
372		$	3,000,000		M		81		30		Pruco Life Insurance Company		AA-
373		$	3,000,000		M		81		75		Reliastar Life Insurance Company		A
374		$	5,000,000		M		81		81		Pacific Life Insurance Company		AA-
375		$	5,000,000		M		81		81		Pacific Life Insurance Company		AA-
376		$	4,000,000		M		81		66		Lincoln National Life Insurance Company		AA-
377		$	250,000		M		81		60		United of Omaha Life Insurance Company		AA-
378		$	3,601,500		M		81		80		Transamerica Life Insurance Company		AA-
379		$	1,000,000		M		81		80		Sun Life Assurance Company of Canada (U.S.)		AA-
380		$	200,000		M		81		58		Protective Life Insurance Company		AA-
381		$	150,000		M		81		58		Protective Life Insurance Company		AA-
382		$	150,000		M		81		58		Protective Life Insurance Company		AA-
383		$	350,000		M		81		58		Lincoln National Life Insurance Company		AA-
384		$	1,187,327		M		81		80		Transamerica Life Insurance Company		AA-
385		$	5,000,000		M		81		112		Principal Life Insurance Company		A+
386		$	150,000		M		81		77		MetLife Insurance Company USA		A+

37

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
387		$	500,000		M		81		65		American General Life Insurance Company		A+
388		$	5,000,000		M		81		91		John Hancock Life Insurance Company (U.S.A.)		AA-
389		$	100,000		M		81		95		Protective Life Insurance Company		AA-
390		$	7,000,000		M		81		71		Lincoln Benefit Life Company		BBB+
391		$	100,000		M		81		52		North American Company for Life And Health Insurance		A+
392		$	1,000,000		M		81		99		Lincoln National Life Insurance Company		AA-
393		$	6,799,139		M		81		105		AXA Equitable Life Insurance Company		AA-
394		$	476,574		M		81		58		Transamerica Life Insurance Company		AA-
395		$	250,000		M		81		80		AXA Equitable Life Insurance Company		AA-
396		$	5,500,000		M		81		105		Metropolitan Life Insurance Company		AA-
397		$	2,250,000		M		81		79		Massachusetts Mutual Life Insurance Company		AA+
398		$	4,000,000		M		81		79		Lincoln National Life Insurance Company		AA-
399		$	4,300,000		F		81		94		American National Insurance Company		A
400		$	1,000,000		F		81		107		John Hancock Life Insurance Company (U.S.A.)		AA-
401		$	6,000,000		M		81		103		AXA Equitable Life Insurance Company		AA-
402		$	200,000		M		81		52		Kansas City Life Insurance Company		N/A
403		$	200,000		M		81		43		Lincoln National Life Insurance Company		AA-
404		$	6,000,000		M		81		92		AXA Equitable Life Insurance Company		AA-
405		$	5,000,000		F		81		101		Reliastar Life Insurance Company		A
406		$	750,000		M		81		55		Lincoln National Life Insurance Company		AA-
407		$	3,000,000		M		81		80		Principal Life Insurance Company		A+
408		$	5,000,000		M		80		121		Lincoln National Life Insurance Company		AA-
409		$	3,000,000		M		80		71		American General Life Insurance Company		A+
410		$	70,000		M		80		37		Pioneer Mutual Life Insurance Company		N/A
411		$	800,000		F		80		85		Prudential Insurance Company of America		AA-
412		$	5,000,000		M		80		65		John Hancock Life Insurance Company (U.S.A.)		AA-
413		$	500,000		M		80		54		John Hancock Life Insurance Company (U.S.A.)		AA-
414		$	5,000,000		M		80		74		John Hancock Life Insurance Company (U.S.A.)		AA-
415		$	200,000		M		80		84		Lincoln National Life Insurance Company		AA-
416		$	1,250,000		M		80		83		AXA Equitable Life Insurance Company		AA-
417		$	1,000,000		M		80		107		Transamerica Life Insurance Company		AA-
418		$	800,000		M		80		107		Columbus Life Insurance Company		AA
419		$	3,000,000		F		80		74		New York Life Insurance Company		AA+
420		$	1,009,467		M		80		45		John Hancock Life Insurance Company (U.S.A.)		AA-
421		$	4,000,000		M		80		55		Metropolitan Life Insurance Company		AA-
422		$	2,500,000		M		80		73		Massachusetts Mutual Life Insurance Company		AA+
423		$	2,500,000		M		80		73		Massachusetts Mutual Life Insurance Company		AA+
424		$	5,000,000		M		80		44		John Hancock Life Insurance Company (U.S.A.)		AA-
425		$	1,000,000		M		80		70		Transamerica Life Insurance Company		AA-
426		$	500,000		M		80		96		Transamerica Life Insurance Company		AA-
427		$	500,000		F		80		109		Columbus Life Insurance Company		AA
428		$	775,000		M		80		108		Lincoln National Life Insurance Company		AA-
429		$	929,975		M		80		63		Lincoln National Life Insurance Company		AA-
430		$	1,445,000		F		80		89		AXA Equitable Life Insurance Company		AA-
431		$	1,500,000		F		80		89		AXA Equitable Life Insurance Company		AA-
432		$	1,000,000		M		80		71		Lincoln National Life Insurance Company		AA-
433		$	325,000		M		80		31		American General Life Insurance Company		A+
434		$	3,750,000		M		80		35		AXA Equitable Life Insurance Company		AA-
435		$	1,000,000		M		80		95		Metropolitan Life Insurance Company		AA-

38

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
436		$	550,000		M		80		65		Pruco Life Insurance Company		AA-
437		$	300,000		M		80		65		Pruco Life Insurance Company		AA-
438		$	800,000		M		80		85		Minnesota Life Insurance Company		A+
439		$	1,000,000		M		80		87		Massachusetts Mutual Life Insurance Company		AA+
440		$	1,200,000		F		80		97		AXA Equitable Life Insurance Company		AA-
441		$	5,000,000		M		80		161		West Coast Life Insurance Company		AA-
442		$	2,000,000		F		80		45		Transamerica Life Insurance Company		AA-
443		$	1,000,000		M		80		65		Ameritas Life Insurance Corporation		A+
444		$	2,000,000		M		80		65		Metropolitan Life Insurance Company		AA-
445		$	1,358,500		M		80		65		Metropolitan Life Insurance Company		AA-
446		$	500,000		M		79		121		Prudential Insurance Company of America		AA-
447		$	1,000,000		M		79		99		Metropolitan Life Insurance Company		AA-
448		$	1,200,000		F		79		118		Athene Annuity & Life Assurance Company		A-
449		$	2,840,000		M		79		78		Transamerica Life Insurance Company		AA-
450		$	750,000		M		79		75		North American Company for Life and Health Insurance		A+
451		$	1,000,000		M		79		75		John Hancock Life Insurance Company (U.S.A.)		AA-
452		$	500,000		M		79		75		North American Company for Life and Health Insurance		A+
453		$	50,000		M		79		33		Lincoln National Life Insurance Company		AA-
454		$	4,000,000		F		79		79		Transamerica Life Insurance Company		AA-
455		$	1,000,000		F		79		62		John Hancock Life Insurance Company (U.S.A.)		AA-
456		$	2,000,000		M		79		87		Lincoln National Life Insurance Company		AA-
457		$	2,000,000		M		79		87		Lincoln National Life Insurance Company		AA-
458		$	5,000,000		M		79		105		Lincoln National Life Insurance Company		AA-
459		$	4,000,000		M		79		132		John Hancock Life Insurance Company (U.S.A.)		AA-
460		$	300,000		M		79		67		Lincoln National Life Insurance Company		AA-
461		$	1,750,000		M		79		51		John Hancock Life Insurance Company (U.S.A.)		AA-
462		$	5,000,000		M		79		89		Transamerica Life Insurance Company		AA-
463		$	1,000,000		M		79		107		Principal Life Insurance Company		A+
464		$	500,000		F		79		126		Ohio National Life Assurance Corporation		A+
465		$	6,250,000		M		79		176		John Hancock Life Insurance Company (U.S.A.)		AA-
466		$	750,000		M		79		102		General American Life Insurance Company		AA-
467		$	600,000		M		79		71		Protective Life Insurance Company		AA-
468		$	400,000		M		79		105		John Hancock Life Insurance Company (U.S.A.)		AA-
469		$	300,000		M		78		65		Penn Mutual Life Insurance Company		A+
470		$	500,000		F		78		141		Accordia Life and Annuity Company		A-
471		$	5,000,000		M		78		123		AXA Equitable Life Insurance Company		AA-
472		$	1,000,000		M		78		90		Accordia Life and Annuity Company		A-
473		$	3,000,000		M		78		84		Pruco Life Insurance Company		AA-
474		$	3,000,000		F		78		93		John Hancock Life Insurance Company (U.S.A.)		AA-
475		$	200,000		F		78		131		West Coast Life Insurance Company		AA-
476		$	250,000		M		78		121		Accordia Life and Annuity Company		A-
477		$	1,100,000		M		78		125		Accordia Life and Annuity Company		A-
478		$	3,000,000		M		78		91		Protective Life Insurance Company		AA-
479		$	2,000,000		F		78		105		Accordia Life and Annuity Company		A-
480		$	2,200,000		F		78		127		Reliastar Life Insurance Company		A
481		$	4,000,000		M		78		56		Massachusetts Mutual Life Insurance Company		AA+
482		$	10,000,000		M		78		119		AXA Equitable Life Insurance Company		AA-
483		$	2,500,000		M		78		126		John Hancock Life Insurance Company (U.S.A.)		AA-
484		$	2,500,000		M		78		126		John Hancock Life Insurance Company (U.S.A.)		AA-

39

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
485		$	1,000,000		F		78		115		John Hancock Life Insurance Company (U.S.A.)		AA-
486		$	1,000,000		F		78		118		American General Life Insurance Company		A+
487		$	7,000,000		F		78		108		Pacific Life Insurance Company		AA-
488		$	100,946		F		78		146		Genworth Life and Annuity Insurance Company		BB-
489		$	2,000,000		M		78		92		Genworth Life Insurance Company		BB-
490		$	350,000		M		78		98		AXA Equitable Life Insurance Company		AA-
491		$	600,000		M		78		98		AXA Equitable Life Insurance Company		AA-
492		$	1,000,000		M		78		71		Pacific Life Insurance Company		AA-
493		$	2,000,000		M		78		105		Transamerica Life Insurance Company		AA-
494		$	200,000		M		78		104		Prudential Insurance Company of America		AA-
495		$	2,000,000		F		78		153		Lincoln National Life Insurance Company		AA-
496		$	150,000		M		78		92		Genworth Life Insurance Company		BB-
497		$	490,620		M		78		74		Ameritas Life Insurance Corporation		A+
498		$	2,000,000		M		78		52		Athene Annuity & Life Assurance Company		A-
499		$	7,097,434		M		78		144		Lincoln National Life Insurance Company		AA-
500		$	5,000,000		M		78		49		West Coast Life Insurance Company		AA-
501		$	1,000,000		M		77		71		Metropolitan Life Insurance Company		AA-
502		$	730,000		M		77		88		Transamerica Life Insurance Company		AA-
503		$	5,000,000		M		77		135		Pruco Life Insurance Company		AA-
504		$	1,000,000		M		77		114		Transamerica Life Insurance Company		AA-
505		$	750,000		M		77		100		Protective Life Insurance Company		AA-
506		$	250,000		M		77		91		Midland National Life Insurance Company		A+
507		$	3,000,000		M		77		46		Accordia Life and Annuity Company		A-
508		$	1,000,000		M		77		135		AXA Equitable Life Insurance Company		AA-
509		$	200,000		M		77		60		Reliastar Life Insurance Company		A
510		$	500,000		M		77		89		AXA Equitable Life Insurance Company		AA-
511		$	3,000,000		M		77		100		John Hancock Life Insurance Company (U.S.A.)		AA-
512		$	5,000,000		M		77		100		John Hancock Life Insurance Company (U.S.A.)		AA-
513		$	1,000,000		M		77		114		Security Life of Denver Insurance Company		A
514		$	5,000,000		M		77		128		Massachusetts Mutual Life Insurance Company		AA+
515		$	5,000,000		M		77		128		Massachusetts Mutual Life Insurance Company		AA+
516		$	8,000,000		M		77		86		Metropolitan Life Insurance Company		AA-
517		$	1,000,000		M		77		82		Transamerica Life Insurance Company		AA-
518		$	1,000,000		M		77		146		Security Mutual Life Insurance Company of NY		N/A
519		$	1,000,000		M		77		91		Athene Annuity & Life Assurance Company of New York		A-
520		$	355,700		M		77		96		Security Life of Denver Insurance Company		A
521		$	6,500,000		F		77		64		General American Life Insurance Company		AA-
522		$	5,000,000		M		77		75		Lincoln Benefit Life Company		BBB+
523		$	250,000		M		77		127		West Coast Life Insurance Company		AA-
524		$	750,000		F		77		72		Delaware Life Insurance Company		BBB+
525		$	1,000,000		M		77		92		General American Life Insurance Company		AA-
526		$	1,000,000		M		77		104		Transamerica Life Insurance Company		AA-
527		$	2,000,000		M		77		138		John Hancock Life Insurance Company (U.S.A.)		AA-
528		$	250,000		M		76		87		Lincoln Benefit Life Company		BBB+
529		$	600,000		M		76		62		United of Omaha Life Insurance Company		AA-
530		$	100,000		M		76		107		Transamerica Life Insurance Company		AA-
531		$	3,000,000		F		76		142		Security Life of Denver Insurance Company		A
532		$	200,000		M		76		59		Metropolitan Life Insurance Company		AA-
533		$	100,000		M		76		59		Metropolitan Life Insurance Company		AA-

40

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
534		$	3,172,397		M		76		65		Pacific Life Insurance Company		AA-
535		$	2,000,000		M		76		99		Protective Life Insurance Company		AA-
536		$	1,500,000		M		76		99		Protective Life Insurance Company		AA-
537		$	100,000		M		76		46		AXA Equitable Life Insurance Company		AA-
538		$	500,000		M		76		82		AXA Equitable Life Insurance Company		AA-
539		$	500,000		M		76		96		United of Omaha Life Insurance Company		AA-
540		$	750,000		M		76		22		North American Company for Life And Health Insurance		A+
541		$	4,000,000		F		76		130		American General Life Insurance Company		A+
542		$	300,000		M		76		71		AIG Life Insurance Company		A+
543		$	500,000		M		76		81		AIG Life Insurance Company		A+
544		$	300,000		M		76		30		Lincoln National Life Insurance Company		AA-
545		$	172,245		F		76		48		Symetra Life Insurance Company		A
546		$	5,004,704		M		76		125		American General Life Insurance Company		A+
547		$	2,000,000		M		76		111		Pruco Life Insurance Company		AA-
548		$	415,000		M		76		107		AIG Life Insurance Company		A+
549		$	5,000,000		M		76		121		AIG Life Insurance Company		A+
550		$	4,000,000		M		76		100		Security Mutual Life Insurance Company of NY		N/A
551		$	2,000,000		M		76		92		American General Life Insurance Company		A+
552		$	10,000,000		F		76		126		Reliastar Life Insurance Company		A
553		$	1,000,000		F		76		141		John Hancock Life Insurance Company (U.S.A.)		AA-
554		$	7,500,000		F		76		164		Security Life of Denver Insurance Company		A
555		$	500,000		M		76		65		American General Life Insurance Company		A+
556		$	250,000		M		76		66		Genworth Life and Annuity Insurance Company		BB-
557		$	3,000,000		F		76		103		General American Life Insurance Company		AA-
558		$	300,000		F		76		124		Minnesota Life Insurance Company		A+
559		$	667,738		M		76		77		MONY Life Insurance Company of America		AA-
560		$	370,000		F		76		117		Minnesota Life Insurance Company		A+
561		$	4,547,770		F		75		167		Principal Life Insurance Company		A+
562		$	500,000		M		75		80		Protective Life Insurance Company		AA-
563		$	2,000,000		M		75		101		Phoenix Life Insurance Company		BB-
564		$	1,000,000		M		75		85		Security Life of Denver Insurance Company		A
565		$	500,000		M		75		31		Midland National Life Insurance Company		A+
566		$	1,000,000		M		75		143		John Hancock Life Insurance Company (U.S.A.)		AA-
567		$	750,000		M		75		141		Lincoln Benefit Life Company		BBB+
568		$	150,000		M		75		95		Genworth Life Insurance Company		BB-
569		$	1,000,000		M		75		90		Transamerica Life Insurance Company		AA-
570		$	3,000,000		M		75		65		AXA Equitable Life Insurance Company		AA-
571		$	1,000,000		F		75		135		Companion Life Insurance Company		AA-
572		$	1,000,000		M		75		131		John Hancock Life Insurance Company (U.S.A.)		AA-
573		$	500,000		M		75		54		William Penn Life Insurance Company of New York		AA-
574		$	8,000,000		F		75		122		West Coast Life Insurance Company		AA-
575		$	100,000		M		75		35		Voya Retirement Insurance and Annuity Company		A
576		$	250,000		F		75		147		AXA Equitable Life Insurance Company		AA-
577		$	3,000,000		M		75		104		Transamerica Life Insurance Company		AA-
578		$	500,000		M		75		104		New York Life Insurance Company		AA+
579		$	500,000		M		75		104		New York Life Insurance Company		AA+
580		$	800,000		M		75		114		John Hancock Life Insurance Company (U.S.A.)		AA-
581		$	190,000		M		75		95		Protective Life Insurance Company		AA-
582		$	100,000		M		75		142		Protective Life Insurance Company		AA-

41

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
583		$	2,000,072		M		75		159		American General Life Insurance Company		A+
584		$	89,626		F		75		109		Union Central Life Insurance Company		N/A
585		$	400,000		M		75		73		Protective Life Insurance Company		AA-
586		$	500,000		M		75		87		Delaware Life Insurance Company		BBB+
587		$	1,784,686		M		75		145		Transamerica Life Insurance Company		AA-
588		$	100,000		M		75		134		Genworth Life Insurance Company		BB-
589		$	250,000		F		75		163		Protective Life Insurance Company		AA-
590		$	8,000,000		M		74		160		Metropolitan Life Insurance Company		AA-
591		$	500,000		M		74		115		Ameritas Life Insurance Corporation		A+
592		$	370,000		M		74		115		Ameritas Life Insurance Corporation		A+
593		$	1,000,000		F		74		112		United of Omaha Life Insurance Company		AA-
594		$	500,000		M		74		90		Lincoln National Life Insurance Company		AA-
595		$	1,841,877		M		74		112		Metropolitan Life Insurance Company		AA-
596		$	500,000		M		74		98		William Penn Life Insurance Company of New York		AA-
597		$	100,000		M		74		102		Protective Life Insurance Company		AA-
598		$	500,000		M		74		120		Metropolitan Life Insurance Company		AA-
599		$	2,500,000		M		74		96		John Hancock Life Insurance Company (U.S.A.)		AA-
600		$	500,000		M		74		126		Pruco Life Insurance Company		AA-
601		$	1,000,000		M		74		99		John Hancock Life Insurance Company (U.S.A.)		AA-
602		$	500,000		M		74		73		Phoenix Life Insurance Company		BB-
603		$	8,600,000		M		74		143		AXA Equitable Life Insurance Company		AA-
604		$	485,000		M		74		145		Metropolitan Life Insurance Company		AA-
605		$	2,500,000		M		74		97		American General Life Insurance Company		A+
606		$	100,000		M		74		96		Transamerica Life Insurance Company		AA-
607		$	1,500,000		M		74		118		Lincoln National Life Insurance Company		AA-
608		$	1,500,000		M		74		118		Lincoln National Life Insurance Company		AA-
609		$	1,500,000		M		74		118		Lincoln National Life Insurance Company		AA-
610		$	1,500,000		M		74		119		American General Life Insurance Company		A+
611		$	1,500,000		M		74		119		American General Life Insurance Company		A+
612		$	2,000,000		M		74		123		John Hancock Life Insurance Company (U.S.A.)		AA-
613		$	2,500,000		M		74		129		Banner Life Insurance Company		AA-
614		$	800,000		M		74		77		Commonwealth Annuity and Life Insurance Company		A-
615		$	300,000		M		74		103		New England Life Insurance Company		A+
616		$	1,167,000		M		74		44		Transamerica Life Insurance Company		AA-
617		$	3,042,627		M		74		103		Massachusetts Mutual Life Insurance Company		AA+
618		$	450,000		M		74		110		Jackson National Life Insurance Company		AA
619		$	1,500,000		M		74		102		Metropolitan Life Insurance Company		AA-
620		$	10,000,000		M		74		136		John Hancock Life Insurance Company (U.S.A.)		AA-
621		$	10,000,000		M		74		110		AXA Equitable Life Insurance Company		AA-
622		$	2,500,000		M		73		45		Transamerica Life Insurance Company		AA-
623		$	750,000		M		73		122		Security Life of Denver Insurance Company		A
624		$	1,000,000		M		73		95		Accordia Life and Annuity Company		A-
625		$	3,000,000		M		73		152		John Hancock Life Insurance Company (U.S.A.)		AA-
626		$	2,000,000		M		73		93		New York Life Insurance Company		AA+
627		$	2,000,000		M		73		93		New York Life Insurance Company		AA+
628		$	5,000,000		M		73		121		John Hancock Life Insurance Company (U.S.A.)		AA-
629		$	250,000		F		73		101		Protective Life Insurance Company		AA-
630		$	2,500,000		M		73		107		Lincoln National Life Insurance Company		AA-
631		$	2,500,000		M		73		107		John Hancock Life Insurance Company (U.S.A.)		AA-

42

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
632		$	2,000,000		M		73		113		Voya Retirement Insurance and Annuity Company		A
633		$	1,500,000		M		73		113		Voya Retirement Insurance and Annuity Company		A
634		$	390,025		M		73		137		Genworth Life and Annuity Insurance Company		BB-
635		$	230,000		M		73		109		Transamerica Life Insurance Company		AA-
636		$	139,398		F		73		18		Lincoln National Life Insurance Company		AA-
637		$	500,000		M		73		29		North American Company for Life and Health Insurance		A+
638		$	600,000		M		73		29		West Coast Life Insurance Company		AA-
639		$	300,000		M		73		107		Protective Life Insurance Company		AA-
640		$	190,000		F		73		183		Protective Life Insurance Company		AA-
641		$	250,000		M		73		61		American General Life Insurance Company		A+
642		$	160,000		M		73		85		RiverSource Life Insurance Company		AA-
643		$	267,988		M		73		46		Minnesota Life Insurance Company		A+
644		$	75,000		F		73		94		American General Life Insurance Company		A+
645		$	600,000		M		73		78		AXA Equitable Life Insurance Company		AA-
646		$	4,000,000		M		73		133		MONY Life Insurance Company of America		AA-
647		$	1,000,000		F		73		151		American General Life Insurance Company		A+
648		$	1,000,000		F		73		136		Reliastar Life Insurance Company		A
649		$	420,000		M		73		114		RiverSource Life Insurance Company		AA-
650		$	4,000,000		M		73		139		AXA Equitable Life Insurance Company		AA-
651		$	250,000		M		72		44		Protective Life Insurance Company		AA-
652		$	650,000		F		72		65		Security Life of Denver Insurance Company		A
653		$	1,000,000		M		72		122		AIG Life Insurance Company		A+
654		$	500,000		M		72		112		Ohio National Life Assurance Corporation		A+
655		$	400,000		M		72		187		Protective Life Insurance Company		AA-
656		$	232,000		M		72		171		Protective Life Insurance Company		AA-
657		$	185,000		M		72		123		Genworth Life and Annuity Insurance Company		BB-
658		$	750,000		M		72		117		Transamerica Life Insurance Company		AA-
659		$	1,350,000		M		72		93		Lincoln National Life Insurance Company		AA-
660		$	1,250,000		M		72		93		West Coast Life Insurance Company		AA-
661		$	5,000,000		M		72		172		John Hancock Life Insurance Company (U.S.A.)		AA-
662		$	1,500,000		F		72		145		Pruco Life Insurance Company		AA-
663		$	5,000,000		M		72		84		Transamerica Life Insurance Company		AA-
664		$	2,400,000		M		72		85		Transamerica Life Insurance Company		AA-
665		$	500,000		M		72		86		Transamerica Life Insurance Company		AA-
666		$	500,000		M		72		86		North American Company for Life And Health Insurance		A+
667		$	10,000,000		M		72		160		Principal Life Insurance Company		A+
668		$	420,000		M		72		123		Protective Life Insurance Company		AA-
669		$	100,000		M		72		39		Genworth Life and Annuity Insurance Company		BB-
670		$	300,000		M		72		39		Genworth Life Insurance Company		BB-
671		$	314,000		M		72		131		Genworth Life Insurance Company		BB-
672		$	250,000		M		72		131		Genworth Life Insurance Company		BB-
673		$	150,000		M		72		28		Protective Life Insurance Company		AA-
674		$	150,000		M		72		28		AXA Equitable Life Insurance Company		AA-
675		$	1,000,000		M		72		48		John Hancock Life Insurance Company (U.S.A.)		AA-
676		$	5,000,000		M		72		107		John Hancock Life Insurance Company (U.S.A.)		AA-
677		$	5,000,000		M		72		107		John Hancock Life Insurance Company (U.S.A.)		AA-
678		$	100,000		M		72		129		Protective Life Insurance Company		AA-
679		$	5,000,000		M		72		143		Metropolitan Life Insurance Company		AA-
680		$	250,000		F		71		113		Ohio National Life Assurance Corporation		A+

43

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
681		$	57,500		M		71		87		Lincoln National Life Insurance Company		AA-
682		$	1,000,000		M		71		161		Protective Life Insurance Company		AA-
683		$	6,000,000		M		71		186		AXA Equitable Life Insurance Company		AA-
684		$	1,000,000		M		71		148		Transamerica Life Insurance Company		AA-
685		$	400,000		M		71		153		Lincoln National Life Insurance Company		AA-
686		$	100,000		M		71		93		Massachusetts Mutual Life Insurance Company		AA+
687		$	92,000		F		71		191		Protective Life Insurance Company		AA-
688		$	300,000		M		71		187		John Hancock Life Insurance Company (U.S.A.)		AA-
689		$	2,000,000		M		71		152		Hartford Life and Annuity Insurance Company		BBB+
690		$	1,500,000		M		71		65		Lincoln National Life Insurance Company		AA-
691		$	250,000		M		71		92		Massachusetts Mutual Life Insurance Company		AA+
692		$	500,000		M		71		154		Protective Life Insurance Company		AA-
693		$	250,000		M		71		176		Lincoln National Life Insurance Company		AA-
694		$	1,500,000		M		71		98		Midland National Life Insurance Company		A+
695		$	202,700		M		71		109		Farmers New World Life Insurance Company		N/A
696		$	500,000		M		71		103		Lincoln Benefit Life Company		BBB+
697		$	700,000		M		71		109		Massachusetts Mutual Life Insurance Company		AA+
698		$	3,000,000		M		70		147		Guardian Life Insurance Company of America		AA+
699		$	385,741		M		70		93		Security Life of Denver Insurance Company		A
700		$	750,000		M		70		127		North American Company for Life And Health Insurance		A+
701		$	100,000		F		70		157		North American Company for Life and Health Insurance		A+
702		$	1,532,043		M		70		145		John Hancock Life Insurance Company (U.S.A.)		AA-
703		$	1,000,000		M		70		179		AXA Equitable Life Insurance Company		AA-
704		$	1,000,000		M		70		80		AXA Equitable Life Insurance Company		AA-
705		$	4,000,000		M		70		125		MetLife Insurance Company USA		A+
706		$	1,000,000		M		70		80		Protective Life Insurance Company		AA-
707		$	200,000		M		70		172		Protective Life Insurance Company		AA-
708		$	2,000,000		M		70		164		John Hancock Life Insurance Company (U.S.A.)		AA-
709		$	2,000,000		M		70		106		Transamerica Life Insurance Company		AA-
710		$	1,000,000		M		70		106		Genworth Life Insurance Company		BB-
711		$	5,000,000		M		70		110		John Hancock Life Insurance Company (U.S.A.)		AA-
712		$	4,000,000		M		70		110		AXA Equitable Life Insurance Company		AA-
713		$	175,000		F		70		103		Lincoln National Life Insurance Company		AA-
714		$	1,000,000		M		70		155		Accordia Life and Annuity Company		A-
715		$	1,000,000		M		70		56		Protective Life Insurance Company		AA-
716		$	1,000,000		M		70		123		Transamerica Life Insurance Company		AA-
717		$	1,000,000		M		70		123		Protective Life Insurance Company		AA-
718		$	2,000,000		M		70		74		Metropolitan Life Insurance Company		AA-
719		$	2,000,000		M		70		74		Metropolitan Life Insurance Company		AA-
720		$	1,000,000		M		70		145		John Hancock Life Insurance Company (U.S.A.)		AA-
721		$	400,000		F		70		134		AXA Equitable Life Insurance Company		AA-
722		$	500,000		M		70		152		Lincoln National Life Insurance Company		AA-
723		$	1,000,000		M		69		39		AXA Equitable Life Insurance Company		AA-
724		$	250,000		M		69		142		State Farm Life Insurance Company		AA
725		$	200,000		M		69		142		State Farm Life Insurance Company		AA
726		$	1,200,000		M		69		118		Massachusetts Mutual Life Insurance Company		AA+
727		$	1,000,000		M		69		130		Transamerica Life Insurance Company		AA-
728		$	1,000,000		M		69		151		Lincoln National Life Insurance Company		AA-
729		$	250,000		F		69		68		Transamerica Life Insurance Company		AA-

44

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
730		$	2,500,000		M		69		153		Pruco Life Insurance Company		AA-
731		$	2,500,000		M		69		153		Pruco Life Insurance Company		AA-
732		$	3,000,000		M		69		141		Genworth Life Insurance Company		BB-
733		$	1,200,000		M		69		141		Genworth Life Insurance Company		BB-
734		$	500,000		M		69		37		Voya Retirement Insurance and Annuity Company		A
735		$	750,000		M		69		153		Northwestern Mutual Life Insurance Company		AA+
736		$	2,000,000		M		69		164		John Hancock Life Insurance Company (U.S.A.)		AA-
737		$	250,000		F		69		149		Protective Life Insurance Company		AA-
738		$	150,000		M		69		111		Protective Life Insurance Company		AA-
739		$	3,000,000		M		69		139		Transamerica Life Insurance Company		AA-
740		$	100,000		M		69		116		Phoenix Life Insurance Company		BB-
741		$	13,250,000		M		69		199		TIAA-CREF Life Insurance Company		AA+
742		$	500,000		M		69		112		Lincoln National Life Insurance Company		AA-
743		$	156,538		F		69		100		New York Life Insurance Company		AA+
744		$	560,000		M		69		109		AXA Equitable Life Insurance Company		AA-
745		$	1,100,000		M		69		146		John Hancock Life Insurance Company (U.S.A.)		AA-
746		$	3,000,000		M		69		185		John Hancock Life Insurance Company (U.S.A.)		AA-
747		$	300,000		M		69		86		Protective Life Insurance Company		AA-
748		$	400,000		M		68		183		Lincoln National Life Insurance Company		AA-
749		$	3,000,000		M		68		94		Reliastar Life Insurance Company		A
750		$	2,000,000		M		68		94		AXA Equitable Life Insurance Company		AA-
751		$	2,000,000		M		68		94		AXA Equitable Life Insurance Company		AA-
752		$	1,000,000		M		68		43		Lincoln National Life Insurance Company		AA-
753		$	1,000,000		M		68		73		Transamerica Life Insurance Company		AA-
754		$	5,000,000		M		68		97		Athene Annuity & Life Assurance Company		A-
755		$	1,000,000		M		68		141		Sun Life Assurance Company of Canada (U.S.)		AA-
756		$	900,000		M		68		172		American General Life Insurance Company		A+
757		$	846,510		M		68		121		Lincoln National Life Insurance Company		AA-
758		$	846,210		M		68		121		Lincoln National Life Insurance Company		AA-
759		$	5,000,000		M		68		113		Lincoln National Life Insurance Company		AA-
760		$	600,000		M		68		80		William Penn Life Insurance Company of New York		AA-
761		$	229,725		F		68		99		Hartford Life and Annuity Insurance Company		BBB+
762		$	105,798		F		68		127		Lincoln Benefit Life Company		BBB+
763		$	67,602		F		68		127		Allstate Life Insurance Company of New York		A+
764		$	1,000,000		M		68		102		The Savings Bank Life Insurance Company of Massachusetts		A-
765		$	5,616,468		M		68		174		John Hancock Life Insurance Company (U.S.A.)		AA-
766		$	4,383,532		M		68		174		John Hancock Life Insurance Company (U.S.A.)		AA-
767		$	320,000		M		68		154		Transamerica Life Insurance Company		AA-
768		$	250,000		M		68		155		Pruco Life Insurance Company		AA-
769		$	250,000		M		68		190		Zurich Life Insurance Company		A
770		$	750,000		M		67		78		Massachusetts Mutual Life Insurance Company		AA+
771		$	350,000		F		67		79		Assurity Life Insurance Company		N/A
772		$	492,547		M		67		90		AXA Equitable Life Insurance Company		AA-
773		$	320,581		M		67		20		American General Life Insurance Company		A+
774		$	400,000		M		67		125		Jackson National Life Insurance Company		AA
775		$	500,000		F		67		163		Banner Life Insurance Company		AA-
776		$	350,000		M		67		91		RiverSource Life Insurance Company		AA-
777		$	989,361		M		67		142		General American Life Insurance Company		AA-

45

		Face Amount			Gender		Age (ALB)		LE (mo.)(1)		Insurance Company		S&P Rating
778		$	200,000		M		67		155		Prudential Insurance Company of America		AA-
779		$	200,000		M		67		155		Prudential Insurance Company of America		AA-
780		$	750,000		M		67		121		Pacific Life Insurance Company		AA-
781		$	500,000		F		67		124		AIG Life Insurance Company		A+
782		$	650,000		M		67		177		Lincoln National Life Insurance Company		AA-
783		$	250,000		M		66		140		Conseco Life Insurance Company		BBB+
784		$	2,000,000		F		66		168		Metropolitan Life Insurance Company		AA-
785		$	250,000		F		66		171		Principal Life Insurance Company		A+
786		$	500,000		M		66		69		Transamerica Life Insurance Company		AA-
787		$	265,000		M		66		151		Protective Life Insurance Company		AA-
788		$	250,000		M		66		113		Transamerica Life Insurance Company		AA-
789		$	10,000,000		M		66		58		Lincoln National Life Insurance Company		AA-
790		$	540,000		M		66		164		West Coast Life Insurance Company		AA-
791		$	350,000		M		65		116		Hartford Life and Annuity Insurance Company		BBB+
792		$	3,500,000		M		65		192		Prudential Insurance Company of America		AA-
793		$	150,000		M		60		90		Jackson National Life Insurance Company		AA
		$	1,525,362,833

____________

(ALB)      Age Last Birthday — the insured’s age is current as of the measurement date.

(1)      The insured’s life expectancy estimate, other than for a small face value insurance policy (i.e., a policy with $1 million in face value benefits or less), is the average of two life expectancy estimates provided by independent third-party medical-actuarial underwriting firms at the time of purchase, actuarially adjusted through the measurement date. Numbers in this column represent months.

Competition

We encounter significant competition from numerous companies in the life insurance secondary market, including hedge funds, investment banks, secured lenders, specialty life insurance finance companies and life insurance companies. Many of these competitors have greater financial and other resources than we do and may have significantly lower cost of funds because they have greater access to insured deposits or the capital markets. Moreover, some of these competitors have significant cash reserves and can better fund shortfalls in collections that might have a more pronounced impact on companies such as ours. They may also have greater market share. In the event that better-financed life insurance companies make a significant effort to compete against our business or the secondary market in general, we would experience significant challenges with our business model.

Competition can take many forms, including the pricing of the financing, transaction structuring, timeliness and responsiveness in processing a seller’s application, and customer service. Some competitors may outperform us in these areas. Some competitors target the same type of life insurance clients as we do and generally have operated in the markets we service for a longer period of time. Increased competition may result in increased costs of purchasing policies or may affect the availability and quality of policies that are available for our purchase. These factors could adversely affect our profitability by reducing our return on investment or increasing our risk.

As we enter new markets, we expect to experience significant competition from incumbent market participants. Our ability to compete in these markets will be dependent upon our ability to deliver value-added products and services to the customers we serve. Even still, our competitors in these markets may have greater financial, market share and other resources than we do. These factors could adversely affect our profitability by reducing our return on investment or increasing our risk as we enter these markets.

Government Regulation

Our business is highly regulated at the state level with respect to life insurance assets, and at the federal level with respect to the issuance of securities. At the state level, states generally subject us to laws and regulations requiring us to obtain specific licenses or approvals to purchase or issue life insurance policies in those states. State statutes typically provide state regulatory agencies with significant powers to interpret, administer and enforce the laws relating to the

46

life insurance industry. Under this authority, state regulators have broad discretionary power and may impose new licensing and other requirements, and interpret or enforce existing regulatory requirements in new and different ways. Any of these new requirements, interpretations or enforcement directives could be adverse to our industry, even in a material way. Furthermore, because the life insurance secondary market is relatively new and because of the history of certain abuses in the industry, we believe it is likely that state regulation will increase and grow more complex in the foreseeable future. We cannot, however, predict what any new regulation would specifically involve or how it might affect our industry or our business.

State regulation more generally affecting life insurance assets (and not necessarily directed at the life insurance secondary market itself) may also affect our industry and business in negative ways. For example, we are aware of recent legislative efforts in some states to mandate the sale or liquidation of life insurance policies as a precondition to eligibility for health care under the Patient Protection and Affordable Care Act. These kinds of laws, if passed, may adversely affect the number of life insurance policies available for purchase.

Although the federal laws and regulations do not directly affect life insurance, in some cases the purchase of a variable life insurance policy may constitute a transaction involving a “security” that is governed by federal securities laws. While we presently hold few variable life insurance policies, our holding of a significant amount of such policies in the future could cause our company or one of our subsidiaries to be characterized as an “investment company” under the federal Investment Company Act of 1940. The application of that law to all or part of our businesses — whether due to our purchase of life insurance policies or to the expansion of the definition of “securities” under federal securities laws — could require us to comply with detailed and complex regulatory requirements, and cause us to fall out of compliance with certain covenants under our senior credit facility. Such an outcome could negatively affect our liquidity and increase our cost of capital and operational expenses, all of which would adversely affect our operating results. It is possible that such an outcome could even threaten the viability of our business and our ability to satisfy our obligations as they come due.

We hold licenses to purchase life insurance policies in 37 states and can also purchase in the eight unregulated states. At times, we may work with licensed entities to purchase a policy in a state where we are not licensed.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA requires that holders of medical records maintain such records and implement procedures designed to assure the privacy of patient records. In order to carry out our business, we receive medical records and obtain a release to share such records with a defined group of persons, take on the responsibility for preserving the privacy of that information, and use the information only for purposes related to the life insurance policies we own.

The Genetic Information Nondiscrimination Act of 2008 (GINA)

GINA is a federal law that protects people from genetic discrimination in health insurance and employment. GINA prohibits health insurers from: (i) requesting, requiring, or using genetic information to make decisions about eligibility for health insurance; or (ii) making decisions on the health insurance premium, contribution amounts, or coverage terms they offer to consumers. This means it is against the law for health insurance companies to use a genetic test result or family health history to deny health insurance, or to decide how much to charge for health insurance. In addition, GINA makes it against the law for health insurers to consider family history or a genetic test result, a pre-existing condition, require a genetic test, or use any genetic information, to discriminate coverage, even if the health insurance company did not mean to collect such genetic information.

GINA does not apply to the life insurance, long-term care or annuity industries. The life insurance, long-term care or annuity industries are founded on medical-evidenced underwriting principles in which specific medical conditions are taken into account when assessing and pricing risk. The regulation of genomic data is relatively new, and we believe it is likely that regulation will increase and grow more complex in the foreseeable future. We cannot, however, predict what any new law or regulation would specifically involve or how it might affect our industry, our business, or our future plans.

Employees

We employ approximately 76 employees.

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Properties

Our principal executive offices are located at 220 South Sixth Street, Suite 1200, Minneapolis, Minnesota 55402. At that location, we lease 17,687 square feet of space for a lease term expiring in 2025. We believe that these facilities are adequate for our current needs and that suitable additional space will be available as needed.

Company Website Access and SEC Filings

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934 are filed with the SEC. We are subject to the informational requirements of the Securities Exchange Act of 1934 and file or furnish reports, proxy statements and other information with the SEC.

Our general website address is www.gwgh.com. Our website has a wealth of information about our company, its mission, and our specialty finance business. Our website also has tools that could be used by our potential clients, financial advisors and investors alike.

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DESCRIPTION OF THE L BONDS

General

The L Bonds are secured obligations of GWG Holdings. The L Bonds will be issued under the indenture between us and Bank of Utah as the indenture trustee, dated October 19, 2011, as amended or supplemented from time to time, including by that certain Amendment No. 3 to Indenture to be entered into in connection with this offering of L Bonds (referred to collectively herein as the “indenture”). The terms and conditions of the L Bonds include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939. The following is a summary of the material provisions of the indenture. For a complete understanding of the L Bonds, you should review the definitive terms and conditions contained in the indenture, which include definitions of certain terms used below. A copy of the indenture has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part, and is available from us at no charge upon request.

The following is a summary of the material terms associated with the L Bonds:

•         The L Bonds are general secured obligations of GWG Holdings. The obligations are secured by a grant of a security interest in all of the assets of GWG Holdings, which assets will serve as collateral for our obligations under the L Bonds. This grant of a security interest is effected pursuant to a pledge and security agreement attached to the indenture.

•         The L Bonds are fully and unconditionally guaranteed by our wholly owned direct subsidiary, GWG Life, but otherwise are not guaranteed by any other person or entity. The guarantee is backed by a grant of a security interest in all of the assets of GWG Life, which assets will serve as additional collateral for our obligations under the L Bonds. Chief among these assets is GWG Life’s ownership interest in DLP IV. This guarantee is effected pursuant to provisions contained in the indenture.

•         The L Bonds are also secured by a pledge of the equity ownership interests in GWG Holdings beneficially owned by its principal stockholders — Jon R. Sabes and Steven F. Sabes — which pledge is effected pursuant to a pledge and security agreement attached to the indenture.

•         Through DLP IV, we are party to a $172.3 million senior credit facility with LNV/CLMG. The amount outstanding under this facility was $155.6 million at June 30, 2017 and $162.7 million at December 31, 2016. The L Bonds will also be junior to any other senior lending facility we may later obtain.

•         The L Bonds are not savings accounts, certificates of deposit (CDs) or other forms of “deposits,” and are not insured by the FDIC or any other governmental agency.

•         The L Bonds are not directly secured by any life insurance assets not owned by GWG Life. Substantially all of our life insurance assets are held by DLP IV. Although GWG Life’s equity ownership interest in DLP IV is an asset in which GWG Life has, pursuant to its guarantee, granted a security interest to serve as collateral for obligations under the L Bonds, the payment on such equity interest will be subordinate to the interests of creditors of DLP IV, including our senior creditor LNV/CLMG.

•         The L Bonds do not have the benefit of a “sinking fund” for the retirement of principal.

•         The L Bonds are not convertible into our capital stock or other securities.

•         We have the option to call and redeem the entire outstanding principal balance and accrued but unpaid interest of any L Bonds at any time and without premium or penalty. If we elect to call and redeem your L Bonds, those redeemed L Bonds will cease to accrue interest after the redemption date under the terms and subject to the conditions of the indenture.

•         Except in limited circumstances (death, bankruptcy or total permanent disability), L Bond holders will have no right to require us to redeem any L Bond prior to its maturity date. Any early redemption will be for the total outstanding principal balance and accrued but unpaid interest. If we in our sole discretion nonetheless elect to accommodate a redemption request, we will redeem the entire (but not less than the entire) outstanding principal balance and accrued but unpaid interest of the L Bonds and may impose a redemption fee of 6% against the outstanding principal balance of the L Bond redeemed. This fee will be subtracted from the amount paid to you.

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The L Bonds will be represented by “Units,” with each whole Unit representing $1,000 in principal amount (USD) of L Bonds. Accordingly, L Bond Units will be sold at 100% of their principal face amount. Throughout this prospectus, we refer to L Bond Units simply as “L Bonds.” The minimum investment amount in the L Bonds will be 25 Units, or $25,000. Above that minimum amount, L Bonds may be purchased in whole or fractional Units. Subject to the minimum investment amount, you may select the principal amount and term of the L Bonds (ranging from two to seven years) you would like to purchase when you subscribe. The interest rate of your L Bonds will remain fixed until maturity. Depending on our capital requirements, we may not, however, always offer L Bonds with the particular terms you seek. See “Description of the L Bonds — Interest Rate and Maturity” below.

Upon acceptance of your subscription, we will create an account in a book-entry registration and transfer system for you, and credit the principal amount of your subscription to your account. We will also send you a purchase confirmation that will indicate our acceptance of your subscription. If your subscription is rejected, all funds deposited will be promptly returned to you without any interest. See “— Registration and Exchange” below. Alternatively, you may subscribe for L Bonds as a direct participant with Depository Trust Company (DTC settlement). See “Plan of Distribution — Settlement Procedures” for more information.

Investors whose subscriptions for L Bonds have been accepted and anyone who subsequently acquires L Bonds in a qualified transfer are referred to as “holders” or “registered holders” in this prospectus. We may modify or supplement the terms of the L Bonds described in this prospectus from time to time in a supplement to the indenture and a supplement to this prospectus. Except as set forth under “— Amendment, Supplement and Waiver” below, any modification or amendment will not affect L Bonds outstanding at the time of such modification or amendment.

The L Bonds are transferable pursuant to the terms of the indenture. The L Bonds may be transferred or exchanged for other L Bonds of the same series and class of a like aggregate principal amount (i.e., the same number of Units) subject to limitations contained in the indenture. We will not charge a fee for any registration, transfer or exchange of L Bonds. However, we may require the holder to pay any tax, assessment fee, or other governmental charge required in connection with any registration, transfer or exchange of L Bonds. The registered holder of any L Bonds will be treated as the owner of such L Bond Units for all purposes.

Denomination

You may purchase L Bonds in the minimum amount of 25 Units, representing a minimum principal amount of $25,000, and in any whole or fractional Unit amounts in excess thereof. You will determine the exact number of L Bond Units you purchase when you subscribe. You may not cumulate multiple purchases L Bond Units in amounts less than 25 Units to satisfy the 25 Unit minimum requirement. In our discretion, however, we may waive the 25 Unit minimum purchase requirement for any investor.

Term

We may offer L Bonds with the following terms to maturity: two years, three years, five years, and seven years.

You will select the term of the L Bonds you purchase when you subscribe. You may purchase multiple L Bonds with different terms by filling in investment amounts for more than one term on your Subscription Agreement. Nevertheless, during this offering we may not always offer L Bonds with each of the maturity terms outlined above.

The actual maturity date will be on the last day of the month in which the L Bond matures (i.e., the month in which the L Bond’s term ends). For example, if you select a two-year term and your L Bond becomes effective on January 1, 2018, then the actual maturity date will be January 31, 2020. After actual maturity, we will pay all outstanding principal and accrued but unpaid interest on the L Bond no later than the fifth day of the calendar month next following its maturity (or the first business day following the fifth day of such month). So, in the case of an L Bond with a maturity date of January 31, 2020, actual payment will be made on or prior to February 5, 2020 (unless such date is not a business day, in which case actual payment will be made on the next business day). The L Bonds do not earn interest after the maturity date or any date set for prepayment.

Should the original L Bond holder (x) no longer be the holder of the L Bond or (y) be unavailable, or a change in payee be necessary, such as in the case of a surviving estate, we may require a copy of the executed assignment to any transferee, or an order from a court or probate commission, as the case may be, in order that we know the principal is returned to the rightful party.

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Interest Rate

The rate of interest we will offer to pay on L Bonds at any particular time will vary based upon market conditions, and will be determined by the term to maturity of the L Bonds, our capital requirements and other factors described below. The interest rate on particular L Bonds will be determined at the time of subscription or renewal and then remain fixed for the original or renewal term of the L Bond. We will establish and may change the interest rates payable for L Bonds of various terms and at various investment levels in an interest rate supplement to this prospectus.

We may offer L Bonds that earn incrementally higher interest rates when, at the time they are purchased or renewed, the aggregate principal amount of the L Bond portfolio of the holder increases. If applicable, the interest rates payable at each level of investment will be set forth in an interest rate supplement to this prospectus. We may change the interest rate for any or all maturities to reflect market conditions at any time by supplementing this prospectus. If we change the interest rates, the interest rate on L Bonds issued before the date of the change will not be affected.

Payments on the L Bonds; Paying Agent and Registrar

Investors will have the opportunity to select whether interest on their L Bonds will be paid monthly or annually. For investors using direct settlement with the Company, this selection opportunity will be presented in the Subscription Agreement.

Interest will accrue on the L Bonds at the stated rate from and including the effective date of the L Bond until maturity. The effective date of an L Bond will be as follows:

•         If you purchase an L Bond through DTC settlement, the effective date of your L Bond purchase will be the date your subscription is accepted by the Company.

•         If you purchase an L Bond through direct settlement with the Company, the effective date of your L Bond purchase will be the following, as applicable: (i) in cases where you pay for your bond via wire transfer directly to us, the first business day of the next calendar month after which we receive the wire; (ii) in cases where you pay for your bond by bank draft directly to us, the first business day of the next calendar month after which we receive the draft; or (iii) in cases where you pay for your bond by personal check, the first business day of the calendar month that is at least five full business days after which we receive the check. In all cases involving direct settlement with the Company, we must also have received and accepted your completed and executed Subscription Agreement.

Interest payments on L Bonds will be paid on the 15th day immediately following the last day of the applicable interest payment period. Interest will be paid without any compounding. The first payment of interest will include interest for the partial period in which the purchase occurred. The indenture provides that all interest will be calculated based on a year with twelve 30-day months.

If you purchase your L Bond Units through direct settlement, we will pay the principal of, and interest on, L Bonds by direct deposit to the account you specify in your Subscription Agreement. We will not accept subscriptions from investors who are not willing to receive their interest payments via direct deposit. If the foregoing payment method is not available, principal and interest payments on the L Bonds will be payable at our principal executive office or at such other place as we may designate for payment purposes. If you purchase your L Bond Units through DTC settlement, our payments of principal and interest will be paid to the depositary (DTC) and then be credited to your brokerage or custodial account through the DTC procedures followed by your brokerage firm or custodian. For more information, please see “Registration and Exchange — Global Certificates Deposited with DTC” below.

We will withhold 28% of any interest payable to any investor who has not provided us with a social security number, employer identification number, or other satisfactory equivalent in the Subscription Agreement (or another document) or where the IRS has notified us that backup withholding is otherwise required. Please see “Material Federal Income Tax Considerations — Backup Withholding and Information Reporting.”

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Registration and Exchange

The L Bonds that we settle directly will generally be issued in book-entry form, which means that no physical L Bond is created, subject, however, to limited exceptions described in the indenture. The L Bonds settled through DTC settlement will be represented by global certificates deposited with the depositary as described below.

Book-Entry Registration

Evidence of your ownership will be provided by written confirmation. As described below, holders may, under certain circumstance described below, opt to receive physical delivery of a certificated security that evidences their L Bonds. Otherwise, the issuance and transfer of L Bonds will be accomplished exclusively through the crediting and debiting of the appropriate accounts in our book-entry registration and transfer system.

The holders of the accounts established upon the purchase or transfer of L Bonds will be deemed to be the owners of the L Bonds under the indenture. The holder of the L Bonds must rely upon the procedures established by the trustee to exercise any rights of a holder of L Bonds under the indenture. We will regularly provide the trustee with information regarding the establishment of new accounts and the transfer of existing accounts.

On or prior to any interest payment date or upon redemption, we will also provide the trustee with information regarding the total amount of any principal and interest due to holders of L Bonds. On each interest payment date, we will credit interest due on each account and direct payments to the holders. We will determine the interest payments to be made to the book-entry accounts and maintain, supervise and review any records relating to book-entry accounts for the L Bonds.

Book-entry notations in the accounts evidencing ownership of the L Bonds are exchangeable for certificated L Bonds only: (i) at the request of the holder, at the end of the Company’s next fiscal quarter; or (ii) after the occurrence of an event of default under the indenture, if holders of more than 50% of the aggregate outstanding principal amount of the L Bonds advise the trustee in writing that the continuation of a book-entry system is no longer in the best interests of the holders of L Bonds. In its discretion, the Company may elect to terminate the book-entry system and replace book-entry notations with physical certificates.

Global Certificates Deposited with DTC

L Bonds may be issued in the form fully registered global certificates deposited with, or on behalf of, The Depository Trust Company (“DTC”), New York, NY, and registered in the name of Cede & Co., as nominee of DTC. Unless and until exchanged, in whole or in part, for L Bonds in definitive registered form, a global certificate may not be transferred except as a whole by the depositary to a nominee of such depositary, by a nominee of such depositary to such depositary or another nominee of such depositary, or by such depositary or any nominee of such depositary to a successor of such depositary or a nominee of such successor.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions, such as transfers and pledges, among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers (including the managing broker-dealer), banks, trust companies, clearing corporations and certain other organizations, some of whom own DTC. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.

If available, purchases of L Bonds within the DTC system must be made by or through direct participants, which will receive a credit for the L Bonds on DTC’s records. The ownership interest of each beneficial owner of the L Bonds will be recorded on the direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchases, but beneficial owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participants through

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which the beneficial owners entered into the transaction. Transfers of ownership interests in the L Bonds are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners.

To facilitate subsequent transfers, all L Bonds deposited by participants with DTC will be registered in the name of DTC’s nominee, Cede & Co. The deposit of L Bonds with DTC and their registration in the name of Cede & Co. will effect no change in beneficial ownership. DTC will have no knowledge of the actual beneficial owners of the L Bonds. DTC’s records will reflect only the identity of the direct participants to whose accounts such notes are credited, which may or may not be the beneficial owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

We will make payments due on the notes to Cede & Co., as nominee of DTC, in immediately available funds. DTC’s practice is to credit direct participants’ accounts, upon DTC’s receipt of funds and corresponding detailed information, on the relevant payment date in accordance with their respective holdings shown on DTC’s records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in “street name,” and will be the responsibility of such participant and not our responsibility or that of DTC, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment to Cede & Co. is our responsibility. Disbursement of such payments to direct participants is the responsibility of Cede & Co. Thereafter, disbursement of such payments to the beneficial owners is the responsibility of direct and indirect participants (i.e., brokers, dealers and custodians).

Except as provided herein, a beneficial owner of an interest in a global certificate will not be entitled to receive physical delivery of the L Bonds. Accordingly, each beneficial owner must rely on the procedures of DTC to exercise any rights under the L Bonds. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global certificate.

As long as the depositary, or its nominee, is the registered holder of a global certificate, the depositary or such nominee will be considered the sole owner and holder of the L Bonds represented thereby for all purposes under the L bonds and the indenture. Except in the limited circumstances referred to below, owners of beneficial interests in a global certificate will not be entitled to have such global certificate or any L Bonds represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated L Bonds in exchange for the global certificate and will not be considered to be the owners or holders of such global certificate or any certificates represented thereby for any purpose under the L Bonds or the indenture. Accordingly, each person owning a beneficial interest in such global certificate must rely on the procedures of the depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest to exercise any rights of a holder under the indenture.

If the depositary for a global certificate representing L Bonds is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by us within 90 days, we will issue L Bonds in definitive form in exchange for such global certificate. In addition, we may at any time and in our sole discretion determine not to have the L Bonds represented by one or more global certificates and, in such event, we will issue the notes in definitive form in exchange for all of the global certificates representing the L Bonds. Finally, if an event of default, or an event which with the giving of notice or lapse of time or both would constitute an event of default, with respect to the L Bonds represented by a global certificate has occurred and is continuing, then we will issue L Bonds in definitive form in exchange for all of the global certificates representing the notes.

Although DTC has agreed to the procedures provided above in order to facilitate transfers, it is under no obligation to perform these procedures, and these procedures may be modified or discontinued at any time.

Limited Rescission Right

If you are purchasing L Bonds through direct settlement with the Company and your Subscription Agreement is accepted at a time when we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the SEC, but such post-effective amendment has not yet been declared

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effective, we will send to you at your registered address a notice and a copy of the related prospectus once it has been declared effective. You will thereupon have the right to rescind your investment upon written request within ten business days from the postmark date of the notice we send to you that the post-effective amendment has been declared effective (and containing the related prospectus). We will promptly return any funds sent with a Subscription Agreement that is properly rescinded without penalty, although any interest previously paid on a rescinded L Bond will be deducted from the funds returned to you upon rescission. A written request for rescission, except in the case of a mailed rescission, must be postmarked on or before the tenth business day after our notice to you (described above). If you notify us other than by mail, we must actually receive your rescission request on or before the tenth business day after our notice to you.

We will not accept purchases of L Bonds through DTC settlement if, as of the end of the monthly closing for DTC settlement, we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the SEC, but such post-effective amendment has not yet been declared effective. In any such case, settlement of your L Bond purchase must occur in the following month.

Renewal or Repayment on Maturity

At least 30 days prior to the maturity of your L Bond, we will provide you with a notice indicating that your L Bond is about to mature and whether we will allow automatic renewal of your L Bond. If we allow you to renew your L Bond, we will also provide to you the then-current form of prospectus, which may include an interest rate or prospectus supplement and any other updates to the information contained in this prospectus. The prospectus, or the interest rate or prospectus supplement, will set forth the interest rates then in effect. The notice will recommend that you review the then-current prospectus, including any interest rate or prospectus supplement, prior to exercising one of the below options. If we do not provide you a new prospectus because the prospectus has not changed since the delivery of this prospectus in connection with your original investment or any prior renewal, we will nonetheless send you a new copy of the prospectus upon your request. Unless the election period is extended as described below, you will have until 15 days prior to the maturity date to exercise one of the following options:

•         You can do nothing, in which case (subject to applicable law) your L Bond will automatically renew for a new term equal to the original term but at the interest rate in effect at the time of renewal. Interest on renewed L Bonds will be paid on the same schedule (i.e., monthly or annually) as the original L Bond. If applicable, a new certificate will be issued.

•         You can elect repayment of your L Bond, in which case the principal amount will be repaid in full along with any accrued but unpaid interest. If you choose this option, your L Bond will not earn interest on or after the maturity date.

•         You can elect repayment of your L Bond and use all or part of the proceeds to purchase a new L Bond with a different term or principal amount. To exercise this option, you will need to complete a new Subscription Agreement for the new L Bond and mail it along with your request, or else work with your broker if you wish to purchase your new L Bond through DTC settlement. Any proceeds from the old L Bond that are not applied to the new L Bond will be sent to you.

The foregoing options will be available to holders unless and until terminated under the indenture. Interest will accrue from the first day of each renewed term. Each renewed L Bond will retain all its original provisions, including provisions relating to payment, except that the interest rate payable during any renewal term will be the interest rate that is being offered at that time to other holders with similar aggregate L Bond portfolios for L Bonds of the same term as set forth in the interest rate supplement delivered with the maturity notice. If similar L Bonds are not then being offered, the (i) interest rate upon renewal will be the rate specified by us on or before the maturity date, or the rate of the existing L Bond if no such rate is specified, and (ii) the maturity will, if L Bonds of the same maturity are being offered at the time of renewal, be the same or, if not, the next earliest maturity.

If we notify the holder of our intention to repay an L Bond at maturity, or if the holder timely requests repayment, we will pay the principal and all accrued but unpaid interest on the L Bond on or prior to the fifth day of the calendar month after the maturity date (or the first business day following the fifth day of such month). Thus, in the case of an L Bond with a maturity date of January 31, 2020, actual payment will be made on or prior to February 5, 2020 (unless such date is not a business day, in which case actual payment will be made on the next business day). No interest will

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accrue after the maturity date. You should be aware that because payment is made by ACH transfer, funds may not be received in the holder’s account for two to three business days.

We will be required from time to time to file post-effective amendments to the registration statement of which this prospectus is a part to update the information it contains. If you would otherwise be entitled to renew your L Bonds upon their stated maturity at a time when we have determined that a post-effective amendment must be filed with the SEC, but such post-effective amendment has not yet been declared effective, then the period during which you can elect renewal (or repayment) will be automatically extended until ten days following the postmark date of our notice to you that the post-effective amendment has been declared effective, which notice shall contain a copy of the related prospectus. All other provisions relating to the renewal or redemption of L Bonds upon their stated maturity described above shall remain unchanged.

For any L Bonds offered hereby that mature on or after the three-year anniversary of the date on which the registration statement of which this prospectus is a part shall have been declared effective, we expect that the renewal of such L Bonds may require us to file a new registration statement. In such a case, the new registration statement must be declared effective before we can renew your L Bond. In this event, if the new registration statement has not yet been filed or become effective, we will extend your election period until ten days following the date of our notice to you that the new registration statement has become effective, which notice will include a new prospectus.

Call and Redemption Prior to Stated Maturity

We may call and redeem, in whole or in part, principal amount and accrued but unpaid interest on any L Bonds prior to their stated maturity only as set forth in the indenture and described below. The holder has no right to put or otherwise require us to redeem any L Bond prior to its maturity date (as originally stated or as it may be extended), except as indicated in the indenture and described below.

Our Voluntary Redemption

We have the right to redeem any L Bond, in whole or in part, at any time prior to its stated maturity upon at least 30 days written notice to the holder of the L Bond. The holder of the L Bond being redeemed will be paid a redemption price equal to the outstanding principal amount thereof plus accrued but unpaid interest up to but not including the date of redemption without any penalty or premium. We may use any criteria we choose to determine which L Bonds we will redeem if we choose to do so. We are not required to redeem L Bonds on a pro rata basis.

Holder’s Put Election Upon Death, Bankruptcy or Total Permanent Disability

L Bonds may be redeemed prior to maturity at the election of a holder who is a natural person (including L Bonds held in an individual retirement account and the holders of a beneficial interest in a global certificate held by a depositary or its nominee), by giving us written notice within 45 days following the holder’s total permanent disability or bankruptcy, as established to our satisfaction, or at the election of the holder’s estate, by giving written notice within 45 days following the death of the holder. Subject to the limitations described below, we will redeem the L Bonds not later than the 15th day of the month next following the month in which we establish to our satisfaction the holder’s death, bankruptcy or total permanent disability. In the event that the 15th day of the month next following the month in which we so establish such facts is not a business day, we will redeem the L Bonds on the next business day. The redemption price, in the event of such a death, bankruptcy or total permanent disability, will be the entire principal amount of the L Bonds, plus accrued but unpaid interest thereon up to and through the last day of the calendar month preceding the redemption date. The indenture defines “total permanent disability” as the determination by a physician, approved by us, that a holder of an L Bond who is a natural person, and who was gainfully employed at the time of issuance of the L Bond (or its renewal date), is unable to work on a full-time basis during a period of 24 consecutive months.

If spouses are joint registered holders of an L Bond, the right to elect to have us redeem L Bonds will apply when either registered holder dies, files bankruptcy or suffers a total permanent disability. If the L Bond is held jointly by two or more persons who are not legally married, none of these persons will have the right to request that we redeem the L Bonds unless all joint holders have died, filed bankruptcy or suffered a total permanent disability. If the L Bond is held by a trust, partnership, corporation or other similar entity, the right to request redemption upon death or total permanent disability does not apply.

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Redemption at Request of Holder

We have no obligation to redeem any L Bonds other than upon maturity, or upon the death, bankruptcy or total permanent disability of a natural person holder. Nevertheless, at our sole discretion we may agree from time to time, at the written request of a holder (including the holder of a beneficial interest in a global certificate held by a depositary or its nominee), to redeem an L Bond, subject, however, to a redemption fee of 6.0% of the principal amount of such L Bond. If we so redeem any L Bond prior to maturity, we will redeem the entire principal amount of such L Bond together with accrued but unpaid interest thereon, The redemption fee will be subtracted from the amount paid to you.

Transfers

The L Bonds will be transferable in accordance with the indenture. For L Bonds that are issued solely in book-entry form, transfers will be effective only upon the delivery to us of an executed assignment or other conveyance instrument in customary form. For L Bonds that are represented by a global certificate held by a depositary or its nominee, transfers of beneficial interests in such certificate must be effected in accordance with the procedures and rules of the depositary.

Upon transfer of an L Bond, we will provide the new holder of the L Bond with a purchase confirmation that will evidence the transfer of the account on our records. If applicable (e.g., if transferred to a custodial account), a new certificate will be issued. No written confirmations will be provided with respect to transfers of beneficial interests in a global certificate held by a depositary or its nominee.

Quarterly Statements

We will provide holders of the L Bonds with quarterly statements, which will indicate, among other things, the account balance at the end of the quarter, interest credited, redemptions made, if any, and the interest rate paid during the quarter. These statements will be sent electronically on or prior to the 10th business day after the end of each calendar quarter. If a holder is unwilling or unable to receive quarterly statements electronically, we will mail the statements to the address of record on or prior to the 10th business day after the end of each calendar quarter. In such a case, we may charge such holders a reasonable fee to cover our expenses incurred in mailing the statements.

Ranking

The L Bonds will constitute secured debt of GWG Holdings. The payment of principal and interest on the L Bonds will be:

•         pari passu with respect to payment and collateral securing all L Bonds previously issued by GWG Holdings, Inc., of which approximately $407.9 million in principal amount is outstanding as of June 30, 2017 (see the caption “— Collateral Security” below);

•         structurally and contractually junior to the present and future obligations owed by our subsidiary DLP IV under our senior credit facility with LNV/CLMG, and structurally or contractually junior to any future obligations that DLP IV or other primary obligors or guarantors may have under future senior secured borrowing facilities; and

•         structurally junior to the present and future claims of creditors of our subsidiaries, other than GWG Life, including trade creditors.

The indenture will permit us to issue other forms of debt, including secured and senior debt, in the future.

“Pari passu” means that claims for payment and entitlement to security among the holders of L Bonds, including the holders of previously issued L Bonds, and the holders of any later-created class of “pari passu debt,” will be treated equally and without preference. Although we have no present intention of causing GWG Life to issue additional secured debt in the future, any such debt issued on a pari passu basis in the future (including renewals of outstanding L Bonds or other renewable pari passu debt) would also be treated equally and without preference in respect of all outstanding L Bonds. Thus, in the event of any default on the L Bonds (or any other debt securities of ours that are pari passu with the L Bonds) resulting in claims for payment or claims on collateral security, the holders of the L Bonds and all such other debt securities pari passu with the L Bonds would share in payment or collateral in proportion to the amount of principal and interest owed on each such debt instrument.

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Guarantee by GWG Life Subsidiary

The payment of principal and interest on the L Bonds, including previously issued L Bonds, is fully and unconditionally guaranteed by GWG Life. There were approximately $407.9 million in principal amount of previously issued L Bonds outstanding as of June 30, 2017.

Collateral Security

The L Bonds are secured by the assets of GWG Holdings, Inc. We will grant a security interest in all of the assets of GWG Holdings to the indenture trustee for the benefit of the L Bond holders. The assets of GWG Holdings consist, and are expected to consist, primarily of (i) any cash proceeds received from its subsidiaries as distributions derived from life insurance assets of subsidiaries, (ii) all other cash and investments held in various accounts, (iii) the equity ownership interests in subsidiaries of GWG Holdings, including the equity ownership interest in GWG Life, together with (iv) all proceeds from the foregoing. This collateral security granted by us is referred to as the “GWG Holdings Assets Collateral.”

As indicated above, our direct and wholly owned subsidiary, GWG Life, will fully and unconditionally guarantee our obligations under the L Bonds. This guarantee will be supported by GWG Life’s grant of a security interest in all of its assets. The assets of GWG Life consist, and are expected to consist, primarily of (i) certain life insurance assets, (ii) any cash proceeds received from life insurance assets owned by GWG Life or received from DLP IV, as distributions derived from life insurance policies owned by that subsidiary, (iii) all other cash and investments held by GWG Life in its various accounts, (iv) GWG Life’s equity ownership interest in its direct subsidiaries, including DLP IV, together with (v) all proceeds from the foregoing. The collateral security granted by GWG Life pursuant to its guarantee of our obligations under the L Bonds is referred to as the “GWG Life Assets Collateral.”

In addition, Messrs. Jon R. Sabes and Steven F. Sabes, our principal stockholders beneficially holding approximately 75% of the outstanding shares of our common stock, have pledged all of the shares they beneficially own in GWG Holdings to further secure our obligations under the L Bonds. This collateral security granted by Messrs. Jon R. Sabes and Steven F. Sabes is referred to as the “GWG Holdings Equity Collateral.”

Together, the GWG Holdings Assets Collateral, GWG Life Assets Collateral and GWG Holdings Equity Collateral comprise all of the collateral security for our obligations under the L Bonds. To the extent that we subsequently establish one or more wholly owned subsidiaries of GWG Holdings or GWG Life, the L Bonds will have a security interest in the equity ownership interests of those subsidiaries if and to the extent owned by GWG Holdings or GWG Life.

The guarantee by GWG Life is contained in the indenture, and the grant of security interests in the GWG Holdings Assets Collateral, GWG Life Assets Collateral and GWG Holdings Equity Collateral is effected through a “Pledge and Security Agreement” that is an exhibit to the indenture and has been amended in connection with this offering of L Bonds. Neither the indenture nor the Pledge and Security Agreement contain any provision preventing a pledging party from disposing of any collateral in the ordinary course of business. In this regard, the Pledge and Security Agreement permits the disposition of GWG Holdings Equity Collateral to the extent the number of shares continuing to constitute such collateral represents at least 10% of the number of shares beneficially held by each individual grantor as of the date of the Pledge and Security Agreement.

Substantially all of our life insurance assets are held in our subsidiaries. The L Bonds will not be directly secured by any security interest in the assets of those subsidiaries, including DLP IV. Instead, the L Bonds will be secured by a pledge of the equity ownership interests in those subsidiaries, including DLP IV, owned by GWG Life by virtue of the guarantee provisions in the indenture and the Pledge and Security Agreement referenced above. An equity ownership interest is, by its very nature, subordinate to the interests of creditors. Therefore, although investors in the L Bonds will have a security interest in the ownership of DLP IV (and other direct subsidiaries of GWG Life) any claim they may have to the assets owned by such entity will be subordinate to the interests of creditors of that entity, including LNV/CLMG, which is the lender to DLP IV under our senior credit facility, and all other creditors of DLP IV, including trade creditors. In addition, there is the risk that the collateral security granted for our obligations under the L Bonds may be insufficient to repay the L Bonds upon an event of default. See “Risk Factors,” page 12 (“The collateral granted as security...”).

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Subordination; Other Indebtedness

Our obligations under the L Bonds will be subordinate to all our senior debt. For this purpose, “our senior debt” presently includes all indebtedness owed or that may in the future become owing under our senior credit facility with LNV/CLMG. As of June 30, 2017, DLP IV had approximately $155.6 million of debt outstanding under the credit facility with LNV/CLMG. As of June 30, 2017, our subsidiary GWG Life had approximately $6.8 million of debt outstanding under our Series I Secured Notes. Nevertheless, in August 2017, we exercised our contractual rights to call for the redemption of all our Series I Secured Notes, and as of the date of this prospectus all Series I Secured Notes had been redeemed. In September 2017, we consummated the redemption of all of those debt obligations. Finally, as of June 30, 2017, we had approximately $407.9 million in principal amount of debt outstanding under previously issued L Bonds.

The maximum amount of debt, including the L Bonds, we may issue is limited by the indenture. In particular, the indenture prohibits us from issuing debt in an amount such that our “debt coverage ratio” would exceed 90%. The indenture defines the debt coverage ratio as a percentage calculated by the ratio of (A) obligations owing by us and our subsidiaries on all outstanding debt for borrowed money (including the L Bonds), over (B) the net present asset value of all life insurance assets we own, directly or indirectly, plus any cash held in our accounts. For this purpose, the net present asset value of our life insurance assets is equal to the present value of the cash flows derived from the face value of policy benefit assets we own, discounted at a rate equal to the weighted average cost of capital for all our indebtedness for the prior month.

We are required to notify the indenture trustee in the event that we violate this restrictive covenant. An “event of default” will exist under the indenture if a violation of this covenant persists for a period of 30 calendar days after our initial notice to the trustee. The L Bonds are guaranteed by GWG Life but otherwise are not guaranteed by any of our subsidiaries, affiliates or control persons. Neither indenture nor the Pledge and Security Agreement prevent holders of debt issued by our subsidiaries from disposing of, or exercising any other rights with respect to, any or all of the collateral securing that debt. Accordingly, in the event of a liquidation or dissolution of one of our subsidiaries (other than GWG Life), creditors of that subsidiary that are senior in rank will be paid in full, or provision for such payment will be made, from the assets of that subsidiary prior to distributing any remaining assets to us as an equity owner of that subsidiary.

The indenture also contains specific subordination provisions, benefitting lenders under any senior credit facility, restricting the right of L Bond holders to enforce certain of their rights in certain circumstances, including:

•         a prohibition on challenging any enforcement action taken by a senior lender or interfering with any legal action or suits undertaken by our senior lenders against us and our affiliates;

•         a 180-day standstill period during which there may not be brought any action against us or our affiliates to enforce rights respecting collateral unless our senior credit facilities have been repaid in full, which period may be extended if the senior lender takes action during such standstill period; and

•         a prohibition on filing a bankruptcy or insolvency case against us or our affiliates for at least one year plus one day after the senior credit facility lenders have been paid in full.

We will not make any payment, direct or indirect (whether for interest, principal, as a result of any redemption or repayment at maturity, on default, or otherwise), on the L Bonds and any other indebtedness, and neither the holders of the L Bonds nor the trustee will have the right, directly or indirectly, to sue to enforce the indenture or the L Bonds, if a default or event of default under any senior credit facility has occurred and is continuing, or if any default or event of default under any senior credit facility would result from such payment, in each case unless and until:

•         the default and event of default has been cured or waived or has ceased to exist; or

•         in the case of a non-payment default that permits a senior lender to declare as due and payable all amounts owing under a senior credit facility (but where that senior lender has not yet so declared amounts as being due and payable), the end of the period commencing on the date the trustee receives written notice of default from the senior lender and ending on the earliest of (1) our discharge of the default (or other cure), (2) the trustee’s receipt of a valid waiver of default from the senior lender, or (3) a written notice from the senior lender terminating the payment prohibition.

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During any payment prohibition period, neither the holders of the L Bonds nor the trustee will have the right, directly or indirectly, to sue to enforce the indenture or the L Bonds. Other provisions of the indenture do permit the trustee to take action to enforce the payment rights of L Bond holders after 179 days have passed since the trustee’s receipt of notice of default from a senior lender, but in such case any funds paid as a result of any such suit or enforcement action shall be applied toward the senior credit facility until the facility is indefeasibly paid in full before being applied to the L Bonds. The indenture contains provisions whereby each investor in the L Bonds consents to the subordination provisions contained in the indenture and related agreements governing collateral security.

If the 180-day standstill period noted above or any other limitation on the rights of the trustee or L Bond holders to assert their rights to payment of principal or interest under the indenture or L Bonds is ultimately determined to conflict with provisions of the Trust Indenture Act of 1939 (most notably sections 316(b) and 317(a) of that Act), then the trustee, as well as any holder who shall not have earlier consented to such subordination provisions, shall (notwithstanding such provision contained in the indenture) be authorized to institute a lawsuit for the enforcement of any payment of principal or interest after their respective due dates.

No Sinking Fund

The L Bonds are not associated with any sinking fund. A sinking fund is generally any account to which contributions will be made, from which payments of principal or interest owed on the L Bonds will be made. See “Risk Factors,” page 12.

Restrictive Covenants

The indenture contains covenants that restrict us from certain actions as described below. In particular, the indenture provides that:

•         we will not declare or pay any dividends or other payments of cash or other property solely in respect of our capital stock to our stockholders (other than a dividend paid in shares of our capital stock on a pro rata basis to all our stockholders) unless no default and no event of default with respect to the L Bonds exists or would exist immediately following the declaration or payment of the dividend or other payment;

•         to the extent legally permissible, we will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or the performance of the indenture;

•         our Board of Directors will not adopt a plan of liquidation that provides for, contemplates or the effectuation of which is preceded by (a) the sale, lease, conveyance or other disposition of all or substantially all of our assets, otherwise than (i) substantially as an entirety, or (ii) in a qualified sales and financing transaction, and (b) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and of our remaining assets to the holders of our capital stock, unless, prior to making any liquidating distribution pursuant to such plan, we make provision for the satisfaction of our obligations under the renewable unsecured subordinated notes; and

•         our debt coverage ratio may not exceed 90%.

The indenture defines the debt coverage ratio as a percentage calculated by the ratio of (A) obligations owing on all outstanding debt for borrowed money (including the L Bonds), over (B) the net present asset value of all life insurance assets we own, plus any cash held in our accounts. For this purpose, the net present asset value of our life insurance assets is equal to the present value of the face value of policy benefit assets we own, discounted at a rate equal to the weighted-average cost of capital for all our indebtedness for the prior month.

Importantly, we are not restricted from entering into “qualified sale and financing transactions” as defined — in the indenture, or incurring additional indebtedness, including additional senior debt.

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Consolidation, Mergers or Sales

The indenture generally permits a consolidation or merger between us and another entity. It also permits the sale or transfer by us of all or substantially all of our property and assets. These transactions are permitted if:

•         the resulting or acquiring entity, if other than us, is a United States corporation, limited liability company or limited partnership and assumes all of our responsibilities and liabilities under the indenture, including the payment of all amounts due on the notes and performance of the covenants in the indenture; and

•         immediately after the transaction, and after giving effect to the transaction, no event of default shall exist under the indenture.

If we consolidate or merge with or into any other entity or sell or lease all or substantially all of our assets, according to the terms and conditions of the indenture, the resulting or acquiring entity will be substituted for us in the indenture with the same effect as if it had been an original party to the indenture. As a result, the successor entity may exercise our rights and powers under the indenture in our name, and we (as an entity) will be released from all our liabilities and obligations under the indenture and under the L Bonds. Nevertheless, no such transaction will by itself eliminate or modify the collateral that we have provided as security for our obligations under the indenture.

Events of Default and Remedies

The indenture provides that each of the following constitutes an event of default:

•         the failure to pay interest or principal on any L Bond for a period of 30 days after it becomes due and payable;

•         a failure to observe or perform any material covenant, condition or agreement in the indenture, but only after notice of failure from the indenture trustee and such failure is not cured within 60 days;

•         our debt coverage ratio exceeds 90% for a period of 30 consecutive calendar days, but only after notice of such breach from the indenture trustee and such breach is not cured within 60 days;

•         certain events of bankruptcy, insolvency or reorganization with respect to us; or

•         the cessation of our business.

In addition, a default under the indenture will create a default under our senior credit facility.

Through DLP IV, we are party to a $172.3 million senior credit facility with LNV Corporation (referred to in this prospectus as LNV), as the lender. The facility is governed by a Loan and Security Agreement, and CLMG Corp (referred to in this prospectus as CLMG) acts as the administrative agent for the lender under the Loan and Security Agreement. The Loan and Security Agreement makes available a total of up to $172.3 million in credit to DLP IV with a maturity date of September 14, 2026. Interest will accrue on amounts borrowed under the agreement at an annual interest rate, determined as of each date of borrowing, equal to (A) the greater of LIBOR or the federal funds rate (as defined in the agreement) plus one-half of one percent per annum, plus (B) 5.75% per annum. As of June 30, 2017, approximately $155.6 million was outstanding under the line of credit. We may use proceeds of the line of credit to repay short-term debt and acquire additional life insurance assets.

Under the Loan and Security Agreement, DLP IV has granted the administrative agent, for the benefit of the lenders under the agreement, a security interest in all of its assets. As with prior collateral arrangements relating to the senior secured debt of GWG Holdings and its subsidiaries (on a consolidated basis), GWG Holdings’ equity ownership in DLP IV will serve as collateral for the obligations of GWG Holdings under its L Bonds (although the life insurance assets owned by DLP IV will not themselves serve directly as collateral for those obligations). The Loan and Security Agreement, among other things, requires the DLP IV to maintain a reserve account to pay anticipated servicing fees for maintaining DLP IV’s pledged policies, debt service and reasonable administrative and third-party expenses identified under the agreement for 12 months. As of June 30, 2017, the reserve account was approximately $27.5 million.

In addition, the Loan and Security Agreement contains certain customary negative covenants restricting the ability of the borrower to directly or indirectly engage in a merger or exchange transaction, sell substantially all of its

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assets, or permit the amendment of the contracts governing the outstanding debt securities of GWG Holdings and its subsidiaries, without the prior consent of the lender.

The Loan and Security Agreement contains customary events of default (e.g., payment defaults, covenant defaults, cross-defaults, defaults arising by virtue of a change in control, and defaults arising from breaches of representations and warranties), as well as defaults for amendments to the organizational documents of the borrower, defaults from pledged policies falling out of good standing, the occurrence of an event that could terminate the arrangement by which GWG Life services the pledged life insurance policies, and the entry of a judgment against the borrower in an amount exceeding $50,000 without payment or discharge, or a stay of execution obtained, within 30 days thereafter.

The indenture requires that we give immediate notice to the indenture trustee upon the occurrence of an event of default under the indenture, unless it has been cured or waived. The indenture trustee may then provide notice to the L Bond holders or withhold the notice if the indenture trustee determines in good faith that withholding the notice is in your best interest, unless the default is a failure to pay principal or interest on any L Bond.

If an event of default occurs, the indenture trustee or the holders of at least 25% in principal amount of the outstanding L Bonds, may by written notice to us declare the unpaid principal and all accrued but unpaid interest on the L Bonds to be immediately due and payable. Notwithstanding the foregoing, the indenture limits the ability of the L Bond holders to enforce certain rights under the indenture in certain circumstances. These limitations are required subordination provisions under our senior credit facility and are summarized above under “— Subordination; Other Indebtedness.” The Pledge and Security Agreement permits the trustee to exercise on behalf of the holders of L Bonds all rights and remedies as are available to a secured creditor under applicable law, subject to any limitations therein or in the indenture. In this regard, the trustee is not authorized under the Pledge and Security Agreement to distribute in kind any collateral in its possession to the holders of L Bonds.

Amendment, Supplement and Waiver

Except as provided in this prospectus or the indenture, the terms of the indenture or the L Bonds then outstanding may be amended, supplemented or waived with the consent of the holders of at least a majority in principal amount of the L Bonds then outstanding (which consent will be presumed if a holder does not object within 30 days of a request for consent), and any existing default or compliance with any provision of the indenture or the L Bonds may be waived with the affirmative consent of the holders of a majority in principal amount of the then outstanding L Bonds.

Notwithstanding the foregoing, an amendment or waiver will not be effective with respect to the L Bonds held by a holder who him, her or itself has not consented if such amendment or waiver:

•         reduces the principal of, or changes the fixed maturity of, any L Bond;

•         reduces the rate of or changes the time for payment of interest, including default interest, on any L Bond;

•         waives a default or event of default in the payment of principal or interest on the L Bonds, except for a rescission or withdrawal of acceleration of the L Bonds made by the holders of at least a majority in aggregate principal amount of the then-outstanding L Bonds and a waiver of the payment default that resulted from such acceleration;

•         makes any change in the provisions of the indenture relating to waivers of past defaults or the rights of holders of L Bonds to receive payments of principal of or interest on the L Bonds; or

•         makes any change to the subordination provisions of the indenture that has a material adverse effect on holders of L Bonds.

Notwithstanding the foregoing, the following kinds of amendments or supplements to the indenture may be effected by us and the trustee without any consent of any holder of the L Bonds:

•         to cure any ambiguity, defect or inconsistency;

•         to provide for assumption of our obligations to holders of the L Bonds in the case of a merger, consolidation or sale of all or substantially all of our assets;

•         to provide for additional uncertificated or certificated L Bonds;

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•         to make any change that does not materially and adversely affect the legal rights under the indenture of any holder of L Bonds, including but not limited to an increase in the aggregate dollar amount of L Bonds which may be outstanding under the indenture and limited in amount thereunder;

•         to modify or eliminate our policy regarding redemptions elected by a holder of L Bonds prior to maturity, including our obligation to redeem L Bonds upon the death, bankruptcy or total permanent disability of any holder of the L Bonds, but only so long as such modifications do not materially and adversely affect any then-existing obligations under pending repurchase commitments for L Bonds;

•         to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, or to comply with other applicable federal or state laws or regulations;

•         to comply with the rules or policies of a depositary of the L Bonds; or

•         in connection with an amendment, extension, replacement, renewal or substitution of any senior debt, to amend the subordination provisions of the indenture to conform to the reasonable requirements of the holder or holders of such senior debt.

Rights of L Bond Holders

As an L Bond holder, you have limited rights to vote on our actions as set forth in the indenture. In general, you will have the right to vote on whether or not to approve some amendments to the indenture. For a description of these rights, see “— Amendment, Supplement and Waiver” above. You will also have the right to direct some actions that the trustee takes if there is an event of default with respect to the L Bonds. For a description of these rights, see above under the caption “— Events of Default.” For a complete description of your rights as an L Bond holder, we encourage you to read a copy of the indenture, which is filed as an exhibit to the registration statement of which this prospectus is a part. We will also provide you with a copy of the indenture upon your request.

The trustee and the L Bond holders will have the right to direct the time, method and place of conducting any proceeding for some of the remedies available, except as otherwise provided in the indenture. The trustee may require reasonable indemnity, satisfactory to the trustee, from L Bond holders before acting at their direction. You will not have any right to pursue any remedy with respect to the indenture or the L Bonds unless you satisfy the conditions contained in the indenture.

The Indenture Trustee

General

Bank of Utah has agreed to be the trustee under the indenture. The indenture contains certain limitations on the rights of the trustee, should it become one of our creditors, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any claim as security or otherwise. The trustee will be permitted to engage in other transactions with us.

Subject to certain exceptions, the holders of a majority in principal amount of the then-outstanding L Bonds will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. The indenture provides that if an event of default specified in the indenture shall occur and not be cured, the trustee will be required, in the exercise of its power, to use the degree of care of a reasonable person in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of L Bonds, unless the holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Resignation or Removal of the Trustee

The trustee may resign at any time, or may be removed by the holders of a majority of the aggregate principal amount of the outstanding L Bonds. In addition, we may remove the trustee for certain failures in its duties, including the insolvency of the trustee or the trustee’s ineligibility to serve as trustee under the Trust Indenture Act of 1939. However, no resignation or removal of the trustee may become effective until a successor trustee has accepted the appointment as provided in the indenture.

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Reports to Trustee

We will provide the trustee with (i) a calculation date report by the 15th day of each month containing a calculation of the debt coverage ratio that includes a summary of all cash, life insurance policy investments serving as collateral, as well as our total outstanding indebtedness including outstanding principal balances, interest credited and paid, transfers made, any redemption or repayment and interest rate paid; (ii) copies of our audited annual financials, no earlier than when the same become a matter of public record; and (iii) any additional information reasonably requested by the trustee.

Certain Charges

We and our servicing agents, if any, may assess service charges for changing the registration of any L Bond to reflect a change in name of the holder, multiple changes in interest payment dates or transfers (whether by operation of law or otherwise) of an L Bond by the holder to another person. The indenture permits us to set off, against amounts otherwise payable to you under the L Bonds, the amount of these charges.

Variations in Terms and Conditions

We may from time to time vary the terms and conditions of the L Bonds offered, including but not limited to minimum initial principal investment amount requirements, maximum aggregate principal amount limits, interest rates, minimum denominations, service and other fees and charges, and redemption provisions. Terms and conditions may be varied by state, locality, principal amount, type of investor (for example, new or current investor) or as otherwise permitted under the indenture governing the securities offered by this prospectus. No change in terms, however, will apply to any L Bonds already issued and outstanding at the time of such change.

Satisfaction and Discharge of Indenture

The indenture shall cease to be of further effect upon the payment in full of all of the outstanding L Bonds and the delivery of an officer’s certificate to the trustee stating that we do not intend to issue additional L Bonds under the indenture or, with certain limitations, upon deposit with the trustee of funds sufficient for the payment in full of all of the outstanding L Bonds.

Reports

We will publish annual reports containing financial statements and quarterly reports containing financial information for the first three quarters of each fiscal year. We will send copies of these reports, at no charge, to any holder of L Bonds who sends us a written request.

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PLAN OF DISTRIBUTION

General

We are offering up to 1,000,000 Units, representing $1,000,000,000 in aggregate principal amount, of L Bonds (referred to throughout this prospectus simply as “L Bonds”) on a continuous basis. The L Bonds will be sold at $1,000 per Unit, and in minimum amounts of 25 Units, or $25,000 or more in principal. There is no minimum amount of L Bonds that must be sold before we access and use the proceeds. The proceeds of new sales of L Bonds will be paid directly to us promptly following each sale and will not be placed in an escrow account. Even if we sell less than the entire $1,000,000,000 in aggregate principal amount of L Bonds Units being offered, the L Bonds that we sell will be issued, and the proceeds of those L Bond sales will be used by us, as described in this prospectus.

The L Bonds will be offered and sold on a best efforts basis by Emerson Equity LLC (our “dealer manager”). Our dealer manager will enter into participating dealer agreements with certain other broker-dealers that are members of FINRA, referred to as “selling group members,” to authorize those broker-dealers to sell our L Bonds. The L Bonds will be offered to the public on the terms set forth in this prospectus and any prospectus supplements we may file from time to time. Neither our dealer manager nor any selling group members will have any obligation to take or purchase any L Bonds. In addition to forming the selling group, our dealer manager provides services to us, which include conducting broker-dealer seminars, holding informational meetings and providing information and answering any questions investors or selling group members may have concerning this offering.

Members of the selling group will receive sales commissions of up to 5.00% of the gross offering proceeds depending upon the maturity of the L Bonds sold. In addition, our dealer manager and selling group members may receive up to 3.00% of the gross offering proceeds as additional compensation consisting of the following:

•         a dealer-manager fee payable to the dealer manager in an amount equal to 0.50% of the principal amount of all L Bonds sold;

•         an accountable expense allowance to be paid to the selling group members, which may include due diligence expenses of the dealer manager and selling group members set forth in a detailed and itemized invoice and as further described below;

•         wholesaling fees, which may consist of commissions and non-transaction-based compensation of the wholesalers;

•         non-cash compensation, which may consist of an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment that is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target, the national and regional sales conferences of our selling group members, training and education meetings for registered representatives of our selling group members, and permissible forms of non-cash compensation to registered representatives of our selling group members, such as gifts that do not exceed an aggregate value of $100 per annum per registered representative and that are not pre-conditioned on achievement of a sales target, including but not limited to seasonal gifts; and

•         up to a 1.00% reallowance to selling group members.

As part of the accountable expense allowance, the dealer manager and selling group members are expected to be reimbursed for accountable out-of-pocket expenses incurred by them during the course of the offering. Expenses eligible for reimbursement may include:

•         travel, lodging, and meals for the wholesalers who are our employees and associated with the dealer manager;

•         reasonable out-of-pocket expenses incurred by selling group members and their associated persons, including reimbursement of actual costs of third-party professionals retained by them; and

•         due diligence expenses of the dealer manager and selling group members set forth in a detailed and itemized invoice.

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Upon the sale of L Bonds by a selling group member, the selling group member effecting the sale will receive selling commissions and additional compensation in connection therewith pursuant to the terms of the soliciting dealer agreement between the dealer manager and the selling group member.

In no event will the total selling commissions and additional compensation, including accountable due diligence expenses and reimbursements, exceed 8.00% of the aggregate gross offering proceeds we receive from the sale of L Bonds.

We may also sell our L Bonds at a discount through the following distribution channels in the event that the investor:

•         purchases L Bonds through fee-based programs, also known as wrap accounts;

•         purchases L Bonds through a selling group member that has an alternative fee arrangement with its clients;

•         purchases L Bonds through certain registered investment advisers;

•         purchases L Bonds through bank trust departments or any other organization or person authorized to act in a fiduciary capacity for its clients or customers; or

•         is an endowment, foundation, pension fund or other institutional investor.

If an investor purchases shares through one of the above distribution channels in our offering, we will sell the L Bonds at a discount, reflecting that selling commissions are not being paid in connection with such purchase. The net proceeds to us will not be affected by any such reduction in selling commissions. Such reduction in the selling price will be credited to the purchaser in the form of additional L Bonds.

Our officers and directors and their family members may purchase the L Bonds offered hereby for investment and not for distribution at a discount from the public offering price. For purposes of this discount, we consider a family member to be a spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law. In addition, if approved by our Board of Directors, certain of our joint venture partners, consultants and other service providers may purchase the L Bonds offered hereby at a discount from the public offering price. We will sell such L Bonds reflecting that selling commissions will not be paid in connection with such sales. Such reduction would be credited in the form of the issuance of additional L Bonds. The net proceeds to us from such sales made net of commissions will be the same as the net proceeds we receive from other sales of L Bonds.

Also, we may sell L Bonds to the dealer manager, selling group members, their retirement plans, their representatives and the family members as described above, IRAs and qualified plans of their representatives at a purchase price reflecting that selling commissions will not be payable in consideration of the services rendered by such dealer manager, selling group members, and their representatives in the offering. Such sales, however, may not be made for the period of time from the effective date through 90 days after the effective date. The reduction would be credited in the form of the issuance of additional L Bonds. The net proceeds to us from the sales of these L Bonds will be the same as the net proceeds we receive from other sales of L Bonds.

Neither our dealer manager nor its affiliates will directly or indirectly compensate any person engaged as an investment advisor or a bank trust department by a potential investor as an inducement for such investment advisor or bank trust department to advise favorably for an investment in the L Bonds offered hereby. Also, we will not pay referral or similar fees to any accountants, attorneys or other persons in connection with the distribution of the L Bonds.

In addition to the sales commissions, fees, allowances, reimbursements and expenses described above, we expect to pay approximately $1,500,500 in offering and related costs and expenses in connection with this offering. These kinds of expenses include all expenses to be paid by us in connection with the offering (other than sales commissions, additional compensation, and expense allowances and reimbursement to our selling group members), including but not limited to legal, accounting, printing and mailing expenses, registration, qualification and associated securities filing fees and other costs and expenses.

The table below sets forth the maximum amount of sales commissions and additional compensation, as described in footnote (1) to the table below, we may pay in connection with this offering.

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L Bond Term		Sales Commission			Additional Compensation(1)			Total(2)
2 years		3.25	%		4.75	%		8.00	%
3 years		4.25	%		3.75	%		8.00	%
5 years		4.90	%		3.10	%		8.00	%
7 years		5.00	%		3.00	%		8.00	%

____________

(1)      As described above, additional compensation includes: (i) a dealer-manager fee payable to the dealer manager in an amount equal to 0.50% of the principal amount of all L Bonds sold; (ii) an accountable expense allowance to the selling group members as described above, which may include due-diligence expenses of the dealer manager and selling group members set forth in a detailed and itemized invoice; (iii) wholesaling fees, which may consist of commissions and non-transaction-based compensation of the wholesalers, (iv) non-cash compensation, which may consist of an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment that is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target, the national and regional sales conferences of our selling group members, training and education meetings for registered representatives of our selling group members, and permissible forms of non-cash compensation to registered representatives of our selling group members, such as gifts that do not exceed an aggregate value of $100 per annum per registered representative and that are not pre-conditioned on achievement of a sales target, including but not limited to seasonal gifts; and (v) up to a 1.00% reallowance to selling group members.

(2)      The combined selling commissions and additional compensation for this offering will not exceed 8.00% of the aggregate gross proceeds of this offering.

The line items reflected in the table below are our current estimates of average sales commissions and additional compensation (including accountable expenses) that we will pay. Specifically, we estimate that the average sales commission will be 5.00%, or $50,000,000 based on $1,000,000,000 in principal amount of L Bonds sold, and the average additional compensation will be 3.00%, or $30,000,000 based on $1,000,000,000 in principal amount of L Bonds sold. The components of “additional compensation” are detailed in footnote (1) to the table above. Actual costs may differ from the percentages and amounts shown in the table below, subject, however, to the limitations noted above.

L Bonds Sold		Sales Commission			Additional Compensation			Total
$500,000,000		$	25,000,000		$	15,000,000		8.00	%
$750,000,000		$	37,500,000		$	22,500,000		8.00	%
$1,000,000,000		$	50,000,000		$	30,000,000		8.00	%

The wholesalers employed by us are registered with and associated persons of our dealer manager. The wholesalers will:

•         attend local, regional and national conferences of the selling group members; and

•         contact selling group members and their registered representatives to make presentations concerning us and this offering.

The wholesalers will receive a portion of their non-transaction based compensation as compensation for their selling efforts. We host training and education meetings for selling group members and their representatives. The costs of the training and education meetings will be borne by us, but counted toward the 8.00% underwriting compensation limit.

Certain of our employees who are also registered representatives and supervisory principals of the dealer manager have been granted certain share appreciation rights (“SARs”) as part of their compensation. The SARs give such individual the contractual right to receive from us additional cash compensation at any point before the SAR’s expiration, but only if the price of our common stock has increased between the grant date and the date when we receive notice of such individual’s intention to exercise the SAR. At the termination of this offering, the aggregate of the appreciation amount, as defined in the SAR agreement, will be calculated and added to the other items of value (e.g., selling commissions and additional forms of compensation) to ensure that aggregate compensation paid in connection with this offering does not exceed 8.00% of the gross offering proceeds.

In accordance with FINRA rules, in no event will our total compensation to FINRA members, including but not limited to sales commissions, the dealer-manager fee and accountable expense and other reimbursements to our

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dealer manager and selling group members, including non-transaction-based compensation of the wholesalers and non-cash compensation, exceed 8.00% of our gross offering proceeds, in the aggregate.

We will indemnify the selling group members and our dealer manager against some civil liabilities, including certain liabilities under the Securities Act of 1933 and liabilities arising from breaches of our representations and warranties contained in the Dealer Manager Agreement.

The foregoing is a summary of the material terms relating to the plan of distribution of the L Bonds contained in the Dealer Manager Agreement. Any amendment to the Dealer Manager Agreement will be filed as an exhibit to an amendment to the registration statement of which this prospectus is a part.

Settlement Procedures

You can place an order for the purchase of L Bonds using DTC Settlement through your selling group member. A selling group member using DTC settlement will have an account with a DTC participant in which your funds will be placed to facilitate settlement. Orders may be placed until the cyclical order due date. Orders will be executed by such selling group member electronically and you must coordinate with your selling group member’s registered representative to pay the full purchase price of the L Bonds by the trade date. If you purchase your L Bonds using DTC settlement, you will be credited with ownership of an L Bond on the second business day after the end of the DTC closing cycle in which the subscription is made (typically, closings will occur on a bi-monthly cycle). If you purchase your L Bonds in this manner, your purchase price will not be held in escrow.

You also have the option to elect to settle your purchase directly with us, the Company. If you elect to use direct settlement with us, you should complete and sign a Subscription Agreement similar to the one filed as an exhibit to the registration statement of which this prospectus is a part. A form of Subscription Agreement is available from your selling group member’s registered representative. Once completed and signed, your Subscription Agreement should be provided to your selling group member who will deliver it to us to be held, together with your related subscription funds, until our acceptance of your subscription. In connection with a direct settlement subscription, you should pay the full purchase price of the L Bonds to us as set forth in the Subscription Agreement. Subscribers may not withdraw funds from the subscription account. Subscriptions will be effective upon our acceptance of your Subscription Agreement and related funds, and we reserve the right to reject any subscription in whole or in part.

Covered Security

Our L Bonds are a “covered security.” The term “covered security” applies to securities exempt from state registration because of their oversight by federal authorities and national-level regulatory bodies pursuant to Section 18 of the Securities Act of 1933. Generally, securities listed on national exchanges are the most common type of covered security exempt from state registration. A non-traded security also can be a covered security if it has a seniority greater than or equal to other securities from the same issuer that are listed on a national exchange. Our L Bonds are a covered security because they are senior to our common stock, which is listed on The Nasdaq Capital Market, and therefore our offering of L Bonds will be exempt from state registration.

Although the status of our L Bonds as a “covered security” will facilitate their purchase and sale to a broader range of investors than would otherwise be available to us, and although the offer and sale of a “covered security” generally involves fewer issuance costs to the issuer of such securities, our L Bonds are not a suitable purchase for all investors. In this regard, please carefully review the “Risk Factors” contained in this prospectus, as well as the disclosures on page 12 under the heading “Covered Security.”

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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of the material United States (“U.S.”) federal income tax considerations relating to the initial purchase, ownership and disposition of the L Bonds by U.S. and non-U.S. holders. This discussion is a summary only and is not a complete analysis of all the potential tax considerations relating to the purchase, ownership and disposition of the L Bonds. We have based this summary on current provisions of the Code of 1986, as amended (the “Code”), applicable U.S. Treasury Regulations promulgated thereunder, judicial opinions, and published rulings of the Internal Revenue Service (the “IRS”), all as in effect on the date of this prospectus. However, these laws and other guidance are subject to differing interpretations or change, possibly with retroactive effect. In addition, we have not sought, and will not seek, a ruling from the IRS or an opinion of counsel with respect to any tax consequences of purchasing, owning or disposing of L Bonds. Thus, the IRS could take a different position regarding one or more of the tax consequences or matters described in this prospectus; and there can be no assurance that any position taken by the IRS would not be sustained.

This discussion is limited to purchasers of L Bonds who acquire the L Bonds from us in this offering and hold the L Bonds as capital assets for federal income tax purposes. This discussion does not address all possible tax consequences that may be applicable to you in light of your specific circumstances. For instance, this discussion does not address the alternative minimum tax provisions of the Code, or special rules applicable to some categories of investors such as financial institutions, insurance companies, tax-exempt organizations, dealers in securities, real estate investment trusts, regulated investment companies, or persons who hold L Bonds as part of a hedge, conversion or constructive sale transaction, straddle or other risk reduction transaction that may be subject to special rules. This discussion also does not address the tax consequences arising under the laws of any foreign, state or local jurisdiction; or any U.S. estate or gift tax laws.

If you are considering the purchase of an L Bond, you should consult your own tax advisors as to the particular tax consequences to you of acquiring, holding or otherwise disposing of the L Bonds, including the effect and applicability of state, local or foreign tax laws, or any U.S. estate and gift tax laws.

As used in this discussion, the term “U.S. holder” means a holder of an L Bond that is:

(i)       for United States federal income tax purposes, a citizen or resident of the United States;

(ii)      a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof or other entity characterized as a corporation or partnership for federal income tax purposes;

(iii)     an estate, the income of which is subject to United States federal income taxation regardless of its source; or

(iv)     a trust, the administration of which is subject to the primary supervision of a court within the United States and which has one or more United States persons with authority to control all substantial decisions, or if the trust was in existence on August 20, 1996, and has elected to continue to be treated as a United States trust.

For the purposes of this discussion, a “non-U.S. holder” means any holder of L Bonds other than a U.S. holder. Any L Bond purchaser who is not a U.S. citizen will be required to furnish documentation, on IRS Form W-8BEN, that clearly states whether it is subject to U.S. withholding taxes, in accordance with applicable requirements of the United States taxing authority.

Characterization of the L Bonds

The federal income tax consequences of owning L Bonds depend on characterization of the L Bonds as debt for federal income tax purposes, rather than as equity interests or a partnership among the holders of the L Bonds. We believe that the L Bonds have been structured in a manner that will allow the L Bonds to be characterized as debt for federal income tax purposes. However, this is only our belief; and no ruling from the IRS or an opinion of counsel has been sought in this regard. Thus, the IRS could successfully challenge this characterization.

If the L Bonds were treated as equity interests, there could be adverse effects on some holders. For example, payments on the L Bonds could (1) if paid to non-U.S. holders, be subject to federal income tax withholding; (2) constitute unrelated business taxable income to some tax-exempt entities, including pension funds and some retirement accounts (if the relationship were characterized as a partnership for tax purposes); and (3) cause the timing and amount of income that accrues to holders of L Bonds to be different from that described below.

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Because of these potential adverse effects, you are urged to consult your own tax advisors as to the tax consequences that may apply to your particular situation in the event the L Bonds are re-characterized as equity interests; and as to the likelihood that the L Bonds could be so re-characterized. The remainder of this discussion assumes that the L Bonds are characterized as debt.

Taxation of U.S. Holders

Stated Interest

Under general federal income tax principles, you must include stated interest in income in accordance with the method of accounting you use for federal income tax purposes. Accordingly, if you are using the accrual method of tax accounting, you must include stated interest in income as it accrues. If you are using the cash method of tax accounting, you must include stated interest in income as it is actually or constructively received. Payments of interest to taxable holders of L Bonds will constitute portfolio income, and not passive activity income, for the purposes of the passive loss limitations of the Code. Accordingly, income arising from payments on the L Bonds will not be subject to reduction by losses from passive activities of a holder.

Income attributable to interest payments on the L Bonds may be offset by investment expense deductions, subject to the limitation that individual investors may only deduct miscellaneous itemized deductions, including investment expenses other than interest, to the extent these deductions exceed 2% of the investor’s adjusted gross income.

If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds L Bonds, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If you are a partner in a partnership purchasing L Bonds, we urge you to consult your tax advisor.

Disposition of L Bonds

In general, a U.S. holder will recognize gain or loss upon the sale, exchange or other taxable disposition of an L Bond measured by the difference between (1) the sum of the cash and the fair market value of all other property received on such disposition, excluding any portion of the payment that is attributable to accrued interest on the L Bonds; and (2) your adjusted tax basis in the L Bond. A U.S. holder’s adjusted tax basis in an L Bond generally will be equal to the price the U.S. holder paid for the L Bond. Any of this gain or loss generally will be long-term capital gain or loss if, at the time of any such taxable disposition, the L Bond was a capital asset in the hands of the holder and was held for more than one year. Net long-term capital gain recognized by individual U.S. holders is eligible for a reduced rate of taxation. The deductibility of capital losses is subject to annual limitations.

The terms of the L Bonds may be modified upon the consent of a specified percentage of holders and, in some cases, without consent of the holders. In addition, the L Bonds may be assumed upon the occurrence of specific transactions. The modification or assumption of an L Bond could, in some instances, give rise to a deemed exchange of an L Bond for a new debt instrument for federal income tax purposes. If an exchange is deemed to occur by reason of a modification or assumption, you could realize gain or loss without receiving any cash.

Additional Tax on Net Investment Income

If you are a U.S. holder other than a corporation, you generally will be subject to a 3.8% additional tax on the lesser of (1) your “net investment income” for the taxable year, and (2) the excess of your modified adjusted gross income for the taxable year over a certain threshold. Your net investment income generally will include any income or gain recognized by you with respect to our L Bonds, unless such income or gain is derived in the ordinary course of the conduct of your trade or business (other than a trade or business that consists of certain passive or trading activities).

Considerations for Tax-Exempt Holders of L Bonds

Tax-exempt entities, including charitable corporations, pension plans, profit sharing or stock bonus plans, individual retirement accounts and some other employee benefit plans are subject to federal income tax on unrelated business taxable income. For example, net income derived from the conduct of a trade or business regularly carried on by a tax-exempt entity or by a partnership in which it is a partner is treated as unrelated business taxable income.

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A $1,000 special deduction is allowed in determining the amount of unrelated business taxable income subject to tax. Tax-exempt entities taxed on their unrelated business taxable income are also subject to the alternative minimum tax for items of tax preference which enter into the computation of unrelated business taxable income.

In general, interest income does not constitute unrelated business taxable income. However, under the debt-financed property rules, if tax-exempt holders of L Bonds finance the acquisition or holding of L Bonds with debt, interest on the L Bonds will be taxable as unrelated business taxable income. The L Bonds will be treated as debt-financed property if the debt was incurred to acquire the L Bonds or was incurred after the acquisition of the L Bonds, so long as the debt would not have been incurred but for the acquisition and, at the time of the acquisition, the incurrence of the debt has already occurred or was foreseeable.

Non-U.S. Holders

The following discussion is a summary of the principal U.S. federal income consequences resulting from the ownership of the L Bonds by non-U.S. holders. However, application of the U.S. federal income tax rules associated with non-U.S. holders is complex and factually sensitive. Thus, if you could be considered to be a non-U.S. holder, you are urged to consult your own tax advisors with respect to the application of the federal income tax rules for your particular situation.

Payments of Interest to Non-U.S. Holders

Subject to the discussion below under “Backup Withholding and Information Reporting,” payments of interest received by a non-U.S. holder generally will not be subject to U.S. federal withholding tax, provided (1) that (a) the non-U.S. holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock entitled to vote; (b) the non-U.S. holder is not a controlled foreign corporation, actually or constructively, through stock ownership; and (c) the beneficial owner of the L Bond complies with the certification requirements, including delivery of a statement, signed by the holder under penalties of perjury, certifying that the holder is a foreign person and provides its name and address; or (2) that the non-U.S. holder is entitled to the benefits of an income tax treaty under which the interest is exempt from U.S. withholding tax and the non-U.S. holder complies with the reporting requirements. If an L Bond is held through a securities clearing organization or other specified financial institutions (an “Intermediary”), the Intermediary may provide the relevant signed statement and, unless the Intermediary is a “qualified” intermediary as defined under the Code, the signed statement provided by the Intermediary must be accompanied by a copy of a valid Form W-8BEN provided by the non-U.S. beneficial holder of the L Bond.

Payments of interest not exempt from United States federal withholding tax as described above will be subject to a withholding tax at the rate of 30%, subject to reduction under an applicable income tax treaty.

Payments of interest on an L Bond to a non-U.S. holder generally will not be subject to U.S. federal income tax, as opposed to withholding tax, unless the income is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States. To claim the benefit of a lower treaty withholding rate, a non-U.S. holder must provide a properly executed IRS Form W-8BEN to us or our paying agent before the payment of stated interest; and may be required to obtain a U.S. taxpayer identification number and provide documentary evidence issued by foreign governmental authorities to prove residence in the foreign country. You should consult your own tax advisor to determine the effects of the application of the U.S. federal withholding tax to your particular situation.

Disposition of the L Bonds by Non-U.S. Holders

Subject to the discussion below under “Backup Withholding and Information Reporting,” a non-U.S. holder generally will not be subject to United States federal income tax, and generally no tax will be withheld with respect to gains realized on the disposition of an L Bond, unless (a) the gain is effectively connected with a United States trade or business conducted by the non-U.S. holder or (b) the non-U.S. holder is an individual who is present in the United States for 183 or more days during the taxable year of the disposition and other requirements are satisfied.

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Non-U.S. Holders Subject to U.S. Income Taxation

If interest and other payments received by a non-U.S. holder with respect to the L Bonds, including proceeds from the disposition of the L Bonds, are effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States, or the non-U.S. holder is otherwise subject to United States federal income taxation on a net basis with respect to the holder’s ownership of the L Bonds, or are individuals that have by operation of law become residents in the United States for federal income tax purposes, the non-U.S. holder generally will be subject to the rules described above applicable to U.S. holders of L Bonds, subject to any modification provided under an applicable income tax treaty. If any of these non-U.S. holders is a corporation, it may also be subject to a U.S. “branch profits tax” at a 30% rate.

Backup Withholding and Information Reporting

Non-corporate U.S. holders may be subject to backup withholding at a rate of 28% on payments of principal, premium, and interest on, and the proceeds of the disposition of, the L Bonds. In general, backup withholding will be imposed only if the U.S. holder (1) fails to furnish its taxpayer identification number (“TIN”), which for an individual would be his or her Social Security number; (2) furnishes an incorrect TIN; (3) is notified by the IRS that it has failed to report payments of interest or dividends; or (4) under some circumstances, fails to certify under penalty of perjury that it has furnished a correct TIN and has been notified by the IRS that it is subject to backup withholding tax for failure to report interest or dividend payments. In addition, the payments of principal and interest to U.S. holders generally will be subject to information reporting. You should consult your tax advisors regarding your qualification for exemption from backup withholding and the procedure for obtaining an exemption, if applicable.

Backup withholding generally will not apply to payments made to a non-U.S. holder of an L Bond who provides the certification that it is a non-U.S. holder, and the payor does not have actual knowledge that a certificate is false, or otherwise establishes an exemption from backup withholding. Payments by United States office of a broker of the proceeds of a disposition of the L Bonds generally will be subject to backup withholding at a rate of 28% unless the non-U.S. holder certifies it is a non-U.S. holder under penalties of perjury or otherwise establishes an exemption. In addition, if a foreign office of a foreign custodian, foreign nominee or other foreign agent of the beneficial owner, or if a foreign office of a foreign “broker” pays the proceeds of the sale of an L Bond to the seller, backup withholding and information reporting will not apply; provided that the nominee, custodian, agent or broker is not a “United States related person,” or a person which derives more than 50% of its gross income for some periods from the conduct of a trade or business in the United States or is a controlled foreign corporation. The payment by a foreign office of a broker that is a United States person or a United States related person of the proceeds of the sale of L Bonds will not be subject to backup withholding, but will be subject to information reporting unless the broker has documentary evidence in its records that the beneficial owner is not a United States person for purposes of the backup withholding and information reporting requirements and other conditions are met, or the beneficial owner otherwise establishes an exemption.

The amount of any backup withholding imposed on a payment to a holder of an L Bond will be allowed as a credit against the holder’s United States federal income tax liability and may entitle the holder to a refund; provided that the required information is furnished to the IRS.

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STATE, LOCAL AND FOREIGN TAXES

We make no representations regarding the tax consequences of the purchase, ownership or disposition of the L Bonds under the tax laws of any state, locality or foreign country. You should consult your own tax advisors regarding these state and foreign tax consequences.

ERISA CONSIDERATIONS

General

Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and Section 4975 of the Code impose restrictions on employee benefit plans that are subject to ERISA, or plans or arrangements that are subject to Code Section 4975, and on persons who are parties in interest or disqualified persons with respect to those plans or arrangements. Some employee benefit plans, like governmental plans and church plans (if no election has been made under Section 410(d) of the Code), are not subject to the restrictions of Title I of ERISA or Code Section 4975, and assets of these plans may be invested in the L Bonds without regard to the ERISA considerations described below, subject to the Code and other applicable federal and state laws affecting tax-exempt organizations generally. Any plan fiduciary that proposes to cause a plan to acquire any of the L Bonds should consult with its counsel with respect to the potential consequences under ERISA and the Code of the plan’s acquisition and ownership of the L Bonds. Investments by plans are also subject to ERISA’s and the Code’s general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that a plan’s investments be made in accordance with the documents governing the plan.

Prohibited Transactions

General

Section 406 of ERISA and Section 4975 of the Code prohibits certain “parties in interest” and “disqualified persons” with respect to a plan from engaging in select transactions involving a plan and its assets unless a statutory, regulatory or administrative exemption applies to the transaction. Section 4975 of the Code imposes excise taxes on parties in interest that engage in non-exempt “prohibited transactions.” Section 502(i) of ERISA requires the Secretary of the U.S. Department of Labor (“Labor”) to assess a civil penalty against a fiduciary who breaches any fiduciary responsibility under, or commits any other violation of, part 4 of Title I of ERISA, or any other person who knowingly participates in a breach or violation.

Plan Asset Regulations

Labor has issued regulations concerning the definition of what constitutes the assets of a plan for purposes of ERISA and the prohibited transaction provisions of the Code. The plan asset regulations describe the circumstances where the assets of an entity in which a plan invests will be considered to be “plan assets,” so that any person who exercises control over the assets would be subject to ERISA’s fiduciary standards. Generally, under the plan asset regulation, when a plan invests in another entity, the plan’s assets do not include, solely by reason of the investment, any of the underlying assets of the entity. However, the plan asset regulation provides that, if a plan acquires an “equity interest” in an entity that is neither a “publicly-offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940 the assets of the entity will be treated as assets of the plan investor unless exceptions apply.

Under the plan asset regulations the term “equity interest” is defined as any interest in an entity other than an instrument that is treated as indebtedness under “applicable local law” and that has no “substantial equity features.” Although the plan asset regulation is silent with respect to the question of which law constitutes “applicable local law” for this purpose, Labor has stated that these determinations should be made under the state law governing interpretation of the instrument in question. In the preamble to the plan asset regulation, Labor declined to provide a precise definition of what features are equity features or the circumstances under which the features would be considered “substantial,” noting that the question of whether a plan’s interest has substantial equity features is an inherently factual one, but that in making that determination it would be appropriate to take into account whether the equity features are such that a plan’s investment would be a practical vehicle for the indirect provision of investment management services. We believe that the L Bonds will be classified as indebtedness without substantial equity features for ERISA purposes.

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Under the plan asset regulations the term “publicly-offered security” is defined as a security that is (i) freely transferable, (ii) part of a class of securities that is widely held, and (iii) either (A) part of a class of securities registered under section 12(b) or 12(g) of the Securities Exchange Act of 1934 or (B) sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act of 1933 and the class of securities of which such security is a part is registered under the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. For purposes of the above, a class of securities is considered to be “widely held” if it is owned by 100 or more investors independent of the issuer and of one another. In the case of this offering, while the offer and sale of the L Bonds have been registered under the Securities Act of 1933, the L Bonds themselves have not been registered under the Securities Exchange Act of 1934. For this reason, we believe that the L Bonds will not likely meet the definition for “publicly-offered security” under the plan asset regulations.

In light of the foregoing, if the L Bonds were deemed to be equity interests for this purpose and no statutory, regulatory, or administrative exception applies, we could be considered to hold plan assets by reason of a plan’s investment in the L Bonds. These plan assets would include an undivided interest in all of our assets. In this case, we may be considered a fiduciary with respect to the investing plans. We would be subject to the fiduciary responsibility provisions of Title I of ERISA, including the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code, and to Section 4975 of the Code with respect to transactions involving any of our assets. The ERISA fiduciary standards could affect the way we conduct the business, which would have consequences for all investors, not just those that are employee benefit plans.

Depending on the relevant facts and circumstances, prohibited transaction exemptions may apply to the purchase or holding of the L Bonds. See, for example, Prohibited Transaction Class Exemption (“PTE”) 96-23, which exempts some transactions effected on behalf of a plan or by an “in-house asset manager;” PTE 95-60, which exempts some transactions between insurance company general accounts and parties in interest; PTE 91-38, which exempts some transactions between bank collective investment funds and parties in interest; PTE 90-1, which exempts some transactions between insurance company pooled separate accounts and parties in interest; or PTE 84-14, which exempts some transactions effected on behalf of a plan by a “qualified professional asset manager.” However, there can be no assurance that any of these exemptions will apply with respect to any plan’s investment in the L Bonds, or that the exemption, if it did apply, would apply to all prohibited transactions that may occur in connection with the investment.

Any plan fiduciary considering whether to purchase L Bonds on behalf of a plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code. Before purchasing any L Bonds, a fiduciary of a plan should make its own determination as to (1) whether GWG Holdings, as issuer of and borrower under the L Bonds, is a “party in interest” under ERISA or a “disqualified person” under the Code with respect to the plan; (2) the availability of the relief provided in the plan asset regulation and (3) the availability of any other prohibited transaction exemptions. In addition, purchasers that are insurance companies should consult their own ERISA counsel with respect to their fiduciary responsibilities associated with their purchase and ownership of the L Bonds, including any responsibility under the Supreme Court case John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank.

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LEGAL MATTERS

Certain legal matters in connection with the L Bonds will be passed upon for us by Maslon LLP, of Minneapolis, Minnesota.

EXPERTS

The consolidated financial statements of GWG Holdings, Inc. and its subsidiaries as of and for the years ended December 31, 2016 and December 31, 2015, included in this prospectus and in the registration statement of which this prospectus is a part, have been audited by Baker Tilly Virchow Krause, LLP, an independent registered public accounting firm. As indicated in their report with respect thereto, these consolidated financial statements are included in this prospectus in reliance upon the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the L Bonds to be offered and sold pursuant to the prospectus which is a part of that registration statement. This prospectus does not contain all the information contained in the registration statement. For further information with respect to us and the L Bonds to be sold in this offering, we refer you to the registration statement, including the agreements, other documents and schedules filed as exhibits to the registration statement.

We file annual, quarterly and current reports, and other information with the SEC. We intend to make these filings available on our website at www.gwgh.com. Information on our website is not incorporated by reference in this prospectus. We maintain an office at 220 South Sixth Street, Suite 1200, Minneapolis, MN 55402 where all records concerning the L Bonds are to be retained. L Bond holders and their representatives can request information regarding the L Bonds by contacting our office by mail at our address or by telephone at (612) 746-1944 or by fax at (612) 746-0445. Upon request, we will provide copies of our filings with the SEC free of charge to our investors. Our SEC filings, including the registration statement of which this prospectus is a part, will also be available on the SEC’s Internet site at http://www.sec.gov. You may read and copy all or any portion of the registration statement or any reports, statements or other information we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. In addition, you may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You may receive copies of these documents upon payment of a duplicating fee by writing to the SEC.

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

We are incorporating certain information about us that we have filed with the SEC by reference in this prospectus, which means that we are disclosing important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus.

We incorporate by reference the documents listed below and any future filings we will make with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement of which this prospectus is a part and prior to effectiveness of such registration statement, and (ii) from the date of this prospectus but prior to the termination of the offering of the securities covered by this prospectus:

•         Our Annual Report on Form 10-K for the period ended December 31, 2016, filed with the SEC on March 15, 2017 (including all exhibits thereto);

•         Our Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and June 30, 2017, filed with the SEC on May 12, 2017 and August 10, 2017, respectively (including all exhibits thereto);

•         Our Current Reports on Form 8-K filed with the SEC on February 9, February 22, March 8, April 3, April 19, May 10, June 30, and August 10, 2017 (including all exhibits thereto); and

•         Our definitive proxy statement filed with the SEC on March 30, 2017 (including all exhibits thereto).

We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed above or filed in the future, that are not deemed “filed” with the SEC or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or certain exhibits furnished pursuant to Item 9.01 of Form 8-K.

The section entitled “Where You Can Find More Information” above describes how you can obtain or access any documents or information that we have incorporated by reference herein. The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

Upon written or oral request, we will provide, free of charge, to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the reports or documents that are incorporated by reference into this prospectus. Such written or oral requests should be made to:

William Acheson, Chief Financial Officer

220 South Sixth Street, Suite 1200

Minneapolis, MN 55402

Telephone Number: (612) 746-1944

In addition, such reports and documents may be found on our website at www.gwgh.com.

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GWG HOLDINGS, INC.

FINANCIAL STATEMENTS

Table of Contents

		Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets at December 31, 2016 and 2015		F-3
Consolidated Statements of Operations for the years ended December 31, 2016 and 2015		F-4
Consolidated Statements of Changes in Equity for the years ended December 31, 2016 and 2015		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015		F-6
Notes to Consolidated Financial Statements		F-8
Condensed Consolidated Balance Sheets as of June 30, 2017, and December 31, 2016		F-29
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016		F-30
Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2017 and 2016		F-31
Consolidated Statement of Changes in Stockholders’ Equity		F-33
Notes to Condensed Consolidated Financial Statements		F-34

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders, Audit Committee and Board of Directors
GWG Holdings, Inc. and Subsidiaries
Minneapolis, MN

We have audited the accompanying consolidated balance sheets of GWG Holdings, Inc. and Subsidiaries as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. We also have audited GWG Holdings, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). The company’s management is responsible for these consolidated financial statements, for maintaining effective control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements include examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GWG Holdings, Inc. and Subsidiaries as of December 31, 2016 and 2015 and the results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, GWG Holdings, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework).

/s/ Baker Tilly Virchow Krause, LLP
Minneapolis, Minnesota
March 15, 2017

F-2

GWG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		December 31, 2016				December 31, 2015
ASSETS
Cash and cash equivalents		$	78,486,982			$	34,425,105
Restricted cash			37,826,596				2,341,900
Investment in life insurance policies, at fair value			511,192,354				356,649,715
Secured MCA advances			5,703,147				—
Life insurance policy benefits receivable			5,345,000				—
Other assets			4,688,103				2,461,045
TOTAL ASSETS		$	643,242,182			$	395,877,765
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities		$	156,064,818			$	63,279,596
Series I Secured Notes			16,404,836				23,287,704
L Bonds			381,312,587				276,482,796
Accounts payable			2,226,712				1,517,440
Interest payable			16,160,599				12,340,061
Other accrued expenses			1,676,761				1,060,786
Deferred taxes, net			2,097,371				1,763,968
TOTAL LIABILITIES		$	575,943,684			$	379,732,351
STOCKHOLDERS’ EQUITY
CONVERTIBLE PREFERRED STOCK – Series A
(par value $0.001; shares authorized 40,000,000; shares outstanding 2,640,521 and 2,781,735; liquidation preference of $19,804,000 and $20,863,000 as of December 31, 2016 and 2015, respectively)			19,701,133				20,784,841
REDEEMABLE PREFERRED STOCK – RPS
(par value $0.001; shares authorized 100,000; shares outstanding 59,183 as of December 31, 2016)			59,025,164				—
COMMON STOCK
(par value $0.001: shares authorized 210,000,000; shares issued and outstanding 5,980,190 and 5,941,790 as of December 31, 2016 and 2015, respectively)			5,980				5,942
Additional paid-in capital			7,383,515				14,563,834
Accumulated deficit			(18,817,294	)			(19,209,203	)
TOTAL STOCKHOLDERS’ EQUITY			67,298,498				16,145,414
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY		$	643,242,182			$	395,877,765

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-3

GWG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

		Year Ended
		December 31, 2016				December 31, 2015
REVENUE
Gain on life insurance policies, net		$	67,801,565			$	39,381,003
MCA income			929,303				—
Interest and other income			746,466				251,249
TOTAL REVENUE			69,477,334				39,632,252
EXPENSES
Interest expense			42,343,374				29,518,718
Employee compensation and benefits			11,784,296				8,010,020
Legal and professional fees			3,947,376				3,152,783
Other expenses			10,676,976				7,784,350
TOTAL EXPENSES			68,752,022				48,465,871
INCOME (LOSS) BEFORE INCOME TAXES			725,312				(8,833,619	)
Income tax expense (benefit)			333,403				(3,509,587	)
NET INCOME (LOSS)			391,909				(5,324,032	)
Preferred stock dividends			(3,537,287	)			(2,069,242	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(3,145,378	)		$	(7,393,274	)
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
Basic		$	(0.53	)		$	(1.25	)
Diluted		$	(0.53	)		$	(1.25	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			5,967,274				5,906,761
Diluted			5,967,274				5,906,761

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

GWG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

		Preferred Stock Shares			Preferred Stock				Common Shares		Common Stock (par)			Additional Paid-in Capital				Accumulated Deficit				Total Equity
Balance, December 31, 2014		2,738,966			$	20,527,866			5,870,193		$	5,870		$	15,741,371			$	(13,885,171	)		$	22,389,936
Net loss		—				—			—			—			—				(5,324,032	)			(5,324,032	)
Issuance of common stock		—				—			60,000			60			581,940				—				582,000
Series A Preferred Stock conversion to common stock		(15,463	)			(115,973	)		11,597			12			115,961				—				—
Issuance of preferred stock		58,232				372,948			—			—			—				—				372,948
Preferred stock dividends		—				—			—			—			(2,069,242	)			—				(2,069,242	)
Stock-based compensation		—				—			—			—			193,804				—				193,804
Balance, December 31, 2015		2,781,735			$	20,784,841			5,941,790		$	5,942		$	14,563,834			$	(19,209,203	)		$	16,145,414
Net loss		—				—			—			—			—				391,909				391,909
Issuance of common stock		—				—			36,450			36			244,149				—				244,185
Redemption of Series A Preferred Stock		(239,749	)			(1,788,451	)		1,950			2			19,498				—				(1,768,951	)
Issuance of Series A Preferred Stock		98,535				704,743			—			—			—				—				704,743
Issuance Redeemable Preferred Stock		59,183				59,025,164			—			—			(4,133,525	)			—				54,891,639
Preferred stock dividends		—				—			—			—			(3,537,288	)			—				(3,537,288	)
Issuance of stock options		—				—			—			—			226,847				—				226,847
Balance, December 31, 2016		2,699,704			$	78,726,297			5,980,190		$	5,980		$	7,383,515			$	(18,817,294	)		$	67,298,498

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

GWG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

		Year Ended
		December 31, 2016				December 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	391,909			$	(5,324,032	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Gain on life insurance policies			(48,988,406	)			(39,371,059	)
Amortization of deferred financing and issuance costs			8,445,252				3,712,056
Deferred income taxes			333,402				(3,509,587	)
Preferred stock issued in lieu of cash dividends			689,742				683,133
Preferred stock dividends payable			302,972				6,800
(Increase) decrease in operating assets:
Due from related parties			1,169				(1,256	)
Life insurance policy benefits receivable			(5,345,000	)			1,750,000
Other assets			(23,022,962	)			(304,526	)
Increase in operating liabilities:
Accounts payable			709,272				313,864
Interest payable			4,868,196				2,213,529
Other accrued expenses			(4,399,443	)			2,183,393
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(66,013,897	)			(37,647,685	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			(94,952,879	)			(38,906,934	)
Carrying value of matured life insurance policies			10,992,624				4,511,289
Investment in Secured MCA advances			(8,727,924	)			—
Proceeds from Secured MCA advances			2,553,466				—
NET CASH FLOWS USED IN INVESTING ACTIVITIES			(90,134,713	)			(34,395,645	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on (repayments of) Senior Credit Facilities			97,713,952				(7,150,000	)
Payments for redemption of Series I Secured Notes			(7,469,462	)			(4,891,681	)
Proceeds from issuance of L Bonds			153,874,402				131,159,348
Payments for issuance and redemption of L Bonds			(10,149,316	)			(7,499,601	)
Payments for redemption of L Bonds			(45,754,691	)			(35,984,061	)
Proceeds from (increase in) restricted cash			(35,484,697	)			1,954,153
Issuance of common stock			244,185				582,000
Proceeds from issuance of preferred stock			57,112,501				—
Payments for issuance costs of preferred stock			(4,140,866	)			—
Payments for redemption of preferred stock			(2,198,233	)			(295,185	)
Payments of preferred stock dividends			(3,537,288	)			(2,069,242	)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			200,210,487				75,805,731
NET INCREASE IN CASH AND CASH EQUIVALENTS			44,061,877				3,762,401
CASH AND CASH EQUIVALENTS
BEGINNING OF YEAR			34,425,105				30,662,704
END OF YEAR		$	78,486,982			$	34,425,105

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

GWG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS — CONTINUED

		Year Ended December 31,
		2016			2015
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid		$	34,607,000		$	22,648,000
Premiums paid		$	40,240,000		$	26,650,000
Stock-based compensation		$	227,000		$	194,000
NON-CASH INVESTING AND FINANCING ACTIVITIES
Options issued to purchase common stock			638,000			353,000
Series I Secured Notes:
Conversion of accrued interest and commission payable to principal		$	234,000		$	203,000
L Bonds:
Conversion of accrued interest and commission payable to principal		$	1,988,000		$	806,000
Series A Preferred Stock:
Conversion to common stock		$	39,000		$	116,000
Issuance of preferred stock in lieu of cash dividends		$	690,000		$	683,000
Investment in life insurance policies included in accounts payable		$	605,000		$	1,079,000

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Business and Summary of Significant Accounting Policies

Nature of Business — We are a financial services company committed to finding new ways of disrupting and transforming the life insurance and related industries through innovative products and services, business processes, financing strategies, and advanced epigenetic technology. Historically, we have focused on creating opportunities for consumers to obtain significantly more value for their life insurance policies as compared to the traditional options offered by the insurance industry. As part of our business, we create opportunities for investors to receive income and capital appreciation from our various activities in the life insurance and related industries. Through its wholly owned subsidiaries, GWG Holdings, Inc. owns a portfolio of life insurance policies. As of the date of this report, our portfolio had an aggregate fair value of $511.2 million. We earn income from changes in the fair value of our portfolio and through the benefits we receive upon the mortality of insureds.

GWG Holdings, Inc. and all of its subsidiaries are incorporated and organized in Delaware. Unless the context otherwise requires or we specifically so indicate, all references in these footnotes to “we,” “us,” “our,” “our Company,” “GWG,” or the “Company” refer to GWG Holdings, Inc. and its subsidiaries collectively and on a consolidated basis. References to the full names of particular entities, such as “GWG Holdings, Inc.” or “GWG Holdings,” are meant to refer only to the particular entity referenced.

On September 30, 2015, GWG Holdings formed a wholly owned subsidiary, Wirth Park Agency, LLC. Wirth Park Agency was formed to convert term life insurance policies into universal, or permanent life insurance. Wirth Park Agency produces commission revenue through this activity.

On December 7, 2015, GWG Holdings formed a wholly owned subsidiary, GWG MCA, LLC. On January 13, 2016, GWG MCA, LLC was converted to a corporation and became GWG MCA Capital, Inc. GWG MCA Capital, Inc. was formed to engage in the merchant cash advance business.

On August 25, 2016, GWG Holdings formed a wholly owned subsidiary, Actüa Life & Annuity Ltd. to engage in various life insurance related businesses and activities.

Use of Estimates — The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue during the reporting period. We regularly evaluate estimates and assumptions, which are based on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances. The actual results that we experience may differ materially and adversely from our estimates. The most significant estimates with regard to these consolidated financial statements relate to (1) the determination of the assumptions used in estimating the fair value of our investments in life insurance policies, and (2) the value of our deferred tax assets and liabilities.

Cash and Cash Equivalents — We consider cash in demand deposit accounts and temporary investments purchased with an original maturity of three months or less to be cash equivalents. We maintain our cash and cash equivalents with highly rated financial institutions. The balances in our bank accounts may exceed Federal Deposit Insurance Corporation limits. We periodically evaluate the risk of exceeding insured levels and may transfer funds as we deem appropriate.

Life Insurance Policies — ASC 325-30 permits a reporting entity to account for its investments in life insurance policies using either the investment method or the fair value method. We elected to use the fair value method to account for our life insurance policies. Under the fair value method we recognize our initial investment at the purchase price. At each subsequent reporting period, we re-measure the investment at fair value in its entirety and recognize the change in fair value as revenue in the current period net of premiums paid.

We also recognize realized gain (revenue) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy, filing of change-of-ownership forms and receipt of payment. In the case of mortality, the gain (or loss) we recognize is the difference between the policy benefits and the carrying values of the policy once we determine that collection of the policy benefits is realizable and reasonably assured. In the case of a policy sale, the gain (or loss) we recognize is the difference between the sale price and the carrying value of the policy on the date of our receipt of sale proceeds.

F-8

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Nature of Business and Summary of Significant Accounting Policies (cont.)

In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as “other assets” on our balance sheet until the acquisition is complete and we have secured title to the policy. On December 31, 2016 and 2015, a total of $42,000 and $31,000, respectively, of our “other assets” comprised direct costs and deposits that we advanced for policy acquisitions.

Other Assets — Actüa Life & Annuity Ltd. (“Actüa”) is a new wholly-owned subsidiary of GWG Holdings engaged in various life insurance businesses and activities. In August 2016, Actüa entered into an exclusive option agreement with the Regents of the University of California to explore the use of predictive mortality forecasting using an epigenetic mortality predictor invented by Dr. Steve Horvath. The cost of entering into this exclusive option agreement is listed as “other assets.”

Stock-Based Compensation: We measure and recognize compensation expense for all stock-based payments at fair value over the requisite service period. We use the Black-Scholes option pricing model to determine the weighted average fair value of options. For restricted stock grants, fair value is determined as the average price of our common stock on the date of grant. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on historical and expected future volatility of our stock. To date, we have not paid any dividends on our common stock. Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates.

Deferred Financing and Issuance Costs — Loans advanced to us under our senior credit facilities, as described in Notes 5 and 6, are reported net of financing costs, which include issuance costs, sales commissions and other direct expenses, which are amortized using the straight-line method over the term of the facility. The Series I Secured Notes and L Bonds, as respectively described in Notes 7 and 8, are reported net of financing costs, which are amortized using the interest method over the term of those borrowings. The Series A, as described in Note 9, is reported net of financing costs (including the fair value of warrants issued), all of which were fully amortized using the interest method as of December 31, 2016. Selling and issuance costs of RPS and Series 2 Redeemable Preferred Stock (“RPS 2”), described in Notes 10 and 11, are netted against additional paid-in-capital.

Earnings (loss) per Share — Basic earnings (loss) per share attributable to common shareholders are calculated using the weighted-average number of shares outstanding during the reported period. Diluted earnings (loss) per share are calculated based on the potential dilutive impact of our outstanding Series A, RPS, warrants and stock options. Due to our net loss for years ended December 31, 2016 and 2015, there are no dilutive securities.

Recently Adopted Pronouncements — On April 7, 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), as part of its simplification initiative. ASU 2015-03 changes the presentation of debt issuance costs by presenting those costs in the balance sheet as a direct deduction from the related debt liability. Amortization of the costs is reported as interest expense. We adopted ASU 2015-03 effective January 1, 2016, as required for public reporting entities.

On February 25, 2016, the FASB issued ASU 2016-02 Leases (“ASU 2016-02”). The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 provides more transparency and comparability in the financial statements of lessees by recognizing all leases with a term greater than twelve months on the balance sheet. Leasees will also be required to disclose key information about their leases. Early adoption is permitted. We have not adopted ASU 2016-02 as of December 31, 2016.

F-9

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Restrictions on Cash

Under the terms of our senior credit facilities (discussed in Notes 5 and 6), we are required to maintain collection and escrow accounts that are used to fund the acquisition of policies, pay annual policy premiums, pay interest and other charges under the facility, and collect policy benefits. The agent for the lender authorizes the disbursements from these accounts. At December 31, 2016 and December 31, 2015, there was a balance of $37,827,000, and $2,342,000, respectively, in these restricted cash accounts.

(3) Investment in Life Insurance Policies

Life insurance policies are valued based on unobservable inputs that are significant to their overall fair value. Changes in the fair value of these policies are recorded as gain or loss on life insurance policies, net of cash premiums paid on those policies, in our consolidated statements of operations. Fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions generally derived from reports obtained from widely accepted life expectancy providers, assumptions relating to cost-of-insurance (premium) rates and other assumptions. The discount rate we apply incorporates current information about discount rate applied by other reporting companies owning portfolios of life insurance policies, the discount rates observed in the life insurance secondary market, market interest rates, the credit exposure to the insurance companies that issued the life insurance policies and management’s estimate of the risk premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. As a result of management’s analysis, discount rates of 10.96% and 11.09% were applied to our portfolio as of December 31, 2016 and December 31, 2015, respectively.

A summary of our policies, organized according to their estimated life expectancy dates as of the dates indicated, is as follows:

		As of December 31, 2016								As of December 31, 2015
Years Ending December 31,		Number of Policies		Estimated Fair Value			Face Value			Number of Policies		Estimated Fair Value			Face Value
2016		—		$	—		$	—		5		$	7,503,000		$	8,500,000
2017		11			14,837,000			16,939,000		12			12,875,000			17,418,000
2018		23			30,830,000			42,564,000		27			37,109,000			58,428,000
2019		55			57,556,000			88,858,000		51			54,242,000			100,967,000
2020		93			85,414,000			159,814,000		59			64,750,000			137,868,000
2021		86			73,825,000			158,744,000		48			45,724,000			116,805,000
2022		66			56,909,000			147,222,000		44			38,394,000			116,998,000
Thereafter		356			191,821,000			747,534,000		150			96,053,000			387,860,000
Totals		690		$	511,192,000			1,361,675,000		396		$	356,650,000		$	944,844,000

We recognized life insurance benefits of $48,452,000 and $31,232,000 during 2016 and 2015, respectively, related to policies with a carrying value of $10,993,000 and $4,511,000, respectively, and as a result recorded realized gains of $37,459,000 and $26,721,000.

Reconciliation of gain on life insurance policies:

		Years Ended December 31,
		2016				2015
Change in fair value		$	70,582,000			$	39,371,000
Premiums and other annual fees			(40,240,000	)			(26,711,000	)
Policy maturities			37,460,000				26,721,000
Gain on life insurance policies, net		$	67,802,000			$	39,381,000

F-10

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) Investment in Life Insurance Policies (cont.)

We currently estimate that premium payments and servicing fees required to maintain our current portfolio of life insurance policies in force for the next five years, assuming no mortalities, are as follows:

Years Ending December 31,		Premiums			Servicing			Premiums and Servicing Fees
2017		$	44,787,000		$	534,000		$	45,321,000
2018			50,165,000			534,000			50,699,000
2019			55,685,000			534,000			56,219,000
2020			60,561,000			534,000			61,095,000
2021			67,824,000			534,000			68,358,000
		$	279,022,000		$	2,670,000		$	281,692,000

Management anticipates funding the premium payments estimated above with proceeds from our senior credit facilities, proceeds from additional debt and equity financing, and proceeds from maturities of life insurance policies. The proceeds of these capital sources may also be used for the purchase, financing, and maintenance of additional life insurance policies.

(4) Fair Value Definition and Hierarchy

ASC 820 establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace, including the existence and transparency of transactions between market participants. Assets and liabilities with readily available and actively quoted prices, or for which fair value can be measured from actively quoted prices in an orderly market, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. ASC 820 maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the use of observable inputs whenever available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect assumptions about how market participants price an asset or liability developed based on the best available information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

The hierarchy is broken down into three levels based on the observability of inputs as follows:

•         Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since valuations are based quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

•         Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•         Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of observable inputs can vary by types of assets and liabilities and is affected by a wide variety of factors, including, for example, whether an instrument is established in the marketplace, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for assets and liabilities categorized in Level 3.

F-11

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) Fair Value Definition and Hierarchy (cont.)

Level 3 Valuation Process

The estimated fair value of our portfolio of life insurance policies is determined on a quarterly basis by our portfolio management committee, taking into consideration changes in discount rate assumptions, estimated premium payments and life expectancy estimate assumptions, as well as any changes in economic and other relevant conditions. The discount rate incorporates current information about discount rate applied by other reporting companies owning portfolios of life insurance policies, the discount rates observed in the life insurance secondary market, market interest rates, the credit exposure to the insurance company that issued the life insurance policy and management’s estimate of the risk premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole.

These inputs are then used to estimate the discounted cash flows from the portfolio using the Model Actuarial Pricing System probabilistic portfolio price model, which estimates the cash flows using various mortality probabilities and scenarios. The valuation process includes a review by senior management as of each valuation date. We also engage a third-party expert to independently test the accuracy of the valuations using the inputs we provide on a quarterly basis.

The following table reconciles the beginning and ending fair value of our Level 3 investments in our portfolio of life insurance policies for the periods ended December 31, as follows:

		Years Ended December 31,
		2016				2015
Beginning balance		$	356,650,000			$	282,883,000
Purchases			94,953,000				38,907,000
Maturities (initial cost basis)			(10,993,000	)			(4,511,000	)
Net change in fair value			70,582,000				39,371,000
Ending balance		$	511,192,000			$	356,650,000

In the past, we periodically updated the independent life expectancy estimates on the insured lives in our portfolio, other than insured lives covered under small face amount policies (i.e., $1 million in face value benefits or less), on a continuous rotating three-year cycle, and through that effort attempted to update life expectancies for approximately one-twelfth of our portfolio each quarter. Nevertheless, the terms of our senior credit facility with LNV Corporation currently requires us to attempt to update life expectancies on a rotating two-year cycle.

The following table summarizes the inputs utilized in estimating the fair value of our portfolio of life insurance policies:

		As of December 31, 2016				As of December 31, 2015
Weighted-average age of insured, years			81.6				82.6
Weighted-average life expectancy, months			83.2				79.3
Average face amount per policy		$	1,973,000			$	2,386,000
Discount rate			10.96	%			11.09	%

These assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. For example, if the life expectancy estimates were increased or decreased by four and eight months on each outstanding

F-12

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) Fair Value Definition and Hierarchy (cont.)

policy, and the discount rates were increased or decreased by 1% and 2%, while all other variables were held constant, the fair value of our investment in life insurance policies would increase or (decrease) as summarized below:

Change in Fair Value of the Investment in Life Insurance Policies

		Change in life expectancy estimates
		minus 8 months			minus 4 months			plus 4 months				plus 8 months
December 31, 2016		$	69,253,000		$	34,601,000		$	(33,846,000	)		$	(67,028,000	)
December 31, 2015		$	48,339,000		$	24,076,000		$	(23,501,000	)		$	(46,482,000	)

 

		Change in discount rate
		minus 2%			minus 1%			plus 1%				plus 2%
December 31, 2016		$	53,764,000		$	25,728,000		$	(23,668,000	)		$	(45,491,000	)
December 31, 2015		$	35,024,000		$	16,786,000		$	(15,485,000	)		$	(29,803,000	)

Other Fair Value Considerations

The carrying value of receivables, prepaid expenses, accounts payable and accrued expenses approximate fair value due to their short-term maturities and low credit risk. Using the income-based valuation approach, the estimated fair value of our Series I Secured Notes and L Bonds, having a combined aggregate face value of $403,681,000 as of December 31, 2016, is approximately $414,419,000 based on a weighted-average market interest rate of 6.45%. The carrying value of the senior credit facilities reflects interest charged at the commercial paper rate or 12-month LIBOR, as applicable, plus an applicable margin. The margin represents our credit risk, and the strength of the portfolio of life insurance policies collateralizing the debt. The overall rate reflects market, and the carrying value of the facility approximates fair value.

GWG MCA participates in the merchant cash advance industry by directly advancing sums to merchants and lending money, on a secured basis, to companies that advance sums to merchants. Each quarter, we review the carrying value of these advances and loans, and determine if an impairment reserve is necessary. At December 31, 2016 one of our secured loans was potentially impaired. The secured loan to Nulook Capital LLC had an outstanding balance of $2,527,000 and a loan loss reserve of $600,000 at December 31, 2016. We deem fair value to be the estimated collectible value on each loan or advance made from GWG MCA. Where we estimate the collectible amount to be less than the outstanding balance, we record a reserve for the difference.

The following table summarizes outstanding warrants as of December 31, 2016:

Month issued		Warrants issued		Fair value per share			Risk free rate			Volatility			Term
March 2012		38,130		$	0.52		0.38	%		36.20	%		5 years
June 2012		161,840		$	1.16		0.41	%		47.36	%		5 years
July 2012		144,547		$	1.16		0.41	%		47.36	%		5 years
September 2012		2,500		$	0.72		0.31	%		40.49	%		5 years
September 2014		16,000		$	1.26		1.85	%		17.03	%		5 years
		363,017

 (5) Credit Facility — Autobahn Funding Company LLC

Through DLP III, we are party to a $105 million senior credit facility with Autobahn Funding Company LLC (“Autobahn”), with a maturity date of June 30, 2018. The facility is governed by a Credit and Security Agreement (the “Agreement”), and DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) acts as the agent for Autobahn under the Agreement. On September 14, 2016, we paid off the senior credit facility in full with funds received from a new senior credit facility with LNV Corporation as described in Note 6.

F-13

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Credit Facility — Autobahn Funding Company LLC (cont.)

Advances under the facility bear interest at a commercial paper rate of the lender at the time of the advance, or at the lender’s cost of borrowing plus 4.25%. We make interest payments on a monthly basis. The effective rate of interest was 5.42% at September 14, 2016 and 5.58% at December 31, 2015.

The amount outstanding under this facility was $0 and $65,011,000 at December 31, 2016 and December 31, 2015, respectively. GWG Holdings is a performance guarantor of the various obligations of GWG Life, as servicer, under the Agreement. Obligations under the facility are secured by our pledge of ownership in our life insurance policies to DZ Bank through an arrangement under which Wells Fargo serves as a securities intermediary.

The Agreement has certain financial (as described below) and nonfinancial covenants, and we were in compliance with these covenants at both December 31, 2016 and 2015.

We have agreed to maintain (i) a positive consolidated net income on a non-GAAP basis (as defined and calculated under the Agreement) for each complete fiscal year, (ii) a tangible net worth on a non-GAAP basis (again, as defined and calculated under the Agreement) of not less than $45 million, and (iii) maintain cash and eligible investments of $15 million or above.

Consolidated non-GAAP net income and non-GAAP tangible net worth as of and for the four quarters ended December 31, 2016, as calculated under the Agreement, was $38,642,000 and $182,514,000, respectively.

Total funds available for additional borrowings under the facility at December 31, 2016 and 2015, were $0 and $39,989,000, respectively.

(6) Credit Facility — CSG Investments, Inc.

On September 14, 2016, we entered into a senior credit facility with LNV Corporation as lender through our subsidiary GWG DLP Funding IV, LLC (“DLP IV”). The facility is governed by a Loan and Security Agreement (the “Loan Agreement”), with CLMG Corp. acting as administrative agent on behalf of the lenders under the Loan Agreement. The Loan Agreement makes available a total of up to $172,300,000 in credit with a maturity date of September 14, 2026. Additional quarterly advances are available under the Loan Agreement at the LIBOR rate as defined by the lender. Interest will accrue on amounts borrowed under the agreement at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (A) the greater of 12-month LIBOR or the federal funds rate (as defined in the agreement) plus one-half of one percent per annum, plus (B) 5.75% per annum. Interest payments are made on a quarterly basis.

The amount outstanding under this facility was $162,725,000 at December 31, 2016. Obligations under the facility are secured by a security interest in DLP IV’s assets, for the benefit of the lenders under the Loan Agreement, through an arrangement under which Wells Fargo serves as security intermediary. The life insurance policies owned by DLP IV do not serve as direct collateral for the obligations of GWG Holdings under its L Bonds or Series I Secured Notes. The difference between the outstanding balance as of December 31, 2016 and the carrying amount relates to unamortized debt issuance costs.

The Loan Agreement requires DLP IV to maintain a reserve account in an amount sufficient to pay 12 months of servicing, administrative and third party expenses identified under the Loan Agreement, and 12 months of debt service as calculated under the Loan Agreement. As of December 31, 2016, the amount set aside in the reserve account was $27,500,000.

The Agreement has certain financial and nonfinancial covenants, and we were in compliance with these covenants at December 31, 2016.

Total funds available for additional borrowings under the facility at December 31, 2016 was $0.

F-14

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7) Series I Secured Notes

Series I Secured Notes (“Series I”) are legal obligations of GWG Life and were privately offered and sold from August 2009 through June 2011. The Series I are secured by the assets of GWG Life and are subordinate to obligations under our senior credit facilities (see Notes 5 and 6). We are party to a Third Amended and Restated Note Issuance and Security Agreement dated November 1, 2011, as amended, under which GWG Life is obligor, GWG Holdings is guarantor, and Lord Securities Corporation serves as trustee of the GWG Life Trust (“Trust”). This agreement contains certain financial and non-financial covenants, and we were in compliance with these covenants at both December 31, 2016 and 2015.

The Series I were sold with original maturity dates ranging from six months to seven years, and with fixed interest rates varying from 5.65% to 9.55% depending on the term of the note. The Series I have renewal features under which we may elect to permit their renewal, subject to the right of bondholders to elect to receive payment at maturity. Effective September 1, 2016, we no longer renew the Series I.

Interest on the Series I is payable monthly, quarterly, annually or at maturity depending on the election of the investor. At December 31, 2016 and 2015, the weighted-average interest rate of our Series I was 8.68% and 8.47%, respectively. The principal amount of Series I outstanding was $16,614,000 and $23,578,000 at December 31, 2016 and 2015, respectively. The difference between the amount outstanding on the Series I and the carrying amount on our balance sheet is due to netting of unamortized deferred issuance costs. Overall, interest expense includes amortization of deferred financing and issuance costs of $332,000 and $362,000 in 2016 and 2015, respectively. Future expected amortization of deferred financing costs is $209,000 in total over the next five years.

Future contractual maturities of Series I payable and future amortization of their deferred financing costs at December 31, 2016 are as follows:

Years Ending December 31,		Contractual Maturities			Amortization of Deferred Financing Costs
2017		$	10,523,000		$	41,000
2018			2,401,000			41,000
2019			1,024,000			20,000
2020			1,725,000			52,000
2021			941,000			55,000
		$	16,614,000		$	209,000

 (8) L Bonds

Our L Bonds are legal obligations of GWG Holdings. Obligations under the L Bonds are secured by the assets of GWG Holdings and by GWG Life, as a guarantor, and are subordinate to the obligations under our senior credit facilities (see Notes 5 and 6). We began publicly offering and selling L Bonds in January 2012 under the name “Renewable Secured Debentures.” These debt securities were re-named “L Bonds” in January 2015. L Bonds are publicly offered and sold on a continuous basis under a registration statement permitting us to sell up to $1.0 billion in principal amount of L Bonds. We are party to an indenture governing the L Bonds dated October 19, 2011, as amended (“Indenture”), under which GWG Holdings is obligor, GWG Life is guarantor, and Bank of Utah serves as indenture trustee. The Indenture contains certain financial and non-financial covenants, and we were in compliance with these covenants at December 31, 2016 and 2015.

Effective September 1, 2016, we ceased selling 6-month and 1-year L Bonds until further notice. In addition, effective September 1, 2016, the L Bond interest rates changed to 5.50%, 6.25%, 7.50% and 8.50% for the 2-, 3-, 5- and 7-year L Bonds, respectively. The bonds have renewal features under which we may elect to permit their renewal, subject to the right of bondholders to elect to receive payment at maturity. Interest is payable monthly or annually depending on the election of the investor.

F-15

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) L Bonds (cont.)

At December 31, 2016 and 2015, the weighted-average interest rate of our L Bonds was 7.23% and 7.16%, respectively. The principal amount of L Bonds outstanding was $387,067,000 and $282,171,000 at December 31, 2016 and 2015, respectively. The difference between the amount of outstanding L Bonds and the carrying amount on our balance sheets is due to netting of unamortized deferred issuance costs and cash receipts for new issuances in process. Amortization of deferred issuance costs was $7,099,000 and $5,285,000 in 2016 and 2015, respectively. Future expected amortization of deferred financing costs as of December 31, 2016 is $11,636,000 in total over the next eight years.

Future contractual maturities of L Bonds, and future amortization of their deferred financing costs, at December 31, 2016 are as follows:

Years Ending December 31,		Contractual Maturities			Amortization of Deferred Financing Costs
2017		$	106,955,000		$	1,178,000
2018			109,407,000			3,000,000
2019			90,463,000			3,450,000
2020			20,679,000			809,000
2021			28,923,000			1,512,000
Thereafter			30,640,000			1,687,000
		$	387,067,000		$	11,636,000

 (9) Series A Convertible Preferred Stock

From July 2011 until September 2012, we privately offered shares of Series A of GWG Holdings at $7.50 per share. In the offering, we sold an aggregate of 3,278,000 shares for gross consideration of $24,582,000. Holders of Series A are entitled to cumulative dividends at the rate of 10% per annum, paid quarterly. Dividends on the Series A are accumulating and are recorded as a reduction to additional paid-in capital. Under certain circumstances described in the Certificate of Designation for the Series A, additional Series A shares may be issued in lieu of cash dividends at the rate of $7.00 per share.

Holders of Series A are entitled to a liquidation preference equal to the stated value of their preferred shares (i.e., $7.50 per share) plus accrued but unpaid dividends. Holders of Series A may presently convert each share of their Series A into 0.75 shares of our common stock at a price of $10.00 per share.

As of December 31, 2016, we issued an aggregate of 473,000 shares of Series A in satisfaction of $3,310,000 in dividends on the Series A, and an aggregate of 696,000 shares of Series A were converted into 522,000 shares of our common stock. As of December 31, 2016, we had 2,640,000 Series A shares outstanding with respect to which we incurred aggregate issuance costs of $2,838,000, all of which is included as a component of additional paid-in capital.

Purchasers of Series A in our offering received warrants to purchase an aggregate of 431,954 shares of our common stock at an exercise price of $12.50 per share. The grant date fair value of these warrants was $428,000. As of December 31, 2016, none of these warrants were exercised, 69,000 warrants have expired. The weighted-average remaining life of these warrants was 0.56 and 1.43 years at December 31, 2016 and 2015, respectively.

In September 2014, we completed, at our discretion, a public offering of our common stock and, as a result, the Series A was reclassified from temporary equity to permanent equity. We may redeem Series A shares at a price equal to 110% of their liquidation preference ($7.50 per share) at any time. As of December 31, 2016, we have redeemed an aggregate of 277,000 shares of Series A.

F-16

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Redeemable Preferred Stock

Beginning November 30, 2015, we began publicly offering up to 100,000 shares of Redeemable Preferred Stock (“RPS”) at $1,000 per share. Holders of RPS are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS are recorded as a reduction to additional paid-in capital. Under certain circumstances described in the Certificate of Designation for the RPS, additional shares of RPS may be issued in lieu of cash dividends.

The RPS ranks senior to our common stock and pari passu with our Series A, and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS may presently convert their RPS into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $15.00 and in an aggregate amount limited to 15% of the stated value of RPS originally purchased by such holder from us and still held by such holder.

Holders of RPS may request that we redeem their RPS at a price equal to their stated value plus accrued but unpaid dividends, less an applicable redemption fee, if any. Nevertheless, the Certificate of Designation for RPS permits us complete discretion to grant redemption requests. Subject to certain restrictions and conditions, we may also redeem shares of RPS without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, after one year from the date of original issuance, we may, at our option, call and redeem shares of RPS at a price equal to their liquidation preference.

As of December 31, 2016, we had sold 59,183 shares of RPS for aggregate gross consideration of $59,025,000, and incurred approximately $4,134,000 of selling costs related to the sale of those shares.

At the time of its issuance, we determined that the RPS contained two embedded features: (1) optional redemption by the holder at our discretion and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the RPS should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. Based on our assessment under ASC 470 “Debt” we do not believe bifurcation of either the holder’s redemption or conversion feature is appropriate.

(11) Series 2 Redeemable Preferred Stock

On February 14, 2017, our public offering up to 150,000 shares of Series 2 Redeemable Preferred Stock (“RPS 2”) at $1,000 per share was declared effective. Holders of RPS 2 are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS 2, when payable, will be recorded as a reduction to additional paid-in capital. Under certain circumstances described in the Certificate of Designation for the RPS 2, additional shares of RPS 2 may be issued in lieu of cash dividends.

The RPS 2 ranks senior to our common stock and pari passu with our Series A and RPS, and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS 2 may, less an applicable conversion discount, if any, convert their RPS 2 into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $12.75 and in an aggregate amount limited to 10% of the stated value of RPS 2 originally purchased from us.

Holders of RPS 2 may request that we redeem their RPS 2 at a price equal to their liquidation preference at a price equal to their stated value plus accrued but unpaid dividends, less an applicable redemption fee, if any. Nevertheless, the Certificate of Designation for RPS 2 permits us complete discretion to decline requests for redemption. Subject to certain restrictions and conditions, we may also redeem shares of RPS 2 without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, we may, at our option, call and redeem shares of RPS 2 at a price equal to their liquidation preference (subject to a minimum redemption price, in the event of redemptions occurring less than one year after issuance, of 107% of the stated value of the shares being redeemed).

We have not sold any shares of RPS 2.

F-17

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12) GWG MCA Capital, Inc — 9% Preferred Stock

Beginning March 31, 2016, GWG MCA began privately offering up to 2,000,000 shares of GWG MCA 9% Preferred Stock (“MCA Preferred”) at $10.00 per share. Holders of MCA Preferred are entitled to cumulative dividends at a rate of 9% per annum, paid monthly. Dividends on the MCA Preferred are included as interest expense in the statements of operations. As of December 31, 2016, a total of 7,155 shares of MCA Preferred had been sold for aggregate gross consideration of $72,000 and approximately $7,000 of selling costs related to the sale of these shares were incurred.

Holders of MCA Preferred were redeemed as of December 31, 2016 at the stated value of their shares plus accrued but unpaid dividends.

(13) Income Taxes

We had a current income tax liability of $0 as of both December 31, 2016 and 2015. The components of deferred income tax expense (benefit) for 2016 and 2015, respectfully, consisted of the following:

		2016			2015
Income tax provision:
Deferred:
Federal		$	252,000		$	(2,660,000	)
State			81,000			(850,000	)
Total income tax expense (benefit)		$	333,000		$	(3,510,000	)

We provided a valuation allowance against the deferred tax asset related to a note receivable, which was charged-off for financial reporting purposes, because we believe that, when realized for tax purposes, it will result in a capital loss that will not be utilized because we have no expectation of generating a capital gain within the applicable carryforward period. Therefore, we do not believe that it is “more likely than not” that the deferred tax asset will be realized.

We also provided a valuation allowance against the deferred tax asset related to a tax basis capital loss generated with respect to our settlement and subsequent disposal of an earlier investment. As we have no expectation of generating capital gains with the applicable carryforward period, we do not believe that it is “more likely than not” that the deferred asset will be realized.

The primary differences between the December 31, 2016 effective tax rate and the statutory federal rate are state taxes, and other non-deductible expenses. The most significant temporary differences between GAAP net income and taxable net income are the treatment of interest costs with respect to the acquisition of the life insurance policies and revenue recognition with respect to the mark-to-market of our life insurance portfolio.

The following table provides a reconciliation of our income tax expense (benefit) at the statutory federal tax rate to our actual income tax expense (benefit):

		2016						2015
Statutory federal income tax		$	247,000		34.0	%		$	(3,004,000	)		34.0	%
State income taxes, net of federal benefit			56,000		7.8	%			(561,000	)		6.3	%
Other permanent differences			30,000		4.2	%			55,000			(0.6	)%
Total income tax expense		$	333,000		46.0	%		$	(3,510,000	)		39.7	%

F-18

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) Income Taxes (cont.)

The tax effects of temporary differences that give rise to deferred income taxes were as follows:

		2016				2015
Deferred tax assets:
Note receivable from related party		$	2,023,000			$	2,023,000
Net operating loss carryforwards			10,781,000				7,049,000
Other assets			1,130,000				375,000
Subtotal			13,934,000				9,447,000
Valuation allowance			(2,164,000	)			(2,164,000	)
Deferred tax assets			11,770,000				7,283,000
Deferred tax liabilities:
Investment in life insurance policies			(13,867,000	)			(9,046,000	)
Other			—				(1,000	)
Net deferred tax liability		$	(2,097,000	)		$	(1,764,000	)

At December 31, 2016 and 2015, we had federal net operating loss (“NOL”) carryforwards of $26,642,000 and $17,451,000, respectively, and aggregate state NOL carryforwards of approximately $26,616,000 and $17,423,000, respectively. The NOL carryforwards will begin to expire in 2031. Future utilization of NOL carryforwards is subject to limitations under Section 382 of the Internal Revenue Code. This section generally relates to a more than 50 percent change in ownership over a three-year period. We currently do not believe that any issuance of common stock has resulted in an ownership change under Section 382.

We provide for a valuation allowance when it is not considered “more likely than not” that our deferred tax assets will be realized. At both December 31, 2016 and 2015 based upon all available evidence, we provided a valuation allowance of $2,164,000, against deferred tax assets related to the likelihood of recovering the tax benefit of a capital loss on a note receivable from a related entity and other capital losses. Management believes all other deferred tax assets are recoverable.

ASC 740 requires the reporting of certain tax positions that do not meet a threshold of “more-likely-than-not” to be recorded as uncertain tax benefits. It management’s responsibility to determine whether it is “more-likely-than-not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based upon the technical merits of the position. Management has reviewed all income tax positions taken or expected to be taken for all open years and determined that the income tax positions are appropriately stated and supported. We do not anticipate that the total unrecognized tax benefits will significantly change prior to December 31, 2016.

Under our accounting policies, interest and penalties on unrecognized tax benefits, as well as interest received from favorable tax settlements are recognized as components of income tax expense. At December 31, 2016 and 2015, we recorded no accrued interest or penalties related to uncertain tax positions.

Our income tax returns for tax years ended December 31, 2013, 2014, 2015 and 2016, when filed, remain open to examination by the Internal Revenue Service and various state taxing jurisdictions. Our tax return for tax year 2012 has now been examined by the IRS (finalized April of 2015) but is open for examination by various state taxing jurisdictions.

F-19

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(14) Common Stock

In September 2014, we consummated an initial public offering of our common stock resulting in the sale of 800,000 shares of common stock at $12.50 per share, and net proceeds of approximately $8.6 million after the payment of underwriting commissions, discounts and expense reimbursements. In connection with this offering, we listed our common stock on the Nasdaq Capital Market under the ticker symbol “GWGH.”

On June 24, 2015 we issued 60,000 restricted common shares at $9.70 per share, determined by the closing market price on the date of grant, to a vendor as payment for services to be rendered over three years. The cost of these shares is amortized over a 12-month period. On March 17, 2016, we issued an additional 6,500 restricted common shares at an average price of $7.16 per share, determined by the closing market price on the date of grant, to this same vendor for additional services provided to us. On April 25, 2016, we issued 25,000 restricted shares of common stock at $6.25 per share, determined by the closing market price on the date of grant, to a vendor as a form of payment for services the vendor is providing to us, which is expensed in the current period.

(15) Stock Incentive Plan

We adopted our 2013 Stock Incentive Plan in March 2013. The Compensation Committee of our Board of Directors is responsible for the administration the plan. Incentives under the plan may be granted incentive stock options and non-statutory stock options; stock appreciation rights; stock awards; restricted stock; restricted stock units; and performance shares. Eligible participants include officers and employees of GWG Holdings and its subsidiaries, members of our Board of Directors, and consultants. 2,000,000 common shares are presently issuable under the plan.

In September 2014, we entered into a stock option agreement with a new management employee granting the employee the right to purchase up to 318,000 of our common stock at an exercise price of $12.50. The grant of such rights to purchase our common stock was treated as an inducement grant and was issued outside the GWG Holdings Inc. 2013 Stock Incentive Plan.

Through December 31, 2016, we had issued stock options for 2,048,000 shares of common stock to employees, officers, and directors under the plan. Options for 738,000 shares have vested, and the remaining options are scheduled to vest over three years. The options were issued with an exercise price between $6.35 and $10.18 for those beneficially owning more than 10% of our common stock, and between $6.00 and $10.25 for all others, which is equal to the estimated market price of the shares on the date of grant. The expected annualized volatility used in the Black-Scholes model valuation of options issued during the period was 25.9%. The annual volatility rate is based on the standard deviation of the average continuously compounded rate of return of five selected comparable companies over the previous 52 weeks. A forfeiture rate of 15% is based on historical information and expected future trend. As of December 31, 2016, stock options for 437,000 shares were forfeited and stock options for 28,000 shares were exercised.

Outstanding stock options:

		Vested			Un-vested			Total
Balance as of December 31, 2014		314,288			685,813			1,000,101
Granted during the year		79,500			273,700			353,200
Vested during the year		238,999			(238,999	)		—
Exercised during the year		(27,667	)		—			(27,667	)
Forfeited during the year		(121,417	)		(150,602	)		(272,019	)
Balance as of December 31, 2015		483,703			569,912			1,053,615
Granted during the year		22,500			608,350			630,850
Vested during the year		251,788			(251,788	)		—
Forfeited during the year		(19,926	)		(82,140	)		(102,066	)
Balance as of December 31, 2016		738,065			844,334			1,582,399

Compensation expense related to un-vested options not yet recognized is $525,000. We expect to recognize this compensation expense over the next three years ($265,000 in 2017, $157,000 in 2018, and $103,000 in 2019).

F-20

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(15) Stock Incentive Plan (cont.)

Stock Appreciation Rights (SARs) — On September 19, 2016 we issued SARs for 145,388 shares of the common stock to employees. The strike price of the SARs was $8.76, which was equal to the market price of the common stock at the close of business on September 19, 2016. 56,358 of the SARs were vested as of December 31, 2016, on which date the market price of the common stock was $8.82. A forfeiture rate of 15% was used in calculating our liability for the SARs.

Outstanding Stock Appreciation Rights:

		Vested		Un-vested		Total
Balance as of December 31, 2015		—		—		—
Granted during the year		106,608		133,127		239,735
Forfeited during the year		—		—		—
Balance as of December 31, 2016		106,608		133,127		239,735

A liability for Stock Appreciation Rights — Compensation Expense was recorded on December 31, 2016 in the amount of $4,266 and Compensation Expense was charged for the same amount.

(16) Net Loss per Common Share

We have outstanding Series A and RPS, as described in Notes 9 and 10. The Series A and RPS are anti-dilutive to our net loss attributable to common shareholders calculation for the years ended December 31, 2016 and December 31, 2015. We also issued warrants to purchase common stock in conjunction with the sale of Series A (see Note 9). Both those warrants and our vested stock options are anti-dilutive at December 31, 2016 and 2015 and have not been included in the fully diluted net loss per common share calculation.

(17) Commitments

We are party to an office lease with U.S. Bank National Association as the landlord. On September 1, 2015, we entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through 2026. Under the amended lease we are obligated to pay base rent plus common area maintenance and a share of building operating costs. Rent expenses under this agreement were $415,000 and $283,000 during 2016 and 2015, respectively.

Minimum lease payments under the amended lease are as follows:

2017			178,000
2018			185,000
2019			191,000
2020			198,000
2021			204,000
2022			210,000
2023			217,000
2024			223,000
2025			230,000
		$	1,836,000

 (18) Contingencies

Litigation — In the normal course of business, we are involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on our financial position, results of operations or cash flows.

F-21

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds

We are publicly offering and selling L Bonds under a registration statement declared effective by the SEC, as described in Note 8. Our obligations under the L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held individually by our largest stockholders, and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life. As a guarantor, GWG Life has fully and unconditionally guaranteed the payment of principal and interest on the L Bonds. Substantially all of our life insurance policies are held by DLP III, DLP IV and the Trust. The policies held by DLP III and DLP IV are not collateral for the L Bond obligations as such policies serve as direct collateral for the senior credit facilities.

The consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantor and issuer because management does not believe that separate financial statements and related disclosures would be material to investors. There are currently no significant restrictions on the ability of GWG Holdings or GWG Life, the guarantor subsidiary, to obtain funds from its subsidiaries by dividend or loan, except as described in these notes. A majority of insurance policies we own are subject to a collateral arrangement with LNV described in Note 6. Under this arrangement, collection and escrow accounts are used to fund premiums for the insurance policies and to pay interest and other charges under the senior credit facility.

The following represents consolidating financial information as of December 31, 2016 and December 31, 2015, with respect to the financial position, and as of December 31, 2016 and 2015, with respect to results of operations and cash flows of GWG Holdings and its subsidiaries. The parent column presents the financial information of GWG Holdings, the primary obligor for the L Bonds. The guarantor subsidiary column presents the financial information of GWG Life, the guarantor subsidiary of the L Bonds, presenting its investment in DLP III, DLP IV and the Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries, including DLP III, DLP IV and the Trust.

F-22

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds (cont.)

Consolidating Balance Sheets

December 31, 2016		Parent				Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations				Consolidated
ASSETS
Cash and cash equivalents		$	28,481,047			$	49,360,952		$	644,983		$	—			$	78,486,982
Restricted cash			—				2,117,649			35,708,947			—				37,826,596
Investment in life insurance policies, at fair value			—				41,277,896			469,914,458			—				511,192,354
Secured MCA advances			—				—			5,703,147			—				5,703,147
Life insurance policy benefits receivable			—				—			5,345,000			—				5,345,000
Other assets			3,854,233				2,056,822			810,640			(2,033,592	)			4,688,103
Investment in subsidiaries			429,971,148				352,337,037			—			(782,308,185	)			—
TOTAL ASSETS		$	462,306,428			$	447,150,356		$	518,127,175		$	(784,341,777	)		$	643,242,182
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities		$	—			$	—		$	156,064,818		$	—			$	156,064,818
Series I Secured Notes			—				16,404,836			—			—				16,404,836
L Bonds			381,312,587				—			—			—				381,312,587
Accounts payable			853,470				731,697			641,545			—				2,226,712
Interest payable			9,882,133				3,743,277			2,535,189			—				16,160,599
Other accrued expenses			862,369				544,032			2,303,952			(2,033,592	)			1,676,761
Deferred taxes, net			2,097,371				—			—			—				2,097,371
TOTAL LIABILITIES			395,007,930				21,423,842			161,545,504			(2,033,592	)			575,943,684
STOCKHOLDERS’ EQUITY (DEFICIT)
Member capital			—				425,726,514			356,581,671			(782,308,185	)			—
Convertible preferred stock			19,701,133				—			—			—				19,701,133
Redeemable preferred stock			59,025,164				—			—			—				59,025,164
Common stock			5,980				—			—			—				5,980
Additional paid-in capital			7,383,515				—			—			—				7,383,515
Accumulated deficit			(18,817,294	)			—			—			—				(18,817,294	)
TOTAL STOCKHOLDERS’ EQUITY			67,298,498				425,726,514			356,581,671			(782,308,185	)			67,298,498
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	462,306,428			$	447,150,356		$	518,127,175		$	(784,341,777	)		$	643,242,182

F-23

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds (cont.)

Consolidating Balance Sheets (continued)

December 31, 2015		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
ASSETS
Cash and cash equivalents		$	32,292,162			$	1,982,722			$	150,221		$	—			$	34,425,105
Restricted cash			—				2,102,257				239,643			—				2,341,900
Investment in life insurance policies, at fair value			—				—				356,649,715			—				356,649,715
Other assets			1,742,074				688,071				30,900			—				2,461,045
Investment in subsidiaries			269,886,254				291,295,951				—			(561,182,205	)			—
TOTAL ASSETS		$	303,920,490			$	296,069,001			$	357,070,479		$	(561,182,205	)		$	395,877,765
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities		$	—			$	(1,000,000	)		$	64,279,596		$	—			$	63,279,596
Series I Secured Notes			—				23,287,704				—			—				23,287,704
L Bonds			276,482,796				—				—			—				276,482,796
Accounts payable			280,988				157,217				1,079,235			—				1,517,440
Interest payable			8,529,959				3,544,626				265,476			—				12,340,061
Other accrued expenses			717,365				343,421				—			—				1,060,786
Deferred taxes, net			1,763,968				—				—			—				1,763,968
TOTAL LIABILITIES			287,775,076				26,332,968				65,624,307			—				379,732,351
STOCKHOLDERS’ EQUITY (DEFICIT)
Member capital			—				269,736,033				291,446,172			(561,182,205	)			—
Convertible preferred stock			20,784,841				—				—			—				20,784,841
Common stock			5,942				—				—			—				5,942
Additional paid-in capital			14,563,834				—				—			—				17,149,391
Accumulated deficit			(19,209,203	)			—				—			—				(19,209,203	)
TOTAL STOCKHOLDERS’ EQUITY			16,145,414				269,736,033				291,446,172			(561,182,205	)			16,145,414
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	303,920,490			$	296,069,001			$	357,070,479		$	(561,182,205	)		$	395,877,765

F-24

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds (cont.)

Consolidated Statements of Operations

For the year ended December 31, 2016		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing fees		$	—			$	13,417			$	—		$	(13,417	)		$	—
Gain on life insurance policies, net			—				379,405				67,422,160			—				67,801,565
MCA income			—				—				929,303			—				929,303
Interest and other income			260,087				59,340				639,414			(212,375	)			746,466
TOTAL REVENUE			260,087				452,162				68,990,877			(225,792	)			69,477,334
EXPENSES
Origination and servicing fees			—				—				13,417			(13,417	)			—
Interest expense			32,149,577				2,311,819				8,094,353			(212,375	)			42,343,374
Employee compensation and benefits			6,874,368				4,358,406				551,522			—				11,784,296
Legal and professional fees			2,107,053				1,628,408				211,915			—				3,947,376
Other expenses			5,822,621				2,871,318				1,983,037			—				10,676,976
TOTAL EXPENSES			46,953,619				11,169,951				10,854,244			(225,792	)			68,752,022
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(46,693,532	)			(10,717,789	)			58,136,633			—				725,312
EQUITY IN INCOME OF SUBSIDIARIES			47,418,844				58,822,543				—			(106,241,387	)			—
NET INCOME BEFORE INCOME TAXES			725,312				48,104,754				58,136,633			(106,241,387	)			725,312
INCOME TAX EXPENSE			333,403				—				—			—				333,403
NET INCOME			391,909				48,104,754				58,136,633			(106,241,387	)			391,909
Preferred stock dividends			(3,537,287	)			—				—			—				(3,537,287	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(3,145,378	)		$	—			$	—		$	—			$	(3,145,378	)

 

For the year ended December 31, 2015		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing fees		$	—			$	2,217,471			$	—		$	(2,217,471	)		$	—
Gain on life insurance policies, net			—				—				39,381,003			—				39,381,003
Interest and other income			45,613				62,125				143,511							251,249
TOTAL REVENUE			45,613				2,279,596				39,524,514			(2,217,471	)			39,632,252
EXPENSES
Origination and servicing fees			—				—				2,217,471			(2,217,471	)			—
Interest expense			22,416,821				2,703,124				4,398,743			—				29,518,718
Employee compensation and benefits			6,007,347				2,002,673				—			—				8,010,020
Legal and professional fees			2,115,580				1,037,203				—			—				3,152,783
Other expenses			4,295,085				3,347,294				141,971			—				7,784,350
TOTAL EXPENSES			34,834,863				9,090,294				6,758,185			(2,217,471	)			48,465,871
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(34,789,250	)			(6,810,698	)			32,766,329			—				(8,833,619	)
EQUITY IN INCOME OF SUBSIDIARIES			25,955,631				32,766,108				—			(58,721,739	)			—
NET INCOME (LOSS) BEFORE INCOME TAXES			(8,833,619	)			25,955,410				32,766,329			(58,721,739	)			(8,833,619	)
INCOME TAX BENEFIT			(3,509,587	)			—				—			—				(3,509,587	)
NET INCOME (LOSS)			(5,324,032	)			25,955,410				32,766,329			(58,721,739	)			(5,324,032	)
Preferred stock dividends			(2,069,242	)			—				—			—				(2,069,242	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(7,393,274	)		$	—			$	—		$	—			$	(7,393,274	)

F-25

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds (cont.)

Consolidated Statements of Cash Flows

For the year ended December 31, 2016		Parent				Guarantor Sub				Non-Guarantor Sub				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	391,909			$	48,104,754			$	58,136,633			$	(106,241,387	)		$	391,909
Adjustments to reconcile net income to net cash flows from operating activities:
(Equity) of subsidiaries			(47,418,845	)			(58,822,542	)			—				106,241,387				—
Gain on life insurance policies, gross			—				—				(48,988,406	)			—				(48,988,406	)
Amortization of deferred financing and issuance costs			7,720,065				(1,307,640	)			2,032,827				—				8,445,252
Deferred income taxes			333,402				—				—				—				333,402
Preferred stock issued in lieu of cash dividends			689,742				—				—				—				689,742
Preferred stock dividends payable			302,972				—				—				—				302,972
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			—				—				(5,345,000	)			—				(5,345,000	)
Due from related parties			—				1,169				—				—				1,169
Other assets			(112,725,117	)			(44,866,357	)			19,683,919				114,884,593				(23,022,962	)
Increase (decrease) in operating liabilities:
Due to related party			(2,033,592	)			—				2,033,592				—				—
Accounts payable			572,483				574,481				(437,692	)			—				709,272
Interest payable			2,191,113				420,259				2,256,824				—				4,868,196
Other accrued expenses			706,718				2,873,233				(7,979,395	)			—				(4,399,444	)
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(149,269,149	)			(53,022,643	)			21,393,302				114,884,593				(66,013,897	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(94,952,879	)			—				(94,952,879	)
Carrying value of matured life insurance policies			—				—				10,992,624				—				10,992,624
Investment in Secured MCA advances			—				—				(8,727,924	)			—				(8,727,924	)
Proceeds from Secured MCA advances			—				—				2,553,466				—				2,553,466
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				—				(90,134,713	)			—				(90,134,713	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on senior credit facilities			—				—				97,713,952				—				97,713,952
Payments for redemption of Series I Secured Notes			—				(7,469,462	)			—				—				(7,469,462	)
Proceeds from issuance of L Bonds			153,874,402				—				—				—				153,874,402
Payment of deferred issuance costs for L Bonds			(10,149,316	)			—				—				—				(10,149,316	)
Payments for redemption of L Bonds			(45,754,691	)			—				—				—				(45,754,691	)
Issuance of common stock			244,185				—				—				—				244,185
Proceeds (payments) from restricted cash			—				(15,392	)			(35,469,305	)			—				(35,484,697	)
Proceeds from issuance of preferred stock			57,040,946				—				71,555				—				57,112,501
Payments for issuance costs of preferred stock			(4,133,526	)			—				(7,340	)			—				(4,140,866	)
Payments for redemption of preferred stock			(2,126,678	)			—				(71,555	)			—				(2,198,233	)
Payments of preferred stock dividends			(3,537,288	)			—				—				—				(3,537,288	)
Issuance of member capital			—				107,885,727				6,998,866				(114,884,593	)			—
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			145,458,034				100,400,873				69,236,173				(114,884,593	)			200,210,487
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(3,811,115	)			47,378,230				494,762				—				44,061,877
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			32,292,162				1,982,722				150,221				—				34,425,105
END OF THE PERIOD		$	28,481,047			$	49,360,952			$	644,983			$	—			$	78,486,982

F-26

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(19) Guarantee of L Bonds (cont.)

Consolidated Statements of Cash Flows (continued)

For the year ended December 31, 2015		Parent				Guarantor Sub				Non-Guarantor Sub				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(5,324,032	)		$	25,955,410			$	32,766,329			$	(58,721,739	)		$	(5,324,032	)
Adjustments to reconcile net income to net cash flows from operating activities:
(Equity) of subsidiaries			(25,955,632	)			(32,766,107	)			—				58,721,739				—
Gain on life insurance policies, gross			—				—				(39,371,059	)			—				(39,371,059	)
Amortization of deferred financing and issuance costs			4,081,051				362,457				(731,452	)			—				3,712,056
Deferred income taxes			(3,509,587	)			—				—				—				(3,509,587	)
Preferred stock issued in lieu of cash dividends			683,133				—				—				—				683,133
Preferred stock dividends payable			6,800				—				—				—				6,800
(Increase) decrease in operating assets:
Due from related parties			—				(1,256	)			—				—				(1,256	)
Life insurance policy benefits receivable			—				—				1,750,000				—				1,750,000
Other assets			(58,689,451	)			(43,314,345	)			—				101,699,270				(304,526	)
Increase (decrease) in operating liabilities:
Accounts payable			(129,909	)			(85,463	)			529,236				—				313,864
Interest payable			2,730,921				233,786				(751,178	)			—				2,213,529
Other accrued expenses			2,059,136				149,242				(24,985	)			—				2,183,393
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(84,047,570	)			(49,466,276	)			(5,833,109	)			101,699,270				(37,647,685	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(38,906,934	)			—				(38,906,934	)
Proceeds from settlement of life insurance policies			—				—				4,511,289				—				4,511,289
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				—				(34,395,645	)			—				(34,395,645	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of senior credit facilities			—				—				(7,150,000	)			—				(7,150,000	)
Payments for redemption of Series I Secured Notes			—				(4,891,681	)			—				—				(4,891,681	)
Proceeds from issuance of L Bonds			131,159,348				—				—				—				131,159,348
Payment of deferred issuance costs for L Bonds			(7,499,601	)			—				—				—				(7,499,601	)
Payments for redemption of L Bonds			(35,984,061	)			—				—				—				(35,984,061	)
Proceeds (payments) from restricted cash			—				(2,019,757	)			3,973,910				—				1,954,153
Issuance of common stock			582,000				—				—				—				582,000
Payments for redemption of preferred stock			(295,185	)			—				—				—				(295,185	)
Payments of preferred stock dividends			(2,069,242	)			—				—				—				(2,069,242	)
Issuance of member capital			—				58,144,205				43,555,065				(101,699,270	)			—
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			85,893,259				51,232,767				40,378,975				(101,699,270	)			75,805,731
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			1,845,689				1,766,491				150,221				—				3,762,401
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			30,446,473				216,231				—				—				30,662,704
END OF THE PERIOD		$	32,292,162			$	1,982,722			$	150,221			$	—			$	34,425,105

F-27

GWG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(20) Concentration

We purchase life insurance policies written by life insurance companies having investment-grade ratings by independent rating agencies. As a result, there may be certain concentrations of policies with life insurance companies. The following summarizes the face value of insurance policies with specific life insurance companies exceeding 10% of the total face value held by us.

		As of December 31,
Life insurance company		2016			2015
John Hancock		14.36	%		12.73	%
AXA Equitable		13.42	%		14.00	%
Lincoln National		11.22	%		*

____________

*         percentage does not exceed 10% of the total face value.

The following summarizes the number of insurance policies held in specific states exceeding 10% of the total face value held by us:

		As of December 31,
State of residence		2016			2015
California		20.72	%		25.25	%
Florida		19.42	%		19.95	%

 (21) Subsequent Events

Subsequent to December 31, 2016, eight policies covering seven individuals have matured. The combined insurance benefits of these policies were $15,975,000. We recorded realized gains of $13,956,000 on these seven policies.

Subsequent to December 31, 2016, we have issued approximately an additional $15,318,000 in principal amount of L Bonds.

Subsequent to December 31, 2016 we have issued approximately $16,871,000 of RPS.

On February 9, 2017, we declared a special cash dividend in the amount of $2.50 per share, payable on or about April 14, 2017, to the holders of RPS of record as of the close of business on April 5, 2017.

On February 14, 2017, we began a public offering of up to 150,000 shares of RPS 2 at $1,000 per share. As of the date of this report, we have not sold any shares of RPS 2.

Effective February 16, 2017, Paul Siegert, Director and Executive Chairman, voluntarily resigned from the Board of Directors. As part of his resignation, we agreed to repurchase Mr. Siegert’s 200,445 shares of GWG common stock for an aggregate of approximately $1.604 million. As a separation payment, Mr. Siegert will continue to receive his regular salary payments (annualized to approximately $201,000) through December 31, 2017 and he forfeited all options, both unvested and vested, to purchase shares of GWG common stock. Following his resignation, the Board of Directors appointed Mark Schwarzmann as a director of the Board and Jon Sabes was appointed Chairman of the Board.

(22) Reclassification of Preferred Stock Dividends

For the quarter ended December 31, 2016, we identified an error relating to prior periods in the classification of preferred stock dividends on the consolidated statement of operations and balance sheet. Preferred stock dividends have been classified as interest expense since the third quarter of 2014, when our initial public offering became effective. As a result, dividend cost resulted in an increase of the accumulated deficit on the balance sheet. The preferred stock dividends should have been charged directly to additional paid-in capital and are separately reflected as preferred stock dividends on the consolidated statement of operations. The reclassification of preferred stock dividends did not result in any changes to total equity in any of the periods effected. Additionally, the reclassification did not result in any changes to net loss attributable to common shareholders or net loss per common share for the year ended December 31, 2015.

F-28

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30, 2017 (unaudited)				December 31, 2016
ASSETS
Cash and cash equivalents		$	52,293,472			$	78,486,982
Restricted cash			46,159,631				37,826,596
Investment in life insurance policies, at fair value			577,049,552				511,192,354
Secured MCA advances			3,525,381				5,703,147
Life insurance policy benefits receivable			6,970,000				5,345,000
Deferred taxes, net			1,620,303				—
Other assets			3,875,810				4,688,103
TOTAL ASSETS		$	691,494,149			$	643,242,182
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior Credit Facilities		$	149,008,826			$	156,064,818
Series I Secured Notes			6,680,961				16,404,836
L Bonds			400,832,308				381,312,587
Accounts payable			4,160,097				2,226,712
Interest payable			14,387,044				16,160,599
Other accrued expenses			2,535,674				1,676,761
Deferred taxes, net			—				2,097,371
TOTAL LIABILITIES			577,604,910				575,943,684
STOCKHOLDERS’ EQUITY
CONVERTIBLE PREFERRED STOCK
(par value $0.001; shares authorized 40,000,000; shares outstanding 2,671,663 and 2,640,521; liquidation preference of $20,037,000 and $19,804,000 as of June 30, 2017 and December 31, 2016, respectively)			19,732,262				19,701,133
REDEEMABLE PREFERRED STOCK
(par value $0.001; shares authorized 100,000; shares outstanding 99,127 and 59,183; liquidation preference of $99,127,000 and $59,183,000 as of June 30, 2017 and December 31, 2016, respectively)			97,728,821				59,025,164
SERIES 2 REDEEMABLE PREFERRED STOCK
(par value $0.001; shares authorized 150,000; shares outstanding 22,536 and 0; liquidation preference of $22,536,000 and $0 as of June 30, 2017 and December 31, 2016, respectively)			20,979,019				—
COMMON STOCK
(par value $0.001: shares authorized 210,000,000; shares issued and outstanding 5,783,555 and 5,980,190 as of June 30, 2017 and December 31, 2016, respectively)			5,784				5,980
Additional paid-in capital			—				7,383,515
Accumulated deficit			(24,556,647	)			(18,817,294	)
TOTAL STOCKHOLDERS’ EQUITY			113,889,239				67,298,498
TOTAL LIABILITIES & EQUITY		$	691,494,149			$	643,242,182

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-29

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

		Three Months Ended							Six Months Ended
		June 30, 2017				June 30, 2016			June 30, 2017				June 30, 2016
REVENUE
Gain on life insurance policies, net		$	11,296,266			$	20,383,347		$	30,696,086			$	38,097,059
MCA income			133,583				223,255			380,159				368,216
Interest and other income			237,737				170,880			679,686				216,100
TOTAL REVENUE			11,667,586				20,777,482			31,755,931				38,681,375
EXPENSES
Interest expense			12,246,025				9,764,657			25,490,241				18,913,811
Employee compensation and benefits			3,741,299				3,071,507			6,904,360				5,537,705
Legal and professional fees			1,330,589				1,304,353			2,276,937				2,510,481
Provision for MCA advances			878,000				300,000			878,000				400,000
Other expenses			2,883,098				2,032,685			5,663,420				4,344,845
TOTAL EXPENSES			21,079,011				16,473,202			41,212,958				31,706,842
INCOME (LOSS) BEFORE INCOME TAXES			(9,411,425	)			4,304,280			(9,457,027	)			6,974,533
INCOME TAX EXPENSE (BENEFIT)			(3,717,174	)			1,822,030			(3,717,674	)			2,906,747
NET INCOME (LOSS)			(5,694,251	)			2,482,250			(5,739,353	)			4,067,786
Preferred stock dividends			2,031,097				600,924			3,898,857				1,112,155
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(7,725,348	)		$	1,881,326		$	(9,638,210	)		$	2,955,631
NET INCOME (LOSS) PER SHARE
Basic		$	(1.34	)		$	0.32		$	(1.69	)		$	0.50
Diluted		$	(1.34	)		$	0.30		$	(1.69	)		$	0.49
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			5,777,724				5,967,098			5,710,909				5,954,944
Diluted			5,777,724				8,017,349			5,710,909				8,002,335

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-30

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)

		Three Months Ended								Six Months Ended
		June 30, 2017				June 30, 2016				June 30, 2017				June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(5,694,251	)		$	2,482,250			$	(5,739,353	)		$	4,067,786
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Change in fair value of life insurance policies			(15,235,502	)			(21,241,376	)			(29,119,335	)			(32,772,929	)
Amortization of deferred financing and issuance costs			1,497,948				2,527,974				4,164,151				3,312,162
Deferred income taxes			(3,717,174	)			1,851,018				(3,717,674	)			2,906,747
Preferred stock dividends payable			363,959				166,472				700,748				330,049
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			2,005,000				9,083,817				(1,625,000	)			(6,829,022	)
Other assets			(557,988	)			(1,210,892	)			868,330				(1,037,466	)
Increase (decrease) in operating liabilities:
Due to related party			(1,970	)			(1,814,173	)			(9,785	)			(101,781	)
Accounts payable and other accrued expenses			1,038,855				(775,213	)			2,256,087				1,192,756
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(20,301,123	)			(8,930,123	)			(32,221,831	)			(28,931,698	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			(19,432,338	)			(24,373,714	)			(42,121,671	)			(48,700,036	)
Carrying value of matured life insurance policies			3,014,834				1,691,764				5,383,808				6,302,243
Investment in Secured MCA advances			(39,671	)			(1,293,829	)			(39,671	)			(5,647,414	)
Proceeds from Secured MCA advances			653,315				907,649				1,423,702				1,025,792
NET CASH FLOWS USED IN INVESTING ACTIVITIES			(15,803,860	)			(23,068,130	)			(35,353,832	)			(47,019,415	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on (repayments of) Senior Credit Facilities			(3,845,037	)			(3,000,000	)			(7,099,537	)			17,000,000
Payments for issuance of senior debt			(1,076,118	)			—				(1,190,412	)			—
Payments for redemption of Series I Secured Notes			(4,348,372	)			(485,350	)			(9,798,261	)			(5,722,743	)
Proceeds from issuance of L Bonds			31,875,811				36,757,771				56,744,470				71,126,660
Payments for issuance and redemption of L Bonds			(15,025,566	)			(11,753,782	)			(39,197,163	)			(22,663,475	)
Transfer from (payments to) restricted cash			1,931,958				8,667,826				(8,333,035	)			(8,818,894	)
Issuance (repurchase) of common stock			4				166,125				(1,603,556	)			212,670
Proceeds from issuance of preferred stock			34,301,747				9,472,673				61,480,941				10,501,209
Payment for issuance and redemption of preferred stock			(3,318,211	)			(845,361	)			(5,722,437	)			(1,617,914	)
Payment of preferred stock dividends			(2,031,097	)			(600,924	)			(3,898,857	)			(1,112,155	)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			38,465,119				38,378,978				41,382,153				58,905,358
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			2,360,136				6,380,725				(26,193,510	)			(17,045,755	)
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD			49,933,336				10,998,625				78,486,982				34,425,105
END OF PERIOD		$	52,293,472			$	17,379,350			$	52,293,472			$	17,379,350

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-31

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS – CONTINUED
(unaudited)

		Three Months Ended						Six Months Ended
		June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid		$	14,323,000		$	10,294,000		$	26,548,000		$	16,399,000
Premiums paid		$	11,646,000		$	8,995,000		$	22,606,000		$	17,441,000
Stock-based compensation		$	89,000		$	41,000		$	406,000		$	50,000
NON-CASH INVESTING AND FINANCING ACTIVITIES
Series I Secured Notes:
Conversion of accrued interest and commissions payable to principal		$	—		$	142,000		$	—		$	187,000
L Bonds:
Conversion of accrued interest and commissions payable to principal		$	397,000		$	370,000		$	905,000		$	661,000
Series A Preferred Stock:
Issuance of Series A Preferred Stock in lieu of cash dividends		$	166,000		$	171,000		$	337,000		$	339,000
Investment in life insurance policies included in accounts payable		$	1,296,000		$	780,000		$	1,296,000		$	780,000

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-32

GWG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)

		Preferred Stock Shares			Preferred Stock				Common Shares			Common Stock (par)				Additional Paid-in Capital				Accumulated Deficit				Total Equity
Balance, December 31, 2015		2,781,735			$	20,784,841			5,941,790			$	5,942			$	14,563,834			$	(19,209,203	)		$	16,145,414
Net income (loss)		—				—			—				—				—				391,909				391,909
Issuance of common stock		—				—			36,450				36				244,149				—				244,185
Redemption of Series A Preferred Stock		(239,749	)			(1,788,451	)		1,950				2				19,498				—				(1,768,951	)
Issuance of Series A Preferred Stock		98,535				704,743			—				—				—				—				704,743
Issuance of Redeemable Preferred Stock		59,183				59,025,164											(4,133,525	)							54,891,639
Preferred stock dividends																	(3,537,288	)							(3,537,288	)
Issuance of stock options		—				—			—				—				226,847				—				226,847
Balance, December 31, 2016		2,699,704			$	78,726,297			5,980,190			$	5,980			$	7,383,515			$	(18,817,294	)		$	67,298,498
Net income (loss)		—				—			—				—				—				(5,739,353	)			(5,739,353	)
Redemption of common stock		—				—			(200,445	)			(200	)			(1,603,360	)			—				(1,603,560	)
Redemption of Series A Preferred Stock		(17,033	)			(126,997	)		3,810				4				—				—				(126,993	)
Issuance of Series A Preferred Stock		48,175				210,230											—								210,230
Issuance of Redeemable Preferred Stock and Series 2 Redeemable Preferred Stock, net of costs		63,041				60,247,764											(2,017,487	)							58,230,277
Redemption of Redeemable Preferred Stock and Series 2 Redeemable Preferred Stock		(561	)			(561,277	)																		(561,277	)
Preferred stock dividends*						(122,323	)										(3,776,534	)							(3,898,857	)
Issuance of stock options						66,408											13,866								80,274
Balance, June 30, 2017		2,793,326			$	138,440,102			5,783,555			$	5,784			$	—			$	(24,556,647	)		$	113,889,239

____________

*         Preferred stock dividends were paid from additional paid-in capital until the latter was exhausted in the second quarter of 2017. Subsequent dividends were charged against the carrying values of the respective series of the Company’s preferred stock resulting in a difference between the Company’s preferred stock book balances and liquidation preference of the respective series of preferred stock.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-33

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Nature of Business and Summary of Significant Accounting Policies

Nature of Business — We are a financial services company committed to finding new ways of disrupting and transforming the life insurance and related industries. We built our business by creating opportunities for consumers to obtain significantly more value for their life insurance policies as compared to the traditional options offered by the insurance industry by creating a secondary market. We are enhancing and extending these activities through innovation in our products and services, business processes, financing strategies, and advanced epigenetic technologies. At the same time, we are creating opportunities for investors to receive income and capital appreciation from our investment activities in the life insurance and related industries.

GWG Holdings, Inc. and all of its subsidiaries are incorporated and organized in Delaware. Unless the context otherwise requires or we specifically so indicate, all references in these footnotes to “we,” “us,” “our,” “our Company,” “GWG,” or the “Company” refer to GWG Holdings, Inc. and its subsidiaries collectively and on a consolidated basis. References to the full names of particular entities, such as “GWG Holdings, Inc.” or “GWG Holdings,” are meant to refer only to the particular entity referenced.

On December 7, 2015, GWG Holdings formed a wholly owned subsidiary, GWG MCA, LLC. On January 13, 2016, GWG MCA, LLC was converted to a corporation and became GWG MCA Capital, Inc. GWG MCA Capital, Inc. (“GWG MCA”) was formed to provide cash advances to small businesses.

On August 25, 2016, GWG Holdings formed a wholly owned subsidiary, Actüa Life & Annuity Ltd. (“Actüa”), to engage in various life insurance related businesses and activities related to its exclusive license for “DNA Methylation Based Predictor of Mortality” technology.

Use of Estimates — The preparation of our consolidated financial statements in conformity with GAAP requires management to make significant estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue during the reporting period. We regularly evaluate estimates and assumptions, which are based on current facts, historical experience, management’s judgment, and various other factors that we believe to be reasonable under the circumstances. Our actual results may differ materially and adversely from our estimates. The most significant estimates with regard to these consolidated financial statements relate to (1) the determination of the assumptions used in estimating the fair value of our investments in life insurance policies, and (2) the value of our deferred tax assets and liabilities.

Cash and Cash Equivalents — We consider cash in demand deposit accounts and temporary investments purchased with an original maturity of three months or less to be cash equivalents. We maintain our cash and cash equivalents with highly rated financial institutions. The balances in our bank accounts may exceed Federal Deposit Insurance Corporation limits. We periodically evaluate the risk of exceeding insured levels and may transfer funds as we deem appropriate.

Life Insurance Policies — Accounting Standards Codification 325-30, Investments in Insurance Contracts (“ASC 325-30”), permits a reporting entity to account for its investments in life insurance policies using either the investment method or the fair value method. We elected to use the fair value method to account for our life insurance policies. We initially record our purchase of life insurance policies at the transaction price, which is the amount paid for the policy, inclusive of all external fees and costs associated with the acquisition. At each subsequent reporting period, we re-measure the investment at fair value in its entirety and recognize the change in fair value as unrealized gain (revenue) in the current period, net of premiums paid.

In a case where our acquisition of a policy is not complete as of a reporting date, but we have nonetheless advanced direct costs and deposits for the acquisition, those costs and deposits are recorded as “other assets” on our balance sheet until the acquisition is complete and we have secured title to the policy. On June 30, 2017 and December 31, 2016, a total of $339,000 and $42,000, respectively, of our “other assets” comprised direct costs and deposits that we had advanced for policy acquisitions.

We also recognize realized gain (or loss) from a life insurance policy upon one of the two following events: (1) our receipt of notice or verified mortality of the insured; or (2) our sale of the policy, filing of change-of-ownership forms

F-34

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Nature of Business and Summary of Significant Accounting Policies (cont.)

and receipt of payment. In the case of mortality, the gain (or loss) we recognize is the difference between the policy benefits and the carrying values of the policy once we determine that collection of the policy benefits is realizable and reasonably assured. In the case of a policy sale, the gain (or loss) we recognize is the difference between the sale price and the carrying value of the policy on the date we receive sale proceeds.

Other Assets — Actüa is engaged in various life insurance related businesses and activities related to its exclusive license for the “DNA Methylation Based Predictor of Mortality” technology for the life insurance industry. The cost of entering into this license agreement is listed as “other assets.”

Stock-Based Compensation — We measure and recognize compensation expense for all stock-based payments at fair value over the requisite service period. We use the Black-Scholes option pricing model to determine the weighted-average fair value of options. For restricted stock grants, fair value is determined as of the closing price of our common stock on the date of grant. Stock-based compensation expense is recorded in general and administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

The expected terms of the options are based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on the standard deviation of the average continuously compounded rate of return of five selected comparable companies over the previous 52 weeks. We have not historically issued any common stock dividends and do not expect to do so in the foreseeable future. Forfeitures for both option and restricted stock grants are estimated at the time of the grant and revised in subsequent periods if actual forfeitures differ from estimates.

Deferred Financing and Issuance Costs — Loans advanced to us under our senior credit facilities, as described in Notes 5 and 6, are reported net of financing costs, including issuance costs, sales commissions and other direct expenses, which are amortized using the straight-line method over the term of the facility. The Series I Secured Notes and L Bonds, as respectively described in Notes 7 and 8, are reported net of financing costs, which are amortized using the interest method over the term of those borrowings. The Series A Convertible Preferred Stock (“Series A”), as described in Note 9, is reported net of financing costs (including the fair value of warrants issued), all of which were fully amortized using the interest method as of June 30, 2017. Selling and issuance costs of Redeemable Preferred Stock (“RPS”) and Series 2 Redeemable Preferred Stock (“RPS 2”), described in Notes 10 and 11, are netted against additional paid-in-capital and against the principal balance of the preferred stock.

Earnings (loss) per Share — Basic earnings (loss) per share attributable to common shareholders are calculated using the weighted-average number of shares outstanding during the reported period. Diluted earnings (loss) per share are calculated based on the potential dilutive impact of our Series A, RPS, RPS 2, warrants and stock options. Due to our net loss for the three and six months ended June 30, 2017, there are no dilutive securities.

Recently Issued Accounting Pronouncements — On April 7, 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), as part of its simplification initiative. ASU 2015-03 changes the presentation of debt issuance costs by presenting those costs in the balance sheet as a direct deduction from the related debt liability. Amortization of the costs is reported as interest expense. We adopted ASU 2015-03 effective January 1, 2016, as required for public reporting entities.

On February 25, 2016, the FASB issued Accounting Standards Update 2016-02 Leases (“ASU 2016-02”). The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 provides more transparency and comparability in the financial statements of lessees by recognizing all leases with a term greater than twelve months on the balance sheet. Lessees will also be required to disclose key information about their leases. Early adoption is permitted. We are currently evaluating the impact of the adoption of this pronouncement and have not yet adopted ASU 2016-02 as of June 30, 2017.

F-35

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Nature of Business and Summary of Significant Accounting Policies (cont.)

In March 2016, the FASB issued Accounting Standards Update 2016-09 (“ASU 2016-09”) to simplify the accounting for stock compensation related to the following items: income tax accounting, award classification, estimation of forfeitures, and cash flow presentation. The new guidance is effective for fiscal years beginning after December 15, 2016. We are currently in the process of adopting this pronouncement.

(2) Restrictions on Cash

Under the terms of our senior credit facilities (discussed in Notes 5 and 6), we are required to maintain collection and escrow accounts that are used to fund the acquisition of policies, pay annual policy premiums, pay interest and other charges under the facility, and collect policy benefits. The agents for the lenders authorize disbursements from these accounts. At June 30, 2017 and December 31, 2016, there was a balance of $46,160,000, and $37,827,000, respectively, in these restricted cash accounts.

(3) Investment in Life Insurance Policies

Life insurance policies are valued based on unobservable inputs that are significant to their overall fair value. Changes in the fair value of these policies are recorded as gain or loss on life insurance policies, net of premiums paid on those policies, in our consolidated statements of operations. Fair value is determined on a discounted cash flow basis that incorporates life expectancy assumptions generally derived from reports obtained from widely accepted life expectancy providers, other than insured lives covered under small face amount policies (i.e., $1 million in face value benefits or less), assumptions relating to cost-of-insurance (premium) rates and other assumptions. The discount rate we apply incorporates current information about discount rates applied by other reporting companies owning portfolios of life insurance policies, the discount rates observed in the life insurance secondary market, market interest rates, the credit exposure to the insurance companies that issued the life insurance policies and management’s estimate of the risk premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. Management has discretion regarding the combination of these and other factors when determining the discount rate. As a result of management’s analysis, a discount rate of 10.81% was applied to our portfolio as of June 30, 2017 as compared to 10.96% as of December 31, 2016.

A summary of our policies, organized according to their estimated life expectancy dates as of the reporting date, is as follows:

		As of June 30, 2017								As of December 31, 2016
Years Ending December 31,		Number of Policies		Estimated Fair Value			Face Value			Number of Policies		Estimated Fair Value			Face Value
2017		4		$	3,044,000		$	3,375,000		11		$	14,837,000		$	16,939,000
2018		11			16,462,000			20,853,000		23			30,830,000			42,564,000
2019		61			64,377,000			92,676,000		55			57,556,000			88,858,000
2020		96			92,535,000			159,203,000		93			85,414,000			159,814,000
2021		85			71,872,000			142,961,000		86			73,825,000			158,744,000
2022		88			80,308,000			184,162,000		66			56,909,000			147,222,000
2023		80			58,506,000			166,527,000		64			44,953,000			128,581,000
Thereafter		368			189,946,000			755,606,000		292			146,868,000			618,953,000
Totals		793		$	577,050,000		$	1,525,363,000		690		$	511,192,000			1,361,675,000

We recognized life insurance benefits of $10,935,000 and $9,829,000 during the three months ended June 30, 2017 and 2016, respectively, related to policies with a carrying value of $3,014,000 and $1,692,000, respectively, and as a result recorded realized gains of $7,920,000 and $8,137,000, respectively. We recognized life insurance benefits of $29,910,000 and $29,067,000 during the six months ended June 30, 2017 and 2016, respectively, related to policies with a carrying value of $5,384,000 and $6,302,000, respectively, and as a result recorded realized gains of $24,526,000 and $22,765,000, respectively.

F-36

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(3) Investment in Life Insurance Policies (cont.)

Reconciliation of gain on life insurance policies:

		Three Months Ended June 30,								Six Months Ended June 30,
		2017				2016				2017				2016
Change in estimated probabilistic cash flows		$	16,446,000			$	17,972,000			$	32,849,000			$	27,425,000
Unrealized gain on acquisitions			8,044,000				9,822,000				18,646,000				17,841,000
Premiums and other annual fees			(11,859,000	)			(8,995,000	)			(22,949,000	)			(17,441,000	)
Change in discount rates(1)			4,143,000				629,000				4,143,000				838,000
Change in life expectancy evaluation(2)			(6,662,000	)			(1,545,000	)			(8,604,000	)			(914,000	)
Realized gain on maturities			7,920,000				8,137,000				24,526,000				22,765,000
Fair value of matured policies			(6,736,000	)			(5,637,000	)			(17,915,000	)			(12,417,000	)
Gain on life insurance policies, net		$	11,296,000			$	20,383,000			$	30,696,000			$	38,097,000

____________

(1)      The discount rate applied to estimate the fair value of the portfolio of life insurance policies we own was 10.81% as of June 30, 2017, compared to 10.96% as of December 31, 2016 and 11.05% as of June 30, 2016. The carrying value of policies acquired during each quarterly reporting period is adjusted to current fair value using the fair value discount rate applied to the entire portfolio as of that reporting date.

(2)      The change in fair value due to updating independent life expectancy estimates on certain life insurance policies in our portfolio.

We currently estimate that premium payments and servicing fees required to maintain our current portfolio of life insurance policies in force for the next five years, assuming no mortalities, are as follows:

Years Ending December 31,		Premiums			Servicing			Premiums and Servicing Fees
Six months ending December 31, 2017		$	24,455,000		$	654,000		$	25,109,000
2018			52,611,000			654,000			53,265,000
2019			58,206,000			654,000			58,860,000
2020			65,722,000			654,000			66,376,000
2021			74,105,000			654,000			74,759,000
2022			83,310,000			654,000			83,964,000
		$	358,409,000		$	3,924,000		$	362,333,000

Management anticipates funding the premium payments estimated above with proceeds from the receipt of policy benefits from our portfolio of life insurance policies, net proceeds from our offering of L Bonds and RPS 2, and from our senior credit facilities. The proceeds of these capital sources may also be used for the purchase, financing, and maintenance of additional life insurance policies.

(4) Fair Value Definition and Hierarchy

Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace, including the existence and transparency of transactions between market participants. Assets and liabilities with readily available and actively quoted prices, or for which fair value can be measured from actively quoted prices in an orderly market, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. ASC 820 maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the use of observable inputs whenever available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect assumptions about how market participants price an asset or liability based on the best available information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

F-37

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Fair Value Definition and Hierarchy (cont.)

The hierarchy is broken down into three levels based on the observability of inputs as follows:

•         Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

•         Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•         Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of observable inputs can vary by types of assets and liabilities and is affected by a wide variety of factors, including, for example, whether an instrument is established in the marketplace, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for assets and liabilities categorized in Level 3.

Level 3 Valuation Process

The estimated fair value of our portfolio of life insurance policies is determined on a quarterly basis by our portfolio management committee, taking into consideration changes in discount rate assumptions, estimated premium payments and life expectancy estimate assumptions, as well as any changes in economic and other relevant conditions. The discount rate incorporates current information about discount rates applied by other reporting companies owning portfolios of life insurance policies, the discount rates observed in other competitive purchases in the life insurance secondary market, market interest rates, the credit exposure to the insurance company that issued the life insurance policy and management’s estimate of the risk premium a purchaser would require to receive the future cash flows derived from our portfolio as a whole. Management has discretion regarding the combination of these and other factors when determining the discount rate.

These inputs are then used to estimate the discounted cash flows from the portfolio using the Model Actuarial Pricing System probabilistic portfolio price model, which estimates the cash flows using various mortality probabilities and scenarios. The valuation process includes a review by senior management as of each valuation date. We also engage a third-party expert to independently test the accuracy of the valuations using the inputs we provide on a quarterly basis.

The following table reconciles the beginning and ending fair value of our Level 3 investments in our portfolio of life insurance policies for the periods ended June 30, as follows:

		Three months ended June 30,								Six months ended June 30,
		2017				2016				2017				2016
Beginning balance		$	545,397,000			$	387,402,000			$	511,192,000			$	356,650,000
Purchases			19,432,000				24,869,000				42,122,000				48,700,000
Maturities (initial cost basis)			(3,014,000	)			(1,692,000	)			(5,384,000	)			(6,303,000	)
Net change in fair value			15,235,000				21,241,000				29,120,000				32,773,000
Ending balance		$	577,050,000			$	431,820,000			$	577,050,000			$	431,820,000

In the past, we periodically updated the independent life expectancy estimates on the insured lives in our portfolio, other than insured lives covered under small face amount policies (i.e., $1 million in face value benefits or less), on a continuous rotating three-year cycle, and through that effort attempted to update life expectancies for approximately one-twelfth of our portfolio each quarter. Currently, however, the terms of our senior credit facility with LNV Corporation require us to attempt to update life expectancies on a rotating two-year cycle.

F-38

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Fair Value Definition and Hierarchy (cont.)

The following table summarizes the inputs utilized in estimating the fair value of our portfolio of life insurance policies:

		As of June 30, 2017				As of December 31, 2016
Weighted-average age of insured, years*			81.5				81.6
Weighted-average life expectancy, months*			82.6				83.2
Average face amount per policy		$	1,924,000			$	1,973,000
Discount rate			10.81	%			10.96	%

____________

(*)      Weighted average by face amount of policy benefits

Life expectancy estimates and market discount rates are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. For example, if the life expectancy estimates were increased or decreased by four and eight months on each outstanding policy, and the discount rates were increased or decreased by 1% and 2%, while all other variables were held constant, the fair value of our investment in life insurance policies would increase or decrease as summarized below:

Change in Fair Value of the Investment in Life Insurance Policies

		Change in life expectancy estimates
		minus 8 months			minus 4 months			plus 4 months				plus 8 months
June 30, 2017		$	78,665,000		$	39,075,000		$	(38,334,000	)		$	(75,932,000	)
December 31, 2016		$	69,253,000		$	34,601,000		$	(33,846,000	)		$	(67,028,000	)

 

		Change in discount rate
		minus 2%			minus 1%			plus 1%				plus 2%
June 30, 2017		$	60,606,488		$	29,002,000		$	(26,678,000	)		$	(51,277,000	)
December 31, 2016		$	53,764,000		$	25,728,000		$	(23,668,000	)		$	(45,491,000	)

Other Fair Value Considerations

The carrying value of receivables, prepaid expenses, accounts payable and accrued expenses approximate fair value due to their short-term maturities and low credit risk. Using the income-based valuation approach, the estimated fair value of our Series I Secured Notes and L Bonds, having a combined aggregate face value of $414,666,000 as of June 30, 2017, is approximately $424,793,000 based on a weighted-average market interest rate of 6.60%. The carrying value of the senior credit facilities reflects interest charged at the commercial paper rate or 12-month LIBOR, as applicable, plus an applicable margin. The margin represents our credit risk, and the strength of the portfolio of life insurance policies collateralizing the debt. The overall rate reflects market, and the carrying value of the facility approximates fair value.

GWG MCA participates in the merchant cash advance industry by directly advancing sums to merchants and lending money, on a secured basis, to companies that advance sums to merchants. Each quarter, we review the carrying value of these advances and loans, and determine if an impairment reserve is necessary. At June 30, 2017 one of our secured loans was potentially impaired. The secured loan to Nulook Capital LLC had an outstanding balance of $2,060,000 and a loan loss reserve of $1,478,000 at June 30, 2017. We deem fair value to be the estimated collectible value on each loan or advance made from GWG MCA. Where we estimate the collectible amount to be less than the outstanding balance, we record a reserve for the difference. We recorded an impairment charge of $870,000 for the quarter ended June 30, 2017.

F-39

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(4) Fair Value Definition and Hierarchy (cont.)

The following table summarizes outstanding warrants related to our Series A offering (see Note 9) and the Company’s initial public offering as of June 30, 2017:

Month issued		Warrants issued		Fair value per share			Risk free rate			Volatility			Term
September 2012		2,500		$	0.72		0.31	%		40.49	%		5 years
September 2014		16,000		$	1.26		1.85	%		17.03	%		5 years
		18,500

 (5) Credit Facility — Autobahn Funding Company LLC

Through GWG DLP Funding III, LLC (“DLP III”) we are party to a $105 million senior credit facility with Autobahn Funding Company LLC (“Autobahn”), with a maturity date of June 30, 2018. The facility is governed by a Credit and Security Agreement (the “Agreement”), and DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) acts as the agent for Autobahn under the Agreement. On September 14, 2016, we paid off this senior credit facility in full with funds received from a new senior credit facility with LNV Corporation as described in Note 6.

Advances under the facility bear interest at a commercial paper rate of the lender at the time of the advance, or at the lender’s cost of borrowing plus 4.25%.

The amount outstanding under this facility was $0 at both June 30, 2017 and December 31, 2016, respectively. GWG Holdings is a performance guarantor of the various obligations of GWG Life, as servicer, under the Agreement. Obligations under the facility are secured by our pledge of ownership in our life insurance policies to DZ Bank through an arrangement under which Wells Fargo serves as securities intermediary.

The Agreement has certain financial (as described below) and non-financial covenants, and we were in compliance with these covenants at both June 30, 2017 and December 31, 2016.

We have agreed to maintain (i) a positive consolidated net income on a non-GAAP basis (as defined and calculated under the Agreement) for each complete fiscal year, (ii) a tangible net worth on a non-GAAP basis (again, as defined and calculated under the Agreement) of not less than $45 million, and (iii) cash and eligible investments of $15 million or above.

Consolidated non-GAAP net income and non-GAAP tangible net worth for the four quarters ended and as of June 30, 2017, as calculated under the Agreement, was $29,590,000 and $225,661,000, respectively.

No life insurance policies were pledged and no funds were available for additional borrowings under the facility at June 30, 2017 and December 31, 2016.

(6) Credit Facility — LNV Corporation

On September 14, 2016, we entered into a senior credit facility with LNV Corporation as lender through our subsidiary GWG DLP Funding IV, LLC. The Loan Agreement governing the facility makes available a total of up to $172,300,000 in credit with a maturity date of September 14, 2026. Additional quarterly advances are available under the Loan Agreement at the LIBOR rate as defined in the Loan Agreement. Interest will accrue on amounts borrowed under the Loan Agreement at an annual interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (A) the greater of 12-month LIBOR or the federal funds rate (as defined in the agreement) plus one-half of one percent per annum, plus (B) 5.75% per annum. The effective rate at June 30, 2017 was 7.59%. Interest payments are made on a quarterly basis.

The amount outstanding under this facility was $155,625,000 at June 30, 2017 and $162,725,000 at December 31, 2016. Obligations under the facility are secured by a security interest in DLP IV’s assets, for the benefit of the lenders under the Loan Agreement, through an arrangement under which Wells Fargo serves as securities intermediary. The

F-40

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(6) Credit Facility — LNV Corporation (cont.)

life insurance policies owned by DLP IV do not serve as direct collateral for the obligations of GWG Holdings under its L Bonds or Series I Secured Notes. The difference between the outstanding balance as of June 30, 2017 and the carrying amount relates to unamortized debt issuance costs.

The Loan Agreement requires DLP IV to maintain a reserve account in an amount sufficient to pay 12 months of servicing, administrative and third party expenses identified under the Loan Agreement, and 12 months of debt service as calculated under the Loan Agreement. As of June 30, 2017, the amount set aside in this specific reserve account was $27,523,000.

The Loan Agreement has certain financial and nonfinancial covenants, and we were in compliance with these covenants at June 30, 2017 and December 31, 2016.

No funds were available for additional borrowings under the facility at June 30, 2017.

(7) Series I Secured Notes

Series I Secured Notes (“Series I”) are legal obligations of GWG Life and were privately offered and sold from August 2009 through June 2011. The Series I are secured by the assets of GWG Life and are subordinate to obligations under our senior credit facilities (see Notes 5 and 6). We are party to a Third Amended and Restated Note Issuance and Security Agreement dated November 1, 2011, as amended, under which GWG Life is obligor, GWG Holdings is guarantor, and Lord Securities Corporation serves as trustee of the GWG Life Trust (“Trust”). This agreement contains certain financial and non-financial covenants, and we were in compliance with these covenants at both June 30, 2017 and December 31, 2016.

The Series I were sold with original maturity dates ranging from six months to seven years, and with fixed interest rates varying from 5.65% to 9.55% depending on the term of the note. The Series I have renewal features under which we may elect to permit their renewal, subject to the right of noteholders to elect to receive payment at maturity. Since September 1, 2016, we are no longer renewing the Series I.

Interest on the Series I is payable monthly, quarterly, annually or at maturity depending on the election of the investor. At June 30, 2017 and December 31, 2016, the weighted-average interest rate of our Series I was 8.72% and 8.68%, respectively. The principal amount of Series I outstanding was $6,815,000 and $16,614,000 at June 30, 2017 and December 31, 2016, respectively. The difference between the amount outstanding on the Series I and the carrying amount on our balance sheet is due to netting of unamortized deferred issuance costs and including redemptions in process. Overall, interest expense includes amortization of deferred financing and issuance costs of $29,000 and $74,000 for the three and six months ended June 30, 2017 and $82,000 and $193,000 for the three and six months ended June 30, 2016. Future expected amortization of deferred financing costs is $134,000 in total over the next five years.

Future contractual maturities of Series I payable, and future amortization of their deferred financing costs, at June 30, 2017 are as follows:

Years Ending December 31,		Contractual Maturities			Amortization of Deferred Financing Costs
Six months ending December 31, 2017		$	749,000		$	3,000
2018			2,376,000			25,000
2019			1,024,000			17,000
2020			1,725,000			41,000
2021			941,000			48,000
		$	6,815,000		$	134,000

F-41

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(8) L Bonds

Our L Bonds are legal obligations of GWG Holdings. Obligations under the L Bonds are secured by the assets of GWG Holdings and by GWG Life, as a guarantor, and are subordinate to the obligations under our senior credit facilities (see Notes 5 and 6). We began publicly offering and selling L Bonds in January 2012 under the name “Renewable Secured Debentures.” These debt securities were re-named “L Bonds” in January 2015. L Bonds are publicly offered and sold on a continuous basis under a registration statement permitting us to sell up to $1.0 billion in principal amount of L Bonds. We are party to an indenture governing the L Bonds dated October 19, 2011, as amended (“Indenture”), under which GWG Holdings is obligor, GWG Life is guarantor, and Bank of Utah serves as indenture trustee. The Indenture contains certain financial and non-financial covenants, and we were in compliance with these covenants at June 30, 2017 and December 31, 2016.

Effective September 1, 2016, we ceased selling 6-month and 1-year L Bonds until further notice. In addition, effective September 1, 2016, the L Bond interest rates that we offer changed to 5.50%, 6.25%, 7.50% and 8.50% for the 2-, 3-, 5- and 7-year L Bonds, respectively. The bonds have renewal features under which we may elect to permit their renewal, subject to the right of bondholders to elect to receive payment at maturity. Interest is payable monthly or annually depending on the election of the investor.

At June 30, 2017 and December 31, 2016, the weighted-average interest rate of our L Bonds was 7.30% and 7.23%, respectively. The principal amount of L Bonds outstanding was $407,850,000 and $387,067,000 at June 30, 2017 and December 31, 2016, respectively. The difference between the amount of outstanding L Bonds and the carrying amount on our balance sheets is due to netting of unamortized deferred issuance costs, cash receipts for new issuances and payments of redemptions in process. Amortization of deferred issuance costs was $927,000 and $2,856,000 for the three and six months ended June 30, 2017 and $1,721,000 and $3,289,000 for the three and six months ended June 30, 2016. Future expected amortization of deferred financing costs as of June 30, 2017 is $13,539,000 in total over the next seven years.

Future contractual maturities of L Bonds, and future amortization of their deferred financing costs, at June 30, 2017 are as follows:

Years Ending December 31,		Contractual Maturities			Amortization of Deferred Financing Costs
Six months ending December 31, 2017		$	47,068,000		$	353,000
2018			108,772,000			2,181,000
2019			116,767,000			4,128,000
2020			49,062,000			2,147,000
2021			28,753,000			1,411,000
Thereafter			57,428,000			3,319,000
		$	407,850,000		$	13,539,000

 (9) Series A Convertible Preferred Stock

From July 2011 through September 2012, we privately offered shares of Series A of GWG Holdings at $7.50 per share. In the offering, we sold an aggregate of 3,278,000 shares for gross consideration of $24,582,000. Holders of Series A are entitled to cumulative dividends at the rate of 10% per annum, paid quarterly. Dividends on the Series A are accumulating and are recorded as a reduction to additional paid-in capital. Under certain circumstances described in the Certificate of Designation for the Series A, additional Series A shares may be issued in lieu of cash dividends at the rate of $7.00 per share.

Holders of Series A are entitled to a liquidation preference equal to the stated value of their preferred shares (i.e., $7.50 per share) plus accrued but unpaid dividends. Holders of Series A may presently convert each share of their Series A into 0.75 shares of our common stock at a price of $10.00 per share.

F-42

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(9) Series A Convertible Preferred Stock (cont.)

As of June 30, 2017, we issued an aggregate of 521,000 shares of Series A in satisfaction of $3,647,000 in dividends on the Series A, and an aggregate of 696,000 shares of Series A were converted into 522,000 shares of our common stock. As of June 30, 2017, we had 2,672,000 Series A shares outstanding with respect to which we incurred aggregate issuance costs of $2,838,000, all of which is included as a component of additional paid-in capital.

Purchasers of Series A in our offering received warrants to purchase an aggregate of 431,954 shares of our common stock at an exercise price of $12.50 per share. The grant date fair value of these warrants was $428,000. As of June 30, 2017, none of these warrants had been exercised and 413,000 warrants have expired. The weighted-average remaining life of these warrants was 1.94 and 0.56 years at June 30, 2017 and December 31, 2016, respectively.

In September 2014, we completed, at our discretion, a public offering of our common stock and, as a result, the Series A was reclassified from temporary equity to permanent equity. We may redeem Series A shares at a price equal to 110% of their liquidation preference ($7.50 per share) at any time. As of June 30, 2017, we have redeemed an aggregate of 439,000 shares of Series A.

(10) Redeemable Preferred Stock

On November 30, 2015, our public offering of up to 100,000 shares of Redeemable Preferred Stock (“RPS”) at $1,000 per share was declared effective. Holders of RPS are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS are recorded as a reduction to additional paid-in capital. Under certain circumstances described in the Certificate of Designation for the RPS, additional shares of RPS may be issued in lieu of cash dividends.

The RPS ranks senior to our common stock and pari passu with our Series A, and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS may presently convert their RPS into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $15.00 and in an aggregate amount limited to 15% of the stated value of RPS originally purchased by such holder from us and still held by such holder.

Holders of RPS may request that we redeem their RPS at a price equal to their stated value plus accrued but unpaid dividends, less an applicable redemption fee, if any. Nevertheless, the Certificate of Designation for RPS permits us complete discretion to grant or decline redemption requests. Subject to certain restrictions and conditions, we may also redeem shares of RPS without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, after one year from the date of original issuance, we may, at our option, call and redeem shares of RPS at a price equal to their liquidation preference.

As of June 30, 2017, we had sold 99,127 shares of RPS for aggregate gross consideration of $99,127,000, and incurred approximately $7,019,000 of selling costs related to the sale of those shares. On March 31, 2017, we closed the RPS offering to investors.

At the time of its issuance, we determined that the RPS contained two embedded features: (1) optional redemption by the holder and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the RPS should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. Based on our assessment under Accounting Standards Codification 470 “Debt” (“ASC 470”) we do not believe bifurcation of either the holder’s redemption or conversion feature is appropriate.

(11) Series 2 Redeemable Preferred Stock

On February 14, 2017, our public offering of up to 150,000 shares of Series 2 Redeemable Preferred Stock (“RPS 2”) at $1,000 per share was declared effective. Holders of RPS 2 are entitled to cumulative dividends at the rate of 7% per annum, paid monthly. Dividends on the RPS 2, when payable, will be recorded as a reduction to additional paid-in

F-43

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(11) Series 2 Redeemable Preferred Stock (cont.)

capital. Under certain circumstances described in the Certificate of Designation for the RPS 2, additional shares of RPS 2 may be issued in lieu of cash dividends.

The RPS 2 ranks senior to our common stock and pari passu with our Series A and RPS, and entitles its holders to a liquidation preference equal to the stated value per share (i.e., $1,000) plus accrued but unpaid dividends. Holders of RPS 2 may, less an applicable conversion discount, if any, convert their RPS 2 into our common stock at a conversion price equal to the volume-weighted average price of our common stock for the 20 trading days immediately prior to the date of conversion, subject to a minimum conversion price of $12.75 and in an aggregate amount limited to 10% of the stated value of RPS 2 originally purchased by such holder from us and still held by such holder.

Holders of RPS 2 may request that we redeem their RPS 2 shares at a price equal to their liquidation preference, less an applicable redemption fee, if any. Nevertheless, the Certificate of Designation for RPS 2 permits us complete discretion to grant or decline requests for redemption. Subject to certain restrictions and conditions, we may also redeem shares of RPS 2 without a redemption fee upon a holder’s death, total disability or bankruptcy. In addition, we may, at our option, call and redeem shares of RPS 2 at a price equal to their liquidation preference (subject to a minimum redemption price, in the event of redemptions occurring less than one year after issuance, of 107% of the stated value of the shares being redeemed).

As of June 30, 2017, we had sold 22,536 shares of RPS 2 for aggregate gross consideration of $22,536,000, and incurred approximately $1,078,000 of selling costs related to the sale of those shares.

At the time of its issuance, we determined that the RPS 2 contained two embedded features: (1) optional redemption by the holder and (2) optional conversion by the holder. We determined that each of the embedded features met the definition of a derivative and that the RPS 2 should be considered an equity host for the purposes of assessing the embedded derivatives for potential bifurcation. Based on our assessment under ASC 470 we do not believe bifurcation of either the holder’s redemption or conversion feature is appropriate.

(12) Income Taxes

We had a current income tax liability of $0 as of both June 30, 2017 and December 31, 2016. The components of deferred income tax expense (benefit) for the three and six months ended June 30, 2017 and 2016, respectfully, consisted of the following:

		Three Months Ended								Six Months Ended
		June 30, 2017				June 30, 2016				June 30, 2017				June 30, 2016
Income tax provision (benefit):
Current:
Federal		$	(27,000	)		$	(23,000	)		$	—			$	—
State		$	(7,000	)		$	(6,000	)		$	—			$	—
Total current tax expense (benefit)			(34,000	)			(29,000	)							—
Deferred:
Federal		$	(2,798,000	)		$	1,397,000			$	(2,818,000	)		$	2,203,000
State		$	(885,000	)		$	454,000			$	(900,000	)		$	704,000
Total deferred tax expense (benefit)			(3,683,000	)			1,851,000				(3,718,000	)			2,907,000
Total income tax expense (benefit)			(3,717,000	)			1,822,000				(3,718,000	)			2,907,000

We provide for a valuation allowance when it is not considered “more likely than not” that our deferred tax assets will be realized. At both June 30, 2017 and December 31, 2016, based upon all available evidence, we provided a valuation allowance of $2,164,000 against deferred tax assets related to the likelihood of recovering the tax benefit of a capital loss on a note receivable from a related entity and other capital losses.

F-44

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(12) Income Taxes (cont.)

The Company is engaged in acquiring of life insurance policies and holding them to maturity. Due to the nature of holding policies and the aging of the underlying insureds, it will be more likely than not that the Company will recognize taxable income as the policies in our portfolio start maturing at an accelerated rate in the near future. Due to this we believe that sufficient taxable income will be recognized during the net operating loss carryover period to utilize the reported deferred tax asset, and that no additional valuation allowance, other than that already recorded, is required.

Accounting Standards Codification 740, Income Taxes (“ASC 740”) requires the reporting of certain tax positions that do not meet a threshold of “more likely than not” to be recorded as uncertain tax benefits. It is management’s responsibility to determine whether it is “more likely than not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based upon the technical merits of the position. Management has reviewed all income tax positions taken or expected to be taken for all open years and determined that the income tax positions are appropriately stated and supported. We do not anticipate that the total unrecognized tax benefits will significantly change prior to June 30, 2017.

Under our accounting policies, interest and penalties on unrecognized tax benefits, as well as interest received from favorable tax settlements, are recognized as components of income tax expense. At June 30, 2017 and December 31, 2016, we recorded no accrued interest or penalties related to uncertain tax positions.

Our income tax returns for tax years ended December 31, 2013, 2014, 2015 and 2016 remain open to examination by the Internal Revenue Service and various state taxing jurisdictions. Our tax return for tax year 2012 has now been examined by the IRS (finalized April of 2015) but is open for examination by various state taxing jurisdictions.

(13) Common Stock

In September 2014, we consummated an initial public offering of our common stock resulting in the sale of 800,000 shares of common stock at $12.50 per share, and net proceeds of approximately $8.6 million after the payment of underwriting commissions, discounts and expense reimbursements. In connection with this offering, we listed our common stock on the Nasdaq Capital Market under the ticker symbol “GWGH.”

(14) Stock Incentive Plan

We adopted our 2013 Stock Incentive Plan in March 2013. The Compensation Committee of our Board of Directors is responsible for the administration of the plan. Participants under the plan may be granted incentive stock options and non-statutory stock options; stock appreciation rights; stock awards; restricted stock; restricted stock units; and performance shares. Eligible participants include officers and employees of GWG Holdings and its subsidiaries, members of our Board of Directors, and consultants. As of June 30, 2017, 3,000,000 common stock options are issuable under the plan.

Stock Options

Through June 30, 2017, we had issued stock options for 1,532,000 shares of common stock to employees, officers, and directors under the plan. Options for 740,000 shares have vested, and the remaining options are scheduled to vest over three years. The options were issued with an exercise price between $6.35 and $10.38 for those beneficially owning more than 10% of our common stock, and between $4.83 and $10.76 for all others, which is equal to the estimated market price of the shares on the date of grant. The expected annualized volatility used in the Black-Scholes model valuation of options issued during the period was 20.0%. The annual volatility rate is based on the standard deviation of the average continuously compounded rate of return of five selected comparable companies over the previous 52 weeks. A forfeiture rate of 15% is based on historical information and expected future trend. As of June 30, 2017, stock options for 679,000 shares had been forfeited and stock options for 70,000 shares had been exercised.

F-45

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(14) Stock Incentive Plan (cont.)

On April 17, 2017, GWG Holdings, Inc. entered into a Separation Agreement with Mr. Jon Gangelhoff. Under this agreement, Mr. Gangelhoff retired and resigned his position as Chief Operating Officer. In addition, all of Mr. Gangelhoff’s unvested outstanding common stock options at the time of his separation were vested under the Separation Agreement.

Outstanding stock options:

		Vested			Un-vested			Total
Balance as of December 31, 2015		483,703			569,912			1,053,615
Granted during the year		22,500			608,350			630,850
Vested during the year		251,788			(251,788	)		—
Exercised during the year
Forfeited during the year		(19,926	)		(82,140	)		(102,066	)
Balance as of December 31, 2016		738,065			844,334			1,582,399
Granted year-to-date		20,100			213,300			233,400
Vested year-to-date		165,783			(165,783	)		—
Exercised year-to-date		(42,000	)		—			(42,000	)
Forfeited year-to-date		(142,119	)		(99,415	)		(241,534	)
Balance as of June 30, 2017		739,829			792,436			1,532,265

Compensation expense related to unvested options not yet recognized is $541,000. We expect to recognize this compensation expense over the next three years ($89,000 in 2017, $217,000 in 2018, $167,000 in 2019, and $68,000 in 2020).

Stock Appreciation Rights (SARs)

As of June 30, 2017, we have issued SARs for 280,472 shares of common stock to employees. The strike price of the SARs was between $7.84 and $10.38, which was equal to the market price of the common stock at the date of issuance. As of June 30, 2017, 114,031 of the SARs were vested. On June 30, 2017 the market price of GWG’s common stock was $10.58.

Outstanding Stock Appreciation Rights:

		Vested		Un-vested			Total
Balance as of December 31, 2015		—		—			—
Granted during the year		106,608		133,127			239,735
Forfeited during the year		—		—			—
Balance as of December 31, 2016		106,608		133,127			239,735
Granted during the year		4,063		36,674			40,737
Vested during the year		3,360		(3,360	)
Forfeited during the year		—		—			—
Balance as of June 30, 2017		114,031		166,441			280,472

A liability for the SARs was recorded on June 30, 2017 in the amount of $316,000 and compensation expense was charged for the amount of $312,000.

Upon the exercise of SARs, the Company is obligated to make cash payment equal to the positive difference between the fair market value of the Company’s common stock on the date of exercise less the fair market value of the common stock on the date of grant.

F-46

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(15) Net Loss per Common Share

We have outstanding Series A, RPS and RPS 2, as described in Notes 9, 10 and 11. The Series A, RPS and RPS 2 are anti-dilutive to our net loss or income attributable to common shareholders calculation at both June 30, 2017 and 2016. We also issued warrants to purchase common stock in conjunction with the sale of Series A (see Note 9). Both those warrants and our vested stock options are anti-dilutive at both June 30, 2017 and 2016 and have not been included in the fully diluted net loss per common share calculation.

(16) Commitments

We are party to an office lease with U.S. Bank National Association as the landlord. On September 1, 2015, we entered into an amendment to our original lease that expanded the leased space to 17,687 square feet and extended the term through 2025. Under the amended lease we are obligated to pay base rent plus common area maintenance and a share of building operating costs. Rent expenses under this agreement were $110,000 and $223,000 during the three and six months ended June 30, 2017 and $123,000 and $232,000 for the three and six months ended June 30, 2016.

Minimum lease payments under the amended lease are as follows:

Six months ending December 31, 2017		$	90,000
2018			185,000
2019			191,000
2020			198,000
2021			204,000
2022			210,000
2023			217,000
2024			223,000
2025			230,000
		$	1,748,000

 (17) Contingencies

Litigation — In the normal course of business, we are involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on our financial position, results of operations or cash flows.

(18) Guarantee of L Bonds

We are publicly offering and selling L Bonds under a registration statement declared effective by the SEC, as described in Note 8. Our obligations under the L Bonds are secured by substantially all the assets of GWG Holdings, a pledge of all our common stock held individually by our largest stockholders, and by a guarantee and corresponding grant of a security interest in substantially all the assets of GWG Life. As a guarantor, GWG Life has fully and unconditionally guaranteed the payment of principal and interest on the L Bonds. Substantially all of our life insurance policies are held by DLP III, DLP IV and the Trust. GWG Life’s equity in DLP III and DLP IV serve as collateral for our L Bond obligations. The policies held by DLP III and DLP IV are not collateral for the L Bond obligations as such policies serve as direct collateral for the senior credit facilities.

The consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantor and issuer because management does not believe that separate financial statements and related disclosures would be material to investors. There are currently no significant restrictions on the ability of GWG Holdings or GWG Life, the guarantor subsidiary, to obtain funds from its subsidiaries by dividend or loan, except as described in these notes. A majority of insurance policies we own are subject to a collateral arrangement with LNV Corporation described in Note 6. Under this arrangement, collection and escrow accounts are used to fund premiums for the insurance policies and to pay interest and other charges under the senior credit facility.

F-47

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

The following represents consolidating financial information as of June 30, 2017 and December 31, 2016, with respect to the financial position, and for the three and six months ended June 30, 2017 and 2016, with respect to results of operations and cash flows of GWG Holdings and its subsidiaries. The parent column presents the financial information of GWG Holdings, the primary obligor for the L Bonds. The guarantor subsidiary column represents the financial information of GWG Life, the guarantor subsidiary of the L Bonds, presenting its investment in DLP III, DLP IV and the Trust under the equity method. The non-guarantor subsidiaries column presents the financial information of all non-guarantor subsidiaries, including DLP III, DLP IV and the Trust.

Condensed Consolidating Balance Sheets

June 30, 2017		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
ASSETS
Cash and cash equivalents		$	49,632,850			$	1,451,260			$	1,209,362		$	—			$	52,293,472
Restricted cash			—				4,454,226				41,705,405			—				46,159,631
Investment in life insurance policies, at fair value			—				41,720,141				535,329,411			—				577,049,552
Secured MCA advances			—				—				3,525,381			—				3,525,381
Life insurance policy benefits receivable			—				—				6,970,000			—				6,970,000
Deferred taxes, net			1,620,303				—				—			—				1,620,303
Other assets			3,030,391				1,435,297				352,461			(942,339	)			3,875,810
Investment in subsidiaries			473,239,085				429,798,593				—			(903,037,678	)			—
TOTAL ASSETS		$	527,522,629			$	478,859,517			$	589,092,020		$	(903,980,017	)		$	691,494,149
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities		$	—			$	(1,076,118	)		$	150,084,944		$	—			$	149,008,826
Series I Secured Notes			—				6,680,961				—			—				6,680,961
L Bonds			400,832,308				—				—			—				400,832,308
Accounts payable			1,166,827				1,377,121				1,616,149			—				4,160,097
Interest and dividends payable			10,312,340				1,087,782				2,995,669			(8,747	)			14,387,044
Other accrued expenses			1,321,915				990,255				1,157,096			(933,592	)			2,535,674
TOTAL LIABILITIES			413,633,390				9,060,001				155,853,858			(942,339	)			577,604,910
STOCKHOLDERS’ EQUITY
Member’s capital			—				469,799,516				433,238,162			(903,037,678	)			—
Convertible preferred stock			19,732,262				—				—			—				19,732,262
Redeemable preferred stock and Series 2 redeemable preferred stock			118,707,840				—				—			—				118,707,840
Common stock			5,784				—				—			—				5,784
Accumulated deficit			(24,556,647	)			—				—			—				(24,556,647	)
TOTAL STOCKHOLDERS’ EQUITY			113,889,239				469,799,516				433,238,162			(903,037,678	)			113,889,239
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	527,522,629			$	478,859,517			$	589,092,020		$	(903,980,017	)		$	691,494,149

F-48

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Condensed Consolidating Balance Sheets (continued)

December 31, 2016		Parent				Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations				Consolidated
ASSETS
Cash and cash equivalents		$	28,481,047			$	49,360,952		$	644,983		$	—			$	78,486,982
Restricted cash			—				2,117,649			35,708,947			—				37,826,596
Investment in life insurance policies, at fair value			—				41,277,896			469,914,458			—				511,192,354
Secured MCA advances			—				—			5,703,147			—				5,703,147
Life insurance policy benefits receivable			—				—			5,345,000			—				5,345,000
Other assets			3,854,233				2,056,822			810,640			(2,033,592	)			4,688,103
Investment in subsidiaries			429,971,148				352,337,037			—			(782,308,185	)			—
TOTAL ASSETS		$	462,306,428			$	447,150,356		$	518,127,175		$	(784,341,777	)		$	643,242,182
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES
Senior credit facilities		$	—			$	—		$	156,064,818		$	—			$	156,064,818
Series I Secured Notes			—				16,404,836			—			—				16,404,836
L Bonds			381,312,587				—			—			—				381,312,587
Accounts payable			853,470				731,697			641,545			—				2,226,712
Interest and dividends payable			9,882,133				3,743,277			2,535,189			—				16,160,599
Other accrued expenses			862,369				544,032			2,303,952			(2,033,592	)			1,676,761
Deferred taxes, net			2,097,371				—			—			—				2,097,371
TOTAL LIABILITIES			395,007,930				21,423,842			161,545,504			(2,033,592	)			575,943,684
STOCKHOLDERS’ EQUITY
Member’s capital			—				425,726,514			356,581,671			(782,308,185	)			—
Convertible preferred stock			19,701,133				—			—			—				19,701,133
Redeemable preferred stock			59,025,164				—			—			—				59,025,164
Common stock			5,980				—			—			—				5,980
Additional paid-in capital			7,383,515				—			—			—				7,383,515
Accumulated deficit			(18,817,294	)			—			—			—				(18,817,294	)
TOTAL STOCKHOLDERS’ EQUITY			67,298,498				425,726,514			356,581,671			(782,308,185	)			67,298,498
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	462,306,428			$	447,150,356		$	518,127,175		$	(784,341,777	)		$	643,242,182

F-49

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Condensed Consolidating Statements of Operations

For the three months ended June 30, 2017		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing income		$	—			$	133,250			$	—		$	(133,250	)		$	—
Gain on life insurance policies, net			—				201,685				11,094,581			—				11,296,266
MCA income			—				—				133,583			—				133,583
Interest and other income			69,221				30,134				164,558			(26,176	)			237,737
TOTAL REVENUE			69,221				365,069				11,392,722			(159,426	)			11,667,586
EXPENSES
Policy servicing fees			—				—				133,250			(133,250	)			—
Interest expense			8,325,874				391,061				3,555,266			(26,176	)			12,246,025
Employee compensation and benefits			2,109,562				1,529,188				102,549			—				3,741,299
Legal and professional fees			284,756				179,461				866,372			—				1,330,589
Provision for MCA advances			—				—				878,000			—				878,000
Other expenses			1,885,146				650,320				347,632			—				2,883,098
TOTAL EXPENSES			12,605,338				2,750,030				5,883,069			(159,426	)			21,079,011
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(12,536,117	)			(2,384,961	)			5,509,653			—				(9,411,425	)
EQUITY IN INCOME OF SUBSIDIARIES			3,124,692				7,241,779				—			(10,366,471	)			—
INCOME (LOSS) BEFORE INCOME TAXES			(9,411,425	)			4,856,818				5,509,653			(10,366,471	)			(9,411,425	)
INCOME TAX BENEFIT			(3,717,174	)			—				—			—				(3,717,174	)
NET INCOME (LOSS)			(5,694,251	)			4,856,818				5,509,653			(10,366,471	)			(5,694,251	)
Preferred stock dividends			2,031,097				—				—			—				2,031,097
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(7,725,348	)		$	4,856,818			$	5,509,653		$	(10,366,471	)		$	(7,725,348	)

 

For the three months ended June 30, 2016		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing income		$	—			$	—			$	—		$	—			$	—
Gain on life insurance policies, net			—				—				20,383,347			—				20,383,347
MCA income			—				—				223,255			—				223,255
Interest and other income			71,222				706				157,927			(58,975	)			170,880
TOTAL REVENUE			71,222				706				20,764,529			(58,975	)			20,777,482
EXPENSES
Policy servicing fees			—				—				—			—				—
Interest expense			7,530,444				644,735				1,648,452			(58,975	)			9,764,656
Employee compensation and benefits			1,638,893				1,283,968				148,646			—				3,071,507
Legal and professional fees			783,596				476,505				44,252			—				1,304,353
Other expenses			1,519,349				425,354				387,982			—				2,332,685
TOTAL EXPENSES			11,472,282				2,830,562				2,229,332			(58,975	)			16,473,201
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(11,401,060	)			(2,829,856	)			18,535,197			—				4,304,281
EQUITY IN INCOME OF SUBSIDIARIES			15,705,341				18,835,036				—			(34,540,377	)			—
INCOME BEFORE INCOME TAXES			4,304,281				16,005,180				18,535,197			(34,540,377	)			4,340,281
INCOME TAX EXPENSE			1,822,030				—				—			—				1,822,030
NET INCOME			2,482,250				16,005,180				18,535,197			(34,540,377	)			2,482,250
Preferred stock dividends			600,924				—				—			—				600,924
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	1,881,326			$	16,005,180			$	18,535,197		$	(34,540,377	)		$	1,881,326

F-50

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Condensed Consolidating Statements of Operations (continued)

For the six months ended June 30, 2017		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing income		$	—			$	186,275			$	—		$	(186,275	)		$	—
Gain on life insurance policies, net			—				1,701,012				28,995,074			—				30,696,086
MCA income			—				—				380,159			—				380,159
Interest and other income			154,228				49,010				543,643			(67,195	)			679,686
TOTAL REVENUE			154,228				1,936,297				29,918,876			(253,470	)			31,755,931
EXPENSES
Policy servicing fees			—				—				186,275			(186,275	)			—
Interest expense			17,587,908				677,415				7,292,113			(67,195	)			25,490,241
Employee compensation and benefits			4,038,357				2,750,770				115,232			—				6,904,359
Legal and professional fees			777,571				440,549				1,058,817			—				2,276,937
Provision for MCA advances			—				—				878,000			—				878,000
Other expenses			3,548,149				1,533,051				582,221			—				5,663,421
TOTAL EXPENSES			25,951,985				5,401,785				10,112,658			(253,470	)			41,212,958
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(25,797,757	)			(3,465,488	)			19,806,218			—				(9,457,027	)
EQUITY IN INCOME OF SUBSIDIARIES			16,340,730				21,305,986				—			(37,646,716	)			—
INCOME (LOSS) BEFORE INCOME TAXES			(9,457,027	)			17,840,498				19,806,218			(37,646,716	)			(9,457,027	)
INCOME TAX BENEFIT			(3,717,674	)			—				—			—				(3,717,674	)
NET INCOME (LOSS)			(5,739,353	)			17,840,498				19,806,218			(37,646,716	)			(5,739,353	)
Preferred stock dividends			(3,898,857	)			—				—			—				(3,898,857	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(9,638,210	)		$	17,840,498			$	19,806,218		$	(37,646,716	)		$	(9,638,210	)

 

For the six months ended June 30, 2016		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries			Eliminations				Consolidated
REVENUE
Policy servicing income		$	—			$	13,417			$	—		$	(13,417	)		$	—
Gain on life insurance policies, net			—				—				38,097,059			—				38,097,059
MCA income			—				—				368,216			—				368,216
Interest and other income			106,019				1,012				198,946			(89,877	)			216,100
TOTAL REVENUE			106,019				14,429				38,664,221			(103,294	)			38,681,375
EXPENSES
Policy servicing fees			—				—				13,417			(13,417	)			—
Interest expense			14,618,037				1,301,971				3,083,680			(89,877	)			18,913,811
Employee compensation and benefits			3,175,323				2,113,049				249,333			—				5,537,705
Legal and professional fees			1,378,335				1,011,155				120,991			—				2,510,481
Other expenses			2,777,326				1,394,028				573,491			—				4,744,845
TOTAL EXPENSES			21,949,021				5,820,203				4,040,912			(103,294	)			31,706,842
INCOME (LOSS) BEFORE EQUITY IN INCOME OF SUBSIDIARIES			(21,843,002	)			(5,805,774	)			34,623,309			—				6,974,533
EQUITY IN INCOME OF SUBSIDIARIES			28,817,535				35,136,402				—			(63,953,937	)			—
INCOME BEFORE INCOME TAXES			6,974,533				29,330,628				34,623,309			(63,953,937	)			6,974,533
INCOME TAX EXPENSE			2,906,747				—				—			—				2,906,747
NET INCOME			4,067,786				29,330,628				34,623,309			(63,953,937	)			4,067,786
Preferred stock dividends			(1,112,155	)			—				—			—				(1,112,155	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	2,955,631			$	29,330,628			$	34,623,309		$	(63,953,937	)		$	2,955,631

F-51

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Condensed Consolidating Statements of Cash Flows

For the three months ended June 30, 2017		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(5,694,251	)		$	4,856,818			$	5,509,653			$	(10,366,471	)		$	(5,694,251	)
Adjustments to reconcile net income to net cash flows from operating activities:
Equity of subsidiaries			(3,124,692	)			(7,241,779	)			—				10,366,471				—
Change in fair value of life insurance policies			—				(134,399	)			(15,101,103	)			—				(15,235,502	)
Amortization of deferred financing and issuance costs			926,816				28,964				542,168				—				1,497,948
Deferred income taxes			(3,717,174	)			—				—				—				(3,717,174	)
Preferred stock dividends payable			363,959				—				—				—				363,959
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			—				600,000				1,405,000				—				2,005,000
Other assets			(32,646,205	)			(23,493,280	)			(297,040	)			55,878,537				(557,988	)
Increase (decrease) in operating liabilities:
Due to related party			398,030				—				(400,000	)			—				(1,970	)
Accounts payable and accrued expenses			1,213,002				(1,405,114	)			1,230,967				—				1,038,855
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(42,280,515	)			(26,788,790	)			(7,110,355	)			55,878,537				(20,301,123	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(19,432,338	)			—				(19,432,338	)
Carrying value of matured life insurance policies			—				256,152				2,758,682				—				3,014,834
Investment in Secured MCA advances			—				—				(39,671	)			—				(39,671	)
Proceeds from Secured MCA advances			—				—				653,315				—				653,315
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				256,152				(16,060,012	)			—				(15,803,860	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on senior credit facilities			—				—				(3,845,037	)			—				(3,845,037	)
Payments for issuance of senior debt			—				(1,076,118	)			—				—				(1,076,118	)
Payments for redemption of Series I Secured Notes			—				(4,348,372	)			—				—				(4,348,372	)
Proceeds from issuance of L Bonds			31,875,811				—				—				—				31,875,811
Payments for issuance and redemption of L Bonds			(15,025,566	)			—				—				—				(15,025,566	)
Payments to restricted cash			—				(893,893	)			2,825,851				—				1,931,958
Issuance of member capital			—				31,450,843				24,427,694				(55,878,537	)			—
Issuance of common stock			4				—				—				—				4
Proceeds from issuance of preferred stock			34,301,747				—				—				—				34,301,747
Payments for issuance and redemption of preferred stock			(3,318,211	)			—				—				—				(3,318,211	)
Payments of preferred stock dividends			(2,031,097	)			—				—				—				(2,031,097	)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			45,802,688				25,132,460				23,408,508				(55,878,537	)			38,465,119
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			3,522,173				(1,400,178	)			238,141								2,360,136
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			46,110,677				2,851,438				971,221				—				49,933,336
END OF THE PERIOD		$	49,632,850			$	1,451,260			$	1,209,362			$	—			$	52,293,472

F-52

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Consolidating Statements of Cash Flows (continued)

For the three months ended June 30, 2016		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	2,482,250			$	16,005,180			$	18,535,197			$	(34,540,377	)		$	2,482,250
Adjustments to reconcile net loss to net cash flows from operating activities:
Equity of subsidiaries			(15,705,341	)			(18,835,036	)			—				34,540,377				—
Change in fair value of life insurance policies			—				—				(21,241,376	)			—				(21,241,376	)
Amortization of deferred financing and issuance costs			2,261,032				(282,257	)			549,199				—				2,527,974
Deferred income taxes			1,851,018				—				—				—				1,851,018
Preferred stock dividends payable			166,472				—				—				—				166,472
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			—				—				9,083,817				—				9,083,817
Other assets			(21,796,633	)			(12,903,506	)			—				33,489,247				(1,210,892	)
Increase (decrease) in operating liabilities:
Due to related party			(71,975	)			17,802				(1,760,000	)			—				(1,814,173	)
Accounts payable and other accrued expenses			1,458,476				130,596				(2,364,285	)			—				(775,213	)
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(29,354,701	)			(15,867,221	)			2,802,552				33,489,247				(8,930,123	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(24,373,714	)			—				(24,373,714	)
Carrying value of matured life insurance policies			—				—				1,691,764				—				1,691,764
Investment in Secured MCA advances			—				—				(1,293,829	)							(1,293,829	)
Proceeds from Secured MCA advances			—				—				907,649				—				907,649
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				—				(23,068,130	)			—				(23,068,130	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of senior credit facilities			—				—				(3,000,000	)							(3,000,000	)
Payments for redemption of Series I Secured Notes			—				(485,350	)			—				—				(485,350	)
Proceeds from issuance of L Bonds			36,757,771				—				—				—				36,757,771
Payments for issuance and redemption of L Bonds			(11,753,782	)			—				—				—				(11,753,782	)
Payments to restricted cash			—				(116,672	)			8,784,498				—				8,667,826
Issuance of member capital			—				18,951,362				14,537,885				(33,489,247	)			—
Issuance of common stock			166,125				—				—				—				166,125
Proceeds from issuance of preferred stock			9,401,118				—				71,555				—				9,472,673
Payments for issuance and redemption of preferred stock			(838,021	)			—				(7,340	)			—				(845,361	)
Payments of preferred stock dividends			(600,924	)			—				—				—				(600,924	)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			33,132,287				18,349,340				20,386,598				(33,489,247	)			38,378,978
NET INCREASE IN CASH AND CASH EQUIVALENTS			3,777,586				2,482,119				121,020				—				6,380,725
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			6,274,035				4,340,365				384,225				—				10,998,625
END OF THE PERIOD		$	10,051,621			$	6,822,484			$	505,245			$	—			$	17,379,350

F-53

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Consolidating Statements of Cash Flows (continued)

For the six months ended June 30, 2017		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(5,739,353	)		$	17,840,498			$	19,806,218			$	(37,646,716	)		$	(5,739,353	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Equity of subsidiaries			(16,340,730	)			(21,305,986	)			—				37,646,716				—
Change in fair value of life insurance policies			—				(1,193,821	)			(27,925,514	)			—				(29,119,335	)
Amortization of deferred financing and issuance costs			2,855,809				74,384				1,233,958				—				4,164,151
Deferred income taxes			(3,717,674	)			—				—				—				(3,717,674	)
Preferred stock dividends payable			700,748				—				—				—				700,748
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			—				—				(1,625,000	)			—				(1,625,000	)
Other assets			(27,138,260	)			(55,534,365	)			458,179				83,082,776				868,330
Increase (decrease) in operating liabilities:
Due to related party			1,089,895				320				(1,100,000	)			—				(9,785	)
Accounts payable and other accrued expenses			1,637,970				(1,563,846	)			2,181,963				—				2,256,087
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(46,651,595	)			(61,682,816	)			(6,970,196	)			83,082,776				(32,221,831	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(42,121,671	)			—				(42,121,671	)
Carrying value of matured life insurance policies			—				751,576				4,632,232				—				5,383,808
Investment in Secured MCA advances			—				—				(39,671	)			—				(39,671	)
Proceeds from Secured MCA advances			—				—				1,423,702				—				1,423,702
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				751,576				(36,105,408	)			—				(35,353,832	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of senior credit facilities			—				—				(7,099,537	)			—				(7,099,537	)
Payments for issuance of senior debt							(1,076,118	)			(114,294	)			—				(1,190,412	)
Payments for redemption of Series I Secured Notes			—				(9,798,261	)			—				—				(9,798,261	)
Proceeds from issuance of L Bonds			56,744,470				—				—				—				56,744,470
Payments for issuance and redemption of L Bonds			(39,197,163	)			—				—				—				(39,197,163	)
Payments to restricted cash			—				(2,336,577	)			(5,996,458	)			—				(8,333,035	)
Issuance of member capital			—				26,232,504				56,850,272				(83,082,776	)			—
Payments for issuance and redemption of common stock			(1,603,556	)			—				—				—				(1,603,556	)
Proceeds from issuance of preferred stock			61,480,941				—				—				—				61,480,941
Payments for issuance and redemption of preferred stock			(5,722,437	)			—				—				—				(5,722,437	)
Payments of preferred stock dividends			(3,898,857	)			—				—				—				(3,898,857	)
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			67,803,398				13,021,548				43,639,983				(83,082,776	)			41,382,153
NET INCREASE IN CASH AND CASH EQUIVALENTS			21,151,803				(47,909,692	)			564,379				—				(26,193,510	)
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			28,481,047				49,360,952				644,983				—				78,486,982
END OF THE PERIOD		$	49,632,850			$	1,451,260			$	1,209,362			$	—			$	52,293,472

F-54

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(18) Guarantee of L Bonds (cont.)

Consolidating Statements of Cash Flows (continued)

For the six months ended June 30, 2016		Parent				Guarantor Subsidiary				Non-Guarantor Subsidiaries				Eliminations				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	4,067,786			$	29,330,628			$	34,623,309			$	(63,953,937	)		$	4,067,786
Adjustments to reconcile net income to net cash flows from operating activities:
Equity of subsidiaries			(28,817,535	)			(35,136,402	)			—				63,953,937				—
Change in fair value of life insurance policies			—				—				(32,772,929	)			—				(32,772,929	)
Amortization of deferred financing and issuance costs			3,909,923				(1,446,463	)			848,702				—				3,312,162
Deferred income taxes			2,906,747				—				—				—				2,906,747
Preferred stock dividends payable			330,049				—				—				—				330,049
(Increase) decrease in operating assets:
Life insurance policy benefits receivable			—				—				(6,829,022	)							(6,829,022	)
Other assets			(60,457,838	)			(37,895,574	)			—				97,315,946				(1,037,466	)
Increase in operating liabilities:
Due to related party			(2,802,976	)			1,195				2,700,000				—				(101,781	)
Accounts payable and accrued expenses			2,240,523				717,298				(1,765,065	)			—				1,192,756
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(78,623,321	)			(44,429,318	)			(3,195,005	)			97,315,946				(28,931,698	)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in life insurance policies			—				—				(48,700,036	)			—				(48,700,036	)
Carrying value of matured life insurance policies			—				—				6,302,243				—				6,302,243
Investment in Secured MCA advances			—				—				(5,647,414	)			—				(5,647,414	)
Proceeds from Secured MCA advances			—				—				1,025,792				—				1,025,792
NET CASH FLOWS USED IN INVESTING ACTIVITIES			—				—				(47,019,415	)			—				(47,019,415	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on senior credit facilities			—				—				17,000,000				—				17,000,000
Payments for redemption of Series I Secured Notes			—				(5,722,743	)			—				—				(5,722,743	)
Proceeds from issuance of L Bonds			71,126,660				—				—				—				71,126,660
Payments for issuance and redemption of L Bonds			(22,663,475	)			—				—				—				(22,663,475	)
Payments to restricted cash			—				(2,822,051	)			(5,996,843	)			—				(8,818,894	)
Issuance of common stock			212,670				—				—				—				212,670
Proceeds from issuance of preferred stock			10,429,654				—				71,555				—				10,501,209
Payments for issuance and redemption of preferred stock			(1,610,574	)			—				(7,340	)			—				(1,617,914	)
Payments of preferred stock dividends			(1,112,155	)			—								—				(1,112,155	)
Issuance of member capital			—				57,813,874				39,502,072				(97,315,946	)			—
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES			56,382,780				49,269,080				50,569,444				(97,315,946	)			58,905,358
NET INCREASE IN CASH AND CASH EQUIVALENTS			(22,240,541	)			4,839,762				355,024				—				(17,045,755	)
CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD			32,292,162				1,982,722				150,221				—				34,425,105
END OF THE PERIOD		$	10,051,621			$	6,822,484			$	505,245			$	—			$	17,379,350

F-55

GWG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(19) Concentrations

We purchase life insurance policies written by life insurance companies having investment-grade ratings by independent rating agencies. As a result, there may be certain concentrations of policies with life insurance companies. The following summarizes the face value of insurance policies with specific life insurance companies exceeding 10% of the total face value of our portfolio.

Life insurance company		June 30, 2017			December 31, 2016
John Hancock		14.13	%		14.36	%
AXA Equitable		12.69	%		13.42	%
Lincoln National		10.86	%		11.22	%
Transamerica		10.31	%		*

____________

*         percentage does not exceed 10% of the total face value.

The following summarizes the number of insurance policies held in specific states exceeding 10% of the total face value of our portfolio:

State of Residence		June 30, 2017			December 31, 2016
Florida		20.30	%		19.42	%
California		19.29	%		20.72	%

 (20) Subsequent events

Since June 30, 2017, we have issued approximately $15,789,000 of L Bonds.

Since June 30, 2017, we have issued approximately $12,762,000 of RPS 2.

As of the date of this report, we exercised our contractual rights to call for the redemption of our Series I Secured Notes and our Series A Preferred Stock and all outstanding warrants related to our Series A offering.

F-56

($1,000,000,000)

GWG HOLDINGS, INC.

L Bonds

_________________________

PROSPECTUS

_________________________

 

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below are expenses (other than the selling agent’s commissions, dealer-manager fees and allowance expenses) we expect to be incurred in connection with the issuance and distribution of the securities registered hereby. With the exception of the Securities and Exchange Commission registration fee, the amounts set forth below are estimates and actual expenses may vary considerably from these estimates depending upon how long the notes are offered and other factors:

Securities and Exchange Commission registration fee		$	115,900
Accounting fees and expenses		$	200,000
Legal fees and expenses		$	500,000
Blue sky fees and expenses		$	20,000
Printing expenses		$	200,000
Trustee fees and expenses		$	0
Miscellaneous		$	164,100
Total		$	1,200,000

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides for, under certain circumstances, the indemnification of our officers, directors, employees and agents against liabilities that they may incur in such capacities. A summary of the circumstances in which such indemnification provided for is contained herein, but that description is qualified in its entirety by reference to the relevant Section of the Delaware General Corporation Law.

In general, the statute provides that any director, officer, employee or agent of a corporation may be indemnified against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in a proceeding (including any civil, criminal, administrative or investigative proceeding) to which the individual was a party by reason of such status. Such indemnity may be provided if the indemnified person’s actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably believed to have been in or not opposed to our best interest; and (iii) with respect to any criminal action, such person had no reasonable cause to believe the actions were unlawful. Unless ordered by a court, indemnification generally may be awarded only after a determination of independent members of the Board of Directors or a committee thereof, by independent legal counsel or by vote of the stockholders that the applicable standard of conduct was met by the individual to be indemnified.

The statutory provisions further provide that to the extent a director, officer, employee or agent is wholly successful on the merits or otherwise in defense of any proceeding to which he was a party, he is entitled to receive indemnification against expenses, including attorneys’ fees, actually and reasonably incurred in connection with the proceeding.

Indemnification in connection with a proceeding by or in the right of GWG Holdings, Inc. (the “Company”) in which the director, officer, employee or agent is successful is permitted only with respect to expenses, including attorneys’ fees actually and reasonably incurred in connection with the defense. In such actions, the person to be indemnified must have acted in good faith, in a manner believed to have been in our best interest and must not have been adjudged liable to us unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which the Court of Chancery or such other court shall deem proper. Indemnification is otherwise prohibited in connection with a proceeding brought on behalf of the Company in which a director is adjudged liable to us, or in connection with any proceeding charging improper personal benefit to the director in which the director is adjudged liable for receipt of an improper personal benefit.

II-1

Delaware law authorizes us to reimburse or pay reasonable expenses incurred by a director, officer, employee or agent in connection with a proceeding in advance of a final disposition of the matter. Such advances of expenses are permitted if the person furnishes to us a written agreement to repay such advances if it is determined that he is not entitled to be indemnified by us.

The statutory section cited above further specifies that any provisions for indemnification of or advances for expenses does not exclude other rights under our certificate of incorporation, corporate bylaws, resolutions of our stockholders or disinterested directors, or otherwise. These indemnification provisions continue for a person who has ceased to be a director, officer, employee or agent of the corporation and inure to the benefit of the heirs, executors and administrators of such persons.

The statutory provision cited above also grants the power to the Company to purchase and maintain insurance policies that protect any director, officer, employee or agent against any liability asserted against or incurred by him in such capacity arising out of his status as such. Such policies may provide for indemnification whether or not the corporation would otherwise have the power to provide for it.

Article 6 of our corporate bylaws provides that we shall indemnify our directors, officers, employees and agents to the fullest extent permitted by the Delaware General Corporation Law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, we understand that in the opinion of the SEC such indemnification is against public policy as expressed in that Act and is therefore unenforceable.

We have purchased directors’ and officers’ liability insurance in order to limit the exposure to liability for indemnification of directors and officers, including liabilities under the Securities Act of 1933.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In 2014, the Company issued 110,584 shares of Series A Preferred Stock as in-kind dividends payable on account of the preferred stock. The preferred stock was sold solely to accredited investors in a private placement under Section 4(a)(2) of the Securities Act of 1933, and Regulation D/Rule 506 thereunder.

In 2014, the Company issued 60,000 shares of common stock to Brewer Consulting Group in exchange for certain advisory services including financial consulting and marketing support to be provided to the Company by Brewer Consulting Group. The common stock was sold to Brewer Consulting Group, as accredited investor, in a private placement under Section 4(a)(2) of the Securities Act of 1933, and Regulation D/Rule 506 thereunder.

In 2015, the Company issued 97,590 shares of Series A Preferred Stock as in-kind dividends payable on account of the preferred stock. The preferred stock was sold solely to accredited investors in a private placement under Section 4(a)(2) of the Securities Act of 1933, and Regulation D/Rule 506 thereunder.

In 2016, the Company issued 99,000 shares of Series A Preferred Stock as in-kind dividends payable on account of the preferred stock. The preferred stock was sold solely to accredited investors in a private placement under Section 4(a)(2) of the Securities Act of 1933, and Regulation D/Rule 506 thereunder.

From January 1 through June 30, 2017, the Company issued 48,000 shares of Series A Preferred Stock as in-kind dividends payable on account of the preferred stock.  The preferred stock was sold solely to accredited investors in a private placement under Section 4(a)(2) of the Securities Act of 1933, and Regulation D/Rule 506 thereunder.

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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The exhibits listed below are filed as a part of this registration statement.

Exhibit		Description
1.1		Form of Dealer Manager Agreement with Emerson Equity (filed herewith)
1.2		Form of Soliciting Dealer Agreement (filed herewith)
3.1		Certificate of Incorporation(1)
3.2		Bylaws (as amended to and including June 2, 2015)(11)
3.3		Certificate of Amendment to Certificate of Incorporation(2)
3.4		Certificate of Designations for Series A Convertible Preferred Stock(2)
3.5		Certificate of Amendment to Certificate of Incorporation(5)
3.6		Certificate of Designation for Redeemable Preferred Stock(7)
3.7		Certificate of Amendment to Certificate of Designation for Redeemable Preferred Stock(4)
3.8		Certificate of Amendment to Certificate of Designation for Redeemable Preferred Stock(7)
3.9		Certificate of Designation for Series 2 Redeemable Preferred Stock(10)
4.1		Form of Amended and Restated Indenture with Bank of Utah (filed herewith)
4.2		Form of Amended and Restated Pledge and Security Agreement by and among GWG Holdings, Inc., GWG Life, LLC, Jon R. Sabes, Steven F. Sabes, and Bank of Utah (filed herewith)
4.3		Form of L Bond(8)
4.4		Form of Subscription Agreement for L Bonds (filed herewith)
5.1		Opinion of Maslon (filed herewith)
10.1		Loan and Security Agreement with GWG DLP Funding IV, LLC (as borrower), CLMG Corp. (as agent) and LNV Corporation (as lender), dated September 14, 2016(9)
10.2		Employment Agreement with Jon R. Sabes, dated June 14, 2011(3)
10.3		Employment Agreement with Steven F. Sabes, dated June 14, 2011(3)
10.4		Employment Agreement with William B. Acheson, dated June 28, 2017(13)
10.5		2013 Stock Incentive Plan (as amended)(12)
10.6		Form of Stock Option Agreement used with 2013 Stock Incentive Plan(6)
21.1		List of Subsidiaries(11)
23.1		Consent of Baker Tilly Virchow Krause, LLP (filed herewith)
23.2		Consent of Maslon LLP (contained within Exhibit 5.1 above)
25.1		Statement of Eligibility of Trustee (filed herewith)

____________

(1)      Incorporated by reference to Form S-1 Registration Statement filed on June 14, 2011 (File No. 333-174887).

(2)      Incorporated by reference to Form S-1/A Registration Statement filed on August 23, 2011 (File No. 333-174887).

(3)      Incorporated by reference to Form S-1/A Registration Statement filed on September 20, 2011 (File No. 333-174887).

(4)      Incorporated by reference to Current Report on Form 8-K filed on April 28, 2016.

(5)      Incorporated by reference to Quarterly Report on Form 10-Q filed on August 8, 2014.

(6)      Incorporated by reference to Form S-1/A Registration Statement filed on June 6, 2014 (File No. 333-195505).

(7)      Incorporated by reference to the registrant’s Annual Report on Form 10-K filed on March 22, 2016.

(8)      Incorporated by reference to Form S-1/A Registration Statement filed on October 30, 2014 (File No. 333-197227).

(9)      Incorporated by reference to Current Report on Form 8-K filed on September 19, 2016.

(10)   Incorporated by reference to Current Report on Form 8-K filed on February 22, 2017.

(11)   Incorporated by reference to Annual Report on Form 10-K filed on March 15, 2017.

(12)   Incorporated by reference to the registrant’s Definitive Proxy Statement filed on April 30, 2015.

(13)   Incorporated by reference to Current Report on Form 8-K filed on June 30, 2017.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the

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event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(a)(2)   That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)        To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)        [intentionally omitted]

(5)        For the purpose of determining any liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(6)        That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)       Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)      Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)     The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)     Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b)        That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on October 10, 2017.

		GWG HOLDINGS, INC.
		By:		/s/ Jon R. Sabes
				Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed, as of October 10, 2017, by the following persons in the capacities indicated below.

Name		Title
/s/ Jon R. Sabes		Director, Chief Executive Officer
Jon R. Sabes		(Principal Executive Officer)
/s/ William Acheson		Chief Financial Officer
William Acheson		(Principal Financial and Accounting Officer)
/s/ Steven F. Sabes		Director, Executive Vice President and Secretary
Steven F. Sabes
		Director
David H. Abramson
/s/ Charles H. Maguire III		Director
Charles H. Maguire III
/s/ Jeffrey L. McGregor		Director
Jeffrey L. McGregor
/s/ Shawn R. Gensch		Director
Shawn R. Gensch
/s/ Mark E. Schwarzmann		Director
Mark E. Schwarzmann

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on October 10, 2017.

		GWG LIFE, LLC
		By:		/s/ Jon R. Sabes
				Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed, as of October 10, 2017, by the following persons in the capacities indicated below.

Name		Title
/s/ Jon R. Sabes		Chief Executive Officer
Jon R. Sabes		(Principal Executive Officer)
/s/ William Acheson		Chief Financial Officer
William Acheson		(Principal Financial and Accounting Officer)
/s/ Jon R. Sabes		Manager of GWG Life, LLC
Jon R. Sabes

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