| Delaware                                                       |   | 26-2222607                                 |
|----------------------------------------------------------------|--------|--------------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   |  (I.R.S. Employer Identification No.) |

----

|                   |                                                                                                     | Page No. |
|------------------------|----------------------------------------------------------------------------------------------------------|----------|
| PART I.           | FINANCIAL INFORMATION                                                                               |     |
| Item 1.                | Financial Statements                                                                                |     |
|                   | Condensed Consolidated Balance Sheets as of March 31, 2012, and December 31, 2011                   | 1        |
|                   | Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011  |  2  |
|                   | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011  |  4  |
|                   | Notes to Condensed Consolidated Financial Statements                                                | 6        |
| Item 2.                | Management’s Discussion and Analysis of Financial Condition and Results of Operations         | 23       |
| Item 4.                | Controls and Procedures                                                                             | 32       |
| PART II.          | OTHER INFORMATION                                                                                        |     |
| Item 2.                | Unregistered Sales of Equity Securities and Use of Proceeds                                         | 32       |
| Item 6.                | Exhibits                                                                                            | 33       |
| SIGNATURES   | 34                                                                                                       |

----

|                                                                                                                                                                         |   | March 31, 2012 |        |   | December 31, 2011 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                                                                                                                         |   | (unaudited)    |        |   |              |   |
| A S S E T S                                                                                                                                                                  |   |
| Cash and cash equivalents                                                                                                                                                    |   | $              | 4,548,766   |   |              | $      | 1,878,349 |   |
| Restricted cash                                                                                                                                                              |   |           | 1,569,464   |   |              |   | 4,794,302 |   |
| Investment in life settlements, at fair value                                                                                                                                |   |           | 128,112,092 |   |              |   | 122,168,524 |   |
| Deferred financing costs, net                                                                                                                                                |   |           | 271,713     |   |              |   | 329,937 |   |
| Other assets                                                                                                                                                                 |   |           | 131,563     |   |              |   | 218,163 |   |
| TOTAL ASSETS                                                                                                                                                                 |   | $              | 134,633,598 |   |              | $      | 129,389,275 |   |
|                                                                                                                                                                         |   |           |        |   |              |   |   |   |
| L I A B I L I T I E S & E Q U I T Y                                                                                                                                      |   |
| LIABILITIES                                                                                                                                                                  |   |           |        |   |              |   |   |   |
| Revolving credit facility                                                                                                                                                    |   | $              | 62,500,000  |   |              | $      | 60,000,000 |   |
| Series I Secured notes payable                                                                                                                                               |   |           | 43,758,661  |   |              |   | 48,179,271 |   |
| Secured renewable debentures                                                                                                                                                 |   |           | 3,061,873   |   |              |   | - |   |
| Accounts payable                                                                                                                                                             |   |           | 370,826     |   |              |   | 435,768 |   |
| Accrued expenses                                                                                                                                                             |   |           |        |   |              |   |   |   |
|      Interest                                                                                                                                       |   |           | 2,132,262   |   |              |   | 1,887,835 |   |
|      Other                                                                                                                                          |   |           | 1,320,045   |   |              |   | 968,339 |   |
| Deferred taxes, net                                                                                                                                                          |   |           | 3,168,769   |   |              |   | 4,308,217 |   |
|                 TOTAL LIABILITIES                                                            |   |           | 116,312,436 |   |              |   | 115,779,430 |   |
|                                                                                                                                                                         |   |           |        |   |              |   |   |   |
| CONVERTIBLE, REDEEMABLE PREFERRED STOCK                                                                                                                                      |   |           |        |   |              |   |   |   |
| (par value $0.001; shares authorized 40,000,000; shares issued and outstanding 2,901,464 and 1,881,329; liquidation preference of $21,760,980 and $14,108,772, respectively) |   |           | 19,845,837  |   |              |   | 12,661,276 |   |
|                                                                                                                                                                         |   |           |        |   |              |   |   |   |
| EQUITY                                                                                                                                                                       |   |           |        |   |              |   |   |   |
| Common stock (par value $0.001: shares authorized  210,000,000; shares issued                                                                                      |   |           |        |   |              |   |   |   |
| and outstanding is  9,989,000 on both March 31, 2012 and December 31, 2011)                                                                                        |   |           | 9,989       |   |              |   | 9,989 |   |
| Additional paid-in capital                                                                                                                                                   |   |           | 7,848,888   |   |              |   | 8,169,303 |   |
| Accumulated deficit                                                                                                                                                          |   |           | (9,383,552  | )      |              |   | (7,230,723 | ) |
|             TOTAL EQUITY (DEFICIT)                                                                          |   |           | (1,524,675  | )      |              |   | 948,569 |   |
|                                                                                                                                                                         |   |           |        |   |              |   |   |   |
| TOTAL LIABILITIES & EQUITY                                                                                                                                          |   | $              | 134,633,598 |   |              | $      | 129,389,275 |   |

----

|                                                                                                                                  |   | Three Months Ended |       |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                                                                  |   | March 31, 2012     |       |   | March 31, 2011 |   |
| REVENUE                                                                                                                               |   |               |       |   |   |   |
| Gain on life settlements, net                                                                                                         |   | $                  | 601,768    |   |   | $ | 5,357,641 |   |
| Interest and other income                                                                                                             |   |               | 1,332      |   |   |   | 30,156 |   |
|             TOTAL REVENUE                                                 |   |               | 603,100    |   |   |   | 5,387,797 |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
| EXPENSES                                                                                                                              |   |               |       |   |   |   |   |   |
| Employee compensation and benefits                                                                                                    |   |               | 533,745    |   |   |   | 483,270 |   |
| Legal and professional fees                                                                                                           |   |               | 364,225    |   |   |   | 160,299 |   |
| Interest expense                                                                                                                      |   |               | 2,438,414  |   |   |   | 1,284,189 |   |
| Other expenses                                                                                                                        |   |               | 558,993    |   |   |   | 229,838 |   |
|             TOTAL EXPENSES                                                |   |               | 3,895,377  |   |   |   | 2,157,596 |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
|             INCOME (LOSS) BEFORE INCOME TAXES                             |   |               | (3,292,277 | ) |   |   | 3,230,201 |   |
|             INCOME TAX BENEFIT                                            |   |               | (1,139,448 | ) |   |   | - |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
|             NET INCOME (LOSS)                                             |   |               | (2,152,829 | ) |   |   | 3,230,201 |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
|             NET INCOME ATTRIBUTABLE TO                                    |   |               |       |   |   |   |   |   |
|                 REDEEMABLE MEMBER’S INTEREST    |   |               | -          |   |   |   | (143,948 | ) |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
|            NET INCOME (LOSS) AVAILABLE TO                                      |   |               |       |   |   |   |   |   |
|                 NONREDEEMABLE MEMBERS’ INTEREST |   | $                  | (2,152,829 | ) |   | $ | 3,086,253 |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
| EARNINGS (LOSS) PER SHARE                                                                                                             |   |               |       |   |   |   |   |   |
| Basic                                                                                                                                 |   | $                  | (0.22      | ) |   | $ | 0.36 |   |
| Diluted                                                                                                                               |   | $                  | (0.22      | ) |   | $ | 0.36 |   |
|                                                                                                                                  |   |               |       |   |   |   |   |   |
| WEIGHTED AVERAGE SHARES OUTSTANDING                                                                                                   |   |               |       |   |   |   |   |   |
|                  Basic                           |   |               | 9,989,000  |   |   |   | 9,000,000 |   |
|                  Diluted                         |   |               | 9,989,000  |   |   |   | 9,000,000 |   |

----

| PROFORMA INFORMATION AS IF THE COMPANY    HAD BEEN A CORPORATION DURING THE THREE MONTHS ENDED MARCH 31, 2011 |   |   |      |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                                                                                              |   |   |      |
| INCOME BEFORE INCOME TAXES                                                                                                        |   | $      | 3,230,201 |   |
| INCOME TAX EXPENSE                                                                                                                |   |   | 1,269,469 |   |
|                                                                                                                              |   |   |      |   |
| NET INCOME                                                                                                                        |   | $      | 1,960,732 |   |
|                                                                                                                              |   |   |      |   |
| PROFORMA EARNINGS PER SHARE ATTRIBUTABLE TO                                                                                       |   |   |      |   |
|     CONTROLLING INTERESTS                                                                                     |   |   |      |   |
| BASIC                                                                                                                             |   | $      | 0.22      |   |
| FULLY DILUTED                                                                                                                     |   | $      | 0.22      |   |
|                                                                                                                              |   |   |      |   |
| PROFORMA WEIGHTED AVERAGE SHARES OUTSTANDING                                                                                      |   |   |      |   |
| BASIC                                                                                                                             |   |   | 9,000,000 |   |
| FULLY DILUTED                                                                                                                     |   |   | 9,000,000 |   |

----

|                                                                                                                                                    |   | Three Months Ended |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                                                                                    |   | March 31, 2012     |       |   | March 31, 2011 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                    |   |               |       |   |   |   |
| Net income (loss)                                                                                                                                       |   | $                  | (2,152,829 | ) |   | $ | 3,230,201 |   |
| Adjustments to reconcile net income (loss) to net                                                                                                       |   |               |       |   |   |   |   |   |
| cash flows from operating activities:                                                                                                                   |   |               |       |   |   |   |   |   |
| Gain on life settlements                                                                                                                                |   |               | (4,791,058 | ) |   |   | (8,379,645 | ) |
| Amortization of deferred financing and issuance costs                                                                                                   |   |               | 567,160    |   |   |   | 193,416 |   |
| Deferred income taxes                                                                                                                                   |   |               | (1,139,448 | ) |   |   | - |   |
| Convertible, redeemable preferred stock dividends payable                                                                                               |   |               | 126,075    |   |   |   | - |   |
| (Increase) decrease in operating assets:                                                                                                                |   |               |       |   |   |   |   |   |
| Due from related parties                                                                                                                                |   |               | 768        |   |   |   | (27,714 | ) |
| Other assets                                                                                                                                            |   |               | (268,672   | ) |   |   | 261,111 |   |
| Increase (decrease) in operating liabilities:                                                                                                           |   |               |       |   |   |   |   |   |
| Accounts payable                                                                                                                                        |   |               | (64,942    | ) |   |   | (587,692 | ) |
| Accrued interest                                                                                                                                        |   |               | 244,427    |   |   |   | 36,287 |   |
| Accrued expenses                                                                                                                                        |   |               | 378,197    |   |   |   | (89,077 | ) |
|                                                                                                                                                    |   |               |       |   |   |   |   |   |
|                   NET CASH FLOWS USED IN OPERATING ACTIVITIES |   |               | (7,100,322 | ) |   |   | (5,363,113 | ) |
|                                                                                                                                                    |   |               |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                    |   |               |       |   |   |   |   |   |
| Investment in life settlements                                                                                                                          |   |               | (1,153,260 | ) |   |   | (4,634,005 | ) |
|                   NET CASH FLOWS USED IN INVESTING ACTIVITIES |   |               | (1,153,260 | ) |   |   | (4,634,005 | ) |
|                                                                                                                                                    |   |               |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                    |   |               |       |   |   |   |   |   |
| Net proceeds from revolving credit facility                                                                                                             |   |               | 2,500,000  |   |   |   | 4,462,500 |   |
| Proceeds from issuance of Series I Secured notes payable                                                                                                |   |               | 50,000     |   |   |   | 6,281,039 |   |
| Payments for redemption of Series I Secured notes payable                                                                                               |   |               | (1,550,537 | ) |   |   | (2,488,350 | ) |
| Proceeds from issuance of secured renewable debentures                                                                                                  |   |               | 3,061,873  |   |   |   | - |   |
| Proceeds from restricted cash                                                                                                                           |   |               | 3,224,838  |   |   |   | 257,671 |   |
| Issuance of preferred stock                                                                                                                             |   |               | 4,436,465  |   |   |   | - |   |
| Payments of issuance cost for preferred stock                                                                                                           |   |               | (798,640   | ) |   |   | - |   |
| NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                                                                                         |   |               | 10,923,999 |   |   |   | 8,512,860 |   |
|                                                                                                                                                    |   |               |       |   |   |   |   |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                               |   |               | 2,670,417  |   |   |   | (1,484,258 | ) |
|                                                                                                                                                    |   |               |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                                                                                               |   |               |       |   |   |   |   |   |
| BEGINNING OF PERIOD                                                                                                                                     |   |               | 1,878,349  |   |   |   | 1,758,230 |   |
| END OF PERIOD                                                                                                                                           |   | $                  | 4,548,766  |   |   | $ | 273,972 |   |

----

|                                                                                   |   | Three Months Ended |      |
|----------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                   |   | March 31, 2012     |      |   | March 31, 2011 |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                      |   |               |      |   |   |   |
| Interest paid                                                                          |   | $                  | 1,149,000 |   |   | $ | 1,058,000 |   |
|                                                                                   |   |               |      |   |   |   |   |   |
| NON-CASH INVESTING AND FINANCING ACTIVITIES                                            |   |               |      |   |   |   |   |   |
| Convertible, redeemable preferred stock:                                               |   |               |      |   |   |   |   |   |
| Non-cash conversion of Series I secured notes                                          |   | $                  | 3,090,000 |   |   | $ | - |   |
| Non-cash conversion of accrued interest payable on Series I secured notes              |   | $                  | 4,000     |   |   | $ | - |   |
| Non-cash accretion of convertible, redeemable preferred stock to redemption value      |   | $                  | 340,000   |   |   | $ | - |   |
| Non-cash conversion of dividends payable                                               |   | $                  | 112,000   |   |   | $ | - |   |
| Non-cash conversion of accrued interest payable on Series I secured notes to principal |   | $                  | 37,000    |   |   | $ | - |   |

----

----

----

----

| Years Ending December 31, |   | Number of Contracts |   |   | Estimated Fair Value |   |        | Face Value |   |
|---------------------------|--------|---------------------|--------|--------|----------------------|--------|-------------|------------|--------|
| 2012                      |   |                | -      |   |                 | $      | -           |       |   | $ | - |   |
| 2013                      |   |                | -      |   |                 |   | -           |       |   |   | - |   |
| 2014                      |   |                | -      |   |                 |   | -           |       |   |   | - |   |
| 2015                      |   |                | 5      |   |                 |   | 2,789,000   |       |   |   | 5,329,000 |   |
| 2016                      |   |                | 12     |   |                 |   | 12,797,000  |       |   |   | 31,135,000 |   |
| 2017                      |   |                | 28     |   |                 |   | 24,046,000  |       |   |   | 67,498,000 |   |
| 2018                      |   |                | 34     |   |                 |   | 25,147,000  |       |   |   | 83,008,000 |   |
| Thereafter                |   |                | 102    |   |                 |   | 63,333,000  |       |   |   | 295,485,000 |   |
| Totals                    |   |                | 181    |   |                 | $      | 128,112,000 |       |   | $ | 482,455,000 |   |

|                           |   | Three Months EndedMarch 31,2012 |       |   | Three Months EndedMarch 31,2011 |   |
|--------------------------------|--------|---------------------------------|------------|--------|---------------------------------|--------|
| Change in fair value           |   | $                               | 4,791,000  |   |                            | $      | 8,380,000 |   |
| Premiums and other annual fees |   |                            | (4,189,000 | )      |                            |   | (3,022,000 | ) |
| Policy maturities              |   |                            | -          |   |                            |   | - |   |
| Gain on life settlements, net  |   | $                               | 602,000    |   |                            | $      | 5,358,000 |   |

| Years Ending December 31,            |   |   |       |
|--------------------------------------|--------|--------|------------|
| Nine months ending December 31, 2012 |   | $      | 11,568,000 |   |
| 2013                                 |   |   | 16,237,000 |   |
| 2014                                 |   |   | 17,274,000 |   |
| 2015                                 |   |   | 18,592,000 |   |
| 2016                                 |   |   | 20,015,000 |   |
|                                 |   | $      | 83,686,000 |   |

----

| ·   | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Valuation adjustments and block discounts are not applied to Level 1 instruments.  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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| Balance at December 31, 2010 |   | $      | 82,718,000  |   |
|------------------------------|--------|--------|-------------|--------|
| Purchases                    |   |   | 11,929,000  |   |
| Maturities                   |   |   | (1,803,000  | )      |
| Net change in fair value     |   |   | 29,325,000  |   |
| Balance at December 31, 2011 |   |   | 122,169,000 |   |
| Purchases                    |   |   | 1,152,000   |   |
| Maturities                   |   |   | -           |   |
| Net change in fair value     |   |   | 4,791,000   |   |
| Balance at March 31, 2012    |   | $      | 128,112,000 |   |

----

|                                      |   | As of March 31, |      |   | As of December 31, |   |
|-------------------------------------------|--------|----------------------|-----------|--------|--------------------|--------|
|                                      |   | 2012                 |      |   | 2011               |   |
| Weighted average age of insured           |   |                 | 81.0      |   |               |   | 80.9 |   |
| Weighted average life expectancy, months* |   |                 | 91.6      |   |               |   | 93.6 |   |
| Average face amount per policy            |   | $                    | 2,665,498 |   |               | $      | 2,722,315 |   |
| Fair Value Discount rate                  |   |                 | 13.45     | %      |               |   | 13.41 | % |

|                        | Change in life expectancy |   |
|-----------------------------|---------------------------|--------|
|                        | plus 4months              |   | minus 4 months |   |
| Investment in life policies |                      |   |   |   |
| March 31, 2012              |                      | $      | (9,912,000 | ) |   | $ | 10,205,000 |   |
|                        |                      |   |   |   |   |   |   |   |
| December 31, 2011           |                      | $      | (9,660,000 | ) |   | $ | 9,951,000 |   |
|                        |                      |   |   |   |   |   |   |   |
|                        | Change in discount rate   |   |
|                        | plus 1%                   |   | minus 1% |   |
| Investment in life policies |                      |   |   |   |   |   |   |   |
| March 31, 2012              |                      | $      | (6,741,000 | ) |   | $ | 7,326,000 |   |
|                        |                      |   |   |   |   |   |   |   |
| December 31, 2011           |                      | $      | (6,665,000 | ) |   | $ | 7,254,000 |   |

----

----

----

| Years Ending December 31, |   |   |       |
|---------------------------|--------|--------|------------|
| 2012                      |   | $      | 18,560,000 |   |
| 2013                      |   |   | 8,897,000  |   |
| 2014                      |   |   | 7,108,000  |   |
| 2015                      |   |   | 4,212,000  |   |
| 2016                      |   |   | 1,161,000  |   |
| Thereafter                |   |   | 4,840,000  |   |
|                      |   | $      | 44,778,000 |   |

| Years Ending December 31, |   |   |      |
|---------------------------|--------|--------|-----------|
| 2012                      |   | $      | 200,000   |   |
| 2013                      |   |   | 330,000   |   |
| 2014                      |   |   | 528,000   |   |
| 2015                      |   |   | 936,000   |   |
| 2016                      |   |   | 45,000    |   |
| Thereafter                |   |   | 1,192,000 |   |
|                      |   | $      | 3,231,000 |   |

----

|                     |   | Three Months Ended March 31, |      |
|--------------------------|--------|-----------------------------------|-----------|
| Income tax benefit:      |   | 2012                              |      |   | 2011 |   |
|  Federal            |   | $                            | 957,000   |   |   |  $ | - |   |
|  State              |   |                              | 182,000   |   |   |   | - |   |
| Total income tax benefit |   | $                                 | 1,139,000 |   |   | $ | - |   |

| •   | Up to 33% of the holder’s unredeemed shares one year after issuance: |
|---------------------|----------------------------------------------------------------------------|

| •   | Up to 66% of the holder’s unredeemed shares two years after issuance; and |
|---------------------|---------------------------------------------------------------------------------|

| •   | Up to 100% of the holder’s unredeemed shares three years after issuance. |
|---------------------|--------------------------------------------------------------------------------|

----

----

|  March 31, 2012                                      | Parent |   | Guarantor Sub |   | Non-Guarantor Sub |   | Eliminations |   | Consolidated |   |
|-----------------------------------------------------------|--------|--------|---------------|--------|-------------------|--------|--------------|--------|--------------|--------|
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
| ASSETS                                                    |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
| Cash and cash equivalents                                 |   | $      | 4,381,377     |   |              | $      | 167,389      |   |         | $      | - |   |   | $ | - |   |   | $ | 4,548,766 |   |
| Restricted cash                                           |   |   | -             |   |              |   | -            |   |         |   | 1,569,464 |   |   |   | - |   |   |   | 1,569,464 |   |
| Investment in life settlements, at fair value             |   |   | -             |   |              |   | 2,186,911    |   |         |   | 125,925,181 |   |   |   | - |   |   |   | 128,112,092 |   |
| Deferred financing costs, net                             |   |   | -             |   |              |   | -            |   |         |   | 271,713 |   |   |   | - |   |   |   | 271,713 |   |
| Other assets                                              |   |   | 24,660        |   |              |   | 106,153      |   |         |   | 750 |   |   |   | - |   |   |   | 131,563 |   |
| Investment in subsidiaries                                |   |   | 21,466,062    |   |              |   | 64,996,883   |   |         |   | - |   |   |   | (86,462,945 | ) |   |   | - |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
|  TOTAL ASSETS                                        |   | $      | 25,872,099    |   |              | $      | 67,457,336   |   |         | $      | 127,767,108 |   |   | $ | (86,462,945 | ) |   | $ | 134,633,598 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES & OWNERS' EQUITY (DEFICIT) |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                               |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Revolving credit facility                                 |   | $      | -             |   |              | $      | -            |   |         | $      | 62,500,000 |   |   | $ | - |   |   | $ | 62,500,000 |   |
| Series I Secured notes payable                            |   |   | -             |   |              |   | 43,758,661   |   |         |   | - |   |   |   | - |   |   |   | 43,758,661 |   |
| Secured renewable debentures                              |   |   | 3,061,873     |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 3,061,873 |   |
| Accounts payable                                          |   |   | 244,036       |   |              |   | 126,790      |   |         |   | - |   |   |   | - |   |   |   | 370,826 |   |
| Accrued expenses                                          |   |   | -             |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   |   |   |
| Interest                                                  |   |   | 15,023        |   |              |   | 1,99,287     |   |         |   | 125,952 |   |   |   | - |   |   |   | 2,132,262 |   |
| Other                                                     |   |   | 1,061,236     |   |              |   | 250,392      |   |         |   | 8,417 |   |   |   | - |   |   |   | 1,320,045 |   |
| Deferred taxes                                            |   |   | 3,168,769     |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 3,168,769 |   |
| TOTAL LIABILITIES                                         |   |   | 7,550,937     |   |              |   | 46,127,130   |   |         |   | 62,634,369 |   |   |   | - |   |   |   | 116,312,436 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| CONVERTIBLE, REDEEMABLE PREFERRED STOCK                   |   |   | 19,845,837    |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 19,845,837 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY (DEFICIT)                                          |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Member capital                                            |   |   | -             |   |              |   | 17,268,547   |   |         |   | 51,404,457 |   |   |   | (68,673,004 | ) |   |   | - |   |
| Common stock                                              |   |   | 9,989         |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 9,989 |   |
| Additional paid-in capital                                |   |   | 7,848,888     |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 7,848,888 |   |
| Accumulated deficit                                       |   |   | (9,383,552    | )      |              |   | 4,061,659    |   |         |   | 13,728,282 |   |   |   | (17,789,941 | ) |   |   | (9,383,552 | ) |
| TOTAL EQUITY (DEFICIT)                                    |   |   | (1,524,675    | )      |              |   | 21,330,206   |   |         |   | 65,132,739 |   |   |   | (86,462,945 | ) |   |   | (1,524,675 | ) |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND   EQUITY (DEFICIT)   |   | $      | 25,872,099    |   |              | $      | 67,457,336   |   |         | $      | 127,767,108 |   |   | $ | (86,462,945 | ) |   | $ | 134,633,598 |   |

----

| December 31, 2011                                         | Parent |   | Guarantor Sub |   | Non-Guarantor Sub |   | Eliminations |   | Consolidated |   |
|-----------------------------------------------------------|--------|--------|---------------|--------|-------------------|--------|--------------|--------|--------------|--------|
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
| ASSETS                                                    |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |
| Cash and cash equivalents                                 |   | $      | 1,746,456     |   |              | $      | 131,893      |   |         | $      | - |   |   | $ | - |   |   | $ | 1,878,349 |   |
| Restricted cash                                           |   |   | -             |   |              |   | 822,227      |   |         |   | 3,972,075 |   |   |   | - |   |   |   | 4,794,302 |   |
| Investment in life settlements, at fair value             |   |   | -             |   |              |   | 4,876,389    |   |         |   | 117,292,135 |   |   |   | - |   |   |   | 122,168,524 |   |
| Deferred financing costs, net                             |   |   | -             |   |              |   | -            |   |         |   | 329,937 |   |   |   | - |   |   |   | 329,937 |   |
| Other assets                                              |   |   | 34,817        |   |              |   | 170,346      |   |         |   | 13,000 |   |   |   | - |   |   |   | 218,163 |   |
| Investment in subsidiaries                                |   |   | 17,026,465    |   |              |   | 61,326,724   |   |         |   | - |   |   |   | (78,353,189 | ) |   |   | - |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
|  TOTAL ASSETS                                        |   | $      | 18,807,738    |   |              | $      | 67,327,579   |   |         | $      | 121,607,147 |   |   | $ | (78,353,189 | ) |   | $ | 129,389,275 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES & OWNERS' EQUITY (DEFICIT) |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                               |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Revolving credit facility                                 |   | $      | -             |   |              | $      | -            |   |         | $      | 60,000,000 |   |   | $ | - |   |   | $ | 60,000,000 |   |
| Series I Secured notes payable                            |   |   | -             |   |              |   | 48,179,271   |   |         |   | - |   |   |   | - |   |   |   | 48,179,271 |   |
| Accounts payable                                          |   |   | 379,457       |   |              |   | 56,311       |   |         |   | - |   |   |   | - |   |   |   | 435,768 |   |
| Accrued expenses                                          |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                  |   |   | -             |   |              |   | 1,779,796    |   |         |   | 108,039 |   |   |   | - |   |   |   | 1,887,835 |   |
| Other                                                     |   |   | 510,219       |   |              |   | 450,704      |   |         |   | 7,416 |   |   |   | - |   |   |   | 968,339 |   |
| Deferred taxes                                            |   |   | 4,308,217     |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 4,308,217 |   |
| TOTAL LIABILITIES                                         |   |   | 5,197,893     |   |              |   | 50,466,082   |   |         |   | 60,115,455 |   |   |   | - |   |   |   | 115,779,430 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| CONVERTIBLE, REDEEMABLE PREFERRED STOCK                   |   |   | 12,661,276    |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 12,661,276 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY (DEFICIT)                                          |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Member capital                                            |   |   | -             |   |              |   | 10,427,852   |   |         |   | 47,620,149 |   |   |   | (58,048,001 | ) |   |   | - |   |
| Common stock                                              |   |   | 9,989         |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 9,989 |   |
| Additional paid-in capital                                |   |   | 8,169,303     |   |              |   | -            |   |         |   | - |   |   |   | - |   |   |   | 8,169,303 |   |
| Accumulated deficit                                       |   |   | (7,230,723    | )      |              |   | 6,433,645    |   |         |   | 13,871,543 |   |   |   | (20,305,188 | ) |   |   | (7,230,723 | ) |
| TOTAL EQUITY                                              |   |   | 948,569       |   |              |   | 16,861,497   |   |         |   | 61,491,692 |   |   |   | (78,353,189 | ) |   |   | 948,569 |   |
|                                                      |   |   |          |   |              |   |         |   |         |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND   EQUITY             |   | $      | 18,807,738    |   |              | $      | 67,327,579   |   |         | $      | 121,607,147 |   |   | $ | (78,353,189 | ) |   | $ | 129,389,275 |   |

----

| For the three months endedMarch 31, 2012                                     |   | Parent |       |   | Guarantor Subsidiary |   |       | Non-Guarantor Subsidiaries |   |   | Eliminations |   |   | Consolidated |      |
|------------------------------------------------------------------------------|--------|--------|------------|--------|----------------------|--------|------------|----------------------------|--------|--------|--------------|--------|--------|--------------|-----------|
| REVENUE                                                                      |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |
|        Contract servicing fees            |   | $      | -          |   |                 | $      | 148,200    |                       |   | $      | -            |   |   | $            | (148,200  | ) |   | $ | - |   |
|        Gain on life settlements, net      |   |   | -          |   |                 |   | 149,970    |                       |   |   | 451,798      |   |   |         | -         |   |   |   | 601,768 |   |
|        Interest and other income          |   |   | 304        |   |                 |   | 955        |                       |   |   | 73           |   |   |         | -         |   |   |   | 1,332 |   |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| TOTAL REVENUE                                                                |   |   | 304        |   |                 |   | 299,125    |                       |   |   | 451,871      |   |   |         | (148,200  | ) |   |   | 603,100 |   |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| EXPENSES                                                                     |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
|        Origination and servicing fees     |   |   | -          |   |                 |   | (6,500     | )                          |   |   | 154,700      |   |   |         | (148,200  | ) |   |   | - |   |
|        Employee compensation and benefits |   |   | -          |   |                 |   | 533,745    |                       |   |   | -            |   |   |         | -         |   |   |   | 533,745 |   |
|        Legal and professional fees        |   |   | 290,903    |   |                 |   | 73,322     |                       |   |   | -            |   |   |         | -         |   |   |   | 364,225 |   |
|        Interest expense                   |   |   | 454,173    |   |                 |   | 1,556,310  |                       |   |   | 427,931      |   |   |         | -         |   |   |   | 2,438,414 |   |
|        Other expenses                     |   |   | 146,407    |   |                 |   | 400,086    |                       |   |   | 12,500       |   |   |         | -         |   |   |   | 558,993 |   |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| TOTAL EXPENSES                                                               |   |   | 891,483    |   |                 |   | 2,556,963  |                       |   |   | 595,131      |   |   |         | (148,200  | ) |   |   | 3,895,377 |   |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| LOSS BEFORE EQUITY IN LOSS                                                   |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| OF SUBSIDIARIES                                                              |   |   | (891,179   | )      |                 |   | (2,257,838 | )                          |   |   | (143,260     | )      |   |         | -         |   |   |   | (3,292,277 | ) |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| EQUITY IN LOSS OF SUBSIDIARY                                                 |   |   | (2,401,098 | )      |                 |   | (114,148   | )                          |   |   | -            |   |   |         | 2,515,246 |   |   |   | - |   |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| NET LOSS BEFORE INCOME TAXES                                                 |   |   | (3,292,277 | )      |                 |   | (2,371,986 | )                          |   |   | (143,260     | )      |   |         | 2,515,246 |   |   |   | (3,292,277 | ) |
|                                                                         |   |   |       |   |                 |   |       |                       |   |   |         |   |   |         |      |   |   |   |   |   |
| INCOME TAX BENEFIT                                                           |   |   | (1,139,448 | )      |                 |   | -          |                       |   |   | -            |   |   |         | -         |   |   |   | (1,139,448 | ) |
| NET LOSS                                                                     |   | $      | (2,152,829 | )      |                 | $      | (2,371,986 | )                          |   | $      | (143,260     | )      |   | $            | 2,515,246 |   |   | $ | (2,152,829 | ) |

| For the three months endedMarch 31, 2011                                     |   | Parent |      |   | Guarantor Subsidiary |   |      | Non-Guarantor Subsidiaries |   |   | Eliminations |   |   | Consolidated |       |
|------------------------------------------------------------------------------|--------|--------|-----------|--------|----------------------|--------|-----------|----------------------------|--------|--------|--------------|--------|--------|--------------|------------|
| REVENUE                                                                      |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |
|        Contract servicing fees            |   | $      | -         |   |                 | $      | 916,000   |                       |   | $      | -            |   |   | $            | (916,000   | ) |   | $ | - |   |
|        Gain on life settlements, net      |   |   | -         |   |                 |   | 38,026    |                       |   |   | 5,319,615    |   |   |         | -          |   |   |   | 5,357,641 |   |
|        Interest and other income          |   |   | -         |   |                 |   | 26,573    |                       |   |   | 3,583        |   |   |         | -          |   |   |   | 30,156 |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| TOTAL REVENUE                                                                |   |   | -         |   |                 |   | 980,599   |                       |   |   | 5,323,198    |   |   |         | (916,000   | ) |   |   | 5,387,797 |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| EXPENSES                                                                     |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
|        Origination and servicing fees     |   |   | -         |   |                 |   | 6,000     |                       |   |   | 910,000      |   |   |         | (916,000   | ) |   |   | - |   |
|        Employee compensation and benefits |   |   | -         |   |                 |   | 483,270   |                       |   |   | -            |   |   |         | -          |   |   |   | 483,270 |   |
|        Legal and professional fees        |   |   | 15,331    |   |                 |   | 144,968   |                       |   |   | -            |   |   |         | -          |   |   |   | 160,299 |   |
|        Interest expense                   |   |   | -         |   |                 |   | 977,688   |                       |   |   | 306,501      |   |   |         | -          |   |   |   | 1,284,189 |   |
|        Other expenses                     |   |   | 747       |   |                 |   | 216,588   |                       |   |   | 12,503       |   |   |         | -          |   |   |   | 229,838 |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| TOTAL EXPENSES                                                               |   |   | 16,078    |   |                 |   | 1,828,514 |                       |   |   | 1,229,004    |   |   |         | (916,000   | ) |   |   | 2,157,596 |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| INCOME (LOSS) BEFORE   EQUITY INCOME (LOSS)                   |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| OF SUBSIDIARIES                                                              |   |   | (16,078   | )      |                 |   | (847,915  | )                          |   |   | 4,094,194    |   |   |         | -          |   |   |   | 3,230,201 |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| EQUITY IN INCOME OF SUBSIDIARY                                               |   |   | 3,246,279 |   |                 |   | 4,123,306 |                       |   |   | -            |   |   |         | (7,369,585 | ) |   |   | - |   |
|                                                                         |   |   |      |   |                 |   |      |                       |   |   |         |   |   |         |       |   |   |   |   |   |
| NET INCOME                                                                   |   | $      | 3,230,201 |   |                 | $      | 3,275,391 |                       |   | $      | 4,094,194    |   |   | $            | (7,369,585 | ) |   | $ | 3,230,201 |   |

----

| For the three months ended March 31, 2012                 |   | Parent |       |   | Guarantor Sub |   |       | Non-Guarantor Sub |   |   | Eliminations |   |   | Consolidated |       |
|-----------------------------------------------------------|--------|--------|------------|--------|---------------|--------|------------|-------------------|--------|--------|--------------|--------|--------|--------------|------------|
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |
| CASH FLOWS FROM OPERATING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |
| Net loss                                                  |   | $      | (2,152,829 | )      |          | $      | (2,371,986 | )                 |   | $      | (143,260     | )      |   | $            | 2,515,246  |   |   | $ | (2,152,829 | ) |
| Adjustments to reconcile net loss to cash:                |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| (Gain) loss on life settlements                           |   |   | -          |   |          |   | 1,066,228  |              |   |   | (5,857,286   | )      |   |         | -          |   |   |   | (4,791,058 | ) |
| Amortization of deferred financing and issuance costs     |   |   | -          |   |          |   | 508,936    |              |   |   | 58,224       |   |   |         | -          |   |   |   | 567,160 |   |
| Deferred income taxes                                     |   |   | (1,139,448 | )      |          |   | -          |              |   |   | -            |   |   |         |       |   |   |   | (1,139,448 | ) |
| Accrued convertible, redeemable preferred stock dividends |   |   | 126,075    |   |          |   | -          |              |   |   | -            |   |   |         | -          |   |   |   | 126,075 |   |
| (Increase) decrease in operating assets:                  |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Due from related parties                                  |   |   | -          |   |          |   | 768        |              |   |   | -            |   |   |         | -          |   |   |   | 768 |   |
| Other assets                                              |   |   | (1,353,267 | )      |          |   | (197,467   | )                 |   |   | 3,797,308    |   |   |         | (2,515,246 | ) |   |   | (268,672 | ) |
| Increase (decrease) in operating liabilities:             |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Accounts payable                                          |   |   | (135,421   | )      |          |   | 70,479     |              |   |   | -            |   |   |         | -          |   |   |   | (64,942 | ) |
| Accrued interest                                          |   |   | 15,023     |   |          |   | 211,491    |              |   |   | 17,913       |   |   |         | -          |   |   |   | 244,427 |   |
| Accrued expenses                                          |   |   | 575,090    |   |          |   | (197,893   | )                 |   |   | 1,000        |   |   |         | -          |   |   |   | 378,197 |   |
| NET CASH FLOWS USED IN OPERATING ACTIVITIES               |   |   | (4,064,777 | )      |          |   | (909,444   | )                 |   |   | (2,126,101   | )      |   |         | -          |   |   |   | (7,100,322 | ) |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Investment in life settlements                            |   |   | -          |   |          |   | 1,623,250  |              |   |   | (2,776,510   | )      |   |         | -          |   |   |   | (1,153,260 | ) |
| NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES |   |   | -          |   |          |   | 1,623,250  |              |   |   | (2,776,510   | )      |   |         | -          |   |   |   | (1,153,260 | ) |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Net proceeds from revolving credit facility               |   |   | -          |   |          |   | -          |              |   |   | 2,500,000    |   |   |         | -          |   |   |   | 2,500,000 |   |
| Proceeds from issuance of Series I Secured notes payable  |   |   | -          |   |          |   | 50,000     |              |   |   | -            |   |   |         | -          |   |   |   | 50,000 |   |
| Payments for redemption of Series I Secured notes payable |   |   | -          |   |          |   | (1,550,537 | )                 |   |   | -            |   |   |         | -          |   |   |   | (1,550,537 | ) |
| Proceeds from issuance of debentures                      |   |   | 3,061,873  |   |          |   | -          |              |   |   | -            |   |   |         | -          |   |   |   | 3,061,873 |   |
| Proceeds (payments) from restricted cash                  |   |   | -          |   |          |   | 822,227    |              |   |   | 2,402,611    |   |   |         | -          |   |   |   | 3,224,838 |   |
| Issuance of preferred stock                               |   |   | 4,436,465  |   |          |   | -          |              |   |   | -            |   |   |         |       |   |   |   | 4,436,465 |   |
| Payments for issuance of preferred stock                  |   |   | (798,640   | )      |          |   | -          |              |   |   | -            |   |   |         | -          |   |   |   | (798,640 | ) |
| NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES |   |   | 6,699,698  |   |          |   | (678,310   | )                 |   |   | 4,902,611    |   |   |         | -          |   |   |   | 10,923,999 |   |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                 |   |   | 2,634,921  |   |          |   | 35,496     |              |   |   | -            |   |   |         | -          |   |   |   | 2,670,417 |   |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                 |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| BEGINNING OF THE PERIOD                                   |   |   | 1,746,456  |   |          |   | 131,893    |              |   |   | -            |   |   |         | -          |   |   |   | 1,878,349 |   |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| END OF THE PERIOD                                         |   | $      | 4,381,377  |   |          | $      | 167,389    |              |   | $      | -            |   |   | $            | -          |   |   | $ | 4,548,766 |   |

----

| For the three months ended March 31, 2011                 |   | Parent |       |   | Guarantor Sub |   |       | Non-Guarantor Sub |   |   | Eliminations |   |   | Consolidated |       |
|-----------------------------------------------------------|--------|--------|------------|--------|---------------|--------|------------|-------------------|--------|--------|--------------|--------|--------|--------------|------------|
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |
| CASH FLOWS FROM OPERATING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |
| Net income (loss)                                         |   | $      | 3,230,201  |   |          | $      | 3,275,391  |              |   | $      | 4,094,194    |   |   | $            | (7,369,585 | ) |   | $ | 3,230,201 |   |
| Adjustments to reconcile net income (loss) to cash:       |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| (Gain) on life settlements                                |   |   | -          |   |          |   | (139,726   | )                 |   |   | (8,239,919   | )      |   |         | -          |   |   |   | (8,379,645 | ) |
| Amortization of deferred financing and issuance costs     |   |   | -          |   |          |   | 135,192    |              |   |   | 58,224       |   |   |         | -          |   |   |   | 193,416 |   |
| (Increase) decrease in operating assets:                  |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Due from related parties                                  |   |   | (30,000    | )      |          |   | 2,286      |              |   |   | -            |   |   |         | -          |   |   |   | (27,714 | ) |
| Other assets                                              |   |   | (3,196,282 | )      |          |   | (8,011,849 | )                 |   |   | 4,099,657    |   |   |         | 7,369,585  |   |   |   | 261,111 |   |
| Increase (decrease) in operating liabilities:             |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Accounts payable                                          |   |   | -          |   |          |   | 26,108     |              |   |   | (613,800     | )      |   |         | -          |   |   |   | (587,692 | ) |
| Accrued interest                                          |   |   | -          |   |          |   | 23,112     |              |   |   | 13,175       |   |   |         | -          |   |   |   | 36,287 |   |
| Accrued expenses                                          |   |   | -          |   |          |   | (76,377    | )                 |   |   | (12,700      | )      |   |         | -          |   |   |   | (89,077 | ) |
| NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES |   |   | 3,919      |   |          |   | (4,765,863 | )                 |   |   | (601,169     | )      |   |         | -          |   |   |   | (5,363,113 | ) |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Investment in life settlements                            |   |   | -          |   |          |   | (16,150    | )                 |   |   | (4,617,855   | )      |   |         | -          |   |   |   | (4,634,005 | ) |
| NET CASH FLOWS USED IN  INVESTING ACTIVITIES    |   |   | -          |   |          |   | (16,150    | )                 |   |   | (4,617,855   | )      |   |         | -          |   |   |   | (4,634,005 | ) |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| Net proceeds from revolving credit facility               |   |   | -          |   |          |   | -          |              |   |   | 4,462,500    |   |   |         | -          |   |   |   | 4,462,500 |   |
| Proceeds from issuance of Series I Secured notes payable  |   |   | -          |   |          |   | 6,281,039  |              |   |   | -            |   |   |         | -          |   |   |   | 6,281,039 |   |
| Payments for redemption of Series I Secured notes payable |   |   | -          |   |          |   | (2,488,350 | )                 |   |   | -            |   |   |         | -          |   |   |   | (2,488,350 | ) |
| Proceeds (payments) from restricted cash                  |   |   | -          |   |          |   | 1,069,535  |              |   |   | (811,864     | )      |   |         | -          |   |   |   | 257,671 |   |
| NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES           |   |   | -          |   |          |   | 4,862,224  |              |   |   | 3,650,636    |   |   |         | -          |   |   |   | 8,512,860 |   |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      |   |   | 3,919      |   |          |   | 80,211     |              |   |   | (1,568,388   | )      |   |         | -          |   |   |   | (1,484,258 | ) |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                 |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| BEGINNING OF THE PERIOD                                   |   |   | -          |   |          |   | 189,842    |              |   |   | 1,568,388    |   |   |         | -          |   |   |   | 1,758,230 |   |
|                                                      |   |   |       |   |          |   |       |              |   |   |         |   |   |         |       |   |   |   |   |   |
| END OF THE PERIOD                                         |   | $      | 3,919      |   |          | $      | 270,053    |              |   | $      | -            |   |   | $            | -          |   |   | $ | 273,972 |   |

----

|                   |   | March 31, |   |   | December 31, |   |
|------------------------|--------|-----------|--------|--------|--------------|--------|
|                   |   | 2012      |   |   | 2011         |   |
| Life insurance company |   | %         |   |   | %            |   |
|                   |   |      |   |   |         |   |
| Company A              |   |      | 17.83  |   |         |   | 17.43 |   |
| Company B              |   |      | 14.87  |   |         |   | 15.06 |   |
| Company C              |   |      | 12.79  |   |         |   | 12.53 |   |
| Company D              |   |      | 9.96   |   |         |   | 10.09 |   |

|               |   | March 31, |   |   | December 31, |   |
|--------------------|--------|-----------|--------|--------|--------------|--------|
|               |   | 2012      |   |   | 2011         |   |
| State of residence |   | %         |   |   | %            |   |
|               |   |      |   |   |         |   |
| California         |   |      | 30.39  |   |         |   | 31.43 |   |
| New York           |   |      | 13.81  |   |         |   | 13.71 |   |
| Florida            |   |      | 11.60  |   |         |   | 11.43 |   |

----

| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|---------|----------------------------------------------------------------------------------------------|

| Total portfolio face value of policy benefits |  $ 482,455,081                 |
|-----------------------------------------------|-------------------------------------|
| Average face value per policy *               |  $ 2,665,498                   |
| Average face value per insured life *         |  $ 2,871,756                   |
| Average age of insured (yrs) *                | 81.02                               |
| Average life expectancy estimate (yrs) *      | 7.63                                |
| Total number of policies                      | 181                                 |
| Demographics                                  | 62% Males; 38% Females              |
| Number of smokers                             |   No insureds are smokers |
| Largest policy as % of total portfolio        | 2.07%                               |
| Average policy as % of total portfolio        | 0.55%                               |
| Average Annual Premium as % of face value     | 3.25%                               |

----

|   | March 31, 201213.45% | March 31, 201113.31% |   |
|--------|----------------------|----------------------|--------|

----

----

----

| Issuer/Borrower              |   | Principal AmountOutstanding atMarch 31, 2012 |        |   | Weighted AverageInterest Rate |   |
|------------------------------|--------|----------------------------------------------|-------------|--------|-------------------------------|--------|
| GWG Holdings, Inc. |   | $                                            | 3,231,000   |   |                          |   | 7.86 | % |
| GWG Life Settlements, LLC    |   |                                         | 44,778,000  |   |                          |   | 8.13 | % |
| GWG DLP Funding II, LLC      |   |                                         | 62,500,000  |   |                          |   | 2.18 | % |
| Total                        |   | $                                            | 110,509,000 |   |                          |   | 4.75 | % |

----

| Year        |   | Premiums and Servicing |       |
|-------------|--------|------------------------|------------|
| 2012        |   | $                      | 11,785,678 |   |
| 2013        |   |                   | 16,453,938 |   |
| 2014        |   |                   | 17,491,427 |   |
| 2015        |   |                   | 18,809,404 |   |
| 2016        |   |                   | 20,232,074 |   |
|  Total |   | $                      | 84,772,521 |   |

----

----

|                                                                        |   | AtMarch 31,2012 |   |   | AtDecember 31,2011 |   |
|-----------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------------|--------|
| Weighted-average expected IRR (1)                                           |   |            | 13.92  | %      |               |   | 14.06 | % |
| Weighted-average revolving credit facility interest rate (2)                |   |            | 2.18   | %      |               |   | 2.25 | % |
| Excess spread (3)                                                           |   |            | 11.74  | %      |               |   | 11.81 | % |
| Total weighted-average interest rate on indebtedness for borrowed money (4) |   |            | 4.75   | %      |               |   | 4.86 | % |
| Total excess spread                                                         |   |            | 9.17   | %      |               |   | 9.20 | % |

| (1) | This represents the weighted-average expected internal rate of return of the life insurance policies as of the measurement date based upon our investment cost basis of the insurance policies and the expected cash flows from the life insurance portfolio. Our investment cost basis is calculated as our cash investment in the life insurance policies, without regard to GAAP-based fair value measurements, and is set forth below: |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | As ofMarch 31,2012 |        |   | As ofDecember 31,2011 |   |
|----------------------------------|--------|--------------------|-------------|--------|-----------------------|--------|
| GAAP fair value                  |   | $                  | 128,112,092 |   |                  | $      | 122,168,524 |   |
| Unrealized fair value gain (A)   |   |               | (52,341,113 | )      |                  |   | (24,959,685 | ) |
| Adjusted cost basis increase (B) |   |               | 47,771,517  |   |                  |   | 19,298,035 |   |
| Investment cost basis (C)        |   | $                  | 123,542,496 |   |                  | $      | 116,506,874 |   |

|   | (A) | This represents the reversal of cumulative unrealized GAAP fair value gain of life insurance policies. |
|--------|-----|--------------------------------------------------------------------------------------------------------|

|   | (B) | Adjusted cost basis is increased to include those acquisition and servicing expenses that are not capitalized by GAAP. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------|

|   | (C) | This is the full cash investment cost basis in life insurance policies from which our expected internal rate of return is calculated. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------|

| (2) | This is the weighted-average revolving credit relating to our revolving credit facility interest rate as of the measurement date. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (3) | We must maintain an excess spread of 2.00% relating to our revolving credit facility to maintain compliance under such facility. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents the weighted-average interest rate paid on all outstanding indebtedness as of measurement date, determined as follows: |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| Outstanding Indebtedness     |   | As ofMarch 31,2012 |        |   | As ofDecember 31,2011 |   |
|------------------------------|--------|--------------------|-------------|--------|-----------------------|--------|
| Revolving credit facility    |   | $                  | 62,500,000  |   |                  | $      | 60,000,000 |   |
| Subsidiary secured notes     |   |               | 44,777,537  |   |                  |   | 49,332,043 |   |
| Renewable secured debentures |   |               | 3,231,000   |   |                  |   | - |   |
| Total                        |   | $                  | 110,508,537 |   |                  | $      | 109,332,043 |   |

| Interest Rates on Indebtedness:  |   |   |   |
|-------------------------------------------------|--------|--------|--------|
| Revolving credit facility                       |   |   | 2.18   | % |   |   | 2.25 | % |
| Subsidiary secured notes                        |   |   | 8.13   | % |   |   | 8.04 | % |
| Renewable secured debentures                    |   |   | 7.86   | % |   |   | N/A |   |
| Weighted-average interest rates on indebtedness |   |   | 4.75   | % |   |   | 4.86 | % |

----

|                                           |   | As ofMarch 31,2012 |        |   | As ofDecember 31,2011 |   |
|------------------------------------------------|--------|--------------------|-------------|--------|-----------------------|--------|
| GAAP net worth (1)                             |   | $                  | 18,321,162  |   |                  | $      | 13,609,845 |   |
| Less intangible assets                         |   |               | (1,555,231  | )      |                  |   | (1,648,116 | ) |
| GAAP tangible net worth                        |   |               | 16,765,931  |   |                  |   | 11,961,729 |   |
| Unrealized fair value gain (2)                 |   |               | (52,341,113 | )      |                  |   | (24,959,684 | ) |
| Adjusted cost basis increase (3)               |   |               | 47,771,518  |   |                  |   | 19,298,035 |   |
| Accrual of unrealized actuarial gain (4)       |   |               | 27,105,199  |   |                  |   | 23,049,629 |   |
| Total adjusted non-GAAP tangible net worth (5) |   | $                  | 39,301,535  |   |                  | $      | 29,349,709 |   |

| (1) | Includes termination of redeemable member’s interest prior to corporate conversion and preferred stock classified as temporary equity. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Reversal of cumulative unrealized fair value gain or loss of life insurance policies. |
|-----|---------------------------------------------------------------------------------------|

| (3) | Adjusted cost basis is increased by acquisition and servicing expenses which are not capitalized under GAAP. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (4) | Accrual of cumulative actuarial gain at expected internal rate of return based on investment cost basis. |
|-----|----------------------------------------------------------------------------------------------------------|

| (5) | We must maintain a total adjusted non-GAAP tangible net worth of $5 million to maintain compliance with our revolving credit facility with DZ Bank/Autobahn. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | Three Months Ended |       |
|------------------------------------------|--------|--------------------|------------|
|                                     |   | March 31, 2012     |       |   | March 31, 2011 |   |
| GAAP net income                          |   | $                  | (2,152,829 | ) |   | $ | 3,230,201 |   |
| Unrealized fair value gain (1)           |   |               | (601,768   | ) |   |   | (5,357,641 | ) |
| Adjusted cost basis increase (2)         |   |               | 1,580,604  |   |   |   | 2,000,772 |   |
| Accrual of unrealized actuarial gain (3) |   |               | 4,055,569  |   |   |   | 2,843,437 |   |
| Total adjusted non-GAAP income (5)       |   | $                  | 2,881,576  |   |   | $ | 2,716,769 |   |

| (1) | Reversal of unrealized fair value gain of life insurance policies for current period. |
|-----|---------------------------------------------------------------------------------------|

| (2) | Adjusted cost basis is increased to include those acquisition and servicing expenses which are not capitalized by GAAP. |
|-----|-------------------------------------------------------------------------------------------------------------------------|

| (3) | Accrual of actuarial gain at expected internal rate of return based on investment cost basis for the period. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (4) | Represents adjusted non-GAAP income from the life insurance portfolio sold on November 1, 2010 owned by GWG DLP Funding, LLC and financed by WestLB AG. This entity was deconsolidated in our GAAP consolidated financial statements, but consolidated for our total adjusted non-GAAP Income measurement. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | We must maintain a positive consolidated net income, calculated on a non-GAAP basis, to maintain compliance with our revolving credit facility with DZ Bank/Autobahn. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 4. | CONTROLS AND PROCEDURES. |
|---------|--------------------------|

| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
|---------|--------------------------------------------------------------|

----

| ITEM 6. | EXHIBITS |
|---------|----------|

| Exhibit |                                                                                                                                                                                          |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1    | Section 302 Certification of the Chief Executive Officer (filed herewith).                                                                                                                    |
| 31.2    | Section 302 Certification of the Chief Financial Officer (filed herewith).                                                                                                                    |
| 32.1    | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
| 99.1    | Letter from Model Actuarial Pricing Systems, dated April 30, 2012 (filed herewith).                                                                                                           |

----

|                                | GWG HOLDINGS, INC. |                                                                        |
|-------------------------------------|--------------------|-----------------------------------------------------------------------------|
|                                |               |                                                                        |   |
| Date:  May 15, 2012       | By:                | /s/ Jon R. Sabes          |   |
|                                |               | Chief Executive Officer                                                     |   |
|                                |               |                                                                        |   |
| Date:  May 15, 2012  | By:           | /s/ Jon Gangelhoff                            |   |
|                                |               | Chief Financial Officer                                                     |   |
|                                |               |                                                                        |   |

----