UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2024

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number: 001-39346

 

MoneyLion Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		85-0849243
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
249-245 West 17th Street, 4th Floor New York, New York		10011
(Address of principal executive offices)		(Zip Code)

 

(212) 300-9865

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		ML		The New York Stock Exchange
Redeemable warrants, each whole warrant exercisable for 1/30th of one share of Class A common stock		ML WS		The New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

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

 

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

There were 10,968,455 shares of the registrant’s Class A common stock, par value $0.0001 per share, outstanding as of August 1, 2024.

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MoneyLion Inc.

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended June 30, 2024

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Consolidated Balance Sheets	1
	Unaudited Consolidated Statements of Operations	2
	Unaudited Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity	3
	Unaudited Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	47
Signatures		49

 

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INTRODUCTORY NOTE

General

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “MoneyLion,” the “Company,” “we,” “us,” “our” and similar references refer to MoneyLion Inc. and, as context requires, its consolidated subsidiaries. “MALKA” refers to Malka Media Group LLC, a wholly-owned subsidiary of MoneyLion Technologies Inc., and “Engine” refers to ML Enterprise Inc., doing business as the brand “Engine by MoneyLion,” a wholly-owned subsidiary of MoneyLion Technologies Inc. which was previously named “Even Financial Inc.” and subsequently renamed in February 2023.

 

For convenience, the trademarks and service marks referred to in this Quarterly Report on Form 10-Q are listed without the ®, TM and SM symbols, but we intend to assert, and notify others of, our rights in and to these trademarks and service marks to the fullest extent under applicable law.

 

Reverse Stock Split

 

On April 24, 2023, the Company amended the Company's Fourth Amended and Restated Certificate of Incorporation (as amended from time to time, the “Certificate of Incorporation”) to effect, effective as of 5:01 p.m. Eastern Time on April 24, 2023, a 1-for-30 reverse stock split (the “Reverse Stock Split”) of the Class A common stock, par value $0.0001 per share (the “Class A Common Stock”). At the effective time of the Reverse Stock Split, every 30 shares of Class A Common Stock either issued and outstanding or held as treasury stock were automatically reclassified into one new share of Class A Common Stock, and the total number of shares of Class A Common Stock authorized for issuance was reduced by a corresponding proportion from 2,000,000,000 shares to 66,666,666 shares. The Reverse Stock Split was approved by the Company's stockholders at a Special Meeting of Stockholders on April 19, 2023 and approved by the Board of Directors on April 21, 2023. The primary goal of the Reverse Stock Split was to increase the per share price of the Class A Common Stock in order to meet the minimum per share price requirement for continued listing on the New York Stock Exchange (the “NYSE”). The Class A Common Stock began trading on the NYSE on an as-adjusted basis on April 25, 2023 under the existing trading symbol “ML.”

 

In addition, as a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of Class A Common Stock underlying the Company’s outstanding equity awards, the number of shares issuable upon the exercise of the Company’s outstanding warrants and the number of shares issuable under the Company’s equity incentive plans and certain existing agreements, as well as the exercise, grant and acquisition prices of such equity awards and warrants, as applicable. Furthermore, proportionate adjustments were made to the conversion factor at which the Company’s previously outstanding Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), converted to Class A Common Stock. The total number of shares of preferred stock of the Company authorized for issuance remained at 200,000,000. Stockholders who would have been entitled to receive fractional shares as a result of the Reverse Stock Split were instead entitled to a cash payment in lieu thereof at a price equal to the fraction of one share to which the stockholder was otherwise entitled multiplied by the closing price per share of the Class A Common Stock on the NYSE on the effective date of the Reverse Stock Split.

 

The effects of the Reverse Stock Split have been reflected in this Quarterly Report on Form 10-Q for all periods presented.

 

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Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the information incorporated herein by reference, contains forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of MoneyLion. These statements are based on the beliefs and assumptions of the management of MoneyLion. Although MoneyLion believes that its respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, MoneyLion cannot assure you that it will achieve or realize these plans, intentions or expectations. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” or “intends” or similar expressions. The forward-looking statements are based on projections prepared by, and are the responsibility of, MoneyLion’s management.

 

Forward-looking statements are inherently subject to known and unknown risks and uncertainties, many of which may be beyond MoneyLion’s control. Forward-looking statements are not guarantees of future performance or outcomes, and MoneyLion’s actual performance and outcomes, including, without limitation, actual results of operations, financial condition and liquidity, and the development of the market in which MoneyLion operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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These and other factors are more fully discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2023, and Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

 

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Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including those we face in connection with the successful implementation of our strategy and the growth of our business. The following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of shares of our securities and result in a loss of all or a portion of your investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The risks described above should be read together with the “Cautionary Statement Regarding Forward-Looking Statements” herein, any other risk factors set forth under Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q, the “Risk Factors” section in the Annual Report on Form 10-K for the year ended December 31, 2023, our consolidated financial statements and the related notes presented in Part I, Item 1 “Financial Statements” in this Quarterly Report on Form 10-Q and the other documents that we file with the SEC. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial.

 

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MONEYLION INC.

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except per share amounts)

(Unaudited)

 

		June 30,				December 31,
		2024				2023
Assets
Cash		$	98,361			$	92,195
Restricted cash, including amounts held by variable interest entities (VIEs) of $1,585 and $128			4,749				2,284
Consumer receivables			237,358				208,167
Allowance for credit losses on consumer receivables			(40,523	)			(35,329	)
Consumer receivables, net, including amounts held by VIEs of $150,174 and $131,283			196,835				172,838
Enterprise receivables, net			23,045				15,978
Property and equipment, net			1,961				1,864
Intangible assets, net			168,302				176,541
Other assets			52,490				53,559
Total assets		$	545,743			$	515,259
Liabilities and Stockholders' Equity
Liabilities:
Secured loans, net		$	64,482			$	64,334
Accounts payable and accrued liabilities			48,984				52,396
Warrant liability			810				810
Other debt, net, including amounts held by VIEs of $129,932 and $125,419			129,932				125,419
Other liabilities			23,079				15,077
Total liabilities			267,287				258,036
Commitments and contingencies (Note 15)
Stockholders' equity:
Class A Common Stock, $0.0001 par value; 66,666,666 shares authorized as of June 30, 2024 and December 31, 2023, 10,977,991 and 10,945,658 issued and outstanding, respectively, as of June 30, 2024 and 10,444,627 and 10,412,294 issued and outstanding, respectively, as of December 31, 2023			1				1
Additional paid-in capital			980,662				969,641
Accumulated deficit			(692,507	)			(702,719	)
Treasury stock at cost, 32,333 shares as of June 30, 2024 and December 31, 2023			(9,700	)			(9,700	)
Total stockholders' equity			278,456				257,223
Total liabilities and stockholders' equity		$	545,743			$	515,259

 

The accompanying notes are an integral part of these consolidated financial statements.

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MONEYLION INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollar amounts in thousands, except per share amounts)

(Unaudited)

 

	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Revenue
Service and subscription revenue	$	127,890			$	103,237			$	245,963			$	193,978
Net interest income on loan receivables		2,956				3,304				5,889				6,232
Total revenue, net		130,846				106,541				251,852				200,210
Operating expenses
Provision for credit losses on consumer receivables		33,431				25,562				53,661				42,073
Compensation and benefits		24,852				22,572				49,638				46,980
Marketing		10,530				6,549				21,396				12,941
Direct costs		34,449				32,230				65,838				62,032
Professional services		11,007				4,518				16,773				9,517
Technology-related costs		6,512				5,611				13,098				11,649
Other operating expenses		4,338				11,219				14,658				20,214
Total operating expenses		125,119				108,261				235,062				205,406
Net income (loss) before other (expense) income and income taxes		5,727				(1,720	)			16,790				(5,196	)
Interest expense		(6,714	)			(7,330	)			(13,531	)			(14,841	)
Change in fair value of warrant liability		(81	)			162				—				13
Change in fair value of contingent consideration from mergers and acquisitions		—				6,367				—				6,613
Goodwill impairment loss		—				(26,721	)			—				(26,721	)
Other income		2,381				1,257				4,740				2,906
Net income (loss) before income taxes		1,313				(27,985	)			7,999				(37,226	)
Income tax benefit		(1,824	)			(262	)			(2,213	)			(286	)
Net income (loss)		3,137				(27,723	)			10,212				(36,940	)
Reversal of previously accrued dividends on preferred stock		—				2,667				—				690
Net income (loss) attributable to common shareholders	$	3,137			$	(25,056	)		$	10,212			$	(36,250	)
Net income (loss) per share, basic	$	0.29			$	(2.71	)		$	0.95			$	(4.05	)
Net income (loss) per share, diluted	$	0.26			$	(2.71	)		$	0.85			$	(4.05	)
Weighted average shares used in computing net income (loss) per share, basic		10,862,853				9,234,238				10,694,635				8,944,836
Weighted average shares used in computing net income (loss) per share, diluted		12,091,421				9,234,238				11,954,975				8,944,836

 

The accompanying notes are an integral part of these consolidated financial statements.

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MONEYLION INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(amounts in thousands, except share amounts)

(Unaudited)

 

																						Total
		Class A Common Stock								Additional				Accumulated				Treasury				Stockholders'
		Shares				Amount				Paid-in Capital				Deficit				Stock				Equity
Balances at April 1, 2024			10,787,923			$	1			$	975,801			$	(695,644	)		$	(9,700	)		$	270,458
Stock-based compensation			—				—				7,531				—				—				7,531
Exercise of stock options and warrants and vesting of RSUs and PSUs, net of tax withholdings			157,735				—				(2,670	)			—				—				(2,670	)
Net income			—				—				—				3,137				—				3,137
Balances at June 30, 2024			10,945,658			$	1			$	980,662			$	(692,507	)		$	(9,700	)		$	278,456

 

																						Total
		Class A Common Stock								Additional				Accumulated				Treasury				Stockholders'
		Shares				Amount				Paid-in Capital				Deficit				Stock				Equity
Balances at January 1, 2024			10,412,294			$	1			$	969,641			$	(702,719	)		$	(9,700	)		$	257,223
Stock-based compensation			—				—				14,028				—				—				14,028
Exercise of stock options and warrants and vesting of RSUs and PSUs, net of tax withholdings			533,364				—				(3,007	)			—				—				(3,007	)
Net income			—				—				—				10,212				—				10,212
Balances at June 30, 2024			10,945,658			$	1			$	980,662			$	(692,507	)		$	(9,700	)		$	278,456

 

 

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MONEYLION INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(amounts in thousands, except share amounts)

(Unaudited)

 

	Redeemable Convertible																														Total
	Preferred Stock (Series A)										Class A Common Stock								Additional				Accumulated				Treasury				Stockholders'
	Shares					Amount					Shares				Amount				Paid-in Capital				Deficit				Stock				Equity
Balances at April 1, 2023		25,701,595				$	173,328					8,799,069			$	1			$	771,881			$	(666,691	)		$	(9,700	)		$	95,491
Stock-based compensation		—					—					—				—				5,250				—				—				5,250
Exercise of stock options and warrants and vesting of RSUs and PSUs, net of tax withholdings		—					—					72,128				—				(183	)			—				—				(183	)
Issuance of options and preferred stock in connection with Engine Acquisition and the related contingent consideration, net of working capital adjustments		4,354,092					1,440					23,453				—				304				—				—				304
Voluntary conversion of preferred stock to common stock		(6,634	)				(45	)				228				—				45				—				—				45
Reversal of previously accrued dividends on preferred stock		—					—					—				—				2,667				—				—				2,667
Settlement of accrued dividends on preferred stock		—					—					229,605				—				2,976				—				—				2,976
Automatic conversion of redeemable convertible preferred stock (Series A)		(30,049,053	)				(174,723	)				1,012,093				—				174,849				—				—				174,849
Other		—					—					(901	)			—				(11	)			—				—				(11	)
Net loss		—					—					—				—				—				(27,723	)			—				(27,723	)
Balances at June 30, 2023		—				$	—					10,135,675			$	1			$	957,778			$	(694,414	)		$	(9,700	)		$	253,665

 

	Redeemable Convertible																														Total
	Preferred Stock (Series A)										Class A Common Stock								Additional				Accumulated				Treasury				Stockholders'
	Shares					Amount					Shares (1)				Amount (1)				Paid-in Capital(1)				Deficit				Stock				Equity
Balances at January 1, 2023		25,655,579				$	173,208					8,587,345			$	1			$	766,839			$	(657,979	)		$	(9,700	)		$	99,161
Stock-based compensation		—					—					—				—				10,955				—				—				10,955
Exercise of stock options and warrants and vesting of RSUs and PSUs, net of tax withholdings		—					—					172,925				—				(782	)			—				—				(782	)
Issuance of common stock in connection with earnout and make-whole provisions related to the acquisition of Malka Media Group LLC		—					—					110,925				—				1,914				—				—				1,914
Issuance of equity in connection with Engine Acquisition and the related contingent consideration, net of working capital adjustments		4,400,172					1,560					23,453				—				304				—				—				304
Voluntary conversion of preferred stock to common stock		(6,698	)				(45	)				230				—				45				—				—				45
Reversal of previously accrued dividends on preferred stock		—					—					—				—				690				—				—				690
Settlement of accrued dividends on preferred stock		—					—					229,605				—				2,976				—				—				2,976
Automatic conversion of redeemable convertible preferred stock (Series A)		(30,049,053	)				(174,723	)				1,012,093				—				174,849				—				—				174,849
Other		—					—					(901	)			—				(12	)			505				—				493
Net loss		—					—					—				—				—				(36,940	)			—				(36,940	)
Balances at June 30, 2023		—				$	—					10,135,675			$	1			$	957,778			$	(694,414	)		$	(9,700	)		$	253,665

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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MONEYLION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

 

	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Cash flows from operating activities:
Net income (loss)	$	3,137			$	(27,723	)		$	10,212			$	(36,940	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Provision for losses on receivables		33,431				25,562				53,661				42,073
Depreciation and amortization expense		6,331				6,113				12,543				12,297
Change in deferred fees and costs, net		322				782				678				1,398
Change in fair value of warrants		81				(162	)			—				(13	)
Change in fair value of contingent consideration from mergers and acquisitions		—				(6,367	)			—				(6,613	)
Loss (gain) on foreign currency translation		44				(171	)			(53	)			(178	)
Goodwill impairment loss		—				26,721				—				26,721
Stock compensation expense		7,531				5,250				14,028				10,955
Deferred income taxes		235				(400	)			471				(493	)
Changes in assets and liabilities:
Accrued interest receivable		(38	)			(211	)			(76	)			(238	)
Enterprise receivables, net		(5,527	)			1,708				(7,067	)			(2,422	)
Other assets		3,117				5,610				1,753				4,360
Accounts payable and accrued liabilities		(1,103	)			1,156				(3,359	)			(8,649	)
Other liabilities		237				(2,505	)			(1,354	)			(4,215	)
Net cash provided by operating activities		47,798				35,363				81,437				38,043
Cash flows from investing activities:
Net originations and collections of finance receivables		(41,676	)			(33,185	)			(69,398	)			(52,832	)
Purchase of property and equipment and software development		(2,244	)			(1,638	)			(4,401	)			(2,675	)
Settlement of contingent consideration related to mergers and acquisitions		—				(766	)			—				(1,116	)
Net cash used in investing activities		(43,920	)			(35,589	)			(73,799	)			(56,623	)
Cash flows from financing activities:
Net proceeds from (repayments to) special purpose vehicle credit facilities		—				—				4,000				(24,000	)
Repayments to secured/senior lenders		—				(5,000	)			—				(5,000	)
Payment of deferred financing costs		—				(154	)			—				(154	)
Payments related to the automatic conversion of redeemable convertible preferred stock (Series A) in lieu of fractional shares of common stock and dividends on preferred stock		—				(3,007	)			—				(3,007	)
Payments related to issuance of common stock related to exercise of stock options and warrants, net of tax withholdings related to vesting of stock-based compensation		(2,670	)			(183	)			(3,007	)			(782	)
Other		—				(12	)			—				(12	)
Net cash (used in) provided by financing activities		(2,670	)			(8,356	)			993				(32,955	)
Net change in cash and restricted cash		1,208				(8,582	)			8,631				(51,535	)
Cash and restricted cash, beginning of period		101,902				110,756				94,479				153,709
Cash and restricted cash, end of period	$	103,110			$	102,174			$	103,110			$	102,174
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,400			$	7,043			$	12,848			$	14,508
Supplemental disclosure of non-cash investing and financing activities:
Voluntary conversion of preferred stock to common stock	$	—			$	45			$	—			$	45
Automatic conversion of redeemable convertible preferred stock (Series A) to common stock	$	—			$	174,849			$	—			$	174,849
Reversal of previously accrued dividends on preferred stock	$	—			$	2,667			$	—			$	690
Issuance of common stock to settle accrued dividends on preferred stock and Preferred Stock Equivalents	$	—			$	3,280			$	—			$	3,280
Equity issued as consideration for mergers and acquisitions	$	—			$	1,744			$	—			$	1,864
Equity issued as settlement of contingent consideration related to Malka Acquisition	$	—			$	1			$	—			$	1,914
Equity issued as settlement of contingent consideration related to Engine Acquisition	$	—			$	1,440			$	—			$	1,440
Lease liabilities incurred in exchange for operating right-of-use assets	$	—			$	—			$	8,885			$	—

 

The accompanying notes are an integral part of these consolidated financial statements.

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MONEYLION INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share amounts or as otherwise indicated)

(Unaudited)

 

 

 

 

 

 

7. OTHER ASSETS

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of MoneyLion and is intended to help the reader understand MoneyLion, our operations and our present business environment. This discussion should be read in conjunction with MoneyLion’s unaudited consolidated financial statements and notes to those financial statements included in Part I, Item 1 “Financial Statements” within this Quarterly Report on Form 10-Q. References to “we,” “us,” “our,” “Company” or “MoneyLion” refer to MoneyLion Inc. and, as context requires, its wholly-owned subsidiaries.

 

Overview

MoneyLion is a leader in financial technology, powering the next generation of personalized products and financial content for American consumers. MoneyLion was founded in 2013 with a vision to rewire the financial system. Our mission is to give everyone the power to make their best financial decisions. We believe that the financial wellness gap in America can be addressed by bridging the financial literacy and the financial access gaps, shortening the distance between education and action.

 

We design and offer modern personal finance products, tools and features and curate money-related content that delivers actionable insights and guidance to our users. We also operate and distribute embedded finance marketplace solutions that match consumers with personalized third-party offers from our partners, providing convenient access to an expansive breadth of financial solutions that enable consumers to borrow, spend, save and achieve better financial outcomes. Our leading marketplace solutions provide valuable distribution, acquisition, growth and monetization channels for our partners. In addition, we provide creative media and brand content services to clients across industries through our media division and leverage our adaptive, in-house content studio to produce and deliver engaging and dynamic content in support of our product and service offerings.

 

We have purposefully built our platform to help consumers navigate all of their financial inflection points, combining our deep first-party product expertise, engaging content, marketplaces, innovative technology, data and AI capabilities to create the ultimate marketplace solution. As of June 30, 2024, we had 17.0 million Total Customers who used 27.7 million Total Products and over 1,200 Enterprise Partners in our network. We strategically employ comprehensive, data-driven analytics and cutting-edge technology to enhance our platform, creating personalized experiences for our users based on our rich datasets. Utilizing innovative approaches to financial guidance that engage and educate our users within a peer community, we seek to empower consumers to take control of their financial lives.

In our Consumer business, we primarily earn revenue as follows:

 

 

 

 

 

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In our Enterprise business, we primarily earn revenue, reflected in enterprise service revenues, as follows:

 

 

 

Recent Developments

 

On August 2, 2024, ML Plus LLC, a wholly-owned indirect subsidiary of MoneyLion Inc., entered into the Third Amendment to Account Servicing Agreement with Pathward, N.A. to amend that certain Account Servicing Agreement, dated as of January 14, 2020, pursuant to which ML Plus LLC provides its RoarMoney demand deposit accounts and debit cards with Pathward, as partner issuing bank, in order to enable the Company to offer overdraft protection in connection with the Program Services. The Third Amendment also extends the term of the Agreement to January 2029 (with automatic renewal for successive two-year periods unless either party provides written notice of non-renewal, which may be without cause, at least 180 days prior to the end of any such term).

 

Factors Affecting Our Performance

We are subject to a number of risks including, but not limited to, the need for successful development of products, services and functionality; the need for additional capital (or financing) to fund operating losses; competition with substitute products and services from larger companies; protection of proprietary technology and information; dependence on key individuals; and risks associated with changes in information technology. For additional information, see the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2023.

New Customer and Client Growth and Increasing Usage Across Existing Customers and Clients

Our ability to effectively acquire new customers and clients through our acquisition and marketing efforts and drive usage of our products and services across our existing customers and clients is key to our growth, particularly as a significant portion of the revenue we generate in our business is derived from transaction-based fees. We believe our customers’ experience is enhanced by using our full suite of first-party financial products and services, complemented by the full spectrum of offers available in our marketplace, as we can better tailor the insights and recommendations we provide to them. In order to grow our business, we must engage and retain customers and continue to expand their use of our platform by cross-selling additional functionality, products and services to them. In our Enterprise business, we are dependent in part on our relationships with our Enterprise Partners, and any failure to effectively match consumers leads from our Channel Partners with product and service offerings from our Product Partners, or any reduced marketing spend by such Product Partners on our Enterprise platform, could adversely affect our business and results of operations.

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Expansion and Innovation of Products, Services and Functionality

We will continue to invest in expanding and enhancing the products, services and functionality available through our platform for our customers and clients. Our ability to expand, enhance and sell additional functionality, products and services to our existing customers and clients may require more sophisticated and costly development, sales or engagement efforts. Any factors that impair our ability to do so may negatively impact our efforts towards retaining and attracting customers and clients.

 

General Economic and Market Conditions

Our performance is impacted by the relative strength of the overall economy, market volatility, consumer spending behavior and consumer demand for financial products and services. For example, with respect to our Consumer business, the willingness of our customers to spend, invest or borrow may fluctuate with their level of disposable income. Other factors such as interest rate fluctuations or monetary policies may also impact our customers’ behavior and our own ability to fund Instacash advances and loan volume. In addition, in our Enterprise business, adverse macroeconomic conditions, such as significant tightening of credit markets, may cause our Product Partners to reduce their marketing spend or advertising on our platform or may cause a reduction in client spending in our Media Services division, which could adversely affect our business and results of operations.

Seasonality

 

We may experience seasonal fluctuations in our revenue. During the fourth quarter, revenue in our Consumer business may benefit from increased consumer spending during the holiday season, which may increase demand for our advance product as consumers seek additional liquidity. During the first quarter, we may see stronger collections on Instacash receivables resulting in a relatively lower provision for credit losses on consumer receivables as a result of the impact of tax refunds, as well as stronger demand for our banking and investment products and services. Seasonal trends may be superseded by market or macroeconomic events, which can have a significant impact on our business, as described above.

 

Competition

We compete across our business lines with a variety of competitors, including traditional banks and credit unions; new entrants obtaining banking licenses; non-bank digital providers offering banking-related services; specialty finance and other non-bank digital providers offering consumer lending-related or earned wage access products; digital wealth management platforms such as robo-advisors offering consumer investment services and other brokerage-related services; and digital financial platform, embedded finance and marketplace competitors, which aggregate and connect consumers to financial product and service offerings. In addition to competing for customers for our product and service offerings, we also compete to attract viewership of the content to which we connect customers, as there are other sources of financial-related content and news, many of which are more established and have a larger subscriber base. Furthermore, we compete with other advertising agencies and other service providers to attract marketing budget spending from our Enterprise clients. With respect to our Media Services division, we compete with others in the digital media and content creation industry, which range from large and established media companies, including social media companies, advertising agencies and production studios, to emerging start-ups. We expect our competition to continue to increase. The success of our business depends on our ability to compete effectively and attract new and retain existing customers and clients, which depends upon many factors both within and beyond our control.

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Pricing of Our Products and Services

We derive a substantial portion of our revenue from fees earned from our products and services. The fees we earn are subject to a variety of external factors such as competition, interchange rates and other macroeconomic factors, such as interest rates and inflation, among others. We may provide discounts or other incentives and rewards that we pay to customers who utilize multiple products and services to expand usage of our platform. We may also lower pricing on our products and services to acquire new customers. As the market for our platform matures, or as new or existing competitors introduce new products, services or functionality that compete with ours, we may experience pricing pressure and be unable to retain current customers and clients and attract new customers and clients at prices that are consistent with our pricing model and operating budget. Our pricing strategy may prove to be unappealing to our customers and clients, and our competitors could choose to bundle certain products and services competitive with ours. If this were to occur, it is possible that we would have to change our pricing strategies or reduce our prices, which could adversely affect our business.

Product and Service Mix

We offer various products and services on our platform, including our core suite of first-party financial products and services, a broad range of financial and non-financial offers in our Consumer Marketplace, Enterprise Marketplace and Media Services in our Enterprise business. Each product and service has a different profitability profile. The relative usage of products and services with high or low profitability and their lifetime value could have an impact on our performance.

Access and Cost of Financing; Forward Flow Arrangement

Our credit products and Instacash product are financed by special purpose vehicle financings from third-party institutional lenders and, in the future, a forward flow financing arrangement pursuant to which we will sell a portion of our eligible Instacash receivables to third-party purchasers and receive a stable stream of servicing fee income, as described further under Part I, Item 1 “Financial Statements – Sale of Consumer Receivables.” The loss of one or more of the financing sources we have for our credit products and Instacash product could have an adverse impact on our performance, and it could be costly to obtain new financing. In addition, the initial price at which we sell Instacash receivables under the forward flow financing arrangement will be based on the average loss rate at 360 days past the repayment date of the three most recent matured monthly cohorts and will be subject to adjustment for future monthly cohorts based on the performance of monthly cohorts at specified intervals past the repayment date compared to the expected loss rates of the reference matured monthly cohorts established at sale and a discount percentage. As a result, the loss on sale of the Instacash receivables sold under the forward flow financing arrangement will be variable depending on the performance of the previously sold Instacash receivables. No Instacash receivables were sold during the three and six months ended June 30, 2024.

Key Performance Metrics

We regularly review several metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

Total Customers

We define Total Customers as the cumulative number of customers that have opened at least one account, including banking, membership subscription, secured personal loan, Instacash advance, managed investment account, cryptocurrency account and customers that are monetized through our marketplace and affiliate products. Total Customers also include customers that have submitted for, received or clicked on at least one marketplace credit offer. We consider Total Customers to be a key performance metric as it can be used to understand lifecycle efforts of our customers, as we look to cross-sell products to our customer base and grow our platform. Total Customers were 17.0 million and 9.9 million as of June 30, 2024 and 2023, respectively.

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Total Products

We define Total Products as the total number of products that our Total Customers have opened, including banking, membership subscription, secured personal loan, Instacash advance, managed investment account, cryptocurrency account and monetized marketplace and affiliate products, as well as customers who signed up for our financial tracking services (with either credit tracking enabled or external linked accounts), whether or not the customer is still registered for the product. Total Products also include marketplace credit offers that our Total Customers have submitted for, received or clicked on through our marketplace. If a customer has funded multiple secured personal loans or Instacash advances or opened multiple products through our marketplace, it is only counted once for each product type. We consider Total Products to be a key performance metric as it can be used to understand the usage of our products across our customer base. Total Products were 27.7 million and 17.3 million as of June 30, 2024 and 2023, respectively.

Enterprise Partners

Enterprise Partners is comprised of Product Partners and Channel Partners. We define Product Partners as providers of the financial and non-financial products and services that we offer in our marketplaces, including financial institutions, financial services providers and other affiliate partners. We define Channel Partners as organizations that allow us to reach a wide base of consumers, including but not limited to news sites, content publishers, product comparison sites and financial institutions. Enterprise Partners were 1,254, comprising 613 Product Partners and 641 Channel Partners, and 1,110, comprising 505 Product Partners and 605 Channel Partners, as of June 30, 2024 and 2023, respectively.

Total Originations

We define Total Originations as the dollar volume of the secured personal loans originated and Instacash advances funded within the stated period. We consider Total Originations to be a key performance metric as it can be used to measure the usage and engagement of the customers across our secured personal lending product and Instacash earned wage access product and is a significant driver of net interest income on finance receivables and service and subscription fees. Total Originations were $770 million and $550 million for the three months ended June 30, 2024 and 2023, respectively, and $1,487 million and $1,056 million for the six months ended June 30, 2024 and 2023, respectively. All originations were originated directly by MoneyLion.

 

Adjusted EBITDA (Non-GAAP Measure)

 

Management believes Adjusted EBITDA, a non-U.S. GAAP measure, provides relevant and useful information to investors regarding the performance of the company. Refer to the “— Non-GAAP Measures” section below for further discussion of Adjusted EBITDA.

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Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Revenues

The following table is reference for the discussion that follows.

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2024				2023				$				%				2024				2023				$				%
		(In thousands, except for percentages)
Consumer revenues
Service and subscription fees		$	89,444			$	66,268			$	23,176				35.0	%		$	174,653			$	128,706			$	45,947				35.7	%
Net interest income on finance receivables			2,956				3,304				(348	)			-10.5	%			5,889				6,232				(343	)			-5.5	%
Total consumer revenues			92,400				69,572				22,828				32.8	%			180,542				134,938				45,604				33.8	%
Enterprise service revenues			38,446				36,969				1,477				4.0	%			71,310				65,272				6,038				9.3	%
Total revenue, net		$	130,846			$	106,541			$	24,305				22.8	%		$	251,852			$	200,210			$	51,642				25.8	%

We generate revenue primarily from various product-related fees, providing membership subscriptions, performing enterprise services and originating loans.

Service and subscription fees

Service and subscription fees increased by $23.2 million, or 35.0%, to $89.4 million for the three months ended June 30, 2024, as compared to $66.3 million for the same period in 2023. The increase in service and subscription fees was driven by increases in fee income related to instant transfer fees and tips from Instacash advances of $22.0 million due to the growth of Instacash advances across both existing and new customers, an increase in subscription fees of $0.6 million due to an increased number of customers using our membership programs and an increase of $0.6 million in revenue from a transaction volume-based incentive payment program from a third-party payment network compared to the three months ended June 30, 2023.

 

Service and subscription fees increased by $45.9 million, or 35.7%, to $174.7 million for the six months ended June 30, 2024, as compared to $128.7 million for the same period in 2023. The increase in service and subscription fees was driven by increases in fee income related to instant transfer fees and tips from Instacash advances of $43.4 million due to the growth of Instacash advances across both existing and new customers, an increase in cardholder and interchange fees from RoarMoney accounts of $0.4 million due to an increased number of customers using RoarMoney, an increase in membership revenues of $1.5 million and an increase of $0.8 million in revenue from a transaction volume-based incentive payment program from a third-party payment network compared to the six months ended June 30, 2023.

 

Net interest income on finance receivables

Net interest income on finance receivables is generated by interest earned on Credit Builder Loans, which is partially offset by the amortization of loan origination costs.

Net interest income on finance receivables decreased by $0.3 million, or 10.5%, to $3.0 million for the three months ended June 30, 2024, as compared to $3.3 million for the same period in 2023. The decrease in net interest income on finance receivables of $0.1 million was driven by the slightly lower receivables outstanding on our Credit Builder Plus loan program across both existing and new customers and higher provision on interest fees of $0.2 million.

 

Net interest income on finance receivables decreased by $0.3 million, or 5.5%, to $5.9 million for the six months ended June 30, 2024, as compared to $6.2 million for the same period in 2023.

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The decrease in net interest income on finance receivables of $0.3 million was driven by the slightly lower receivables outstanding on our Credit Builder Plus loan program across both existing and new customers and higher provision on interest fees of $0.3 million, which was slightly offset by lower amortization of loan origination costs of $0.2 million.

Enterprise service revenues

Enterprise service revenues increased by $1.5 million, or 4.0%, to $38.4 million for the three months ended June 30, 2024, as compared to $37.0 million for the same period in 2023. This increase was primarily driven by stronger performance within our Enterprise Marketplace, which was partially offset by lower performance within our Consumer Marketplace and Media Services division.

 

Enterprise service revenues increased by $6.0 million, or 9.3%, to $71.3 million for the six months ended June 30, 2024, as compared to $65.3 million for the same period in 2023. This increase was primarily driven by stronger performance within our Enterprise Marketplace, which was partially offset by lower performance in our Consumer Marketplace and Media Services division.

 

 

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Operating Expenses

The following table is reference for the discussion that follows:

 

		Three Months Ended June 30,								Change								Six Months Ended June 30,								Change
		2024				2023				$				%				2024				2023				$				%
		(In thousands, except for percentages)
Operating expenses
Provision for credit losses on consumer receivables		$	33,431			$	25,562			$	7,869				30.8	%		$	53,661			$	42,073			$	11,588				27.5	%
Compensation and benefits			24,852				22,572				2,280				10.1	%			49,638				46,980				2,658				5.7	%
Marketing			10,530				6,549				3,981				60.8	%			21,396				12,941				8,455				65.3	%
Direct costs			34,449				32,230				2,219				6.9	%			65,838				62,032				3,806				6.1	%
Professional services			11,007				4,518				6,489				143.6	%			16,773				9,517				7,256				76.2	%
Technology-related costs			6,512				5,611				901				16.1	%			13,098				11,649				1,449				12.4	%
Other operating expenses			4,338				11,219				(6,881	)			-61.3	%			14,658				20,214				(5,556	)			-27.5	%
Total operating expenses		$	125,119			$	108,261			$	16,858				15.6	%		$	235,062			$	205,406			$	29,656				14.4	%
Other (expense) income
Interest expense		$	(6,714	)		$	(7,330	)		$	616				-8.4	%		$	(13,531	)		$	(14,841	)		$	1,310				-8.8	%
Change in fair value of warrant liability			(81	)			162				(243	)		nm					—				13				(13	)			-100.0	%
Change in fair value of contingent consideration from mergers and acquisitions			—				6,367				(6,367	)			-100.0	%			—				6,613				(6,613	)			-100.0	%
Goodwill impairment loss			—				(26,721	)			26,721				-100.0	%			—				(26,721	)			26,721				-100.0	%
Other income			2,381				1,257				1,124				89.4	%			4,740				2,906				1,834				63.1	%
Total other expense		$	(4,414	)		$	(26,265	)		$	21,851				-83.2	%		$	(8,791	)		$	(32,030	)		$	23,239				-72.6	%
Income tax benefit		$	(1,824	)		$	(262	)		$	(1,562	)			596.2	%		$	(2,213	)		$	(286	)		$	(1,927	)			673.8	%

 

Our operating expenses consist of the following:

Provision for credit losses on consumer receivables

Provision for credit losses on consumer receivables consists of amounts charged during the period to maintain an allowance for credit losses. The allowance represents management’s estimate of the credit losses in our consumer receivable portfolio and is based on management’s assessment of many factors, including changes in the nature, volume and risk characteristics of the consumer receivables portfolio, including trends in delinquency and charge-offs and current economic conditions that may affect the customer’s ability to pay.

Provision for credit losses on consumer receivables increased by $7.9 million, or 30.8%, to $33.4 million for the three months ended June 30, 2024, as compared to $25.6 million for the same period in 2023. This resulted primarily from an increase to provision related to Instacash advance receivables of $8.3 million and an increase to provision related to subscription fees of $0.5 million, which was partially offset by a decrease to provision related to Credit Builder Plus loan receivables of $1.1 million.

 

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Provision for credit losses on consumer receivables increased by $11.6 million, or 27.5%, to $53.7 million for the six months ended June 30, 2024, as compared to $42.1 million for the same period in 2023. This resulted primarily from an increase to provision related to Instacash advance receivables of $15.8 million and an increase to provision related to subscription fees of $0.5 million, which was partially offset by a decrease to provision related to Credit Builder Plus loan receivables of $2.2 million and a decrease to provision for Instacash instant transfer fees and tips of $2.5 million.

 

Compensation and benefits

Compensation and benefits increased by $2.3 million, or 10.1%, to $24.9 million for the three months ended June 30, 2024, as compared to $22.6 million for the same period in 2023. This increase was primarily driven by an increase in stock-based compensation of $2.3 million, an increase in employee salary and benefits expenses of $0.2 million and an increase in incentive compensation of $0.1 million due to company performance, which was partially offset by higher capitalized salaries of $0.4 million.

 

Compensation and benefits increased by $2.7 million, or 5.7%, to $49.6 million for the six months ended June 30, 2024, as compared to $47.0 million for the same period in 2023. This increase was primarily driven by an increase in stock-based compensation of $3.1 million, an increase in incentive compensation of $0.6 million due to company performance and an increase in severance costs of $0.3 million. This was partially offset by higher capitalized salaries of $1.1 million and a $0.2 million decrease in employee salary and benefits expenses.

 

Marketing

Marketing increased by $4.0 million, or 60.8%, to $10.5 million for the three months ended June 30, 2024, as compared to $6.5 million for the same period in 2023. This increase resulted primarily from higher spend related to advertising through digital platforms and sponsorships.

 

Marketing increased by $8.5 million, or 65.3%, to $21.4 million for the six months ended June 30, 2024, as compared to $12.9 million for the same period in 2023. This increase resulted primarily from higher spend related to advertising through digital platforms and sponsorships.

Direct costs

Direct costs increased by $2.2 million, or 6.9%, to $34.4 million for the three months ended June 30, 2024, as compared to $32.2 million for the same period in 2023. The increase was primarily driven by an increase in payment processing fees of $2.1 million and an increase in underwriting expenses of $0.6 million, driven by growth in Total Originations and Total Customers, which was partially offset by a $0.3 million decrease in costs related to our MoneyLion Investing and RoarMoney Banking offering and a decrease of $0.2 million in direct costs of Enterprise revenues.

 

Direct costs increased by $3.8 million, or 6.1%, to $65.8 million for the six months ended June 30, 2024, as compared to $62.0 million for the same period in 2023. The increase was primarily driven by $0.7 million of direct costs related to the growth of Enterprise revenues, an increase in payment processing fees of $2.6 million and an increase in underwriting expenses of $1.1 million, driven by growth in Total Originations and Total Customers, which was partially offset by a $0.5 million decrease in costs related to our RoarMoney Banking and MoneyLion Investing offering.

Professional services

Professional services increased by $6.5 million, or 143.6%, to $11.0 million for the three months ended June 30, 2024, as compared to $4.5 million for the same period in 2023. This increase resulted primarily from an increase in outside legal expenses of $4.8 million, an increase in accounting and auditing fees of $0.5 million driven by regulatory compliance requirements, an increase in outside consulting expenses of $0.4 million and an increase in recruiting fees of $0.3 million.

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Professional services increased by $7.3 million, or 76.2%, to $16.8 million for the six months ended June 30, 2024, as compared to $9.5 million for the same period in 2023. This increase resulted primarily from an increase in outside legal expenses of $5.5 million, an increase in accounting and auditing fees of $0.4 million driven by regulatory compliance requirements, an increase in outside consulting expenses of $0.7 million and an increase in recruiting fees of $0.6 million.

 

Technology-related costs

Technology-related costs increased by $0.9 million, or 16.1%, to $6.5 million for the three months ended June 30, 2024, as compared to $5.6 million for the same period in 2023. This increase resulted primarily from an increase in expenses for software licenses and subscriptions of $0.6 million and depreciation and amortization related to equipment and software of $0.3 million.

 

Technology-related costs increased by $1.4 million, or 12.4%, to $13.1 million for the six months ended June 30, 2024, as compared to $11.6 million for the same period in 2023. This increase resulted primarily from an increase in depreciation and amortization related to equipment and software of $0.4 million and an increase in expenses for software licenses and subscriptions of $1.0 million.

Other operating expenses

Other operating expenses decreased by $6.9 million, or 61.3%, to $4.3 million for the three months ended June 30, 2024, as compared to $11.2 million for the same period in 2023. The decrease was primarily driven by lower costs related to legal matters of $5.4 million and a decrease in the provision for bad debts and increased recoveries of receivables in our Enterprise business of $1.1 million.

 

Other operating expenses decreased by $5.6 million, or 27.5%, to $14.7 million for the six months ended June 30, 2024, as compared to $20.2 million for the same period in 2023. The decrease was primarily driven by lower costs related to legal matters of $5.2 million, a decrease in the provision for bad debts and increased recoveries of receivables in our Enterprise business of $2.3 million and a decrease in insurance expenses of $1.1 million, which was partially offset by a $3.6 million increase in expenses related to processing transactions in our Consumer business.

 

Our other (expense) income consists of the following:

Interest expense

Interest expense decreased by $0.6 million, or 8.4%, to $6.7 million for the three months ended June 30, 2024, as compared to $7.3 million for the same period in 2023. This decrease was primarily driven by a decrease in interest expense on secured debt of $0.9 million due to a decrease in average outstanding principal of secured debt and a decrease in the variable interest rate, which was partially offset by an increase of $0.3 million in interest expense on other debt due to an increase in the average outstanding principal of other debt. See Part I, Item 1 “Financial Statements — Debt” for more information.

 

Interest expense decreased by $1.3 million, or 8.8%, to $13.5 million for the six months ended June 30, 2024, as compared to $14.8 million for the same period in 2023. This decrease was primarily driven by a decrease in interest expense on secured debt of $1.6 million due to a decrease in average outstanding principal of secured debt and a decrease in the variable interest rate, which was partially offset by an increase of $0.4 million in interest expense on other debt due to an increase in the average outstanding principal of other debt. See Part I, Item 1 “Financial Statements — Debt” for more information.

 

Change in fair value of warrant liability

 

Change in fair value of warrant liability was an expense of $0.1 million for the three months ended June 30, 2024, as compared to a benefit of $0.2 million for the same period in 2023. The change in fair value of warrant liability was due to changes in inputs that drive the warrant liability fair value calculations.

 

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There was no significant change in fair value of warrant liability for the six months ended June 30, 2024, as compared to the same period in 2023. There were minimal changes in inputs that drove the warrant liability fair value calculations from the beginning to the end of both periods.

Change in fair value of contingent consideration from mergers and acquisitions

There was no change in fair value of contingent consideration from mergers and acquisitions for the three or six months ended June 30, 2024 since there was no unsettled contingent consideration outstanding during the three or six months ended June 30, 2024.

 

Goodwill impairment loss

 

There was no goodwill impairment loss for the three or six months ended June 30, 2024 since all goodwill had been written off by the end of the fiscal year ended December 31, 2023.

 

Other income

Other income increased by $1.1 million to $2.4 million for the three months ended June 30, 2024, as compared to other income of $1.3 million for the same period in 2023. The increase was primarily driven by lower losses on debt extinguishments of $0.5 million, an increase in interest income earned on interest bearing deposits of $0.4 million and an increase in rental income of $0.2 million.

 

Other income increased by $1.8 million to $4.7 million for the six months ended June 30, 2024, as compared to other income of $2.9 million for the same period in 2023. The increase was primarily driven by an increase in interest income earned on interest bearing deposits of $1.0 million, lower losses on debt extinguishments of $0.5 million and an increase in rental income of $0.3 million.

Income tax benefit

See Part I, Item 1 “Financial Statements — Income Taxes” for an explanation of the tax activity recorded during the six months ended June 30, 2024.

Non-GAAP Measures

In addition to net income (loss), which is a measure presented in accordance with U.S. GAAP, management believes that Adjusted EBITDA provides relevant and useful information which is widely used by analysts, investors and competitors in our industry in assessing performance. Adjusted EBITDA is a supplemental measure of our performance that is neither required by nor presented in accordance with U.S. GAAP. Adjusted EBITDA should not be considered as a substitute for U.S. GAAP metrics such as net income (loss) or any other performance measures derived in accordance with U.S. GAAP and may not be comparable to similar measures used by other companies.

We define Adjusted EBITDA as net income (loss) plus interest expense related to corporate debt, income tax expense (benefit), depreciation and amortization expense, change in fair value of warrant liability, change in fair value of contingent consideration from mergers and acquisitions, goodwill impairment loss, stock-based compensation expense and certain other expenses that management does not consider in measuring performance. We believe that Adjusted EBITDA provides a meaningful understanding of an aspect of profitability based on our current product portfolio. In addition, Adjusted EBITDA is useful to an investor in evaluating our performance because it:

 

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The reconciliation of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 is as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		(unaudited)								(unaudited)
Net income (loss)		$	3,137			$	(27,723	)		$	10,212			$	(36,940	)
Add back:
Interest related to corporate debt(1)			2,576				3,475				5,371				7,035
Income tax benefit			(1,824	)			(262	)			(2,213	)			(286	)
Depreciation and amortization expense			6,331				6,113				12,543				12,297
Changes in fair value of warrant liability			81				(162	)			-				(13	)
Change in fair value of contingent consideration from mergers and acquisitions			-				(6,367	)			-				(6,613	)
Goodwill impairment loss			-				26,721				-				26,721
Stock-based compensation expense			7,531				5,250				14,028				10,955
Other expenses(2)			686				2,188				2,062				3,373
Adjusted EBITDA		$	18,518			$	9,233			$	42,003			$	16,529

 

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Changes in Financial Condition to June 30, 2024 from December 31, 2023

		June 30,				December 31,				Change
		2024				2023				$				%
Assets
Cash and restricted cash		$	103,110			$	94,479			$	8,631				9.1	%
Consumer receivables			237,358				208,167				29,191				14.0	%
Allowance for credit losses on consumer receivables			(40,523	)			(35,329	)			(5,194	)			14.7	%
Consumer receivables, net			196,835				172,838				23,997				13.9	%
Enterprise receivables, net			23,045				15,978				7,067				44.2	%
Property and equipment, net			1,961				1,864				97				5.2	%
Intangible assets, net			168,302				176,541				(8,239	)			-4.7	%
Other assets			52,490				53,559				(1,069	)			-2.0	%
Total assets		$	545,743			$	515,259			$	30,484				5.9	%
Liabilities and Stockholders' Equity
Liabilities:
Debt agreements		$	194,414			$	189,753			$	4,661				2.5	%
Accounts payable and accrued liabilities			48,984				52,396				(3,412	)			-6.5	%
Warrant liability			810				810				-				0.0	%
Other liabilities			23,079				15,077				8,002				53.1	%
Total liabilities			267,287				258,036				9,251				3.6	%
Stockholders' equity:
Common Stock			1				1				-				0.0	%
Additional paid-in capital			980,662				969,641				11,021				1.1	%
Accumulated deficit			(692,507	)			(702,719	)			10,212				-1.5	%
Treasury stock			(9,700	)			(9,700	)			-				0.0	%
Total stockholders' equity			278,456				257,223				21,233				8.3	%
Total liabilities and stockholders' equity		$	545,743			$	515,259			$	30,484				5.9	%

 

Assets

Cash and restricted cash

Cash and restricted cash increased by $8.6 million, or 9.1%, to $103.1 million as of June 30, 2024, as compared to $94.5 million as of December 31, 2023. Refer to the “— Cash Flows” section below for further discussion on the net change in cash and restricted cash from operating activities, investing activities and financing activities during the period.

Consumer receivables, net

Consumer receivables, net increased by $24.0 million, or 13.9%, to $196.8 million as of June 30, 2024, as compared to $172.8 million as of December 31, 2023. The increase was primarily attributable to an increase in Instacash receivables, net of allowance for credit losses, of $14.2 million and an increase in loan receivables, net of allowance for credit losses, of $9.2 million. Refer to Part I, Item 1 “Financial Statements — Consumer Receivables” for additional information.

Enterprise receivables, net

Enterprise receivables, net increased by $7.1 million, or 44.2%, to $23.0 million as of June 30, 2024, as compared to $16.0 million as of December 31, 2023. This increase was primarily attributable to growth in Enterprise Marketplace receivables of $5.5 million and an increase in Media Services receivables of $1.3 million.

 

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Intangible assets, net

Intangible assets, net decreased by $8.2 million, or 4.7%, to $168.3 million as of June 30, 2024, as compared to $176.5 million as of December 31, 2023. This decrease was primarily attributable to the amortization of intangible assets of $12.1 million, which was partially offset by an increase in capitalized software of $3.9 million.

Other assets

Other assets decreased by $1.1 million, or 2.0%, to $52.5 million as of June 30, 2024, as compared to $53.6 million as of December 31, 2023. This decrease was primarily attributable to a decrease in the receivable from payment processors and a decrease in prepaid expenses, which was partially offset by an increase in operating lease right-of-use assets due to a lease of the Company’s new corporate headquarters entered into during the six months ended June 30, 2024. Refer to Part I, Item 1 “Financial Statements — Other Assets” for additional information.

Liabilities

Debt agreements

Debt agreements increased by $4.7 million, or 2.5%, to $194.4 million as of June 30, 2024, as compared to $189.8 million as of December 31, 2023. Refer to Part I, Item 1 “Financial Statements — Debt” for further discussion of financing transactions.

Accounts payable and accrued expenses

Accounts payable and accrued expenses decreased by $3.4 million, or 6.5%, to $49.0 million as of June 30, 2024, as compared to $52.4 million as of December 31, 2023. The decrease was primarily attributable to a reduction in litigation accruals, annual bonuses and state taxes paid during the six months ending June 30, 2024, which was partially offset by increases in accounts payable for professional fees and payables owed to Channel Partners.

Warrant liability

Warrant liability activity between June 30, 2024 and December 31, 2023 was not significant. Refer to the “— Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023” section above for further discussion on the change in fair value of warrant liability.

Other liabilities

Other liabilities increased by $8.0 million, or 53.1%, to $23.1 million as of June 30, 2024, as compared to $15.1 million as of December 31, 2023. The increase was primarily driven by an increase in operating lease liabilities due to a lease of the Company’s new corporate headquarters entered into during the six months ended June 30, 2024.

 

Liquidity and Capital Resources

We believe our existing cash and cash equivalents and cash flows from operating activities will be sufficient to meet our operating working capital needs for at least the next twelve months. Our future financing requirements will depend on several factors, including our growth, the timing and level of spending to support continued development of our platform, the expansion of marketing activities and merger and acquisition activity. In addition, growth of our finance receivables increases our liquidity needs, and any failure to meet those liquidity needs could adversely affect our business. Additional funds may not be available on terms favorable to us or at all. If the Company is unable to generate positive operating cash flows, additional debt and equity financings or refinancing of existing debt financings may be necessary to sustain future operations.

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Receivables originated on our platform, including Credit Builder Loans and Instacash advances, were primarily financed through special purpose vehicle financings from third-party institutional lenders. As of June 30, 2024, there was an outstanding principal balance of $66.5 million under the ROAR 1 SPV Credit Facility and an outstanding principal balance of $64.5 million under the ROAR 2 SPV Credit Facility. For more information, see Note 7, “Debt” and Note 2, “Summary of Significant Accounting Policies” of the Company’s Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility and VIE considerations related to the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility, respectively.

 

In the future, the majority of our receivables for our Instacash product will be financed through a forward flow financing arrangement pursuant to which we will sell a portion of our eligible Instacash receivables at a discount to third-party purchasers and receive a stable stream of servicing fee income based on net collections. For more information, see Part I, Item 1 “Financial Statements – Sale of Consumer Receivables.”

The following table presents the Company’s cash, restricted cash and receivable from payment processor as of June 30, 2024 and December 31, 2023:

		June 30,				December 31,
		2024				2023
Cash		$	98,361			$	92,195
Restricted cash			4,749				2,284
Receivable from payment processor		$	29,502			$	37,362

 

Cash Flows

The following table presents net change in cash and restricted cash from operating, investing and financing activities during the three and six months ended June 30, 2024 and 2023:

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net cash provided by operating activities		$	47,798			$	35,363			$	81,437			$	38,043
Net cash used in investing activities			(43,920	)			(35,589	)			(73,799	)			(56,623	)
Net cash (used in) provided by financing activities			(2,670	)			(8,356	)			993				(32,955	)
Net change in cash and restricted cash		$	1,208			$	(8,582	)		$	8,631			$	(51,535	)

 

Operating Activities

 

Net cash provided by operating activities was $47.8 million for the three months ended June 30, 2024 compared to net cash provided by operating activities of $35.4 million for the three months ended June 30, 2023. This increase in net cash provided by operating activities was primarily driven by an increase in profitability, after adjusting for non-cash activity included in our net income (loss), of approximately $21.5 million, which was partially offset by a decrease of $9.1 million related to changes in working capital.

 

Net cash provided by operating activities was $81.4 million for the six months ended June 30, 2024 compared to net cash provided by operating activities of $38.0 million for the six months ended June 30, 2023. This increase in net cash provided by operating activities was primarily driven by an increase in profitability, after adjusting for non-cash activity included in our net income (loss), of approximately $42.3 million and an increase of $1.1 million related to changes in working capital.

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Investing Activities

Net cash used in investing activities was $43.9 million for the three months ended June 30, 2024 compared to net cash used in investing activities of $35.6 million for the three months ended June 30, 2023. The increase in net cash used in investing activities was primarily related to increases in net finance receivable originations during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

 

Net cash used in investing activities was $73.8 million for the six months ended June 30, 2024 compared to net cash used in investing activities of $56.6 million for the six months ended June 30, 2023. The increase in net cash used in investing activities was primarily related to increases in net finance receivable originations during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Financing Activities

Net cash used in financing activities was $2.7 million for the three months ended June 30, 2024 compared to net cash used in financing activities of $8.4 million for the three months ended June 30, 2023. The decrease in net cash used for financing activities was primarily attributable to a decrease in payments of debt principal of $5.0 million and a decrease in preferred stock settlement payments of $3.0 million, which was partially offset by an increase of $2.5 million in cash used for tax payments owed on the vesting of stock compensation during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

 

Net cash provided by financing activities was $1.0 million for the six months ended June 30, 2024 compared to net cash used in financing activities of $33.0 million for the six months ended June 30, 2023. The increase in net cash provided by financing activities was primarily attributable to a decrease in payments of debt principal of $29.0 million, an increase in proceeds from debt of $4.0 million and a decrease in preferred stock settlement payments of $3.0 million, which was partially offset by an increase of $2.2 million in cash used for tax payments owed on the vesting of stock compensation during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

 

Financing Arrangements

Refer to Part I, Item 1 “Financial Statements — Debt” for further discussion on financing transactions during the period.

Contractual Obligations

 

The table below summarizes debt, lease and other long-term minimum cash obligations outstanding as of June 30, 2024:

		Total				Remainder of 2024				2025 – 2026				2027 – 2028				Thereafter
Monroe Term Loans		$	65,000			$	—			$	65,000			$	—			$	—
ROAR 1 SPV Credit Facility			66,500				—				66,500				—				—
ROAR 2 SPV Credit Facility			64,500				—				64,500				—				—
Operating lease obligations			20,031				2,295				8,192				6,605				2,939
Vendor unconditional purchase obligations			23,296				—				14,796				8,500				—
Total		$	239,327			$	2,295			$	218,988			$	15,105			$	2,939

 

Secured Loans and Other Debt

For more information regarding our secured loans and other debt, see Part I, Item 1 “Financial Statements — Debt” in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

At June 30, 2024, the Company did not have any material off-balance sheet arrangements.

 

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Critical Accounting Policies and Estimates

 

See Part I, Item 1 “Financial Statements — Summary of Significant Accounting Policies” for a description of critical accounting policies and estimates.

Recently Issued and Adopted Accounting Pronouncements

See Part I, Item 1 “Financial Statements — Summary of Significant Accounting Policies” for a description of recently issued accounting pronouncements that may potentially impact our results of operations, financial condition or cash flows.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates.

Interest Rates Risk

Interest rates may adversely impact our customers’ level of engagement on our platform and ability and willingness to pay outstanding amounts owed to us. While we do not charge interest on a lot of our products, higher interest rates could deter customers from utilizing our credit products and other loans. Moreover, higher interest rates may lead to increased delinquencies, charge-offs and allowances for loans and interest receivable, which could have an adverse effect on our operating results.

The Monroe Term Loans and future funding arrangements may bear a variable interest rate. The ROAR 1 SPV Credit Facility and ROAR 2 SPV Credit Facility have fixed interest rates. Given the fixed interest rates charged on many of our loans, a rising variable interest rate would reduce our interest margin earned in these funding arrangements. Dramatic increases in interest rates may make these forms of funding nonviable. A one percent change in the interest rate on our variable interest rate debt, based on principal balances as of June 30, 2024, would result in an approximately $0.7 million impact to annual interest expense.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2024, our disclosure controls and procedures were effective in providing reasonable assurance that the information required for disclosure in reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to Company management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

 

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We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – OTHER INFORMATION

 

Item 1. Legal Proceedings

From time to time, we are subject to various claims and legal proceedings in the ordinary course of business, including lawsuits, arbitrations, class actions and other litigation. We are also the subject of various actions, inquiries, investigations and proceedings by regulatory and other governmental agencies. The outcome of any such legal and regulatory matters, including those discussed in this section, is inherently uncertain, and some of these matters may result in adverse judgments or awards, including penalties, injunctions or other relief, which could materially and adversely impact our business, financial condition, operating results and cash flows. See Part I, Item 1A “Risk Factors — Risks Relating to Legal and Accounting Matters — Unfavorable outcomes in legal proceedings may harm our business, financial condition, results of operations and cash flows” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

 

We have determined, based on our current knowledge, that the aggregate amount or range of losses that are estimable with respect to our legal proceedings, including the matters described below, would not have a material adverse effect on our business, financial position, results of operations or cash flows. As of June 30, 2024, amounts accrued were not material. Notwithstanding the foregoing, the ultimate outcome of legal proceedings involves judgments, estimates and inherent uncertainties, and cannot be predicted with certainty. It is possible that an adverse outcome of any matter could be material to our business, financial position, results of operations or cash flows as a whole for any particular reporting period of occurrence. In addition, it is possible that a matter may prompt litigation or additional investigations or proceedings by other government agencies or private litigants.

 

State Regulatory Examinations and Investigations

 

We hold a number of state licenses in connection with our business activities, and must also comply with other applicable compliance and regulatory requirements in the states where we operate. In most states where we operate, one or more regulatory agencies have authority with respect to regulation and enforcement of our business activities under applicable state laws, and we may also be subject to the supervisory and examination authority of such state regulatory agencies. Examinations by state regulators have and may continue to result in findings or recommendations that require us, among other potential consequences, to provide refunds to customers or to modify our internal controls and/or business practices.

In the ordinary course of our business, we are and have been from time to time subject to, and may in the future be subject to, governmental and regulatory examinations, information requests, investigations and proceedings (both formal and informal) in connection with various aspects of our activities by state agencies, certain of which could result in adverse judgments, settlements, fines, penalties, restitution, disgorgement, injunctions or other relief. We have responded to and cooperated with the relevant state agencies and will continue to do so in the future, as appropriate.

 

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CFPB Litigation

 

On September 29, 2022, the Consumer Financial Protection Bureau (the “CFPB”) initiated a civil action in the United States District Court for the Southern District of New York (“SDNY”) against MoneyLion Technologies Inc., ML Plus LLC and our 38 state lending subsidiaries, alleging violations of the Military Lending Act and the Consumer Financial Protection Act. The CFPB is seeking injunctive relief, redress for allegedly affected consumers and civil monetary penalties. On January 10, 2023, we moved to dismiss the lawsuit, asserting various constitutional and merits-based arguments. On June 13, 2023, the CFPB filed its first amended complaint, alleging substantially similar claims as those asserted in its initial complaint. On July 11, 2023, we moved to dismiss the lawsuit, again asserting various constitutional and merit-based arguments. On October 9, 2023, we moved for a stay of the action pending a decision from the United States Supreme Court in CFPB v. Community Financial Services Association of America, Ltd., No. 22-448 (U.S. argued Oct. 3, 2023) (“CFSA”). On December 1, 2023, the Court issued an order granting our motion and staying the action pending the United State Supreme Court’s decision in CFSA. On May 16, 2024, the Supreme Court decided CFSA. Accordingly, our motion to dismiss is now pending with the SDNY. We continue to maintain that the CFPB’s claims are meritless and are vigorously defending against the lawsuit. Nevertheless, at this time, we cannot predict or determine the timing or final outcome of this matter or the effect that any adverse determinations in the lawsuit may have on our business, financial condition, results of operations or cash flows.

 

MALKA Seller Members Litigation

 

On July 21, 2023, Jeffrey Frommer, Lyusen Krubich, Daniel Fried and Pat Capra, the former equity owners of MALKA (collectively, the “Seller Members”), brought a civil action in the SDNY against MoneyLion Technologies Inc. alleging, among other things, breaches of the Membership Interest Purchase Agreement (the “MIPA”) governing our acquisition of MALKA. Among other claims, the Seller Members allege that they are entitled to payment of $25.0 million of Class A Common Stock pursuant to the earnout provisions set forth in the MIPA, based on the Seller Members’ assertion that MALKA achieved certain financial targets for the year ended December 31, 2022 (such payment, the “2022 Earnout Payment”). We believe that the Seller Members are not entitled to any portion of the 2022 Earnout Payment under the terms of the MIPA and filed counterclaims against the Seller Members, alleging, among other things, fraud, negligent misrepresentation, conversion, breach of fiduciary duties and breach of contract and seeking compensatory damages and other remedies as a result of wrongdoing by the Seller Members. On October 17, 2023, the SDNY denied, in full, the Seller Members’ motion for a preliminary injunction to remove the restrictive legends on certain shares of Class A Common Stock previously issued to the Seller Members. Separately, on November 3, 2023, the Seller Members moved to dismiss our amended counterclaims and third-party complaint. On May 14, 2024, the SDNY denied the Seller Members’ motion to dismiss with respect to our counterclaims alleging fraud, negligent misrepresentation, breach of fiduciary duty and certain conversion and breach of contract claims. The SDNY dismissed certain of our counterclaims relating to declaratory judgment, unjust enrichment and conversion as duplicative of our fraud and misrepresentation counterclaims, as well as certain other breach of contract counterclaims. We continue to vigorously pursue our remaining counterclaims and defend against the Seller Members’ claims, which we believe are meritless. However, at this time, we cannot predict or determine the timing or final outcome of this matter or the effect that any adverse determinations in the lawsuit may have on our business, financial condition, results of operations or cash flows.

 

Former Series A Preferred Stockholders Litigation

 

On July 27, 2023, MassMutual Ventures US II LLC, Canaan X L.P., Canaan XI L.P., F-Prime Capital Partners Tech Fund LP and GreatPoint Ventures Innovation Fund II, L.P., each of which are former holders of the Company’s Series A Preferred Stock (collectively, the “Former Preferred Stockholders”), brought a civil action in the SDNY against MoneyLion Inc., our Board of Directors and certain officers asserting claims under Section 14(a) relating to the Definitive Proxy Statement we filed with the SEC on March 31, 2023 in connection with the Special Meeting of Stockholders relating to the 1-for-30 Reverse Stock Split of the Class A Common Stock effected on April 24, 2023 and related state law claims. On November 6, 2023, we filed a motion to dismiss the lawsuit in its entirety.
 

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On May 15, 2024, the SDNY granted our motion to dismiss the Former Preferred Stockholders’ complaint in its entirety. The SDNY dismissed the Former Preferred Stockholders’ claim under Section 14(a) of the Securities Exchange Act of 1934 for failure to state a claim and declined to exercise supplemental jurisdiction over the remaining state law claims, dismissing such state law claims without prejudice. On June 14, 2024, Canaan X L.P., Canaan XI L.P., GreatPoint Ventures Innovation Fund II, L.P. filed a notice of appeal with the United States Court of Appeals for the Second Circuit. We continue to believe that the Former Preferred Stockholders’ claims are meritless and intend to vigorously defend against the appeal if any Former Preferred Stockholders decide to pursue their appeal. Nevertheless, at this time, we cannot predict or determine the timing or final outcome of this matter or the effect that any adverse determinations in the lawsuit may have on our business, financial condition, results of operations or cash flows.

 

Item 1A. Risk Factors

 

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as otherwise set forth below. We may disclose additional changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

 

The legal and regulatory regimes governing certain of our products and services are uncertain and evolving. Changing or new laws, regulations, interpretations or regulatory enforcement priorities may have a material and adverse effect on our business, financial condition and results of operations.

We are required to comply with constantly changing federal, state and local laws, regulations and rules that regulate various aspects of the products and services that we offer. Federal and state regulators of consumer financial products and services are also enforcing existing laws, regulations and rules more aggressively and enhancing their supervisory expectations regarding the management of legal and regulatory compliance risks. Such laws, regulations and rules are complex and require us to incur significant expenses and devote significant management attention to ensure compliance. For example, the CFPB may adopt new model disclosures and regulations governing consumer financial services, including regulations defining unfair, deceptive or abusive acts or practices, and they could also issue advisory opinions or other similar soft tools to complement its rulemaking authority which could subject us to new or differing legal and regulatory requirements, which could materially and adversely affect our business. The CFPB’s authority to change or interpret regulations adopted in the past by other regulators, or to rescind or alter past regulatory guidance, could increase our compliance costs and litigation exposure. If the CFPB or other similar regulatory bodies adopt, or customer advocacy groups are able to generate widespread support for, positions that are detrimental to our business, then our business, financial condition and results of operations could be harmed.

Changes in the laws, regulations and enforcement priorities applicable to our business, including reexamination of current enforcement practices, could have a material and adverse impact on our business, financial condition, results of operations and cash flows. We may not be able to respond quickly or effectively to regulatory, legislative and other developments. In particular, the regulatory landscape regarding earned wage access products (including our Instacash advance service) is uncertain and evolving given rapid growth in the use of earned wage access products in recent years. State and federal regulators, including the California Department of Financial Protection and Innovation, may in the future launch inquiries, reviews or similar investigations or issue new, or change or interpret, regulations or rules relating to earned wage access products, which could result in additional compliance requirements and other risks relating to our current and past business activities as described herein. For instance, on July 18, 2024, the CFPB issued a proposed interpretive rule, which, if finalized in its proposed form, would characterize certain earned wage access products as consumer loans subject to the Truth in Lending Act. It is possible that we could incur additional operational costs relating to our Instacash service and that other risks described herein could be heightened if the interpretive rule becomes final. State and federal regulators could also launch inquiries, reviews or similar investigations into our Instacash product.

 

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Proposals to change the statutes affecting financial services companies are frequently introduced in Congress and state legislatures that, if enacted, could affect our operating environment in substantial and unpredictable ways. We cannot determine with any degree of certainty whether any such legislative or regulatory proposals will be enacted and, if enacted, the ultimate impact that any such potential legislation or implemented regulations, or any such potential regulatory actions by federal or state regulators, would have upon our business or our operating environment. As a result, we could be forced, as we have in the past, to temporarily pause, limit or permanently cease to offer our earned wage access product in certain states depending on state regulatory regimes. In addition, numerous federal and state regulators have the authority to promulgate or change regulations that could have a similar effect on our third-party partners and service providers and restrict their business practices, such as the recent rulemaking under the TCPA by the Federal Communications Commission to require one-to-one consumer consents for telemarketing. These changes and uncertainties make our business planning more difficult and could result in changes to our business model, impair our ability to offer our existing or planned features, products and services or increase our cost of doing business.

Our failure to comply (or to ensure that our third-party partners, service providers or other agents comply) with these changing laws, regulations or rules may result in litigation, enforcement actions and penalties, including revocation of licenses and registrations; fines and other monetary penalties; civil and criminal liability; substantially reduced payments by our customers; modification of the original terms of loans and other products, permanent forgiveness of debt or inability to collect on amounts owed by our borrowers; and indemnification claims. Such consequences could, among other things, require changes to our business practices and scope of operations or harm our reputation, which in turn, could have a material adverse effect on our business, financial condition and results of operations. If our practices are not consistent or viewed as not consistent with legal and regulatory requirements, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, litigation or criminal or civil sanctions, all of which may have an adverse effect on our reputation, business, results of operations and financial condition.

 

New laws, regulations, rules, guidance and policies could require us to incur significant expenses to ensure compliance, adversely impact our profitability, limit our ability to continue existing or pursue new business activities, require us to change certain of our business practices or alter our relationships with customers, affect retention of key personnel or expose us to additional costs (including increased compliance costs and/or customer remediation). These changes also may require us to invest significant resources or devote significant management attention in order to make any necessary changes. For example, the regulatory frameworks for an open banking paradigm and AI and machine learning technology are evolving and remain uncertain. It is possible that new laws and regulations will be adopted in the U.S., or existing laws and regulations may be interpreted in new ways, that would affect the operation of our platform and the way in which we use consumer data, AI and machine learning technology, including with respect to fair lending laws.

 

We rely on a variety of funding sources to support our business model. If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

To support the origination of loans, cash advances and other receivables on our platform and the growth of our business, we must maintain a variety of funding arrangements. We cannot guarantee that we will be able to extend or replace our existing funding arrangements at maturity on reasonable terms or at all. For example, disruptions in the credit markets or other factors, such as the high inflation and interest rate environment in 2023 and to date in 2024, could adversely affect the availability, diversity, cost and terms of our funding arrangements. In addition, our funding sources may reassess their exposure to our industry or our business, including as a result of any significant underperformance of the consumer receivables facilitated through our platform or regulatory developments, in particular regarding earned wage access products, that impose significant requirements on, or increase potential risks and liabilities related to, the consumer receivables facilitated through our platform, and fail to renew or extend facilities or impose higher costs to access our funding. If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding on terms acceptable to us, or at all, we would need to secure additional sources of funding or reduce our operations significantly, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Further, as the volume of consumer receivables facilitated through our platform increases and in order to support future business growth, we may require the expansion of our funding capacity under our existing funding arrangements or the addition of new sources of capital. We may also change our funding strategy over time depending on the attractiveness and availability of alternative funding structures. For example, we entered into a new forward flow financing arrangement on June 30, 2024 to finance the origination of Instacash advances, as described further under Part I, Item 1 “Financial Statements – Sale of Consumer Receivables.” The availability and diversity of new funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control. In the event of a sudden or unexpected shortage of funds in the financial system, we may not be able to maintain necessary levels of funding without incurring high funding costs or a reduction in the term or size of funding instruments. In such a case, if we are unable to arrange new or alternative methods of financing on favorable terms, we would have to reduce our transaction volume or otherwise inhibit our business growth, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The agreements governing our funding arrangements require us to comply with certain covenants. A breach of such covenants or other events of default under our funding agreements could result in the reduction or termination of our access to such funding, could increase our cost of such funding or, in some cases, could give our lenders the right to require repayment of the loans prior to their scheduled maturity. Certain of these covenants and restrictions limit our and our subsidiaries’ ability to, among other things: incur additional indebtedness; create liens on certain assets; pay dividends on or make distributions in respect of their capital stock or make other restricted payments; consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; purchase or otherwise acquire assets or equity interests; modify organizational documents; enter into certain transactions with their affiliates; enter into restrictive agreements; engage in other business activities; and make investments. The Monroe Credit Agreement also contains certain financial covenants with respect to minimum adjusted revenue, EBITDA, liquidity and unrestricted cash (each as defined therein).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

 

Item 3. Default Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

 

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Item 6. Exhibits

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, the representations, warranties, covenants and agreements contained in such exhibits were made only for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to such agreements instead of establishing these matters as facts and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Unless otherwise explicitly stated therein, investors and security holders are not third-party beneficiaries under any of the agreements attached as exhibits hereto and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its affiliates or businesses. Moreover, the assertions embodied in the representations and warranties contained in each such agreement are qualified by information in confidential disclosure letters or schedules that the parties have exchanged. Moreover, information concerning the subject matter of the representations and warranties may change after the respective dates of such agreements, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Exhibit No.		Description
3.1		Fourth Amended and Restated Certificate of Incorporation of MoneyLion Inc. (incorporated by reference to Exhibit 3.1 to MoneyLion Inc.'s Registration Statement on Form S-1 (File 333-260254), filed with the SEC on October 14, 2021).
3.1.1		Certificate of Amendment to the MoneyLion Inc. Fourth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to MoneyLion Inc.'s Current Report on Form 8-K (File 001-39346), filed with the SEC on April 24, 2023).
3.2		Amended and Restated Bylaws of MoneyLion Inc., effective as of March 15, 2023 (incorporated by reference to Exhibit 3.2 of MoneyLion Inc.’s Annual Report on Form 10-K (File No. 001-39346), filed with the SEC on March 16, 2023).
10.1*†		Amendment No. 3 to Credit Agreement, dated as of June 30, 2024, by and among MoneyLion Technologies Inc., as borrower, the various financial institutions party thereto, as lenders, and Monroe Capital Management Advisors, LLC, as administrative agent for the lenders.
10.2*†		Master Receivables Purchase Agreement, dated as of June 30, 2024, by and among ML Plus LLC, as seller, Sound Point Capital Management LP, as purchaser agent, and SP Main Street Funding I LLC and each additional purchaser from time to time party thereto, as purchasers.
10.3*†		Servicing Agreement, dated as of June 30, 2024, by and among MoneyLion Technologies Inc., as servicer, Sound Point Capital Management LP, as purchaser agent, and SP Main Street Funding I LLC and each additional purchaser from time to time party thereto, as purchasers.
31.1*		Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

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* Filed herewith.

** The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

† Certain schedules and exhibits to this exhibit have been omitted pursuant to Regulation S-K Item 601(a)(5), or certain portions of this exhibit have been redacted pursuant to Regulation S-K Item 601(b)(10)(iv).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MONEYLION INC.
Date: August 6, 2024	By:	/s/ Richard Correia
		Richard Correia President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Date: August 6, 2024	By:	/s/ Mark Torossian
		Mark Torossian Chief Accounting Officer (Principal Accounting Officer)

 

 

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