As filed with the Securities and Exchange Commission on July 1, 2022
Registration No. 333-260254
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Post-Effective Amendment No. 2 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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(Exact Name of Registrant as Specified in Its Charter)
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| | 6770 | 85-0849243 | ||
| (State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
MoneyLion Inc.
30 West 21st Street, 9th Floor
New York, NY 10010
(212) 300-9865
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
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Richard Correia
Chief Financial Officer and Treasurer
MoneyLion Inc.
30 West 21st Street, 9th Floor
New York, NY 10010
(212) 300-9865
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Copies of all correspondence to:
Byron B. Rooney
Lee Hochbaum
Darren M. Schweiger
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Tel: (212) 450-4000
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Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||
| | ☒ | 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 7(a)(2)(B) of the Securities Act .
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-260254) (as amended, the “Registration Statement”) of MoneyLion Inc. (the “Registrant”), as originally declared effective by the Securities and Exchange Commission (the “SEC”) on October 22, 2021, is being filed pursuant to the undertakings in Item 17 of the Registration Statement to update the information in the Registration Statement to reflect, among other things, the Registrant’s audited results for the year ended December 31, 2021 and its unaudited results for the quarter ended March 31, 2022. The information included in this Post-Effective Amendment No. 2 amends the Registration Statement and the prospectus contained therein.
No additional securities are being registered under this Post-Effective Amendment No. 2. All applicable registration fees were paid at the time of the original filing of the Registration Statement.
The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the U.S. Securities and Exchange Commission declares the registration statement effective. This preliminary prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting offers to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY 1, 2022
PRELIMINARY PROSPECTUS
MONEYLION INC.
198,372,672 Shares of Class A Common Stock
8,100,000 Warrants to Purchase Shares of Class A Common Stock
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The selling stockholders named in this prospectus (the “Selling Stockholders”) may offer and sell from time to time up to 172,772,672 shares of MoneyLion Inc. Class A common stock, par value $0.0001 per share (the “MoneyLion Class A Common Stock”), pursuant to various registration rights held by the Selling Stockholders, including up to 10,768,901 shares of MoneyLion Class A Common Stock that may be issued to the Selling Stockholders pursuant to the earn-out provisions of the Merger Agreement (as defined herein), and 8,100,000 warrants to purchase MoneyLion Class A Common Stock issued in a private placement to Fusion Sponsor LLC (the “Sponsor”).
In addition, this prospectus relates to the issuance by us of up to 17,500,000 shares of MoneyLion Class A Common Stock that are issuable by us upon the exercise of the Public Warrants (as defined herein) and up to 8,100,000 shares of MoneyLion Class A Common Stock underlying the Sponsor’s private placement warrants.
The Selling Stockholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from the sale of the warrants or shares of MoneyLion Class A Common Stock by the Selling Stockholders except with respect to amounts received by us due to the exercise of the warrants. We expect to use the proceeds received from the exercise of the warrants, if any, for working capital and general corporate purposes. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The Selling Stockholders will bear all commissions and discounts, if any, attributable to their sale of these securities. See “Plan of Distribution.”
The MoneyLion Class A Common Stock and the Public Warrants are listed on the New York Stock Exchange (the “NYSE”) under the symbols “ML” and “ML WS”, respectively. On June 30, 2022, the last reported sales price of the MoneyLion Class A Common Stock was $1.32 per share and the last reported sales price of the Public Warrants was $0.19 per warrant.
Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 7 of this prospectus, and under similar headings in any amendment or supplements to this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
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The date of this prospectus is July , 2022.
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No one has been authorized to provide you with information that is different from that contained in this prospectus. This prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this prospectus is accurate as of any date other than that date.
For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
i
PRESENTATION OF FINANCIAL INFORMATION
MoneyLion’s acquisitions of Malka Media Group LLC and Even Financial Inc., as described herein, and related ongoing integration activities resulted in significant changes to MoneyLion’s revenue and cost structure. As a result, MoneyLion reclassified its consolidated balance sheets and consolidated statements of operations following the acquisitions to present its financial condition and results of operations in a new format that better represents its new revenue and cost structure. Accordingly, unless otherwise indicated, the historical financial information of the Company in this prospectus as of and for the three months ended March 31, 2022 (including the prior comparative periods as of December 31, 2021, in the case of the consolidated balance sheet, and for the three months ended March 31, 2021, in the case of the consolidated statement of operations) reflects the reclassification of MoneyLion’s consolidated balance sheets and consolidated statements of operations; all other historical financial information of the Company in this prospectus reflects MoneyLion’s historical presentation of its consolidated balance sheets and consolidated statements of operations. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 1, “Description of Business and Basis of Presentation” to the unaudited interim consolidated financial statements included in this prospectus.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes 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. RSM US LLP (“RSM”), MoneyLion’s independent auditor, has not examined, compiled or otherwise applied procedures with respect to the accompanying forward-looking financial information presented herein and, accordingly, expresses no opinion or any other form of assurance on it. The RSM report included in this prospectus relates to historical financial information of MoneyLion. It does not extend to the forward-looking information and should not be read as if it does.
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 prospectus. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:
• factors relating to the business, operations and financial performance of MoneyLion, including market conditions and global and economic factors beyond MoneyLion’s control, including the COVID-19 pandemic;
• intense and increasing competition in the industries in which MoneyLion and its subsidiaries, including MALKA and Even Financial (each as defined herein), operate, and demand for and consumer confidence in MoneyLion’s products and services, including as a result of any adverse publicity concerning MoneyLion;
• MoneyLion’s ability to realize strategic objectives and avoid difficulties and risks of any acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures and other transactions;
• MoneyLion’s reliance on third parties to provide services;
• MoneyLion’s ability to service loans or advances properly and the performance of the loans and other receivables originated through MoneyLion’s platform;
• MoneyLion’s ability to raise financing in the future, to comply with restrictive covenants related to its long-term indebtedness and to manage the effects of changes in the cost of capital;
• MoneyLion’s success in retaining or recruiting, or changing as required, its officers, key employees and directors, including MALKA’s ability to retain its content creators;
• MoneyLion’s ability to comply with the extensive and evolving laws and regulations applicable to its business;
• risks related to the proper functioning of MoneyLion’s IT systems and data storage, including as a result of cyberattacks and other security breaches or disruptions suffered by MoneyLion or third parties upon which it relies;
• MoneyLion’s ability to protect its intellectual property rights;
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• MoneyLion’s ability to comply with laws and regulations applicable to its business and the outcome of any legal or governmental proceedings that may be instituted against MoneyLion;
• MoneyLion’s ability to establish and maintain an effective system of internal controls over financial reporting;
• MoneyLion’s ability to maintain the listing of MoneyLion’s Class A common stock (“MoneyLion Class A Common Stock”) and of MoneyLion’s publicly traded warrants to purchase MoneyLion Class A Common Stock (the “Public Warrants”) on the NYSE and any volatility in the market price of MoneyLion’s securities; and
• other factors detailed under the heading “Risk Factors” in this prospectus.
The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of MoneyLion. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can MoneyLion assess the impact of all such risk factors on the business of MoneyLion, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to MoneyLion or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. MoneyLion undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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SUMMARY OF THE PROSPECTUS
This summary highlights selected information from this prospectus and does not contain all of the information that is important to you in making an investment decision. This summary is qualified in its entirety by the more detailed information included in this prospectus. Before making your investment decision with respect to our securities, you should carefully read this entire prospectus, including the information under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements included elsewhere in this prospectus.
Unless otherwise indicated or the context otherwise requires: for the period prior to the Business Combination (as defined in Note 1, “Description of Business and Basis of Presentation” in the audited consolidated financial statements included in this prospectus), references in this prospectus to “Legacy MoneyLion,” “MoneyLion,” the “Company”, “we,” “our,” “us” and other similar terms refer to MoneyLion Technologies Inc. and, as context requires, its consolidated subsidiaries; for the period following the Business Combination, “MoneyLion,” the “Company”, “we,” “our,” “us” and other similar terms refer to MoneyLion Inc. and, as context requires, its consolidated subsidiaries; and “Fusion” refers to Fusion Acquisition Corp. prior to the Business Combination.
General
MoneyLion is a leading digital financial services and lifestyle content platform. We provide consumers a full suite of financial and non-financial solutions, bundling proprietary, low-cost financial products with products that are offered through our marketplace and network affiliate partners. We engage and educate our customers with daily, money-related and money-adjacent content, delivered through a hyper-personalized feed, to empower our customers at all times. When our customers enjoy periods of financial excess, we provide tools for them to easily manage their spending and saving goals through our digital banking and automated investing solutions. When our customers experience moments of financial need, we provide them immediate access to innovative lending or earned income advance products and credit improvement programs that can bridge these times of financial stress and improve their financial health. We also leverage our distinct data, technology and network advantages to deliver leading embedded finance marketplace solutions for our Enterprise Partners (as defined herein), allowing them to better connect with existing end-users and reach new potential end-users, complemented by advertising services and digital media and content production services custom designed to promote Enterprise Partners’ products and services. We believe that the combination of solutions that MoneyLion provides uniquely positions us to disrupt how financial products are consumed, unlocking a total addressable market that we estimate to be over $274 billion.
Our technology platform has been purpose-built to support our strategy of creating a relationship with the customer. How Americans consume financial information and advice is evolving, with many Americans engaging with financial content online and on select social media channels. We endeavor for the MoneyLion platform to become a daily destination for product discovery, education, advice and financial transactions, allowing our customers to better understand their individual financial circumstances and take action to live a better financial life. Our comprehensive, modern approach to providing money-related content, products and services to our customers is designed to allow MoneyLion to own the end-to-end financial product buying cycle.
In addition, the technical architecture of our platform, which centers around a data-driven, multifaceted understanding of our customers built upon our longstanding experience in risk management, underwriting and origination, differentiates us from the transactional solutions provided by incumbents in our industry. Consumer financial services remain oriented around siloed service providers with incomplete customer data and fee-first product delivery models. We believe consumers benefit when their financial partner understands their entire financial life and can provide both access and advice at the right time, the right place and, importantly, with the appropriate solution. Traditional providers generally attempt to sell consumers specific financial products, only seeking to qualify them as a suitable buyer and generate a fee. With a deep, data-driven understanding of our customers and a broad set of integrated, tailor-made products, we can guide our customers to use our products when and if appropriate for their needs, creating a mutually beneficial partnership.
We address large, pervasive problems in the $3.5 trillion financial services industry by focusing on the largest segment of consumers, the hardworking American middle class. American consumers face enormous costs to obtain the basic elements of financial life — spend, save, invest and borrow — that in aggregate generate over $250 billion
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in fees for the financial services industry on an annual basis. With 100 million middle-class Americans as our core focus — defined as individuals with household incomes up to $150,000 and FICO scores up to 750 — the breadth of our potential customers, and the costs they face in obtaining financial services, are substantial.
We have only just begun to address these problems, but our progress to date demonstrates the demand for MoneyLion to rewire the banking system. As of December 31, 2021, over 3.3 million customers have opened an account on our platform to use at least one of our current products. We added approximately 3.0 million of these customers since the beginning of 2019, and we believe that we have a substantial opportunity to grow our customer base going forward. We focus on delivering the benefits of our personalized, all-in-one, digital financial platform to our customers. We believe the value proposition of our platform approach will increase the network effects for sustained user growth. Our data-driven perspective of our customers and our capability to create content to engage with our customers increases their time spent on our platform, allowing us to introduce products and guidance that address their changing life circumstances.
The mailing address of MoneyLion’s principal executive office is 30 West 21st Street, 9th Floor, New York, NY, 10010 and its telephone number is (212) 300-9865.
Product Platform
MoneyLion’s current product platform includes:
• RoarMoney: modern mobile banking offering premium features with no minimums, ability to get paid two days early with direct deposit, bill pay and credit-card like rewards;
• MoneyLion Investing: the first investment account for a significant portion of our customers, automatically manages their investments on a discretionary basis in custom portfolios from leading providers like Global X and Wilshire, and offered without account minimums;
• MoneyLion Crypto: an easy-to-use account that allows users to buy and sell certain popular cryptocurrencies, which we believe provides broader and more convenient access to investing in cryptocurrency for our customers, with no trading commissions or account minimums;
• Rounds Ups: a feature that allows customers to automatically “round up” qualifying purchases to the nearest dollar and transfer accrued round ups to the customer’s MoneyLion Investing account or MoneyLion Crypto account;
• Instacash Earned Income Advances: short-term 0% APR advances against expected salary or other recurring income deposits, available in moments of need, providing funds to help avoid overdraft fees or finance daily transactions;
• Credit Builder Plus: a suite of services that help customers establish or repair credit, gain financial literacy and track financial health in a bundled membership subscription that includes banking and investing accounts, a loyalty rewards program and access to cost-effective credit;
• Financial Tracking: intelligent, automated platform that evaluates a customer’s financial situation across four key dimensions and delivers personalized guidance that helps them decide what actions to take and which products to use to improve their financial health, along with a personalized action plan meant to help customers reach their financial goals; and
• MoneyLife: online financial education content destination where customers can share and discover ideas, advice and insights regarding their financial lives, delivered through a personalized financial feed tailored to each user based on intent and interests.
For additional information, see “Business — Our Product Platform.”
Customer Engagement
MoneyLion’s mission is to improve financial outcomes for the American middle class by offering a variety of products and services to help them successfully manage their financial lives. However, products and services alone are insufficient to address their needs — we believe that financial education and guidance are essential components
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of a personalized, all-in-one, digital financial platform. Our financial education and guidance philosophy incorporates a holistic, customer-centric set of digital engagement practices, including automated suggestions, recommendations, behavioral nudges, goal setting and adjustment, planning tips and reporting, driven by our knowledge of the customer, their peers and our customers’ own goals. Our solutions demonstrate how we use deep insights in our customers’ needs to promote better financial outcomes for them:
• MoneyLion Investing: When customers set up a MoneyLion Investing account offered by our wholly-owned subsidiary, ML Wealth LLC (“ML Wealth”), customers are encouraged to develop sound investing habits by enabling certain account features, including auto-investing and round ups. Auto-investing allows our customers to automatically contribute into their investment account with recurring deposits directly into the account. With round ups, customers can round up purchases to the nearest dollar, then transfer and invest the accrued round ups in their investment account using their selected investment strategy. Customers are also prompted to track and visualize their personal investment progress by selecting from a list of pre-populated goals, such as creating a rainy day fund or buying a house, or to create a customized goal within their investment account without impacting their pre-selected investment strategy. If a customer does not enable these features at account creation, they may receive on-screen notifications regarding the continued availability of these features. These digital engagement practices promote positive, long-term investing behaviors by our customers and are not intended to encourage them to invest in different products or change investment strategies. We do not use technology to recommend securities or investment strategies involving securities. Additionally, since there are no asset-based management fees charged on MoneyLion Investing accounts, ML Wealth’s interests are aligned with those of our customers in supporting responsible investing practices.
• MoneyLion Crypto: MoneyLion Crypto is an online cryptocurrency account provided by Zero Hash (as defined herein), a third-party regulated digital asset settlement provider, that enables customers to buy, sell and hold cryptocurrency. The MoneyLion Crypto product aligns with our financial education model — we believe that all customers, regardless of their financial means, should be informed about and have access to cryptocurrency, and we provide features enabling them to start small and build with confidence over time. Customers have the ability to enable auto-investing, allowing them to choose to automatically transfer an amount of their choice (minimum $1) at the frequency of their choice (daily, weekly, biweekly or monthly) from their RoarMoney account to purchase crypto assets available on the MoneyLion Crypto platform. Customers can also enable automatic round ups on their purchases so that the accrued round ups are transferred to their MoneyLion Crypto account and invested in Bitcoin. We also offer customer promotions to increase customer awareness and knowledge around cryptocurrencies, which have the effect of driving customer engagement with MoneyLion Crypto. For example, customers are prompted to guess the price of a cryptocurrency at a future date and time and the customer with the closest guess wins a prize in the form of cryptocurrency deposited in their MoneyLion Crypto account. This promotion requires a MoneyLion Crypto account to be opened, but it does not require a purchase of cryptocurrency. It increases customer knowledge around how cryptocurrencies are traded and drives customer engagement, but it is not revenue-generating since there are no mandatory fees associated with MoneyLion Crypto.
• MoneyLife: MoneyLife is a video content-driven educational platform available on the MoneyLion app and our website where customers can share and discover ideas, advice and insights regarding their financial lives. MoneyLife includes content driven by financial advice and education influencers, tools to achieve financial goals and additional ways of earning rewards to shop and save. We believe our customers prefer and benefit from educational content delivered in-context, as they are using our app or website. Through MoneyLife, we provide an additional daily destination site for current customers and additional prospective customers. As customers consume content on MoneyLife and drive engagement to our products or affiliate partners, we gain insights on how to optimize the information presented in future videos or articles so that it increases customer engagement and cross-sell opportunities for us and our affiliate partners. Consistent with our mission, MoneyLife provides much needed financial education and guidance to our customers to help them to successfully manage their financial lives.
Our business involves the collection, storage, processing, use, sharing and transmission of personally identifiable information (“PII”) and other sensitive data, including customer and employee information, financial information and information about how customers interact with our platform. We collect, store, process, use, share
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and transmit data while maintaining physical, electronic and procedural safeguards. We maintain physical security measures designed to guard against unauthorized access to systems and use safeguards such as firewalls and data encryption. We also enforce physical access controls to our facilities and we authorize access to PII on a least privilege access model only for those employees or agents who require it to fulfill the responsibilities of their jobs. See “Business — Privacy and Security” for more information on our data collection practices and policies.
By creating an accessible, enjoyable and personalized digital financial platform, MoneyLion engages our customers and provides financial education and guidance that benefits them. The more time our customers spend accessing our platform and its range of financial education resources, the more informed and the better equipped our customers are to achieve their financial goals. Our digital engagement practices are designed to promote financial literacy and awareness and to provide customers with guidance and information they need to make better informed decisions about their finances. We believe our efforts to reach customers through straightforward and easy-to-understand educational content and guidance align our interests with theirs and helps our customers to build sustainable, long-term financial success.
Regulation
We operate in a rapidly evolving regulatory environment and are subject to extensive and complex regulation under U.S. federal law and the laws of the states in which we operate covering most aspects of our business. We must comply with various federal consumer protection regimes and are subject to regulation by the Consumer Financial Protection Bureau (“CFPB”), which regulates consumer financial services we may provide. Our business and related marketing activities are also generally subject to applicable requirements under other federal statutes and the rules and regulations promulgated thereunder, including, but not limited to, the Federal Trade Commission Act, the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Military Lending Act, the Electronic Fund Transfer Act, the Telephone Consumer Protection Act and the Controlling the Assault of Non-Solicited Pornography and Marketing Act. With respect to the loans that we originate, we are subject to state licensing and other jurisdiction-specific regulations regarding consumer lending activity, which prescribe, among other things, restrictions on loan origination and servicing practices and related activities and disclosure and notice requirements and subject us to supervision and examination by state regulatory authorities. Our wholly-owned subsidiary, ML Wealth, which provides investment management services, is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and subject to, among other things, anti-fraud provisions and fiduciary duties derived from the Advisers Act and various restrictions and obligations related to its dealings with clients and investments it manages, as well as examination and regulation by the Securities and Exchange Commission (the “SEC”). In addition, although we do not currently engage in any business activity through MoneyLion Securities LLC, a registered broker-dealer and member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), MoneyLion Securities LLC is subject to SEC and FINRA rules and regulations, which cover all aspects of broker-dealer business and operations, including minimum capital requirements. We are also generally subject to compliance obligations related to BSA/AML laws and regulations and the prevention of financial crimes, as well as numerous privacy, data protection, cybersecurity and other laws and regulations in the United States stemming from the collection, storage, use, disclosure, transfer, processing and protection of the information, including PII, we acquire in connection with our consumers’ use of our service.
In addition, we are indirectly impacted by various laws and regulations pursuant to our partnerships with MetaBank (as defined herein), which offers Federal Deposit Insurance Corporation (“FDIC”)-insured, non-interest-bearing deposit accounts and debit cards to our consumers, and Zero Hash, which provides digital currency-related products and services to our consumers. MetaBank is chartered as a national bank and subject to regulation and supervision as such by the Office of the Comptroller of the Currency (the “OCC”) and the FDIC, so certain laws and regulations that apply directly to MetaBank are indirectly applicable to us as a service provider to MetaBank. The Zero Hash entities are registered as money services businesses with the Financial Crimes Enforcement Network (“FinCEN”) and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii. Under the terms of our agreement with Zero Hash, we are not directly involved in any cryptocurrency transactions or the exchange of fiat funds for
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cryptocurrency at or through Zero Hash, and therefore, we do not currently expect to be subject to money services business, money transmitter licensing, or other licensing or regulatory requirements specific to transactions relating to virtual currencies.
We could become subject to additional legal or regulatory requirements if laws or regulations change in the jurisdictions in which we operate, or if we were to release new products or services, under applicable laws or regulations to which we are not currently subject today, including if there is a determination that digital assets such as cryptocurrencies are “securities” for purposes of federal securities laws. In addition, the regulatory framework for our products and services is evolving and uncertain as federal and state governments and regulators consider the application of existing laws and potential adoption of new laws. New laws and regulations, as well as continued uncertainty regarding the application of existing laws and regulations to our products and services, may negatively affect our business. This could include the need to obtain new or different types of licenses or comply with additional laws and regulations in order to conduct our business.
For additional information, see “Business — Regulatory Environment.”
Recent Developments
Refinancing
See “Description of Certain Indebtedness” and “Certain Relationships and Related Party Transactions – Second Lien Loan” for information regarding the Credit Agreement (as defined therein) that MoneyLion Technologies Inc., a Delaware corporation and the direct, wholly-owned subsidiary of MoneyLion, entered into on March 24, 2022.
Even Acquisition
On February 17, 2022, MoneyLion completed its acquisition (the “Even Acquisition”) of Even Financial Inc. (“Even Financial”). Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces.
The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 Product Partners and 500 Channel Partners (each as defined herein), covering a breadth of financial services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans.
At the closing of the Even Acquisition, MoneyLion (i) issued to the equityholders of Even Financial an aggregate of 28,164,811 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), along with an additional 529,120 shares of Preferred Stock to advisors of Even Financial for transaction expenses, valued at $193.6 million, (ii) paid to certain Even Financial management equityholders approximately $14.5 million in cash and (iii) exchanged 8,883,228 options to acquire Even Financial common stock for 5,901,846 options to acquire MoneyLion Class A Common Stock, of which the vested portion at the acquisition date was valued at $8.9 million. The equityholders and advisors of Even Financial are also entitled to receive an additional payment from MoneyLion of up to an aggregate of 8,000,000 shares of Preferred Stock, based on the attributed revenue of Even Financial’s business during the 13-month period commencing January 1, 2022 (the “Even Financial Earnout”), and certain recipients of options to acquire shares of the MoneyLion Class A Common Stock are entitled to receive dividend equivalents in lieu of receiving Preferred Stock, subject to certain conditions (the “Preferred Stock Equivalents”). The combined value of the Even Financial Earnout and Preferred Stock Equivalents was $45.3 million as of the closing of the Even Acquisition. The total purchase price was approximately $271.0 million, subject to customary purchase price adjustments for working capital and inclusive of amounts used to repay approximately $5.7 million of existing indebtedness of Even Financial and pay $2.9 million of seller transaction costs.
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THE OFFERING
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Securities Offered by the Selling Stockholders |
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Terms of the Offering |
The Selling Stockholders will determine when and how they will dispose of the shares of MoneyLion Class A Common Stock and warrants registered under this prospectus for resale. |
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Shares Outstanding Prior to the Offering |
As of June 27, 2022, we had 237,069,783 shares of MoneyLion Class A Common Stock issued and outstanding. |
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Shares Outstanding After the Offering |
273,438,684 shares of MoneyLion Class A Common Stock (assuming the exercise for cash of warrants to purchase 25,600,000 shares of MoneyLion Class A Common Stock and the issuance of all 10,768,901 shares of MoneyLion Class A Common Stock that may be issued to the Selling Stockholders pursuant to the earn-out provisions of the Merger Agreement). |
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Use of Proceeds |
We will not receive any of the proceeds from the sale of the warrants or shares of MoneyLion Class A Common Stock by the Selling Stockholders except with respect to amounts received by us due to the exercise of the warrants. We expect to use the proceeds received from the exercise of the warrants, if any, for working capital and general corporate purposes. See “Use of Proceeds.” |
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NYSE Ticker Symbols |
The MoneyLion Class A Common Stock and the Public Warrants are listed on the NYSE under the symbols “ML” and “ML WS”, respectively. |
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RISK FACTORS
We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations or reputation. The risks described below are not the only risks we face. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our business, financial condition, results of operations or reputation. Our business could be harmed by any of these risks. In assessing these risks, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and related notes.
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:
• MoneyLion’s financial condition, results of operations and business may be adversely impacted by the COVID-19 pandemic, economic conditions and other factors that it cannot control. In an economic downturn, MoneyLion may not be able to grow its business or maintain expected levels of liquidity or revenue growth.
• MoneyLion’s results of operations and future prospects depend on its ability to attract new and retain existing customers. MoneyLion faces intense and increasing competition and if it does not compete effectively, its competitive positioning and operating results may be harmed.
• Demand for MoneyLion’s products or services may decline if it does not continue to innovate or respond to evolving technological or other changes. A significant change in consumer confidence in MoneyLion’s products or services or adverse publicity concerning MoneyLion, its business or its personnel could negatively impact MoneyLion’s business.
• Any acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures and other transactions could fail to achieve strategic objectives, disrupt MoneyLion’s ongoing operations or result in operating difficulties, liabilities and expenses, harm its business and negatively impact its results of operations.
• Because MoneyLion relies on third parties to provide services, MoneyLion could be adversely impacted if such third parties fail to fulfill their obligations or if MoneyLion’s arrangements with them are terminated and suitable replacements cannot be found on commercially reasonable terms or at all.
• If MoneyLion fails to comply with the applicable requirements of its third-party partners, they could seek to suspend or terminate MoneyLion’s accounts, which could adversely affect MoneyLion’s business. The loss of third-party service providers, or the failure by a third-party service provider to comply with legal or regulatory requirements or otherwise perform its functions properly may adversely MoneyLion’s business.
• If MALKA, MoneyLion’s wholly-owned subsidiary, is unable to remain competitive or retain key clients, its business and results of operations and financial position may be adversely affected. Increases in the costs of content may have an adverse effect on MALKA’s business, financial condition and results of operations.
• If the information provided to MoneyLion by customers is incorrect or fraudulent, MoneyLion may misjudge a customer’s qualifications to receive its products and services and its results of operations may be harmed and could subject MoneyLion to regulatory scrutiny or penalties.
• If loans and other receivables originated through MoneyLion’s platform do not perform, or significantly underperform, MoneyLion may incur financial losses on the receivables it originates or lose the confidence of its financing sources. In addition, a failure by MoneyLion to service loans or advances properly could result in lost revenue and negatively impact its business and operations or subject MoneyLion to regulatory scrutiny or penalties.
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• If MoneyLion’s existing funding arrangements are not renewed or replaced or its existing funding sources are unwilling or unable to provide funding to it on terms acceptable to it, or at all, it could have a material adverse effect on MoneyLion’s business, results of operations, financial condition, cash flows and future prospects. MoneyLion may be unsuccessful in managing the effects of changes in the cost of capital on its business.
• MoneyLion’s engineering and technical development teams are based primarily in Malaysia, which could be adversely affected by changes in political or economic stability, or by government policies.
• Systems defects, failures or disruptions, including events beyond MoneyLion’s control, and resulting interruptions in the availability of MoneyLion’s websites, applications, products, or services could harm MoneyLion’s business, harm its reputation, result in significant costs to MoneyLion, decrease MoneyLion’s potential profitability and expose it to substantial liability.
• MoneyLion has a history of losses and may not achieve profitability in the future.
• MoneyLion’s business is subject to extensive regulation, examination and oversight in a variety of areas. The legal and regulatory regimes governing certain of MoneyLion’s products and services are uncertain and evolving. Changing laws, regulations, interpretations or regulatory enforcement priorities may negatively impact the management of its business, results of operations, ability to offer certain products or the terms and conditions upon which they are offered and ability to compete.
• Cyberattacks and other security breaches or disruptions suffered by MoneyLion or third parties upon which it relies could have a materially adverse effect on MoneyLion’s business, harm its reputation and expose it to public scrutiny or liability.
• While MoneyLion takes precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of MoneyLion’s products and services or subject MoneyLion to scrutiny or penalties.
• MoneyLion may be unable to sufficiently obtain, maintain, protect or enforce its intellectual property and other proprietary rights. In addition, MoneyLion’s business and platform depend in part on intellectual property and proprietary rights and technology licensed from or otherwise made available to MoneyLion by third parties. If MoneyLion fails to comply with its obligations under license or technology agreements with third parties, MoneyLion may be required to pay damages and MoneyLion could lose license rights that are critical to its business.
• MoneyLion has in the past been, and continues to be, subject to inquiries, subpoenas, exams, pending investigations and enforcement matters by state and federal regulators, the outcomes of which are uncertain and could cause reputational and financial harm to MoneyLion’s business and results of operations.
• The market price of MoneyLion’s securities may be volatile. In addition, MoneyLion’s failure to meet the continued listing requirements of the NYSE could result in a delisting of its securities.
Risks Relating to Our Business and Operations
Our financial condition and results of operations may be adversely impacted by the COVID-19 pandemic.
Occurrences of epidemics or pandemics, depending on their scale, may cause different degrees of disruption to the regional, state and local economies in which we offer our products and services. The current COVID-19 pandemic could have a material adverse effect on the value, operating results and financial condition of our business.
The COVID-19 pandemic has caused substantial changes in consumer behavior, restrictions on business and individual activities and high unemployment rates, which led to reduced economic activity and may continue to cause economic volatility. Extraordinary actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world, including travel bans, quarantines, “stay-at-home” orders, suspension of interest accrual and similar mandates for many individuals and businesses to substantially restrict daily activities have led to a decrease in consumer
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activity generally. Additionally, the COVID-19 pandemic has had a negative impact on consumer finances and on employment levels, which could lead to lower demand for loans, higher loan delinquencies, less likelihood of signing up for our membership programs, less likelihood of making investments through our platform and less spending on the MoneyLion platform, all of which would have a negative impact on our financial condition, results of operations and cash flows.
There continue to be significant uncertainties associated with the COVID-19 pandemic, including with respect to the course, duration and severity of the virus and additional variants, future actions that may be taken by governmental authorities and private businesses to contain the COVID-19 pandemic or to mitigate its impact and the effectiveness of such actions, the timing and speed of economic recovery and the ultimate effectiveness of vaccinations for COVID-19. We continue to monitor the situation and assess further possible implications to our business. A continued significant economic slowdown could have a substantial adverse effect on our financial condition, liquidity and results of operations. COVID-19 could have the following adverse effects on our business and results of operations, among others:
• reduced borrower approval rates, including as a result of credit eligibility and other adjustments;
• lower average balances of our loans as a result of changes in consumer demand and adjustments to our credit decisioning process and credit criteria;
• reduced pool of customers eligible for our loan or advance products;
• impeded liquidity and negative fair value adjustments with respect to our loans or advance products; and
• reduced funds available for our investment products.
See “Management’s Discussion and Analysis of our Financial Condition and Results of Operations — Recent Developments” and “— Results of Operations for the Twelve Months Ended December 31, 2021 and 2020” for further discussion of the impact of the COVID-19 pandemic in recent periods on our business and operating results. We cannot at this time reasonably estimate the impact to our future results of operations, cash flows and financial condition; however, if these conditions worsen, we may be materially and adversely impacted. The COVID-19 pandemic, and its impact, may also have the effect of heightening many of the other risks described herein.
Our business may be adversely affected by economic conditions and other factors that we cannot control.
Uncertainty and negative trends in general economic conditions, including significant tightening of credit markets, historically have created a difficult operating environment for our industry. Many factors, including factors that are beyond our control, may impact our results of operations or financial condition and our overall success by affecting a customer’s willingness and capacity to use our products and services, including a customer’s willingness to incur loan obligations or willingness or capacity to make payments on their loans or other services we offer. These factors include interest rates, unemployment levels, conditions in the housing market, immigration policies, gas prices, energy costs, government shutdowns, trade wars and delays in tax refunds, as well as events such as natural disasters, acts of war, terrorism, catastrophes and pandemics.
Many new customers on our platform have limited or no credit history and limited financial resources. Accordingly, such customers have historically been, and may in the future become, disproportionately affected by adverse macroeconomic conditions, such as the disruption and uncertainty caused by the COVID-19 pandemic. In addition, major medical expenses, divorce, death or other issues that affect customers could affect a customer’s willingness or ability to make payments on their loans or advances or engage in investing activities. If borrowers default on loans facilitated on our platform, the cost to service these loans may also increase without a corresponding increase in revenue earned from lending operations and the value of the loans could decline. Higher default rates by these borrowers may lead to lower demand by our funding sources and institutional investors to fund loans and other receivables facilitated by our platform, which would adversely affect our business, financial condition and results of operations.
During periods of economic slowdown or recession, our current and potential investors in our special purpose financing structure may reduce the number of loans or other receivables they are willing to finance or demand terms that are less favorable to us, to compensate for any increased risks. A reduction in the volume of the loans and other receivables we are able to finance through this structure would negatively impact our ability to maintain or increase the level of our lending and provision of other services to customers. Any sustained decline in demand for loans
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or other services we offer, or any increase in delinquencies or defaults that result from economic downturns, may harm our ability to maintain robust volumes for our lending operations and other services, which would adversely affect our business, financial condition and results of operations. For the year ended December 31, 2021, for secured personal loans provided through our Credit Builder Plus membership program, the average 30+ day delinquency rate was 3.9% and the average monthly default rate was 1.4%. For the year ended December 31, 2021, the non-repayment rate for advances provided through our Instacash product was 5.4%. See “Business — Our Product Platform.”
For example, the COVID-19 pandemic and other related adverse economic events led to a significant increase in unemployment, comparable, and at times surpassing, the unemployment rates during the peak of the financial crisis in 2008. There can be no assurance that levels of unemployment or underemployment will improve in the near term. The increase in the unemployment rate could increase the non-repayment rate on our loans and advance products, increase the rate of customers declaring bankruptcy or decrease our customers’ use of our investment and other products and services, any of which could adversely affect the attractiveness of our loans and other receivables to our financing sources. If we are unable to adjust our platform to account for events like the COVID-19 pandemic and the resulting rise in unemployment, or if our platform is unable to more successfully predict the creditworthiness of potential borrowers compared to other lenders, then our business, financial condition and results of operations could be adversely affected.
Furthermore, the COVID-19 pandemic has caused some borrowers on our platform to request a temporary extension or modification of the payment schedules of their loans under our temporary relief or loan modification programs, or hardship programs. If a large number of borrowers seek to participate in such hardship programs, the investment returns of our financing sources could decline. Further, if the rate of borrowers that participate in such hardship programs is greater than those experienced by our competitors, then our financing sources may become less interested providing financing for our loans and other consumer receivables, which could negatively impact our funding strategy or significantly increase the cost of obtaining funding. Any of the foregoing could adversely affect our business, financial condition and results of operations.
If there is an economic downturn that affects our current and prospective customers or our financing sources, or if we are unable to address and mitigate the risks associated with any of the foregoing, our business, financial condition and results of operations could be adversely affected.
We operate in a cyclical industry. In an economic downturn, we may not be able to grow our business or maintain expected levels of liquidity or revenue growth.
The timing, severity and duration of an economic downturn can have a significant negative impact on our ability to generate adequate revenue and to absorb expected and unexpected losses. For example, in making a decision whether to extend credit to a new or existing customer or determine appropriate pricing for a loan or whether to provide a customer an advance, our decision strategies rely on robust data collection, including from third-party sources, proprietary scoring models and market expertise. An economic downturn could place financial stress on our customers, potentially impacting our ability to make accurate assessments or decisions about our customers’ ability to pay for loans and other services we provide, as well as our customers’ willingness to use our products and services. Our ability to adapt in a manner that balances future revenue production and loss management may be tested in a downturn. The longevity and severity of a downturn may also place pressure on our funding sources. There can be no assurance that our financing arrangements will remain available to us through any particular business cycle or be renewed on the same terms. The timing and extent of a downturn may also require us to change, postpone or cancel our strategic initiatives or growth plans to pursue shorter-term sustainability. The longer and more severe an economic downturn, the greater the potential adverse impact on us, which could be material.
We are a rapidly growing company with a relatively limited operating history, which may result in increased risks, uncertainties, expenses and difficulties, and makes it difficult to evaluate our future prospects.
We were founded in 2013 and have experienced rapid growth in recent years. Our limited operating history may make it difficult to make accurate predictions about our future performance. Assessing our business and future prospects may also be difficult because of the risks and difficulties we face. These risks and difficulties include our ability to:
• improve the effectiveness and predictiveness of our data-driven platform;
• maintain and increase the volume of loans, advances and other financial products we provide through our platform;
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• enter into new and maintain existing relationships with third-party partners and service providers;
• successfully maintain cost-effective sources of financing for our operations;
• maintain competitive interest rates offered to borrowers on our platform, while enabling our funding sources to achieve an adequate return over their cost of funds;
• successfully build our brand and protect our reputation from negative publicity;
• increase the effectiveness of our marketing strategies, including our direct consumer marketing initiatives;
• continue to expand the number of our potential customers;
• successfully adjust our proprietary models, products and services in a timely manner in response to changing macroeconomic conditions and fluctuations in the credit market;
• comply with and successfully adapt to complex and evolving regulatory environments;
• protect against increasingly sophisticated fraudulent uses of financial products and online theft;
• successfully compete with companies that are currently in, or may in the future enter, the business of providing consumer financial services;
• enter into new markets and introduce new products and services;
• sufficiently obtain, maintain, protect, or enforce our intellectual property and other proprietary rights;
• effectively secure and maintain the confidentiality of the information received, accessed, stored, provided and used across our systems;
• successfully obtain and maintain funding and liquidity to support continued growth and general corporate purposes;
• attract, integrate and retain qualified employees; and
• effectively manage and expand the capabilities of our operations teams, outsourcing relationships and other business operations.
If we are not able to timely and effectively address these risks and difficulties as well as those described elsewhere in this “Risk Factors” section, our business and results of operations may be harmed.
Our results of operations and future prospects depend on our ability to attract new and retain existing customers. We face intense and increasing competition and, if we do not compete effectively, our competitive positioning and our operating results may be harmed.
We operate in a rapidly changing and highly competitive industry, and our results of operations and future prospects depend on, among others:
• the continued growth of our customer base;
• our ability to monetize our customer base, including through additional products by our existing customers;
• our ability to acquire customers at a lower cost; and
• our ability to increase the overall value to us of each of our customers while they remain on our platform.
We believe that our ability to compete depends upon many factors both within and beyond our control, including, among others, the following:
• the size, diversity and activity levels of our customer base;
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• the timing and market acceptance of products and services, including developments and enhancements to those products and services, offered by us and our competitors;
• customer service and support efforts;
• selling and marketing efforts;
• the ease of use, performance, price and reliability of solutions developed either by us or our competitors;
• changes in economic conditions, regulatory and policy developments;
• general credit markets conditions and their impact on our liquidity and ability to access funding;
• the ongoing impact of the COVID-19 pandemic on the lending and financial services markets we serve;
• our brand strength relative to our competitors; and
• competition over highly skilled personnel in the technology industry.
We expect our competition to continue to increase, as there are generally no substantial barriers to entry to the markets we serve. In addition to established enterprises, we may also face competition from early-stage companies attempting to capitalize on the same, or similar, opportunities as we are. Some of our current and potential competitors have longer operating histories, particularly with respect to financial services products similar to ours, significantly greater financial, technical, marketing and other resources and a larger customer base than we do. This allows them, among other things, to potentially offer more competitive pricing or other terms or features, a broader range of financial products or a more specialized set of specific products or services, as well as respond more quickly than we can to new or emerging technologies and changes in customer preferences. Our existing or future competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products and services. This could attract customers away from our services and reduce our market share in the future. Additionally, when new competitors seek to enter our markets, or when existing market participants seek to increase their market share, these competitors sometimes undercut, or otherwise exert pressure on, the pricing terms prevalent in that market, which could adversely affect our market share and/or ability to capitalize on new market opportunities.
We currently compete at multiple levels with a variety of competitors, including:
• traditional banks and credit unions;
• new entrants obtaining banking licenses;
• other non-bank digital providers that white label regulated products, offering banking-related services;
• specialty finance and other non-bank providers, offering consumer lending-related products or advances; and
• online wealth management platforms, such as robo-advisors, offering consumer investment services.
We compete with traditional banks for many of the services we offer. Because we do not currently control a bank or a bank holding company, we are subject to regulation by a variety of state and federal regulators across our products and services and we rely on MetaBank®, N.A. (“MetaBank”), a South Dakota-based, nationally chartered bank owned by Meta Financial Group, Inc. (NASDAQ: CASH), to provide banking accounts and debit cards to our customers. This regulation by federal, state and local authorities increases our compliance costs, particularly for our lending business, as we navigate multiple regimes with different examination schedules and processes, varying disclosure requirements and at times conflicting consumer protection laws. In addition, our ability to compete may be hampered in certain states where the amount of interest we are permitted to charge customers is capped and we are consequently unable to make loans to all the customers that we believe may be qualified but to whom we cannot offer the appropriate risk-adjusted margin.
Our current and future business prospects demand that we act to meet these competitive challenges but, in doing so, our net revenue and results of operations could be adversely affected if we, for example, increase marketing expenditures or make other expenditures. Competitive pressures could also result in us reducing the
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amounts we charge for our various products and services, such as reducing the annual percentage rate on the loans we originate, or incurring higher customer acquisition costs, and could make it more difficult for us to grow our financial services product offerings in both number and volume for new as well as existing customers. All of the foregoing factors and events could adversely affect our business, financial condition, results of operations, cash flows and future prospects.
In addition, our subsidiary, MALKA, faces competition from others in the digital content creation industry and media companies. MALKA’s current and potential competitors range from large and established companies to emerging start-ups. Established companies have longer operating histories and more established relationships with customers and users, and they can use their experience and resources in ways that could affect MALKA’s competitive position, including by making acquisitions, investing aggressively in research and development, aggressively initiating intellectual property claims (whether or not meritorious) and competing aggressively for advertisers and websites. Emerging start-ups may be able to innovate and provide products and services faster than we can. MALKA’s operating results may suffer if its digital content is not appropriately timed with market opportunities, or if its digital content is not effectively brought to market. As technology continues to develop, MALKA may be forced to compete in different ways and expend significant resources in order to remain competitive. If MALKA’s competitors are more successful than MALKA is in developing compelling content or in attracting and retaining clients, MALKA’s revenues and operating results could be adversely affected.
Demand for our products or services may decline if we do not continue to innovate or respond to evolving technological or other changes.
We operate in a dynamic industry characterized by rapidly evolving technology, frequent product introductions and competition based on pricing and other differentiators. We rely on our proprietary technology to make the MoneyLion platform available to customers, to service customers and to introduce new products. In addition, we may increasingly rely on technological innovation as we introduce new types of products, expand our current products into new markets, and continue to streamline the MoneyLion platform. The process of developing new technologies and products is complex, and if we are unable to successfully innovate and continue to deliver a superior customer experience, customers’ demand for our products may decrease and our growth and operations may be harmed. Participants in our industry also compete on price, and our ability to meet the demand of our customers in this respect could affect our ability to maintain demand for our products and services.
In addition, our subsidiary, MALKA, provides digital media and content production services to clients in entertainment, sports, gaming, live streaming and other sectors. To the extent that MALKA is unable to successfully innovate and provide superior services to its clients, these actions could reduce demand for certain services provided by MALKA, which could have an adverse effect on our results of operations and financial position.
Any acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures and other transactions could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business and negatively impact our results of operations.
We have and will continue to evaluate and consider strategic transactions, combinations, acquisitions, dispositions or alliances, or other entries into new businesses. These transactions, including the recently completed acquisitions of MALKA and Even Financial, could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be successful in negotiating favorable terms and/or consummating the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.
Any strategic transaction, combination, acquisition, disposition or alliance we have entered into, including the recently completed acquisitions of MALKA and Even Financial, or may enter into in the future will involve risks encountered in business relationships, including:
• difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business;
• inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;
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• difficulties in retaining, training, motivating and integrating key personnel;
• diversion of management’s time and resources from our normal daily operations;
• difficulties in successfully incorporating licensed or acquired technology and rights into our platform;
• difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations;
• difficulties in retaining relationships with customers, employees and suppliers of the acquired business;
• risks of entering markets in which we have no or limited direct prior experience;
• regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business;
• assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability;
• failure to successfully further develop the acquired technology;
• liability for activities of the acquired or disposed of business before the acquisition or disposition, including patent and trademark infringement claims, violations of laws, regulatory actions, commercial disputes, tax liabilities and other known and unknown liabilities;
• difficulty in separating assets and replacing shared services;
• assumption of exposure to performance of any acquired loan portfolios;
• potential disruptions to our ongoing businesses; and
• unexpected costs and unknown risks and liabilities associated with strategic transactions.
We may not make any transactions, combinations, acquisitions, dispositions or alliances, or any such transactions, combinations, acquisitions, dispositions or alliances may not be successful, may not benefit our business strategy, may not generate sufficient revenue to offset the associated costs or may not otherwise result in the intended benefits. It may take us longer than expected to fully realize the anticipated benefits and synergies of these transactions, and those benefits and synergies may ultimately be smaller than anticipated or may not be realized at all, which could adversely affect our business and operating results.
Our recent acquisitions of MALKA and Even Financial include both cash consideration and issuance of equity. Any future transactions, combinations, acquisitions, dispositions or alliances may also require us to issue additional equity securities, spend our cash, or incur debt (and increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders and the interests of holders of our indebtedness.
We may not be successful in identifying businesses or opportunities that meet our acquisition or expansion criteria. Even if a potential acquisition target or other strategic investment is identified, we may not be successful in completing such acquisition or integrating such new business or other investment. For example, we may not be successful in completing the integration of the MALKA business or the Even Financial business with our business. We expect that completing the integration process for each acquisition will require significant additional time and resources, and we may not be able to manage the process successfully. It is possible that we will experience disruption of our, MALKA’s or Even Financial’s ongoing businesses.
In addition, we cannot assure you that any future acquisition of new businesses or technology will lead to the successful development of new or enhanced products and services or that any new or enhanced products and services, if developed, will achieve market acceptance or prove to be profitable. Further, we may also choose to divest certain businesses or product lines that no longer fit with our strategic objectives. If we decide to sell assets or a business, we may have difficulty obtaining terms acceptable to us in a timely manner, or at all. Additionally, the terms of such potential transactions may expose us to ongoing obligations and liabilities.
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Because we rely on third parties to provide services, we could be adversely impacted if they fail to fulfill their obligations or if our arrangements with them are terminated and suitable replacements cannot be found on commercially reasonable terms or at all.
We depend on certain key third-party partners, service providers and vendors for certain products and services. The success of our business depends in part on our ability to work with a bank partner, currently MetaBank, to provide our customers with deposit accounts and debit cards facilitated through our platform. We are also dependent on our relationship with DriveWealth LLC (“DriveWealth”), a third-party broker-dealer partner, which provides brokerage and related services for the investment accounts facilitated through our platform, as well as with Zero Hash, a third-party digital asset settlement provider, which provides certain digital currency-related products and services to our customers. Any changes in these relationships or loss of these partners could degrade the functionality of our products and services, impose additional costs or requirements or give preferential treatment to competitors’ services, including their own services, and materially and adversely affect usage of our products and services. In the event our agreements with these third parties are terminated, or if upon their expiration we are unable to renew the contracts on terms favorable to us, or at all, it may be difficult for us to replace these services, which may adversely affect our operations and profitability. Some of these organizations and third-party service providers provide similar services and technology to our competitors, and we do not have long-term or exclusive contracts with them.
In addition, we rely on relationships with third-party partners to obtain and maintain customers. Our ability to acquire new customers could be materially harmed if we are unable to enter into or maintain these relationships on terms that are commercially reasonable to us, or at all.
Our systems and operations or those of our third-party service providers could be exposed to damage or interruption from, among other things, financial insolvency, bankruptcy, contractual default, or adverse regulatory changes. In addition, we may be unable to renew our existing contracts with our most significant third-party relationships, MetaBank and DriveWealth, or they may stop providing or otherwise supporting the products and services we obtain from them, and we may not be able to obtain these or similar products or services on the same or similar terms as our existing arrangements, if at all. The failure of these third-party providers to perform their obligations and provide the products and services we obtain from them in a timely manner for any reason could adversely affect our operations and profitability.
If we fail to comply with the applicable requirements of our third-party partners, they could seek to suspend or terminate our accounts, which could adversely affect our business.
We rely on agreements with MetaBank, DriveWealth, Zero Hash and other third-party providers to provide deposit accounts, debit card services, investment advisory services and cryptocurrency-related services. These agreements and corresponding regulations governing banks and financial institutions may give them substantial discretion in approving certain aspects of our business practices, including our application and qualification procedures for customers and require us to comply with certain legal requirements. Our financial institution partners’ discretionary actions under these agreements could impose material limitations to, or have a material adverse effect on, our business, financial condition and results of operations. Without these relationships, we would not be able to service our deposit accounts, debit cards, investment accounts and cryptocurrency accounts, which would have a material adverse effect on our business, financial condition and results of operations. Furthermore, our financial results could be adversely affected if our costs associated with such relationships materially change or if any penalty or claim for damages is imposed as a result of our breach of the agreement with them or their other requirements.
We rely on third-party service providers for payment processing and other functions that are important to our operations. The loss of those service providers could materially and adversely affect our business, results of operations and financial condition. Additionally, if a third-party service provider fails to comply with legal or regulatory requirements or otherwise to perform these functions properly, our business may be adversely affected.
We rely on third-party service providers to perform various functions relating to our business, including underwriting, fraud detection, marketing, operational functions, cloud infrastructure services, information technology and telecommunications, and, because we are not a bank and cannot belong to or directly access the ACH payment network, ACH processing and debit card payment processing. While we oversee these service providers
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to ensure they provide services in accordance with our agreements and regulatory requirements, we do not have control over the operations of any of the third-party service providers that we utilize. In the event that a third-party service provider for any reason fails to perform such functions, including through negligence, willful misconduct or fraud, our ability to process payments and perform other operational functions for which we currently rely on such third-party service providers will suffer and our business, cash flows and future prospects may be negatively impacted.
Additionally, if one or more key third-party service providers were to cease to exist, to become a debtor in a bankruptcy or an insolvency proceeding or to seek relief under any debtor relief laws or to terminate its relationship with us, there could be delays in our ability to process payments and perform other operational functions for which we are currently relying on such third-party service provider, and we may not be able to promptly replace such third-party service provider with a different third-party service provider that has the ability to promptly provide the same services in the same manner and on the same economic terms. As a result of any such delay or inability to replace such key third-party service provider, our ability to process payments and perform other business functions could suffer and our business, cash flows and future prospects may be negatively impacted.
A significant change in consumer confidence in our products and services or adverse publicity concerning us, our business or our personnel could negatively impact our business.
We have developed a strong and trusted brand that has contributed significantly to the success of our business. We believe that maintaining and promoting our brand in a cost-effective manner is critical to achieving widespread acceptance of our products and services, retaining existing customers on our platform and expanding our base of customers.
Maintaining and promoting our brand will depend largely on our ability to continue to provide useful, reliable, secure and innovative products and services, the effectiveness of our marketing efforts, the experience of existing customers and our ability to maintain trust and remain a leading financial services platform. We may introduce, or make changes to, features, products, services, privacy practices or terms of service that customers do not like, which may materially and adversely affect our brand. Our efforts to build our brand have involved significant expense, and we expect to increase our marketing spend in the near term. Our brand promotion activities, including efforts and initiatives to create personalized content using MALKA’s digital media and content production services, may not generate customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand. Additionally, the successful protection and maintenance of our brand will depend on our ability to obtain, maintain, protect and enforce trademark and other intellectual property protection for our brand. If we fail to successfully promote, protect and maintain our brand or if we incur excessive expenses in this effort, we may lose our existing merchants and customers to our competitors or be unable to attract new merchants and customers. Any such loss of existing merchants or customers, or inability to attract new merchants or customers, would have an adverse effect on our business and results of operations.
Harm to our brand can arise from many sources, including failure by us or our partners and service providers to satisfy expectations of service and quality, inadequate protection or misuse of PII, compliance failures and claims, litigation and other claims, misconduct by our partners or other counterparties or any other negative publicity concerning our company or key personnel, including management and MALKA’s content creators. We have been, from time to time and may in the future be, the target of incomplete, inaccurate and misleading or false statements about our company and our business that could damage our brand and deter customers from adopting our services.
Any negative publicity relating to the individuals or entities that we employ or contract with or that otherwise represent our company, including from reported or actual incidents or allegations of illegal or improper conduct, such as harassment, discrimination or other misconduct, as well as any negative publicity about our industry or our company, the quality and reliability of our products and services, our compliance and risk management processes, changes to our products and services, our ability to effectively manage and resolve customer complaints, our privacy, data protection and information security practices, litigation, regulatory licensing and infrastructure, and the experience of our customers with our products or services, could result in significant media attention, even if not directly relating to or involving MoneyLion. This could also have a negative impact on our reputation, potentially resulting in termination of contracts, our inability to attract new customer or client relationships or the loss or termination of such employees’ services. If we do not successfully maintain a strong and trusted brand, our business could be materially and adversely affected.
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Companies periodically review and change their advertising and marketing business models and relationships. If MALKA, our wholly-owned subsidiary, is unable to remain competitive or retain key clients, its business and results of operations and financial position may be adversely affected.
From time to time, MALKA’s clients put their advertising and marketing business up for competitive review. Key competitive considerations for retaining existing business and winning new business include the quality and effectiveness of the advertising and marketing services that MALKA offers and the content that it produces, actions taken by MALKA’s competitors to enhance their offerings, whether MALKA meets the expectations of its customers, its ability to efficiently serve clients, particularly large international clients, on a broad geographic basis and a number of other factors. To the extent that MALKA is not able to remain competitive or retain key clients, its revenue may be materially adversely affected, which could have an adverse effect on our results of operations and financial position. In addition, many factors can affect corporate spending, including economic conditions, changes in tax rates and tax laws and inflation, and any reduction in client spending or a delay in client payments could significantly impact MALKA’s operating results. While corporate spending may decline at any time for reasons beyond our or MALKA’s control, the risks associated with MALKA’s business become more acute in periods of a slowing economy or recession, which may be accompanied by reductions in corporate sponsorship and advertising.
If the information provided to us by customers is incorrect or fraudulent, we may misjudge a customer’s qualifications to receive our products and services and our results of operations may be harmed and could subject us to regulatory scrutiny or penalties.
Our decisions to provide many of our products and services to our customers are based partly on information customers provide to us or authorize us to receive. To the extent that these customers provide information to us in a manner that we are unable to verify, our decisioning process may not accurately reflect the associated risk. In addition, data provided by third-party sources, including consumer reporting agencies, is a component of our credit decisions and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could harm our reputation, business and results of operations.
In addition, we use identity and fraud prevention tools to analyze data provided by external databases to authenticate each applicant’s identity. From time to time, these checks have failed and there is a risk that these checks could fail in the future, and fraud, which may be significant, may occur. We may not be able to recoup funds underlying loans or associated with our other services made in connection with inaccurate statements, omissions of fact or fraud, in which case our revenue, results of operations and profitability will be harmed. Fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, which could negatively impact our results of operations, brand and reputation, and require us to take steps to reduce fraud risk, which could increase our costs.
Many of our investment advisory customers are first-time investors and our revenues could be reduced if these customers stop investing altogether or stop using our platform for their investing activities.
Our business model focuses on making the financial markets accessible to a broad demographic of retail investors. In each of the years ended December 31, 2020 and 2019, over half of our customers for the applicable period were first-time investors. Our success, and our ability to increase revenues and operate profitably, depends in part on such customers continuing to utilize our platform, even as global social and economic conditions shift. However, our customers do not have long-term contractual arrangements with us and can utilize our platform on a transaction-by-transaction basis and may also cease to use our platform at any time or use a competitor’s platform. We may face particular challenges in retaining these investors as customers, for example as a result of a return to pre-COVID-19 behaviors, increased volatility in the financial markets or increasing availability of competing products that seek to target the same demographic. In particular, a broad decline or volatility in the equity or other financial markets could result in some of these investors exiting the markets and leaving our platform. Any significant loss of these customers or a significant reduction in their use of our platform could have a material impact on our investment volumes and revenues, and materially adversely affect our business, financial condition and results of operations.
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If loans and other receivables originated through our platform do not perform, or significantly underperform, we may incur financial losses on the receivables we originate or lose the confidence of our financing sources.
Any significant underperformance of the loans and other receivables facilitated through our platform, especially if they underperform compared to those generated by our competitors, may adversely impact our relationship with our funding sources and result in their loss of confidence in us, which could lead to the termination of our existing funding arrangements. Any requirement that we increase the amount of receivables we hold on our balance sheet due to a decrease or termination by our funding sources in their investments in our credit products and other consumer receivables could have a material adverse effect on our business, results of operations, financial condition and future prospects.
Borrowers may prepay a loan at any time without penalty, which could reduce our revenue and limit our ability to obtain financing for our lending operations.
A borrower may decide to prepay all or a portion of the remaining principal amount on a loan at any time without penalty. If the entire or a significant portion of the remaining unpaid principal amount of a loan is prepaid, we would receive significantly lower interest associated with such prepaid loan. Prepayments may occur for a variety of reasons, including if interest rates decrease after a loan is made. If a significant volume of prepayments occurs, the amount of our servicing fees would decline, which could harm our business and results of operations. Our data-driven models are designed to predict prepayment rates. However, if a significant volume of prepayments occur that our models do not accurately predict, returns targeted by our financing sources in our loan funding programs would be adversely affected and our ability to attract new investors would be negatively affected.
We service all of the loans and advances we originate. A failure by us to service loans or advances properly could result in lost revenue and negatively impact our business and operations or subject us to regulatory scrutiny or penalties.
We service all of the loans and advances we originate. Any failure on our part to perform functions related to our servicing activities to properly service our loans or advances could result in a significant decrease in the amount of loans or advances we service and therefore adversely impact the amount of revenue generated from interest income.
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, results of operations, financial condition, cash flows and future prospects.
To support the origination of loans and other receivables on our platform and the growth of our business, we must maintain a variety of funding arrangements. If we are unable to maintain access to, or expand, our funding arrangements, our business, results of operations, financial condition and future prospects could be materially and adversely affected.
We cannot guarantee that these funding arrangements will continue to be available on favorable terms or at all, and our funding strategy may change over time and depends on the availability of such funding arrangements. For example, disruptions in the credit markets or other factors, such as the impact of the COVID-19 pandemic, could adversely affect the availability, diversity, cost and terms of our funding arrangements. The broad impact of COVID-19 on the financial markets has created uncertainty and volatility in many funding markets and with many funding sources. In addition, our funding sources may reassess their exposure to our industry and either curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access our funding.
In addition, there can be no assurances that we would be able to extend or replace our existing funding arrangements at maturity, on reasonable terms or at all. 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. Further, as the volume of loans and other receivables facilitated through our platform increases, we may require the expansion of our funding capacity under our existing funding arrangements or the addition of new sources of capital. The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control.
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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 debt; 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; and enter into certain transactions with their affiliates. Our senior credit facility also contains certain financial maintenance covenants that require us and our subsidiaries to maintain a certain income level each quarter, and to maintain a minimum level of unrestricted cash while any borrowings under the senior credit facility are outstanding.
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, a reduction in the term or size of funding instruments, and/or the liquidation of certain assets. 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, which could have a material adverse effect on our business, results of operations, financial condition, cash flows and future prospects.
We may be unsuccessful in managing the effects of changes in the cost of capital on our business.
In the future, we may seek to access the capital markets to obtain capital to develop new technologies, expand our business, respond to competitive pressures and make acquisitions. We may try to raise additional funds through public or private financings, strategic relationships or other arrangements. However, our future access to the capital markets and ability to obtain debt or equity funding could be restricted due to a variety of factors, including a deterioration of our earnings, cash flows, balance sheet quality, our credit rating, investor interest or overall business or industry prospects, our share price, interest rates, adverse regulatory changes, a disruption to or volatility or deterioration in the state of the capital markets, or a negative bias toward our industry by market participants. Due to the negative bias toward our industry, certain financial institutions have restricted access to available financing by participants in our industry, and we may have more limited access to institutional capital than other businesses. Future prevailing capital market conditions and potential disruptions in the capital markets may adversely affect our efforts to arrange additional financing on terms that are satisfactory to us, if at all. In addition, our share price has been and may continue to be volatile and any limitation on market liquidity or reduction in the price of MoneyLion Class A Common Stock, including as a result of a delisting of our securities from a national exchange, could have a material adverse effect on our ability to raise capital on terms acceptable to us, or at all. If adequate funds are not available, or are not available on acceptable terms, we may not have sufficient liquidity to fund our operations, make future investments, take advantage of acquisitions or other opportunities, or respond to competitive challenges and this, in turn, could adversely affect our ability to advance our strategic plans. In addition, if the capital and credit markets experience volatility, and the availability of funds is limited, third parties with whom we do business may incur increased costs or business disruption and this could adversely affect our business relationships with such third parties, which in turn could have a material adverse effect on our business, results of operations, financial condition, cash flows and future prospects.
If we succeed in raising additional funds through the issuance of equity or equity-linked securities, then existing stockholders could experience substantial dilution. If we raise additional funds through the issuance of debt securities or preferred stock, these new securities would have rights, preferences and privileges senior to those of the holders of our common stock. In addition, any such issuance could subject us to restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Further, to the extent we incur additional indebtedness or such other obligations, the risks associated with our existing debt, including our possible inability to service our existing debt, would increase.
We depend on our key personnel and other highly skilled personnel, and if we fail to attract, retain and motivate our personnel, our business, financial condition and results of operations could be adversely affected.
Our success significantly depends on the continued service of our senior management team, including Diwakar (Dee) Choubey, our Co-Founder and Chief Executive Officer, and Richard (Rick) Correia, our Chief Financial Officer, and other highly skilled personnel. Our success also depends on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization.
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Competition for highly skilled personnel, including engineering and data analytics personnel, is extremely intense, particularly in New York where our headquarters is located. We have experienced, and expect to continue to face, difficulty identifying and hiring qualified personnel in many areas and may also encounter difficulties in retaining key employees of acquired companies, especially as we pursue our growth strategy. Further, as a result of the COVID-19 pandemic, a large and increasing number of companies have adopted permanent work-from-home policies, which further increases the challenges associated with hiring and retaining qualified personnel. We may not be able to hire or retain such personnel at compensation or flexibility levels consistent with our existing compensation and salary structure and policies. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In particular, candidates making employment decisions, specifically in high-technology industries, often consider the value of any equity they may receive in connection with their employment. Any significant volatility in the price of our stock may adversely affect our ability to attract or retain highly skilled technical, financial and marketing personnel.
In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements. While we are in the process of training their replacements, the quality of our services and our ability to serve our customers could decline, resulting in an adverse effect on our business.
Increases in the costs of content may have an adverse effect on MALKA’s business, financial condition and results of operations.
The success of the business of our subsidiary, MALKA, is dependent in part on its ability to produce popular content. The production of such content depends on MALKA’s ability to retain its content creators. As MALKA’s business develops, MALKA may incur increasing revenue-sharing costs to compensate its content creators for producing original content. MALKA relies on its team to generate creative ideas for original content and to supervise the original content origination and production process, and MALKA intends to continue to invest resources in content production. If MALKA is not able to compete effectively for talent or attract and retain top influencers at reasonable costs, MALKA’s original content production capabilities would be negatively impacted.
Our engineering and technical development teams are based primarily in Malaysia, which could be adversely affected by changes in political or economic stability or by government policies.
Our engineering and technical development teams operate a foreign office in Malaysia, which is subject to relatively higher degrees of political and social instability than the United States and may lack the infrastructure to withstand political unrest or natural disasters. The political or regulatory climate in the United States, or elsewhere, also could change so that it would not be lawful or practical for us to use international operations in the manner in which we currently use them. If we had to curtail or cease operations in Malaysia and transfer some or all of these operations to another geographic area, we would incur significant transition costs as well as higher future overhead costs that could materially and adversely affect our results of operations. In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”). Any violations of the FCPA or local anti-corruption laws by us, our subsidiaries or our local agents could have an adverse effect on our business and reputation and result in substantial financial penalties or other sanctions.
Our ability to collect payments on our financial products and services and maintain accurate accounts may be adversely affected by computer malware, social engineering, phishing, physical or electronic break-ins, undetected technical errors, bugs and similar disruptions.
The automated nature of our platform may make it an attractive target for hacking and potentially vulnerable to computer viruses, physical or electronic break-ins and similar disruptions. It is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, in which case there would be an increased risk of fraud or identity theft, and we may experience losses on, or delays in the collection of amounts owed on, a fraudulently induced loan or payments relating to our other products and services. Security breaches could occur from outside our company, and also from the actions of persons inside our
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company who may have authorized or unauthorized access to our technology systems. Furthermore, any failure of our computer systems could cause an interruption in operations and result in disruptions in, or reductions in the amount of, collections on fees and other amounts from our customers.
Additionally, if hackers were able to access our secure files, they might be able to gain access to the personal information of our customers. If we are unable to prevent such activity, we may be subject to significant liability, negative publicity and a material loss of customers, all of which may negatively affect our business.
Our platform and internal systems, and those of third parties upon whom we rely, rely on software that is highly technical, and if it contains undetected technical errors, our business could be adversely affected.
Our platform and internal systems rely on software that is highly technical and complex. In addition, our platform and internal systems depend on the ability of such software to store, retrieve, process and manage high volumes of data. The software upon which we rely may from time to time contain undetected technical errors or bugs. Some technical errors or bugs may only be discovered after the code has been released for external or internal use. Technical errors or other design defects within the software upon which we rely may result in failure to accurately predict a loan applicant’s creditworthiness or the suitability of other applicants for our other products and services, failure to comply with applicable laws and regulations, approval of sub-optimally priced loans, incorrectly displayed interest rates or other fees to borrowers and other customers, or incorrectly charged interest or fees to borrowers and other customers, third-party partners or institutional investors, failure to detect fraudulent activity on our platform, our inability to accurately evaluate potential customers, a negative experience for customers or third-party partners, delayed introductions of new features or enhancements or failure to protect customer data, our intellectual property or other sensitive data or proprietary information. Any technical errors, bugs or defects discovered in the software upon which we rely could result in harm to our reputation, loss of customers or bank partners, increased regulatory scrutiny, fines or penalties, loss of revenue or liability for damages, any of which could adversely affect our business, financial condition and results of operations.
Some aspects of our business processes include open-source software, which poses risks that could have a material and adverse effect on our business, financial condition and results of operations. In addition, any failure to comply with the terms of one or more of these open-source licenses could negatively affect our business.
We incorporate open-source software into processes supporting our business and anticipate using open-source software in the future. Such open-source software may include software covered by licenses like the GNU General Public License and the Apache License. The terms of various open-source licenses to which we are subject have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems, limits our use of the software, inhibits certain aspects of our systems and negatively affects our business operations.
Some open-source licenses contain requirements that we make source code modifications or derivative works we create publicly available or make available on unfavorable terms or at no cost, based upon the type of open-source software we use.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source license, such use could inadvertently occur, or could be claimed to have occurred, in part because open-source license terms are often ambiguous. We may face claims from third parties claiming ownership of, or demanding the release or license of, modifications or derivative works that we have developed using such open-source software (which could include our proprietary source code or artificial intelligence (“AI”) models), or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation and if portions of our proprietary AI models or software are determined to be subject to an open-source license, or if the license terms for the open-source software that we incorporate change, we could be required to publicly release all or affected portions of our source code, purchase a costly license, cease offering the implicated products or services unless and until we can re-engineer such source code in a manner that avoids infringement, discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or change our business activities, any of which could negatively affect our business operations and potentially our intellectual property rights. In addition, the re-engineering process could require us to expend significant additional research and
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development resources, and we may not be able to complete the re-engineering process successfully. If we were required to publicly disclose any portion of our proprietary models, it is possible we could lose the benefit of trade secret protection for our models.
In addition to risks related to license requirements, the use of certain open-source software can lead to greater risks than the use of third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification, controls or other contractual protections regarding infringement claims or the quality of the origin of the software. There is little legal precedent in this area, and any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop products and services that are similar to or better than ours. Use of open-source software may also present additional security risks because the public availability of such software may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on open-source software. Any of these risks associated with the use of open-source software could be difficult to eliminate or manage, and if not addressed, could materially and adversely affect our business, financial condition and results of operations.
Systems defects, failures or disruptions, including events beyond our control, and resulting interruptions in the availability of our websites, applications, products, or services could harm our business, harm our reputation, result in significant costs to us, decrease our potential profitability and expose us to substantial liability.
We use vendors, such as our cloud computing web services provider, account transaction and card processing companies, and third-party software providers, in the operation of our platform. The satisfactory performance, reliability and availability of our technology and our underlying network and infrastructure are critical to our operations and reputation and the ability of our platform to attract new and retain existing customers. We rely on these vendors to protect their systems and facilities against damage or service interruptions from natural disasters, power or telecommunications failures, air quality issues, environmental conditions, computer viruses or attempts to harm these systems, criminal acts, unauthorized access, sabotage, acts of vandalism, military actions, negligence, human errors, fraud, spikes in platform use and denial of service issues, hardware failures, improper operation, cyberattacks, data loss, wars and similar events. If our arrangement with a vendor is terminated or if there is a lapse of service or damage to its systems or facilities, we could experience interruptions in our ability to operate our platform. We also may experience increased costs and difficulties in replacing that vendor and replacement services may not be available on commercially reasonable terms, on a timely basis, or at all.
In addition, our platform is accessed by many customers, often at the same time. As we continue to expand the number of our customers, and products and services available through our platform, we may not be able to scale our technology to accommodate the increased capacity requirements. The failure of data centers, internet service providers or other third-party service providers to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to grow our business and scale our operations. Any interruptions or delays in our platform availability, whether as a result of a failure to perform on the part of a vendor, any damage to one of our vendor’s systems or facilities, the termination of any of our third-party vendor agreements, software failures, our or our vendor’s error, natural disasters, terrorism, other man-made problems, security breaches, whether accidental or willful, or other factors, could harm our relationships with our customers, prevent our customers from accessing their accounts, damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, cause the loss of critical data, prevent us from supporting our platform, products or services or cause us to incur additional expense in arranging for new facilities and support or otherwise harm our business and also harm our reputation.
In addition, we source certain information from third parties. For example, our risk-scoring model is based on algorithms that evaluate a number of factors and currently depend on sourcing certain information from third parties, including consumer reporting agencies. In the event that any third party from which we source information experiences a service disruption, whether as a result of maintenance, natural disasters, terrorism, or security breaches, whether accidental or willful, or other factors, the ability to score and decision loan applications and applications for our other products and services through our platform may be adversely impacted. Additionally, there may be errors contained in the information provided by third parties. This may result in the inability to approve otherwise qualified applicants through our platform, which may adversely impact our business by negatively impacting our reputation and reducing our transaction volume.
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To the extent we use or are dependent on any particular third-party data, technology, or software, we may also be harmed if such data, technology, or software becomes non-compliant with existing regulations or industry standards, becomes subject to third-party claims of intellectual property infringement, misappropriation, or other violation, or malfunctions or functions in a way we did not anticipate. Any loss of the right to use any of this data, technology, or software could result in delays in the provisioning of our products and services until equivalent or replacement data, technology, or software is either developed by us, or, if available, is identified, obtained, and integrated, and there is no guarantee that we would be successful in developing, identifying, obtaining, or integrating equivalent or similar data, technology, or software, which could result in the loss or limiting of our products, services, or features available in our products or services.
In addition, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Our disaster recovery plan has not been tested under actual disaster conditions, and we may not have sufficient capacity to recover all data and services in the event of an outage. Furthermore, prolonged interruption in the availability, or reduction in the speed or other functionality, of our platform, products or services could materially harm our reputation and business. Any of the foregoing could prevent us from processing transactions or posting payments on our platform, damage our brand and reputation, divert the attention of our employees, reduce our revenue, subject us to liability and cause customers to abandon our platform, any of which could have a material and adverse effect on our business, results of operations, financial condition and future prospects.
Real or perceived inaccuracies in our key operating metrics may harm our reputation and negatively affect our business.
We track certain key operating metrics such as total payment volume, Total Originations and Total Customers (each as defined herein) with internal systems and tools that are not independently verified by any third party. While the metrics presented are based on what we believe to be reasonable assumptions and estimates, our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time. In addition, limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies. If the internal systems and tools we use to track these metrics understate or overstate performance or contain algorithmic or other technical errors, the key operating metrics we report may not be accurate. If investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our results of operations and financial condition could be adversely affected.
We have a history of losses and may not achieve profitability in the future.
Our net losses were $164.9 million and $41.6 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we had a total accumulated deficit of $465.3 million. We may continue to incur net losses in the future, and such losses may fluctuate significantly from quarter to quarter. We will need to generate and sustain significant revenues for our business generally, and achieve greater scale and generate greater operating cash flows in future periods in order to achieve, maintain or increase our level of profitability. We intend to continue to invest in sales and marketing, technology and new products and services in order to enhance our brand recognition and our value proposition to our customers, and these additional costs will create further challenges to generating near-term profitability. We also expect general and administrative expenses to increase to meet the increased compliance and other requirements associated with operating as a public company and evolving regulatory requirements.
Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue sufficiently to offset our higher operating expenses. We may continue to incur losses and not achieve future profitability or, if achieved, be unable to maintain such profitability, due to a number of reasons, including the risks described in “Risk Factors” herein, unforeseen expenses, difficulties, complications and delays and other unknown events.
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Risks Relating to Financial Regulation
Our business is subject to extensive regulation, examination and oversight in a variety of areas, including registration and licensing requirements under federal, state and local laws and regulations.
We are subject to extensive regulation, supervision and examination under United States federal and state laws and regulations. Regulators have broad discretion with respect to the interpretation, implementation and enforcement of these laws and regulations, including through enforcement actions that could subject us to civil money penalties, customer remediations, increased compliance costs and limits or prohibitions on our ability to offer certain products or services or to engage in certain activities. Any failure or perceived failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions and/or damage our reputation, which could materially and adversely affect our business. In addition, to the extent that we undertake actions requiring regulatory approval or non-objection, regulators may make their approval or non-objection subject to conditions or restrictions that could have a material adverse effect on our business. Moreover, any competitors subject to different, or in some cases less restrictive, legislative or regulatory regimes may have or obtain a competitive advantage over us.
We are subject to the regulatory and enforcement authority of the CFPB, which oversees compliance with federal consumer financial protection laws. In addition, if the CFPB were to expand its supervisory authority by promulgating new regulations, it is possible that the CFPB could be permitted to conduct periodic examination of our business, which may increase our risk of regulatory or enforcement actions. Further, we are regulated by many state regulatory agencies through licensing and other supervisory or enforcement authority, which includes regular examination by state governmental authorities.
In addition, our wholly-owned subsidiary, ML Wealth, is registered as an investment adviser under the Advisers Act and is subject to regulation by the SEC. The Advisers Act, together with related regulations and interpretations of the SEC, impose numerous obligations and restrictions on investment advisers, including requirements relating to the safekeeping of client funds and securities, limitations on advertising, disclosure and reporting obligations, prohibitions on fraudulent activities, restrictions on agency cross and principal transactions between an adviser and its advisory clients and other detailed operating requirements, as well as general fiduciary obligations. We also have a wholly-owned subsidiary, MoneyLion Securities LLC, which is a broker-dealer and is therefore registered with the SEC and a member of FINRA. Although we do not currently engage in any business activity through MoneyLion Securities LLC, as a broker-dealer, it is subject to SEC and FINRA rules and regulations.
We are also subject to potential enforcement and other actions that may be brought by state attorneys general or other state enforcement authorities and other governmental agencies. Any such actions could result in civil money penalties and fines, customer remediations, increased compliance costs, damage to our reputation and brand and limits or prohibitions of our ability to offer certain products and services or engage in certain business practices. Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters, which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.
The legal and regulatory regimes governing certain of our products and services are uncertain and evolving. Changing laws, regulations, interpretations or regulatory enforcement priorities may negatively impact the management of our business, results of operations, ability to offer certain products or the terms and conditions upon which they are offered and ability to compete.
We are required to comply with constantly changing federal, state and local laws and regulations that regulate, among other things, the terms of the loans and other consumer receivables that we originate and the associated fees that may be charged. 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. Changes in the laws, regulations and enforcement priorities applicable to our business could have a material impact on our business model, operations and financial position.
Such laws and regulations are complex and require us to incur significant expenses and devote significant management attention to ensure compliance. In addition, our failure to comply (or to ensure that our agents and third-party service providers comply) with these laws or regulations may result in litigation or enforcement actions, the penalties for which could include: revocation of licenses and registrations; fines and other monetary penalties; civil and
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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, directly or indirectly, collect all or a part of the principal of or interest on loans or other amounts owed by our customers; 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 results of operations, financial condition or business.
State attorneys general have indicated that they will take a more active role in enforcing consumer protection laws, including through use of Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) provisions that authorize state attorneys general to enforce certain provisions of federal consumer financial laws and obtain civil money penalties and other relief available to the CFPB.
Further, we may not be able to respond quickly or effectively to regulatory, legislative and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products and services and/or increase our cost of doing business. In addition, 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 or criminal or civil sanctions, all of which may have an adverse effect on our reputation, business, results of operations and financial condition.
These regulatory changes and uncertainties make our business planning more difficult and could result in changes to our business model and potentially adversely impact the results of our operations. New laws or regulations also require us to incur significant expenses to ensure compliance. As compared to our competitors, we could be subject to more stringent state or local regulations or could incur marginally greater compliance costs as a result of regulatory changes.
Proposals to change the statutes affecting financial services companies are frequently introduced in Congress and state legislatures that, if enacted, may affect our operating environment in substantial and unpredictable ways. In addition, numerous federal and state regulators have the authority to promulgate or change regulations that could have a similar effect on our operating environment. 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.
In addition, we expect to continue to launch new products and services in the coming years, which may subject us to additional legal and regulatory requirements under federal, state and local laws and regulations, but which we expect to be similar to the legal and regulatory regimes to which we are already subject.
New laws, regulations, policies or changes in enforcement of existing laws or regulations applicable to our business, or reexamination of current practices, could 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 its 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 and could adversely affect our business.
The regulatory regime governing blockchain technologies and digital assets is uncertain, and new regulations or policies may alter our business practices with respect to digital assets.
We currently offer certain cryptocurrency-related products and services available to our customers through Zero Hash. The Zero Hash entities are registered as money services businesses with FinCEN and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii. Although many regulators have provided some guidance, regulation of digital assets based on or incorporating blockchain, such as digital assets and digital asset exchanges, remains uncertain and will continue to evolve. Further, regulation varies significantly among international, federal, state and local jurisdictions. As blockchain networks and blockchain assets have grown in popularity and in market size, federal and state agencies are increasingly taking interest in, and in certain cases regulating, their use and operation. Treatment of virtual currencies continues to evolve under federal and state law. Many U.S. regulators, including the SEC, FinCEN, the Commodity Futures
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Trading Commission, (the “CFTC”), the Internal Revenue Service (the “IRS”) and state regulators including the New York State Department of Financial Services (the “NYSDFS”), have made official pronouncements or issued guidance or rules regarding the treatment of Bitcoin and other digital currencies. The IRS released guidance treating virtual currency as property that is not currency for U.S. federal income tax purposes, although there is no indication yet whether other courts or federal or state regulators will follow this classification. Both federal and state agencies have instituted enforcement actions against those violating their interpretation of existing laws. Other U.S. and many state agencies have offered little official guidance and issued no definitive rules regarding the treatment of digital assets. The CFTC has publicly taken the position that certain virtual currencies, which term includes digital assets, are commodities. To the extent that virtual currencies are deemed to fall within the definition of a “commodity interest” under the Commodity Exchange Act (the “CEA”), we may be subject to additional regulation under the CEA and CFTC regulations.
As blockchain technologies and digital assets business activities grow in popularity and market size, and as new digital assets businesses and technologies emerge and proliferate, foreign, federal, state and local legislators and regulators revisit and update their laws and policies, and can be expected to continue to do so in the future. For example, in August 2021, the Chair of the SEC stated that he believed investors using digital asset trading platforms are not adequately protected, and that activities on the platforms can implicate the securities laws, commodities laws and banking laws, raising a number of issues related to protecting investors and consumers, guarding against illicit activity and ensuring financial stability. The Chair expressed a need for the SEC to have additional authorities to prevent transactions, products and platforms from “falling between regulatory cracks,” as well as for more resources to protect investors in “this growing and volatile sector.” The Chair called for federal legislation centering on digital asset trading, lending and decentralized finance platforms, seeking “additional plenary authority” to write rules for digital asset trading and lending. It is not possible to predict whether Congress will grant additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how they might impact the ability of digital asset markets to function or how any new regulations that may flow from such authorities might impact the value of digital assets generally and those offered by Zero Hash to our customers specifically. Changes in the legislative or regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government, may significantly affect or change the manner in which we currently conduct some aspects of our business.
A determination that a digital asset is a “security” for purposes of the federal securities laws could adversely affect the value of that digital asset and potentially digital assets generally, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of MoneyLion Class A Common Stock.
Depending on its characteristics, a digital asset may be considered a “security” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict. Public, though non-binding, statements by senior officials at the SEC have in the past indicated that the SEC did not consider Bitcoin or Ethereum (in their then-current form) to be a security. On the other hand, the SEC has brought enforcement actions against the promoters of several other digital assets on the basis that the digital assets in question are securities. Moreover, in September 2021, testimony before the Senate Banking Committee, the Chair of the SEC stated that “only a small number” of digital assets are not securities. However, statements such as this are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital asset. Beyond the public enforcement actions involving specific digital assets, the SEC has not yet publicly identified which specific digital assets it considers to be securities, although it is possible that the SEC could do so in the future in the context of enforcement actions or in public statements outside of the enforcement context.
The SEC’s positions on the federal securities law status of particular digital assets are closely watched and can have dramatic effects, whether or not the SEC’s positions prevail in federal court. For example, in 2020, the SEC filed a complaint against the promoters of XRP alleging that they raised more than $1.3 billion through XRP sales that should have been registered under the federal securities laws, but were not. In the weeks following the filing of the SEC’s complaint, several cryptocurrency exchanges suspended trades in XRP on their platforms for U.S. users pending a resolution of the complaint. During this same period, XRP’s market capitalization fell to less than $10 billion, which was less than half of its market capitalization in the days prior to the complaint. The SEC’s action against XRP’s promoters underscores the continuing uncertainty around which digital assets are securities.
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Whether a digital asset is a security under the federal securities laws depends on whether it is included in the lists of instruments making up the definition of “security” in the Securities Act, the Exchange Act, the Investment Advisors Act and the Investment Company Act of 1940, as amended. Digital assets as such do not appear in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has typically analyzed whether a particular digital asset is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the Howey and Reves tests, respectively. For many digital assets, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular digital asset qualifying as a security under one or both of the Howey and Reves tests. The SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given digital asset is a security in April 2019; however, this framework is not a rule, regulation or statement of the SEC and is not binding on the SEC. Adding to the complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the relevant facts evolve.
Any enforcement action by the SEC or a state securities regulator, or a court decision or SEC announcement, asserting or finding that a particular digital asset is a security for purposes of the federal securities laws would be expected to have an immediate and material adverse impact on the trading value of that digital asset if it is then generally used or traded in the United States, and depending on the specific characteristics of the digital asset, could have adverse spillover effects on the trading values of other digital assets perceived to share similar characteristics that are also generally used or traded in the United States. This is because the business models behind most digital assets are incompatible with U.S. regulations applying to transactions in securities. If a digital asset is asserted or found to be a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets. For example, all transactions in such digital asset would have to be registered with the SEC and potentially state securities regulators, or conducted in accordance with exemptions from registration, which could severely limit its liquidity and usefulness. At the same time, some of these digital assets may then be supported by existing broker-dealers and alternative trading systems that have recently been approved by FINRA to support this digital asset securities activity. The digital asset securities markets, including broker-dealer and alternative trading systems, are at an infancy stage and may not support a particular digital asset if it is categorized as a security by the SEC or provide the liquidity necessary to support active trading in a particular digital asset that is a security. Moreover, the network on which such digital asset is utilized may be subject to regulation as a securities intermediary, which could effectively render the network impracticable for its existing purposes. This risk may be heightened in light of recent amendments proposed by the SEC to expand the definition of “exchange” under Exchange Act Rule 3b-16 to include certain communication protocol systems that bring together “trading interest” of buyers and sellers of securities. Depending on how such an amended rule is ultimately adopted and interpreted, the amendments could require various digital asset trading protocols (or their related parties) that facilitate trading in digital assets to register as securities exchanges or rely on an exemption, such as Regulation ATS, which may negatively impact the market price for certain digital assets. In addition to materially and adversely affecting the trading value of the digital asset, any such consequences are likely to significantly impact the digital asset’s liquidity and market participants’ ability to convert the digital asset into U.S. dollars.
As described under “— A determination that a digital asset is a ‘security’ for purposes of the federal securities laws could have adverse regulatory consequences for MoneyLion Crypto, and could therefore adversely impact our business, financial condition and results of operations as well as the market price for MoneyLion Class A Common Stock,” the determination that a digital asset is a security under the federal securities laws could also have adverse U.S. regulatory consequences for us. But even if there were no such adverse U.S. regulatory consequences, we may nevertheless decide to terminate our services relating to that digital asset.
A determination that a digital asset is a “security” for purposes of the federal securities laws could have adverse regulatory consequences for MoneyLion Crypto, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of MoneyLion Class A Common Stock.
In addition to the potential for adverse consequences to our business, financial condition and results of operations described under “— A determination that a digital asset is a ‘security’ for purposes of the federal securities laws could adversely affect the value of that digital asset and potentially digital assets generally, and could therefore adversely impact our business, financial condition and results of operations as well as the market price of MoneyLion Class A Common Stock,” the classification of a digital asset as a security under the federal
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securities laws has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, clearing and holding of such assets. These implications could include the following, any of which could have adverse consequences to our business, financial condition and results of operations as well as the market price of MoneyLion Class A Common Stock:
• Liability for participating in unregistered securities offerings. In the United States, securities generally may not be offered or sold unless registered with the SEC or an exemption from registration is available. If a digital asset is determined to be a security and Zero Hash offered or sold that digital asset to our customers without a valid exemption from SEC registration requirements, we could incur liability to purchasers as well as SEC monetary fines and other penalties, including restrictions on our ability to conduct our business.
• Liability for acting as an unregistered broker-dealer, national securities exchange or clearing agency. A person in the business of effecting transactions in securities in the United States is generally subject to registration with the SEC as a “broker” or “dealer.” A platform that brings together purchasers and sellers to trade securities in the United States is generally subject to registration as a national securities exchange, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system. The SEC has previously pursued enforcement actions against market participants for failure to comply with these rules. For example, in August 2021, the SEC settled an enforcement action against Poloniex, LLC (“Poloniex”), alleging that Poloniex operated a digital asset trading platform that met the definition of an “exchange” under the federal securities laws. According to the SEC’s settlement order, the Poloniex Trading Platform displayed a limit order book that matched the orders of multiple buyers and sellers in digital assets, including digital assets that the SEC alleged were securities. The SEC alleged that Poloniex did not register as a national securities exchange and did not operate pursuant to an exemption from registration at any time, and therefore violated Section 5 of the Exchange Act. In settling the case, Poloniex paid more than $10 million in disgorgement, prejudgment interest and civil money penalties. Any similar regulatory actions involving MoneyLion Crypto could result in liability, including civil monetary penalties and disgorgement, injunctive relief and cease and desist orders requiring MoneyLion Crypto to cease from engaging in certain activities, and/or undertakings requiring the retention of compliance consultants or monitors. Such regulatory actions could also damage our reputation or otherwise result in a material adverse impact on our business, including restrictions on our ability to conduct our business.
• Liability for acting as an unregistered investment adviser. A person in the business of advising others, for compensation, with respect to securities in the United States or to U.S. clients is subject to registration and regulation as an investment adviser under the Advisers Act, unless a valid exemption from such registration applies. If a digital asset is determined to be a security and we advised clients as to that digital asset in a manner implicating Advisers Act registration requirements without being so registered or without a valid registration exemption, we could incur SEC monetary fines and other penalties, including restrictions on our ability to conduct business.
We may be able to take steps in order to bring our operations into compliance with the federal securities laws following a determination that one or more digital assets in which our MoneyLion Crypto customers transact are securities, but there is no guarantee that we would be able to take such actions as may be necessary to ensure that our future activities related to MoneyLion Crypto comply with applicable law, which could force us to discontinue some or all of our business activities related to MoneyLion Crypto. In general, any steps we are able to take in order to ensure future compliance with applicable laws would not insulate us from liability for past violations.
While the above description of adverse regulatory consequences focuses on the federal securities laws, the various U.S. states and jurisdictions outside the United States also intensively regulate securities transactions, and so a U.S. state’s or other jurisdiction’s determination that a particular digital asset is a security could have similarly adverse consequences to our business, financial condition and results of operations.
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Our process for analyzing whether or not a particular digital asset is a security for purposes of the federal securities laws may not yield results that are consistent with subsequent determinations by the SEC or federal courts, or with similar determinations made by our competitors.
For each digital asset supported by Zero Hash for trading that we consider for inclusion on the MoneyLion Crypto platform, we perform a legal analysis under the U.S. federal securities laws to determine whether it constitutes a “security” under the U.S. federal securities laws. This process, which takes into account (i) U.S. federal securities laws, case law and other guidance, (ii) available information and facts relating to the digital asset and (iii) our technical understanding of digital asset technologies, as described further below, is a “risk-based” assessment, not a legally binding determination on any regulatory body or court, and does not preclude legal or regulatory action. This analysis is performed in close consultation with subject matter experts from functional areas of the Company, such as legal, operations, product, data, engineering and security, who can provide significant technical expertise. For each digital asset we analyze, we also consult external legal counsel, which provides a legal memorandum containing its analysis regarding whether a digital asset in question is a security under the U.S. federal securities laws.
As part of our analysis, we assess available information and facts relating to the digital asset, including, among other considerations: (i) detailed facts describing the history and creation of the digital asset, including how the digital asset was initially distributed or sold, including to what extent the digital asset was promoted, (ii) technology of the digital asset, such as the legitimacy of the digital asset, core operating code contributions from the developers and/or third parties, the transparency of the code and type of blockchain, (iii) the market factors associated with the asset, such as the digital asset’s total market value in comparison to the total digital asset market value and trading volume of the digital asset, (iv) network structure and market mechanisms related to the digital asset that impact the security of such digital asset, (v) publicly available information about, and prepared by, the developers of the digital asset, including whitepapers and websites, (vi) the circumstances and developer representations in connection with prior sales of the digital asset, including, among other things, with respect to whether stringent security protocols exist, (vii) the extent to which the digital asset is operable and (viii) the extent to which the digital asset is decentralized versus having a centralized control person or persons.
Our determination that each digital asset available on the MoneyLion Crypto platform is not a “security” for purposes of the U.S. federal securities laws is a “risk-based” assessment, not a legally binding determination on any regulatory body or court, and does not preclude legal or regulatory action. In addition, the internal policies and procedures we utilize in our analysis or other model industry- or state-based frameworks or whitelists have not been endorsed by the SEC, its staff or other regulatory authorities. The application of securities laws to the specific facts and circumstances of digital assets may be complex and subject to change, and a determination by us or state regulatory authorities does not guarantee any conclusion under the U.S. federal securities laws. There can be no assurances that we will properly characterize any given digital asset as a security or non-security or that the SEC, other regulatory authorities or a court, if the question was presented to it, would agree with our assessment. As a result, any particular digital asset that ML Crypto customers transact in via Zero Hash may in the future be found by the SEC, a federal court or a state securities regulator to be a security notwithstanding our prior determination.
Neither MoneyLion Crypto nor Zero Hash is registered with the SEC in any capacity, including as a broker-dealer, exchange, ATS or clearing agency. If the SEC, other regulatory authority or a court were to determine that a digital asset that we facilitate trading of through MoneyLion Crypto is a security, we would not be able to offer access to such digital asset for trading through Zero Hash until we are able to do so in a compliant manner. A determination by the SEC, another regulatory authority or a court that a digital asset that Zero Hash currently supports for trading through the MoneyLion Crypto platform constitutes a security may also result in us determining that it is advisable to remove other digital assets from MoneyLion Crypto that have similar characteristics to the digital asset that was determined to be a security. In addition, we could be subject to judicial or administrative sanctions for failing to facilitate trades of the digital asset in compliance with the registration requirements. Such an action could result in injunction and cease and desist orders, as well as civil monetary penalties, fines and disgorgement, criminal liability and reputational harm. Customers that traded such supported digital asset on MoneyLion Crypto and suffered trading losses may also seek to rescind a transaction that we facilitated as the basis that it was conducted in violation of applicable law, which could subject us to significant liability. Furthermore, if we remove any assets from trading through MoneyLion Crypto, our decision may be unpopular with users and may reduce our ability to attract and retain customers interested in trading securities and digital assets, especially if such assets remain traded on unregulated exchanges and platforms, which includes some of our competitors.
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Because of complexities in applying the federal securities laws to digital assets and the fact that different companies doing business in the digital asset industry take varying approaches to digital asset analyses, we expect that competitors may reach different conclusions from us on the securities-law status of a particular digital asset or digital asset category. Although we anticipate that these differences will narrow over time as the SEC and federal courts address the securities-law status of larger numbers of individual digital assets, until that occurs, where competitors conclude that they have the ability to transact in digital assets in ways that we do not permit because of these different conclusions, some competitors may have business and revenue opportunities that are not available to us.
States may require that we obtain licenses that apply to blockchain technologies and digital assets.
Under the terms of our agreement with Zero Hash, we are not directly involved in any cryptocurrency transactions or the exchange of fiat funds for cryptocurrency at or through Zero Hash, and therefore, we do not currently expect to be subject to money services business, money transmitter licensing, or other licensing or regulatory requirements specific to transactions relating to virtual currencies. However, state and federal regulatory frameworks around virtual currencies continue to evolve and are subject to interpretation and change, which may subject us to additional licensing and other requirements. The Zero Hash entities are registered as money services businesses with FinCEN and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii.
As MoneyLion is not directly involved in the custody, trading or pricing of any crypto assets and instead enables Zero Hash to offer its crypto asset services to MoneyLion Crypto customers, MoneyLion does not maintain insurance policies covering the crypto assets in which MoneyLion Crypto customers transact. In addition, while MoneyLion’s agreement with Zero Hash requires Zero Hash to indemnify us for, among other things, all liabilities, losses, expenses and costs arising out of, in connection with or relating to (a) Zero Hash’s failure to perform or comply with the provisions of the agreement, (b) Zero Hash’s cryptocurrency business and their provision of cryptocurrency transaction services, (c) any claims or disputes between Zero Hash and a customer with respect to the purchase and sale of cryptocurrency and (d) any failure by Zero Hash to comply with, or perform any action required by, applicable laws, rules and regulations, it does not require Zero Hash to indemnify us or MoneyLion Crypto customers for any risk of loss related to customers’ underlying crypto assets, nor does it require Zero Hash to maintain an insurance policy with respect to the crypto assets of MoneyLion Crypto customers custodied with Zero Hash. Zero Hash’s wallet technology provider, Fireblocks Inc. (“Fireblocks”), is SOC 2 Type II certified by Ernst & Young and undergoes a SOC 2 Type II review on an annual basis, as well as regular penetration testing by third-party firms to evaluate the Fireblocks security architecture. Fireblocks also maintains an insurance policy which has coverage for technology, cyberattacks and professional liability and is rated “A” by A.M. Best based on the strength of the policy. However, Zero Hash does not maintain separate insurance coverage for any risk of loss with respect to the digital assets that they custody on behalf of customers. As a result, customers who purchase cryptocurrencies through MoneyLion Crypto may suffer losses with respect to their digital assets that are not covered by insurance and for which no person is liable for damages and may have limited rights of legal recourse in the event of such loss. For additional information regarding our arrangement with Zero Hash, see “Business — Our Business Model.”
In the case of virtual currencies, state regulators such as the NYSDFS have created regulatory frameworks. For example, in July 2014, the NYSDFS proposed the first U.S. regulatory framework for licensing participants in virtual currency business activity. The regulations, known as the “BitLicense”, are intended to focus on consumer protection. The NYSDFS issued its final BitLicense regulatory framework in June 2015. The BitLicense regulates the conduct of businesses that are involved in virtual currencies in New York or with New York customers and prohibits any person or entity involved in such activity from conducting such activities without a license. Zero Hash LLC has received a BitLicense but remains in the process of obtaining approval to conduct virtual currency business activity in New York; therefore we do not currently offer cryptocurrency-related products to our New York customers but we expect to do so in the future.
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Other states may adopt similar statutes and regulations which will require us or our partners to obtain a license to conduct digital asset activities. Effective August 1, 2020, Louisiana adopted the Virtual Currency Business Act, which requires an operator of a virtual currency business to obtain a virtual currency license to conduct business in Louisiana, and the Louisiana Office of Financial Institutions issued related guidance in December 2021. Other states, such as Texas, have published guidance on how their existing regulatory regimes governing money transmitters apply to virtual currencies. Some states, such as Alabama, North Carolina and Washington, have amended their state’s statutes to include virtual currencies in existing licensing regimes, while others have interpreted their existing statutes as requiring a money transmitter license to conduct certain virtual currency business activities.
It is likely that, as blockchain technologies and the use of virtual currencies continues to grow, additional states will take steps to monitor the developing industry and may require us or our regulated partners to obtain additional licenses in connection with our virtual currency activity.
If loans made by our lending subsidiaries are found to violate applicable state interest rate limits or other provisions of applicable state lending and other laws, it could adversely affect our business, results of operations, financial condition and future prospects.
We have 37 subsidiaries through which we conduct our consumer lending business. These entities originate loans pursuant to state licenses or applicable exemptions under state law. The loans we originate are subject to state licensing or exemption requirements and interest rate restrictions, as well as numerous state requirements regarding consumer protection, interest rate, disclosure, prohibitions on certain activities and loan term lengths. If the loans we originate were deemed subject to and in violation of certain state consumer finance or other laws, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas) and other penalties or consequences, and the loans could be rendered void or unenforceable in whole or in part, any of which could have an adverse effect on our business, results of operations, financial condition and future prospects.
If we operate without having obtained necessary state or local licenses, it could adversely affect our business, results of operations, financial condition and future prospects.
Certain states have adopted laws regulating and requiring licensing, registration, notice filing or other approval by parties that engage in certain activity regarding consumer finance transactions, including facilitating and assisting such transactions in certain circumstances. Furthermore, certain states and localities have also adopted laws requiring licensing, registration, notice filing or other approval for consumer debt collection or servicing and/or purchasing or selling consumer loans. We have also received inquiries from state regulatory agencies regarding requirements to obtain licenses from or register with those states, including in states where we have determined that we are not required to obtain such a license or be registered with the state, and we expect to continue to receive such inquiries. The application of some consumer financial licensing laws to our platform and the related activities it performs is unclear. In addition, state licensing requirements may evolve over time, including, in particular, recent trends toward increased licensing requirements and regulation of parties engaged in loan solicitation activities. If we were found to be in violation of applicable state licensing requirements by a court or a state, federal or local enforcement agency, or agree to resolve such concerns by voluntary agreement, we could be subject to or agree to pay fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, and the loans facilitated through our platform could be rendered void or unenforceable in whole or in part, any of which could have an adverse effect on the enforceability or collectability of the loans facilitated through our platform.
The highly regulated environment in which our third-party financial institution partners operate may subject us to regulation and could have an adverse effect on our business, results of operations, financial condition and future prospects.
Our third-party partners are subject to federal and state supervision and regulation. Federal regulation of the banking and investment industries, along with tax and accounting laws, regulations, rules and standards, may limit their operations significantly and control the methods by which they conduct business. In addition, compliance with laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance requirements. Regulatory requirements affect our third-party partners’ banking, investment and virtual
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currency practices, among other aspects of their business, and restrict transactions between us and our third-party partners. These requirements may constrain the operations of our third-party partners, and the adoption of new laws and changes to, or repeal of, existing laws may have a further impact on our business and the businesses of our third-party partners.
In choosing whether and how to conduct business with us, current and prospective third-party partners can be expected to take into account the legal, regulatory and supervisory regime that applies to them, including potential changes in the application or interpretation of regulatory standards, licensing requirements or supervisory expectations. Regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our current and prospective third-party partners.
Furthermore, the regulatory agencies have extremely broad discretion in their interpretation of the regulations and laws and their interpretation of the quality of our third-party partners’ assets. If any regulatory agency’s assessment of the quality of our third-party partners’ assets, operations, lending practices, investment practices or other aspects of their business changes, it may reduce our third-party partners’ earnings, capital ratios and share price in such a way that affects our business.
Bank holding companies and financial institutions are extensively regulated and currently face an uncertain regulatory environment. Applicable state and federal laws, regulations and interpretations, including enforcement policies and accounting principles, have been subject to significant changes in recent years, and may be subject to significant future changes. We cannot predict with any degree of certainty the substance or effect of pending or future legislation or regulation or the application of laws and regulations to our current and prospective third-party partners. Future changes may have an adverse effect on our current and prospective third-party partners and, therefore, on us.
Risks Relating to Cybersecurity
The collection, processing, use, storage, sharing and transmission of PII and other sensitive data are subject to stringent and changing state, federal and international laws, regulations and standards and policies and could give rise to liabilities as a result of our failure or perceived failure to protect such data, comply with privacy and data protection laws and regulations or adhere to the privacy and data protection practices that we articulate to our customers.
In the course of our operations and the processing of transactions, we collect, process, store, disclose, use, share and/or transmit a large volume of PII and other sensitive data from current, past and prospective customers as well as our employees in and across multiple jurisdictions. The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. There are federal, state and foreign laws and regulations regarding privacy, data security and the collection, processing, use, storage, protection, sharing and/or transmission of PII and sensitive data. For example, the Gramm-Leach-Bliley Act (“GLBA”) (along with its implementing regulations) restricts certain collection, processing, storage, use and disclosure of personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain nonpublic or otherwise legally protected information. Additionally, many states continue to enact legislation on matters of privacy, information security, cybersecurity, data breach and data breach notification requirements. For example, as of January 1, 2020, the California Consumer Privacy Act (“CCPA”) grants additional consumer rights with respect to data privacy in California. The CCPA, among other things, entitles California residents to know how their PII is being collected and shared, to access or request the deletion of their PII and to opt out of certain sharing of their PII. The CCPA is subject to further amendments pending certain proposed regulations that are being reviewed and revised by the California Attorney General. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of PII. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. We cannot predict the impact of the CCPA on our business, operations or financial condition, but it could result in liabilities and/or require us to modify certain processes or procedures, which could result in additional costs.
Additionally, the California Privacy Rights Act (“CPRA”) was passed in November 2020. Effective in most material respects starting on January 1, 2023, the CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding customers’ rights with respect to
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certain sensitive PII. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The effects of the CCPA and the CPRA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
We expect more states to enact legislation similar to the CCPA and the CPRA, which provide customers with new privacy rights and increase the privacy and security obligations of entities handling certain PII of such customers. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation, such as in Virginia, which signed such legislation, the Virginia Consumer Data Protection Act (“VCDPA”), into law on March 2, 2021 with an effective date of January 1, 2023. In addition, on July 7, 2021, Colorado enacted the Colorado Privacy Act (the “CoPA”), becoming the third comprehensive consumer privacy law to be passed in the United States (after the CCPA and VCDPA). The CoPA is set to take effect on July 1, 2023. The VCDPA, CoPA and such other proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Additionally, our investment adviser, ML Wealth, and broker-dealer, MoneyLion Securities LLC, are subject to SEC Regulation S-P, which requires that businesses maintain policies and procedures addressing the protection of customer information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of customer records and information and against unauthorized access to or use of customer records or information. Regulation S-P also requires businesses to provide initial and annual privacy notices to customers describing information sharing policies and informing customers of their rights.
Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our services and platform capabilities. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our platform, which could have an adverse effect on our business. Any violations or perceived violations of these laws, rules and regulations by us, or any third parties with which we do business, may require us to change our business practices or operational structure, including limiting our activities in certain states and/or jurisdictions, addressing legal claims by governmental entities or private actors, sustaining monetary penalties, sustaining reputational damage, expending substantial costs, time and other resources and/or sustaining other harms to our business. Furthermore, our online, external-facing privacy policy and website make certain statements regarding our privacy, information security and data security practices with regard to information collected from our customers or visitors to our website. Failure or perceived failure to adhere to such practices may result in regulatory scrutiny and investigation, complaints by affected customers or visitors to our website, reputational damage and/or other harm to our business. If either we, or the third-party service providers with which we share customer data, are unable to address privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and policies, it could result in additional costs and liability to us, damage our reputation, inhibit sales and harm our business, financial condition and results of operations.
Cyberattacks and other security breaches or disruptions suffered by us or third parties upon which we rely could have a materially adverse effect on our business, harm our reputation and expose us to public scrutiny or liability.
In the normal course of business, we collect, process, use and retain sensitive and confidential information regarding our customers and prospective customers, including data provided by and related to customers and their transactions, as well as other data of the counterparties to their payments. We also have arrangements in place with certain third-party service providers that require us to share consumer information. Although we devote resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of third-party service providers, are vulnerable to actual or threatened external or internal security breaches, acts of vandalism, theft, fraud or misconduct on the part of employees, other internal sources or third parties, computer viruses, phishing attacks, internet interruptions, disruptions or losses, misplaced or lost data, ransomware, unauthorized encryption, denial-of-service attacks, social engineering, unauthorized access, spam or other attacks, natural disasters, fires, terrorism, war, telecommunications or electrical interruptions or failures, programming or human errors or malfeasance and other similar malicious or inadvertent disruptions or events. We and our third-party service providers from time to time have experienced and may in
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the future continue to experience such instances. For example, during the third quarter of 2021, we experienced a customer account takeover incident where an unknown third party(ies) utilized password and other customer credentials found outside of MoneyLion to successfully gain access to MoneyLion customer accounts. In some cases, the bad actors facilitated unauthorized financial transactions. Our investigation to date shows no signs that our systems were actually breached by the bad actors, and we have compensated and made whole the customers whose accounts were accessed and financially impacted. We also worked with our banking partners and advisors to provide notices to affected customers and relevant regulators, and expect to incur total costs and expenses associated with the incident that are immaterial to our financial statements and operations. We also face security threats from malicious third parties that could obtain unauthorized access to our systems and networks, which threats we anticipate will continue to grow in scope and complexity over time. These events could interrupt our business or operations, result in legal claims or proceedings, result in significant legal and financial exposure, supervisory liability under U.S. federal or state, or non-U.S. laws regarding the privacy and protection of information, including PII, damage to our reputation and a loss of confidence in the security of our systems, products and services. Although the impact to date from these events has not had a material adverse effect on us, no assurance is given that this will be the case in the future.
Information security risks in the financial services industry have increased recently, in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and other malicious third parties. In addition to cyberattacks and other security breaches involving the theft of sensitive and confidential information, hackers, terrorists, sophisticated nation-state and nation-state supported actors and other malicious third parties recently have engaged in attacks that are designed to disrupt key business services, such as consumer-facing websites. We and our third-party service providers may not be able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used to sabotage or to obtain unauthorized access to our or our third-party service providers’ technology, systems, networks and/or physical facilities in which data is stored or through which data is transmitted change frequently and because attacks can originate from a wide variety of sources. We employ detection and response mechanisms designed to contain and mitigate security incidents. Nonetheless, early detection efforts may be thwarted by sophisticated attacks and malware designed to avoid detection. We also may fail to detect the existence of a security breach related to the information of our customers and to prevent or detect service interruption, system failure or data loss. Further, as the current COVID-19 pandemic continues to result in a significant number of people working from home, these cybersecurity risks may be heightened by an increased attack surface across our business and those of our customers and third-party service providers. We cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our customers or our proprietary information, software, methodologies and business secrets could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security of our systems, products and services, all of which could have a material adverse impact on our business. In addition, there recently have been a number of well-publicized attacks or breaches affecting companies in the financial services industry that have heightened concern by customers, which could also intensify regulatory focus, cause customers to lose trust in the security of the industry in general and result in reduced use of our services and increased costs, all of which could also have a material adverse effect on our business.
Most jurisdictions (including all 50 states) have enacted laws requiring companies to notify individuals, regulatory authorities and/or others of security breaches involving certain types of data. In addition, our agreements with certain partners and service providers may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers, partners and service providers to lose confidence in the effectiveness of our security measures and require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach. A security breach of any of our vendors that processes PII of our customers may pose similar risks.
A security breach may also cause us to breach customer contracts. Our agreements with certain partners and service providers may require us to use industry-standard or reasonable measures to safeguard PII. We also may be subject to laws that require us to use industry-standard or reasonable security measures to safeguard PII. A security
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breach could lead to claims by our customers or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. As a result, we could be subject to legal action or our customers could end their relationships with us. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages, and in some cases our customer agreements may not limit our remediation costs or liability with respect to data breaches.
Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our technology, systems, networks or physical facilities, or those of our third-party service providers, could result in litigation with our customers or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our products and/or technology capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity or availability of PII was disrupted, we could incur significant liability, or our technology, systems or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.
While we maintain cybersecurity insurance, we may not have adequate insurance coverage with respect to liabilities that result from any cyberattacks or other security breaches or disruptions suffered by us or third parties upon which we rely. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
While we take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of our products and services or subject us to scrutiny or penalties.
There is risk of fraudulent activity associated with our platform, customers, service providers and third parties handling consumer information. Our resources, technologies and fraud prevention tools may be insufficient to accurately detect and prevent fraud. The level of fraud-related charge-offs on the loans and other products and services facilitated through our platform could be adversely affected if fraudulent activity were to significantly increase. Significant amounts of fraudulent cancellations or chargebacks could adversely affect our business or financial condition. High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity and the erosion of trust from our customers, and could materially and adversely affect our business, results of operations, financial condition, future prospects and cash flows.
Risks Relating to Intellectual Property
We may be unable to sufficiently obtain, maintain, protect or enforce our intellectual property and other proprietary rights, which could reduce the value of our platform, products, services and brand, impair our competitive position and cause reputational harm.
Intellectual property and other proprietary rights are important to the success of our business. Our ability to compete effectively is dependent in part upon our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary rights, including with respect to our proprietary technology, and to obtain licenses to use the intellectual property and proprietary rights of others. We rely on a combination of trademarks, service marks, copyrights, trade secrets, domain names and contractual rights to protect our intellectual property and other proprietary rights. We own the domain name rights for moneylion.com, and, as of December 31, 2021, we owned 22 registered trademarks, one copyright, and four trademark applications in the United States. Nonetheless, the steps we take to obtain, maintain, protect and enforce our intellectual property and other proprietary rights may be inadequate and, despite our efforts to protect these rights, unauthorized third parties, including our competitors, may duplicate, mimic, reverse engineer, access, obtain, or use the proprietary aspects of our technology, processes, products, or services without our permission, thereby impeding our ability to promote our platform and possibly leading to customer confusion. Our competitors and other third parties may also design around or independently develop similar technology or otherwise duplicate or mimic our services or products such that we would not be able to successfully assert our intellectual property or other proprietary rights against them. We have filed, and
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may continue in the future to file, applications to protect certain of our innovations and intellectual property. We cannot assure that any future patent, trademark, or service mark registrations will be issued for our pending or future applications or that any of our current or future patents, copyrights, trademarks, or service marks (whether registered or unregistered) will be valid, enforceable, sufficiently broad in scope, provide adequate protection of our intellectual property or other proprietary rights, or provide us with any competitive advantage.
Our trademarks, trade names and service marks have significant value, and our brand is an important factor in the marketing of our services. We rely on, and intend to rely on, both registrations and common law protections for our trademarks. However, we may be unable to prevent competitors or other third parties from acquiring or using trademarks, service marks, or other intellectual property or other proprietary rights that are similar to, infringe upon, misappropriate, dilute, or otherwise violate or diminish the value of our trademarks and service marks and our other intellectual property and proprietary rights. The value of our intellectual property and other proprietary rights could diminish if others assert rights in or ownership of our intellectual property or other proprietary rights, or in trademarks or service marks that are similar to our trademarks or service marks. Additionally, if third parties succeed in registering or developing common law rights in such trademarks or similar trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to develop brand recognition of our platform, products or services. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could adversely impact our business, financial condition and results of operations.
In addition to registered intellectual property rights such as trademark registrations, we rely on non-registered proprietary information and technology, such as trade secrets, confidential information, know-how and technical information. In order to protect our proprietary information and technology, we rely in part on confidentiality and intellectual property assignment agreements with our employees and contractors involved in the development of material intellectual property for us, which require such individuals to assign such intellectual property to us and place restrictions on the employees’ and contractors’ use and disclosure of our confidential information. However, these agreements may not be self-executing, and we cannot guarantee that we have entered into such agreements containing obligations of confidentiality with each party that has or may have had access to proprietary information, know-how, or trade secrets owned or held by us. Individuals that were involved in the development of intellectual property for us or who had access to our intellectual property may make adverse ownership claims to our current and future intellectual property. Likewise, to the extent that our employees, independent contractors or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting works of authorship, know-how and inventions. Moreover, our contractual arrangements may be insufficient, breached or may otherwise not effectively prevent disclosure of, or control access to, our confidential or otherwise proprietary information or provide an adequate remedy in the event of an unauthorized disclosure, which could cause us to lose any competitive advantage resulting from this intellectual property. The measures we have put in place may not prevent misappropriation, infringement, or other violation of our intellectual property, proprietary rights or information and any resulting loss of competitive advantage, and we may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement or other violation by others, which is time-consuming and expensive, could cause a diversion of resources and may not be successful, even when our rights have been infringed, misappropriated or otherwise violated. Our efforts to enforce our intellectual property and other proprietary rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property and other proprietary rights, and if such defenses, counterclaims or countersuits are successful, it could diminish or we could otherwise lose valuable intellectual property and other proprietary rights. Furthermore, changes to U.S. or foreign intellectual property laws and regulations may jeopardize the enforceability and validity of our intellectual property portfolio and harm our ability to obtain patent protection, including for some of our unique business methods. Additionally, the laws of some foreign countries may not be as protective of intellectual property and other proprietary rights as those in the U.S., and the mechanisms for enforcement of intellectual property and other proprietary rights may be inadequate.
Furthermore, third parties may challenge, invalidate, or circumvent our intellectual property and proprietary rights, including through administrative processes or litigation. The legal standards relating to the validity, enforceability and scope of protection of intellectual property and other proprietary rights are uncertain and still evolving. Our intellectual property and other proprietary rights may not be sufficient to provide us with a
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competitive advantage and the value of our intellectual property and other proprietary rights could also diminish if others assert rights therein or ownership thereof, and we may be unable to successfully resolve any such conflicts in our favor or to our satisfaction.
We may be sued by third parties for alleged infringement, misappropriation or other violation of their intellectual property or other proprietary rights which may be costly and may subject us to significant liability and increased costs of doing business.
Our success depends, in part, on our ability to develop and commercialize our products and services without infringing, misappropriating or otherwise violating the intellectual property or other proprietary rights of third parties.
We may become involved in disputes from time to time concerning intellectual property or other proprietary rights of third parties, which may relate to our own proprietary technology, or to technology that we acquire or license from third parties, and we may not prevail in these disputes. Relatedly, competitors or other third parties may raise claims alleging that we, service providers or other third parties retained or indemnified by us, infringe on, misappropriate or otherwise violate such competitors’ or other third parties’ intellectual property or other proprietary rights. These claims of infringement, misappropriation or other violation may be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid all such alleged violations of such intellectual property or other proprietary rights. We also may be unaware of third-party intellectual property or other proprietary rights that cover or otherwise relate to some or all of our products and services. For example, there may be issued patents of which we are not aware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our current or future technologies or products. There also may be pending patent applications of which we are not aware that may result in issued patents, which could be alleged to be infringed by our current or future technologies or products. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover our current or future technologies or products.
Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, a claim of infringement, misappropriation or other violation against us may require us to spend significant amounts of time and other resources to defend against the claim (even if we ultimately prevail), pay significant money damages, make significant payments for legal fees, settlement payments or other costs, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property (temporarily or permanently), cease offering certain products or services, obtain a license, which may not be available on commercially reasonable terms or at all, to sell or use the relevant technology or redesign our allegedly infringing products or services, or functionality therein, to avoid infringement, misappropriation or other violations, which could be costly, time-consuming or impossible, rebrand our products and services and/or be prevented from selling some of our products or services if third parties successfully oppose or challenge our trademarks or successfully claim that we infringe, misappropriate or otherwise violate their trademarks or other intellectual property rights and/or limit the manner in which we use our brands. In addition, if a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we may be forced to limit or stop sales of our relevant products and technology capabilities or cease business activities related to such intellectual property. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition or results of operations.
Some of the aforementioned risks of infringement, misappropriation or other violation, in particular with respect to patents, are potentially increased due to the nature of our business, industry and intellectual property portfolio. For instance, it has become common in recent years for certain third parties to purchase patents or other intellectual property assets for the sole purpose of making claims of infringement, misappropriation or other violation in an attempt to extract settlements from companies such as ours. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them than we can. In a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both. The strength of our defenses may depend on the patents asserted, the interpretation of these patents or our ability to invalidate the asserted patents. However, we could be unsuccessful in advancing non-infringement and/or invalidity arguments in our defense. In the U.S., issued patents enjoy a presumption of validity, and the party challenging the validity of a
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patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. We do not currently have a patent portfolio, which could prevent us from deterring patent infringement claims from competitors or other third parties and our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we may have. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, any future patents we may have may provide little or no deterrence as we would not be able to assert them against such entities or individuals.
In addition to the previously mentioned impacts of intellectual property-related litigation, while in some cases a third party may have agreed to indemnify us for costs associated with intellectual property-related litigation, such indemnifying third party may refuse or be unable to uphold its contractual obligations. In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of the MoneyLion Class A Common Stock. The occurrence of infringement and misappropriation claims may grow as the market for our platform and products grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources. Any of the foregoing could adversely impact our business, financial condition and results of operations.
Our business and platform depend in part on intellectual property and proprietary rights and technology licensed from or otherwise made available to us by third parties. If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages and we could lose license rights that are critical to our business.
Our business and our platform rely on technologies developed or licensed by third parties. These third-party software components may become obsolete, defective or incompatible with future versions of our services, relationships with the third-party licensors or technology providers may deteriorate or our agreements with the third-party licensors or technology providers may expire or be terminated. Additionally, some of these licenses or other grants of rights may not be available to us in the future on terms that are acceptable, or at all, or that allow our platform, products and services to remain competitive. Our inability to obtain licenses or rights on favorable terms could have a material and adverse effect on our business and results of operations. Furthermore, incorporating intellectual property or proprietary rights licensed from or otherwise made available to us by third parties on a non-exclusive basis in our products or services could limit our ability to protect the intellectual property and proprietary rights in our services and our ability to restrict third parties from developing, selling or otherwise providing similar or competitive technology using the same third-party intellectual property or proprietary rights.
We believe we have all the necessary licenses and other grants of rights from third parties to use technology and software that we do not own. A third party could, however, allege that we are infringing its rights, which may deter our ability to obtain licenses or other grants of rights on commercially reasonable terms from the third party, if at all, or cause the third party to commence litigation against us. Our failure to obtain necessary licenses or other rights, or litigation or claims arising out of intellectual property matters, may harm or restrict our business. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Any such litigation or the failure to obtain any necessary licenses or other rights could adversely impact our business, financial position and results of operations.
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Risks Relating to Legal and Regulatory Matters
Failure to comply with anti-money laundering, economic and trade sanctions regulations and similar laws could subject us to penalties and other adverse consequences.
We maintain an enterprise-wide program designed to enable us to comply with all applicable anti-money laundering and anti-terrorism financing laws and regulations, including the Bank Secrecy Act (“BSA”) and the USA PATRIOT Act of 2001. This program includes policies, procedures, processes and other internal controls designed to identify, monitor, manage and mitigate the risk of money laundering and terrorist financing. These controls include procedures and processes to detect and report potentially suspicious transactions, perform consumer due diligence, respond to requests from law enforcement and meet all recordkeeping and reporting requirements related to particular transactions involving currency or monetary instruments. We are required to maintain this program under our agreements with our third-party partners, and certain state regulatory agencies have intimated they expect the program to be in place and followed. We cannot provide any assurance that our programs and controls will be effective to ensure compliance with all applicable anti-money laundering and anti-terrorism financing laws and regulations we are required to comply with, and our failure to comply with these laws and regulations could result in a breach and termination of our agreements with our third-party partners or criticism by state governmental agencies, which would have a material adverse effect on our business, results of operations, financial condition and future prospects.
We have in the past, and continue to be, subject to inquiries, subpoenas, exams, pending investigations and enforcement matters by state and federal regulators, the outcomes of which are uncertain and could cause reputational and financial harm to our business and results of operations.
The financial services industry is subject to extensive regulation under federal, state and applicable international laws. From time to time, we have been, and continue to be, subject to inquiries, subpoenas, pending investigations and enforcement matters by state and federal regulators and have been threatened with or named as a defendant in lawsuits, arbitrations and administrative claims involving securities, consumer financial services and other matters. We are also subject to periodic regulatory examinations and inspections. Compliance and trading problems that are reported to regulators, such as the SEC, FINRA, the CFPB or state regulators, by dissatisfied customers or others are investigated by such regulators, and may, if pursued, result in formal claims being filed against us by customers or disciplinary action being taken against us or our employees by regulators or enforcement agencies. To resolve issues raised in examinations or other governmental actions, we may be required to take various corrective actions, including changing certain business practices, making refunds or taking other actions that could be financially or competitively detrimental to us. We expect to continue to incur costs to comply with governmental regulations. Any such claims or disciplinary actions that are decided against us could have a material impact on our financial results. For a discussion of specific legal and regulatory proceedings, inquiries and investigations, to which we are currently subject, please refer to “Legal Proceedings.”
Unfavorable outcomes in legal proceedings may harm our business and results of operations.
We are, and may in the future become, subject to litigation, claims, examinations, investigations, legal and administrative cases and proceedings, whether civil or criminal, or lawsuits by governmental agencies or private parties, which may affect our results of operations. These claims, lawsuits and proceedings could involve labor and employment, discrimination and harassment, commercial disputes, intellectual property rights (including patent, trademark, copyright, trade secret and other proprietary rights), class actions, general contract, tort, defamation, data privacy rights, antitrust, common law fraud, government regulation, compliance, alleged federal and state securities and “blue sky” law violations or other investor claims and other matters. Due to the consumer-oriented nature of our business and the application of certain laws and regulations, participants in our industry are regularly named as defendants in litigation alleging violations of federal and state laws and regulations and consumer law torts, including fraud. Many of these legal proceedings involve alleged violations of consumer protection laws. In addition, we have in the past and may in the future be subject to litigation, claims, examinations, investigations, legal and administrative cases and proceedings related to our loan products and other financial services we provide. For instance, our membership model and some of the products and services we offer are relatively novel and have been subject to limited regulatory scrutiny, but there has been, and may continue to be, increasing regulatory interest in and/or litigation challenging our membership model, our products or our services.
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Any unfavorable results of pending or future legal proceedings may result in contractual damages, usury-related claims, fines, penalties, injunctions, the unenforceability, rescission or other impairment of loans originated on our platform or other censure that could have a material adverse effect on our business, results of operations and financial condition. Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could harm our business, financial condition and results of operations.
Although we currently maintain insurance, there can be no assurance that we will be able to maintain such insurance on acceptable terms in the future, if at all, or that any such insurance will provide adequate protection against potential liabilities. Additionally, we do not carry insurance for all categories of risk that our business may encounter. Any significant liability that is uninsured or not fully insured may require us to pay substantial amounts. There can be no assurance that any current or future claims will not materially and adversely affect our business, financial position, results of operations and cash flows.
Changes in tax law and differences in interpretation of tax laws and regulations may adversely impact our financial statements.
We operate in multiple jurisdictions and are subject to tax laws and regulations of the U.S. federal, state and local and non-U.S. governments. U.S. federal, state and local and non-U.S. tax laws and regulations are complex and subject to varying interpretations. U.S. federal, state and local and non-U.S. tax authorities may interpret tax laws and regulations differently than we do and challenge tax positions that we have taken. This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest or penalties that could have an adverse effect on our financial condition and results of operations. Further, future changes to U.S. federal, state and local and non-U.S. tax laws and regulations could increase our tax obligations in jurisdictions where we do business or require us to change the manner in which we conduct some aspects of our business.
As the regulatory framework for artificial intelligence and machine learning technology evolves, our business, financial condition and results of operations may be adversely affected.
The regulatory framework for artificial intelligence and machine learning technology is evolving and remains 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 artificial intelligence and machine learning technology, including with respect to fair lending laws. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are now subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations of the applicable listing standards of the NYSE. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over
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financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and significant management oversight. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
The nature of our business is such that our financial statements involve a number of complex accounting policies, many of which involve significant elements of judgment, including determinations regarding the consolidation of variable interest entities, determinations regarding the fair value of derivative warrant liabilities and the appropriate classification of various items within our financial statements. The inherent complexity of these accounting matters and the nature and variety of transactions in which we are involved require that we have sufficient qualified accounting personnel with an appropriate level of experience and controls in our financial reporting process commensurate with the complexity of our business. While we believe we have sufficient internal accounting personnel and external resources and appropriate controls to address the demands of our business, we expect that the growth and development of our business will place significant additional demands on our accounting resources. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE. As a public company, we are now subject to the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and will be required to provide an annual management report on the effectiveness of our internal control over financial reporting. There can be no assurance that we will maintain internal control over financial reporting sufficient to enable us to identify or avoid material weaknesses in the future.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could materially and adversely affect our business, results of operations and financial condition and could cause a decline in the trading price of our common stock.
MoneyLion has identified material weaknesses in its internal control over financial reporting which remain un-remediated as of December 31, 2021. If MoneyLion is unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of an entity’s annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls.
Subsequent to the issuance of MoneyLion’s consolidated financial statements for the years ended December 31, 2020 and December 31, 2019, MoneyLion had to restate such financial statements with respect to the treatment of the noncontrolling interests attributable to the Class B investors of Invest in America Credit Fund I LLC (“IIA”). For additional information with respect to the restatement, see Note 2 to MoneyLion’s audited financial statements for the years ended December 31, 2020 and December 31, 2019 included in our prospectus (File No. 333-255936), filed with the SEC on September 3, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). As a result of the foregoing, MoneyLion identified a material weakness
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in its internal control over financial reporting as of December 31, 2020 and December 31, 2019. MoneyLion did not maintain an effective control environment as there were certain areas in which the accounting function did not operate as expected, resulting in the foregoing restatement of previously issued financial statements. Despite efforts to improve the deficiencies in our internal control over financial reporting, the Company’s management has concluded that the material weakness in our internal control over financial reporting as of December 31, 2020 and December 31, 2019 remained un-remediated as of December 31, 2021.
In addition, subsequent to the issuance of MoneyLion’s condensed consolidated financial statements as of September 30, 2021, MoneyLion had to restate its previously issued financial statements with respect to the accounting for the conversion of subordinated convertible notes and exercise of stock warrants into equity and the calculation of diluted earnings per share for the three months ended September 30, 2021. As a result of the foregoing, MoneyLion identified additional material weaknesses in its internal control over financial reporting as of September 30, 2021, which remained un-remediated as of December 31, 2021. MoneyLion did not maintain an effective control environment, resulting in the foregoing restatement of previously issued financial statements, as there were certain areas in which the accounting function did not operate as expected, due to a lack of sufficient internal accounting resources and inadequate level of precision embedded in control activities, as well as lack of sufficient formalization over processes and control evidence, resulting in multiple audit adjustments and restatements in our previously issued financial statements.
Effective internal controls are necessary to provide reliable financial reports and prevent fraud. MoneyLion continues to evaluate steps to remediate these material weaknesses and is in the process of remediating the control deficiencies that relate to the material weaknesses. We intend to complete the remediation by December 31, 2022, but these remediation measures may be time consuming and costly, and there is no assurance that we will be able to complete the remediation and put in place the appropriate controls within this timeframe or that these initiatives will ultimately have the intended effects.
If MoneyLion identifies any new material weaknesses in the future, any such newly identified material weakness could limit its ability to prevent or detect a misstatement of its accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures MoneyLion has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.
The material weaknesses in our internal control over financial reporting and the restatements of certain of our previously issued financial statements subjected us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings.
As a result of the material weaknesses in our internal control over financial reporting and the restatement of certain of our previously issued financial statements as described further in the foregoing risk factor, we have become subject to additional risks and uncertainties, including, among others, increased professional fees and expenses and time commitment that may be required to address matters related to the remediation of the material weaknesses and the restatements and increased scrutiny of the SEC and other regulatory bodies, which could cause investors to lose confidence in our reported financial information and could subject us to penalties. In addition, we face increased potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from, among other things, the restatements and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, financial condition and results of operations and could cause our stock price to decline.
Our risk management processes and procedures may not be effective.
Our risk management processes and procedures seek to appropriately balance risk and return and mitigate risks. We have established processes and procedures intended to identify, measure, monitor and control the types of risk to which we are subject, including credit risk, deposit risk, market risk, liquidity risk, strategic risk, operational risk, cybersecurity risk and reputational risk. Credit risk is the risk of loss that arises when a loan obligor fails to meet the terms of a loan repayment obligation, the loan enters default, and if uncured results in financial loss of
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remaining principal and interest to the investor. Our exposure to credit risk mainly arises from our lending activities. Deposit risk refers to accelerated availability of depositor funds, prior to settlement, risk of ACH returns or merchant settlements and transactional limits that may be applied to deposit accounts. Market risk is the risk of loss due to changes in external market factors, such as interest rates, asset prices and foreign exchange rates. Liquidity risk is the risk that financial condition or overall safety and soundness are adversely affected by an inability, or perceived inability, to meet obligations (e.g., current and future cash flow needs) and support business growth. We actively monitor our liquidity position. Strategic risk is the risk from changes in the business environment, ineffective business strategies, improper implementation of decisions or inadequate responsiveness to changes in the business and competitive environment.
Our management is responsible for defining the priorities, initiatives and resources necessary to execute our strategic plan, the success of which is regularly evaluated by the board of directors. Operational risk is the risk of loss arising from inadequate or failed internal processes, controls, people (e.g., human error or misconduct) or systems (e.g. technology problems), business continuity or external events (e.g., natural disasters), compliance, reputational, regulatory or legal matters and includes those risks as they relate directly to us, fraud losses attributed to applications, transaction processing or employees, as well as to third parties with whom we contract or otherwise do business. Operational risk is one of the most prevalent forms of risk in our risk profile. We strive to manage operational risk by establishing policies and procedures to accomplish timely and efficient processing, obtaining periodic internal control attestations from management, conducting internal process risk control self-assessments and audit reviews to evaluate the effectiveness of internal controls.
In order to be effective, among other things, our enterprise risk management capabilities must adapt and align to support any new product or loan features, capability, strategic development, or external change. Cybersecurity risk is the risk of a malicious technological attack intended to impact the confidentiality, availability or integrity of our systems and data, including, but not limited to, sensitive client data. Our technology and information security teams rely on a layered system of preventive and detective technologies, practices and policies to detect, mitigate and neutralize cybersecurity threats. In addition, our information security team and third-party consultants regularly assess our cybersecurity risks and mitigation efforts. Cyberattacks can also result in financial and reputational risk.
Reputational risk is the risk arising from possible negative perceptions of us, whether true or not, among our current and prospective customers, counterparties, employees and regulators. The potential for either enhancing or damaging our reputation is inherent in almost all aspects of business activity. We manage this risk through our commitment to a set of core values that emphasize and reward high standards of ethical behavior, maintaining a culture of compliance and by being responsive to customer and regulatory requirements.
Risk is inherent in our business, and therefore, despite our efforts to manage risk, there can be no assurance that we will not sustain unexpected losses. We could incur substantial losses and our business operations could be disrupted to the extent our business model, operational processes, control functions, technological capabilities, risk analyses and business/product knowledge do not adequately identify and manage potential risks associated with our strategic initiatives. There also may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, including when processes are changed or new products and services are introduced. If our risk management framework does not effectively identify and control our risks, we could suffer unexpected losses or be adversely affected, which could have a material adverse effect on our business.
Our ability to use our deferred tax assets to offset future taxable income may be subject to certain limitations that could subject our business to higher tax liabilities.
We may be limited in the portion of net operating loss carryforwards (“NOLs”) that we can use in the future to offset taxable income for U.S. federal and state income tax purposes. A lack of future taxable income would adversely affect our ability to utilize our NOLs.
In addition, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxable income. Future changes in our stock ownership as well as other changes that may be outside of our control, could result in additional ownership changes under Section 382 of the Code. Our NOLs may also be impaired under similar provisions of state law.
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We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. On the basis of this evaluation, a full valuation allowance has historically been recorded to recognize only deferred tax assets that are more likely than not to be realized.
Finally, further changes to the federal or state tax laws that would further reduce the corporate tax rate could operate to effectively reduce or eliminate the value of any deferred tax asset. Our tax attributes as of December 31, 2021 may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.
Risks Relating to Ownership of MoneyLion Class A Common Stock
Our warrants are exercisable for MoneyLion Class A Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
As of June 27, 2022, there were 17,499,900 outstanding Public Warrants to purchase 17,499,900 shares of MoneyLion Class A Common Stock at an exercise price of $11.50 per share, which warrants became exercisable commencing 30 days following the Business Combination. In addition, as of June 27, 2022, there were 8,100,000 private placement warrants outstanding exercisable for 8,100,000 shares of MoneyLion Class A Common Stock at an exercise price of $11.50 per share. To the extent such warrants are exercised, additional shares of MoneyLion Class A Common Stock will be issued, which will result in dilution to the holders of MoneyLion Class A Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of MoneyLion Class A Common Stock, the impact of which is increased as the value of our stock price increases.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of MoneyLion Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we give notice of redemption. If and when the warrants become redeemable by MoneyLion, we may exercise the redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders to (i) exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the warrants at the then-current market price when the holder might otherwise wish to hold onto such warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
In addition, we may redeem your warrants after they become exercisable for a number of shares of MoneyLion Class A Common Stock determined based on the redemption date and the fair market value of MoneyLion Class A Common Stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of the MoneyLion Class A Common Stock had your warrants remained outstanding.
Delaware law and provisions in MoneyLion’s Certificate of Incorporation and Bylaws could make a takeover proposal more difficult.
Our organizational documents are governed by Delaware law. Certain provisions of Delaware law and of MoneyLion’s Fourth Amended and Restated Certificate of Incorporation (as amended and restated from time to time, the “Certificate of Incorporation”) and Amended and Restated Bylaws (as amended and restated from time to time, the “Bylaws”) could discourage, delay, defer or prevent a merger, tender offer, proxy contest or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares of MoneyLion Class A Common Stock held by MoneyLion’s stockholders. These provisions include the ability of the board of directors to designate the terms of and issue new series of preference shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire MoneyLion, even if the third party’s offer may be considered beneficial by many of MoneyLion’s stockholders. As a result, MoneyLion’s stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, MoneyLion may experience negative reactions from the financial markets, including negative impacts on the price of MoneyLion Class A Common Stock. These provisions could also discourage proxy contests and make it more difficult for MoneyLion’s stockholders to elect directors of their choosing and to cause MoneyLion to take other corporate actions that MoneyLion’s stockholders desire.
The market price of our securities may be volatile.
Fluctuations in the price of MoneyLion’s securities could contribute to the loss of all or part of your investment. The trading price of MoneyLion securities may be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and MoneyLion securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Factors affecting the trading price of MoneyLion’s securities may include:
• actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
• changes in the market’s expectations about MoneyLion’s operating results;
• success of competitors;
• operating results failing to meet the expectations of securities analysts or investors in a particular period;
• changes in financial estimates and recommendations by securities analysts concerning MoneyLion or the industry in which MoneyLion operates in general;
• operating and stock price performance of other companies that investors deem comparable to MoneyLion;
• ability to market new and enhanced products and services on a timely basis;
• changes in laws and regulations affecting our business;
• commencement of, or involvement in, litigation involving MoneyLion;
• changes in MoneyLion’s capital structure, such as future issuances of securities or the incurrence of additional debt;
• the volume of shares of MoneyLion Class A Common Stock available for public sale;
• any major change in MoneyLion’s board or management;
• sales of substantial amounts of MoneyLion Class A Common Stock by MoneyLion’s directors, executive officers or significant stockholders or the perception that such sales could occur; and
• general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and the NYSE specifically, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your securities at or above the price at which it was acquired. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to MoneyLion could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
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MoneyLion’s failure to meet the continued listing requirements of the NYSE could result in a delisting of its securities.
If MoneyLion fails to satisfy the continued listing requirements of the NYSE such as the corporate governance requirements or the minimum closing bid price requirement, the NYSE may take steps to delist its securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, MoneyLion can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its securities to become listed again, stabilize the market price or improve the liquidity of its securities, prevent its securities from dropping below the NYSE minimum bid price requirement or prevent future non-compliance with the NYSE’s listing requirements. Additionally, if MoneyLion’s securities are not listed on, or become delisted from, the NYSE for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of MoneyLion’s securities may be more limited than if it were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
MoneyLion qualifies as an emerging growth company within the meaning of Section 2(a) of the Securities Act, as modified by the JOBS Act. Because MoneyLion intends to take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make MoneyLion’s securities less attractive to investors and may make it more difficult to compare MoneyLion’s performance with other public companies.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such time as those standards apply to private companies. MoneyLion intends to take advantage of this extended transition period under the JOBS Act for adopting new or revised financial accounting standards.
For as long as MoneyLion continues to be an emerging growth company, it may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, its stockholders may not have access to certain information that they may deem important. MoneyLion could be an emerging growth company for up to five years, although circumstances could cause it to lose that status earlier, including if its total annual gross revenue exceeds $1.07 billion, if it issues more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time it is a “large accelerated filer” under U.S. securities laws.
MoneyLion cannot predict if investors will find MoneyLion Class A Common Stock less attractive because it may rely on these exemptions. If some investors find MoneyLion Class A Common Stock less attractive as a result, there may be a less active trading market for MoneyLion Class A Common Stock and MoneyLion’s share price may be more volatile. If an active, liquid public trading market for MoneyLion Class A Common Stock does not develop or is not maintained, we may be limited in our ability to raise capital by selling shares of MoneyLion Class A Common Stock and our ability to acquire other companies or assets by using shares of MoneyLion Class A Common Stock or other MoneyLion securities as consideration. Further, there is no guarantee that the exemptions available to MoneyLion under the JOBS Act will result in significant savings. To the extent that MoneyLion chooses not to use exemptions from various reporting requirements under the JOBS Act, it will incur additional compliance costs, which may impact MoneyLion’s financial condition.
Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by MoneyLion’s stockholders, which could limit MoneyLion’s stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with MoneyLion or MoneyLion’s directors, officers or other employees.
Our Certificate of Incorporation provides that, unless MoneyLion consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of MoneyLion, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of MoneyLion to MoneyLion or MoneyLion’s stockholders, (iii) any action asserting a claim against MoneyLion, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or MoneyLion’s Certificate of Incorporation or Bylaws, or (iv) any action
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asserting a claim against MoneyLion, its directors, officers or employees governed by the internal affairs doctrine and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, except for, as to each of (i) through (iv) above, any claim (A) as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Notwithstanding the foregoing, these provisions will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Any person or entity purchasing or otherwise acquiring any interest in any security of MoneyLion shall be deemed to have notice of and consented to these provisions.
These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with MoneyLion or MoneyLion’s directors, officers or other employees, which may discourage such lawsuits. We note that there is uncertainty as to whether a court would enforce these provisions and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Alternatively, if a court were to find these provisions of our Certificate of Incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, MoneyLion may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect MoneyLion’s business, financial condition and results of operations and result in a diversion of the time and resources of MoneyLion’s management and board of directors.
We incur significant costs and have become subject to additional regulations and requirements as a result of becoming a public company, and our management is required to devote substantial time to new compliance matters, which could lower profits and make it more difficult to run our business.
We completed the Business Combination with Legacy MoneyLion on September 22, 2021. As a publicly traded company, MoneyLion incurs significant legal, accounting and other expenses that Legacy MoneyLion was not required to incur in the past as a privately held company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-employee directors. We also have incurred, and will continue to incur, costs associated with compliance with the rules and regulations of the SEC, the listing requirements of NYSE and various other costs of a public company. These expenses will increase once MoneyLion is no longer an “emerging growth company” as defined under the JOBS Act. These laws and regulations also could make it more difficult and costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult to attract and retain qualified persons to serve on our board of directors and board committees and to serve as executive officers.
In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure for public companies, including the Dodd-Frank Act, the Sarbanes-Oxley Act, regulations related thereto and the rules and regulations of the SEC and NYSE, have increased the costs and the time that must be devoted to compliance matters. We expect these rules and regulations will increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities.
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USE OF PROCEEDS
All of the shares of MoneyLion Class A Common Stock offered by the Selling Stockholders pursuant to this prospectus will be sold by the Selling Stockholders for their respective amounts. We will not receive any of the proceeds from these sales.
We will receive up to an aggregate of approximately $93,150,000 from the exercise of the private placement warrants, assuming the exercise in full of all such warrants for cash. We expect to use the net proceeds from the exercise of the private placement warrants for general corporate purposes, which may include acquisitions and other business opportunities and the repayment of indebtedness. Our management will have broad discretion over the use of proceeds from the exercise of the warrants.
There is no assurance that the holders of the warrants will elect to exercise any or all of the warrants. To the extent that the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.
We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The Selling Stockholders will bear all commissions and discounts, if any, attributable to their sale of these securities. See “Plan of Distribution.”
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MARKET PRICE OF OUR SECURITIES
The MoneyLion Class A Common Stock and Public Warrants are listed on the NYSE under the symbols “ML” and “ML WS”, respectively. On June 30, 2022, the closing sale prices of the MoneyLion Class A Common Stock and Public Warrants were $1.32 and $0.19, respectively. As of June 27, 2022, there were approximately 64 holders of record of the MoneyLion Class A Common Stock and 10 holders of record of the Public Warrants. Such numbers do not include beneficial owners holding our securities through nominee names.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections and elsewhere in this prospectus, our actual results may differ materially from those discussed below and elsewhere in this prospectus.
Reclassification — The acquisitions of MALKA and Even Financial and related ongoing integration activities have caused significant changes to the revenue and cost structure of the Company such that the organization of financial statement line items in both the consolidated balance sheets and the consolidated statements of operations used in prior reporting periods are no longer sufficient to properly present the Company’s financial condition and results of operations as of March 31, 2022. Reclassifications have been performed relative to the previous presentation of the consolidated balance sheet as of December 31, 2021 and the consolidated statement of operations for the quarter ended March 31, 2021 to present in a new format that better represents the new revenue and cost structure of the Company. The reclassifications had no impact on previously reported total assets, total liabilities or net income (loss) and an immaterial impact on total revenue, net. There was no impact on the consolidated statements of cash flows or consolidated statements of redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit). There are also related reclassifications and expanded disclosure, where necessary, contained within the notes to the consolidated financial statements.
Overview
MoneyLion is a leading digital financial services and lifestyle content platform. We provide consumers a full suite of financial and non-financial solutions, bundling proprietary, low-cost financial products with products that are offered through our marketplace and network affiliate partners. We engage and educate our customers with daily, money-related and money-adjacent content, delivered through a hyper-personalized feed, to empower our customers at all times. When our customers enjoy periods of financial excess, we provide tools for them to easily manage their spending and saving goals through our digital banking and automated investing solutions. When our customers experience moments of financial need, we provide them immediate access to innovative lending or earned income advance products and credit improvement programs that can bridge these times of financial stress and improve their financial health. We also leverage our distinct data, technology and network advantages to deliver leading embedded finance marketplace solutions for our Enterprise Partners, allowing them to better connect with existing end-users and reach new potential end-users, complemented by advertising services and digital media and content production services custom designed to promote Enterprise Partners’ products and services. We believe that the combination of solutions that MoneyLion provides uniquely positions us to disrupt how financial products are consumed, unlocking a total addressable market that we estimate to be over $274 billion.
The Company’s key consumer product offerings include:
RoarMoney Premium Mobile Banking — RoarMoney is our FDIC-insured digital demand deposit account with zero minimums, premium features and rewards. Our RoarMoney demand deposit accounts are currently issued by MetaBank, a South Dakota-based, nationally chartered bank owned by Meta Financial Group, Inc. (NASDAQ: CASH). Customers can open a RoarMoney account in minutes through the MoneyLion mobile application, add funds to their account and begin spending using a RoarMoney virtual debit card. RoarMoney accounts also include a physical MoneyLion Debit Mastercard that can be used at any of the approximately 55,000 Allpoint ATM network locations to make no-fee withdrawals. We earn revenue from interchange fees from payment networks based on customer expenditures on the debit card. We also earn revenue from cardholder fees such as a small monthly administrative fee charged to our customers and a fee charged to customers when an out-of-network ATM is utilized to withdraw cash. Both interchange fees and cardholder fees are reflected in service and subscription fees as of March 31, 2022 and fee income as of December 31, 2021. We incur direct costs in connection with the RoarMoney account offering, which include fees paid to the payment networks and our partner bank.
Personalized Investing — MoneyLion Investing is an online investment account that offers access to separately managed accounts invested based on model portfolios comprised of ETFs and managed on a discretionary basis. Advisory services related to the MoneyLion investment account are provided by ML Wealth, an SEC-registered
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investment adviser and an indirect wholly-owned subsidiary of MoneyLion. Brokerage and custodial services are provided by DriveWealth, a third-party provider. This fully-managed account model allows customers to set their investment strategy and let ML Wealth manage investment decisions to implement that strategy on a discretionary basis. An investment account holder simply identifies their investing comfort zone to receive a personalized portfolio, a mix of stock and bond ETFs. Our managed investment account is available on a standalone basis. Through MoneyLion Investing, customers are able to develop sound investing habits by enabling certain account features, including auto-investing and round ups. Auto-investing allows our customers to automatically contribute into their investment account with recurring deposits directly into the account. With round ups, customers can also choose to automatically round up purchases made either on their RoarMoney account or an external bank account to the nearest dollar. The accrued round ups can then be transferred into the customer’s MoneyLion Investing account and invested in accordance with the customer’s chosen investment strategy. We earn revenue from a small monthly administration fee from our customers who use this product, which is reflected in service and subscription fees as of March 31, 2022 and fee income as of December 31, 2021.
Crypto — MoneyLion Crypto is an online cryptocurrency account that enables customers to buy, sell and hold cryptocurrency. The account is provided by Zero Hash. The Zero Hash entities are registered as money services businesses with FinCEN and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii. RoarMoney accountholders can open a MoneyLion Crypto account through the MoneyLion mobile application and fund it via their RoarMoney account. In addition, customers can also choose to automatically round up purchases made either on their RoarMoney account or an external bank account to the nearest dollar. The accrued round ups can then be transferred into the customer’s MoneyLion Crypto account and invested in Bitcoin. As of December 31, 2021, the only cryptocurrencies available through the MoneyLion Crypto account were Bitcoin and Ether. In January 2022, MoneyLion Crypto expanded to include Bitcoin Cash and Litecoin. Both MoneyLion and Zero Hash must consent in writing before adding any additional digital assets to the program. We earn revenue from Zero Hash as they pay us a share of the fees that they earn from our customers in exchange for MoneyLion enabling Zero Hash to effect digital currency-related transactions for our customers. This revenue is reflected in service and subscription fees as of March 31, 2022 and fee income as of December 31, 2021.
Instacash — Instacash is our 0% APR advance product that gives customers early access to their recurring income deposits. Customers can access Instacash advances at any time during a regular deposit period up to their advance limit, providing customers with the flexibility to cover temporary cash needs and avoid costly overdraft fees. There are no fees associated with regular delivery of funds to either a RoarMoney account (typically delivered within 12-48 hours) or an external checking account (typically delivered within two to five business days). However, customers have the option to pay an additional fee in order to receive their funds on an expedited basis (typically within minutes or less), the amount of which is based on the amount of the disbursement and whether the funds are delivered to a RoarMoney account or an external checking account. Customers may also choose to leave MoneyLion an optional tip for use of the Instacash service. We earn revenue from tips and instant transfer fees, both reflected in service and subscription fees as of March 31, 2022 and fee income as of December 31, 2021.
Credit Builder Plus — Our Credit Builder Plus membership program offers a proven path for our customers to access credit and establish or rebuild history, build savings, establish financial literacy and track their financial health. For a monthly cost of $19.99, customers receive a suite of services including banking and investment accounts, credit tracking and financial literacy content, rewards programs and access to loans of up to $1,000 at competitive rates offered by MoneyLion lending subsidiaries, allowing our customers to establish up to twelve months of payment history with all three credit bureaus. We offer our Credit Builder Plus members access to the Lion’s Share Loyalty Program, where members can earn rewards of up to $19.99 per month. We earn revenue from monthly subscription fees paid by our customers. These fees are reflected in service and subscription fees as of March 31, 2022 and membership subscription revenue as of December 31, 2021. As part of the Credit Builder Plus membership program, members may apply for a Credit Builder Plus secured personal loan. In addition to a free standard disbursement option, we also offered our customers an option to disburse their funds to their MoneyLion-serviced RoarMoney bank account or external bank account on an expedited basis for an instant transfer fee. This instant disbursement option for Credit Builder Plus loans was removed in the second quarter of 2021. We earn revenue from interest income, reflected in net interest income on finance receivables, and, prior to the removal of the instant disbursement option, instant transfer fees, reflected in service and subscription fees as of March 31, 2022 and fee income as of December 31, 2021.
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Financial Tracking — We offer our customers access to financial tracking tools such as Financial Heartbeat, GamePlan and credit score tracking. Financial Heartbeat is an intelligent, automated tool that guides customers on their financial journey. Financial Heartbeat evaluates customers’ financial situation across four key dimensions: SAVE (savings and financial preparedness), SPEND (spending and personal budget), SHIELD (insurance needs and coverage) and SCORE (credit tracking and health). Through our easy-to-use interface, customers can review the key issues impacting their financial situation, decide what actions to take, evaluate which products to use and receive guidance on how to stay motivated on their journey towards financial wellness. GamePlan provides our customers with a personalized action plan, including a checklist with tasks, meant to help them reach their financial goals across different categories such as spending, saving and more. Financial tracking tools are offered to our customers at no cost and we do not earn revenue from these services.
MoneyLife — Consistent with our vision of establishing MoneyLion as a lifestyle brand, in 2021 we introduced MoneyLife, an online financial education content destination. MoneyLife is an influencer-focused, video content-driven educational platform where customers can share and discover ideas, advice and insights regarding their financial lives. MoneyLife includes highly personalized content driven by financial advice and education influencers, tools to achieve financial goals and additional ways of earning rewards to shop and save. Our acquisition of MALKA, a creator network and content platform, accelerates our ability to engage with consumers across all digital and emerging channels, allowing us to directly connect with communities natively inside and outside of our platform. Through MoneyLife, we provide an additional daily destination site for current customers, drive additional prospective customers to MoneyLion and increase customer engagement and cross-sell opportunities for both MoneyLion and its affiliate partners.
The Company’s key enterprise service offerings include:
Affiliate Marketing Program — We work with various affiliate partners that offer products or services that we may recommend to our customers via display ads, offers or campaigns through our digital platforms. Our customers can access these offers on a standalone basis. We earn revenue from fees from our affiliate partners based on a range of criteria depending on each affiliate relationship including, but not limited to, customers’ clicks, impressions, completed transactions or a share of revenue generated for the affiliate partner. This revenue is reflected in enterprise service revenues as of March 31, 2022 and affiliates income as of December 31, 2021.
Even Financial Marketplace — Through Even Financial, we digitally connect and match consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Our infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, bridging financial institutions and channel partners via Even Financial’s API and embedded finance marketplaces. Even Financial’s network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. We earn revenue, which is reflected in enterprise service revenue, from our Product Partners based on performance structure. We incur direct costs related to the fees paid to our Channel Partners.
Digital Media and Content Production — Through MALKA, we offer digital media and content production services provided to enterprise clients in entertainment, sports, gaming, live streaming and other sectors. We produce content across every digital medium, from creative advertising campaigns and original branded content to e-gaming livestreams, podcast series, feature length documentaries, sports representation and marketing. We earn revenue, which is reflected in enterprise service revenue as of March 31, 2022 and other income as of December 31, 2021, from our enterprise clients based on performance obligations within our contracts with them.
Recent Developments
Recent events impacting our business are as follows:
COVID-19 — The COVID-19 pandemic has caused substantial changes in consumer behavior, restrictions on business and individual activities and high unemployment rates, which led to reduced economic activity and may continue to cause economic volatility. There continue to be significant uncertainties associated with the COVID-19 pandemic, including with respect to the course, duration and severity of the virus and additional variants, future actions that may be taken by governmental authorities and private businesses to contain the COVID-19 pandemic or to mitigate its impact and the effectiveness of such actions, the timing and speed of economic recovery and the ultimate effectiveness of vaccinations for COVID-19.
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In response to the economic uncertainty caused by the pandemic, during 2021, we made certain operational changes and implemented certain consumer support programs which were immaterial to our performance. For example, we reduced our marketing activities such as advertising through digital platforms, which have since returned to pre-pandemic levels and also reduced our sponsorship arrangements with third parties. In addition, we implemented underwriting policy changes on a targeted basis to more closely manage credit risk while we further evaluated market conditions. Our underwriting models are dynamic relative to real time changes in our customer’s income and credit profiles and our credit performance remained steady as our underwriting models quickly adapted to these changes. To further support our customers, we expanded our payment deferral options and reduced certain fees, while providing them with relevant content and resources on topics like unemployment insurance and stimulus checks. For instance, for our secured personal loan customers with no prior missed payments, we offered payment deferrals based on a customer’s payment frequency, ranging from one payment deferral for monthly payments and up to three payment deferrals for weekly payments. For our Instacash customers with an outstanding advance, we allowed them to change the scheduled repayment date by up to 14 days. Once the advance was repaid, the customer could request another change to the scheduled repayment on another advance. While there is no limit to the number of changes a customer may be granted, they are limited to one at a time and per advance. Despite the economic uncertainty as a result of COVID-19, we have increased the number of customers on our platform.
Management will continue to monitor the nature and extent of potential impact to the business as the pandemic continues.
Business Combinations — Since January 1, 2021, we have completed the following business combinations:
• Merger with Fusion — On September 22, 2021, Legacy MoneyLion completed the Business Combination with Fusion and became a publicly traded company. The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, for which Legacy MoneyLion was determined to be the accounting acquirer. Since the Business Combination was accounted for as a reverse recapitalization, no goodwill or other intangible assets were recorded, in accordance with U.S. GAAP. Under this method of accounting, Fusion was treated as the “acquired” company for financial reporting purposes. Operations prior to the Business Combination are those of Legacy MoneyLion. See Note 3, “Business Combination” of the audited consolidated financial statements included in this prospectus for additional information.
• MALKA Acquisition — On November 15, 2021, MoneyLion completed its acquisition of MALKA (the “MALKA Acquisition”). MALKA is a creator network and content platform that provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors. The MALKA Acquisition accelerates MoneyLion’s ability to engage with consumers across all digital and emerging channels, allowing MoneyLion to directly connect with communities natively inside and outside of its existing platform. We intend for MALKA to operate as an indirect, wholly-owned subsidiary of MoneyLion Inc. with MALKA’s pre-acquisition management team leading day-to-day operations.
Related to the closing of the MALKA Acquisition, MoneyLion issued 4,181,441 in restricted shares of MoneyLion Class A Common Stock and paid approximately $10.0 million in cash to the sellers in exchange for all of the issued and outstanding membership interests of MALKA. MoneyLion also paid down approximately $2.2 million of MALKA debt facilities. The sellers may earn up to an additional $35 million payable in restricted shares of MoneyLion Class A Common Stock if MALKA’s revenue and EBITDA exceeds certain targets in 2021 and 2022. The total purchase price of the MALKA Acquisition was approximately $52.7 million.
• Even Acquisition — On February 17, 2022, MoneyLion completed its acquisition of Even Financial. Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces.
The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial
53
services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans.
At the closing of the Even Acquisition, the Company (i) issued to the equityholders of Even Financial an aggregate of 28,164,811 shares of Preferred Stock, along with an additional 529,120 shares of Preferred Stock to advisors of Even Financial for transaction expenses, valued at $193.6 million, (ii) paid to certain Even Financial management equityholders approximately $14.5 million in cash and (iii) exchanged 8,883,228 options to acquire Even Financial common stock for 5,901,846 options to acquire MoneyLion Class A Common Stock, of which the vested portion at the acquisition date was valued at $9.0 million. The equityholders and advisors of Even Financial are also entitled to receive an additional payment from the Company of up to an aggregate of 8,000,000 shares of Preferred Stock, based on the attributed revenue of Even Financial’s business during the 13-month period commencing January 1, 2022, and certain recipients of options to acquire shares of the MoneyLion Class A Common Stock are entitled to receive dividend equivalents in lieu of receiving Preferred Stock, subject to certain conditions. The combined value of the Earnout and Preferred Stock Equivalents was $45.3 million as of the closing of the Even Acquisition. The total purchase price was approximately $271 million, subject to customary purchase price adjustments for working capital and inclusive of amounts used to repay approximately $5.7 million of existing indebtedness of Even Financial and pay $2.9 million of seller transaction costs.
Factors Affecting Our Performance
The Company is subject to a number of risks including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, dependence on key individuals and risks associated with changes in information technology.
New customer growth and increasing usage across existing customers
Our ability to effectively acquire new customers through our acquisition and marketing efforts, and drive usage of our products across our existing customers is key to our growth. We invested in the platform approach and believe our customers’ experience is enhanced by using our full product suite as we can better tailor the insights and recommendations. In turn, this generates higher revenue and lifetime value from our customer base.
Product expansion and innovation
We believe in the platform approach and providing relevant products to our customers to help them better manage their financial lives, both in times of need and excess. We will continue to invest in enhancing our existing suite of products and developing new products. Any factors that impair our ability to do so may negatively impact our efforts towards retaining and attracting customers.
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. 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 advances and loan volume.
Competition
We compete with several larger financial institutions and technology platforms that offer similar products and services. We compete with those that offer both single point solutions similar to any one of our products as well as more integrated, complete solutions. Some of our competitors may have access to more resources than we do and thus may be able to offer better pricing or benefits to our customers.
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Pricing of our products
We derive a substantial portion of our revenue from fees earned from our products. 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 to customers who utilize multiple products to expand usage of our platform. We may also lower pricing on our products to acquire new customers. For example, we offer our customers discounts such as Shake ‘N’ Bank cashback and other cashback rewards opportunities as part of our RoarMoney bank account product offering and such discounts are provided to customers based on eligible MoneyLion debit card transactions. On average, approximately 40% of our eligible RoarMoney bank account customers receive this benefit. We also offer our Credit Builder Plus members access to our Lion’s Share Loyalty Program where members can earn up to $19.99 per month. The size of the Lion’s Share reward depends on a customer’s number of logins into the MoneyLion app and purchases using their RoarMoney account in that month. On average, approximately 25% of our Credit Builder Plus members who met the minimum eligibility criteria received a Lion’s Share reward.
Product mix
We offer various products and services on our platform, including a membership program, loans, cash advances, affiliate offers and cryptocurrency, investment and bank accounts. Each product has a different profitability profile. The relative usage of products with high or low profitability and their lifetime value could have an impact on our performance.
Access and cost of financing
Our credit products and other receivables were primarily financed through IIA until the end of the fourth quarter of 2021. Beginning in the fourth quarter of 2021, we transitioned our primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. Loss of one or more of the financing sources we have for our credit products and other receivables could have an adverse impact on our performance, and it could be costly to obtain new financing.
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, cash advance, managed investment account, cryptocurrency account or affiliate product. Following the Even Acquisition, Total Customers also include customers that have submitted for, received and clicked on at least one offer, including loans, credit cards, mortgages, savings and insurance products, from a Product Partner via our Even Financial marketplace. 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 3.9 million and 1.8 million as of March 31, 2022 and 2021, respectively, and 3.3 million and 1.4 million as of December 31, 2021 and 2020, respectively.
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, cash advance, managed investment account, cryptocurrency account, affiliate product, or 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. Following the Even Acquisition, Total Products also include products that our Total Customers have submitted for, received and clicked on via our Even Financial marketplace. If a customer has funded multiple secured personal loans or cash advances or received and clicked on multiple products via our Even Financial 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 9.0 million and 5.1 million as of March 31, 2022 and 2021, respectively, and 8.0 million and 4.5 million as of December 31, 2021 and 2020, respectively.
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Enterprise Partners
Enterprise Partners is comprised of Product Partners and Channel Partners. We define Product Partners as financial institutions and financial service providers. 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 980 as of March 31, 2022, comprised of 424 Product Partners and 556 Channel Partners. The number of Enterprise Partners prior to the Even Acquisition was not significant.
Total Originations
We define Total Originations as the dollar volume of the secured personal loans originated and cash 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 and Instacash products and is a significant driver of net interest income on finance receivables and service and subscription fees. Total Originations were $408 million and $189 million for the three months ended March 31, 2022 and 2021, respectively, and $1.1 billion and $410 million for the twelve months ended December 31, 2021 and 2020, respectively, and were originated directly by MoneyLion.
Adjusted Revenue
Adjusted Revenue is defined as total revenue, net, plus amortization of loan origination costs less provision for loss on subscription receivables (previously called provision for loss on membership receivables), provision for loss on fees receivables and revenue derived from phased out products. The definition of Adjusted Revenue previously removed non-operating income, which has been moved out of total revenue, net and into other (expense) income as part of our GAAP financial statements reclassification. We believe that Adjusted Revenue provides a meaningful understanding of revenue from ongoing products and recurring revenue for comparability purposes. Adjusted Revenue is a non-GAAP measure and should not be viewed as a substitute for total revenue, net. Refer to the “— Non-GAAP Measures” section below for further discussion.
Our Adjusted Revenue is further broken into the following categories:
|
Three Months Ended |
||||||
|
2022 |
2021 |
|||||
|
(in thousands) |
||||||
|
Consumer |
$ |
45,724 |
$ |
31,489 |
||
|
Enterprise |
|
20,753 |
|
996 |
||
|
Adjusted Revenue |
$ |
66,477 |
$ |
32,485 |
||
This breakdown of Adjusted Revenue across the categories of consumer revenue and enterprise revenue helps provide our management with a better understanding of Adjusted Revenue by type and may help to inform strategic pricing and resource allocations across our products.
Prior to our GAAP financial statements reclassification to present our financial statements in a new format that better represents the new revenue and cost structure of the Company following the MALKA Acquisition and Even Acquisition, we broke down Adjusted Revenue into the following categories to help provide our management with a better understanding of Adjusted Revenue by type and inform strategic pricing and resource allocations across our products:
|
Twelve Months Ended |
||||||
|
2021 |
2020 |
|||||
|
(In thousands) |
||||||
|
Fees |
$ |
125,081 |
$ |
60,955 |
||
|
Payments |
|
13,602 |
|
6,556 |
||
|
Advice |
|
16,622 |
|
3,388 |
||
|
Interest |
|
9,628 |
|
5,154 |
||
|
Adjusted Revenue |
$ |
164,934 |
$ |
76,053 |
||
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Adjusted Gross Profit and Adjusted EBITDA
Adjusted Gross Profit is defined as gross profit less revenue derived from phased out products. The definition of Adjusted Gross Profit previously removed non-operating income, which has been moved out of total revenue, net and into other (expense) income as part of our GAAP financial statement reclassification. Adjusted EBITDA is defined as net income (loss) plus interest expense related to corporate debt, income tax expense (benefit), depreciation and amortization expense, change in fair value of warrants, change in fair value of subordinated convertible notes, change in fair value of contingent consideration from mergers and acquisitions, stock-based compensation and one-time expenses (previously broken out into one-time transaction related expenses and other one-time expenses) less origination financing cost of capital. We believe Adjusted Gross Profit and Adjusted EBITDA provide a meaningful understanding of an aspect of profitability based on our current product portfolio. These are non-GAAP measures and should not be viewed as a substitute for gross profit nor net income (loss). Refer to the “— Non-GAAP Measures” section below for further discussion.
Results of Operations for the Three Months Ended March 31, 2022 and 2021
Revenues
The following table is reference for the discussion that follows.
|
Three Months Ended |
Change |
|||||||||||
|
2022 |
2021 |
$ |
% |
|||||||||
|
(In thousands, except for percentages) |
||||||||||||
|
Consumer revenues |
|
|
|
|
||||||||
|
Service and subscription fees |
$ |
46,394 |
$ |
30,472 |
$ |
15,922 |
52.3 |
% |
||||
|
Net interest income on finance receivables |
|
2,568 |
|
1,662 |
|
906 |
54.5 |
% |
||||
|
Total consumer revenues |
|
48,962 |
|
32,134 |
|
16,828 |
52.4 |
% |
||||
|
Enterprise service revenues |
|
20,752 |
|
996 |
|
19,756 |
1,983.5 |
% |
||||
|
Total revenue, net |
$ |
69,714 |
$ |
33,130 |
$ |
36,584 |
110.4 |
% |
||||
We generate revenues primarily from various product-related fees, providing membership subscriptions, performing enterprise services and originating loans.
Total revenues increased by $36.6 million, or 110.4%, to $69.7 million for the three months ended March 31, 2022, as compared to $33.1 million for the same period in 2021.
Service and subscription fees
Service and subscription fees increased by $15.9 million, or 52.3%, to $46.4 million for the three months ended March 31, 2022, as compared to $30.5 million for the same period in 2021. The increase in service and subscription fees were driven by increases in fee income related to instant transfer fees and tips from Instacash of $15.4 million driven by the growth of Instacash advances, across both existing and new customers, and an increase in subscription fees of $1.4 million due to an increased number of customers using the Credit Builder Plus membership program. These increases were partially offset by decreases in fee income related to interchange, cardholder and administration fees from our bank and investment accounts of $0.9 million driven by lower payment volume.
Net interest income on finance receivables
Net interest income on finance receivables is generated by interest earned on Credit Builder Plus loans, which is partially offset by the amortization of loan origination costs.
Net interest income on finance receivables increased by $0.9 million, or 54.5%, to $2.6 million for the three months ended March 31, 2022, as compared to $1.7 million for the same period in 2021. The increase in net interest income on finance receivables was driven by an over 40% year-over-year origination growth on our Credit Builder Plus loan program across both existing and new customers. The amortization of loan origination costs increased by $0.1 million to $0.3 million for the three months ended March 31, 2022, as compared to $0.2 million for the same period in 2021.
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Enterprise service revenues
Enterprise service revenues increased by $19.8 million, or 1,983.5%, to $20.8 million for the three months ended March 31, 2022, as compared to $1.0 million for the same period in 2021. This increase was primarily attributable to the acquisitions of Even Financial and MALKA, which significantly expanded the Company’s affiliate marketing platform, number of enterprise partners and digital media and content production services.
Operating Expenses
The following table is reference for the discussion that follows:
|
Three Months Ended |
Change |
|||||||||||
|
2022 |
2021 |
$ |
% |
|||||||||
|
(In thousands, except for percentages) |
||||||||||||
|
Operating expenses |
|
|
|
|
||||||||
|
Provision for credit losses on consumer receivables |
23,044 |
|
5,708 |
|
17,336 |
|
303.7 |
% |
||||
|
Compensation and benefits |
22,043 |
|
7,057 |
|
14,986 |
|
212.4 |
% |
||||
|
Marketing |
11,416 |
|
4,363 |
|
7,053 |
|
161.7 |
% |
||||
|
Direct costs |
21,204 |
|
9,903 |
|
11,301 |
|
114.1 |
% |
||||
|
Professional services |
7,288 |
|
3,586 |
|
3,702 |
|
103.2 |
% |
||||
|
Technology-related costs |
4,505 |
|
2,199 |
|
2,306 |
|
104.9 |
% |
||||
|
Other operating expenses |
10,769 |
|
1,082 |
|
9,687 |
|
895.3 |
% |
||||
|
Total operating expenses |
100,269 |
|
33,898 |
|
66,371 |
|
195.8 |
% |
||||
|
Other (expense) income |
|
|
|
|
||||||||
|
Interest expense |
(6,174 |
) |
(1,471 |
) |
(4,703 |
) |
319.7 |
% |
||||
|
Change in fair value of warrant |
3,910 |
|
(31,230 |
) |
35,140 |
|
nm |
|
||||
|
Change in fair value of subordinated convertible notes |
— |
|
(39,939 |
) |
39,939 |
|
nm |
|
||||
|
Change in fair value of contingent consideration from mergers and acquisitions |
(682 |
) |
— |
|
(682 |
) |
nm |
|
||||
|
Other (expense) income |
(916 |
) |
27 |
|
(943 |
) |
nm |
|
||||
|
Total other (expense) income |
(3,862 |
) |
(72,613 |
) |
68,751 |
|
(94.7 |
)% |
||||
|
Income tax (benefit) expense |
(28,417 |
) |
25 |
|
(28,442 |
) |
nm |
|
||||
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 and advance 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 $17.3 million, or 303.7%, to $23.0 million for the three months ended March 31, 2022, as compared to $5.7 million for the same period in 2021. This increase resulted primarily from an increase to provision related to Instacash advance receivables of $12.5 million, Instacash instant transfer fees and tips of $1.4 million and Credit Builder Plus loan receivables of $1.7 million, evidenced by the increase in Total Originations from approximately $189 million for the three months ended March 31, 2021 compared to approximately $408 million for the same period in 2022. Provision related to subscription fees increased by $1.3 million. Related to the ML Plus loans, a legacy product we transitioned from in the second quarter of 2020, the provision decreased by $0.4 million.
58
Compensation and benefits
Compensation and benefits increased by $15.0 million, or 212.4%, to $22.0 million for the three months ended March 31, 2022, as compared to $7.1 million for the same period in 2021. This increase was driven primarily by $7.0 million of additional compensation and benefits expenses attributable to the acquisitions of Even Financial and MALKA, an increase in stock-based compensation of $2.9 million and a $1.2 million increase in discretionary incentive bonuses due to increased headcount throughout 2021.
Marketing
Marketing increased by $7.1 million, or 161.7%, to $11.4 million for the three months ended March 31, 2022, as compared to $4.4 million for the same period in 2021. This increase resulted primarily from an increase in costs related to advertising through digital platforms of $3.4 million and other marketing-related activities of $3.8 million.
Direct costs
Direct costs increased by $11.3 million, or 114.1%, to $21.2 million for the three months ended March 31, 2022, as compared to $9.9 million for the same period in 2021. The increase was primarily driven by $10.5 million of direct costs related to Even and MALKA, $2.2 million of increased payment processing fees and $0.7 million of increased underwriting expenses driven by growth in total originations and total customers; partially offset by a $2.1 million decrease in costs related to our bank account offering.
Professional services
Professional services increased by $3.7 million, or 103.2%, to $7.3 million for the three months ended March 31, 2022, as compared to $3.6 million for the same period in 2021. This increase resulted primarily from an increase in fees related to accounting and consulting services of $1.8 million and legal services of $1.6 million, supporting our public reporting and other transaction-related requirements.
Technology-related costs
Technology-related costs increased by $2.3 million, or 104.9%, to $4.5 million for the three months ended March 31, 2022, as compared to $2.2 million for the same period in 2021. This increase resulted primarily from an increase in costs related to internet hosting expenses of $0.6 million, software licenses and subscriptions of $0.8 million and depreciation and amortization related to equipment and software of $0.5 million.
Other operating expenses
Other operating expenses increased by $9.7 million to $10.8 million for the three months ended March 31, 2022, as compared to $1.1 million for the same period in 2021. The increase was driven by $2.4 million of additional amortization expenses which was primarily attributable to the acquisitions of Even Financial and MALKA, $2.0 million of insurance-related expenses, $1.7 million related to a reserve for costs related to ongoing legal matters, and $1.8 million for other general operating expenses.
Our other (expense) income consists of the following:
Interest expense
Interest expense increased by $4.7 million, or 319.7%, to $6.2 million for the three months ended March 31, 2022, as compared to $1.5 million for the same period in 2021. This increase resulted from an increase in average debt outstanding during the three months ended March 31, 2022 compared to the same period in 2021. See Note 9, “Debt” of the unaudited consolidated financial statements included in this prospectus for more information.
Change in fair value of warrant liability
Change in fair value of warrant liability was a benefit of $3.9 million for the three months ended March 31, 2022, as compared to an expense of $31.2 million for the same period in 2021. The change in fair value of warrant liability was due to changes in inputs that drive the warrant liability fair value calculations.
59
Change in fair value of subordinated convertible notes
Change in fair value of subordinated convertible notes had no expense for the three months ended March 31, 2022 compared to an expense of $39.9 million for the three months ended March 31, 2021. There was no activity for the three months ended March 31, 2022 because the subordinated convertible notes were converted into common stock immediately prior to the Business Combination Closing in September 2021; the noteholders subsequently received shares of MoneyLion Class A Common Stock upon the Business Combination Closing.
Change in fair value of contingent consideration from mergers and acquisitions
Change in fair value of contingent consideration from mergers and acquisitions was an expense of $0.7 million for the three months ended March 31, 2022, as compared to zero for the same period in 2021. No contingent consideration from mergers and acquisitions was outstanding for the three months ended March 31, 2021.
Other (expense) income
Other (expense) income decreased by $0.9 million to other expense of $0.9 million for the three months ended March 31, 2022, as compared to $0.0 million for the same period in 2021. The majority of other expense in the three months ended March 31, 2022 was related to expenses from debt transactions during the period.
Income tax (benefit) expense
See Note 11, “Income Taxes” of the unaudited consolidated financial statements included in this prospectus for an explanation of the significant income tax benefit recorded during the three months ended March 31, 2022.
Results of Operations for the Twelve Months Ended December 31, 2021 and 2020
The following table is reference for the discussion that follows.
|
Twelve Months Ended |
Change |
|||||||||||
|
2021 |
2020 |
$ |
% |
|||||||||
|
(In thousands, except for percentages) |
||||||||||||
|
Revenue |
|
|
|
|
||||||||
|
Net interest income on finance |
$ |
7,002 |
$ |
4,347 |
$ |
2,655 |
61.1 |
% |
||||
|
Membership subscription revenue |
|
32,357 |
|
25,994 |
|
6,363 |
24.5 |
% |
||||
|
Affiliates income |
|
10,900 |
|
2,234 |
|
8,666 |
387.9 |
% |
||||
|
Fee income |
|
116,131 |
|
46,639 |
|
69,492 |
149.0 |
% |
||||
|
Other income |
|
4,721 |
|
197 |
|
4,524 |
2,296.4 |
% |
||||
|
Total Revenues, net |
|
171,111 |
|
79,411 |
|
91,700 |
115.5 |
% |
||||
|
Operating expenses |
|
|
|
|
||||||||
|
Marketing |
|
43,170 |
|
11,060 |
|
32,110 |
290.3 |
% |
||||
|
Provision for loss on receivables |
|
60,749 |
|
21,294 |
|
39,455 |
185.3 |
% |
||||
|
Other direct costs |
|
8,864 |
|
4,336 |
|
4,528 |
104.4 |
% |
||||
|
Interest expense |
|
7,251 |
|
2,950 |
|
4,301 |
145.8 |
% |
||||
|
Personnel expenses |
|
45,878 |
|
24,200 |
|
21,678 |
89.6 |
% |
||||
|
Underwriting expenses |
|
8,253 |
|
6,242 |
|
2,011 |
32.2 |
% |
||||
|
Information technology expenses |
|
7,488 |
|
7,041 |
|
447 |
6.3 |
% |
||||
|
Bank and payment processor fees |
|
24,565 |
|
13,737 |
|
10,828 |
78.8 |
% |
||||
|
Change in fair value of warrant liability |
|
39,629 |
|
14,419 |
|
25,210 |
174.8 |
% |
||||
|
Change in fair value of subordinated convertible notes |
|
41,877 |
|
4,000 |
|
37,877 |
946.9 |
% |
||||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
6,229 |
|
— |
|
6,229 |
nm |
|
||||
|
Professional fees |
|
19,847 |
|
8,396 |
|
11,451 |
136.4 |
% |
||||
|
Depreciation and amortization expense |
|
2,392 |
|
1,108 |
|
1,284 |
115.9 |
% |
||||
60
|
Twelve Months Ended |
Change |
||||||||||||||
|
2021 |
2020 |
$ |
% |
||||||||||||
|
(In thousands, except for percentages) |
|||||||||||||||
|
Occupancy expense |
|
997 |
|
|
1,233 |
|
|
(236 |
) |
(19.1 |
)% |
||||
|
Gain on foreign currency translation |
|
(431 |
) |
|
(179 |
) |
|
(252 |
) |
140.8 |
% |
||||
|
Other operating expenses |
|
19,172 |
|
|
1,155 |
|
|
18,017 |
|
1,559.9 |
% |
||||
|
Total operating expenses |
|
335,930 |
|
|
120,992 |
|
|
214,938 |
|
177.6 |
% |
||||
|
Net loss before income taxes |
|
(164,819 |
) |
|
(41,581 |
) |
|
(123,238 |
) |
296.4 |
% |
||||
|
Income tax expense |
|
56 |
|
|
6 |
|
|
50 |
|
833.3 |
% |
||||
|
Net loss |
$ |
(164,875 |
) |
$ |
(41,587 |
) |
$ |
(123,288 |
) |
296.5 |
% |
||||
Revenues
We generate revenues primarily from originating loans, providing membership subscriptions, various product related fees and promoting affiliate services.
Total revenues increased by $91.7 million, or 115.5%, to $171.1 million for the twelve months ended December 31, 2021, as compared to $79.4 million for the same period in 2020.
Net interest income on finance receivables
Net interest income on finance receivables is generated by interest earned on unsecured personal loans, ML Plus loans, and Credit Builder Plus loans, which is offset by the amortization of loan origination costs.
Net interest income on finance receivables increased by $2.7 million, or 61.1%, to $7.0 million for the twelve months ended December 31, 2021, as compared to $4.3 million for the same period in 2020. Net interest income on finance receivables comprises the following:
Credit Builder Plus loans
Net interest income related to Credit Builder Plus loans increased by $5.4 million, or 128.1%, to $9.6 million for the twelve months ended December 31, 2021 as compared to $4.2 million for the same period in 2020. We launched Credit Builder Plus in 2019 and it became our only secured personal loan product in the second quarter of 2020 as we transitioned from ML Plus loans, which contributed to the increase in net interest income as Credit Builder Plus loans increased across both existing and new customers.
ML Plus loans
Net interest income related to ML Plus loans decreased by $0.9 million to $0.0 million for the twelve months ended December 31, 2021, as compared to $0.9 million for the same period in 2020. We transitioned from originating ML Plus loans in the second quarter of 2020 as we offered our new and existing customers our Credit Builder Plus loans. Therefore, these loans are immaterial to our ongoing performance as they represent less than 1% of receivables on our consolidated balance sheets.
Unsecured personal loans
Net interest income related to unsecured personal loans decreased by $1.3 million to $(0.1) million for the twelve months ended December 31, 2021, as compared to $1.2 million for the same period in 2020. During the first quarter of 2020, we phased out originating unsecured personal loans. Therefore, these loans are immaterial to our ongoing performance as they represent less than 1% of receivables on our consolidated balance sheets.
Amortization of loan origination costs
The amortization of loan origination costs increased by $0.6 million, to $2.5 million for the twelve months ended December 31, 2021, as compared to $1.9 million for the same period in 2020.
61
Membership subscription revenue
Membership subscription revenue increased by $6.4 million, or 24.5%, to $32.4 million for the twelve months ended December 31, 2021, as compared to $26.0 million for the same period in 2020 due to an increasing number of customers using the Credit Builder Plus membership program. This was slightly offset by a lower monthly Credit Builder Plus membership fee charged to customers compared to the higher priced ML Plus membership offered in the first half of 2020. There was a non-recurring adjustment of $3.6 million in 2020 that reduced membership revenue during that period. Membership subscription revenue would have increased $2.8 million during this period excluding this adjustment.
Affiliates income
Affiliates income increased by $8.7 million, or 387.9%, to $10.9 million for the twelve months ended December 31, 2021, as compared to $2.2 million for the same period in 2020. This increase was primarily attributable to an increase in income generated from running campaigns promoting various affiliate partners through our digital platform, driven by the expansion of our partner network and growth in Total Customers.
Fee income
Fee income increased by $69.5 million, or 149.0%, to $116.1 million for the twelve months ended December 31, 2021, as compared to $46.6 million for the same period in 2020.
Fee income is primarily comprised of the following:
Instant transfer fees
Fee income related to instant transfer fees on Instacash, Credit Builder Plus loans and ML Plus loans increased by $51.6 million to $78.0 million for the twelve months ended December 31, 2021, as compared to $26.4 million for the same period in 2020. The increase is largely attributable to the growth of Instacash advances, across both existing and new customers. We launched the instant transfer disbursement option for Instacash customers in 2019 and have since seen a consistent percentage of our Instacash customers elect this disbursement option. In November 2021, our pricing structure was changed from a fixed to a variable structure based on the size of the advance. Additionally, there was a decrease in instant transfer fees on Credit Builder Plus loans as beginning in the second quarter of 2021, the instant transfer disbursement option was removed for Credit Builder Plus loans.
Tips
Fee income related to tips from Instacash increased by $11.7 million to $23.5 million for the twelve months ended December 31, 2021, as compared to $11.8 million for the same period in 2020. This increase was driven by the growth of Instacash advances, across both existing and new customers.
Interchange fees
Fee income related to interchange fees from our bank account increased by $5.8 million to $11.1 million for the twelve months ended December 31, 2021, as compared to $5.3 million for the same period in 2020. This increase was driven by an increase in bank account customers and transaction volume on the platform.
Cardholder fees
Fee income related to cardholder fees from our bank account increased by $1.2 million to $2.5 million for the twelve months ended December 31, 2021, as compared to $1.3 million for the same period in 2020. This increase was primarily driven by a small monthly administration fee that we began charging our bank account customers in the third quarter of 2020 as well as an increase in bank account customers and usage of ATM-related services.
62
Administration fees
Fee income related to administration fees from our managed investment account decreased by $0.1 million to $1.0 million for the twelve months ended December 31, 2021, as compared to $1.1 million for the same period in 2020. We charge our investment account customers a small administration fee. We transitioned from a quarterly to monthly frequency, while holding the fee amount the same, in the fourth quarter of 2020, while also instituting a waiver of the fee for Credit Builder Plus members.
Credit-related decision services fees
Fee income related to credit-related decision services decreased to zero for the twelve months ended December 31, 2021, as compared to $0.7 million for same period in 2020. These decreases in revenue were due to the phasing out of this offering in the first quarter of 2020. We do not expect this to contribute to revenue going forward.
Other income
Other income increased by $4.5 million to $4.7 million, for the twelve months ended December 31, 2021, as compared to $0.2 million for the same period in 2020. This increase was primarily driven by revenue generated by digital media and content production services.
Operating Expenses
Our operating expenses consist of the following:
Marketing
Marketing increased by $32.1 million, or 290.3%, to $43.2 million for the twelve months ended December 31, 2021, as compared to $11.1 million for the same period in 2020. This increase resulted primarily from an increase in costs related to advertising through digital platforms of $26.8 million and other marketing-related activities of $5.6 million, partially offset by a decrease in costs related to sponsor agreements with third parties of $0.3 million. Marketing expenses also included $1.1 million in the twelve months ended December 31, 2021 related to the Business Combination.
Provision for loss on receivables
Provision for loss on receivables consists of amounts charged during the period to maintain an allowance for credit and advance losses. The allowance represents management’s estimate of the credit losses in our loan and advance portfolio and is based on management’s assessment of many factors, including changes in the nature, volume and risk characteristics of the finance receivables portfolio, including trends in delinquency and charge-offs and current economic conditions that may affect the customer’s ability to pay.
Provision for loss on receivables increased by $39.5 million, or 185.3%, to $60.7 million for the twelve months ended December 31, 2021, as compared to $21.3 million for the same period in 2020. This increase resulted primarily from an increase to provision related to Instacash advance receivables of $30.4 million, Instacash instant transfer fees and tips of $4.2 million and Credit Builder Plus loan receivables of $1.0 million, evidenced by the increase in Total Originations from approximately $410 million for the twelve months ended December 31, 2020 compared to approximately $1.1 billion for the same period in 2021. Provision related to membership fees increased by $1.3 million. Related to the ML Plus loans, a legacy product we transitioned from in the second quarter of 2020, the provision increased by $2.3 million, from $(3.3) million in the twelve months ended December 31, 2020 compared to $(1.0) million for the same period in 2021.
Other direct costs
Other direct costs increased by $4.5 million, or 104.4%, to $8.9 million for the twelve months ended December 31, 2021, as compared to $4.3 million for the same period in 2020. This increase resulted from an increase in costs related to our bank account offering, paid to our partner bank, card associations and third-party service providers, which was largely driven by the increase in bank account customers and transaction volume on the platform.
63
Interest expense
Interest expense increased by $4.3 million, or 145.8%, to $7.3 million for the twelve months ended December 31, 2021, as compared to $3.0 million for the same period in 2020. This increase resulted from an increase in debt from December 31, 2020 to December 31, 2021. See Note 9, “Debt” of the audited consolidated financial statements included in this prospectus for more information.
Personnel expenses
Personnel expenses increased by $21.7 million, or 89.6%, to $45.9 million for the twelve months ended December 31, 2021, as compared to $24.2 million for the same period in 2020. This increase resulted from an increase in personnel-related costs, such as compensation and benefits, including $6.3 million in non-recurring, discretionary incentive bonus expense related to the Business Combination. Stock-based compensation also increased by $3.4 million. Total employees across all locations increased from 234 as of December 31, 2020 to 556 as of December 31, 2021.
Underwriting expenses
Underwriting expenses increased by $2.0 million, or 32.2%, to $8.3 million for the twelve months ended December 31, 2021, as compared to $6.2 million for the same period in 2020. This increase resulted primarily from an increase in data costs for Total Originations and Total Customers.
Information technology expenses
Information technology expenses increased by $0.4 million, or 6.3%, to $7.5 million for the twelve months ended December 31, 2021, as compared to $7.0 million for the same period in 2020. This increase resulted primarily from an increase in internet hosting expenses of $0.9 million, offset by a decrease in software licenses and subscriptions of $0.4 million.
Bank and payment processor fees
Bank and payment processor fees increased by $10.8 million, or 78.8%, to $24.6 million for the twelve months ended December 31, 2021, as compared to $13.7 million for the same period in 2020. This increase resulted primarily from an increase in payment processing fees driven by the growth in Total Originations and Total Customers.
Change in fair value of warrant liability
Change in fair value of warrant liability was an expense of $39.6 million for the twelve months ended December 31, 2021, as compared to an expense of $14.4 million for the same period in 2020. The change in fair value of warrant liability is due to changes in inputs that drive the fair value calculations.
Change in fair value of subordinated convertible notes
Change in fair value of subordinated convertible notes was an expense of $41.9 million for the twelve months ended December 31, 2021, as compared to $4.0 million for the same period in 2020. The increase in expense resulted from the issuance of the convertible subordinated notes in December 2020 and January 2021, which were converted into common stock immediately prior to the Business Combination Closing; the noteholders subsequently received shares of MoneyLion Class A Common Stock upon the Business Combination Closing.
Change in fair value of contingent consideration from mergers and acquisitions
Change in fair value of contingent consideration from mergers and acquisitions was an expense of $6.2 million for the twelve months ended December 31, 2021, as compared to zero for the same period in 2020. The change in fair value and related increase in expense resulted from MALKA’s operating performance exceeding initial estimates available at the time of the MALKA Acquisition.
64
Professional fees
Professional fees increased by $11.5 million, or 136.4%, to $19.8 million for the twelve months ended December 31, 2021, as compared to $8.4 million for the same period in 2020. This increase resulted primarily from an increase in fees related to accounting and consulting services of $5.5 million and legal services of $5.9 million, resulting in part from supplemental accounting and legal support related to the Business Combination and other transaction-related activity such as the MALKA Acquisition and Even Acquisition.
Other operating expenses
Other operating expenses increased by $18.0 million to $19.2 million for the twelve months ended December 31, 2021, as compared to $1.2 million for the same period in 2020. The increase was driven by an increase of $10.3 million in losses for unrecovered customer purchase transactions related to our banking product, $3.5 million insurance-related expenses, digital media and content production services costs of $2.6 million, $1.9 million related to a reserve for costs related to ongoing legal matters and other general operating expenses. This was offset by the gain related to the forgiveness of loans of $3.2 million as the SBA approved the Company’s application for forgiveness with respect to the entire outstanding balance of the PPP loan in the second quarter of 2021.
Non-GAAP Measures
In addition to total revenue, net, net income (loss) and gross profit, which are measures presented in accordance with U.S. GAAP, management believes that Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA provide relevant and useful information which is widely used by analysts, investors and competitors in our industry in assessing performance. Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA are supplemental measures of MoneyLion’s performance that are neither required by nor presented in accordance with U.S. GAAP. Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA should not be considered as substitutes for U.S. GAAP metrics such as total revenue, net, net income (loss), gross profit 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 Revenue as total revenue, net plus amortization of loan origination costs less provision for loss on subscription receivables (previously called provision for loss on membership receivables), provision for loss on fees receivables and revenue derived from phased out products. The definition of Adjusted Revenue previously removed non-operating income, which has been moved out of total revenue, net and into other (expense) income as part of our GAAP financial statement reclassification. We believe that Adjusted Revenue provides a meaningful understanding of revenue from ongoing products and recurring revenue for comparability purposes.
We define Adjusted Gross Profit as gross profit less revenue derived from phased out products. The definition of Adjusted Gross Profit previously removed non-operating income, which has been moved out of total revenue, net and into other (expense) income as part of our GAAP financial statement reclassification. 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 subordinated convertible notes, change in fair value of contingent consideration from mergers and acquisitions, stock-based compensation and one-time expenses (previously broken out into one-time transaction related expenses and other one-time expenses) less origination financing cost of capital. We believe that these measures provide a meaningful understanding of an aspect of profitability based on our current product portfolio.
Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA are useful to an investor in evaluating our performance because these measures:
• are widely used by investors to measure a company’s operating performance;
• are metrics used by rating agencies, lenders and other parties to evaluate our credit worthiness; and
• are used by our management for various purposes, including as measures of performance and as a basis for strategic planning and forecasting.
65
The reconciliation of total revenue, net to Adjusted Revenue for the three months ended March 31, 2022 and 2021 is as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
(in thousands) |
||||||||
|
Total revenues, net |
$ |
69,714 |
|
$ |
33,130 |
|
||
|
Add back: |
|
|
|
|
||||
|
Amortization of loan origination costs(1) |
|
324 |
|
|
81 |
|
||
|
Less: |
|
|
|
|
||||
|
Provision for credit losses on receivables – subscription receivables(2) |
|
(1,541 |
) |
|
(234 |
) |
||
|
Provision for credit losses on receivables – fees receivables(3) |
|
(2,001 |
) |
|
(615 |
) |
||
|
Revenue derived from products that have been phased out(4) |
|
(20 |
) |
|
124 |
|
||
|
Adjusted Revenue |
$ |
66,477 |
|
$ |
32,485 |
|
||
____________
(1) Amortization of loan origination costs are included within net interest income from finance receivables.
(2) We deduct provision for credit losses on receivables related to subscription receivables from total revenue, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to subscription receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the unaudited consolidated financial statements included in this prospectus for further discussion.
(3) We deduct provision for credit losses on receivables related to fees receivables from total revenue, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to fees receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the unaudited consolidated financial statements included in this prospectus for further discussion.
(4) Revenue derived from products that have been phased out includes net interest income and fees related to unsecured personal loans, which are included within net interest income from finance receivables and fee income, respectively. Revenue from unsecured personal loans was zero and $(0.1) million for the three months ended March 31, 2022 and 2021, respectively.
The reconciliation of total revenues, net to Adjusted Revenue for the twelve months ended December 31, 2021 and 2020 is as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
(In thousands) |
||||||||
|
Total revenues, net |
$ |
171,111 |
|
$ |
79,411 |
|
||
|
Add back: |
|
|
|
|
||||
|
Amortization of loan origination costs(1) |
|
2,500 |
|
|
1,894 |
|
||
|
Less: |
|
|
|
|
||||
|
Provision for loss on receivables – membership receivables(2) |
|
(3,170 |
) |
|
(1,856 |
) |
||
|
Provision for loss on receivables – fees receivables(3) |
|
(5,604 |
) |
|
(1,356 |
) |
||
|
Revenue, net derived from products that have been phased out(4) |
|
114 |
|
|
(1,926 |
) |
||
|
Non-operating income(5) |
|
(17 |
) |
|
(113 |
) |
||
|
Adjusted Revenue |
$ |
164,934 |
|
$ |
76,053 |
|
||
____________
(1) Amortization of loan origination costs are included within net interest income from finance receivables.
(2) We deduct provision for loss on receivables related to membership receivables from total revenues, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to membership receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in this prospectus for further discussion.
66
(3) We deduct provision for loss on receivables related to fees receivables from total revenues, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to fees receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in this prospectus for further discussion.
(4) Revenue, net derived from products that have been phased out includes net interest income and fees related to unsecured personal loans, which are included within net interest income from finance receivables and fee income, respectively, and credit-related decision servicing fees, which is included within fee income. Revenue from unsecured personal loans was $(0.1) million and $1.2 million for the twelve months ended December 31, 2021 and 2020, respectively. Revenue from credit-related decision servicing was zero and $0.7 million for the twelve months ended December 31, 2021 and 2020, respectively.
(5) Non-operating income is included within other income and consists of interest income earned on cash balances and is considered non-operating.
The reconciliation of gross profit, which is prepared in accordance with U.S. GAAP, to Adjusted Gross Profit for the three months ended March 31, 2022 and 2021 is as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
(in thousands) |
||||||||
|
Total revenue, net |
$ |
69,714 |
|
$ |
33,130 |
|
||
|
Less: |
|
|
|
|
||||
|
Cost of Sales |
|
|
|
|
||||
|
Direct costs |
|
(21,204 |
) |
|
(9,903 |
) |
||
|
Provision for credit losses on receivables – subscription receivables(1) |
|
(1,541 |
) |
|
(234 |
) |
||
|
Provision for credit losses on receivables – fees receivables(2) |
|
(2,001 |
) |
|
(615 |
) |
||
|
Technology related costs |
|
(2,461 |
) |
|
(1,406 |
) |
||
|
Professional services |
|
(1,056 |
) |
|
(741 |
) |
||
|
Compensation and benefits |
|
(1,014 |
) |
|
(886 |
) |
||
|
Other operating expenses |
|
(104 |
) |
|
(50 |
) |
||
|
Gross Profit |
$ |
40,333 |
|
$ |
19,294 |
|
||
|
Less: |
|
|
|
|
||||
|
Revenue derived from products that have been phased out(3) |
|
(20 |
) |
|
124 |
|
||
|
Adjusted Gross Profit |
$ |
40,314 |
|
$ |
19,418 |
|
||
____________
(1) We deduct provision for credit losses on receivables related to subscription receivables from total revenue, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to subscription receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the unaudited consolidated financial statements included in this prospectus for further discussion.
(2) We deduct provision for credit losses on receivables related to fees receivables from total revenue, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to fees receivables is included within provision for loss on receivables on the statement of operations. Refer to the Note 2, “Summary of Significant Accounting Policies” of the unaudited consolidated financial statements included in this prospectus for further discussion.
(3) Revenue derived from products that have been phased out includes net interest income and fees related to unsecured personal loans, which are included within net interest income from finance receivables and fee income, respectively. Revenue from unsecured personal loans was zero and $(0.1) million for the three months ended March 31, 2022 and 2021, respectively.
67
The reconciliation of gross profit, which is prepared in accordance with U.S. GAAP, to Adjusted Gross Profit for the twelve months ended December 31, 2021 and 2020 is as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
(In thousands) |
||||||||
|
Total revenues, net |
$ |
171,111 |
|
$ |
79,411 |
|
||
|
Less: |
|
|
|
|
||||
|
Cost of sales |
|
|
|
|
||||
|
Bank and payment processor fees |
|
(24,565 |
) |
|
(13,737 |
) |
||
|
Underwriting expenses |
|
(8,253 |
) |
|
(6,242 |
) |
||
|
Provision for loss on receivables – membership receivables(1) |
|
(3,170 |
) |
|
(1,856 |
) |
||
|
Provision for loss on receivables – fees receivables(2) |
|
(5,604 |
) |
|
(1,356 |
) |
||
|
Information technology expenses |
|
(6,352 |
) |
|
(5,280 |
) |
||
|
Professional fees |
|
(3,574 |
) |
|
(2,753 |
) |
||
|
Personnel expenses |
|
(3,836 |
) |
|
(3,513 |
) |
||
|
Other direct costs |
|
(8,864 |
) |
|
(4,336 |
) |
||
|
Other operating (income) expenses |
|
(2,708 |
) |
|
282 |
|
||
|
Gross profit |
|
104,185 |
|
|
40,620 |
|
||
|
Less: |
|
|
|
|
||||
|
Revenue, net derived from products that have been phased out(3) |
|
114 |
|
|
(1,926 |
) |
||
|
Non-operating income(4) |
|
(17 |
) |
|
(113 |
) |
||
|
Adjusted Gross Profit |
$ |
104,283 |
|
$ |
38,580 |
|
||
____________
(1) We deduct provision for loss on receivables related to membership receivables from total revenues, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to membership receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in this prospectus for further discussion.
(2) We deduct provision for loss on receivables related to fees receivables from total revenues, net as it is related to revenue-based receivables. For U.S. GAAP reporting purposes, provision for loss on receivables related to fees receivables is included within provision for loss on receivables on the statement of operations. Refer to Note 2, “Summary of Significant Accounting Policies” of the audited consolidated financial statements included in this prospectus for further discussion.
(3) Revenue, net derived from products that have been phased out includes net interest income and fees related to unsecured personal loans, which are included within net interest income from finance receivables and fee income, respectively, and credit-related decision servicing fees, which is included within fee income. Revenue from unsecured personal loans was $(0.1) million and $1.2 million for the twelve months ended December 31, 2021 and 2020, respectively. Revenue from credit-related decision servicing was zero and $0.7 million for the twelve months ended December 31, 2021 and 2020, respectively.
(4) Non-operating income is included within other income and consists of interest income earned on cash balances and is considered non-operating.
The reconciliation of net loss, which is prepared in accordance with U.S. GAAP, to Adjusted EBITDA for the three months ended March 31, 2022 and 2021 is as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
(in thousands) |
||||||||
|
Net income (loss) |
$ |
(6,000 |
) |
$ |
(73,406 |
) |
||
|
Add back: |
|
|
|
|
||||
|
Interest related to corporate debt(1) |
|
1,387 |
|
|
1,471 |
|
||
|
Income tax expense (benefit) |
|
(28,417 |
) |
|
25 |
|
||
|
Depreciation and amortization expense |
|
3,421 |
|
|
514 |
|
||
|
Changes in fair value of warrant liability |
|
(3,910 |
) |
|
31,230 |
|
||
|
Changes in fair value of subordinated convertible notes |
|
— |
|
|
39,939 |
|
||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
682 |
|
|
— |
|
||
|
Stock-based compensation expense |
|
3,268 |
|
|
518 |
|
||
|
One-time expenses(2) |
|
4,777 |
|
|
1,262 |
|
||
|
Less: |
|
|
|
|
||||
|
Origination financing cost of capital(3) |
|
— |
|
|
(2,767 |
) |
||
|
Adjusted EBITDA |
$ |
(24,792 |
) |
$ |
(1,213 |
) |
||
____________
(1) We add back the interest expense related to all outstanding corporate debt, excluding outstanding principal balances related to the Roar 1 SPV Credit Facility and the Roar 2 SPV Credit Facility. For U.S. GAAP reporting purposes, interest expense related to corporate debt is included within interest expense in the statement of operations.
68
(2) We add back other one-time expenses, including those related to transactions, including mergers and acquisitions and financings, that occurred, litigation-related expenses and non-recurring costs or gains. Generally, these expenses are included within other expenses or professional fees in the statement of operations.
(3) Origination financing cost of capital represents the preferred return attributable to IIA investors. This is included within temporary equity on historical consolidated balance sheets. Since we transitioned away from IIA in December 2021, this will have no impact on our Adjusted EBITDA going forward.
The reconciliation of net loss, which is prepared in accordance with U.S. GAAP, to Adjusted EBITDA for the twelve months ended December 31, 2021 and 2020 is as follows:
|
Twelve Months Ended December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
(In thousands) |
||||||||
|
Net loss |
$ |
(164,875 |
) |
$ |
(41,587 |
) |
||
|
Add back: |
|
|
|
|
||||
|
Interest expense related to corporate debt(1) |
|
6,179 |
|
|
2,950 |
|
||
|
Income tax expense |
|
56 |
|
|
6 |
|
||
|
Depreciation and amortization expense |
|
2,392 |
|
|
1,108 |
|
||
|
Change in fair value of warrant liability |
|
39,629 |
|
|
14,419 |
|
||
|
Change in fair value of subordinated convertible notes |
|
41,877 |
|
|
4,000 |
|
||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
6,229 |
|
|
— |
|
||
|
Stock compensation expense |
|
5,039 |
|
|
1,650 |
|
||
|
One-time transaction related expenses(2) |
|
10,409 |
|
|
50 |
|
||
|
Other one-time (gains) expenses(3) |
|
(1,358 |
) |
|
775 |
|
||
|
Less: |
|
|
|
|
||||
|
Origination financing cost of capital(4) |
|
(12,718 |
) |
|
(8,409 |
) |
||
|
Adjusted EBITDA |
$ |
(67,140 |
) |
$ |
(25,038 |
) |
||
____________
(1) We add back the interest expense related to all outstanding corporate debt, excluding outstanding principal balances related to the Roar 1 SPV Credit Facility and the Roar 2 SPV Credit Facility. For U.S. GAAP reporting purposes, interest expense related to corporate debt is included within interest expense in the statement of operations.
(2) We add back one-time expenses that are related to transactions, including mergers and acquisitions and financings, that occurred. Generally these expenses are included within professional fees in the statement of operations.
(3) We add back other one-time expenses, not related to transactions, such as litigation-related expenses and non-recurring costs or gains. Generally these expenses are included within other expenses or professional fees in the statement of operations.
(4) Origination financing cost of capital represents the preferred return attributable to IIA investors. This is included within temporary equity on the consolidated balance sheet. As we transitioned away from IIA in December 2021, this will have no impact on our Adjusted EBITDA going forward.
69
Changes in Financial Condition to March 31, 2022 from December 31, 2021
|
March 31, |
December 31, |
Change |
|||||||||||||
|
$ |
% |
||||||||||||||
|
(In thousands, except for percentages) |
|||||||||||||||
|
Assets |
|
|
|
|
|
|
|
||||||||
|
Cash and restricted cash |
$ |
248,987 |
|
$ |
246,224 |
|
$ |
2,763 |
|
1.1 |
% |
||||
|
Consumer receivables |
|
153,634 |
|
|
153,741 |
|
|
(107 |
) |
(0.1 |
)% |
||||
|
Allowance for credit losses on consumer receivables |
|
(22,291 |
) |
|
(22,323 |
) |
|
32 |
|
(0.1 |
)% |
||||
|
Consumer receivables, net |
|
131,343 |
|
|
131,418 |
|
|
(75 |
) |
(0.1 |
)% |
||||
|
Enterprise receivables |
|
14,207 |
|
|
6,002 |
|
|
8,205 |
|
136.7 |
% |
||||
|
Property and equipment, net |
|
2,140 |
|
|
1,801 |
|
|
339 |
|
18.8 |
% |
||||
|
Goodwill and intangible assets, net |
|
374,626 |
|
|
77,665 |
|
|
296,961 |
|
382.4 |
% |
||||
|
Other assets |
|
37,932 |
|
|
28,428 |
|
|
9,504 |
|
33.4 |
% |
||||
|
Total assets |
$ |
809,235 |
|
$ |
491,538 |
|
$ |
317,697 |
|
64.6 |
% |
||||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
||||||||
|
Liabilities: |
|
|
|
|
|
|
|
||||||||
|
Debt agreements |
|
240,915 |
|
|
186,591 |
|
|
54,324 |
|
29.1 |
% |
||||
|
Accounts payable and accrued |
|
43,933 |
|
|
36,868 |
|
|
7,065 |
|
19.2 |
% |
||||
|
Warrant liability |
|
4,350 |
|
|
8,260 |
|
|
(3,910 |
) |
(47.3 |
)% |
||||
|
Other liabilities |
|
81,948 |
|
|
26,585 |
|
|
55,363 |
|
208.2 |
% |
||||
|
Total liabilities |
|
371,146 |
|
|
258,304 |
|
|
112,842 |
|
43.7 |
% |
||||
|
Redeemable convertible preferred stock (Series A) |
|
194,675 |
|
|
— |
|
|
194,675 |
|
nm |
|
||||
|
Stockholders’ equity: |
|
|
|
|
|
|
|
||||||||
|
Common Stock |
|
24 |
|
|
23 |
|
|
1 |
|
4.3 |
% |
||||
|
Additional paid-in capital |
|
723,394 |
|
|
708,175 |
|
|
15,219 |
|
2.1 |
% |
||||
|
Accumulated deficit |
|
(470,304 |
) |
|
(465,264 |
) |
|
(5,040 |
) |
1.1 |
% |
||||
|
Treasury stock |
|
(9,700 |
) |
|
(9,700 |
) |
|
— |
|
0.0 |
% |
||||
|
Total stockholders’ equity |
|
243,414 |
|
|
233,234 |
|
|
10,180 |
|
4.4 |
% |
||||
|
Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
$ |
809,235 |
|
$ |
491,538 |
|
$ |
317,697 |
|
64.6 |
% |
||||
Assets
Cash and restricted cash
Cash and restricted cash increased by $2.8 million, or 1.1%, to $249.0 million as of March 31, 2022, as compared to $246.2 million as of December 31, 2021. Refer to the “Cash Flows” section below for further discussion on the net cash provided by (used in) operating activities, investing activities and financing activities during the period.
Consumer receivables, net
Consumer receivables, net remained stable at $131.3 million as of March 31, 2022, as compared to $131.4 million as of December 31, 2021. The decrease in loan receivables from December 31, 2021 to March 31, 2022 was mostly offset by increases in Instacash receivables.
Enterprise receivables
Enterprise receivables increased by $8.2 million, or 136.7%, to $14.2 million as of March 31, 2022, as compared to $6.0 million as of December 31, 2021. This increase was primarily attributable to the acquisition of Even Financial, which significantly expanded the Company’s affiliate marketing platform and number of Enterprise Partners.
70
Goodwill and intangible assets, net
Goodwill and intangible assets, net increased by $297.0 million, or 382.4%, to $374.6 million as of March 31, 2022, as compared to $77.7 million as of December 31, 2021. This increase was attributable to the Even Acquisition, which closed in the first quarter of 2022.
Other assets
Other assets increased by $9.5 million, or 33.4%, to $37.9 million as of March 31, 2022, as compared to $28.4 million as of December 31, 2021. This was primarily attributable to the new lease accounting standard adopted during the first quarter of 2022 which resulted in an operating lease right-of-use asset of $8.7 million as of March 31, 2022.
Liabilities
Debt agreements
Debt agreements increased by $54.3 million, or 29.1%, to $240.9 million as of March 31, 2022, as compared to $186.6 million as of December 31, 2021. Refer to the Note 9, “Debt” of the unaudited consolidated financial statements included in this prospectus for further discussion on financing transactions during the period.
Accounts payable and accrued expenses
Accounts payable and accrued expenses increased by $7.1 million, or 19.2%, to $43.9 million as of March 31, 2022, as compared to $36.9 million as of December 31, 2021, which was primarily attributable to new accounts payable and accruals of $10.1 million associated with Even Financial, which the Company acquired during the first quarter of 2022.
Warrant liability
Warrant liability decreased by $3.9 million, or 47.3%, to $4.4 million as of March 31, 2022, as compared to $8.3 million as of December 31, 2021. Refer to the “Results of Operations for the Three Months Ended March 31, 2022 and 2021” section above for further discussion on the change in fair value of warrant liability.
Other liabilities
Other liabilities increased by $55.4 million, or 208.2%, to $81.9 million as of March 31, 2022, as compared to $26.6 million as of December 31, 2021. The increase was primarily attributable to an increase in liabilities related to contingent consideration from mergers and acquisitions of $46.1 million primarily related to the Even Acquisition and an increase from the new lease accounting standard adopted during the first quarter of 2022 which resulted in operating lease liability of $8.7 million as of March 31, 2022.
Changes in Financial Condition to December 31, 2021 from December 31, 2020
|
December 31, |
December 31, |
Change |
|||||||||||||
|
$ |
% |
||||||||||||||
|
(In thousands, except for percentages) |
|||||||||||||||
|
Assets |
|
|
|
|
|
|
|
||||||||
|
Cash and restricted cash |
$ |
246,224 |
|
$ |
20,927 |
|
$ |
225,297 |
|
1,076.6 |
% |
||||
|
Receivables |
|
153,741 |
|
|
68,794 |
|
|
84,947 |
|
123.5 |
% |
||||
|
Allowance for losses on receivables |
|
(22,323 |
) |
|
(9,127 |
) |
|
(13,196 |
) |
144.6 |
% |
||||
|
Receivables, net |
|
131,418 |
|
|
59,667 |
|
|
71,751 |
|
120.3 |
% |
||||
|
Property and equipment, net |
|
1,801 |
|
|
502 |
|
|
1,299 |
|
258.8 |
% |
||||
|
Goodwill and intangible assets, net |
|
77,665 |
|
|
30,840 |
|
|
46,825 |
|
151.8 |
% |
||||
|
Other assets |
|
34,430 |
|
|
11,707 |
|
|
22,723 |
|
194.1 |
% |
||||
|
Total assets |
$ |
491,538 |
|
$ |
123,643 |
|
$ |
367,895 |
|
297.5 |
% |
||||
71
|
December 31, |
December 31, |
Change |
|||||||||||||
|
$ |
% |
||||||||||||||
|
(In thousands, except for percentages) |
|||||||||||||||
|
Liabilities, Redeemable Convertible Preferred Stock, Redeemable Noncontrolling Interests and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
||||||||
|
Liabilities: |
|
|
|
|
|
|
|
||||||||
|
Debt agreements |
|
186,591 |
|
|
46,602 |
|
|
139,989 |
|
300.4 |
% |
||||
|
Accounts payable and accrued |
|
63,453 |
|
|
20,968 |
|
|
42,485 |
|
202.6 |
% |
||||
|
Warrant liability |
|
8,260 |
|
|
24,667 |
|
|
(16,407 |
) |
(66.5 |
)% |
||||
|
Total liabilities |
|
258,304 |
|
|
92,237 |
|
|
166,067 |
|
180.0 |
% |
||||
|
Redeemable convertible preferred stock (Series A-1, A-2, A-3, B, B-2, C, C-1) |
|
— |
|
|
288,183 |
|
|
(288,183 |
) |
(100.0 |
)% |
||||
|
Redeemable noncontrolling interests |
|
— |
|
|
71,852 |
|
|
(71,852 |
) |
(100.0 |
)% |
||||
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
||||||||
|
Common Stock |
|
23 |
|
|
— |
|
|
23 |
|
0.0 |
% |
||||
|
Additional paid-in capital |
|
708,175 |
|
|
— |
|
|
708,175 |
|
0.0 |
% |
||||
|
Accumulated deficit |
|
(465,264 |
) |
|
(327,629 |
) |
|
(137,635 |
) |
42.0 |
% |
||||
|
Treasury stock |
|
(9,700 |
) |
|
(1,000 |
) |
|
(8,700 |
) |
870.0 |
% |
||||
|
Total stockholders’ equity (deficit) |
|
233,234 |
|
|
(328,629 |
) |
|
561,863 |
|
(171.0 |
)% |
||||
|
Total liabilities, redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity |
$ |
491,538 |
|
$ |
123,643 |
|
$ |
367,895 |
|
297.5 |
% |
||||
Assets
Cash and restricted cash
Cash and restricted cash increased by $225.3 million, or 1,076.6%, to $246.2 million as of December 31, 2021, as compared to $20.9 million as of December 31, 2020. Refer to the “— Cash Flows” section below for further discussion on the net cash provided by (used in) operating activities, investing activities and financing activities during the period.
Receivables, net
Receivables, net increased by $71.8 million, or 120.3%, to $131.4 million as of December 31, 2021, as compared to $59.7 million as of December 31, 2020. This increase was primarily driven by the increase in Total Originations, including Credit Builder Plus loans and Instacash advances, membership fees and Instacash tips and instant transfer fees as Instacash continued to see strong growth. This was partially offset by the decrease in ML Plus loans as we completed our transition to Credit Builder Plus loans in 2020 as well as unsecured personal loans as we phased out this offering in 2020. Refer to the “— Results of Operations for the twelve months ended December 31, 2021 and 2020” section above for further discussion on the changes in revenues and provisions for loss on receivables.
Goodwill and intangible assets, net
Goodwill and intangible assets, net increased by $46.8 million, or 151.8%, to $77.7 million as of December 31, 2021, as compared to $30.8 million as of December 31, 2020. This increase was attributable to the MALKA Acquisition, which closed in the fourth quarter of 2021.
72
Other assets
Other assets increased by $22.7 million, or 194.1%, to $34.4 million as of December 31, 2021, as compared to $11.7 million as of December 31, 2020. This was primarily attributable to an increase in prepaid expenses of $7.2 million, including $5.4 million in insurance premiums, receivable from payment processor — debit card collections and others of $12.3 million and other assets of $3.2 million.
Liabilities
Debt agreements
Debt agreements increased by $140.0 million, or 300.4%, to $186.6 million as of December 31, 2021, as compared to $46.6 million as of December 31, 2020. This increase was primarily attributable to $146.0 million of aggregate new debt related to the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility and the additional $20.0 million borrowings on the Second Lien Loan (as defined herein), partially offset by the conversion of the fair value Subordinated Convertible Notes (as defined herein) of $14.0 million, repayment of $5.0 million of the Second Lien Loan and forgiveness of a $3.2 million loan that the Company borrowed from a bank under the U.S. Small Business Administration’s Paycheck Protection Program that was introduced as part of the U.S. government’s COVID-19 relief efforts. Refer to the Note 9, “Debt” of the audited consolidated financial statements included in this prospectus for further discussion on financing transactions during the period.
Accounts payable and accrued expenses
Accounts payable and accrued expenses increased by $42.5 million, or 202.6%, to $63.5 million as of December 31, 2021, as compared to $21.0 million as of December 31, 2020, which was attributable to an increase in operating expenses during the period, $5.4 million of accrued liability related to insurance premiums, $3.7 million of transaction costs related to the Business Combination that remain unpaid as of December 31, 2021 and $18.0 million of contingent consideration related to the MALKA Acquisition. Refer to the “— Results of Operations for the Twelve Months Ended December 31, 2021 and 2020” section above for further discussion on operating expense activity during the period.
Warrant liability
Warrant liability decreased by $16.4 million, or 66.5%, to $8.3 million as of December 31, 2021, as compared to $24.7 million as of December 31, 2020. Part of the change is due to the conversion of older warrants and acquisition of new warrants as part of the Business Combination described in Note 3, “Business Combination” of the audited consolidated financial statements included in this prospectus. Also refer to the “— Results of Operations for the Twelve Months Ended December 31, 2021 and 2020” section above for further discussion on the change in fair value of warrant liability.
Liquidity and Capital Resources
As a result of the Business Combination, we raised net proceeds of $293.2 million, including the contribution of cash held in Fusion’s trust account from its initial public offering of $91.1 million, post redemption of Fusion’s common stock held by Fusion’s public stockholders prior to the Business Combination, and $250.0 million of private investment in public equity (“PIPE”) at $10.00 per share of MoneyLion Class A Common Stock, net of transaction expenses. Prior to the Business Combination, the funds received from previous common stock and redeemable convertible preferred stock equity financings, as well as the Company’s ability to obtain lending commitments, provided the liquidity necessary for the Company to fund its operations. 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.
73
Receivables originated on our platform, including Credit Builder Plus loans and Instacash advances, were primarily financed through IIA until the end of the fourth quarter of 2021. Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. As of March 31, 2022, there was an outstanding principal balance of $83 million under the ROAR 1 SPV Credit Facility and an outstanding principal balance of $73 million under the ROAR 2 SPV Credit Facility. See Note 8, “Variable Interest Entities” of the audited and unaudited consolidated financial statements included in this prospectus for more information on the ROAR 1 SPV Credit Facility and ROAR 2 SPV Credit Facility.
The following table presents the Company’s cash, restricted cash and receivable from payment processor, as of March 31, 2022, December 31, 2021 and December 31, 2020:
|
March 31, |
December 31, |
December 31, |
|||||||
|
Cash |
$ |
185,009 |
$ |
201,763 |
$ |
19,406 |
|||
|
Restricted cash |
|
63,978 |
|
44,461 |
|
1,521 |
|||
|
Receivable from payment processor |
$ |
18,309 |
$ |
18,576 |
$ |
8,350 |
|||
Cash Flows
The following table presents cash (used in) provided by operating, investing and financing activities during the three months ended March 31, 2022 and 2021 and the twelve months ended December 31, 2021 and 2020:
|
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
|
2022 |
2021 |
2021 |
2020 |
|||||||||||||
|
Net cash (used in) provided by operating activities |
$ |
(8,651 |
) |
$ |
3,291 |
|
$ |
(8,569 |
) |
$ |
3,028 |
|
||||
|
Net cash used in investing activities |
|
(42,279 |
) |
|
(15,145 |
) |
|
(144,361 |
) |
|
(42,747 |
) |
||||
|
Net cash provided by financing activities |
|
53,693 |
|
|
50,743 |
|
|
378,227 |
|
|
14,833 |
|
||||
|
Net change in cash and restricted cash |
$ |
2,763 |
|
$ |
38,889 |
|
$ |
225,297 |
|
$ |
(24,886 |
) |
||||
Operating Activities
Net cash used in operating activities was $8.7 million for the three months ended March 31, 2022 compared to net cash provided by operating activities of $3.3 million for the three months ended March 31, 2021. This was primarily driven by a decrease in profitability, after adjusting for non-cash activity included in our net loss, of approximately $13.1 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily as the result of increases in operating expenses and interest expense, which were partially offset by increases in net revenues and changes in working capital.
Net cash used in operating activities was $8.6 million for the twelve months ended December 31, 2021 compared to net cash provided by operating activities of $3.0 million for the twelve months ended December 31, 2020. The primary driver was a decrease in profitability of approximately $12.6 million during the twelve months ended December 31, 2021 compared to the twelve months ended December 31, 2020, primarily as the result of increases in marketing expenses, other direct costs, personnel expenses, bank and payment processor fees, professional fees and other expenses, which were partially offset by increases in net revenues.
Investing Activities
Net cash used in investing activities was $42.3 million and $15.1 million for the three months ended March 31, 2022 and 2021, respectively. The increase in cash used in investing activities was primarily related to a $7.8 million increase in net originations and collections of finance receivables and $18.6 million spent on the Even Acquisition, net of cash received, during the three months ended March 31, 2022.
Net cash used in investing activities was $144.4 million and $42.7 million for the twelve months ended December 31, 2021 and 2020, respectively. The increase in cash used in investing activities was primarily related to an increase in net originations and collections of finance receivables of $90.2 million and $12.1 million spent on the MALKA Acquisition during the twelve months ended December 31, 2021.
74
Financing Activities
Net cash provided by financing activities was $53.7 million and $50.7 million for the three months ended March 31, 2022 and 2021, respectively. The increase in cash provided by financing activities was primarily attributable to an increase in net proceeds from financing sources during the three months ended March 31, 2022.
Net cash provided by financing activities was $378.2 million and $14.8 million for the twelve months ended December 31, 2021 and 2020, respectively. The increase in cash provided by financing activities was primarily attributable to net proceeds from the Business Combination of $293.2 million, proceeds of $146.0 million from aggregate new debt related to the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility and an increase in proceeds from the issuance of convertible notes of $26.8 million, partially offset by an increase in outflows to noncontrolling interests of $73.9 million and payments for redeemed common stock and stock options of $22.4 million.
Financing Arrangements
Refer to Note 9, “Debt” of the audited and unaudited consolidated financial statements included in this prospectus for further discussion on financing transactions during the periods presented.
Contractual Obligations
The table below summarizes debt, lease and other long-term minimum cash obligations outstanding as of March 31, 2022:
|
Total |
Remainder |
2023 – 2024 |
2025 – 2026 |
Thereafter |
|||||||||||
|
Monroe Term Loans |
|
90,000 |
|
— |
|
20,000 |
|
70,000 |
|
— |
|||||
|
ROAR 1 SPV Credit Facility |
|
83,000 |
|
— |
|
— |
|
83,000 |
|
— |
|||||
|
ROAR 2 SPV Credit Facility |
|
73,000 |
|
— |
|
— |
|
73,000 |
|
— |
|||||
|
Operating lease obligations |
|
12,722 |
|
1,733 |
|
5,553 |
|
3,764 |
|
1,672 |
|||||
|
Total |
$ |
258,722 |
$ |
1,733 |
$ |
25,553 |
$ |
229,764 |
$ |
1,672 |
|||||
Secured Loans and Other Debt
For more information regarding our secured loans and other debt, see Note 9, “Debt” of the audited and unaudited consolidated financial statements included in this prospectus.
Equity
Series A Redeemable Convertible Preferred Stock
In connection with the acquisition of Even Financial, the Company issued 28,693,931 shares of Preferred Stock. For more information regarding the Preferred Stock, see Note 12, “Common and Preferred Stock” of the audited consolidated financial statements included in this prospectus.
Off-Balance Sheet Arrangements
At March 31, 2022, the Company did not have any material off-balance sheet arrangements.
Critical Accounting Policies and Estimates
See Note 2, “Summary of Significant Accounting Policies” of the audited and unaudited consolidated financial statements included in this prospectus for a description of critical accounting policies and estimates.
Recently Issued and Adopted Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies” of the audited and unaudited consolidated financial statements included in this prospectus for a description of recently issued accounting pronouncements that may potentially impact our results of operations, financial condition or cash flows.
75
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.
Certain of our funding arrangements, and future funding arrangements may, bear a variable interest rate. 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 March 31, 2022, would result in an approximately $0.9 million impact to annual interest expense.
76
BUSINESS
Mission
Rewire the American banking system to positively change the financial path for every hard-working American.
Company Overview
MoneyLion was founded on a simple observation: the current financial system fails to meet the needs of 100 million middle-class Americans. We believe these Americans deserve a better alternative in financial services, and MoneyLion can be a partner in improving their financial well-being. MoneyLion is a leading digital financial services and lifestyle content platform. We provide consumers a full suite of financial and non-financial solutions, bundling proprietary, low-cost financial products with products that are offered through our marketplace and network affiliate partners. We engage and educate our customers with daily, money-related and money-adjacent content, delivered through a hyper-personalized feed, to empower our customers at all times. When our customers enjoy periods of financial excess, we provide tools for them to easily manage their spending and saving goals through our digital banking and automated investing solutions. When our customers experience moments of financial need, we provide them immediate access to innovative lending or earned income advance products and credit improvement programs that can bridge these times of financial stress and improve their financial health. We also leverage our distinct data, technology and network advantages to deliver leading embedded finance marketplace solutions for our Enterprise Partners, allowing them to better connect with existing end-users and reach new potential end-users, complemented by advertising services and digital media and content production services custom designed to promote Enterprise Partners’ products and services. We believe that the combination of solutions that MoneyLion provides uniquely positions us to disrupt how financial products are consumed, unlocking a total addressable market that we estimate to be over $274 billion.
Our technology platform has been purpose-built to support our strategy of creating a relationship with the customer. How Americans consume financial information and advice is evolving, with many Americans engaging with financial content online and on select social media channels. We endeavor for the MoneyLion platform to become a daily destination for product discovery, education, advice and financial transactions, allowing our customers to better understand their individual financial circumstances and take action to live a better financial life. Our comprehensive, modern approach to providing money-related content, products and services to our customers is designed to allow MoneyLion to own the end-to-end financial product buying cycle.
In addition, the technical architecture of our platform, which centers around a data-driven, multifaceted understanding of our customers built upon our longstanding experience in risk management, underwriting and origination, differentiates us from the transactional solutions provided by incumbents in our industry. Consumer financial services remain oriented around siloed service providers with incomplete customer data and fee-first product delivery models. We believe consumers benefit when their financial partner understands their entire financial life and can provide both access and advice at the right time, the right place and, importantly, with the appropriate solution. Traditional providers generally attempt to sell consumers specific financial products, only seeking to qualify them as a suitable buyer and generate a fee. With a deep, data-driven understanding of our customers and a broad set of integrated, tailor-made products, we can guide our customers to use our products when and if appropriate for their needs, creating a mutually beneficial partnership.
We address large, pervasive problems in the $3.5 trillion financial services industry by focusing on the largest segment of consumers, the hardworking American middle class. American consumers face enormous costs to obtain the basic elements of financial life — spend, save, invest and borrow — that in aggregate generate over $250 billion in fees for the financial services industry on an annual basis. With 100 million middle-class Americans as our core focus — defined as individuals with household incomes up to $150,000 and FICO scores up to 750 — the breadth of our potential customers, and the costs they face in obtaining financial services, are substantial.
We have only just begun to address these problems, but our progress to date demonstrates the demand for MoneyLion to rewire the banking system. As of December 31, 2021, over 3.3 million customers have opened an account on our platform to use at least one of our current products. We added approximately 3.0 million of these customers since the beginning of 2019, and we believe that we have a substantial opportunity to grow our customer base going forward. We focus on delivering the benefits of our personalized, all-in-one, digital financial platform to our customers. We believe the value proposition of our platform approach will increase the network effects for sustained user growth. Our data-driven perspective of our customers and our capability to create content to engage with our customers increases their time spent on our platform, allowing us to introduce products and guidance that address their changing life circumstances.
77
Our Strategy
We address our customers’ needs by pursuing a differentiated strategy. Our personalized, all-in-one, digital financial platform is designed to foster a relationship with consumers and provide them with the tools to discover and learn about their finances and our solutions, as well as to transact in a variety of different financial and non-financial products based on their individual circumstances, all through one app. Our strategy is supported by:
1) Team: a leading management team and employees across the globe with backgrounds in technology, product design and development, financial services, digital experiences, content creation and media;
2) Data: innovative products and services and personalized customer experiences delivered from our near-decade long, data-driven understanding of our customers and their needs;
3) Technology: a purpose-built, scalable technical architecture built to connect the dynamic needs of the American consumer with our proprietary, as well as third-party, products;
4) Platform: proven track record and continued ability to add the next set of key features to give our customers easy access to a comprehensive suite of products and services within the MoneyLion ecosystem;
5) Guidance: financial recommendations that are highly personalized, real-time and automated, spanning lifestyle, saving, spending, borrowing and investing; and
6) Content: curated content created in partnership with thought leaders and influencers supporting the financial discovery and decision-making process in order to acquire, engage and retain customers and improve financial literacy and know-how.
Organize a Team to Address the Problem: The complexity of the problems faced by our customers required a different type of team to address them. The American middle class is under tremendous, ongoing financial stress with many individuals living paycheck to paycheck without enough savings to navigate through a small financial setback, even before COVID-19. We believed building yet another provider of standard financial products, whether delivered digitally or at a branch, was unlikely to impact their financial well-being for the better.
What was required were individuals who understood the current ecosystem of solutions in detail, including its legacy technology, exorbitant pricing models and myopic single transaction-focused view of customers. But understanding the problem set was only the beginning. Experience in solving seemingly intractable problems through the application of modern data and technology tools was necessary. Our team grew to include individuals who had built advanced technologies to algorithmically identify and eliminate inefficiencies in some of the most demanding and competitive markets. To this team, we added experts in product development and financial planning to translate these solutions into a data-driven platform that maximized the benefit of these innovations for our customers.
Organizing a team that understands the complex problems of both our customers and the financial system and has the experience to address such problems was our foundation. However, to generate meaningful benefits for our customers, we had to go farther. Customers required a partner who could deliver products that were transparent and made addressing their problems both easy to understand and enjoyable. We added team members experienced in delivering best-in-class consumer digital experiences, bringing to market a beautiful, easy-to-use interface for our customers to access our platform, consume our products and receive advice.
Lastly, as we established an institution built for every hardworking American to use, we acquired capabilities in content creation, talent relationships and production. We have a differentiated ability to introduce MoneyLion to our prospective consumers through culturally relevant, personalized content and stories told through thought leaders and influencers in a cost-effective manner. We believe our innovations in customer acquisition, engagement and retention have provided us with network effects that we expect to continue as we scale.
Understand the Problem Through Data: We build innovative consumer financial products that address our customers’ individual and complex problems by leveraging advancements in data science from both Silicon Valley and Wall Street and applying those advancements for the benefit of America’s middle class. We believe this approach separates us both from incumbent providers and new market entrants.
78
MoneyLion begins and ends every conversation with data. We have a near-decade long track record of underwriting, pricing risk and originating credit at scale across the American credit spectrum. We now benefit from the compounding improvements made to our data models since 2013. This compounding data advantage garnered through conducting scaled consumer diligence, underwriting and servicing allows us to offer differentiated, personalized experiences across our platform. This advantage drives our approach to understanding the problems of our customers, how we can address these problems with products and guidance and how we approach prospective customers in a timely, cost-effective manner.
We consume an enormous flow of data about the American middle class to understand their problems. Since inception, we have engaged with millions of Americans through our web and mobile applications, linked to over 17 million bank accounts, and integrated over 100 external data sources, coming to understand the cycle of financial excess and deficit that permeates our prospective customer base. Each day we ingest billions of transactional data points such that our understanding grows, and with it, our ability to address both legacy and emerging problems in our customers’ lives. We are constantly analyzing this data reservoir through our 55 machine learning models to generate three billion inferences, categorizations and predictions per day that we distill into over 14,000 insights for each of our customers.
These insights allow us to understand our customers and drive the development of innovative products. On a standalone basis, our products reflect deep insights in our customers’ needs:
• RoarMoney Banking product: modern mobile banking offering premium features with no minimums, ability to get paid two days early with direct deposit, bill pay and credit-card like rewards;
• MoneyLion Investment product: the first investment account for a significant portion of our customers, automatically manages their investments on a discretionary basis in custom portfolios from leading providers like Global X Management Company LLC (“Global X”) and Wilshire Advisors, LLC (“Wilshire”), and offered without account minimums;
• MoneyLion Crypto product: an easy-to-use account that allows users to buy and sell certain popular cryptocurrencies, which we believe provides broader and more convenient access to investing in cryptocurrency for our customers, with no trading commissions or account minimums;
• Instacash Earned Income Advance product: short-term 0% APR advances against expected salary or other recurring income deposits; available in moments of need, providing funds to help avoid overdraft fees or finance daily transactions; and
• Credit Builder Plus membership program: a suite of services that help customers establish or repair credit, gain financial literacy and track financial health in a bundled membership subscription that includes banking and investing accounts, a loyalty rewards program and access to cost-effective credit.
Our data-driven customer insights drive the power of our platform, where our current products can work in conjunction to drive better outcomes for our customers. Selected examples include:
• Customers can track their account balances from the MoneyLion mobile application so they can request a 0% APR Instacash advance to be delivered to their account to avoid costly overdraft fees;
• When a customer earns a cashback reward using their MoneyLion debit card, it is automatically invested in a fully managed investment account where it can be withdrawn and spent or remain invested; and
• Credit Builder Plus secured personal loans are collateralized in part by assets in the customers’ investment account, allowing a customer to enjoy the benefits of a lower rate while leaving their assets invested.
Lastly, we use our data advantage to drive our efficient customer acquisition strategy through peer-to-peer referrals, dynamic performance marketing strategies, affiliates, brand marketing and search engine optimizations. Drawing upon the best practices of advertising technology, we use our deep understanding of our prospective customers to cost effectively introduce the MoneyLion platform at the right time and place.
79
Build Technology to Scale and Innovate: When we started MoneyLion, we recognized that both incumbent providers of financial services and new market entrants generally chose to build technology to deliver a single product to market. While certainly an easier path than building a platform, a monoline product model can never deliver a fully integrated platform experience or support rapid product innovation. We chose to build differently.
We built a single core platform from an array of microservices that allows us to deliver both our current products as well as all those we have in development. We believe this technology development model is more in line with the best practices of leading global technology companies, rather than the legacy models still largely employed in the financial services industry.
The primary beneficiary of our technology strategy is our customers. Products we have introduced are integrated across our platform. Customers can move money from their bank account to their investment or crypto account and invest that money into an ETF or a cryptocurrency. Customers can request a salary advance and deposit that money into their bank account. These seamless product experiences can occur within a single app, without friction, in real-time and reflects the benefit of our original design decision.
We have experienced additional benefits from our decision to build a truly integrated technology platform, that we believe will only compound as we add additional products and features to the platform:
• Deliver new products to our customers, from prototype to onboarding, in under six months;
• Reduce our cost to deliver our products and service on an ongoing basis;
• Approve customer requests for new accounts, loans, advances, etc. in under ten seconds;
• Transact across the platform on our own payment rails, allowing for instantaneous, costless transfers; and
• Utilize decision engines that automate over 99% of our customer interactions.
We built this platform to deliver a uniform customer experience alongside near complete flexibility in terms of the regulated and unregulated partners we utilize to support our products. For example, MoneyLion is not a bank. However, our customers can open and utilize an FDIC-insured digital demand deposit account, provided by a partner bank, that is fully integrated into our platform. This model allows MoneyLion to adopt best-of-breed partners to support an ever-increasing range of financial activities, shortening the time to deliver new products to our customers, while maintaining a seamless customer experience.
We utilize Amazon Web Services (“AWS”) to host and deliver our platform to customers. Delivery through AWS allows for reliable, secure, cost-effective and high-performance scaling.
We have also invested in specific technologies to attract prospective customers to MoneyLion and convert those individuals into customers. Our technological approach to customer acquisition and retention is a core competitive advantage of MoneyLion and an area in which we will continue to invest resources to maintain what we believe is a material advantage in our cost of marketing.
Solve with a Platform, not a Product: Many new companies have entered the market since our inception that seek to provide an individual or single-point financial product to American consumers, while fewer, if any, have attempted to deliver a complete platform of products as we do. We continue to believe that a single product strategy is neither advantageous for consumers nor a tenable long-term strategy for the providers of these products.
Our customers require a variety of products and services to successfully manage their financial lives. By providing a complete platform for these customers, they can address these financial needs both conveniently and seamlessly, and we are able to architect a unique user experience, personalized to the individual customer. Most importantly, by addressing the complete financial life of our customers, we can provide much needed guidance to our customers as to their saving, spending, borrowing and investing decisions, with substantially better insight into their life circumstances. We believe a valuable financial partner needs to both see and provide guidance based on the whole problem, rather than only a portion, and our platform approach is fundamental to achieving our mission to improve financial outcomes for the American middle class.
80
In addition to being a better alternative for our customers, we believe that our platform approach is a substantially better long-term model as a business. The cost to acquire customers in a competitive market such as consumer financial services is a material portion of the variable cost structure for both incumbent providers as well as new market entrants. A platform approach allows us to generate multiple income streams from a single customer and deliver our products at pricing levels that we believe will be comparatively lower over the long-term while maintaining attractive operating margins. Lastly, as we continue to mature our customer relationships, we believe that we will continue to grow wallet share with our customers in a manner only available to a full-service platform.
Similarly, our platform approach has also proved advantageous in acquiring new customers. We believe our ability to selectively market multiple products at once allows us to more cost effectively reach prospective customers initially seeking at least one of the products on our platform.
Guidance Brings it All Together: Providing our customers with access to financial products is fundamental to our mission. However, products alone, without discovery, education and personalized insights, will not adequately address the financial needs of our customers. We believe that contextual and relevant financial education and guidance is an essential component of the required service model of a personalized, all-in-one, digital financial platform.
When we refer to guiding our customers, we are not referring to an asset allocation strategy or a specific investment opportunity. We use the term guidance to reflect a holistic, customer-centric set of automated suggestions, recommendations, behavioral nudges, goal setting and adjustment, planning tips and reporting across the entire spectrum of financial product discovery, saving, spending, borrowing and investing activities driven by our knowledge of the customer, their peers and our customers’ own goals.
Our model is most similar to goals-based planning, a methodology used by certain incumbent providers of financial planning services to address multiple customer objectives across different time horizons. Historically, goals-based planning has been used by financial planning providers to assist high-net-worth customers navigate their allocation of resources across current and future objectives. Through our acquisition of WTI, we acquired WTI’s market-leading wealth management decisioning and administration technology, including fGPS (Financial Goals Positioning System), a version of goals-based planning that we adopted, customized and refined for our middle-class American customers and which we believe to be more advanced than those employed by even the most sophisticated financial planning organizations. Amongst our many advancements, we expect to deliver real-time goals-based planning services, customized to the individual customer and their goals, on a fully automated basis, covering millions of concurrent customers and goals.
To date, we have focused our guidance on addressing the immediate and near-term problems of our customers to assist them in making decisions to place them on a path to a better financial future. Examples include:
• Avoiding overdraft fees;
• Managing short-term gaps in cash flow;
• Improving their credit score;
• Building a rainy-day fund;
• Paying bills; and
• Opening an investment account.
As our customers make progress on the basic elements of managing their financial lives, we will assist them in setting and maintaining progress towards longer-dated goals and aspirations. Examples of longer-dated goals we will seek to assist our customers achieve include:
• Purchasing insurance;
• Planning for a vacation;
• Buying a car;
• Saving for college;
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• Buying a home; and
• Retirement planning.
Our platform utilizes affiliates, third-party providers of products and services to whom we may introduce our customers from our network to assist customers in making purchases in-line with their goals. We expect to grow our affiliate network over time to address the range of customer-defined goals. We earn revenue from fees from our affiliate partners in exchange for meeting certain success metrics related to their campaigns such as customers’ clicks, impressions or completed transactions. This revenue is reflected in affiliates income.
Content to Drive Engagement and Financial Literacy: Our customers not only want to successfully manage their financial lives, but they want to do so in a way that is both informative and enjoyable. Consistent with our vision of establishing MoneyLion as a lifestyle brand, we introduced MoneyLife, an online financial education content destination. MoneyLife is a video content-driven educational platform available on the MoneyLion app and our website where customers can share and discover ideas, advice and insights regarding their financial lives. MoneyLife includes highly personalized content driven by financial advice and education influencers, tools to achieve financial goals and additional ways of earning rewards to shop and save. Through MoneyLife, we provide an additional daily destination site for current customers, drive additional prospective customers and increase customer engagement and cross-sell opportunities for us and our affiliate partners. Our acquisition of MALKA, a creator network and content platform, accelerates our ability to engage with consumers across all digital and emerging channels, allowing us to directly connect with communities natively inside and outside of our platform. We will expand our vision of a daily destination, which started with our own MoneyLife content, with personalized content that educates, informs and supports consumers’ financial decision making and other general interests. MALKA operates as an independent wholly-owned subsidiary of MoneyLion and produces digital media and content for us as well as its own clients across entertainment, sports, gaming, live streaming and other sectors. We earn revenue from fees that MALKA charges its clients in connection with its digital media and content production, client services and licensing. This revenue is reflected in other income.
Our Product Platform
Once consumers download the free MoneyLion app, they are ready to improve their financial health, with a full range of financial services across banking, borrowing and investing, delivered through a personalized, all-in-one, easy-to-use digital financial platform.
Our intuitive and user-friendly app provides a fast, seamless experience across all our products. We continually listen to our customers’ feedback and implement improvements on an accelerated release cycle, always remaining committed to delivering a delightful customer experience. As of December 31, 2021, we had received over 130,000 five-star ratings across all app stores, with a 4.7 average on Apple, a 4.3 average on Google and a 4.7 average on TrustPilot, and had an overall Net Promoter Score of 51 for December 2021.
MoneyLion’s current product platform includes:
• RoarMoney: modern mobile banking offering premium features with no minimums, ability to get paid two days early with direct deposit, bill pay and credit-card like rewards;
• MoneyLion Investing: the first investment account for a significant portion of our customers, automatically manages their investments on a discretionary basis in custom portfolios from leading providers like Global X and Wilshire, and offered without account minimums;
• MoneyLion Crypto: an easy-to-use account that allows users to buy and sell certain popular cryptocurrencies, which we believe provides broader and more convenient access to investing in cryptocurrency for our customers, with no trading commissions or account minimums;
• Rounds Ups: a feature that allows customers to automatically “round up” qualifying purchases to the nearest dollar and transfer accrued round ups to the customer’s MoneyLion Investing account or MoneyLion Crypto account;
• Instacash Earned Income Advances: short-term 0% APR advances against expected salary or other recurring income deposits, available in moments of need, providing funds to help avoid overdraft fees or finance daily transactions;
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• Credit Builder Plus: a suite of services that help customers establish or repair credit, gain financial literacy and track financial health in a bundled membership subscription that includes banking and investing accounts, a loyalty rewards program and access to cost-effective credit;
• Financial Tracking: intelligent, automated platform that evaluates a customer’s financial situation across four key dimensions and delivers personalized guidance that helps them decide what actions to take and which products to use to improve their financial health, along with a personalized action plan meant to help customers reach their financial goals; and
• MoneyLife: online financial education content destination where customers can share and discover ideas, advice and insights regarding their financial lives, delivered through a personalized financial feed tailored to each user based on intent and interests.
Premium Mobile Banking: RoarMoney
RoarMoney is our FDIC-insured digital demand deposit account with zero minimums, premium features and rewards. Our RoarMoney demand deposit accounts are currently issued by MetaBank.
Customers can open a RoarMoney account in minutes through the MoneyLion mobile application, add funds to their account and begin spending using a RoarMoney virtual debit card. RoarMoney accounts also include a physical MoneyLion Debit Mastercard that can be used at any of the approximately 55,000 Allpoint ATM network locations to make no-fee withdrawals.
Our RoarMoney account includes some of the best features and rewards in banking, including:
• Zero account minimums;
• Approximately 55,000 Allpoint ATM network locations to make no-fee withdrawals;
• Paychecks delivered up to two days earlier than the scheduled payment date with direct deposit into the RoarMoney account, a feature accessible with no additional mandatory fees;
• Price Protection, a Mastercard-sponsored insurance benefit, worth up to $1,000 in individual coverage limits per year per MoneyLion Debit Mastercard cardholder;
• Access to mobile wallets such as Apple Pay and Google Pay;
• Shake ‘N’ Bank cashback rewards. Through Shake ‘N’ Bank rewards, customers can shake their phones after purchases of more than $10 for a reward, allowing them to earn up to five times the amount of their purchases back, subject to a cap of $500. Shake ‘N’ Bank rewards are deposited automatically into a customer’s MoneyLion investment account. Maintaining an investment account is a requirement in order to earn Shake ‘N’ Bank rewards; and
• Other cashback rewards opportunities when customers make qualified purchases with eligible merchants using their debit card. Rewards are automatically added to the RoarMoney account or to a MoneyLion investment account, through which a customer can either withdraw the cash reward or keep it invested. RoarMoney customers may receive 1-5% cashback on transactions at eligible merchants or merchant categories that are determined by MoneyLion.
RoarMoney offers robust security controls such as multi-factor authentication, contactless payment, instant card lock and robust protection against unauthorized purchases if cards are lost or stolen.
Each RoarMoney account is charged a $1 per month administrative fee, which is deducted from the customer’s RoarMoney account. The account administrative fee is retained by MoneyLion and is not shared with any of its third-party partners/vendors. If a customer’s account has less than $1 on deposit, the account will not be charged the administrative fee. We began charging this fee in 2020 and assessed the administrative fee on approximately 49% and 20%, respectively, of total RoarMoney accounts during the years ended December 31, 2021 and 2020.
Our RoarMoney demand deposit accounts are currently issued by MetaBank. MetaBank is also the issuer of all RoarMoney debit cards and sponsors access to debit networks for payment transactions, funding transactions and associated settlement of funds under a sponsorship agreement with MoneyLion. MetaBank also provides
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sponsorship and support for ACH and associated funds settlement. Under the agreement between MoneyLion and MetaBank, MetaBank receives all of the program revenue and transaction fees, and passes them on to MoneyLion, minus any obligations owed to MetaBank. MoneyLion pays all payment network fees and other program-specific expenses associated with RoarMoney. These payment network fees are set directly by the various payment networks and based on the transactions processed on their respective network. See “Our Business Model” herein for additional information.
RoarMoney accounts can be funded with a direct deposit, an external debit card, an external bank account, or mobile check capture. For an additional retail service fee of up to $4.95 paid to the retailer, customers may also make cash deposits to their RoarMoney debit cards through a network of over 90,000 retailers across the country, a service provided by Green Dot Corporation (“Green Dot”). Under our network membership agreement with Green Dot, all transactions made by customers through the Green Dot network are settled by MetaBank. MoneyLion does not pay Green Dot any fees for this service, nor does MoneyLion receive any of the retail service fee revenue collected by retailer. Green Dot may have revenue sharing arrangements with the retailer.
Shake ‘N’ Bank and other cashback rewards are paid for by MoneyLion and included in our marketing expense on our consolidated statement of operations. We pay a nominal fee to MetaBank for our customers to access their direct deposits up to two days earlier than the scheduled payment date. As part of a fee arrangement between MoneyLion and Allpoint, MoneyLion pays Allpoint a fee to provide RoarMoney customers with access to approximately 55,000 Allpoint ATM network locations at no additional cost to RoarMoney customers. Price Protection is an insurance benefit sponsored by Mastercard and provided to MoneyLion Debit Mastercard cardholders by the Member Companies of AIG Insurance Company and paid for by MoneyLion.
Personalized Investing: MoneyLion Investing
MoneyLion Investing is an online investment account that offers access to separately managed accounts invested based on model portfolios comprised of ETFs and managed on a discretionary basis. Advisory services related to the MoneyLion investment account are provided by ML Wealth, an SEC-registered investment adviser and an indirect wholly-owned subsidiary of MoneyLion Inc. Brokerage and custodial services are provided by DriveWealth, a third-party provider. See “Our Business Model” herein for additional information regarding our agreement with DriveWealth.
This fully-managed account model allows customers to set their investment strategy and let ML Wealth manage investment decisions to implement that strategy on a discretionary basis. An investment account holder simply identifies their investing comfort zone to receive a personalized portfolio, a mix of stock and bond ETFs. The customer is then free to make the portfolio more or less aggressive, if their preferences or goals change. Additionally, accounts are monitored on an ongoing basis and are managed to and rebalanced toward target allocations whenever there is money movement within an account, when model allocations are updated, as well as on a periodic basis. Auto-investing allows customers to automatically contribute into their investment account with recurring deposits directly into the account. In addition, customers can also choose to automatically round up purchases made either on their RoarMoney account or an external bank account to the nearest dollar. The accrued round ups can then be transferred into the customer’s MoneyLion Investing account and invested in accordance with the customer’s chosen investment strategy.
Investment strategies range from Steady-Income (most conservative; consistent investment income with an all-bond ETF portfolio and minimal exposure to market fluctuation) to Equity Only (most aggressive; taking on higher potential risk by investing in equity ETFs, in pursuit of the highest long-term potential gains). Thematic investing allows customers to invest in their interests and passions, with thematic ETFs aligned to specific topics such as technology innovation and social responsibility, by adding additional models to their investment account to be incorporated as part of their target allocations alongside their core allocation model.
Each active investment account is charged a $1 per month administrative fee, which is deducted from the customer’s investment account. The account administrative fee is retained by MoneyLion and is not shared with any of its third-party partners/vendors. If a customer’s account has no balance, the account will not be charged the administrative fee. We began charging this fee in the fourth quarter of 2019 and for the years ended December 31, 2021 and 2020, approximately 60% and 87%, respectively, of our investment accounts have been charged the administrative fee. There are no asset-based management fees charged or minimum balance required to maintain an investment account.
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Portfolios are powered by two of the leading global investment solution providers in the industry, Wilshire and Global X. Wilshire provides ML Wealth with consulting services with respect to the development and maintenance of risk-based asset allocation and ETF selection for the core allocation models that ML Wealth offers to customers. Global X and Wilshire each provide research and consulting regarding the construction of the thematic portfolios that ML Wealth offers to customers. ML Wealth compensates Wilshire directly through a flat fee investment consulting arrangement for these services, including asset allocation research and advice, as well as security due diligence and selection. ML Wealth does not compensate Global X for these services.
As of December 31, 2021, ML Wealth had assets under management of approximately $14.7 million. Certain cashback rewards offered by MoneyLion (or its affiliates) may be added directly to the MoneyLion investment account. In those cases, the customer is required to maintain an investment account to be eligible for the reward. These rewards are offered and funded by MoneyLion and not by ML Wealth. See “Premium Mobile Banking: RoarMoney” herein.
Cryptocurrency Access: MoneyLion Crypto
MoneyLion Crypto is an online cryptocurrency account that enables customers to buy, sell and hold cryptocurrency. The account is provided by Zero Hash LLC and its affiliate, Zero Hash Liquidity Services LLC (collectively, “Zero Hash”). The Zero Hash entities are registered as money services businesses with FinCEN and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii.
RoarMoney accountholders can open a MoneyLion Crypto account through the MoneyLion mobile application and fund it via their RoarMoney account. Customers are subject to a minimum purchase per transaction of $1 and a daily maximum total purchase limit of $2,500. In addition, customers can also choose to automatically transfer an amount of their choice (minimum $1) at the frequency of their choice (daily, weekly, biweekly or monthly) from their RoarMoney account to purchase crypto assets available on the MoneyLion Crypto platform, as well as choose to automatically round up purchases made either on their RoarMoney account or an external bank account to the nearest dollar. The accrued round ups can then be transferred into the customer’s MoneyLion Crypto account and invested in Bitcoin (as described further below).
As of December 31, 2021, the only cryptocurrencies available through the MoneyLion Crypto account were Bitcoin and Ether. In January 2022, MoneyLion Crypto expanded to include Bitcoin Cash and Litecoin. Transactions in additional digital assets may only be made available through the MoneyLion Crypto account if mutually agreed between us and Zero Hash. We have evaluated and will continue to evaluate expanding the cryptocurrency offerings available to our customers through their MoneyLion Crypto account in light of, among other factors, customer demand, estimated costs, potential risks and applicable laws and regulatory guidance relating to different types of cryptocurrency and digital assets. Both MoneyLion and Zero Hash must consent in writing before adding any additional digital assets to the program.
There are no mandatory fees or minimum account balances associated with the MoneyLion Crypto account.
Features to Encourage Sound Saving and Investing Habits: Round Ups
Through MoneyLion’s round up feature, customers can choose to automatically round up qualifying purchases (excluding, for instance, balance transfers and ATM transactions) made either on their RoarMoney account or an external bank account to the nearest dollar. Once round ups reach $5, the accrued round ups are either, at the election of the customer upon activating round ups, transferred to the customer’s MoneyLion Investing account and invested in accordance with the customer’s chosen investment strategy or transferred to the customer’s MoneyLion Crypto account and invested in Bitcoin. Currently, round ups transferred to a customer’s MoneyLion Crypto account are only invested in Bitcoin and not any other cryptocurrency available through MoneyLion Crypto.
In order to enable round ups, a customer is required to designate (i) at least one debit or credit card that is linked to the MoneyLion app as a transaction source from which qualifying purchases will be rounded up and (ii) a bank account that is linked to the MoneyLion app from which MoneyLion is authorized to debit amounts to fund round ups.
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Customers have the option to choose to double each round up in order to increase the funds they invest from rounded up purchases. If customers do not have sufficient funds to cover a full round up transfer, MoneyLion debits the lesser available amount instead of the full round up amount. All MoneyLion users are eligible to sign up for round ups, and there are no additional fees required to use the round up feature, though separate fees may be required associated with establishing or utilizing RoarMoney, MoneyLion Investing and MoneyLion Crypto accounts.
We believe round ups help our customers establish good saving and investing habits, allowing them to build their MoneyLion Investing or MoneyLion Crypto portfolio with discipline and consistency. Moreover, enabling automatic contributions through round ups helps customers stay invested even in challenging times, with frequent and regular investments that avoid overreactions to market movements and headlines. We believe this feature provides our customers with the option to take easy action to live a better financial life, helping them to achieve their financial goals or bridge times of financial need.
Access to Earned Money: Instacash
Instacash is our 0% APR advance product that gives customers early access to their recurring income deposits. Customers can access Instacash advances at any time during a regular deposit period up to their advance limit, providing customers with the flexibility to cover temporary cash needs and avoid costly overdraft fees. When customers link their RoarMoney account or an external checking account, they can qualify for Instacash. No credit check is required.
Eligibility for Instacash is based on the verification of the customer’s checking account and the customer’s identity, and the advance limit is primarily based on a percentage of income or other recurring deposit amounts detected through the linked checking account. This process is fully automated unless there are any issues flagged via our customer identification processes. MoneyLion has the sole authority to make Instacash advances.
There are no fees associated with regular delivery of funds to either a RoarMoney account (typically delivered within 12-48 hours) or an external checking account (typically delivered within two to five business days). However, customers have the option to pay an additional fee in order to receive their funds on an expedited basis (typically within minutes or less), the amount of which is based on the amount of the disbursement and whether the funds are delivered to a RoarMoney account or an external checking account. Customers may also choose to leave MoneyLion an optional tip for use of the Instacash service. Instacash advances are included in receivables, net in our consolidated balance sheets.
Building Credit History and Giving Access to Credit: Credit Builder Plus
Our Credit Builder Plus membership program offers a proven path for our customers to access credit and establish or rebuild history, build savings, establish financial literacy and track their financial health.
For a monthly cost of $19.99, customers receive a suite of services including banking and investment accounts, credit tracking and financial literacy content, rewards programs and access to loans of up to $1,000 at competitive rates offered by MoneyLion lending subsidiaries, allowing our customers to establish up to twelve months of payment history with all three credit bureaus. Credit Builder Plus members do not pay additional recurring fees for the services included in the membership program — the $1 per month administrative fees for the RoarMoney account and MoneyLion investment account are waived. Credit Builder Plus members may incur certain fees or other charges for using specific features of the membership services, such as interest charges on a loan they choose to borrow or non-recurring convenience fees associated with their RoarMoney account.
We offer our Credit Builder Plus members access to the Lion’s Share Loyalty Program, where members can earn rewards of up to $19.99 per month. The size of the Lion’s Share reward depends on a customer’s number of logins into the MoneyLion app and purchases using their RoarMoney account in that month. Expenses related to our Lion’s Share Loyalty Program are included in our marketing expense. For the year ended December 31, 2021, on average approximately 25% of our Credit Builder Plus customers who met the minimum eligibility criteria received this benefit.
As part of the Credit Builder Plus membership program, members may apply for a Credit Builder Plus secured personal loan. While most other credit builder products in the market do not give the consumer any of the loan funds upfront, MoneyLion provides a portion of the loan proceeds right away alongside access to Instacash
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advances to help cover everyday expenses. The rest of the loan funds are saved for the customer in a credit reserve account, an account in the customer’s name maintained by ML Wealth and held at DriveWealth (“Credit Reserve Account”). Based on the customer’s credit profile, the MoneyLion lending subsidiary will disburse a portion of the loan principal to the customer’s selected bank account, with the remainder deposited in a Credit Reserve Account. Funds in the Credit Reserve Account serve as collateral that partially secures the loan, which may not be withdrawn while the loan is outstanding and may be liquidated if the customer defaults on their loan obligations. Funds in the Credit Reserve Account are held in low-volatility money market funds or cash sweep vehicles and become fully accessible to the customer once the full loan amount has been repaid. Monitoring of the collateral is done through monthly reviews of the collateral value relative to the value of the outstanding loan-based finance receivables. With the membership, customers receive their credit score as well as key credit factors, such as credit utilization, to track their progress.
For the year ended December 31, 2021, the average Credit Builder Plus loan was $705, with a weighted average APR of 21.29%. Credit Builder Plus loans range in size from $500 to $1,000 with an interest rate range from 5.99% to 29.99%. All Credit Builder Plus loans have 12-month terms. Our underwriting is driven by proprietary models that combine applicants’ prior credit history, based on credit bureau data, with bank account and income data and their repayment history with MoneyLion. We do not have a minimum FICO score for approval of the Credit Builder Plus loans. MoneyLion develops and executes all credit policies and risk management strategies directly. While MoneyLion does not provide a guarantee for the performance of loans and other receivables that we originate, we sold these loans and other receivables at a discount of approximately 10% to IIA. Beginning in the fourth quarter of 2021, we transitioned our primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. The receivables are included in receivables, net on our consolidated balance sheet.
Prior to our launch of Credit Builder Plus in 2019, we offered a ML Plus membership through which we originated unsecured personal loans, ML Plus loans. The ML Plus membership transitioned into the Credit Builder Plus membership in the second quarter of 2020. ML Plus loans were fixed at $500, with an interest rate of 5.99%. All ML Plus loans had 12-month terms. Our underwriting was driven by proprietary models that combine applicants’ prior credit history, based on credit bureau data, with bank account and income data and their performance history with MoneyLion. MoneyLion develops and executes all credit policies and risk management strategies directly. While MoneyLion does not provide a guarantee for the performance of loans and other receivables that we originate, we sold these loans and other receivables at a discount of approximately 10% to IIA. See “ML Plus loans” above for more information on ML Plus loans.
Advice and financial wellness: Financial Tracking
In addition to offering a complementary suite of financial products, MoneyLion has pioneered a new approach to personal financial management with Financial Heartbeat, an intelligent, automated tool that guides customers on their financial journey. Financial Heartbeat evaluates customers’ financial situation across four key dimensions: SAVE (savings and financial preparedness), SPEND (spending and personal budget), SHIELD (insurance needs and coverage) and SCORE (credit tracking and health). Through our easy-to-use interface, customers can review the key issues impacting their financial situation, decide what actions to take, evaluate which products to use and receive guidance on how to stay motivated on their journey towards financial wellness. In addition, GamePlan provides our customers with a personalized action plan, including a checklist with tasks, meant to help them reach their financial goals across different categories such as spending, saving and more.
Engaging content and improving financial literacy: MoneyLife
Consistent with our vision of establishing MoneyLion as a lifestyle brand, in 2021 we introduced MoneyLife, an online financial education content destination. MoneyLife is a video content-driven educational platform available on the MoneyLion app and our website where customers can share and discover ideas, advice and insights regarding their financial lives. MoneyLife includes content driven by financial advice and education influencers, tools to achieve financial goals and additional ways of earning rewards to shop and save. Our acquisition of MALKA accelerates our ability to engage with consumers across all digital and emerging channels, allowing us to expand our vision of a daily destination, which started with our own MoneyLife content, with personalized content that educates, informs and supports consumers’ financial decision making and other general interests. We estimate that
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in the fourth quarter of 2021, MALKA’s content creators provided over 69 million MoneyLion brand impressions. MoneyLife will drive additional prospective customers to MoneyLion and increase customer engagement and cross-sell opportunities for both MoneyLion and its affiliate partners.
Our Business Model
We offer a range of financial products and services through a single platform delivered via a mobile application. Our subsidiary, MALKA, provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors.
Our revenue is primarily broken out into the following categories:
• Fee income: In 2021, 68% of revenue, $116 million in revenue
• MoneyLion Investing (administration fees), Crypto (revenue share)
• RoarMoney (interchange fees, out-of-network ATM fees, administration fees)
• Instacash (instant transfer convenience fees, tips)
• Membership subscription revenue: In 2021, 19% of revenue, $32 million in revenue
• Credit Builder Plus (monthly recurring membership fees)
• Net interest income on finance receivables: In 2021, 4% of revenue, $7 million in revenue
• Credit Builder Plus (loan interest income)
• MoneyLion Plus (loan interest income)
• Unsecured personal loans (loan interest income)
• Affiliates income: In 2021, 6% of revenue, $11 million in revenue
• Affiliates (fees earned from affiliate partners)
• Other income: In 2021, 3% of revenue, $5 million in revenue
• MALKA (media and content production, client services, licensing fees)
Our Adjusted Revenue is primarily broken out into the following categories:
• Fees: In 2021, 76% of Adjusted Revenue, $125 million in Adjusted Revenue
• Instacash (instant transfer convenience fees, tips)
• Credit Builder Plus (monthly recurring membership fees, loan instant transfer convenience fees)
• Payments: In 2021, 8% of Adjusted Revenue, $14 million in Adjusted Revenue
• RoarMoney (interchange fees, out-of-network ATM fees, administration fees)
• Advice: In 2021, 10% of Adjusted Revenue, $17 million in Adjusted Revenue
• MoneyLion Investing (administration fees), Crypto (revenue share)
• Affiliates (fees earned from affiliate partners)
• MALKA (media and content production, client services, licensing fees)
• Interest: In 2021, 6% of Adjusted Revenue, $10 million in Adjusted Revenue
• Credit Builder Plus (loan interest income)
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Adjusted Revenue is a non-GAAP measure. See the “Non-GAAP Measures” section above for a reconciliation of Adjusted Revenue to total revenues, net.
We originate loans directly under our lending licenses or pursuant to applicable exemptions across various states in the U.S., and we service all of the loans that we originate. Our subsidiary, ML Plus LLC, makes Instacash advances that we service.
Receivables originated on our platform, including Credit Builder Plus loans and Instacash advances, were primarily financed through IIA until the end of the fourth quarter of 2021. IIA was formed in 2016 and is an indirect wholly owned subsidiary of MoneyLion. IIA had been our primary source of funding for originated receivables since 2018. IIA is organized as a Delaware limited liability company and is treated as a partnership for United States income tax purposes. IIA’s membership interests were issued in separately designated series, with each series consisting of Class A Units and Class B Units. IIA investors owned all non-voting Class B Units of the applicable series they invested in, which entitled them to a targeted, non-guaranteed, preferred return of typically 12% per year. ML Capital III LLC (“ML Capital III”), an indirect wholly owned MoneyLion subsidiary, is the managing member of IIA and owned the Class A Units of each series, which entitled ML Capital III to returns that exceeded the targeted preferred return on the Class B Units (if any). IIA used proceeds from the sale of Class B Units to investors to purchase borrower payment dependent promissory notes from Invest in America Notes SPV I LLC and Invest in America Notes SPV IV LLC, each an indirect wholly-owned MoneyLion subsidiary. The collateral consisted of a portfolio of underlying MoneyLion loans and advance receivables. Investors in Class B Units funded their investment into IIA at the time of subscription, which proceeds were used to finance receivables originated on MoneyLion’s platform. At the end of the fourth quarter of 2021, IIA was wound down and all assets were returned to investors. As of December 31, 2021, IIA had no assets.
Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. In September 2021, ROAR 1 SPV Finance LLC, an indirect wholly owned subsidiary of MoneyLion (the “ROAR 1 SPV Borrower”), entered into a $100 million credit agreement (the “ROAR 1 SPV Credit Facility”) with a lender for the funding of receivables, which secure the ROAR 1 SPV Credit Facility. As of December 31, 2021, there was an outstanding principal balance of $78 million under the ROAR 1 SPV Credit Facility. In December 2021, ROAR 2 SPV Finance LLC, an indirect wholly owned subsidiary of MoneyLion (the “ROAR 2 SPV Borrower”), entered into a $125 million credit agreement (the “ROAR 2 SPV Credit Facility”) with a lender for the funding of receivables, which secure the ROAR 2 SPV Credit Facility. As of December 31, 2021, there was an outstanding principal balance of $68 million under the ROAR 2 SPV Credit Facility.
We depend on certain key third-party partners to provide certain of our products and services. Our RoarMoney demand deposit accounts and associated debit cards are currently issued by MetaBank. Our subsidiary, ML Plus LLC, is party to an Account Servicing Agreement (as amended from time to time, the “Account Servicing Agreement”) with MetaBank, which had an initial three-year term ending January 2023 and was amended in December 2021 to extend the term until January 2026, with automatic renewal for successive two-year periods unless either party provides written notice of non-renewal, which may be provided without cause to the other party at least 180 days prior to the end of any such term. In addition, upon the occurrence of certain early termination events, either we or MetaBank may terminate the Account Servicing Agreement immediately upon written notice to the other party. The Account Servicing Agreement does not prohibit MetaBank from working with our competitors or from offering competing services, nor does it prevent us from working with other banks to provide similar services. Our partnership with MetaBank allows us to provide deposit accounts and debit cards while complying with various federal, state and other laws. MetaBank also sponsors access to debit networks and ACH for payment transactions, funding transactions and associated settlement of funds. Under the terms of the Account Servicing Agreement, MetaBank has the right to supervise, oversee, monitor and review our performance, and we have to comply with applicable laws and regulations, including data privacy, BSA/ U.S. anti-money laundering (“AML”) and Customer Identification Program requirements. MetaBank receives all of the program revenue and transaction fees, and passes it on to MoneyLion, minus any obligations owed to MetaBank. In addition, we are generally responsible for any expenses related to this arrangement, including payment network fees, marketing expenses, vendor management expenses and taxes.
In connection with our arrangements with MetaBank, we have also entered into a multi-year service agreement with Galileo, in which Galileo has agreed to process all of our transactions for our RoarMoney accounts and debit cards, and to handle corresponding payments and adjustments. Galileo also maintains cardholder information,
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implements certain fraud control processes and procedures and provides related services in connection with the RoarMoney accounts and debit cards. We pay the greater of actual fees or the minimum monthly fee for these services. Following the initial term, the service agreement renews for successive two-year periods unless either party provides written notice of non-renewal, which may be provided without cause, to the other party at least 180 days prior to the end of any such term. The occurrence of certain events would provide each party with an early termination right under the agreement.
Our MoneyLion Investing offering is currently reliant upon DriveWealth, a third-party broker-dealer partner, which provides brokerage and related services for the investment accounts facilitated through our platform. Under the terms of ML Wealth’s amended and restated Carrying Agreement with DriveWealth, which was entered into in October 2020, DriveWealth provides brokerage and custodial services to ML Wealth’s advisory customers, including by executing orders successfully submitted by ML Wealth via its master trading account. The Carrying Agreement has an initial three-year term ending October 2023, which automatically renews for successive one-year periods unless either party provides written notice of non-renewal, which may be provided without cause, to the other party at least 60 days prior to the end of any such term. In addition, upon the occurrence of certain early termination events, either we or DriveWealth may terminate the agreement immediately upon written notice to the other party. The Carrying Agreement does not prohibit DriveWealth from working with our competitors or from offering competing services, and DriveWealth currently provides similar services to a variety of other financial institutions. Under our arrangement, our customers must sign a Customer Account Agreement with DriveWealth, and DriveWealth maintains ultimate authority on whether to reject the opening of an account, or to take any actions related to an account, including closing any account, liquidating the assets under an account or limiting the activities of any account, if DriveWealth deems it necessary to comply with applicable laws or if there is a reasonable risk-based justification for doing so.
Our MoneyLion Crypto account offering is currently reliant upon Zero Hash, a third-party regulated digital asset settlement provider. Under the terms of the licensing and cooperating agreement signed with Zero Hash LLC and its affiliate, Zero Hash Liquidity Services LLC, entered into on March 26, 2021, Zero Hash pays us a share of the fees that they earn from our customers in exchange for MoneyLion enabling Zero Hash to effect digital currency-related transactions for our customers with RoarMoney accounts (as described further below) that reside in states where Zero Hash is authorized to conduct digital assets activities, which currently includes all U.S. states and the District of Columbia except for New York and Hawaii. Both parties agreed, at launch, to limit the cryptocurrency offerings to Bitcoin and Ether, which was subsequently expanded to include Bitcoin Cash and Litecoin in January 2022. We have evaluated and will continue to evaluate expanding the cryptocurrency offerings available to our customers through their MoneyLion Crypto account in light of, among other factors, customer demand, estimated costs, potential risks and applicable laws and regulatory guidance relating to different types of cryptocurrency and digital assets. Both MoneyLion and Zero Hash must consent in writing before adding any additional digital assets to the program.
Under the terms of our agreement with Zero Hash, Zero Hash is primarily liable for its digital asset activities. MoneyLion is not directly involved in any cryptocurrency transactions or the exchange of fiat funds for cryptocurrency taking place at or through Zero Hash, which provides all custody, trading and pricing of the crypto assets. We enable Zero Hash to offer its services to MoneyLion Crypto customers through the MoneyLion platform; each customer opening a MoneyLion Crypto account is required to enter into a separate user agreement with Zero Hash (the “Zero Hash User Agreement”) to engage in the buying and selling of the available cryptocurrency offerings. The role of MoneyLion is limited to passing instructions from MoneyLion customers to a depository bank (that provides the RoarMoney demand deposit account) that instruct the depository bank to transfer funds to Zero Hash for the crypto asset transaction(s). The depository bank then sends, pursuant to the customer’s instructions, funds directly to Zero Hash.
The opening of Zero Hash accounts, approval of Zero Hash customers, the Zero Hash User Agreement, supervision of Zero Hash accounts used for the custody of crypto assets and the crypto asset transactions themselves are all within the exclusive control of Zero Hash. Zero Hash maintains all liability for the money transmission, custody and transfer services provided pursuant to the Zero Hash User Agreement, and further assumes all liability with respect to their provision of cryptocurrency services, the purchase and sale of cryptocurrency, customer claims regarding Zero Hash’s settlement of cryptocurrency and Zero Hash’s failure to comply with applicable law related to the trading, settlement and custodian services it provides to customers. As MoneyLion is not directly involved in the custody, trading or pricing of any crypto assets and instead enables Zero Hash to offer its crypto asset services to MoneyLion Crypto customers, MoneyLion does not maintain insurance policies covering the crypto assets in which MoneyLion Crypto customers transact. MoneyLion’s direct arrangement with Zero Hash obligates Zero Hash to maintain all
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applicable licenses and to comply with applicable law and also specifically requires Zero Hash to indemnify us for, among other things, all liabilities, losses, expenses and costs arising out of, in connection with or relating to (a) Zero Hash’s failure to perform or comply with the provisions of the agreement, (b) Zero Hash’s cryptocurrency business and their provision of cryptocurrency transaction services, (c) any claims or disputes between Zero Hash and a customer with respect to the purchase and sale of cryptocurrency and (d) any failure by Zero Hash to comply with, or perform any action required by, applicable laws, rules and regulations. However, Zero Hash is not required to indemnify us or MoneyLion Crypto customers for any risk of loss related to customers’ underlying crypto assets, nor is Zero Hash required to maintain an insurance policy with respect to the crypto assets of MoneyLion Crypto customers custodied with Zero Hash. Zero Hash’s wallet technology provider, Fireblocks, is SOC 2 Type II certified by Ernst & Young and undergoes a SOC 2 Type II review on an annual basis, as well as regular penetration testing by third-party firms to evaluate the Fireblocks security architecture. Fireblocks also maintains an insurance policy which has coverage for technology, cyberattacks and professional liability and is rated “A” by A.M. Best based on the strength of the policy. However, Zero Hash does not maintain separate insurance coverage for any risk of loss with respect to the digital assets that they custody on behalf of customers. As a result, customers who purchase cryptocurrencies through MoneyLion Crypto may suffer losses with respect to their digital assets that are not covered by insurance and for which no person is liable for damages and may have limited rights of legal recourse in the event of such loss. For additional information, see “Risk Factors — Risks Relating to Financial Regulation — States may require that we obtain licenses that apply to blockchain technologies and digital assets.”
Our Growth Strategy
We believe we are in the early innings of realizing the full value of our existing platform. We seek to capitalize on the structural advantages inherent in being a digitally native, customer-centric and built-to-scale platform as we continue capturing market share and economic gains. Our multi-pronged growth strategy, designed to continue building upon the momentum we have generated to date to create even greater value for consumers, is to:
• Continue penetrating our large addressable market;
• Increase top-of-funnel conversion;
• Accelerate cross-sell and attachment rates with our platform approach;
• Deliver new products, features and content;
• Grow our affiliate network and expand our corporate partnerships; and
• Evaluate additional strategic acquisitions.
Continue penetrating our large addressable market: Our target market is the 100 million middle-class Americans whose needs are not well-addressed by the current financial system. We define this market as individuals with household incomes up to $150,000 and FICO scores up to 750. While we have achieved significant growth and scale to date through developing a personalized, all-in-one, digital financial platform to meet the needs of our customers, the addressable market is vast. We believe we have a long runway for future growth, and we have the ability to substantially increase our marketing spend versus our historical expenditure levels. We believe we have developed a highly efficient customer acquisition approach that will allow us to effectively deploy the expanded marketing spend and drive new customer growth.
Increase top-of-funnel conversion: We have a significant opportunity to increase the rate at which we convert consumers we reach through various marketing channels into customers. While we have invested in a technology-based approach to customer acquisition that is highly efficient, we believe scale will allow us to further enhance top-of-funnel conversion. Expanding our market presence and consumer awareness of our brand is expected to result in higher rates of customer conversion. In addition, a growing customer base and associated financial and transactional data points will enhance our consumer insights and allow us to better address the needs of our target market, the middle class. Those insights will allow us to innovate and offer an even broader suite of financial products, attracting more customers onto the MoneyLion platform.
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Accelerate cross-sell and attachment rates with our platform approach: We take a platform approach to address our customers’ entire financial lives. The combination of a deep, data-driven understanding of our customers’ pain points and a broad suite of products allows us to help improve our customers’ financial well-being while producing strong revenue growth and profitability. We believe the number of customers using two or more products will further expand as more customers see value in our holistic platform approach, and as we continue to innovate and launch new products. Not only does multiple product engagement increase revenue per customer and drive revenue growth, it also further enhances our profitability by driving a lower cost to acquire and service customers.
Deliver new products, features and content: Our product and engineering teams are constantly innovating, leveraging both our data-driven understanding of our customers and our existing technology infrastructure to build new, impactful products and features. Our products and services follow established product development steps, including research and development, design, validation and testing. For each product launch, we generally anticipate expenses related to technology, product design and implementation, including compensation and benefits, to amount to approximately $1.5 to $2.0 million on average. We are developing several new products and services to continue our mission to better serve our customers which will provide further financial flexibility for MoneyLion customers.
Another way we aim to better serve our customers is through the creation of digital media and content that educates our customers about how to improve their financial health by using MoneyLion’s and our affiliates’ products and services. MoneyLife, our online financial education content destination, includes content driven by financial advice and education influencers, tools to achieve financial goals and additional ways of earning rewards to shop and save. Through MoneyLife, we will drive additional prospective customers to MoneyLion and increase customer engagement and cross-sell opportunities for both MoneyLion and our affiliate partners. Our acquisition of MALKA will accelerate our ability to engage with consumers across all digital and emerging channels.
Grow our affiliate network and expand our corporate partnerships: We have established an affiliate network to offer products and services to our customers as guided by our platform. We will continue to dramatically expand our pool of affiliate partners to provide our customers an ever-growing selection of products that can lower their cost of living and improve their quality of life.
MoneyLion partners with companies to provide company-sponsored financial wellness programs that are designed to decrease financial stress and bolster productivity by offering employees the financial products, education and tailored advice they require. We expect to continue to add corporate partners to deliver our products in a cost-effective manner to our targeted customer segment.
Evaluate additional strategic acquisitions: We acquired MALKA in November 2021. MALKA is a creator network and content platform that produces digital media and content across entertainment, sports, games, live streaming and other sectors. MALKA’s content capabilities can drive industry-leading customer acquisition and retention at scale to help accelerate MoneyLion’s customer growth. By combining MALKA’s capabilities with MoneyLion’s financial products and extensive first-party data, we hope to turn the MoneyLion mobile application into a daily destination for our customers with personalized content that educates, informs and supports customers’ financial decisions.
In addition, on December 15, 2021, we entered into an agreement to acquire Even Financial, an embedded finance marketplace that digitally connects and matches consumers with real-time personalized financial product recommendations from a growing network of financial institution, insurance and fintech partners, which closed on February 17, 2022. This acquisition strengthens MoneyLion’s platform by improving customers’ abilities to find and access the right financial products to help them manage their financial lives. The acquisition also extends our addressable market, extends the reach of our own products, diversifies our revenue mix and furthers our ambition to be the premier financial super app for hardworking Americans.
We will continue to evaluate opportunistic acquisitions that would allow us to either expand our product and service offerings to our existing customers or allow us to enter new verticals.
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Marketing
Our customer acquisition channels combine a mix of online and offline, as well as paid and unpaid, channels. They include marketing affiliates, sponsorships, radio, direct mail, organic web traffic, email marketing and online advertising, among others.
MoneyLion applies a full-funnel marketing approach both in media and in content creation. By creating complete marketing programs, we believe we generate a sustainable cost advantage across our various customer acquisition channels. We create multiple secondary content pieces from an original long-form content asset, and then cycle these content assets and marketing narratives across earned media channels and our own platforms, including our MoneyLion mobile application.
Customer Service
We are dedicated to addressing the needs of our customers. We believe that our multi-pronged approach to providing cost-effective customer service helps to support customer satisfaction. We offer a searchable, robust self-service Frequently Asked Questions database within our help center, where most questions can be easily answered 24 hours a day, seven days a week. In addition, we offer both a chatbot and a live chat service with an agent, either through the home screen of the MoneyLion app or on the MoneyLion web dashboard. Finally, should a customer wish to speak with a live agent over the phone or email their inquiries to our customer support team, we offer those support services as well.
Competitive Landscape
Consumer financial services is a large, fragmented and competitive market, and we compete in varying degrees with a range of existing providers of consumer-focused banking, lending, investing and other financial products. Our competitors are generally large, well-capitalized financial services companies. Some of our current and potential competitors have longer operating histories, particularly with respect to financial products similar to what we offer, significantly greater financial, technical, marketing and other resources and a larger customer base. Our competitors include:
Banking Competitors: Traditional banks and credit unions (e.g., Chase and Wells Fargo), new entrants obtaining banking licenses (e.g., Varo Money) and other non-bank digital providers that white label regulated products, offering banking-related services (e.g., Chime);
Lending and Earned Income Advance Competitors: Traditional banks and credit unions, specialty finance and other non-bank providers, offering consumer lending-related or advance products (e.g., Upstart and Dave);
Marketplace Competitors: Online financial product and service marketplaces and aggregators that offer consumer financial products and services (e.g., Credit Karma and WalletHub); and
Investing Competitors: Online wealth management platforms, such as robo-advisors, offering consumer investment services (e.g., Betterment and Stash).
We believe other market participants do not adequately meet the needs of the 100 million middle-class Americans who make up our target market. We feel our data-driven approach, single-core technology stack, holistic product offering and financial guidance focus represent compelling competitive differentiators that will allow us to continue to capture market share and drive growth.
Management Team
We are a founder-led business with a diverse management team that brings together experienced viewpoints from both technology and financial services.
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Employees and Culture
We believe we have built a unique company culture. We attract smart and talented individuals, who possess a passion for innovation and flourish when provided the opportunity to learn and grow. We provide our employees with support programs designed to allow employees to thrive and our teams to outperform. Incentives are further aligned through a broad-based equity compensation program across the employee base.
In operating multiple offices across the globe, bringing together some of the best talent from both the U.S. and around the world, we place significant emphasis on having a seamless, one-firm culture and employee experience. This model has paid dividends for our global team members as reflected in our employee engagement and retention.
As the focal point of our human capital strategy, we attract and retain a diverse, talented and motivated employee base. Career growth at MoneyLion may include manager skills and leadership training, peer-based recognition and rewards, transparent incentive and promotion processes and time and budget allocated to learning and development initiatives.
We place special emphasis on diversity, from our recruitment process to our career development programs. Our management team members come from diverse backgrounds and seek to build a company with diversity clearly established as an organization priority. Here Women Roar is an employee resource group that aims to champion the growth and advancement of women at MoneyLion by investing in their social, personal and professional development. In 2021, we launched additional employee resource groups to further support our employees of diverse backgrounds.
As of December 31, 2021, we had a total of 556 employees across all locations, which included 155 MALKA employees who joined the MoneyLion team in connection with the MALKA Acquisition. Of our employees, approximately 15%, 20%, 46%, 6% and 1% are located in our New York City, Jersey City, Kuala Lumpur, Santa Monica and Sioux Falls offices, respectively, and the remaining approximately 13% work remotely. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Privacy and Security
Our business involves the collection, storage, processing, use, sharing and transmission of PII and other sensitive data, including customer and employee information, financial information and information about how customers interact with our platform. We collect, store, process, use, share and transmit data while maintaining physical, electronic and procedural safeguards. We maintain physical security measures designed to guard against unauthorized access to systems and use safeguards such as firewalls and data encryption. We also enforce physical access controls to our facilities and we authorize access to PII on a least privilege access model only for those employees or agents who require it to fulfill the responsibilities of their jobs.
To prevent against fraud, we have built fraud detection capabilities to protect our customers and merchants. We first seek to establish the consumer’s identity using basic information following our KYC protocols. The consumer is then evaluated by our fraud model, and we will then either move forward in the approval processes or request additional data from the consumer. Our sophisticated fraud models use approximately 40-80 other data points to make a near-instantaneous decision on whether to block a transaction. There are also secondary rules that, when triggered, are designed to ensure a transaction is sent to fraud investigators.
The technology infrastructure supporting our platform optimizes the storage and processing of large amounts of data and facilitates the deployment and operations of large-scale products and services in our cloud computing environments. Our technology infrastructure is designed around industry practices intended to reduce downtime in the event of outages or disaster recovery occurrences. We incorporate multiple layers of protection for business continuity and system redundancy purposes to address cybersecurity risks and loss of data. We have a robust cybersecurity program designed to protect our technology, including regularly testing our systems to identify and address potential vulnerabilities. We strive to continually improve our technology infrastructure to enhance the customer experience and to increase efficiency, scalability and security.
As a result of our collection, storage, processing, use, sharing and transmission of PII and other sensitive data, we are subject to certain privacy and information security laws, including, for example, the GLBA, the CCPA, the CPRA and other state privacy regulations, and other laws, rules and regulations designed to regulate consumer information and data privacy, security and protection and mitigate identity theft. These laws impose obligations
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with respect to the collection, processing, storage, disposal, use, transfer, retention and disclosure of PII, and some may require that financial services providers have in place policies regarding information privacy and security. In addition, under certain of these laws, we must provide notice to consumers of our policies and practices for sharing PII with third parties, provide notice of changes to our policies and, with limited exceptions, give consumers the right to prevent use of their PII and disclosure of it to third parties. Further, all 50 states and the District of Columbia have adopted data breach notification laws that impose, in varying degrees, an obligation to notify affected individuals in the event of a data or security breach or compromise of our systems, including when their PII has or may have been accessed by an unauthorized person. These laws may also require us to notify relevant law enforcement, regulators or consumer reporting agencies in the event of a data breach. Some laws may also impose physical and electronic security requirements regarding the safeguarding of PII. Privacy and information security laws evolve regularly, and complying with these various laws, rules, regulations and standards, and with any new laws or regulations or changes to existing laws, could cause us to incur substantial costs that are likely to increase over time, requiring us to adjust our compliance program on an ongoing basis, change our business practices in a manner adverse to our business, divert resources from other initiatives and projects and restrict the way products and services involving data are offered. See “Risk Factors — Risks Relating to Cybersecurity — The collection, processing, use, storage, sharing and transmission of PII and other sensitive data are subject to stringent and changing state, federal and international laws, regulations and standards and policies and could give rise to liabilities as a result of our failure or perceived failure to protect such data, comply with privacy and data protection laws and regulations or adhere to the privacy and data protection practices that we articulate to our customers.”
Regulatory Environment
We operate in a rapidly evolving regulatory environment and are subject to extensive and complex regulation under U.S. federal law and the laws of the states in which we operate. These cover most aspects of our business and include laws, regulations, rules and guidance relating to consumer finance and protection, privacy and data protection, banking, payments and investment advisory services, among other areas. For example, with respect to our lending business, certain state laws may, if applicable, regulate interest rates and other charges and require certain disclosures to our customers, and may also require licensing for certain activities. In addition, other federal and state laws, public policy and general principles of equity, such as with respect to the protection of consumers, unfair and deceptive acts or practices and debt collection practices, may apply to our activities involving the origination, servicing and collection of consumer loans, as well as to our activities in banking, cash advances, payments, investment advisory services and other areas. We are impacted by these laws and regulations both directly and indirectly, including by way of our partnership with MetaBank, which provides deposit accounts and debit cards to our customers. Ensuring compliance with these laws and regulations imposes significant burdens on our business operations.
We could become subject to additional legal or regulatory requirements if laws or regulations change in the jurisdictions in which we operate, or if we were to release new products or services, under applicable laws or regulations to which we are not currently subject today. In addition, the regulatory framework for our products and services is evolving and uncertain as federal and state governments and regulators consider the application of existing laws and potential adoption of new laws. Although some of the products and services that we offer are relatively novel, we are typically required to comply with the existing regulatory regimes for consumer financial products and services. New laws and regulations, as well as continued uncertainty regarding the application of existing laws and regulations to our products and services, may negatively affect our business. This could include the need to obtain new or different types of licenses or comply with additional laws and regulations in order to conduct our business.
State licensing requirements and regulation
Our lending operations must satisfy the laws and standards of each individual U.S. state in which we operate. This means that when individual states differ in how they regulate consumer lending activity, we must operate in accordance with those jurisdictional-specific requirements.
We are subject to state licensing and other requirements with respect to loans that we originate, and we have obtained necessary licenses or conduct operations pursuant to relevant exemptions in order to originate loans in the jurisdictions in which we do so. Licensing statutes and regulations vary from state to state and prescribe different requirements, including restrictions on loan origination and servicing practices (including limits on the type,
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amount and manner of our fees), interest rate limits, disclosure requirements, periodic examination requirements, surety bond and minimum specified net worth requirements, periodic financial reporting requirements, notification requirements for changes in principal officers, stock ownership or corporate control, restrictions on advertising and requirements that loan forms be submitted for review. We are also subject to supervision and examination by state regulatory authorities in the jurisdictions where we operate, which have resulted and may continue to result in findings or recommendations that require us to modify our internal controls and/or business practices. The application of state licensing requirements to our business model is not always clear, and while we believe we are in compliance with applicable licensing requirements, state regulators may request or require that we obtain additional licenses or otherwise comply with additional requirements in the future, which may result in changes to our business practices. If we are found to have engaged in activities that require a state license without having the requisite license or in activities that are otherwise deemed to be in violation of state lending laws, the licensing authority may impose fines, restrict our operations in the relevant state or seek other remedies for activities conducted in the state.
U.S. federal consumer protection requirements
We must comply with various federal consumer protection regimes, both pursuant to the financial products and services we provide directly and as a service provider to our bank partner, including those set forth in “Risk Factors — Risks Relating to Financial Regulation — Our business is subject to extensive regulation, examination and oversight in a variety of areas, including registration and licensing requirements under federal, state and local laws and regulations.”
We are subject to regulation by the CFPB, which oversees compliance with and enforces federal consumer financial protection laws. The CFPB directly and significantly influences the regulation of consumer financial services, including the origination, brokering, servicing, transfer and collection of consumer loans, including personal loans and other consumer financial services we may provide. The CFPB has substantial power to regulate financial products and services received by consumers from both bank and non-bank providers of consumer financial products or services and their respective service providers, including rulemaking authority in enumerated areas of federal law applicable to consumer financial products or services such as truth in lending, fair credit reporting and fair debt collection. Under Title X of the Dodd-Frank Act, the CFPB has the authority to pursue enforcement actions against companies that offer or provide consumer financial products or services that engage in unfair, deceptive or abusive acts or practices, which can be referred to as “UDAAP.” The CFPB may also seek a range of other remedies, including rescission of contracts, refund of money, return of real property, restitution, disgorgement of profits or other compensation for unjust enrichment, damages, public notification of the violation, and “conduct” restrictions (i.e., future limits on the target’s activities or functions). Where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to enforce such laws and regulations.
The CFPB also has enforcement authority with respect to the conduct of third parties that provide services to financial institutions. The CFPB has made it clear that it expects non-bank entities to maintain an effective process for managing risks associated with vendor relationships, including compliance-related risks. In connection with this vendor risk management process, we are expected to perform due diligence reviews of potential vendors, review their policies and procedures and internal training materials to confirm compliance-related focus, include enforceable consequences in contracts with vendors regarding failure to comply with consumer protection requirements and take prompt action, including terminating the relationship, in the event that vendors fail to meet our expectations.
Our business activities are also subject to applicable requirements under other federal statutes and regulations, including, but not limited to:
• Federal Trade Commission Act. The Federal Trade Commission Act prohibits “unfair” and “deceptive” acts and practices in business or commerce and gives the Federal Trade Commission (the “FTC”) enforcement authority to prevent and redress violations of this prohibition. Whether a particular act or practice violates these laws or the UDAAP-prevention laws enforced by the CFPB frequently involves a highly subjective and/or fact-specific judgment.
• Truth in Lending Act. The Truth in Lending Act (“TILA”) and Regulation Z, which implements it, require lenders to provide consumers with uniform and understandable information concerning certain terms and conditions of their loan and credit transactions prior to the consummation of a credit transaction and, in the case of certain open-end loans, at the time of a loan solicitation, application,
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approval and origination of a credit transaction. TILA also regulates the advertising of credit and gives borrowers, among other things, certain rights regarding updated disclosures and periodic statements, security interests taken to secure the credit, the right to rescind certain loan transactions, a right to an investigation and resolution of billing errors and the treatment of credit balances.
• Equal Credit Opportunity Act. The federal Equal Credit Opportunity Act (“ECOA”) prohibits creditors from discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act or any applicable state law. Regulation B, which implements ECOA, restricts creditors from requesting certain types of information from loan applicants and from using advertising or making statements that would discourage on a prohibited basis a reasonable person from making or pursuing an application. ECOA also requires creditors to provide consumers and certain small businesses with timely responses to applications for credit, including notices of adverse action taken on credit applications.
• Fair Credit Reporting Act. The federal Fair Credit Reporting Act (“FCRA”), as amended by the Fair and Accurate Credit Transactions Act, promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies. FCRA requires a permissible purpose to obtain a consumer credit report and requires persons that furnish loan payment information to credit bureaus to report such information accurately. FCRA also imposes disclosure requirements on creditors who take adverse action on credit applications based on information contained in a consumer report or received from a third party and requires creditors who use consumer reports in establishing loan terms to provide risk-based pricing or credit score notices to affected consumers. The FCRA also imposes rules and disclosure requirements on creditors’ use of consumer reports for marketing purposes, which impacts our ability to use consumer reports and prescreened lists to market consumer loans through direct mail and other means.
• Military Lending Act. The Military Lending Act (“MLA”) restricts, among other things, the interest rate and other terms that can be offered to active military personnel and their dependents. The MLA caps the interest rate that may be offered to a covered borrower for most types of consumer credit to a 36% military annual percentage rate, or “MAPR,” which includes certain fees such as application fees, participation fees and fees for add-on products. The MLA also requires certain disclosures and prohibits certain terms, such as mandatory arbitration if a dispute arises concerning the consumer credit product.
• Electronic Fund Transfer Act and NACHA Rules. The federal Electronic Fund Transfer Act (“EFTA”) and Regulation E that implements it provide guidelines and restrictions on the provision of electronic fund transfer services to consumers, and on making an electronic transfer of funds from consumers’ bank accounts. In addition, transfers performed by ACH electronic transfers are subject to detailed timing and notification rules and guidelines administered by the National Automated Clearinghouse Association (“NACHA”). Most transfers of funds in connection with the origination and repayment of loans are performed by electronic fund transfers, such as ACH transfers. EFTA requires that lenders make available loan payment methods other than automatic preauthorized electronic fund transfers and prohibits lenders from conditioning the approval of a loan transaction on the borrower’s agreement to repay the loan through automatic fund transfers. In 2018, the NACHA Board of Directors approved a change in the NACHA Operating Rules that requires ACH originators to utilize commercially reasonable fraudulent transaction detection systems. The rule change requires ACH originators, including lenders, to include account validation as part of their commercially reasonable fraudulent transaction detection system, for the first use of new account information. The rule change took effect on March 19, 2021, and became enforceable for all ACH originators on March 19, 2022. Accordingly, we use NACHA-approved vendors to perform commercially reasonable verification of external accounts for ACH transactions.
• GLBA. The GLBA includes limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information, and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and nonaffiliated entities, as well as to safeguard personal customer information.
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The federal regulatory framework applicable to consumer financial services providers, such as us, is evolving and uncertain. Additional or different requirements may apply to our business in the future. While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective or will be adequate as laws change or are applied in a new manner.
Investment adviser and broker-dealer regulation
We offer investment management services through our wholly-owned subsidiary ML Wealth, an internet-based investment adviser that is registered as an investment adviser under the Advisers Act and is subject to regulation by the SEC. ML Wealth is subject to, among other things, the anti-fraud provisions of the Advisers Act and fiduciary duties derived from these provisions, which apply to our relationships with our advisory clients. These provisions and duties impose restrictions and obligations on us with respect to our dealings with our clients and the investments we manage, including, for example, disclosure of any conflicts of interest. ML Wealth has in the past and will in the future be subject to periodic SEC examinations. A regular or routine SEC examination will typically involve, at a minimum, a careful review of the adviser’s books and records and may include interviewing employees. The SEC examination staff may also conduct more frequent examinations focusing on a limited number of specific issues or conduct an examination “for cause.” ML Wealth is also subject to other requirements under the Advisers Act and related regulations primarily intended to protect advisory clients. These additional requirements include maintaining effective and comprehensive compliance programs and written policies and procedures, record-keeping, reporting and disclosure, advertising and solicitation rules, safeguards for protecting client funds and securities, limitations on agency cross and principal transactions between an adviser and its advisory clients, restrictions on advisory contract assignments, privacy protection regulations and anti-corruption rules relating to investors associated with U.S. state or local governments.
The Advisers Act generally grants the SEC broad administrative powers, including the power to limit or restrict an investment adviser from conducting advisory activities in the event it fails to comply with federal securities laws. Additional sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individuals from associating with an investment adviser, the revocation of registrations, significant monetary penalties, disgorgement of gains, cease-and-desist orders and other censures. The SEC may bring civil actions against investment advisers, and seek damages or other relief, in a U.S. district court or before an administrative law judge. Even if an investigation or proceeding did not result in a sanction or the sanction imposed against us or our personnel by the SEC were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing clients or fail to gain new clients.
One of our subsidiaries, MoneyLion Securities LLC, is a broker-dealer and is therefore registered with the SEC and a member of the FINRA. Although we do not currently engage in any business activity through MoneyLion Securities LLC, as a broker-dealer, it is subject to SEC and FINRA rules and regulations. The principal purpose of regulating broker-dealers is the protection of clients and securities markets. The regulations cover all aspects of the broker-dealer business and operations, including, among other things, sales and trading practices, client onboarding, communications with the public, publication or distribution of research, margin lending, uses and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping, reporting, fee arrangements, disclosures to clients, suitability, acting in retail customers’ best interests when making recommendations to them, customer privacy, data protection, information security and cybersecurity, the safeguarding of customer information, the sharing of customer information, best execution of customer orders, public offerings, customer qualifications for margin and options transactions, registration of personnel, business continuity planning, transactions with affiliates, conflicts and the conduct of directors, officers and employees.
MoneyLion Securities LLC is subject to Rule 15c3-1 (the “Uniform Net Capital Rule”) under the Exchange Act, and related self-regulatory organization requirements. The Uniform Net Capital Rule specifies minimum capital requirements that measure the general financial soundness and liquidity of broker-dealers. SEC and FINRA rules require notification to these regulators when net capital falls below certain defined criteria, or when withdrawals of capital exceed certain thresholds. These rules also dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer. If MoneyLion Securities LLC fails to maintain specified levels of net capital, we
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could be subject to sanctions, which may include immediate suspension or revocation of registration, and suspension or expulsion. MoneyLion Securities LLC has been and currently is in compliance with the Uniform Net Capital Rule and has net capital in excess of the minimum requirements.
The SEC, FINRA and applicable state securities authorities also have the authority to conduct periodic examinations of MoneyLion Securities LLC and may also conduct administrative proceedings that could result in sanctions being imposed. To the extent any applicable SEC, state or FINRA rules or regulations change, MoneyLion Securities LLC will need to adapt to those changes.
Regulation of our bank partnership model
Pursuant to our partnership with MetaBank, we offer to our customers FDIC-insured, non-interest-bearing deposit accounts and debit cards with which customers can access their account balances, both of which are provided by MetaBank. We act as the service provider to, among other things, provide customer support and technology features for customers utilizing their MetaBank account through our platform.
MetaBank is chartered as a national bank and subject to regulation and supervision as such by the OCC and the FDIC. Many laws and regulations that apply directly to MetaBank are indirectly applicable to us as a service provider to MetaBank. Our partnership with MetaBank is also subject to the supervision and enforcement authority of the OCC, MetaBank’s primary banking regulator. Additionally, in order for each participating customer’s deposits to be covered by FDIC insurance up to the applicable maximum deposit insurance amount, we and MetaBank must meet certain eligibility requirements established by the FDIC, such as adequately evidencing participating customers’ ownership of each account.
Regulation of money services business/money transmission involving virtual currencies
We offer certain digital currency-related products and services to our customers through a partnership with Zero Hash. The Zero Hash entities are registered as money services businesses with FinCEN and hold active money transmitter licenses (or the state equivalent of such licenses) in all U.S. states and the District of Columbia except for (i) California, Indiana and Wisconsin, where Zero Hash relies upon licensing exemptions; (ii) Montana, which does not currently have a money transmitter licensing requirement; and (iii) Hawaii. The Zero Hash entities currently engage in crypto asset activities in all U.S. states and the District of Columbia except for New York and Hawaii. Under the terms of our agreement with Zero Hash, we are not directly involved in any cryptocurrency transactions or the exchange of fiat funds for cryptocurrency at or through Zero Hash, and therefore, we do not currently expect to be subject to money services business, money transmitter licensing, or other licensing or regulatory requirements specific to transactions relating to virtual currencies. Other laws and regulations may apply to us as a service provider to Zero Hash LLC and Zero Hash Liquidity Services LLC, including BSA/AML requirements, but these would be similar to the legal and regulatory regimes to which we are already subject. However, federal and state laws and regulations applicable to digital assets remain uncertain and will continue to evolve, and changes to the applicable laws, regulations or guidance in this area may require us to meet additional licensing, registration or other requirements.
Analysis of digital assets as “securities” for purposes of the U.S. federal securities laws
A key question with respect to the trading of cryptocurrencies is whether the digital assets our customers transact in via MoneyLion Crypto are “securities” under the federal securities laws. As a general matter, if a particular digital asset is a security, any transaction in that digital asset that falls under U.S. jurisdiction would be subject to the SEC’s anti-fraud and anti-manipulation authority. In addition, offers and sales of that digital asset would require registration under the Securities Act or, alternatively, establishing an exemption from registration. Our involvement in these transactions could subject us to regulation as a broker-dealer or investment adviser. In addition, while transactions in digital asset securities in the United States or with U.S. clients and counterparties would generally be subject to regulation under the federal securities laws, similar transactions that take place outside the United States with non-U.S. clients and counterparties generally would not implicate the federal securities laws. As a result, the manner in which we are able to engage in transactions in a particular digital asset depends on the digital asset itself and the characteristics of the specific transaction, and requires us to maintain procedures for conducting careful facts-and-circumstances analyses.
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We have adapted our process for determining the federal securities law status of digital assets over time. As part of our federal securities law analytical process, we take into account a number of factors, including the various definitions of “security” under the federal securities laws and federal court decisions interpreting elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as reports, orders, press releases, public statements and speeches by the SEC and its staff providing guidance on when a digital asset may be a security for purposes of the federal securities laws. We continue to monitor the U.S. (and global) regulatory environment, and we expect our process to continuously evolve to take into account case law, facts and developments in technology, as regulatory guidance evolves.
We believe that our process reflects a thoughtful analysis that is reasonably designed to facilitate consistent application of available legal guidance to digital assets to determine whether a particular digital asset is a security. However, we recognize that the application of securities laws to the specific facts and circumstances of digital asset transactions is complex and subject to change, and therefore legal and regulatory risk will be an inherent feature of the MoneyLion Crypto business model until greater legal and regulatory certainty becomes possible. Our determination that each digital asset available on the MoneyLion Crypto platform is not a “security” for purposes of the U.S. federal securities laws is a “risk-based” assessment, not a legally binding determination on any regulatory body or court, and does not preclude legal or regulatory action. As a result, we acknowledge that a particular digital asset that our customers transact in may in the future be found by the SEC, a federal court or a state securities regulator to be a security notwithstanding our prior determination. We also acknowledge that the SEC, a federal court or a state securities regulator may determine that a digital asset is a security based on factors that are difficult to predict and/or are outside of our control, potentially including the actions of a third-party promoter. In that case, our prior determination, even if reasonable under the circumstances, would not preclude legal or regulatory enforcement action, or lawsuits brought by our clients and counterparties, based on the presence of a security.
The potential consequences of having engaged in a digital asset transaction in the United States or with U.S. clients and counterparties in which we did not, but in retrospect should have, treated the digital asset in question as a security would depend on the facts of the specific transaction. For example, if we brokered a trade or engaged in a principal transaction in an unregistered digital asset security, depending on the facts, it is possible that we could have acted as an unregistered broker or dealer or as an “underwriter” with respect to that digital asset security, incurring fines and other penalties for the failure to register as a broker-dealer with the SEC and for having engaged in an illegal unregistered securities transaction. A client or counterparty who purchased a digital asset in an illegal unregistered securities transaction in which we were involved could also, depending on the facts, have the right to rescind that transaction and to sue us for damages. Similarly, if we advised a client or counterparty in connection with the purchase or sale of a digital asset security, depending on the facts, we could incur fines and other penalties for the failure to register as an investment adviser, and our client or counterparty could also have a damages claim against us. The amount of fines, penalties and damages that we could incur as a result of having improperly transacted in digital asset securities could be significant enough to have a material adverse effect on our business, financial condition and results of operations.
Other requirements
In addition to the requirements described above, we are subject to and seek to comply with other state and federal laws and regulations applicable to consumer lending and other consumer financial services, including additional requirements relating to loan disclosure, credit discrimination, credit reporting, debt collection and UDAAP prevention. These laws and regulations may be enforced by state banking or consumer protection regulatory agencies, state attorneys general, the CFPB and private litigants, among others. Given our novel business model and the subjective nature of some of these laws and regulations, particularly UDAAP-prevention laws, we may become subject to regulatory scrutiny or legal challenge with respect to our compliance with these requirements.
Given the nature of our business and our arrangements with third parties, we are subject to compliance obligations related to BSA/AML laws and regulations. We have developed and currently operate an AML program designed to prevent our products from being used to facilitate money laundering, terrorist financing and other financial crimes. Our program is also designed to prevent our products from being used to facilitate business in certain countries or territories, or with certain individuals or entities, including those on designated lists promulgated by the U.S. Department of the Treasury’s Office of Foreign Assets Controls and other U.S. and non-U.S. sanctions authorities. Our AML and sanctions compliance programs include policies, procedures, reporting protocols and
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internal controls, including the designation of a BSA/AML compliance officer to oversee the programs. Our programs are designed to address these legal and regulatory requirements and to assist in managing risk associated with money laundering and terrorist financing.
We collect, store, use, disclose, transfer and otherwise process a wide variety of information, including PII, for various purposes in our business, including to help ensure the integrity of our services and to provide features and functionality to our customers. This aspect of our business, including the collection, storage, use, disclosure, transfer, processing and protection of the information, including PII, we acquire in connection with our consumers use of our services, is subject to numerous privacy, data protection, cybersecurity and other laws and regulations in the United States, including the GLBA as well as state laws such as the CCPA. Accordingly, we publish our privacy policies and terms of service, which describe our practices concerning the collection, storage, use, disclosure, transmission, processing and protection of information. The laws and regulations that apply to privacy and security issues are evolving and are subject to interpretation and change, and therefore, additional laws and regulations may become relevant to us. For additional discussion, please see the risk factors related to regulation of our business and regulation in the areas of privacy and data use under “Risk Factors — Risks Relating to Cybersecurity — The collection, processing, use, storage, sharing and transmission of PII and other sensitive data are subject to stringent and changing state, federal and international laws, regulations and standards and policies and could give rise to liabilities as a result of our failure or perceived failure to protect such data, comply with privacy and data protection laws and regulations or adhere to the privacy and data protection practices that we articulate to our customers.”
In addition, there are federal and state laws and regulations on marketing activities conducted over the internet, or by mail, email or telephone, including without limitation the federal Telephone Consumer Protection Act (“TCPA”), the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”), FTC regulations and guidelines that implement the FTC’s Do-Not-Call Registry and impose other requirements in connection with telemarketing activities and state telemarketing laws. Our marketing activities may subject us to some of these laws and regulations. MoneyLion’s policies address the requirements of the TCPA and other laws and regulations limiting telephone outreach, and we do not engage in certain activities covered by the TCPA. Our email communications with all consumers are formulated to comply with the CAN-SPAM Act and other applicable requirements.
The offerings of membership interests in designated series of IIA described under “Our Business Model” herein were not offered publicly to retail investors and were not registered under the Securities Act. IIA membership interests were offered in private placements only to “accredited investors” within the meaning of the Securities Act, pursuant to the exemption provided in Regulation D thereunder, or to non-US persons in offshore transactions, pursuant to the exemption provided in Regulation S thereunder.
Various federal and state regulatory agencies in the United States continue to examine a wide variety of issues that are applicable to us and may impact our business. These issues include account management guidelines, antidiscrimination, consumer protection, identity theft, privacy, disclosure rules, electronic transfers, cybersecurity and marketing. As our business continues to develop and expand, we continue to monitor the additional rules and regulations that may become relevant.
Intellectual Property
We rely on a combination of trademark, trade secrets and copyright laws, as well as confidentiality procedures and contractual restrictions, to establish, maintain and protect our proprietary rights. We own the domain name rights for, among other sites, moneylion.com and malkamedia.com, and, as of December 31, 2021, we owned 22 registered trademarks, one copyright and four trademark applications in the United States. Despite substantial investment in research and development activities, we have not focused on patents and patent applications historically. In addition to the intellectual property that we own, we license certain third-party technologies and intellectual property, which are incorporated into some of our products and services.
Although we take steps to protect our intellectual property and proprietary rights, we cannot be certain that the efforts we have taken to protect our intellectual property may not be sufficient or effective. It may be possible for other parties to copy or otherwise obtain and use the content of our solutions or other technology without authorization. Moreover, others may independently develop technologies or services that are competitive with ours or that infringe, misappropriate or otherwise violate our intellectual property and proprietary rights. In addition, third parties may initiate litigation against us alleging infringement, misappropriation or other violation of their proprietary
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rights or declaring their non-infringement of our intellectual property. Failure to protect our intellectual property or proprietary rights adequately could significantly harm our competitive position, business, financial condition and results of operations. See “Risk Factors” for a more comprehensive description of risks related to our intellectual property and proprietary rights.
Facilities
Our principal corporate headquarters are located in New York City, and as of December 31, 2021, we maintained additional offices in Jersey City, New Jersey, Kuala Lumpur, Malaysia, Santa Monica, California and Sioux Falls, South Dakota. We lease all our facilities and do not own any real property. We believe our facilities are adequate and suitable for our current needs and that, should it become necessary, suitable additional or alternative space will be available to accommodate our operations.
|
Location |
Approximate |
|
|
New York, New York (Headquarters) |
10,690 |
|
|
Jersey City, New Jersey |
11,028 |
|
|
Kuala Lumpur, Malaysia |
8,925 |
|
|
Santa Monica, California |
3,750 |
|
|
Sioux Falls, South Dakota |
1,095 |
Legal Proceedings
From time to time, we are subject to various claims and legal proceedings in the ordinary course of business, including 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, and could materially and adversely impact our business, financial condition, operating results and cash flows. See “Risk Factors — Risks Relating to Legal and Regulatory Matters — Unfavorable outcomes in legal proceedings may harm our business and results of operations.”
State Regulatory Examinations and Investigations
We hold a number of state licenses in connection with our business activities and must comply with various licensing, compliance and other requirements in the states in which we operate. In most states in which we operate, one or more regulatory agencies have authority with respect to regulation and enforcement under applicable state laws, and we may also be subject to the supervisory and examination authority of state regulators. 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.
With respect to our activities in California, we received a report of examination in 2020 from the California Department of Financial Protection and Innovation (the “CA DFPI”) regarding MoneyLion of California, LLC, our subsidiary, and a follow-up request for information in May 2021. This matter is ongoing, and we intend to continue to fully cooperate with the CA DFPI in this matter. In addition, the CA DFPI is currently conducting an industry-wide investigation of companies that provide earned wage access products and services, including Instacash. We intend to continue cooperating fully in this investigation and to that end entered into a memorandum of understanding (“MOU”) with the CA DFPI on February 23, 2021. The MOU requires us to regularly provide certain information to the CA DFPI and adhere to certain best practices regarding Instacash while the CA DFPI continues to investigate. Any potential impacts on our financial condition or operations relating to these CA DFPI matters are unknown at this time.
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We are also in the process of responding to Civil Investigative Demands (“CIDs”) or other investigatory requests relating to our provision of consumer financial services from the office of the Attorney General of the Commonwealth of Virginia, the New York Attorney General’s Office, as well as the Colorado Department of Law. We are cooperating with each of these state regulators and intend to take any corrective actions required to maintain compliance with applicable state laws. We cannot predict the outcome or any potential impact on our financial condition or operations at this time.
CFPB Civil Investigative Demands
We have received and are in the process of responding to CIDs from the CFPB relating to our compliance with the Military Lending Act and our membership model. We will continue to provide to the CFPB all of the information and documents required by the CIDs and intend to continue to fully cooperate with the CFPB in this investigation. The investigation is ongoing and any potential impact on our financial condition or operations are unknown at this time.
SEC Investigation
We have received and are in the process of responding to investigative subpoenas from the SEC concerning IIA, which primarily held assets from institutional investors, and was our primary source of funding for originated receivables through the end of the fourth quarter of 2021. We are cooperating with the investigation and cannot predict its outcome or any potential impact on our financial condition or operations.
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MANAGEMENT
Board of Directors and Management
The following persons serve as MoneyLion’s executive officers and directors. For biographical information concerning the executive officers and directors, see below.
|
Name |
Age |
Position |
||
|
Executive Officers |
||||
|
Diwakar (Dee) Choubey |
41 |
Chief Executive Officer and President |
||
|
Richard (Rick) Correia |
49 |
Chief Financial Officer and Treasurer |
||
|
Mark Torossian |
38 |
Chief Accounting Officer |
||
|
Timmie (Tim) Hong |
40 |
Chief Product Officer |
||
|
Chee Mun Foong |
44 |
Chief Technology Officer |
||
|
Adam VanWagner |
40 |
Chief Legal Officer and Secretary |
|
Directors |
||||
|
John Chrystal |
64 |
Chair of the Board of Directors |
||
|
Ambassador (Ret) Dwight L. Bush |
65 |
Director |
||
|
Diwakar (Dee) Choubey |
40 |
Director |
||
|
Matt Derella |
44 |
Director |
||
|
Jeffrey Gary |
59 |
Director |
||
|
Lisa Gersh |
63 |
Director |
||
|
Annette Nazareth |
66 |
Director |
||
|
Michael Paull |
50 |
Director |
||
|
Chris Sugden |
52 |
Director |
The following is a biographical summary of the experience of our executive officers and directors:
Executive Officers
Information on Diwakar (Dee) Choubey can be found below under “— Directors.”
Richard (Rick) Correia, 49, joined MoneyLion in 2016 and serves as its Chief Financial Officer and Treasurer. Prior to joining MoneyLion, Mr. Correia served in various roles at Citadel from 2008 to 2016, most recently as the Chief Operating Officer of Surveyor Capital. Prior to joining Citadel, Mr. Correia served in various roles at Merrill Lynch from 2001 to 2008, most recently as the Chief Operating Officer of Alternative Investments. Previously, Mr. Correia was a Manager at Accenture. Mr. Correia received a Bachelor of Commerce from Queen’s University, Canada.
Mark Torossian, 38, joined MoneyLion in January 2022 and serves as its Chief Accounting Officer. Prior to joining MoneyLion, Mr. Torossian was the Chief Accounting Officer of Salt Blockchain Inc. from March 2021 to January 2022. From March to December 2020, he was Senior Vice President of Finance & Principal Accounting Officer for OnDeck Capital Inc. (ONDK), a financial services company specializing in small business lending. Mr. Torossian joined OnDeck Capital Inc. from Bank of New York Mellon (“BNY”), where he held various leadership roles between 2008 and 2020. From January 2016 to March 2020, Mr. Torossian served as Director — Chief Financial Officer of BNY’s Asset Servicing Americas business, with responsibility for overseeing all aspects of financial and strategic support for U.S., Canada and Latin America. Mr. Torossian holds a MS Finance and BBA Public Accounting from Pace University and is a Certified Public Accountant (CPA) in the State of New York.
Timmie (Tim) Hong, 40, joined MoneyLion in 2015 and serves as its Chief Product Officer. Prior to joining MoneyLion, Mr. Hong was a part of the founding team of Tsumobi from 2011 to 2015, where he was responsible for growth, marketing, product and analytics. Previously, Mr. Hong was Senior Vice President of Product Development and Analytics at EmSense Corporation. Mr. Hong holds a Master of Science in Management Science and Engineering from Stanford University and a Bachelor of Science in Materials Science, Engineering and Physics from MIT.
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Chee Mun Foong, 44, co-founded MoneyLion in 2013 and has been its Chief Technology Officer since inception. Prior to co-founding MoneyLion, Mr. Foong served in various roles at Simulex from 1999 to 2013, most recently as Vice President of Technology. Mr. Foong holds a Bachelor of Science in Electrical Engineering from Purdue University.
Adam VanWagner, 40, joined MoneyLion in 2018 and serves as its Chief Legal Officer and Secretary. Prior to joining MoneyLion, Mr. VanWagner was a lawyer with Kleinberg Kaplan from 2015 to 2018 and Davis Polk & Wardwell from 2012 to 2015. Previously, Mr. VanWagner was an entertainment industry professional holding various production and studio positions from 2005 to 2009. Mr. VanWagner holds a Juris Doctor from the Fordham University School of Law and a Bachelor of Arts from the University of Minnesota.
Directors
John Chrystal, 64, joined MoneyLion in 2016. From June 2013 until February 2022, he served as a director of The Bancorp and its subsidiaries, including serving as Vice Chairman beginning in April 2017. Mr. Chrystal previously served as Interim Chief Executive Officer of The Bancorp, Inc. and President of The Bancorp Bank from December 2015 through May 2016. Mr. Chrystal has served as a director of INSU Acquisition Corp. III, a SPAC, since December 2020. Mr. Chrystal brings more than 30 years of experience as a highly-regarded financial services leader to MoneyLion. Among the companies Mr. Chrystal serves as an independent director of are Regatta Loan Management LLC and the Trust for Advised Portfolios. Mr. Chrystal was also a Managing Member of Bent Gate Advisors, LLC, the Chief Risk Officer of DiMaio Ahmad Capital, and was a Managing Director with Credit Suisse entities, with oversight of asset management and financial products functions. Mr. Chrystal received an MBA from The University of Chicago and an undergraduate degree from Iowa State University. We believe that Mr. Chrystal is a valuable member of MoneyLion’s board of directors because of his extensive experience in the financial services industry and his prior track record as a senior executive and director.
Ambassador (Ret) Dwight L. Bush, 65, joined MoneyLion in 2021. He previously served as the U.S. Ambassador to the Kingdom of Morocco under President Barack Obama, from 2014-2017. Ambassador Bush is a highly accomplished business executive with a background in banking and finance, corporate management and public company and private organization governance. Ambassador Bush is Chief Executive Officer of D.L. Bush & Associates, a Washington, D.C.-based strategy and business advisory firm. Ambassador Bush is currently advising several multinational companies and investors on investment projects in the Middle East, North Africa and the United States of America and has served as Advisor to the Rock Creek Group since 2022. Ambassador Bush also serves as a trustee of Goldman Sachs Trust and Goldman Sachs Variable Insurance Trust. Starting in 1979, Ambassador Bush joined Chase Manhattan Bank, where he enjoyed a 15-year career that included international corporate banking assignments in Latin America, Asia and the Middle East, and corporate finance and project finance in New York and Washington, D.C. After 15 years at Chase, Ambassador Bush had risen to Managing Director in the Project Finance Group when he resigned and joined Sallie Mae Corporation, serving as Vice President of Corporate Development from 1994 to 1997. From 1998 to 2006, Ambassador Bush worked as a Principal at Stuart Mill Capital, LLC; Vice President and Chief Financial Officer at SatoTravel Holdings, Inc.; and Vice Chairman at Enhanced Capital Partners, LLC. Ambassador Bush was President and CEO of Urban Trust Bank, Urban Trust Holdings and President of UTB Education Finance, LLC from 2006 through 2008. In addition to his corporate work, Ambassador Bush has been active in non-profit governance, including serving on the boards of trustees or directors of CARE’s Global Leaders Network, Cornell University, The GAVI Alliance and The Middle East Investment Initiative. Ambassador Bush holds a B.A. in Government from Cornell University. We believe Ambassador Bush is a valuable member of MoneyLion’s board of directors because of his extensive experience as a senior executive in the financial services industry and his prior track record in the private sector and as a government official.
Diwakar (Dee) Choubey, 41, co-founded MoneyLion in 2013 and has been its Chief Executive Officer and President since inception. Prior to co-founding MoneyLion, Mr. Choubey was a senior investment banking professional at Barclays from 2011 to 2013. Prior to joining Barclays, Mr. Choubey was a Vice President at Citadel Securities from 2009 to 2011. Prior to joining Citadel, Mr. Choubey was an investment banking professional at Goldman Sachs from 2005 to 2009 and Citigroup from 2003 to 2005. Mr. Choubey holds a Bachelor of Arts in Economics with Honors from the University of Chicago. We believe that Mr. Choubey is a valuable member of MoneyLion’s board of directors because of his extensive experience as co-founder and Chief Executive Officer of MoneyLion.
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Matt Derella, 44, joined MoneyLion in 2021. Since September 2021, he has served as an advisor to 01 Advisors, a venture capital firm, to help early stage companies scale their customer base and operations. Mr. Derella previously served as Chief Customer Officer for Twitter, a global telecommunications platform, during which his responsibilities included revenue performance, content partnerships, country operations and customer service around the world. Prior to that position, he served as Global Vice President, Revenue & Operations at Twitter starting in 2016. Prior to joining Twitter, Mr. Derella spent five years at Google where he held various leadership roles, including taking YouTube into the television marketplace with their first Brandcast event. He holds a B.A. in English from Georgetown University, where he graduated with honors. We believe that Mr. Derella is a valuable member of MoneyLion’s board of directors because of his extensive experience in the C-suite of several prominent technology companies and his proven ability to help drive scale and growth.
Jeffrey Gary, 59, joined MoneyLion in 2020. Mr. Gary has a 30-year track record in the financial services industry, including significant fintech, financial services, investment and merger and acquisition experience. He is an experienced board member and investor, having worked on numerous transactions with SPACs and public and private equity companies and has directly led audit, fiduciary, and corporate governance committees of these companies. He currently sits on the boards of directors of Insight Acquisition Corp., a SPAC company, where he also serves as Chief Executive Officer and Chief Financial Officer, and Arca U.S. Treasury Mutual Fund, the first SEC-registered StableCoin mutual fund. Mr. Gary also sits on the advisory boards for three other fintech companies, DealBox (since May 2019), TokenPlace (since September 2020) and Total Network Service/Digital Names (since May 2019). Previously, Mr. Gary served on the board of directors of Fusion Acquisition Corp II (February 2021 to January 2022), where he also served as Chief Financial Officer; National Holdings Corporation (February 2019 to March 2021), where he was the Audit Committee Chair; and the Axonic Alternative Income Mutual Fund (October 2018 to March 2020). Mr. Gary has also served as a senior portfolio manager and led investment teams at Avenue Capital Group (from January 2012 to July 2018), where he worked closely with the SPAC investment team on their two completed SPAC transactions in 2015 and in 2017; Third Avenue (from May 2009 to December 2010), BlackRock, Inc. (from September 2003 to December 2008), AIG/American General (from May 1998 to September 2003) and Koch Industries (from September 1996 to April 1998) where he invested across all asset classes with a focus on the high-yield, bank loan and distressed markets. For over 15 years, Mr. Gary was the portfolio manager for numerous NYSE-listed funds. Mr. Gary also sat as an investment committee member at BlackRock Capital BDC from February 2005 to December 2008, where he was involved with the review and approval of all private equity and credit investments, and was a team member in the launch and initial public offering of BKCC. He started his career at PricewaterhouseCoopers as a senior auditor from September 1984 to June 1987 and later as a senior analyst at Citigroup from July 1987 to July 1988. From August 1988 to December 2002, Mr. Gary was an investment banker at Mesirow Financial. From January 1993 to August 1996, he was a senior distressed analyst at Cargill, Inc. Mr. Gary earned a Bachelor of Science in Accounting from Penn State University in 1984 and a Master of Business Administration in Finance and International Business from Northwestern University (Kellogg) in 1991. Mr. Gary is a Certified Public Accountant. We believe that Mr. Gary is a valuable member of MoneyLion’s board of directors because of his extensive experience in the financial services industry and his prior track record as a senior executive and director of Fusion.
Lisa Gersh, 63, joined MoneyLion in 2021. From October 2017 to October 2018, Ms. Gersh served as Chief Executive Officer of Alexander Wang, a global fashion brand based in New York City. From 2014 to 2017, Ms. Gersh transformed Gwyneth Paltrow’s blog, Goop, Inc. (“Goop”), into the first contextual commerce brand, overseeing the launch of Goop’s e-commerce store, skincare and fashion lines and created Goop’s pop-up retail strategy. In 2011, Ms. Gersh took over the operations of Martha Stewart Living Omnimedia, Inc., first as President and later as its Chief Executive Officer. Ms. Gersh co-founded Oxygen Media (“Oxygen”), the first ever multi-platform brand and created content for women, by women, in 1999 and remained its President and Chief Operating Officer until the company’s sale to NBC in 2007. Following the sale of Oxygen, Ms. Gersh joined NBC and spearheaded NBC’s acquisition of The Weather Channel, serving briefly as its interim Chief Executive Officer. Ms. Gersh began her career as a lawyer, first as a litigation associate at Debevoise & Plimpton LLP, and then as a Partner at Friedman, Kaplan, Seiler & Adelman LLP, which Ms. Gersh co-founded. Currently, Ms. Gersh serves on the board of directors of Hasbro, Inc., where she is the Chair of the Compensation Committee and serves on the Audit Committee, and Pershing Square Tontine Holdings, Ltd., where she is the Chair of the Compensation Committee and serves on the Audit Committee. She also serves on the board of directors of Jones Road, the Samsung Retail Advisory Board and The Bail Project, a national non-profit organization. Ms. Gersh previously served on the board of directors of Establishment Labs Holdings Inc., TheKnot.com, comScore, Inc. and XO Group Inc. Ms. Gersh holds a B.A. from SUNY Binghamton and a J.D. from Rutgers Law School. We believe that Ms. Gersh is a valuable member of MoneyLion’s board of directors because of her extensive experience in the retail industry and her prior track record as a senior executive and a director on the boards of public companies.
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Annette Nazareth, 66, joined MoneyLion in 2021. She has been a Senior Counsel of Davis Polk & Wardwell since 2021. She was a Partner of Davis Polk from 2008 to 2020, where she led the firm’s Trading and Markets practice in the Financial Institutions Group. She also served as head of the firm’s Washington, D.C. office. Ms. Nazareth is an experienced financial markets regulator, former SEC Commissioner, and recognized authority on financial markets regulatory issues. As a Partner of Davis Polk, she regularly advised boards of directors on corporate governance matters and corporations that were subject to regulatory and enforcement actions. She also advised domestic and international clients, including broker-dealers, swap dealers, exchanges, clearinghouses and other financial institutions, across a broad range of complex financial regulatory and legislative matters. Ms. Nazareth serves on the boards of Broadridge Financial Solutions and Figure Acquisition Corp. I. She also serves on several not-for-profit boards, including: Urban Institute; Watson Institute of Brown University; Protestant Episcopal Cathedral Foundation; St. Albans School of Public Service; Board of Visitors of Columbia Law School; and the SEC Historical Society (Chair). She is also the Chair of the Integrity Council for the Voluntary Carbon Market and a member of the American Law Institute. Ms. Nazareth has been a key player in financial services regulation for much of her career, and was a highly regarded financial services policymaker for more than a decade. She served as an SEC Commissioner from 2005 to 2008. She initially joined the SEC in 1998 as a Senior Counsel to Chairman Arthur Levitt and then served as Interim Director of the Division of Investment Management. She served as Director of the Division of Market Regulation (now the Division of Trading and Markets) from 1999 to 2005. Ms. Nazareth served as the SEC’s representative in international meetings as a member of the Financial Stability Forum from 1999 to 2008. She also served as the senior SEC staff person on the President’s Working Group on Financial Markets. She holds an A.B. in History and Economics from Brown University and a J.D. from Columbia University. We believe Ms. Nazareth is a valuable member of MoneyLion’s board of directors because of her extensive experience in the financial regulatory world and her prior track record as a senior attorney and government official.
Michael Paull, 50, joined MoneyLion in 2021. Mr. Paull currently serves as President of Disney Streaming and oversees Disney+, Hulu, ESPN+ and Star+ globally from Disney’s Media & Entertainment Distribution (DMED) segment. He and his team are responsible for marketing, product, technology, data science and business operations for the streaming services, along with programming and content curation, working closely and collaboratively with Disney’s world-class content engines fueling Disney’s direct-to-consumer ecosystem. Mr. Paull joined The Walt Disney Company in 2017 with the acquisition of Bamtech Media, where he served as CEO and has served as a director since 2017. Mr. Paull and his team have played a key role in Disney’s pivot into the direct-to-consumer space, launching ESPN+ in 2018, followed by the launch and rapid global expansion of Disney+ in 2019 and the launch of Star+ in Latin America in August 2021. Before joining Bamtech, Mr. Paull worked from 2012 to 2017 at Amazon as Vice President, Digital Video, where he ran Amazon Channels worldwide and was responsible for its global content, product, technology, operations, and marketing. During his tenure at Amazon, he also oversaw Prime Video and Amazon’s TVOD business in the U.S., as well as the development of Prime Music. Mr. Paull has more than 20 years of consumer product development, technology, content distribution and acquisition and media industry experience. Before Amazon, he led Sony Music’s digital business worldwide and held other senior leadership positions with Sony Pictures Entertainment, FOX Entertainment Group, and Time Warner. Mr. Paull received his M.B.A. from Harvard Business School, and holds a B.S. from the University of California. We believe Mr. Paull is a valuable member of MoneyLion’s board of directors because of his extensive career in the technology industry and his leadership experience as President of Disney Streaming.
Chris Sugden, 52, joined MoneyLion in 2016. He currently serves as Managing Partner and Chairman of the investment committee of Edison Partners, with which he has been affiliated since 2002. He is a successful entrepreneur, experienced in finance, business strategy, accounting, product management, sales, marketing and capital formation. His financial and operating perspective for growth-stage companies makes him a valuable asset to portfolio company management. Mr. Sugden has deep domain, investment expertise and successful exits in payments, wealth management, electronic trading and capital markets segments. In addition to MoneyLion, Mr. Sugden currently sits on the board of six other Edison Partners’ fintech portfolio companies, ComplySci, goHenry, Nuula, Prepaid Technologies YieldStreet and Zelis, and previously served as a director of Gain Capital Holdings, Inc. Mr. Sugden began his career with PricewaterhouseCoopers, where he was a supervisor in the entrepreneurial services group in Boston. Mr. Sugden holds a B.A. in Accounting and Finance from Michigan State University. We believe that Mr. Sugden is a valuable member of MoneyLion’s board of directors because of his extensive experience in the financial services industry and his prior track record as a senior executive and director.
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Board Structure and Compensation of Directors
MoneyLion’s board of directors consists of nine members. MoneyLion’s board has determined that each of Chris Sugden, John Chrystal, Lisa Gersh, Annette Nazareth, Ambassador (Ret) Dwight L. Bush, Michael Paull, Matt Derella and Jeffrey Gary is independent under applicable NYSE rules and the applicable rules and regulations of the SEC.
MoneyLion’s directors are divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until MoneyLion’s annual meetings of stockholders in 2025, 2023 and 2024, respectively.
(1) MoneyLion’s Class I directors are Diwakar (Dee) Choubey, Chris Sugden and Jeffrey Gary, and their terms will expire at the annual meeting of stockholders in 2025.
(2) MoneyLion’s Class II directors are John Chrystal, Lisa Gersh and Dwight L. Bush, and their terms will expire at the annual meeting of stockholders in 2023.
(3) MoneyLion’s Class III directors are Annette Nazareth, Michael Paull and Matt Derella, and their terms will expire at the annual meeting of stockholders in 2024.
At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of MoneyLion’s board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.
For a description of the current compensation arrangements with MoneyLion’s non-employee directors, see “Executive and Director Compensation — Director Compensation” below. Each non-employee director also receives a reimbursement of expenses incurred for each board meeting and each committee meeting attended. MoneyLion’s board of directors will determine the annual compensation to be paid to the members of MoneyLion’s board of directors.
Board Committees
Audit Committee
Currently, the members of MoneyLion’s Audit Committee are John Chrystal, Dwight L. Bush, Jeffrey Gary and Matt Derella. Jeffrey Gary serves as the chair of MoneyLion’s Audit Committee. The composition of MoneyLion’s Audit Committee meets the requirements for independence under the current NYSE listing standards and SEC rules and regulations. Each member of MoneyLion’s Audit Committee is financially literate. In addition, MoneyLion’s board of directors has determined that Jeff Gary is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act. This designation does not impose on him any duties, obligations or liabilities that are greater than any that are generally imposed on members of MoneyLion’s Audit Committee and MoneyLion’s board of directors. MoneyLion’s Audit Committee is directly responsible for, among other things:
• selecting a firm to serve as the independent registered public accounting firm to audit MoneyLion’s financial statements;
• ensuring the independence of the independent registered public accounting firm;
• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, MoneyLion’s interim and year-end operating results;
• develop and oversee compliance with MoneyLion’s Code of Ethics (described below);
• oversee the receipt, retention and treatment of concerns about questionable accounting or audit matters, as well as oversee the receipt of matters referred to it pursuant to MoneyLion’s whistleblower policy;
• considering the adequacy of MoneyLion’s internal controls and internal audit function;
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• reviewing material related party transactions or potential conflicts of interest involving officers and directors, or those that require disclosure; and
• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.
Compensation Committee
Currently, the members of MoneyLion’s Compensation Committee are Lisa Gersh, Matt Derella, Chris Sugden and Michael Paull. Chris Sugden serves as the chair of MoneyLion’s Compensation Committee. Each member of the Compensation Committee is a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act, and meets the requirements for independence under the current NYSE listing standards. MoneyLion’s Compensation Committee is responsible for, among other things:
• reviewing and approving, or recommending to MoneyLion’s board of directors for approval, the compensation of MoneyLion’s executive officers and directors;
• administering MoneyLion’s stock and equity incentive plans;
• reviewing and approving, or making recommendations to MoneyLion’s board of directors with respect to, incentive compensation and equity plans; and
• reviewing MoneyLion’s overall compensation philosophy.
Nominating and Corporate Governance Committee
Currently, the members of MoneyLion’s Nominating and Corporate Governance Committee are Annette Nazareth, Lisa Gersh and Michael Paull. Lisa Gersh is the chair of MoneyLion’s Nominating and Corporate Governance Committee. Each member of the Nominating and Corporate Governance Committee meets the requirements for independence under the current NYSE listing standards. MoneyLion’s Nominating and Corporate Governance Committee is responsible for, among other things:
• identifying and recommending candidates for membership on MoneyLion’s board of directors and for appointment to board committees;
• reviewing and recommending MoneyLion’s corporate governance guidelines and policies, and overseeing compliance with the same;
• reviewing proposed waivers of the Code of Business Conduct and Ethics for directors and executive officers;
• overseeing the process of evaluating the performance of MoneyLion’s board of directors; and
• assisting MoneyLion’s board of directors on corporate governance matters.
Risk and Compliance Committee
Currently, the members of MoneyLion’s Risk and Compliance Committee are Dwight L. Bush, Annette Nazareth and Chris Sudgen. Dwight L. Bush serves is the chair of MoneyLion’s Risk and Compliance Committee. MoneyLion’s Risk and Compliance Committee is responsible for, among other things:
• reviewing systemic financial risks and enterprise exposure to MoneyLion, as well as risk exposure with respect to MoneyLion’s operational areas, including any related policies and procedures related to risk assessment and risk management;
• reviewing MoneyLion’s compliance and data security programs, including matters arising under MoneyLion’s whistleblower policy referred to it by the audit committee; and
• reviewing material legal and regulatory matters.
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Code of Business Conduct and Ethics
MoneyLion’s board of directors adopted a Code of Business Conduct and Ethics that applies to all of MoneyLion’s employees, officers and directors, including MoneyLion’s Chief Executive Officer and President, Chief Financial Officer and Treasurer and other executive and senior financial officers. The full text of MoneyLion’s Code of Business Conduct and Ethics is posted on the investor relations section of MoneyLion’s website. We intend to disclose future amendments to MoneyLion’s Code of Business Conduct and Ethics, or any waivers thereof, on the investor relations section of MoneyLion’s website or in public filings.
Copies of our Code of Business Conduct and Ethics, along with our Corporate Governance Guidelines and the Charters of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Risk and Compliance Committee, are available on our website at investors.moneylion.com. Information on or accessible through our website is not part of, or incorporated by reference into, this prospectus. In addition, a copy of the Code of Business Conduct and Ethics will be provided without charge upon request from us.
Compensation Committee Interlocks and Insider Participation
None of MoneyLion’s executive officers have served as a member of a compensation committee (or if no committee performs that function, the board of directors) of any other entity, other than MoneyLion, that has an executive officer serving as a member of MoneyLion’s board of directors.
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EXECUTIVE AND DIRECTOR COMPENSATION
This section discusses the material components of the executive compensation program for MoneyLion executive officers who were “named executive officers” for 2021. For 2021, MoneyLion’s “named executive officers” and their positions were as follows:
• Diwakar Choubey, Chief Executive Officer, President and Director;
• Richard Correia, Chief Financial Officer and Treasurer; and
• Timmie Hong, Chief Product Officer
MoneyLion is an emerging growth company and therefore is subject to reduced disclosure obligations regarding executive compensation, including only being required to provide disclosure with respect to three “named executive officers” and is exempt from the requirements of holding a nonbinding advisory vote on executive compensation.
Summary Compensation Table
The following table presents all of the compensation awarded to or earned by or paid to MoneyLion’s named executive officers for the year ended December 31, 2021.
|
Name and Principal Position |
Year |
Salary |
Bonus |
Option |
Non-Equity |
All Other |
Total |
|||||||
|
Diwakar Choubey |
2021 |
452,000 |
1,455,000 |
2,932,127 |
— |
13,225 |
4,852,352 |
|||||||
|
Chief Executive Officer, President and Director |
2020 |
372,159 |
400,000 |
56,411 |
— |
8,241 |
836,811 |
|||||||
|
Richard Correia |
2021 |
437,000 |
1,420,000 |
1,612,678 |
— |
12,669 |
3,482,347 |
|||||||
|
Chief Financial Officer and Treasurer |
2020 |
375,629 |
500,000 |
56,411 |
— |
4,386 |
936,426 |
|||||||
|
Timmie Hong |
2021 |
385,000 |
950,000 |
1,612,678 |
— |
13,225 |
2,960,903 |
|||||||
|
Chief Product Officer |
2020 |
333,840 |
500,000 |
282,055 |
— |
13,759 |
1,129,654 |
____________
(1) Amounts payable in this bonus column represent (i) bonus payments made pursuant to the transaction bonus pool relating to the successful completion of the Business Combination ($1,000,000 for each of Messrs. Choubey and Correia and $600,000 for Mr. Hong) and (ii) an annual discretionary performance bonus determined by the Compensation Committee of the MoneyLion board of directors, based on performance in 2021 ($455,000 for Mr. Choubey, $420,000 for Mr. Correia and $350,000 for Mr. Hong). Each of these bonuses are further described below.
(2) Amounts reflect the full grant-date fair value of options granted during 2021, computed in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all option awards made to executive officers in Note 13 to our audited consolidated financial statements included elsewhere in this prospectus. The stock option awards granted to each of our named executive officers in 2021 consisted of at-the-money options.
(3) Amounts reflect: for Mr. Choubey, (i) $11,600 of matching contributions under the MoneyLion 401(k) Plan and (ii) life insurance, long and short-term disability premium payments in the amount of $1,625; for Mr. Correia, (i) $11,044.34 of matching contributions under the MoneyLion 401(k) Plan, and (ii) life insurance, long and short-term disability premium payments in the amount of $1,625; and for Mr. Hong (i) $11,600 of matching contributions under the MoneyLion 401(k) Plan and (ii) life insurance, long and short-term disability premium payments in the amount of $1,625.
Elements of MoneyLion’s Executive Compensation Program
For the year ended December 31, 2021, the compensation for each named executive officer generally consisted of a base salary, performance-based cash bonus (for the 2021 performance year), stock options and standard employee benefits. These elements (and the amounts of compensation and benefits under each element) were selected because MoneyLion believes they are necessary to help attract and retain executive talent which is fundamental to its success. Below is a more detailed summary of the current executive compensation program as it relates to MoneyLion’s named executive officers.
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Base Salaries
The named executive officers receive a base salary to compensate them for services rendered to MoneyLion. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.
2021 Discretionary Cash Bonuses
MoneyLion maintains a discretionary cash-based short-term incentive compensation program in which certain of its employees, including the named executive officers, are eligible to receive bonuses based on, among other things, the named executive officer’s overall performance and MoneyLion’s performance. Such awards are designed to incentivize the named executive officers with a variable level of compensation that is based on performance measures established by MoneyLion’s board of directors or Compensation Committee.
In 2021, Messrs. Choubey, Correia and Hong were eligible to earn a discretionary annual cash bonus, based on individual and company performance. None of the named executive officers had an annual bonus target for 2021.
The actual bonuses earned, as determined by the Compensation Committee of the board of directors, by each named executive officer for performance in 2021 and paid in March 2022 are set forth above in the Summary Compensation Table ($455,000 for Mr. Choubey, $420,000 for Mr. Correia and $350,000 for Mr. Hong).
Business Combination Bonus
The Merger Agreement (as defined herein) provided that Legacy MoneyLion would establish a $5,000,000 transaction bonus pool to be allocated and paid to Legacy MoneyLion employees upon the successful closing of the Business Combination. The board of directors of Legacy MoneyLion determined that, in recognition of their leadership throughout the transaction process, upon the successful completion of the Business Combination, Mr. Choubey and Mr. Correia would each receive a $1,000,000 transaction bonus and that Mr. Hong would be paid a $600,000 transaction bonus.
Equity Compensation
Equity Incentive Plan and Outstanding Awards
2021 Stock Option Grants
Legacy MoneyLion maintained the 2014 Equity Incentive Plan (referred to as the “2014 Plan”) in order to facilitate the grant of long-term equity incentive awards to directors, employees (including the named executive officers) and consultants of MoneyLion and its affiliates to obtain and retain services of these individuals.
In 2021, Legacy MoneyLion granted options to each of the named executive officers in order to encourage their continued service and alignment with shareholders. In 2021, Messrs. Choubey, Correia and Hong were granted options with respect to 118,483 shares (1,944,045 shares after the exchange ratio adjustment in connection with the Business Combination Closing), 65,116 shares (1,069,230 shares after the exchange ratio adjustment in connection with the Business Combination Closing), 65,116 shares (1,069,230 shares after the exchange ratio adjustment in connection with the Business Combination Closing), respectively, with an adjusted exercise price of $2.58 per share.
These options vest over four years, with 25% vesting on the first anniversary of the date of grant and the remainder vesting in equal monthly instalments over the following three-year period such that the award is fully vested four years after the grant date, generally subject to the named executive officer’s continued service through the applicable vesting dates.
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MoneyLion Inc. Amended and Restated Omnibus Incentive Plan
We have adopted and our stockholders have approved the MoneyLion Inc. Amended and Restated Omnibus Incentive Plan (the “Incentive Plan”). We expect that awards will be made under the Incentive Plan in the future.
The aggregate number of shares of MoneyLion Class A Common Stock reserved for issuance pursuant to awards under the Incentive Plan is 79,297,049 shares of MoneyLion Class A Common Stock, which includes 65,235,347 shares of MoneyLion Class A Common Stock issuable in connection with outstanding prior awards (including (i) 38,985,776 stock options granted under the 2014 Plan and (ii) 5,889,466 “Substitute Awards” (as defined in the Incentive Plan) granted in connection with MoneyLion’s acquisition of Even Financial). During the term of the Incentive Plan, the total number of shares of MoneyLion Class A Common Stock authorized for issuance under the Incentive Plan will be increased annually by an amount equal to 5% of the total number of shares of all classes of MoneyLion’s voting stock outstanding on December 31 of each year. Any employee, director or consultant of MoneyLion is eligible to receive an award under the Incentive Plan, to the extent that an offer of such award is permitted by applicable law, stock market or exchange rules, and regulations or accounting or tax rules and regulations.
The Incentive Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance-based awards, other cash-based awards and other stock-based awards, or any combination thereof. Each award will be set forth in a separate grant notice or agreement and will indicate the type and terms and conditions of the award.
Other Elements of Compensation
Retirement Plans
MoneyLion maintains a 401(k) defined contribution retirement savings plan for its employees in the United States, including the named executive officers, who satisfy certain eligibility requirements. Messrs. Choubey, Correia and Hong are eligible to participate in the 401(k) plan on the same terms as other U.S. full-time employees, including matching employer contributions equal to 100% of the first 3% of the employees’ contribution and 50% of the next 2% of the employees’ contribution.
Employee Benefits and Perquisites
All of MoneyLion’s full-time employees in the United States, including Messrs. Choubey, Correia and Hong, are eligible to participate in health and welfare plans, including medical, dental and vision benefits, medical and dependent care, flexible spending accounts, short-term and long-term disability insurance and life insurance.
MoneyLion believes the benefits described above are necessary and appropriate to provide a competitive compensation package to its named executive officers.
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OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END
|
Option Awards |
||||||||||||
|
Name |
Grant |
Number of |
Number of |
Equity |
Option |
Option |
||||||
|
Diwakar Choubey |
11/15/2017 |
1,476,701 |
— |
0.22 |
11/15/2027 |
|||||||
|
11/01/2018 |
354,159 |
105,291 |
0.40 |
11/01/2028 |
||||||||
|
09/21/2019 |
1,384,408 |
1,076,762 |
0.40 |
09/21/2029 |
||||||||
|
05/01/2020 |
64,948 |
99,130 |
0.59 |
05/01/2030 |
||||||||
|
02/01/2021 |
— |
1,944,045 |
2.58 |
02/01/2021 |
||||||||
|
Richard Correia |
12/31/2016 |
1,422,556 |
— |
0.13 |
12/31/2026 |
|||||||
|
11/15/2017 |
1,143,410 |
— |
0.22 |
11/15/2027 |
||||||||
|
11/01/2018 |
174,265 |
51,809 |
0.40 |
11/01/2028 |
||||||||
|
09/21/2019 |
1,615,142 |
1,256,222 |
0.40 |
09/21/2029 |
||||||||
|
05/01/2020 |
64,948 |
99,130 |
0.59 |
05/01/2030 |
||||||||
|
02/01/2021 |
— |
1,069,230 |
2.58 |
02/01/2031 |
||||||||
|
Timmie Hong |
03/01/2016 |
504,540 |
— |
0.15 |
03/01/2026 |
|||||||
|
08/01/2016 |
223,966 |
— |
0.15 |
08/01/2026 |
||||||||
|
11/15/2017 |
656,312 |
— |
0.22 |
11/15/2027 |
||||||||
|
11/01/2018 |
295,134 |
87,742 |
0.40 |
11/01/2028 |
||||||||
|
09/21/2019 |
298,135 |
231,882 |
0.40 |
09/21/2029 |
||||||||
|
05/01/2020 |
324,737 |
495,652 |
0.59 |
05/01/2030 |
||||||||
|
02/01/2021 |
1,069,230 |
2.58 |
02/01/2031 |
|||||||||
____________
(1) These options vest as to 25% of the options upon the first anniversary of the grant date, with the remaining 75% vesting in equal monthly instalments over the following three-year period such that the award is fully vested four years after the grant date, generally subject to the named executive officer’s continued service through the applicable vesting dates.
Executive Compensation Arrangements
Messrs. Choubey and Correia entered into employment agreements with Legacy MoneyLion in November 2019. The terms and conditions of such agreements are described in more detail below. Mr. Hong was not party to an employment agreement with MoneyLion in 2021.
Executive Employment Agreements
On November 19, 2019, Legacy MoneyLion entered into an employment agreement with each of Messrs. Choubey and Correia (the “NEO Employment Agreements”), providing for their employment as Chief Executive Officer of Legacy MoneyLion and Chief Financial Officer of Legacy MoneyLion, respectively. The NEO Employment Agreements provided for an initial two-year term that automatically renewed upon the same terms and conditions set forth in the agreements for successive one-year terms, unless the named executive officer or MoneyLion provided, in the case of Mr. Choubey, six months’, and in the case of Mr. Correia, three months’, prior notice to the other party of the intent not to renew.
Messrs. Choubey and Correia were entitled to an annual base salary, which for 2021 was $452,000, and $437,000, respectively, and for each fiscal year beginning in 2020, a discretionary annual cash bonus determined in the discretion of MoneyLion’s board of directors or Compensation Committee, based on, among other things, the named executive officer’s performance and MoneyLion’s performance. The NEO Employment Agreements provided that the named executive officer must be in good standing on the actual payment date to be eligible to receive the bonus, except as discussed below.
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Pursuant to the NEO Employment Agreements, upon termination of the named executive officer’s employment by MoneyLion without “Cause” or by the named executive officer for “Good Reason” (as such terms are defined in the NEO Employment Agreements), and for Mr. Correia, upon MoneyLion’s non-renewal of the term of employment, the named executive officer was entitled to, in addition to any accrued amounts, and subject to the named executive officer’s execution of a release of claims in favor of MoneyLion and compliance with the restrictive covenants set forth below, (i) continuation of his annual base salary for a period of six months, (ii) payment, for the portion of the named executive officer’s premiums equal to the portion being paid by MoneyLion immediately prior to the date of termination, of the cost of the named executive officer’s and his dependents’ participation in MoneyLion’s health and dental plans for six months, (subject to certain earlier terminations of such coverage, as set forth in the NEO Employment Agreements), (iii) any accrued and unpaid discretionary bonus for the year prior to the year of termination, (iv) if determined by the Compensation Committee (and for Mr. Correia, the CEO), payment of a discretionary bonus (if any) and (v) immediate vesting of any then unvested options that would have vested in the twelve-month period following the named executive officer’s termination.
In addition to the severance payments set forth above, if the named executive officer was terminated by MoneyLion without Cause (and for Mr. Correia, upon MoneyLion’s non-renewal of the term of employment), in each case, within 12 months after a Change in Control (as defined in the NEO Employment Agreements), subject to the named executive officer’s execution of a release of claims in favor of MoneyLion and compliance with the restrictive covenants set forth below, the named executive officer was entitled to (i) continuation of his annual base salary for a period of 12 months, (ii) payment, for the portion of the named executive officer’s premiums equal to the portion being paid by MoneyLion immediately prior to the date of termination, of the cost of the named executive officer’s and his dependents’ participation in MoneyLion’s health and dental plans for 12 months (subject to certain earlier terminations of such coverage, as set forth in the NEO Employment Agreements), (iii) any accrued and unpaid discretionary bonus for the year prior to the year of termination, (iv) if determined by the Compensation Committee (and for Mr. Correia, the CEO) payment of a discretionary bonus (if any) for the year of termination and (v) immediate vesting of any then unvested options held by the named executive officer on the date of his termination.
In addition, pursuant to the NEO Employment Agreements, Messrs. Choubey and Correia were required to sign a Confidentiality and Assignment of Inventions Agreement, which provided a non-competition restriction for a period of 6 months following termination of employment with MoneyLion. The named executive officers were also subject to non-solicitation of employees, customers and clients restrictions for a period of 6 months following termination of employment with MoneyLion for any reason.
2022 Employment Agreements
In March of 2022, MoneyLion entered into new employment agreements with each of Messrs. Choubey, Correia and Hong. The new employment agreements are on substantially similar terms, with differing annual base salaries and titles, and the new employment agreements supersede any prior employment agreements or offer letters (including the NEO Employment Agreements described above) with the foregoing named executive officers.
Each of the new employment agreements has an initial three-year term, which will automatically renew for successive one-year terms unless either party provides 90 days’ prior written notice of non-renewal. Mr. Choubey’s employment agreement provides Mr. Choubey with an annual base salary of $650,000, and that he will continue as Chief Executive Officer of MoneyLion and will serve on its board of directors, Mr. Correia’s employment agreement provides Mr. Correia with an annual base salary of $600,000 and that he will serve as Chief Financial Officer and Mr. Hong’s employment agreement provides Mr. Hong with an annual base salary of $500,000 and that he will serve as Chief Product Officer. Pursuant to each of the employment agreements, each named executive officer has an opportunity to earn an annual equity award grant, as determined by the Compensation Committee, and an annual bonus with a target amount to be determined by the Compensation Committee.
The new employment agreements also provide for severance upon the termination of a named executive officer under his employment agreement by MoneyLion without “Cause,” by the named executive officer for “Good Reason,” due to MoneyLion’s non-renewal of the applicable employment agreement or upon such named executive officer’s death or “Disability” (as such terms are defined in the applicable employment agreement), subject to certain conditions set forth in the applicable employment agreement, including the execution of a general release of any and all claims: (a) severance pay equal to the sum of (i) his base salary at his then current annual rate for a
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period of twelve months following the termination date and (ii) his target bonus at the amount in effect at the time of termination or, if no target bonus has been determined for the year during which the termination of employment occurs, the annual bonus most recently paid to such named executive officer, (b) a pro rata performance-based annual bonus for the year of such named executive officer’s termination of employment, (c) continued participation in MoneyLion’s group medical and dental plans for a specified period following termination and (d) the immediate vesting of the portion of any previously granted and unvested option awards that would have vested during the one-year period immediately following the date of termination of such named executive officer’s employment. Furthermore, in the event of the termination of any named executive officer’s employment within six months prior to or 24 months following a “Change in Control” (as defined in the applicable employment agreement), subject to certain conditions set forth in the applicable employment agreement, including the execution of a general release of any and all claims, the named executive officer will be entitled to (A) severance pay equal to the sum of (1) his base salary at his then current annual rate for a period of 24 months following the termination date and (2) two times his target bonus at the amount in effect at the time of termination or, if no target bonus has been determined for the year during which the termination of employment occurs, the annual bonus most recently paid to such named executive officer, (B) a pro rata performance-based annual bonus for the year of such named executive officer’s termination of employment, (C) continued participation in the Company’s group medical and dental plans for a specified period following termination and (D) the immediate vesting of any previously granted and unvested option awards.
Each of the employment agreements contains customary perpetual non-disclosure, non-disparagement and, for a period of twelve months following termination of the named executive officer’s employment with the Company, non-compete and non-solicit covenants by which each of the named executive officer is bound.
2022 Equity Grants
In March of 2022, MoneyLion granted each of the named executive officers restricted stock units and performance share awards pursuant to the terms and conditions of the Incentive Plan. Each named executive officer was granted (i) restricted stock units (the “RSUs”) that vest in 12 quarterly instalments over a three-year period, generally subject to the applicable named executive officer’s continued employment through each vesting date, (ii) performance share awards that are earned based on the achievement of specified target key performance indicators during 2022 related to MoneyLion’s revenue, customer acquisition and EBITDA (the “Performance Goals”) (with the number of Annual PSUs that can be earned to be between 80% and 120% of the target amount) and vest over a three-year period (including the year of grant) (the “Annual PSUs”), provided that the applicable Performance Goals are achieved and the named executive officer generally remains employed through the applicable vesting date and (iii) performance share awards that vest based on the achievement of specified share prices (the “Share Price PSUs”) (25%, 50%, 75% and 100% of the Share Price PSUs will vest upon the achievement of a volume-weighted average price per share of the MoneyLion Class A Common Stock over 20 consecutive trading days equal to or greater than $8.00, $10.00, $12.00 and $15.00, respectively) within four years of the date of grant and minimum time vesting conditions, generally subject to the applicable named executive officer’s continued employment through the applicable vesting date.
In March 2022, Mr. Choubey received a grant of (i) 2,185,902 RSUs, (ii) 1,092,787 Annual PSUs (at 100% of target) and (iii) 2,909,836 Share Price PSUs, Mr. Correia received a grant of (i) 1,360,724 RSUs, (ii) 680,259 Annual PSUs (at 100% of target) and (iii) 2,090,164 Share Price PSUs and Mr. Hong received a grant of (i) 450,842 RSUs, (ii) 225,387 Annual PSUs (at 100% of target) and (iii) 1,434,426 Share Price PSUs.
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DIRECTOR COMPENSATION
Director Compensation Table
The following table sets forth information regarding compensation earned by or paid to MoneyLion’s directors during the year ended December 31, 2021, excluding Mr. Choubey for whom we provided compensation disclosure in the Summary Compensation Table.
|
Name (a) |
Fees Earned or |
Stock |
Non-Equity |
Non-qualified |
All Other |
Total |
||||||
|
Dwight Bush |
17,500 |
289,229 |
— |
— |
— |
306,729 |
||||||
|
John Chrystal(3) |
21,250 |
289,229 |
— |
— |
— |
310,479 |
||||||
|
Greg DePetris(3) |
13,500 |
289,229 |
— |
— |
— |
302,729 |
||||||
|
Matt Derella |
14,000 |
289,229 |
— |
— |
— |
303,229 |
||||||
|
Jeffrey Gary |
15,000 |
289,229 |
— |
— |
— |
304,229 |
||||||
|
Lisa Gersh |
13,500 |
289,229 |
— |
— |
— |
302,729 |
||||||
|
Annette Nazareth |
13,500 |
289,229 |
— |
— |
— |
302,729 |
||||||
|
Michael Paull |
12,500 |
289,229 |
— |
— |
— |
301,729 |
||||||
|
Chris Sugden |
15,500 |
289,229 |
— |
— |
— |
304,729 |
____________
(1) Fees disclosed in this column represent the first quarterly payment made to each of the members of the board of directors in accordance with the terms of the Outside Director Compensation Program described below.
(2) Reflects the grant date value of the restricted stock units granted in accordance with the terms of the Outside Director Compensation Program during the applicable year as calculated in accordance with ASC Topic 718. Assumptions made in the course of this valuation are set forth in Note 13 to our audited financial statements incorporated by reference in this prospectus. This grant represents the initial grant of restricted stock units pursuant to the Outside Director Compensation Program, with 1/6 of the grant vesting on March 22, 2022 and the remainder vesting in equal quarterly instalments until the award is fully vested on the third anniversary of the date of grant.
(3) Mr. DePetris was previously granted an award of (i) 237,355 options (all of which are vested) on September 1, 2017 that have an exercise price of $0.22 per share and (ii) 1,230,584 options (461,469 of which are vested) on September 1, 2020 that have an exercise price of $0.59 per share. Mr. Chrystal was previously granted an award of (i) 142,420 options (all of which are vested) on September 1, 2017 that have an exercise price of $0.22 per share and (ii) 410,195 options (128,186 of which are vested) on September 1, 2020 that have an exercise price of $0.59 per share. Mr. DePetris’s term as a director expired on June 15, 2022 at the annual meeting of stockholders in 2022.
In November 2021, MoneyLion adopted the Outside Director Compensation Program that provides non-employee directors with the following annual cash retainers for service on our board of directors and its standing committees:
• A $40,000 annual cash retainer for service as a member of our board of directors;
• an additional $35,000 annual cash retainer for serving as the non-executive chair of the board of directors;
• the following additional cash retainers for service on the standing committees of the board of directors:
• Risk & Compliance Committee — $10,000 (or $20,000 as chair)
• Audit Committee — $10,000 (or $20,000 as chair)
• Compensation Committee — $6,000 (or $12,000 as chair)
• Nominating & Corporate Governance Committee — $4,000 (or $8,000 as chair)
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In addition to the cash compensation, the Outside Director Compensation Program provides that our non-employee directors will be granted an initial equity award of restricted stock units upon joining the board with a value of $300,000 based on a thirty (30) day volume weighted average price and an annual equity award of restricted stock units with a value of $150,000 based on a thirty (30) day volume weighted average price for each year thereafter (beginning in 2022). The initial equity award vests in equal quarterly instalments until it is fully vested on the third anniversary of the director’s appointment date and the annual equity award will vest quarterly such that it is fully-vested on the first anniversary of the grant date, in each case subject to continued service through such date. The Outside Director Compensation Program also provides for the accelerated vesting of any unvested restricted stock units upon a Change in Control (as defined in the Incentive Plan), subject to continued employment through the date of consummation of the Change in Control.
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DESCRIPTION OF SECURITIES
The following description of capital stock is intended as a summary only and is qualified in its entirety by reference to our Certificate of Incorporation, our Bylaws, the Certificate of Designation of the Preferred Stock and the Warrant Agreement, which are incorporated by reference as Exhibits 3.1, 3.2, 3.3 and 4.2, respectively, to the registration statement of which this prospectus is a part. We encourage you to read these documents and the applicable portion of the DGCL carefully.
Authorized and Outstanding Stock
Our Certificate of Incorporation authorizes the issuance of an aggregate of 2,200,000,000 shares of capital stock, consisting of 2,000,000,000 shares of MoneyLion’s Class A common stock, $0.0001 par value per share and 200,000,000 shares of preferred stock, $0.0001 par value per share. As of June 27, 2022, we had 237,069,783 shares of MoneyLion Class A Common Stock issued and outstanding and 28,693,931 shares of Preferred Stock issued and outstanding. The outstanding shares of MoneyLion Class A Common Stock and Preferred Stock are duly authorized, validly issued, fully paid and non-assessable. Our purpose is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (as amended, the “DGCL”). Unless our board of directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.
Class A Common Stock
Voting Rights
Each holder of the shares of MoneyLion Class A Common Stock is entitled to one vote for each share of MoneyLion Class A Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, as provide by our Certificate of Incorporation. The holders of the shares of MoneyLion Class A Common Stock do not have cumulative voting rights in the election of directors. Generally, all matters to be voted on by the holders of MoneyLion Class A Common Stock must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast present in person or represented by proxy, unless otherwise specified by law, our Certificate of Incorporation or Bylaws.
Dividend Right
Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of MoneyLion Class A Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the MoneyLion board of directors out of funds legally available therefor.
Rights upon Liquidation, Dissolution and Winding-Up
In the event of any voluntary or involuntary liquidation, dissolution or winding up of MoneyLion’s affairs, the holders of the shares of MoneyLion Class A Common Stock are entitled to share ratably in all assets remaining after payment of MoneyLion’s debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the shares of MoneyLion Class A Common Stock, then outstanding, if any.
Preemptive or Other Rights
The holders of shares of MoneyLion Class A Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the shares of MoneyLion Class A Common Stock. The rights, preferences and privileges of holders of shares of MoneyLion Class A Common Stock will be subject to those of the holders of any shares of the preferred stock MoneyLion may issue in the future.
Preferred Stock
General
Our Certificate of Incorporation authorizes the MoneyLion board of directors to establish one or more series of preferred stock. Unless required by law or by any stock exchange, and subject to the terms of our Certificate of Incorporation, the authorized shares of preferred stock will be available for issuance without further action by
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holders of MoneyLion Class A Common Stock. The MoneyLion board of directors is able to determine, with respect to any series of preferred stock, designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any.
MoneyLion could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of MoneyLion Class A Common Stock might believe to be in their best interests or in which the holders of MoneyLion Class A Common Stock might receive a premium over the market price of the shares of MoneyLion Class A Common Stock. Additionally, the issuance of preferred stock may adversely affect the rights of holders of MoneyLion Class A Common Stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the rights of the common stock to distributions upon a liquidation, dissolution or winding up or other event. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of the MoneyLion Class A Common Stock.
Series A Convertible Preferred Stock
Each holder of the shares of Preferred Stock (other than certain regulated holders subject to the Bank Holding Company Act of 1956, as amended) is entitled to vote as a single class with the holders of the MoneyLion Class A Common Stock and the holders of any other class or series of capital stock of MoneyLion then entitled to vote. Shares of Preferred Stock are convertible into shares of MoneyLion Class A Common Stock on a one-for-one basis, subject to customary anti-dilution adjustments. The Preferred Stock (i) is convertible at any time upon the holder’s election and (ii) automatically converts into MoneyLion Class A Common Stock if the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE equals or exceeds $10.00 on any 20 trading days (which may be consecutive or nonconsecutive) within any consecutive 30 trading day period that ends no later than the last day of the lockup period that applies to such shares of Preferred Stock. Holders of the Preferred Stock are entitled to a 3% cumulative annual dividend, payable at the Company’s election in either cash or MoneyLion Class A Common Stock (or a combination thereof), with any dividends on the MoneyLion Class A Common Stock valued based on the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE for the 20 trading days ending on the trading day immediately prior to the date on which the dividend is paid. Upon a liquidation of the Company, holders of the Preferred Stock will be entitled to a liquidation preference of the greater of $10.00 per share or the amount per share that such holder would have received had the Preferred Stock been converted into MoneyLion Class A Common Stock immediately prior to the liquidation.
Warrants
Public Stockholders’ Warrants
As of June 27, 2022, there were outstanding an aggregate of 17,499,900 public warrants, which entitle the holder to acquire shares of MoneyLion Class A Common Stock. Each whole warrant entitles the registered holder to purchase one share of MoneyLion Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, provided that MoneyLion has an effective registration statement under the Securities Act, covering the shares of MoneyLion Class A Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or it permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. A holder may exercise its warrants only for a whole number of shares of MoneyLion Class A Common Stock. This means only a whole warrant may be exercised at a given time by a warrant holder; only whole warrants will trade. The warrants will expire on September 22, 2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We will not be obligated to deliver any shares of MoneyLion Class A Common Stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of MoneyLion Class A Common Stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to MoneyLion satisfying its obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue shares of MoneyLion Class A Common Stock upon exercise of a warrant unless the shares of MoneyLion Class A Common Stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two
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immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant.
MoneyLion filed with the U.S. Securities and Exchange Commission a registration statement for the registration, under the Securities Act, of the shares of MoneyLion Class A Common Stock issuable upon exercise of the warrants, which was declared effective on October 22, 2021. MoneyLion will use its best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the shares of MoneyLion Class A Common Stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants
MoneyLion may call the warrants for redemption for cash:
• in whole and not in part;
• at a price of $0.01 per warrant;
• upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
• if, and only if, the closing price of the MoneyLion Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of shares of MoneyLion Class A Common Stock and equity-linked securities for capital raising purposes in connection with the Business Combination Closing, as described elsewhere in this prospectus) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders.
MoneyLion may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and MoneyLion issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the shares of MoneyLion Class A Common Stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of shares of MoneyLion Class A Common Stock and equity-linked securities for capital raising purposes in connection with the Business Combination Closing, as described elsewhere in this prospectus) as well as the $11.50 warrant exercise price after the redemption notice is issued.
If MoneyLion calls the warrants for redemption, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of MoneyLion Class A Common Stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of MoneyLion Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of MoneyLion Class A Common Stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) of the MoneyLion Class A Common Stock over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average closing price of the shares of MoneyLion Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of
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MoneyLion Class A Common Stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants. If we call our warrants for redemption and our management does not take advantage of this option, the holders of the private placement warrants and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the shares of MoneyLion Class A Common Stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of MoneyLion Class A Common Stock is increased by a share capitalization payable in shares of MoneyLion Class A Common Stock, or by a split-up of common stock or other similar event, then, on the effective date of such share capitalization, split-up or similar event, the number of shares of MoneyLion Class A Common Stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of common stock. A rights offering to holders of common stock entitling holders to purchase shares of MoneyLion Class A Common Stock at a price less than the fair market value will be deemed a share capitalization of a number of shares of MoneyLion Class A Common Stock equal to the product of (i) the number of shares of MoneyLion Class A Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for shares of MoneyLion Class A Common Stock) multiplied by (ii) one (1) minus the quotient of (x) the price per shares of MoneyLion Class A Common Stock paid in such rights offering and divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for shares of MoneyLion Class A Common Stock, in determining the price payable for shares of MoneyLion Class A Common Stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of shares of MoneyLion Class A Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of MoneyLion Class A Common Stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if MoneyLion, at any time while the warrants are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to the holders of common stock on account of such shares of common stock (or other shares of capital stock into which the warrants are convertible), other than (a) as described above and (b) certain ordinary cash dividends, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of common stock in respect of such event.
If the number of outstanding shares of MoneyLion Class A Common Stock is decreased by a consolidation, combination, reverse share split or reclassification of shares of MoneyLion Class A Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse share split, reclassification or similar event, the number of shares of MoneyLion Class A Common Stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of MoneyLion Class A Common Stock.
Whenever the number of shares of MoneyLion Class A Common Stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of MoneyLion Class A Common Stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of MoneyLion Class A Common Stock so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding shares of MoneyLion Class A Common Stock (other than those described above or that solely affects the par value of such shares of MoneyLion Class A Common Stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding shares of MoneyLion Class A Common Stock), or in the case of any sale or conveyance to another
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corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of MoneyLion Class A Common Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of MoneyLion Class A Common Stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. If less than 70% of the consideration receivable by the holders of shares of MoneyLion Class A Common Stock in such a transaction is payable in the form of shares of MoneyLion Class A Common Stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant. The purpose of such exercise price reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants.
The warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, and that all other modifications or amendments will require the vote or written consent of the holders of at least 50% of the then outstanding public warrants, and, solely with respect to any amendment to the terms of the private placement warrants, a majority of the then outstanding private placement warrants. You should review a copy of the warrant agreement, which is incorporated by reference as Exhibit 4.2 to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of MoneyLion Class A Common Stock and any voting rights until they exercise their warrants and receive shares of MoneyLion Class A Common Stock. After the issuance of shares of MoneyLion Class A Common Stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of MoneyLion Class A Common Stock to be issued to the warrant holder.
Private Placement Warrants
As of June 27, 2022, there were 8,100,000 private placement warrants outstanding exercisable for 8,100,000 shares of MoneyLion Class A common stock. The private placement warrants are not redeemable by us so long as they are held by Fusion Sponsor LLC, a Delaware limited liability company, or its permitted transferees. The initial purchasers, or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Except as described in this section, the private placement warrants have terms and provisions that are identical to the public warrants of MoneyLion. If the private placement warrants are held by holders other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by us for cash and exercisable by the holders on the same basis as the warrants included in the units sold in Fusion Acquisition Corp.’s initial public offering, consummated on June 30, 2020.
If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of MoneyLion Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of MoneyLion Class A Common Stock underlying the warrants, multiplied by the excess of the “fair market value” of the MoneyLion Class A Common Stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” means the average closing price of the shares of MoneyLion Class A Common Stock for the
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10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of MoneyLion Class A Common Stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.
Anti-Takeover Effects of the Certificate of Incorporation and Bylaws and Certain Provisions of Delaware Law
Our Certificate of Incorporation, Bylaws and the DGCL contain provisions that are summarized in the following paragraphs and that are intended to enhance the likelihood of continuity and stability in the composition of the MoneyLion board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile or abusive change of control and enhance the ability of the MoneyLion board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of MoneyLion by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of MoneyLion Class A Common Stock held by stockholders.
Authorized but Unissued Capital Stock
Delaware law does not require stockholder approval for any issuance of shares that are authorized and available for issuance. However, the listing requirements of the NYSE, which apply so long as the shares of MoneyLion Class A Common Stock remain listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or the then outstanding number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions. Additionally, the number of authorized shares of any series of common stock or preferred stock may be increased or decreased (but not below the number of shares thereof outstanding) by the affirmative vote of the holders of a majority in voting power, irrespective of the provisions of Section 242(b)(2) of the DGCL.
The MoneyLion board of directors may generally issue shares of one or more series of preferred stock on terms designed to discourage, delay or prevent a change of control of MoneyLion or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances in one or more series without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, to facilitate acquisitions and employee benefit plans.
One of the effects of the existence of authorized and unissued and unreserved shares of MoneyLion Class A Common Stock or preferred stock may be to enable the MoneyLion board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of MoneyLion by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of MoneyLion Class A Common Stock at prices higher than prevailing market prices.
Removal of Directors; Vacancies and Newly Created Directorships
Our Certificate of Incorporation provides that, subject to the rights granted to one or more series of preferred stock then outstanding, no director may be removed from office by the stockholders other than for cause with the affirmative of vote of at least 66 2/3% of the total voting power then outstanding. Our Certificate of Incorporation further provides that, subject to the rights granted to one or more series of preferred stock then outstanding, any newly-created directorship on the MoneyLion board of directors that results from an increase in the number of directors and any vacancies on the MoneyLion board of directors will be filled solely only by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the stockholders.
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Special Stockholder Meetings
Our Certificate of Incorporation provides that special meetings of our stockholders may be called at any time only by the MoneyLion board of directors acting pursuant to a resolution adopted by the MoneyLion board of directors, subject to the rights of holders of any series of preferred stock then outstanding. Our Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deterring, delaying or discouraging hostile takeovers, or changes in control or management of MoneyLion.
Director Nominations and Stockholder Proposals
Our Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the MoneyLion board of directors or a committee of the MoneyLion board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders, subject to specified exceptions. Our Bylaws also specify requirements as to the form and content of a stockholder’s notice. Our Bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of MoneyLion.
Stockholder Action by Written Consent
Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice, and without a vote if a consent or consents in writing, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our Certificate of Incorporation provides otherwise. Subject to applicable law and the rights, if any, of the holders of any outstanding series of preferred stock or any other outstanding class or series of stock of MoneyLion, our Certificate of Incorporation does not permit our holders of common stock to act by consent in writing.
Section 203 of the DGCL
MoneyLion is subject to the provisions of Section 203 of the DGCL, which we refer to as “Section 203” regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:
• prior to the date of the transaction, the MoneyLion board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
• upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
• at or subsequent to the date of the transaction, the business combination is approved by the MoneyLion board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
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Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. The MoneyLion board of directors expects the existence of this provision to have an anti-takeover effect with respect to transactions the MoneyLion board of directors does not approve in advance. The MoneyLion board of directors also anticipates that Section 203 may discourage attempts that might result in a premium over the market price for the shares of MoneyLion Class A Common Stock held by stockholders.
The provisions of Delaware law and the provisions of our Certificate of Incorporation and Bylaws could have the effect of discouraging others from attempting hostile takeovers and as a consequence, they might also inhibit temporary fluctuations in the market price of the MoneyLion Class A Common Stock that often result from actual or rumored hostile takeover attempts. These provisions might also have the effect of preventing changes in MoneyLion’s management. It is also possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation in which we are a constituent entity. Pursuant to the DGCL, stockholders who properly demand and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Court of Chancery of the State of Delaware, plus interest, if any, on the amount determined to be the fair value, from the effective time of such merger or consolidation through the date of payment of the judgment.
Stockholders’ Derivative Actions
Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law. To bring such an action, the stockholder must otherwise comply with Delaware law regarding derivative actions.
Exclusive Forum
Our Certificate of Incorporation provides that, unless MoneyLion consents in writing to the selection of an alternative forum, the Court of Chancery shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of MoneyLion, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of MoneyLion to MoneyLion or MoneyLion’s stockholders, (iii) any action asserting a claim against MoneyLion, its directors, officers or employees arising pursuant to any provision of the DGCL or our Certificate of Incorporation or Bylaws, or (iv) any action asserting a claim against MoneyLion, its directors, officers or employees governed by the internal affairs doctrine and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, except for, as to each of (i) through (iv) above, any claim (A) as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Notwithstanding the foregoing, these provisions will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in any security of MoneyLion shall be deemed to have notice of and consented to these provisions.
It is possible that a court could find these forum selection provisions to be inapplicable or unenforceable and, accordingly, MoneyLion could be required to litigate claims in multiple jurisdictions, incur additional costs or otherwise not receive the benefits that the MoneyLion board of directors expects MoneyLion’s forum selection provisions to provide.
126
To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of our company shall be deemed to have notice of and consented to the forum provisions in our Certificate of Incorporation. However, investors will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder as a result of the forum selection provisions in our Certificate of Incorporation.
Conflicts of Interest
Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our Certificate of Incorporation, to the maximum extent permitted from time to time by Delaware law, renounces any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to our directors or their affiliates, other than those directors or affiliates who are our or our subsidiaries’ employees. Our Certificate of Incorporation provides that, to the fullest extent permitted by law, none of the directors who are not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or (ii) otherwise competing with us or our affiliates. Our Certificate of Incorporation does not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of MoneyLion. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our Certificate of Incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.
Limitations on Liability and Indemnification of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. Our Certificate of Incorporation includes a provision that eliminates the personal liability of directors for monetary damages to the corporation or its stockholders for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has breached such director’s duty of loyalty, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends, redemptions or repurchases or derived an improper benefit from his or her actions as a director.
The limitation of liability provision in our Certificate of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Transfer Agent and Registrar
The transfer agent and registrar for the MoneyLion Class A Common Stock and Preferred Stock is Continental Stock Transfer & Trust Company. The transfer agent’s address is 1 State Street, 30th Floor, New York, New York 1004.
Listing
The MoneyLion Class A Common Stock and Public Warrants are listed on the NYSE under the symbols “ML” and “ML WS”, respectively.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
Term Loan
General
On March 24, 2022 (the “Credit Agreement Closing Date”), MoneyLion Technologies Inc., a Delaware corporation and the direct, wholly-owned subsidiary of MoneyLion Inc. (in its capacity as borrower, the “Borrower”), entered into a Credit Agreement (the “Credit Agreement”) with certain financial institutions from time to time party thereto (together with their respective successors and permitted assigns, the “Lenders”), as lenders, and Monroe Capital Management Advisors, LLC, a Delaware limited liability company (“Monroe Capital”), as administrative agent and lead arranger, which provides for the following:
• $70.0 million aggregate principal amount of term loans (the “Term A-1 Loans”), available to be drawn at the Credit Agreement Closing Date;
• $20.0 million aggregate principal amount of term loans (the “Term A-2 Loans”), which replaces the $20.0 million aggregate principal amount of term loans outstanding under the Borrower’s existing Second Lien Loan with affiliates of Monroe Capital, as described further below;
• $20.0 million aggregate principal amount of delayed draw term loans (the “Term B Loans”), which are available to be drawn for a period of 18-months following the Credit Agreement Closing Date, subject to certain conditions set forth in the Credit Agreement; and
• subject to certain conditions set forth in the Credit Agreement, the ability to incur incremental commitments of up to $60.0 million aggregate principal amount of Term A-1 Loans or Term B Loans (the “Incremental Term Loans”; the Term A-1 Loans, the Term A-2 Loans, the Term B Loans and, if applicable, the Incremental Term Loans, collectively, the “Term Loans”).
In connection with the foregoing, the Borrower borrowed Term A-1 Loans in an aggregate principal amount of $70.0 million. Proceeds of the Term A-1 Loans were used (a) to repay in full the approximately $24.0 million aggregate principal amount outstanding under the Borrower’s existing first-lien loan facility with Silicon Valley Bank, as lender, including accrued and unpaid interest and related fees, (b) to pay transaction-related fees and expenses and (c) for general corporate purposes and working capital needs of MoneyLion and its subsidiaries. With respect to the Term A-2 Loans, pursuant to the Credit Agreement, the Lenders thereunder were deemed to have rolled over their loans under the Second Lien Loan in the same aggregate principal amount as their respective commitments with respect to the Term A-2 Loans, following which all obligations in respect of the Second Lien Loan were deemed to be satisfied and paid in full. For more information about the Second Lien Loan, please see Note 9, “Debt — Second Lien Loan,” to MoneyLion’s audited consolidated financial statements included elsewhere in this prospectus.
Interest
The Term A-1 Loans and Term B Loans bear annual interest, payable monthly, at a floating rate measured by reference to, at the Borrower’s option, either (a) a base rate then in effect (equal to the greater of (i) the federal funds rate plus 0.50%, (ii) the prime rate, (iii) 2.00% and (iv) an adjusted one-month Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 1.00%) plus 1.00%) plus an applicable margin ranging from 6.00% to 8.25% per annum, depending on whether the “EBITDA Trigger Date” has occurred, the Borrower’s “Enterprise Value” and, once the EBITDA Trigger Date has occurred, its “Total Debt to EBITDA Ratio” (as such terms are defined in the Credit Agreement, which is incorporated by reference as Exhibit 10.11 to the registration statement of which this prospectus is a part) or (b) an adjusted one-month or three-month SOFR (subject to a floor of 1.00%) plus an applicable margin ranging from 7.00% to 9.25% per annum, depending on whether the EBITDA Trigger Date has occurred, the Borrower’s Enterprise Value and, once the EBITDA Trigger Date has occurred, its Total Debt to EBITDA Ratio. The Term A-2 Loans bear annual interest, payable monthly, at the greater of (i) 12% and (ii) a floating rate measured by reference to the prime rate plus 5.75% per annum, subject to a cap of 15%.
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Optional and Mandatory Prepayments
The Term Loans may be prepaid at the Borrower’s option at any time, in minimum principal amounts, and are subject to mandatory prepayment in an amount equal to 100% of the net cash proceeds upon the occurrence of certain asset dispositions and equity and debt offerings, 100% of certain extraordinary cash receipts and 0-50% of certain excess cash flow, in each case as specified in the Credit Agreement and subject to certain reinvestment rights as set forth in the Credit Agreement. Upon the occurrence of certain triggering events, including any prepayment of any Term Loans for any reason (subject to limited exceptions), the Borrower is required to pay a premium ranging from 0.00% to 3.00% of the principal amount of such prepayment depending on the Term Loans repaid and the date of the prepayment, plus, in the case of any Term Loans other than Term A-2 Loans and in the event the prepayment occurs within 12 months after the Credit Agreement Closing Date, all interest that would have otherwise been payable on the amount of the principal prepayment from the date of prepayment to and including the date that is 12 months after the Credit Agreement Closing Date.
Final Maturity
The Term A-1 Loans and the Term B Loans mature on the fourth anniversary of the Credit Agreement Closing Date, March 24, 2026, and the Term A-2 Loans mature on May 1, 2023.
Representations and Warranties and Certain Covenants
The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including financial covenants with respect to minimum adjusted revenue, EBITDA, liquidity and unrestricted cash. The negative covenants, among other things, limit or restrict the ability of the “Loan Parties” (as defined in the Credit Agreement) and their subsidiaries to: incur additional indebtedness; incur additional liens; make dividends, distributions and other restricted payments; merge, consolidate, sell, transfer, dispose of, convey or lease assets or equity interests; purchase or otherwise acquire assets or equity interests; modify organizational documents; enter into certain transactions with affiliates; enter into restrictive agreements; engage in other business activities; and make investments.
Guarantee and Security
The obligations under the Credit Agreement are guaranteed by MoneyLion, as parent, and each direct and indirect existing and future wholly-owned subsidiary of the Borrower, other than special purpose entities, certain foreign subsidiaries, certain regulated subsidiaries and certain other excluded subsidiaries (the “Guarantors”). The obligations of the Borrower and each Guarantor are secured by a perfected, first-priority security interest in substantially all tangible and intangible assets of the Borrower and each Guarantor, subject to certain customary exceptions.
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SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK
Rule 144
Pursuant to Rule 144 under the Securities Act (“Rule 144”), a person who has beneficially owned restricted MoneyLion Class A Common Stock of MoneyLion for at least six months would be entitled to sell their MoneyLion Class A Common Stock provided that (i) such person is not deemed to have been an affiliate of MoneyLion at the time of, or at any time during the three months preceding, a sale and (ii) MoneyLion is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as it was required to file reports) preceding the sale.
Persons who have beneficially owned restricted MoneyLion Class A Common Stock of MoneyLion for at least six months but who are affiliates of MoneyLion at the time of, or at any time during the three months preceding, a sale would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
• 1% of the total number of shares of MoneyLion Class A Common Stock then outstanding; or
• the average weekly reported trading volume of MoneyLion Class A Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by affiliates of MoneyLion under Rule 144 are also limited by manner of sale provisions and notice requirements and by the availability of current public information about MoneyLion.
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially issued by shell companies (other than business-combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
• the issuer of the securities that was formerly a shell company has ceased to be a shell company;
• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials) other than Form 8-K reports; and
• at least one year has elapsed from the time that the issuer filed current Form 10-type information with the SEC reflecting its status as an entity that is not a shell company.
As a result of the consummation of the Business Combination, we are no longer a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth information regarding the beneficial ownership of shares of MoneyLion Class A Common Stock and Preferred Stock by:
• each person who is known to be the beneficial owner of more than 5% of MoneyLion Class A Common Stock or Preferred Stock;
• each person who is an executive officer or director of MoneyLion; and
• all executive officers and directors of MoneyLion as a group.
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.
The beneficial ownership of MoneyLion Class A Common Stock is based on 237,069,783 shares of MoneyLion Class A Common Stock and 28,693,931 shares of Preferred Stock outstanding as of June 27, 2022.
Unless otherwise indicated, MoneyLion believes that each person named in the table below has sole voting and investment power with respect to all shares of MoneyLion Class A Common Stock or of Preferred Stock beneficially owned by them.
|
MoneyLion Class A |
Preferred Stock |
|||||||||
|
Number of |
% of |
Number of |
% of |
|||||||
|
Directors and Executive Officers of MoneyLion |
|
|
||||||||
|
Diwakar (Dee) Choubey(1)(2) |
22,306,472 |
9.4 |
% |
— |
— |
|
||||
|
Richard (Rick) Correia(1)(3) |
5,550,479 |
2.3 |
% |
— |
— |
|
||||
|
Mark Torossian(1) |
— |
* |
|
— |
— |
|
||||
|
Timmie (Tim) Hong(1)(4) |
3,058,491 |
1.3 |
% |
— |
— |
|
||||
|
Chee Mun Foong(1)(5) |
3,226,775 |
1.4 |
% |
— |
— |
|
||||
|
Adam VanWagner(1)(6) |
185,786 |
* |
|
— |
— |
|
||||
|
Dwight L. Bush(1) |
11,967 |
* |
|
— |
— |
|
||||
|
John Chrystal(1)(7) |
600,939 |
* |
|
— |
— |
|
||||
|
Matt Derella(1) |
135,210 |
* |
|
— |
— |
|
||||
|
Jeffrey Gary(1) |
86,967 |
* |
|
— |
— |
|
||||
|
Lisa Gersh(1) |
11,967 |
* |
|
— |
— |
|
||||
|
Annette Nazareth(1) |
11,967 |
* |
|
— |
— |
|
||||
|
Michael Paull(1) |
11,967 |
* |
|
— |
— |
|
||||
|
Chris Sugden(1) |
11,967 |
* |
|
— |
— |
|
||||
|
All Directors and Executive Officers of MoneyLion as a Group (fifteen individuals) |
35,210,954 |
14.9 |
% |
— |
— |
|
||||
|
Five Percent Holders: |
|
|
||||||||
|
Rohit D’Souza(8) |
24,587,275 |
10.4 |
% |
— |
— |
|
||||
|
Fintech Collective(9) |
18,735,926 |
7.9 |
% |
— |
— |
|
||||
|
Edison Partners(10) |
32,625,157 |
13.8 |
% |
— |
— |
|
||||
|
StepStone(11) |
23,371,457 |
9.9 |
% |
— |
— |
|
||||
|
American Express Travel Related Services Company, Inc.(12) |
— |
— |
|
1,618,229 |
5.6 |
% |
||||
|
Canaan X L.P.(13) |
— |
— |
|
2,911,083 |
10.1 |
% |
||||
131
|
MoneyLion Class A |
Preferred Stock |
||||||||
|
Number of |
% of |
Number of |
% of |
||||||
|
Citi Ventures Inc.(14) |
— |
— |
1,620,102 |
5.6 |
% |
||||
|
F-Prime Capital Partners Tech Fund LP(15) |
— |
— |
3,424,219 |
11.9 |
% |
||||
|
GreatPoint Ventures Innovation Fund II, L.P.(16) |
— |
— |
5,792,756 |
20.2 |
% |
||||
|
MassMutual Ventures US II LLC(17) |
— |
— |
1,620,103 |
5.6 |
% |
||||
____________
* Less than one percent.
(1) The business address of each of these stockholders is c/o MoneyLion Inc., 30 West 21st Street, 9th Floor, New York, NY 10010.
(2) Includes (i) 13,858,706 shares of MoneyLion Class A Common Stock held directly by Mr. Choubey, (ii) 4,705,507 shares of MoneyLion Class A Common Stock which Mr. Choubey has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan, (iii) 378,661 shares of MoneyLion Class A Common Stock held by Mr. Choubey’s spouse and (iv) 3,363,598 shares of MoneyLion Class A Common Stock held in trusts, the beneficiaries of which are members of Mr. Choubey’s family. Mr. Choubey disclaims beneficial ownership of all shares of MoneyLion Class A Common Stock held of record by such trusts.
(3) Includes (i) 72,218 shares of MoneyLion Class A Common Stock held directly by Mr. Correia and (ii) 5,478,261 shares of MoneyLion Class A Common Stock which Mr. Correia has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan.
(4) Includes (i) 28,256 shares of MoneyLion Class A Common Stock held directly by Mr. Hong and (ii) 3,030,235 shares of MoneyLion Class A Common Stock which Mr. Hong has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan.
(5) Includes (i) 1,994,755 shares of MoneyLion Class A Common Stock held directly by Mr. Foong and (ii) 1,232,020 shares of MoneyLion Class A Common Stock which Mr. Foong has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan.
(6) Includes (i) 28,825 shares of MoneyLion Class A Common Stock held directly by Mr. VanWagner and (ii) 156,961 shares of MoneyLion Class A Common Stock which Mr. VanWagner has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan.
(7) Includes (i) 261,967 shares of MoneyLion Class A Common Stock held directly by Mr. Chrystal and (ii) 338,972 shares of MoneyLion Class A Common Stock which Mr. Chrystal has the right to acquire through the exercise of vested options and vested RSUs, which represent a contingent right to receive one share of MoneyLion Class A Common Stock, granted pursuant to the Incentive Plan.
(8) Based on the Schedule 13G filed on October 4, 2021, includes 21,300,039 shares of MoneyLion Class A Common Stock indirectly beneficially owned through RDS MoneyLion Holdings I, LLC, 1,582,433 shares of MoneyLion Class A Common Stock indirectly beneficially owned through Bear Creek Ventures, LLC and 1,704,803 shares of MoneyLion Class A Common Stock indirectly beneficially owned through Telluride Capital Ventures, LLC. The business address of Mr. D’Souza is 425 Park Ave S, New York, NY 10016.
(9) Based on the Schedule 13G filed on October 4, 2021, FinTech Collective, LLC (“Fintech Collective”) holds shares of MoneyLion Class A Common Stock through FinTech Collective II-AV LLC, FinTech Collective SL1 LLC, FinTech Collective SL2 LLC, FinTech Collective SL3 LLC, FinTech Collective SL4 LLC, and FinTech Collective W2 LLC. FinTech Collective, LLC is the sole manager of FinTech Collective Management LLC, which in turn manages the above-mentioned shareholders of MoneyLion. The business address is 200 Park Avenue South, Suite 1611, New York, NY 10003.
(10) Based on the Schedule 13D filed on February 11, 2022, Edison Partners VIII, L.P. (“Edison Partners”), a Delaware limited partnership, is a registered holder of shares of MoneyLion Class A Common Stock. Edison VIII GP LLC, a Delaware limited liability company, is the general partner of Edison Partners VIII, L.P. Christopher S. Sugden, a member of MoneyLion’s board of directors, is the Managing Member of the general partner. The business address of Edison Partners and its general partner is: Edison Partners, 281 Witherspoon Street, Suite 300, Princeton, NJ 08540.
(11) Based on the Schedule 13G filed on October 4, 2021, StepStone Group LP (“StepStone”) is the investment manager of several direct stockholders of MoneyLion, including AU Special Investments II, L.P., Greenspring Global Partners VIII-A, L.P., Greenspring Global Partners VIII-C, L.P., Greenspring Opportunities IV, L.P., and Greenspring SK Special, L.P. (collectively, the “Greenspring Funds”). StepStone has voting and dispositive power over the shares of MoneyLion Class
132
A Common Stock held by the Greenspring Funds pursuant to each Greenspring Fund’s limited partnership agreement and certain investment management agreements to which Greenspring and such Greenspring Funds are parties. The business address of StepStone is 4225 Executive Square, Suite 1600, La Jolla, CA 90237. The business address of each of the Greenspring Funds is 100 Painters Mill Road, Suite 700, Owings Mills, MD 21117.
(12) The address of American Express Travel Related Services Company, Inc. is 200 Vesey St, New York, NY 10285-1000.
(13) Canaan Partners X LLC is the general partner of Canaan X L.P. and may be deemed to have sole investment and voting power over the shares held by Canaan X L.P. The managing members of Canaan X L.P. are Brenton K. Ahrens, Stephen M. Bloch, Wende S. Hutton, Maha S. Ibrahim, Deepak Kamra, Nina Kjellson, Guy M. Russo, Timothy M. Shannon and Hrach Simonian. No one managing member of Canaan Partners X LLC has sole voting or investment power over the shares held by Canaan X L.P. Investment and voting decisions with respect to the shares held by Canaan X L.P. are made by the managers of Canaan Partners X LLC, collectively.
(14) The address of Citi Ventures Inc. is 388 Greenwich St Attn: Louis Valdich, New York, NY 10013-2362.
(15) Impressa Holdings LLC is the general partner of F-Prime Capital Partners Tech Fund LP and Impresa Management LLC is the managing partner of F-Prime Capital Partners Tech Fund LP. Lane MacDonald is the president of Impresa Management LLC and may be deemed to have sole voting or investment power over the shares held by F-Prime Capital Partners Tech Fund LP. The address of F-Prime Capital Partners Tech Fund LP is One Main Street, Cambridge, MA 02142.
(16) The address of GreatPoint Ventures Innovation Fund II, L.P. is 400 N Michigan Ave Ste S1700, Chicago, IL 60611-4104.
(17) The address of MassMutual Ventures US II LLC is 470 Atlantic Ave, Boston, MA 02210-2208.
133
SELLING STOCKHOLDERS
On September 22, 2021, we consummated the Business Combination.
The Selling Stockholders may offer and sell, from time to time, any or all of the shares of MoneyLion Class A Common Stock being offered for resale by this prospectus, including up to 10,768,901 shares of MoneyLion Class A Common Stock that may be issued to the Selling Stockholders pursuant to the earn-out provisions of the Merger Agreement.
In addition, this prospectus relates to the offer and sale of up to 25,600,000 shares of MoneyLion Class A Common Stock that are issuable by us upon the exercise of the private placement warrants and the Public Warrants.
The term “Selling Stockholders” includes the Stockholders listed in the table below and their permitted transferees.
The table below provides information regarding the beneficial ownership of the MoneyLion Class A Common Stock and warrants of each Selling Stockholder (a) prior to the offering as of the filing of the Company’s Registration Statement on Form S-1 (File No. 333-260254), as originally declared effective by the SEC on October 22, 2021, to which the Post-Effective Amendment No. 2 of which this prospectus is a part relates, (b) the number of shares of MoneyLion Class A Common Stock and warrants that may be sold by each Selling Stockholder under this prospectus and (c) the number of shares and percentage of MoneyLion Class A Common Stock and warrants that each Selling Stockholder will beneficially own after this offering.
Because each Selling Stockholder may dispose of all, none or some portion of their securities, no estimate can be given as to the number of securities that will be beneficially owned by a Selling Stockholder upon termination of this offering. For purposes of the table below, however, we have assumed that after termination of this offering, none of the securities covered by this prospectus will be beneficially owned by the Selling Stockholder and further assumed that the Selling Stockholders will not acquire beneficial ownership of any additional securities during the offering. In addition, the Selling Stockholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, our securities in transactions exempt from the registration requirements of the Securities Act after the date on which the information in the table is presented.
|
Shares of MoneyLion Class A Common Stock |
Warrants to Purchase MoneyLion Class A |
|||||||||||||||
|
Name |
Number |
Number |
Number |
Percent |
Number |
Number |
Number Beneficially Owned After Offering |
Percent |
||||||||
|
Altimeter Partners Fund, LP(2) |
1,000,000 |
1,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Altshares Event-Driven ETF(4) |
7,292 |
7,292 |
— |
— |
— |
— |
— |
— |
||||||||
|
Apollo Credit Strategies Master Fund Ltd.(3) |
1,756,400 |
1,756,400 |
— |
— |
— |
— |
— |
— |
||||||||
|
Apollo PPF Credit |
243,600 |
243,600 |
— |
— |
— |
— |
— |
— |
||||||||
|
Arbitrage Fund(4) |
1,219,108 |
1,219,108 |
— |
— |
— |
— |
— |
— |
||||||||
|
Arthur M. Berd Irrevocable |
1,027,413 |
1,027,413 |
— |
— |
— |
— |
— |
— |
||||||||
|
AU Special Investment II, L.P.(6) |
5,086,929 |
5,086,929 |
— |
— |
— |
— |
— |
— |
||||||||
|
Bear Creek Ventures, LLC(29) |
1,718,751 |
1,718,751 |
— |
— |
— |
— |
— |
— |
||||||||
|
BEMAP Master Fund Ltd(7) |
258,931 |
258,931 |
— |
— |
— |
— |
— |
— |
||||||||
|
Berd LLC(5) |
1,027,413 |
1,027,413 |
— |
— |
— |
— |
— |
— |
||||||||
|
Bespoke Alpha MAC MIM LP(7) |
33,483 |
33,483 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Capital Allocation Trust(8) |
153,626 |
153,626 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Global Allocation Collective Fund(8) |
84,331 |
84,331 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Global Allocation Fund, Inc.(8) |
845,373 |
845,373 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Global Allocation Portfolio of BlackRock Series Fund, Inc.(8) |
6,574 |
6,574 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc.(8) |
280,443 |
280,443 |
— |
— |
— |
— |
— |
— |
||||||||
134
|
Shares of MoneyLion Class A Common Stock |
Warrants to Purchase MoneyLion Class A |
|||||||||||||||
|
Name |
Number |
Number |
Number |
Percent |
Number |
Number |
Number Beneficially Owned After Offering |
Percent |
||||||||
|
BlackRock Global Funds – Global Allocation Fund(8) |
522,935 |
522,935 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Global Funds – Global Dynamic Equity Fund(8) |
20,390 |
20,390 |
— |
— |
— |
— |
— |
— |
||||||||
|
BlackRock Strategic Income Opportunities Portfolio of BlackRock Funds V(8) |
586,328 |
586,328 |
— |
— |
— |
— |
— |
— |
||||||||
|
Blackwell Partners LLC(9) |
222,222 |
222,222 |
— |
— |
— |
— |
— |
— |
||||||||
|
Bloom Tree Fund LP(9) |
143,120 |
143,120 |
— |
— |
— |
— |
— |
— |
||||||||
|
Bloom Tree Master Fund Ltd.(9) |
634,658 |
634,658 |
— |
— |
— |
— |
— |
— |
||||||||
|
BMO Nesbitt Burns ITF MMCAP International Inc. SPC for and on behalf of MMCAP Master Segregated Portfolio |
400,000 |
400,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Castle Hook Master Fund Ltd.(11) |
1,000,000 |
1,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Chee Mun Foong(1) |
2,212,635 |
2,212,635 |
— |
— |
— |
— |
— |
— |
||||||||
|
Citadel Multi-Strategy Equities Master Fund Ltd.(12) |
1,000,000 |
1,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Cohen MoneyLion PIPE LLC(13) |
200,000 |
200,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
CVI Investments, Inc.(14) |
400,000 |
400,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Diwakar Choubey(1) |
15,126,184 |
15,126,184 |
— |
— |
— |
— |
— |
— |
||||||||
|
DS Liquid Div RVA MON LLC(7) |
312,336 |
312,336 |
— |
— |
— |
— |
— |
— |
||||||||
|
Edison Partners VIII, LP(15) |
35,435,636 |
35,435,636 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fairfax County Employees’ Retirement System(16) |
100,000 |
100,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
FIG Growth Trust(30) |
891,062 |
891,062 |
— |
— |
— |
— |
— |
— |
||||||||
|
FIG Heritage Trust 1(30) |
891,062 |
891,062 |
— |
— |
— |
— |
— |
— |
||||||||
|
FIG Heritage Trust 2(30) |
935,614 |
935,614 |
— |
— |
— |
— |
— |
— |
||||||||
|
FIG Heritage Trust 3(30) |
935,614 |
935,614 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective II-AV LLC(17) |
6,988,918 |
6,988,918 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective SL1 LLC(17) |
7,441,096 |
7,441,096 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective SL2 LLC(17) |
1,870,053 |
1,870,053 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective SL3 LLC(17) |
713,099 |
713,099 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective SL4 LLC(17) |
997,632 |
997,632 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fintech Collective W2 LLC(17) |
2,339,126 |
2,339,126 |
— |
— |
— |
— |
— |
— |
||||||||
|
Fusion Sponsor LLC(18) |
16,850,000 |
16,850,000 |
— |
— |
8,100,000 |
8,100,000 |
— |
— |
||||||||
|
Glazer Enhanced Fund, LP(19) |
58,061 |
58,061 |
— |
— |
— |
— |
— |
— |
||||||||
|
Glazer Enhanced Offshore Fund, Ltd(19) |
116,121 |
116,121 |
— |
— |
— |
— |
— |
— |
||||||||
|
Greenspring Global Partners VIII-A, L.P.(6) |
5,807,227 |
5,807,227 |
— |
— |
— |
— |
— |
— |
||||||||
|
Greenspring Global Partners VIII-C, L.P.(6) |
380,821 |
380,821 |
— |
— |
— |
— |
— |
— |
||||||||
|
Greenspring Opportunities IV, |
13,076,884 |
13,076,884 |
— |
— |
— |
— |
— |
— |
||||||||
|
Greenspring SK Special, L.P.(6) |
1,032,919 |
1,032,919 |
— |
— |
— |
— |
— |
— |
||||||||
|
Hedosophia Group Limited(20) |
2,000,000 |
2,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Highmark Limited, in Respect of Its Segregated Account, Highmark Multi-Strategy 2(19) |
25,818 |
25,818 |
— |
— |
— |
— |
— |
— |
||||||||
|
Kepos Alpha Master Fund L.P.(21) |
400,000 |
400,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Linden Capital L.P.(22) |
400,000 |
400,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Millais Limited(23) |
1,000,000 |
1,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Monashee Pure Alpha SPV I LP(7) |
153,899 |
153,899 |
— |
— |
— |
— |
— |
— |
||||||||
|
Monashee Solitario Fund LP(7) |
197,409 |
197,409 |
— |
— |
— |
— |
— |
— |
||||||||
|
Morningstar Alternatives Fund(4) |
25,132 |
25,132 |
— |
— |
— |
— |
— |
— |
||||||||
|
PartnerSelect Alternative Strategies Fund(4) |
202,900 |
202,900 |
— |
— |
— |
— |
— |
— |
||||||||
|
RDS MoneyLion Holdings I, LLC(29) |
23,134,921 |
23,134,921 |
— |
— |
— |
— |
— |
— |
||||||||
|
Senator Global Opportunity Master Fund L.P.(24) |
1,500,000 |
1,500,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Series A BlackPoint Multi-Series Fund(25) |
80,000 |
80,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Series A BlackPoint Select Alternatives Fund(25) |
120,000 |
120,000 |
— |
— |
— |
— |
— |
— |
||||||||
135
|
Shares of MoneyLion Class A Common Stock |
Warrants to Purchase MoneyLion Class A |
|||||||||||||||
|
Name |
Number |
Number |
Number |
Percent |
Number |
Number |
Number Beneficially Owned After Offering |
Percent |
||||||||
|
SFL SPV I LLC(7) |
43,942 |
43,942 |
— |
— |
— |
— |
— |
— |
||||||||
|
Soroban Opportunities Master Fund LP(26) |
4,500,000 |
4,500,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Telluride Capital Ventures, LLC(29) |
1,851,663 |
1,851,663 |
— |
— |
— |
— |
— |
— |
||||||||
|
Untitled Master Fund, LP(27) |
1,000,000 |
1,000,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Washington Harbour Capital Long Only Master Fund LP(28) |
60,000 |
60,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Washington Harbour Capital Master Fund, LP(28) |
1,440,000 |
1,440,000 |
— |
— |
— |
— |
— |
— |
||||||||
|
Water Island Event-Driven |
139,670 |
139,670 |
— |
— |
— |
— |
— |
— |
||||||||
|
Water Island Merger Arbitrage Institutional Commingled Fund, LP(4) |
105,898 |
105,898 |
— |
— |
— |
— |
— |
— |
||||||||
____________
(1) The business address of each of these stockholders is c/o MoneyLion Inc., 30 West 21st Street, 9th Floor, New York, NY 10010.
(2) The address of Altimeter Partners Fund, LP is One International Place, Suite 4610, Boston, MA, 2110.
(3) The address of each of these stockholders is 9 West 57th Street, 43rd Floor, New York, NY 10019.
(4) The address of each of these stockholders is 41 Madison Ave, 42nd Floor, New York, NY 10010.
(5) The address of each of these stockholders is 17201 Collins Ave, Apt 3801, Sunny Isles Beach, FL 33160.
(6) The address of each of these stockholders is 100 Painters Mill Road, Suite 700 Owings Mills, MD 21117.
(7) The address of each of these stockholders is 75 Park Plaza, 2nd Floor, Boston, MA 2116.
(8) The address of each of these stockholders is c/o Blackrock, 55 East 52nd Street, New York, NY 10055.
(9) The address of each of these stockholders is 101 Park Avenue, New York, NY 10178.
(10) The address of BMO Nesbitt Burn ITF MMCAP International Inc. SPC for and on behalf of MMCAP Master Segregated Portfolio Account is c/o BMO Nesbitt Burns, 1 First Canadian Place, B1 Levelt Stock Cage, Toronto, Ontario M5X 1H3.
(11) The address of Castle Hook Master Fund Ltd. is 250 West 55th Street, 32nd Floor, New York NY 10019.
(12) The address of Citadel Multi-Strategy Equities Master Fund Ltd. is c/o Citadel Enterprise Americas LLC 131 South Dearborn Street, Chicago, IL 60603.
(13) The address of Cohen MoneyLion PIPE LLC is 3 Columbus Circle, New York, NY 10019.
(14) The address of CVI Investments, Inc. is c/o Heights Capital Management, Inc., 101 California Street, Suite 3250, San Francisco, CA 94111.
(15) The address of Edison Partner VIII, LP is 281 Witherspoon Street, Suite 300, Princeton, NJ 08540.
(16) The address of the Fairfax County Employees’ Retirement System is 2107 Wilson Blvd, Suite 410, Arlington, VA 22201.
(17) The address of each of these stockholders is 200 Park Avenue South, Suite 1611, New York, NY 10003.
(18) Number of shares beneficially owned include (i) 8,750,000 shares of Class A common stock that were formerly Founder Shares and (ii) 8,100,000 shares of Class A common stock underlying the 8,100,000 private placement warrants held by the stockholder. The address of Fusion Sponsor, LLC is 667 Madison Avenue, 5th Floor, New York, NY 10065.
(19) The address of each of these stockholders is 250 W 55th St., Suite 30A, New York, NY 10019.
(20) The address of Hedosophia Group Limited is Roseneath, the Grange, St. Peter Port, Guernsey, GY1 2QJ.
(21) The address of Kepos Alpha Master Fund L.P. is c/o Kepos Capital LP, 11 Times Square, 35th Floor, New York, NY 10036.
(22) The address of Linden Capital L.P. is c/o Linden Advisors LP, 590 Madison Ave, 15th Floor, New York, NY 10022.
(23) The address of Millais Limited is c/o Millais USA LLC, 767 5th Ave., 9th Floor, New York, NY 10153.
(24) The address of Senator Global Opportunity Master Fund L.P. is 510 Madison Ave, 28th Floor, New York, NY 10022.
(25) The address of each of these stockholders is 595 Shrewsbury Ave., Suite 203, Shrewsbury, NY 7702.
(26) The address of Soroban Opportunities Master Fund LP is c/o Soroban Capital Partners LP, 55 West 46th Street, 32nd Floor, New York, NY 10036.
(27) The address of Untitled Master Fund, LP is 412 W 15th Street, 12th Floor, New York, NY 10011.
(28) The address of each of these stockholders is 1201 Wilson Blvd., Suite 2210, Arlington, VA 22209.
(29) The address of each of these stockholders is 425 Park Avenue South, Apt 21B, New York, NY 10016.
(30) The address of each of these stockholders is 260 5th Avenue, Apt 9S, New York, NY 10001.
136
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Person Transaction Policy
MoneyLion has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.
A “Related Person Transaction” is a transaction, arrangement or relationship in which MoneyLion or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” means:
• any person who is, or at any time during the applicable period was, one of MoneyLion’s executive officers or a member of the MoneyLion board of directors;
• any person who is known by MoneyLion to be the beneficial owner of more than five percent (5%) of MoneyLion’s voting stock;
• any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than five percent (5%) of MoneyLion’s voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than five percent (5%) of MoneyLion’s voting stock; and
• any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10 percent (10%) or greater beneficial ownership interest.
MoneyLion has policies and procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to the Audit Committee Charter, the Audit Committee has the responsibility to review and approve related person transactions.
Registration Rights Agreement
In connection with the Business Combination, on September 22, 2021, certain stockholders entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with MoneyLion and Fusion Sponsor LLC, a Delaware limited liability company. The Registration Rights Agreement provides the parties thereto with certain demand, “piggy-back” and resale shelf registration rights following the expiration of any related lock-up period, as applicable, subject to certain minimum requirements and customary conditions.
Indemnification Agreements
On September 22, 2021, MoneyLion entered into indemnification agreements with each of its directors and executive officers. The indemnification agreements and MoneyLion’s Certificate of Incorporation and Bylaws require MoneyLion to indemnify its directors and executive officers to the fullest extent permitted by law. See “Description of Securities — Limitations on Liability and Indemnification of Officers and Directors” for additional information.
Second Lien Loan
In April 2020, MoneyLion entered into the $5.0 million Second Lien Loan with MLi Subdebt Facility 1 LLC, pursuant to the Loan and Security Agreement, dated as of April 17, 2020. MLi Subdebt Facility 1 LLC is controlled by Rohit D’Souza, a former member of MoneyLion’s board of directors and a shareholder. The Second Lien Loan bears interest at the greater of (a) 12%, and (b) a fluctuating rate of interest per annum equal to the Wall Street Journal Prime Rate plus 5.75%, not to exceed 15%. Initially, the principal borrowings under the Second Lien Loan could be increased to up to $25.0 million upon the mutual consent of MoneyLion and the lender. On August 27, 2021, the Company entered into an amendment to the Second Lien Loan for an incremental borrowing of $20.0 million, increasing total borrowings under the Second Lien Loan to the maximum facility size of $25.0 million. The incremental borrowing was provided by additional lenders, one of which replaced MLi Subdebt
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Facility 1 LLC as administrative agent and collateral agent under the Second Lien Loan. Interest only is payable until April 30, 2022, and thereafter outstanding principal will be repaid in twelve equal installments through the facility maturity date of May 1, 2023. The Second Lien Loan is secured on a second-priority basis by all assets of MoneyLion, including capital stock of all subsidiaries, except for capital stock and assets in certain excluded subsidiaries, as defined, including IIA and all of the related SPVs, ROAR 1 SPV Finance LLC and ROAR 2 SPV Finance LLC. Under the terms of the Loan and Security Agreement, MoneyLion is subject to certain covenants, as defined therein. MoneyLion used the Second Lien Loan proceeds for general corporate purposes. Upon the consummation of the Business Combination, MoneyLion repaid the original $5.0 million principal balance owed to MLi Subdebt Facility 1 LLC, together with accrued interest and fees. As of December 31, 2021, the $20.0 million principal balance owed to affiliates of Monroe Capital remained outstanding. For more information about the Second Lien Loan, please see Note 9, “Debt — Second Lien Loan,” to MoneyLion’s audited consolidated financial statements included elsewhere in this prospectus.
On March 24, 2022, MoneyLion Technologies Inc., a Delaware corporation and the direct, wholly-owned subsidiary of MoneyLion, entered into the Credit Agreement with the Lenders and Monroe Capital, as administrative agent and lead arranger. Among other things, pursuant to the Credit Agreement, the Lenders thereunder were deemed to have rolled over their respective portions of the Second Lien Loan in the same aggregate principal amount as their respective commitments with respect to the Term A-2 Loans under the Credit Agreement, following which all obligations in respect of the Second Lien Loan were deemed to be satisfied and paid in full. For more information about the Credit Agreement and the related refinancing transactions, please see “Description of Certain Indebtedness.”
Marketing Consulting Agreement
MoneyLion is party to an Amended and Restated Marketing Consulting Agreement, dated as of May 11, 2021 and as amended from time to time (the “Marketing Consulting Agreement”), with LeadGen Data Services LLC (“LeadGen”), pursuant to which LeadGen provides MoneyLion with certain marketing, consumer acquisition, lead generation and other consulting services. Gregory DePetris, a former member of MoneyLion’s board of directors, and Rohit D’Souza, a former member of MoneyLion’s board of directors and a shareholder, each has an indirect ownership interest of approximately 16.5% of LeadGen. For the year ended December 31, 2021, MoneyLion paid approximately $6,624,004 to LeadGen and earned $7,082,795 of revenue under the Marketing Consulting Agreement.
Employment Arrangements
During the year ended December 31, 2021, MoneyLion employed Shreya Choubey, the wife of Dee Choubey, the Chief Executive Officer of MoneyLion, as Vice President of Product. During the year ended December 31, 2021, Shreya Choubey received aggregate compensation, inclusive of her base salary, bonus, company contributions under MoneyLion’s defined contribution retirement plan and other perks customary to employees of similar position and title, of approximately $242,042.
During the year ended December 31, 2021, MoneyLion employed Chee Hong Foong, the brother of Chee Mun Foong, the Chief Technology Officer of MoneyLion, as Head of Data Science. During the year ended December 31, 2021, Chee Hong Foong received aggregate compensation, inclusive of his base salary, bonus and other perks customary to employees of similar position and title, of approximately 1,054,750 MYR (equivalent to approximately $250,880 USD based on an exchange rate of 4.2042 MYR to $1 USD).
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain material United States federal income tax consequences of the ownership and disposition of the MoneyLion Class A Common Stock and warrants, which we refer to collectively as our securities. This discussion applies only to securities that are held as capital assets for U.S. federal income tax purposes and is applicable only to persons who are receiving our securities in this offering.
This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, including but not limited to:
• our sponsor, founders, officers or directors;
• financial institutions or financial services entities;
• broker-dealers;
• governments or agencies or instrumentalities thereof;
• regulated investment companies;
• S corporations;
• real estate investment trusts;
• expatriates or former long-term residents of the United States;
• persons that actually or constructively own five percent (5%) or more (by vote or value) of the MoneyLion Class A Common Stock;
• insurance companies;
• dealers or traders subject to a mark-to-market method of tax accounting with respect to our securities;
• accrual-method taxpayers who are required under Section 451(b) of the Internal Revenue Code of 1986, as amended (the “Code”), to recognize income for U.S. federal income tax purposes no later than when such income is taken into account in applicable financial statements;
• persons holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction;
• U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
• partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities;
• persons who acquire our securities as compensation; and
• tax-exempt entities.
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) or other pass-through entity holds our securities, the U.S. federal income tax treatment of a partner in such partnership or equityholder in such pass-through entity generally will depend upon the status of the partner or equityholder, upon the activities of the partnership or other pass-through entity and upon certain determinations made at the partner or equityholder level. Accordingly, we urge partners in partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes) and equityholders in other pass-through entities considering the acquisition of our securities to consult their tax advisors regarding the U.S. federal income tax considerations of the ownership and disposition of our securities by such partnership or pass-through entity.
This discussion is based on the Code, and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax
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consequences described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes). We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF OUR SECURITIES, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS.
U.S. Holders
This section applies to you if you are a “U.S. holder.” As used herein, the term “U.S. holder” means a beneficial owner of our securities who or that is for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity taxable as a corporation) organized in or under the laws of the United States, any state thereof or the District of Columbia; or
• an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
Taxation of Distributions
If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. holders of shares of the MoneyLion Class A Common Stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in the MoneyLion Class A Common Stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the MoneyLion Class A Common Stock and will be treated as described below under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants.” Dividends we pay to a U.S. holder that is a taxable corporation generally will qualify for the dividends received deduction if the requirements relating to the requisite holding period are satisfied. With certain exceptions, and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder generally will constitute “qualified dividends” that currently are subject to tax at preferential long-term capital gains rates.
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number of shares of MoneyLion Class A Common Stock for which the warrant may be exercised or to the exercise price of the warrant on the occurrence of certain events. An adjustment which has the effect of preventing dilution generally is not a taxable event. U.S. holders of the warrants would, however, be treated as receiving a constructive distribution from us if, for example, the adjustment to the number of such shares or to such exercise price increases the warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of MoneyLion Class A Common Stock that would be obtained upon exercise or through a decrease in the exercise price of the warrants), including as a result of a distribution of cash or other property to the holders of shares of MoneyLion Class A Common Stock which is taxable to such holders of such shares as a distribution. Any constructive distribution received by a U.S. holder would be subject to tax in the same manner as if such U.S. holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest resulting from the adjustment. Generally, a U.S. holder’s adjusted tax basis in its warrants would be increased to the extent any such constructive distribution is treated as a dividend.
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Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants
Upon a sale or other taxable disposition of our securities (which, in general, would include a redemption of our warrants that is treated as a taxable exchange of such warrants as described below under “Exercise, Lapse or Redemption of a Warrant”), a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the securities. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the securities so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. holders currently are eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.
Generally, the amount of gain or loss recognized by a U.S. holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition and (ii) the U.S. holder’s adjusted tax basis in its securities transferred in such disposition.
Exercise, Lapse or Redemption of a Warrant
Except as discussed below with respect to the cashless exercise of a warrant, a U.S. holder generally will not recognize taxable gain or loss as a result of the acquisition of MoneyLion Class A Common Stock upon exercise of a warrant for cash. The U.S. holder’s tax basis in the shares of MoneyLion Class A Common Stock received upon exercise of the warrants generally will be an amount equal to the sum of the U.S. holder’s initial investment in the warrants and the exercise price of such warrants. For U.S. federal income tax purposes, it is unclear whether the U.S. holder’s holding period for the MoneyLion Class A Common Stock received upon exercise of the warrants will begin on the date following the date of exercise or on the date of exercise of the warrants; in either case, the holding period will not include the period during which the U.S. holder held the warrants. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such U.S. holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. holder’s tax basis in the MoneyLion Class A Common Stock received would equal the holder’s basis in the warrants exercised therefor. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. holder’s holding period in the MoneyLion Class A Common Stock would be treated as commencing on the date following the date of exercise or on the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of the MoneyLion Class A Common Stock would include the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise could be treated in part as a taxable exchange in which gain or loss would be recognized. In such event, a portion of the warrants to be exercised on a cashless basis could, for U.S. federal income tax purposes, be deemed to have been surrendered in consideration for the exercise price of the remaining warrants, which would be deemed to be exercised. For this purpose, a U.S. holder would be deemed to have surrendered a number of warrants having an aggregate value equal to the exercise price for the number of warrants deemed exercised. The U.S. holder would recognize capital gain or loss in an amount equal to the difference between the exercise price of the warrants deemed exercised and the U.S. holder’s tax basis in the warrants deemed surrendered. Such gain or loss would be long-term or short-term depending on the U.S. Holder’s holding period in the warrants deemed surrendered. In this case, a U.S. holder’s tax basis in the MoneyLion Class A Common Stock received would equal the sum of the U.S. holder’s initial investment in the warrants deemed exercised and the exercise price of such warrants. It is unclear whether a U.S. holder’s holding period for the MoneyLion Class A Common Stock would commence on the date following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrant.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. holder’s holding period would commence with respect to the MoneyLion Class A Common Stock received, there can be no assurance as to which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. holders should consult their tax advisors regarding the tax consequences of a cashless exercise.
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If we redeem warrants for cash or if we purchase warrants in an open market transaction, such redemption or purchase generally will be treated as a taxable disposition to the U.S. holder, taxed as described above under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants.”
If we give notice of an intention to redeem warrants and a U.S. holder exercises its warrants on a cashless basis and receives an amount of MoneyLion Class A Common Stock in respect thereof, we intend to treat such exercise as a redemption of warrants for MoneyLion Class A Common Stock for U.S. federal income tax purposes. Such redemption should be treated as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code. Accordingly, a U.S. holder should not recognize any gain or loss on the redemption of warrants for shares of MoneyLion Class A Common Stock. A U.S. holder’s aggregate tax basis in the shares of MoneyLion Class A Common Stock received in the redemption generally should equal the U.S. holder’s aggregate tax basis in the warrants redeemed and the holding period for the shares of MoneyLion Class A Common Stock received should include the U.S. holder’s holding period for the surrendered warrants. However, there is some uncertainty regarding this tax treatment and it is possible such a redemption could be treated differently, including as, in part, a taxable exchange in which gain or loss would be recognized in a manner similar to that discussed above for a cashless exercise of warrants. Accordingly, a U.S. holder is urged to consult its tax advisor regarding the tax consequences of a redemption of warrants for shares of MoneyLion Class A Common Stock.
Information Reporting and Backup Withholding
In general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds of the sale or other disposition of our securities, unless the U.S. holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. holder fails to provide a taxpayer identification number or a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.
All U.S. holders should consult their tax advisors regarding the application of information reporting and backup withholding to them.
Non-U.S. Holders
This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of our securities who or that is for U.S. federal income tax purposes:
• a non-resident alien individual (other than certain former citizens and residents of the United States subject to U.S. tax as expatriates);
• a foreign corporation; or
• an estate or trust that is not a U.S. holder;
but generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
Taxation of Distributions
In general, any distributions (other than certain distributions of our stock or rights to acquire our stock) made to a Non-U.S. holder of shares of MoneyLion Class A Common Stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. holder is eligible for a reduced
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rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). In the case of any constructive dividend to a Non-U.S. holder of warrants (as described above in “U.S. Holders — Possible Constructive Dividends”), it is possible that this tax would be withheld from any amount owed to the Non-U.S. holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from warrants or other property subsequently paid or credited to such Non-U.S. holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. holder’s adjusted tax basis in its shares of MoneyLion Class A Common Stock and, to the extent such distribution exceeds the Non-U.S. holder’s adjusted tax basis, as gain realized from the sale or other disposition of MoneyLion Class A Common Stock, which will be treated as described below under “Non-U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants” below.
The withholding tax generally does not apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. federal income tax as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A corporate Non-U.S. holder receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower applicable treaty rate).
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants
A Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our securities (including the expiration or redemption of warrants), unless:
• the gain is effectively connected with the conduct by the Non-U.S. holder of a trade or business within the United States (and, under certain income tax treaties, is attributable to a U.S. permanent establishment or fixed base maintained by the Non-U.S. holder); or
• we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held our securities and certain exceptions do not apply.
Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a corporate Non-U.S. holder may also be subject to an additional “branch profits tax” at a thirty percent (30%) rate (or a lower applicable income tax treaty rate).
If the second bullet point above applies to a Non-U.S. holder, gain recognized by such holder will be subject to tax at generally applicable U.S. federal income tax rates. We believe that we are not, and do not anticipate becoming, a United States real property holding corporation. However, such determination is factual in nature and subject to change and no assurance can be provided as to whether we would be treated as a United States real property holding corporation in any future year.
Exercise, Lapse or Redemption of a Warrant
The U.S. federal income tax treatment of a Non-U.S. holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. holder, or the redemption of a warrant held by a Non-U.S. holder generally will correspond to the U.S. federal income tax treatment of the exercise, lapse or redemption of a warrant by a U.S. holder, as described above under “U.S. Holders — Exercise, Lapse or Redemption of a Warrant” above, although to the extent a cashless exercise or redemption of a warrant results in a taxable exchange, the consequences would be similar to those described above under “Non-U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of MoneyLion Class A Common Stock and Warrants.”
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Information Reporting and Backup Withholding
Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of our securities. A Non-U.S. holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty generally will satisfy the certification requirements necessary to avoid the backup withholding as well.
Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
All Non-U.S. holders should consult their tax advisors regarding the application of information reporting and backup withholding to them.
FATCA Withholding Taxes
Under Sections 1471 through 1474 of the Code (commonly referred to as “FATCA”), payments of dividends on and the gross proceeds of dispositions of our securities paid to (i) a “foreign financial institution” (as specifically defined in the Code) or (ii) a “non-financial foreign entity” (as specifically defined in the Code) will be subject to a withholding tax (separate and apart from, but without duplication of, the withholding tax described above) at a rate of 30%, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied or an exemption from these rules applies. Under proposed U.S. Treasury regulations promulgated by the Treasury Department on December 13, 2018, which state that taxpayers may rely on the proposed Treasury regulations until final Treasury regulations are issued, this withholding tax will not apply to the gross proceeds from the sale or disposition of our securities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “— Taxation of Distributions,” the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. Non-U.S. holders should consult their tax advisors regarding the possible implications of this withholding tax on their investment in our securities.
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PLAN OF DISTRIBUTION
The Selling Stockholders, which as used here includes donees, pledgees, transferees or other successors-in-interest selling warrants, shares of MoneyLion Class A Common Stock or interests in shares of MoneyLion Class A Common Stock received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their warrants, shares of MoneyLion Class A Common Stock or interests in shares of MoneyLion Class A Common Stock on any stock exchange, market or trading facility on which the warrants or shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The Selling Stockholders may use any one or more of the following methods when disposing of warrants, shares of MoneyLion Class A Common Stock or interests therein:
• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
• block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
• purchases by a broker-dealer as principal and resale by the broker-dealer for their account;
• an exchange distribution in accordance with the rules of the applicable exchange;
• privately negotiated transactions;
• short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC;
• through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
• broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
• a combination of any such methods of sale; and
• any other method permitted by applicable law.
The Selling Stockholders may, from time to time, pledge or grant a security interest in some or all of the warrants or shares of MoneyLion Class A Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the warrants or shares of MoneyLion Class A Common Stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Stockholders to include the pledgee, transferee or other successors-in-interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer the warrants or shares of MoneyLion Class A Common Stock in other circumstances, in which case the transferees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our warrants, shares of MoneyLion Class A Common Stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the warrants or shares of MoneyLion Class A Common Stock in the course of hedging the positions they assume. The Selling Stockholders may also sell warrants or shares of MoneyLion Class A Common Stock short and deliver these securities to close out their short positions, or loan or pledge the warrants or shares of MoneyLion Class A Common Stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of warrants or shares offered by this prospectus, which warrants or shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
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Each of the Selling Stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of warrants or shares of MoneyLion Class A Common Stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.
The Selling Stockholders and any underwriters, broker-dealers or agents that participate in the sale of the shares of MoneyLion Class A Common Stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act.
Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling Stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the warrants or the shares of MoneyLion Class A Common Stock to be sold, the names of the Selling Stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the warrants or shares of MoneyLion Class A Common Stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the warrants or shares of MoneyLion Class A Common Stock may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the Selling Stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of warrants or shares of MoneyLion Class A Common Stock in the market and to the activities of the Selling Stockholders and their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The Selling Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the Selling Stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the warrants or shares offered by this prospectus.
We have agreed with the Selling Stockholders to keep the registration statement of which this prospectus constitutes a part effective until all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or the securities have been withdrawn.
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LEGAL MATTERS
Davis Polk & Wardwell LLP has passed upon the validity of the MoneyLion Class A Common Stock offered by this prospectus and certain other legal matters related to this prospectus.
EXPERTS
The consolidated financial statements of MoneyLion Inc. as of December 31, 2021 and 2020 (as restated) and for each of the years in the two-year period ended December 31, 2021 included in this prospectus, have been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report thereon in this prospectus and registration statement, in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The consolidated balance sheet of EVEN Financial, Inc. as of December 31, 2021 and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows for the year ended December 31, 2021, incorporated in this prospectus by reference from the MoneyLion Inc. Current Report on Form 8-K/A dated May 5, 2022, have been audited by RSM US LLP, independent auditors as stated in their report thereon incorporated herein by reference, and have been incorporated in this prospectus and registration statement in reliance upon such report and upon the authority of that firm as experts in auditing and accounting.
The financial statements of EVEN Financial, Inc. as of and for the year ended December 31, 2020 incorporated by reference in this Prospectus have been audited by Deloitte & Touche LLP, independent auditor, as stated in their report. Such financial statements are incorporated by reference in reliance upon the report of such firm given their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1, including exhibits, under the Securities Act with respect to the shares of MoneyLion Class A Common Stock offered by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information pertaining to us and our securities, you should refer to the registration statement and our exhibits.
In addition, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public on a website maintained by the SEC located at www.sec.gov. We also maintain a website at https://www.moneylion.com. Through our website, we make available, free of charge, annual, quarterly and current reports, proxy statements and other information as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this prospectus.
147
Index to Consolidated Financial Statements
|
Page |
||
|
Audited Consolidated Financial Statements: |
||
|
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 49) |
F-2 |
|
|
F-3 |
||
|
F-4 |
||
|
F-5 |
||
|
F-7 |
||
|
F-9 |
||
|
Unaudited Interim Consolidated Financial Statements: |
||
|
F-38 |
||
|
F-39 |
||
|
F-40 |
||
|
F-41 |
||
|
F-42 |
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of MoneyLion Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MoneyLion Inc. and its subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ RSM US LLP
We have served as the Company’s auditor since 2016.
Austin, Texas
March 17, 2022
F-2
MONEYLION INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except per share amounts)
|
December 31, |
December 31, |
|||||||
|
Assets |
|
|
|
|
||||
| Cash, including amounts held by variable interest entities (VIEs) of $ |
$ |
|
|
$ |
|
|
||
| Restricted cash, including amounts held by VIEs of $ |
|
|
|
|
|
|
||
|
Receivables |
|
|
|
|
|
|
||
|
Allowance for losses on receivables |
|
( |
) |
|
( |
) |
||
| Receivables, net, including amounts held by VIEs of $ |
|
|
|
|
|
|
||
|
Property and equipment, net |
|
|
|
|
|
|
||
|
Intangible assets, net |
|
|
|
|
|
|
||
|
Goodwill |
|
|
|
|
|
|
||
|
Other assets |
|
|
|
|
|
|
||
|
Total assets |
$ |
|
|
$ |
|
|
||
|
Liabilities, Redeemable Convertible Preferred Stock, Redeemable Noncontrolling Interests and Stockholders’ Deficit |
|
|
|
|
||||
|
Liabilities: |
|
|
|
|
||||
|
Secured loans |
|
|
|
|
|
|
||
|
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
Subordinated convertible notes, at fair value |
|
|
|
|
|
|||
|
Related party loan |
|
|
|
|
|
|||
|
Warrant liability |
|
|
|
|
|
|
||
| Other debt, including amounts held by VIEs of $ |
|
|
|
|
|
|
||
|
Total liabilities |
|
|
|
|
|
|
||
|
Commitments and contingencies (Note 17) |
|
|
|
|
||||
| Redeemable convertible preferred stock (Series A-1, A-2, A-3, B, B-2, C, C-1), $ |
|
|
|
|
|
|||
|
Redeemable noncontrolling interests |
|
— |
|
|
|
|
||
|
Stockholders’ equity (deficit): |
|
|
|
|
||||
| Class A Common Stock, $ |
|
|
|
|
|
|||
|
Additional paid-in capital |
|
|
|
|
|
|||
|
Accumulated deficit |
|
( |
) |
|
( |
) |
||
| Treasury stock at cost, |
|
( |
) |
|
( |
) |
||
|
Total stockholders’ equity (deficit) |
|
|
|
|
( |
) |
||
|
Total liabilities, redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) |
$ |
|
|
$ |
|
|
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination,” for details.
The accompanying notes are an integral part of these consolidated financial statements.
F-3
MONEYLION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share amounts)
|
December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Revenue |
|
|
|
|
||||
|
Net interest income on finance receivables |
$ |
|
|
$ |
|
|
||
|
Membership subscription revenue |
|
|
|
|
|
|
||
|
Affiliates income |
|
|
|
|
|
|
||
|
Fee income |
|
|
|
|
|
|
||
|
Other income |
|
|
|
|
|
|
||
|
Total Revenues, net |
|
|
|
|
|
|
||
|
Operating expenses |
|
|
|
|
||||
|
Marketing |
|
|
|
|
|
|
||
|
Provision for loss on receivables |
|
|
|
|
|
|
||
|
Other direct costs |
|
|
|
|
|
|
||
|
Interest expense |
|
|
|
|
|
|
||
|
Personnel expenses |
|
|
|
|
|
|
||
|
Underwriting expenses |
|
|
|
|
|
|
||
|
Information technology expenses |
|
|
|
|
|
|
||
|
Bank and payment processor fees |
|
|
|
|
|
|
||
|
Change in fair value of warrant liability |
|
|
|
|
|
|
||
|
Change in fair value of subordinated convertible notes |
|
|
|
|
|
|
||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
|
|
|
|
|||
|
Professional fees |
|
|
|
|
|
|
||
|
Depreciation and amortization expense |
|
|
|
|
|
|
||
|
Occupancy expense |
|
|
|
|
|
|
||
|
Gain on foreign currency translation |
|
( |
) |
|
( |
) |
||
|
Other operating expenses |
|
|
|
|
|
|
||
|
Total operating expenses |
|
|
|
|
|
|
||
|
Net loss before income taxes |
|
( |
) |
|
( |
) |
||
|
Income tax expense |
|
|
|
|
|
|
||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
|
Net income attributable to redeemable noncontrolling interests |
|
( |
) |
|
( |
) |
||
|
Reversal of previously accrued (accrual of) dividends on redeemable convertible preferred stock |
|
|
|
|
( |
) |
||
|
Net loss attributable to common shareholders |
$ |
( |
) |
$ |
( |
) |
||
|
|
|
|
|
|||||
|
Net loss per share, basic and diluted(1) |
$ |
( |
) |
$ |
( |
) |
||
|
Weighted average shares used in computing net loss per share, basic and diluted(1) |
|
|
|
|
|
|
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination,” for details. Because the Company had a net loss in the twelve months ended December 31, 2021 and 2020, the Company’s potentially dilutive securities, which include stock options, restricted stock units, preferred stock and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders for these periods is the same.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
MONEYLION INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,
REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)
(amounts in thousands, except share amounts)
|
|
|
Class A |
Additional Paid-in Capital |
|
|
Total Stockholders’ |
|||||||||||||||||||||||||||
|
Shares(1) |
Amount |
Shares(1) |
Amount |
||||||||||||||||||||||||||||||
|
Balances at January 1, 2021 |
|
|
$ |
|
|
$ |
|
|
|
|
$ |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|||||||||||
|
Stock-based compensation |
— |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Exercise of stock options and warrants |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Accrued dividends on redeemable convertible |
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
||||||||||||
|
Preferred stock conversion |
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Reverse capitalization on September 22, 2021 |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Redemption of common stock |
— |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
( |
) |
||||||||||||||
|
Redemption of stock options |
— |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||||||||||
|
Issuance of common stock in connection with the acquisition of Malka Media Group LLC |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Issuance of common stock in connection with business contracts |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Contributions from redeemable noncontrolling interests |
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Redemptions by redeemable noncontrolling interests |
— |
|
|
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Distributions to redeemable noncontrolling interests |
— |
|
|
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss) |
— |
|
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|||||||||||||
|
Balances at December 31, 2021 |
— |
|
$ |
|
$ |
|
|
|
$ |
|
$ |
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|
|||||||||||
F-5
MONEYLION INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,
REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT) — (Continued)
(amounts in thousands, except share amounts)
|
Redeemable Convertible |
Redeemable Noncontrolling Interests |
Class A |
Additional Paid-in Capital |
|
|
Total Stockholders’ |
||||||||||||||||||||||||
|
Shares(1) |
Amount |
Shares(1) |
Amount |
|||||||||||||||||||||||||||
|
Balances at January 1, 2020 |
|
$ |
|
$ |
|
|
|
$ |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|||||||||||
|
Stock-based compensation |
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Exercise of stock options and warrants |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Issuance of Series C-1 in connection with the |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Issuance of Series C-1 redeemable convertible |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Accrued dividends on redeemable convertible |
— |
|
|
|
|
— |
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
||||||||||||
|
Redemption of common stock |
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Redemption of stock options |
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Contributions from redeemable noncontrolling interests |
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Redemptions by redeemable noncontrolling interests |
— |
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Distributions to redeemable noncontrolling interests |
— |
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss) |
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|||||||||||||
|
Balances at December 31, 2020 |
|
$ |
|
$ |
|
|
|
$ |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|||||||||||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination,” for details.
The accompanying notes are an integral part of these consolidated financial statements.
F-6
MONEYLION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
|
December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
|
Adjustments to reconcile net loss to net cash provided by operating |
|
|
|
|
||||
|
Provision for losses on receivables |
|
|
|
|
|
|
||
|
Depreciation and amortization expense |
|
|
|
|
|
|
||
|
Change in deferred fees and costs, net |
|
|
|
|
|
|
||
|
Change in fair value of warrants |
|
|
|
|
|
|
||
|
Change in fair value of subordinated convertible notes |
|
|
|
|
|
|
||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
|
|
|
|
|||
|
Gain on PPP Loan forgiveness |
|
( |
) |
|
|
|||
|
Gains on foreign currency translation |
|
( |
) |
|
( |
) |
||
|
Stock compensation expense |
|
|
|
|
|
|
||
|
Changes in assets and liabilities, net of effects of business combination: |
|
|
|
|
||||
|
Accrued interest receivable |
|
( |
) |
|
|
|
||
|
Other assets |
|
( |
) |
|
( |
) |
||
|
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
Net cash (used in) provided by operating activities |
|
( |
) |
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Net originations and collections of finance receivables |
|
( |
) |
|
( |
) |
||
|
Purchase of property, equipment and software |
|
( |
) |
|
( |
) |
||
|
Acquisition of Malka Media Group LLC, net of cash acquired |
|
( |
) |
|
|
|||
|
Net cash used in investing activities |
|
( |
) |
|
( |
) |
||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Repayments to secured/senior lenders |
|
( |
) |
|
( |
) |
||
|
Repayment of related party loan |
|
( |
) |
|
|
|||
|
Proceeds from issuance of related party loan |
|
|
|
|
|
|||
|
Proceeds from issuance of special purpose vehicle credit facilities |
|
|
|
|
|
|||
|
Proceeds from issuance of subordinated convertible notes |
|
|
|
|
|
|
||
|
Borrowings from secured lenders |
|
|
|
|
|
|
||
|
Payment of deferred financing costs |
|
( |
) |
|
|
|||
|
Redemption of founders common stock |
|
( |
) |
|
|
|||
|
Payment of redeemed stock options |
|
( |
) |
|
|
|||
|
Proceeds from issuance of common stock related to exercise of stock |
|
|
|
|
|
|
||
|
Proceeds from reverse capitalization, net of transaction costs |
|
|
|
|
|
|||
|
Issuance of Series C-1 preferred stock |
|
|
|
|
|
|||
|
Contributions from redeemable noncontrolling interests |
|
|
|
|
|
|
||
|
Redemptions by redeemable noncontrolling interests |
|
( |
) |
|
( |
) |
||
|
Distributions to noncontrolling interests |
|
( |
) |
|
( |
) |
||
|
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|||||
|
Net change in cash and restricted cash |
|
|
|
|
( |
) |
||
|
Cash and restricted cash, beginning of year |
|
|
|
|
|
|
||
|
Cash and restricted cash, end of year |
$ |
|
|
$ |
|
|
||
F-7
MONEYLION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(amounts in thousands)
|
December 31, |
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|
2021 |
2020 |
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|
Supplemental disclosure of cash flow information: |
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Cash paid for interest |
$ |
|
|
$ |
|
|
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|
|
|
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|
Supplemental disclosure of non-cash investing and financing activities: |
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|
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|
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|
Accrued dividends on redeemable convertible preferred stock |
$ |
( |
) |
$ |
( |
) |
||
|
Series C-1 redeemable convertible preferred stock issued to acquire WTI |
$ |
|
$ |
|
|
|||
|
Conversion of preferred stock to common stock |
$ |
|
|
$ |
|
|||
|
Issuance of common stock related to convertible debt |
$ |
|
|
$ |
|
|||
|
Issuance of common stock related to warrants exercised |
$ |
|
|
$ |
|
|||
|
Acquisition of private warrants |
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
On September 22, 2021 (the “Business Combination Closing Date”), MoneyLion Inc., formerly known as Fusion Acquisition Corp. (prior to the Business Combination Closing Date, “Fusion” and after the Business Combination Closing Date, “MoneyLion” or the “Company”), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of February 11, 2021 and amended on June 28, 2021 and September 4, 2021 (the “Merger Agreement”), by and among Fusion, ML Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Fusion (“Merger Sub”), and MoneyLion Technologies Inc., formerly known as MoneyLion Inc. (prior to the Business Combination Closing Date, “MoneyLion” or the “Company”, and after the Business Combination Closing Date, “Legacy MoneyLion”), a Delaware corporation.
Pursuant to the terms of the Merger Agreement, immediately upon the completion of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Business Combination Closing”), each of the following transactions occurred in the following order: (i) Merger Sub merged with and into Legacy MoneyLion, with Legacy MoneyLion surviving the merger as a wholly owned subsidiary of Fusion (the “Merger”); (ii) Legacy MoneyLion changed its name to “MoneyLion Technologies Inc.”; and (iii) Fusion changed its name to “MoneyLion Inc.” Following the Business Combination, MoneyLion Inc. became a publicly traded company, with Legacy MoneyLion, a subsidiary of MoneyLion, continuing the existing business operations. MoneyLion’s Class A common stock, par value $
As previously announced, on February 11, 2021, concurrently with the execution of the Merger Agreement, Fusion entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, Fusion agreed to issue and sell in private placements an aggregate of
MoneyLion was founded in 2013, and the Company’s headquarters is located in New York, New York. The Company operates a personal finance platform (the “Platform”) that provides a mobile app that is designed to help users simplify their personal financial management and improve their financial health, giving users access to credit, investment, banking and other financial services and provide them with a single place to track spending, savings and credit. The Platform is based upon analytical models that power recommendations which are designed to help users achieve their financial goals ranging from building savings, improving credit health and managing unexpected expenses. Investment management services are provided by ML Wealth LLC, a wholly owned subsidiary of the Company, which is a Securities and Exchange Commission (“SEC”) registered investment advisor.
On November 15, 2021, MoneyLion acquired MALKA Media Group LLC (“MALKA”). MALKA is a creator network and content platform that produces digital media and content across entertainment, sports, games, live streaming and other sectors. MALKA’s content capabilities can drive industry-leading customer acquisition and retention at scale to help accelerate MoneyLion’s customer growth. By combining MALKA’s capabilities with MoneyLion’s financial products and extensive first-party data, MoneyLion hopes to turn the MoneyLion mobile application into a daily destination for its customers with personalized content that educates, informs and supports customers’ financial decisions.
Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The consolidated financial statements include the accounts of MoneyLion Inc. and its wholly owned subsidiaries and consolidated variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The Company does
F-9
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (cont.)
not have any items of other comprehensive income (loss); therefore, there is no difference between net loss and comprehensive loss for the twelve months ended December 31, 2021 and 2020. Certain reclassifications have been made to the prior period financial statements to conform to the classification adopted in the current period.
Receivables originated on the Company’s platform, including Credit Builder Plus loans and Instacash advances, were primarily financed through Invest in America Credit Fund 1 LLC (“IIA”) until the end of the fourth quarter of 2021. IIA is organized as a Delaware limited liability company and is treated as a partnership for United States income tax purposes. IIA’s membership interests were issued in separately designated series, with each series consisting of Class A Units and Class B Units. IIA investors owned all non-voting Class B Units of the applicable series they invested in, which entitled them to a targeted, non-guaranteed, preferred return of typically
Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. By December 2021, investor balances were returned to all IIA Class B Unit holders and as of December 31, 2021, IIA had no assets. As a result, only Class A units remain which are wholly owned by ML Capital III making IIA and the IIA Notes SPVs indirect wholly owned MoneyLion subsidiaries, and therefore as of December 31, 2021 there was no longer a noncontrolling interest related to IIA and the IIA Notes SPVs. For more information on the alternative financing sources, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility.
F-10
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of the Company, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments and adjustments to eliminate intercompany transactions and balances, necessary for a fair presentation of its financial position and its results of operations, changes in redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) and cash flows.
Use of Estimates — The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements included, but are not limited to, revenue recognition, provision for transaction losses, accounting for business combinations, determination of useful lives of property and equipment, valuation and useful lives of intangible assets, impairment assessment of goodwill, internal-use software, valuation of common stock, valuation of stock warrants, valuation of convertible notes, stock option valuations, income taxes, and the recognition and disclosure of contingent liabilities. The Company evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements.
Revenue Recognition and Related Receivables — The ML Plus membership was developed to allow customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. In 2019 the Company began offering the Credit Builder Plus membership, which is intended to emphasize the program’s ability to help customers build credit while also saving. These programs are offered directly to MoneyLion customers. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances. Revenue is recognized as the Company transfers control of promised goods or services to members, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods or services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors. Based on the Company’s evaluation of these factors, revenue is recorded either gross or net of costs associated with the transaction.
Membership subscription revenue is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Membership receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time.
Members of the Credit Builder Plus membership program typically receive the cash related to loans and interest-free Instacash advances in 1-3 business days. Members may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a member. Instant transfer fees are recognized gross over the term of the loan or Instacash advance, as the services related to these fees are not distinct from the services of the loan or Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer.
With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer.
F-11
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Affiliate revenue is generated by displaying ads on the Company’s mobile application and by sending emails or other messages to customers promoting affiliate services. For affiliate services, the Company enters into agreements with the affiliates in the form of a signed contract, which specify the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the customer arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion.
Interest income and the related accrued interest receivables on loan-related finance receivables is accrued based upon the daily principal amount outstanding except for when these loans are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due.
Digital media and content production services provided to third parties are generally earned and recognized over time as the performance obligations within the contracts are satisfied. The revenue is recorded in other income in the statement of operations. Contracts for digital media and content production services are typically short-term.
Allowance for Losses on Receivables — An allowance for losses on finance receivables and related accrued interest and fee receivables is established to provide for probable losses incurred in the Company’s finance receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of many factors, including changes in the nature, volume, and risk characteristics of the finance receivables portfolio, including trends in delinquency and charge-offs and current economic conditions that may affect the borrower’s ability to pay. The allowance is developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors.
The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable.
The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products.
An allowance for losses on membership and fees receivables is established to provide probable losses incurred in the Company’s membership and fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements.
Segment Information — Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is
F-12
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
the chief executive officer. The Company has one business activity and there are no segment managers who are held accountable for material operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment.
Governmental Regulation — The Company is subject to various state and federal laws and regulations in each of the states in which it operates, which are subject to change and may impose significant costs or limitations on the way the Company conducts or expands its business. The Company’s loans are originated under individual state laws, which may carry different rates and rate limits, and have varying terms and conditions depending upon the state in which they are offered. The Company is licensed or exempt from licensing to make loans in substantially all states in the United States of America. Other governmental regulations include, but are not limited to, imposed limits on certain charges, insurance products and required licensing and qualification.
Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
|
Level 1: |
Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|||
|
Level 2: |
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. |
|||
|
Level 3: |
Valuations for assets and liabilities that are derived from other valuation methodologies including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections determined by management in estimating the fair value assigned to such assets or liabilities. |
The Company evaluates the significance of transfers between levels based upon the nature of the financial instruments and size of the transfer relative to total net assets available for benefits. For the years ended December 31, 2021 and 2020, there were no transfers in or out of levels 1, 2 or 3.
Net Loss Per Share — The Company calculated basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered the redeemable convertible preferred stock to be a participating security as the holders are entitled to receive aggregated accrued and not paid dividends if/when declared by the board of directors at a dividend rate payable in preference and priority to the holders of common stock.
Under the two-class method, basic net loss per share attributable to common stockholders was calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. The net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of redeemable convertible preferred stock do not have a contractual obligation to share in losses, which is consistent with the if converted method of calculation. Diluted net loss per share attributable to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted stock units, right to receive Earnout Shares, as defined in Note 3, “Business Combination,” and warrants to purchase redeemable convertible preferred stock and common stock were considered common shares equivalents but had been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was
F-13
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
anti-dilutive. In periods in which the Company reports a net loss attributable to all classes of common stockholders, diluted net loss per share attributable to all classes of common stockholders is the same as basic net loss per share attributable to all classes of common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported net losses attributable to common stockholders for the fiscal years ended December 31, 2021 and 2020.
Cash — Cash includes cash and cash equivalents held at financial institutions. For purposes of the consolidated financial statements, the Company considers all highly liquid investments purchased with a maturity date of three months or less to be cash equivalents. At times, the Company may maintain deposits with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limits, but management believes any such amounts do not represent a significant credit risk.
Restricted Cash — Restricted cash consists of cash required to be held on reserve by the Company’s vendors for purposes of loan or advance processing or funding and cash on hand in the VIEs. All cash accounts are held in federally insured institutions, which may at times exceed federally insured limits. The Company has not experienced losses in such accounts. Management believes the Company’s exposure to credit risk is minimal for these accounts.
Goodwill — The Company performs goodwill impairment testing annually, on the last day of the fiscal year or more frequently if indicators of potential impairment exist. The goodwill impairment test is performed at the reporting unit level. The Company first evaluates whether it is more likely than not that the fair value of the reporting unit has fallen below its carrying amount. No indicators of fair value falling below the reporting unit carrying amount were noted on a quantitative or qualitative basis during the fiscal year 2021 assessment.
Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three years. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred.
Impairment of Long-Lived Assets — Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment charges were recognized during the years ended December 31, 2021 and 2020.
Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effects of future tax rate changes are recognized in the period when the enactment of new rates occurs.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the positions taken or the amount of the positions that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, it is more likely than not that the
F-14
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than
Stock
The Company accounts for the restricted stock units granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant.
The fair value of the awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred.
Warrant Liability — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Accounting Standards Codification (“ASC”) 480 and ASC 815. The Company accounts for its outstanding Public Warrants and Private Placement Warrants (as defined in Note 14. “Stock Warrants”) in accordance with the guidance contained in Accounting Standards Codification 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”).
The Company determined that the Private Placement Warrants do not meet the criteria for equity treatment thereunder. For issued or modified warrants that do not meet all the criteria for equity treatment, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. As such, each Private Placement Warrant is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model.
The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
Subordinated Convertible Notes — As permitted under ASC 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option to account for its Subordinated Convertible Notes (as defined below). In accordance with ASC 825, the Company records these Subordinated Convertible Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the consolidated statement of operations. As a result of applying the fair value option, direct costs and fees related to the Subordinated Convertible Notes were expensed as incurred and were not deferred. The Company concluded that it was appropriate to apply the fair value option to the Subordinated Convertible Notes because there are no non-contingent beneficial conversion options related to the Subordinated Convertible Notes.
The Subordinated Convertible Notes were valued using a scenario-based discounted cash flow analysis. The Company estimated the probability and timing of the scenarios based on management’s assumptions and knowledge of specified events at issuance and as of each reporting date. The Subordinated Convertible Notes are classified as Level 3 because of the Company’s reliance on unobservable assumptions.
F-15
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Contingent consideration from mergers and acquisitions — The Company determined that the contingent consideration related to the MALKA earnout provisions do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA earnout was estimated using a Monte Carlo Simulation Model.
Property and Equipment — Property and equipment is carried at cost. Depreciation is determined principally under the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred.
The estimated useful lives of property and equipment are described below:
|
Property and Equipment |
Useful |
|
|
Leasehold improvements |
|
|
|
Furniture and fixtures |
|
|
|
Computers and equipment |
|
Debt Issuance Costs — Costs incurred to obtain debt financing are capitalized and amortized into interest expense over the life of the related debt using a method that approximates the effective interest method. Debt issuance costs are recorded as a contra debt balance in the accompanying consolidated financial statements.
Marketing Costs — Costs related to marketing activities are expensed as incurred.
Recently Adopted Accounting Pronouncements —
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The new guidance provides for the deferral of implementation costs for cloud computing arrangements and expensing those costs over the term of the cloud services arrangement. The new guidance is effective for fiscal years beginning after December 15, 2020 and interim periods in 2021. The adoption of the ASU did not have an impact on the Company’s consolidated financial statements.
In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide: (1) financing to the issuer, or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.
F-16
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently Issued Accounting Pronouncements Not Yet Adopted —
The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance.
In February 2016, the FASB Issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for the Company on January 1, 2022. The Company is in the process of evaluating the impact that the pending adoption of this new guidance will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference LIBOR or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of December 31, 2021. As such, the Company currently does not intend to elect the optional expedients and exceptions.
F-17
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures.
3. BUSINESS COMBINATION
On September 21, 2021, Fusion held a Special Meeting (the “Special Meeting”) at which the Fusion stockholders considered and adopted, among other matters, the Merger Agreement and the transactions contemplated therein (the “Business Combination Transactions”). On September 22, 2021, the parties to the Merger Agreement consummated the Business Combination Transactions.
Immediately prior to the time of filing of a certificate of merger with the Secretary of State of the State of Delaware upon consummation of the Merger, all issued and outstanding shares of Legacy MoneyLion preferred stock converted into shares of Legacy MoneyLion common stock (the “Legacy MoneyLion Common Stock”), par value $
• all outstanding warrants to purchase shares of Legacy MoneyLion preferred stock or Legacy MoneyLion Common Stock (“Legacy MoneyLion Warrants”) were either exercised and ultimately converted into shares of Legacy MoneyLion Common Stock or terminated;
• 11,231,595 outstanding shares of Legacy MoneyLion Common Stock (which includes the shares of Legacy MoneyLion Common Stock issued to former holders of Legacy MoneyLion Warrants) were cancelled in exchange for the right to receive 184,285,695 shares of MoneyLion Class A Common Stock;
• 2,360,627 outstanding and unexercised options to purchase shares of Legacy MoneyLion Common Stock (“Legacy MoneyLion Options”) converted into options to acquire 38,732,676 shares of MoneyLion Class A Common Stock, of which 18,861,298 options are vested and 19,871,378 options are unvested; and
• each holder of an outstanding share of Legacy MoneyLion Common Stock (following the Conversion) and/or Legacy MoneyLion Options (each such holder, an “Earnout Participant”) also received the right to receive the applicable pro rata portion of MoneyLion Class A Common Stock (the “Earnout Shares”) with respect to each share of MoneyLion Class A Common Stock or option exercisable for shares of MoneyLion Class A Common Stock, contingent upon MoneyLion Class A Common Stock reaching certain price milestones. 7.5 million and 10.0 million shares of MoneyLion Class A Common Stock will be issued if the MoneyLion Class A Common Stock share price equals or is greater than $12.50 and $16.50, respectively, for twenty out of any thirty consecutive trading days within five years of the Business Combination Closing Date. The Earnout Shares meet the conditions for equity classification in accordance with ASC 815-40.
In connection with the Business Combination Closing, holders of
F-18
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
3. BUSINESS COMBINATION (cont.)
MoneyLion, net of transaction expenses. Following the Redemptions and the issuance of PIPE Shares in connection with the PIPE Financing,
Upon consummation of the Business Combination Transactions:
• each outstanding share of Fusion Class B common stock automatically converted into one share of MoneyLion Class A Common Stock; and
• outstanding warrants to purchase the common stock of Fusion automatically converted into warrants to purchase shares of MoneyLion Class A Common Stock.
As of the Business Combination Closing Date and following the completion of the sale of 25,000,000 shares of MoneyLion Class A Common Stock in the PIPE Financing, MoneyLion had the following outstanding securities:
• 227,147,708 shares of MoneyLion Class A Common Stock;
• 38,732,676 MoneyLion options, of which options to purchase 18,861,298 shares of MoneyLion Class A Common Stock were vested and options to purchase 19,871,378 shares of MoneyLion Class A Common stock were unvested; and
• 17,500,000 public warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share and 8,100,000 private placement warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share (assumed from Fusion).
Conversion of Legacy MoneyLion shares was calculated utilizing the exchange ratio of approximately 16.4078 per share of MoneyLion Class A Common Stock (the “Exchange Ratio”).
The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under the guidance in ASC 805, Legacy MoneyLion is treated as the “acquirer” for financial reporting purposes. As such, Legacy MoneyLion is deemed the accounting predecessor of the combined business, and MoneyLion, as the parent company of the combined business, is the successor SEC registrant, meaning that Legacy MoneyLion’s financial statements for previous periods are disclosed in the registrant’s periodic reports filed with the SEC following the Business Combination. The Business Combination had a significant impact on the MoneyLion’s reported financial position and results as a consequence of the reverse recapitalization. The most significant change in MoneyLion’s reported financial position and results was an estimated net increase in cash (as compared to the MoneyLion’s consolidated balance sheet at December 31, 2020) of approximately $
The transaction closed on September 22, 2021, and on the following day the MoneyLion Class A Common Stock and Public Warrants began trading on the New York Stock Exchange under the symbols “ML” and “ML WS”, respectively, for trading in the public market.
F-19
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
4. RECEIVABLES
The Company’s finance receivables consist of secured personal loans, unsecured personal loans and principal amounts of Instacash advances. Accrued interest receivables represent the interest accrued on the loan receivables based upon the daily principal amount outstanding. Fees receivables represent the amounts due to the Company for tips and instant transfer fees related to the Instacash advance product. Membership receivables represent the amounts billed to customers for membership subscription services. The credit quality and future repayment of finance receivables are dependent upon the customer’s ability to perform under the terms of the agreement. Factors such as unemployment rates and housing values, among others, may impact the customer’s ability to perform under the loan or advance terms. When assessing provision for losses on finance receivables, the Company takes into account the composition of the outstanding finance receivables, charge-off rates to date and the forecasted principal loss rates. Please see the tables below for the finance receivable activity, charge-off rates and aging by product for the twelve months ended December 31, 2021 and 2020. The Company has experienced significant growth in Instacash, a shorter-term advance product with lower charge-off rates than loans. As Instacash has become a larger component of finance receivable activity, the overall charge-off rate has decreased significantly.
Receivables consisted of the following:
|
December 31, |
December 31, |
|||||
|
Unsecured personal loan receivables |
$ |
|
$ |
|
||
|
Secured personal loan receivables |
|
|
|
|
||
|
Loan receivables |
|
|
|
|
||
|
Instacash receivables |
|
|
|
|
||
|
Finance receivables |
|
|
|
|
||
|
Fees receivable |
|
|
|
|
||
|
Membership receivables |
|
|
|
|
||
|
Deferred loan origination costs |
|
|
|
|
||
|
Accrued interest receivable |
|
|
|
|
||
|
Receivables, before allowance for loan losses |
$ |
|
$ |
|
||
Changes in the allowance for losses on receivables were as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|
||
|
Provision for loss on receivables |
|
|
|
|
|
|
||
|
Receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|
||
Changes in allowance for losses on finance receivables were as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|
||
|
Provision for loss on receivables |
|
|
|
|
|
|
||
|
Finance receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|
||
F-20
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
4. RECEIVABLES (cont.)
Changes in allowance for losses on membership receivables were as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
Beginning balance |
$ |
|
$ |
|
||||
|
Provision for loss on receivables |
|
|
|
|
|
|
||
|
Membership receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|||
Changes in allowance for losses on fees receivable were as follows:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
Beginning balance |
$ |
|
$ |
|
||||
|
Provision for loss on receivables |
|
|
|
|
|
|
||
|
Fees receivable charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|||
The following is an assessment of the credit quality of finance receivables as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable portfolio:
|
December 31, |
December 31, |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
|
% |
|
|
|
% |
||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Finance receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
The following is an assessment of the credit quality of loans as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable loans portfolio:
|
December 31, |
December 31, |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
|
% |
|
|
|
% |
||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Loan receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
F-21
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
4. RECEIVABLES (cont.)
The following is an assessment of the credit quality of Instacash as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable Instacash portfolio:
|
December 31, |
December 31, |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
% |
|
|
% |
||||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Instacash receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
The following is an assessment of the credit quality of membership receivables as of December 31, 2021 and 2020 and presents the contractual delinquency of the membership receivable portfolio:
|
December 31, |
December 31, |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
|
% |
|
|
|
% |
||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Membership receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
The following is an assessment of the credit quality of fees receivable as of December 31, 2021 and 2020 and presents the contractual delinquency of the fees receivable portfolio:
|
December 31, |
December 31, |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
% |
|
|
% |
||||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Fees receivable before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
F-22
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
|
December 31, |
December 31, |
|||||||
|
Leasehold improvements |
$ |
|
|
$ |
|
|
||
|
Furniture and fixtures |
|
|
|
|
|
|
||
|
Computers and equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|||
|
Less: accumulated depreciation |
|
( |
) |
|
( |
) |
||
|
Furniture and equipment, net |
$ |
|
|
$ |
|
|
||
Total depreciation expense related to property and equipment was $
6. INTANGIBLE ASSETS
Goodwill as of December 31, 2021 and 2020 was $
Intangible assets consisted of the following:
|
Useful |
December 31, |
December 31, |
||||||||
|
Capitalized internal-use software |
|
$ |
|
|
$ |
|
|
|||
|
Work in process |
|
|
|
|
|
|
||||
|
Proprietary technology |
|
|
|
|
|
|
|
|||
|
Customer relationships |
|
|
|
|
|
|
||||
|
Trade names |
|
|
|
|
|
|
||||
|
Less: accumulated amortization |
|
( |
) |
|
( |
) |
||||
|
Intangible assets, net |
$ |
|
|
$ |
|
|
||||
For the twelve months ended December 31, 2021 and 2020, total amortization expense was $
The following table summarizes estimated future amortization expense of intangible assets placed in service at December 31, 2021 for the years ending:
|
2022 |
$ |
|
|
|
2023 |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
Thereafter |
|
|
|
|
$ |
|
F-23
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
7. OTHER ASSETS
Other assets consisted of the following:
|
December 31, |
December 31, |
|||||
|
Receivable from payment processor – Debit card collections |
$ |
|
$ |
|
||
|
Receivable from payment processor – Other |
|
|
|
|
||
|
Prepaid expenses |
|
|
|
|
||
|
Other |
|
|
|
|
||
|
Total other assets |
$ |
|
$ |
|
||
8. VARIABLE INTEREST ENTITIES
The following table summarizes the VIEs’ assets and liabilities included in the Company’s consolidated financial statements, after intercompany eliminations, as of December 31, 2021 and 2020:
|
December 31, |
December 31, |
|||||||
|
Assets: |
|
|
|
|
||||
|
Cash |
$ |
|
$ |
|
|
|||
|
Restricted cash |
|
|
|
|
|
|||
|
Finance receivables |
|
|
|
|
|
|
||
|
Allowance for losses on finance receivables |
|
( |
) |
|
( |
) |
||
|
Finance receivables, net |
|
|
|
|
|
|
||
|
Total assets |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|||||
|
Liabilities: |
|
|
|
|
||||
|
Other debt |
$ |
|
|
|
|
|||
|
Total liabilities |
$ |
|
|
$ |
|
|||
By December 2021, IIA and the IIA Notes SPVs became indirect wholly owned MoneyLion subsidiaries, removing the variable interest in those entities. See Note 1. “Description of Business and Basis of Presentation” for more information.
Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party lenders (the “SPV Credit Facilities”). The Company may sell certain loan and Instacash receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (the “SPV Borrowers”), which pledge such receivables as collateral to support the financing of additional receivables. The underlying loan and Instacash receivables are originated and serviced by other wholly owned subsidiaries of the Company. The SPV Borrowers are required to maintain pledged collateral consisting of loan and Instacash receivables with a net asset balance that equals or exceeds
F-24
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
8. VARIABLE INTEREST ENTITIES (cont.)
The Company is required to evaluate the SPV Borrowers for consolidation, which the Company has concluded are VIEs. The Company has the ability to direct the activities of the SPV Borrowers that most significantly impact the economic performance of the wholly owned subsidiaries that act as the originators and servicer of the loan and Instacash receivables held by the SPV Borrowers. Additionally, the Company has the obligation to absorb losses related to the pledged collateral in excess of the aggregate principal amount of the receivables and the right to proceeds related to the excess loan and Instacash receivables securing the SPV Credit Facilities once all loans and interest under such SPV Credit Facilities are repaid, which exposes the Company to losses and returns that could potentially be significant to the SPV Borrowers. Accordingly, the Company determined it is the primary beneficiary of the SPV Borrowers and is required to consolidate them as indirect wholly owned VIEs. For more information, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility.
9. DEBT
SPV Debt Agreements — In March 2018, and then in April 2018, IIA Notes SPV II LLC and IIA Notes SPV III LLC, indirect wholly owned subsidiaries of the Company, entered into Loan and Security Agreements (the “SPV Debt Agreements”) with separate lenders establishing a total credit facility of a minimum of $
6.75% Bank Loan — In September 2018, the Company entered into a Loan and Security Agreement (the “6.75% Bank Loan”) with a bank for a
Second Lien Loan — In April 2020, the Company entered into a Loan and Security Agreement (“Second Lien Loan”) with a lender for a second-lien loan facility with an initial principal balance of $
First Lien Loan — In July 2020, the Company entered into a Loan and Security Agreement (“First Lien Loan”) with a bank for a $
F-25
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
9. DEBT (cont.)
Subordinated Convertible Notes — In December 2020, the Company sold to a third-party lender $
Other Debt —
In August 2016, the Company entered into a $
In connection with the 2016 Credit Agreement, the Company granted warrants allowing the lender to purchase up to
In April 2020, the Company borrowed $
F-26
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
9. DEBT (cont.)
In September 2021, ROAR 1 SPV Finance LLC, an indirect wholly owned subsidiary of the Company (the “ROAR 1 SPV Borrower”), entered into a $
In December 2021, ROAR 2 SPV Finance LLC, an indirect wholly owned subsidiary of the Company (the “ROAR 2 SPV Borrower”), entered into a $
Debt Maturities — Of the principal related to the Company’s debt agreements, $
10. INCOME TAXES
For the years ended December 31, 2021 and 2020, income tax expense computed at the federal statutory income tax rate of
A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:
|
Years Ended December 31, |
||||||||||||||
|
2021 |
2020 |
|||||||||||||
|
Federal statutory rate |
$ |
( |
) |
|
% |
$ |
( |
) |
|
% |
||||
|
Effect of: |
|
|
|
|
|
|
||||||||
|
State taxes, net of federal tax benefit |
|
( |
) |
|
% |
|
( |
) |
|
% |
||||
|
Deferred rate change |
|
( |
) |
|
% |
|
( |
) |
|
% |
||||
|
Change in fair value of subordinated convertible notes |
|
|
|
( |
)% |
|
|
% |
||||||
|
Change in fair value of warrant liability |
|
|
|
( |
)% |
|
|
% |
||||||
|
Accrued dividends on redeemable convertible preferred stock |
|
|
% |
|
|
|
( |
)% |
||||||
|
Return to provision |
|
|
|
( |
)% |
|
|
|
||||||
|
Other permanent differences |
|
( |
) |
|
% |
|
|
|
( |
)% |
||||
|
Other |
|
|
|
( |
)% |
|
|
|
( |
)% |
||||
|
Change in valuation allowance |
|
|
|
( |
)% |
|
|
|
( |
)% |
||||
|
Total |
$ |
|
|
( |
)% |
$ |
|
|
( |
)% |
||||
F-27
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
10. INCOME TAXES (cont.)
The income tax (benefit) expense is as follows:
|
Years Ended |
||||||
|
2021 |
2020 |
|||||
|
Current: |
|
|
||||
|
Federal |
$ |
$ |
||||
|
State |
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|||||
|
Deferred taxes |
|
|
||||
|
Income tax benefit |
$ |
|
$ |
|
||
The tax effects of the primary temporary differences included in net deferred tax assets and liabilities are shown in the following table:
|
December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Net operating loss carryforwards |
$ |
|
|
$ |
|
|
||
|
Allowance for losses on finance receivables |
|
|
|
|
|
|
||
|
Research and development credit |
|
|
|
|
|
|
||
|
Stock compensation |
|
|
|
|
|
|
||
|
Legal reserve |
|
|
|
|
|
|||
|
Other |
|
|
|
|
|
|
||
|
Total deferred tax assets, gross |
|
|
|
|
|
|
||
|
Less: valuation allowance |
|
( |
) |
|
( |
) |
||
|
Total deferred tax assets, net |
|
|
|
|
|
|
||
|
|
|
|
|
|||||
|
Deferred finance receivable fees and costs, net |
|
( |
) |
|
( |
) |
||
|
Depreciation of furniture and equipment |
|
( |
) |
|
( |
) |
||
|
Other |
|
( |
) |
|
|
|||
|
Total deferred tax liabilities |
|
( |
) |
|
( |
) |
||
|
Total deferred tax assets (liabilities), net |
$ |
|
$ |
|
||||
As of December 31, 2021 and 2020, the Company maintained a valuation allowance of $
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $
Total U.S. federal and state operating loss carryforwards as of December 31, 2021 and 2020 were approximately $
As of December 31, 2021, the Company’s federal research and development credit carryforwards for income tax purposes were approximately $
F-28
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
10. INCOME TAXES (cont.)
The Company primarily files income tax returns in the United States federal jurisdiction and various states. The Company’s U.S. federal returns and state returns are no longer subject to income tax examinations for taxable years before 2018.
The Company has performed a review to determine whether the future utilization of net operating loss and credit carryforwards will be restricted due to ownership changes that have occurred. The study determined that there will be no utilization limit after December 31, 2025. The review did not consider whether the future utilization of net operating loss and credit carryforwards will be restricted under IRC sections 382 and 383 due to ownership changes that occurred in the MALKA acquisition. However, based on the value of the Company at the date of change, the Company believes that there would not be a limitation triggered by the ownership change and therefore would not result in any adjustment to the deferred tax assets. Due to the net operating loss carryforwards, the statute of limitations remains open for federal and state returns.
11. COMMON STOCK
Following the Business Combination Closing on September 22, 2021,
12. REDEEMABLE CONVERTIBLE PREFERRED STOCK
Each share of Legacy MoneyLion’s redeemable convertible preferred stock was convertible at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into a number of fully paid and non-assessable shares of Legacy MoneyLion Common Stock as could be determined by dividing the applicable original issue price by the applicable conversion price in effect at the time of conversion.
Pursuant to the Merger Agreement, all outstanding shares of Legacy MoneyLion’s redeemable convertible preferred stock automatically converted into
13. STOCK-BASED COMPENSATION
2014 Stock Option Plan
Prior to the Business Combination, MoneyLion’s Amended and Restated 2014 Stock Option Plan (the “2014 Plan”) allowed the Company to provide benefits in the form of stock options. The Company had designated a total of
2021 Stock Incentive Plan
At the Special Meeting, Fusion stockholders approved the Omnibus Incentive Plan (the “2021 Plan”). As of the Business Combination Closing, each Legacy MoneyLion Option that was outstanding and unexercised as of immediately prior to the Business Combination Closing Date automatically converted into the right to receive an option to acquire a number of shares of MoneyLion Class A Common Stock equal to the number of shares of Legacy MoneyLion Common Stock subject to such MoneyLion Option as of immediately prior to the Business Combination Closing Date, multiplied by the Exchange Ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of such Legacy MoneyLion Option in effect immediately prior to the Business Combination Closing Date, divided by the Exchange Ratio (rounded up to the nearest whole cent). The intent behind the terms in the Merger Agreement related to the exchange of the Legacy MoneyLion Options was to provide the holders with awards of equal value to the original awards. Accordingly, the impact of the conversion was such that the number of shares issuable under the modified awards and the related exercise prices were adjusted
F-29
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
13. STOCK-BASED COMPENSATION (cont.)
using the Exchange Ratio with all other terms remaining unchanged. The conversion ratio adjustment was without substance (akin to a stock split), and therefore, the effect of the change in the number of shares and the exercise price and share value were equal and offsetting to one another. As a result, the fair value of the modified awards was equal to the fair value of the awards immediately before the modification and, therefore, there was no incremental compensation expense that should be recognized. There were no changes to the vesting period within the plan.
The 2021 Plan permits the Company to deliver up to
Stock-based compensation of $
During 2021, the Company issued
The weighted average grant date fair value of options granted during the twelve months ended December 31, 2021 and 2020 was $
| Twelve Months Ended | ||||
| 2021 | 2020 | |||
| Expected Volatility | | | ||
| Expected Dividend | — | — | ||
| Expected Term in Years | | | ||
| Expected Forfeitures | —% | —% | ||
| Risk Free Interest Rate | | | ||
The following table represents activity within the 2021 Plan since December 31, 2020:
|
Number of Shares |
Weighted |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic |
|||||||||
|
Options outstanding at December 31, 2020 |
|
|
$ |
|
|
$ |
|
|
||||
|
Options granted |
|
|
|
|
|
|
||||||
|
Options exercised |
( |
) |
|
|
$ |
( |
) |
|||||
|
Options forfeited |
( |
) |
|
|
|
|
||||||
|
Options expired |
( |
) |
|
|
|
|
|
|||||
|
Options outstanding at December 31, 2021 |
|
|
$ |
|
|
$ |
|
|
||||
|
Exercisable at December 31, 2021 |
|
|
|
|
|
$ |
|
|
||||
|
Unvested at December 31, 2021 |
|
|
$ |
|
|
|
||||||
F-30
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
13. STOCK-BASED COMPENSATION (cont.)
14. STOCK WARRANTS
Public Warrants and Private Placement Warrants
As a result of the Business Combination, MoneyLion acquired from Fusion, as of September 22, 2021, public warrants outstanding to purchase an aggregate of
Redemption of Warrants for Cash
The Company may call the warrants for redemption:
• in whole and not in part;
• at a price of $
• upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
• if, and only if, the closing price of the MoneyLion Class A Common Stock equals or exceeds $
If and when the warrants become redeemable, the Company may exercise the redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The Private Placement Warrants are identical to the Public Warrants except that the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Except as described above, if holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering the warrants for that number of shares of MoneyLion Class A Common Stock equal to the quotient obtained by dividing the product of the number of shares of Money Lion Class A Common Stock underlying the warrants multiplied by the excess of the “historical fair market value” (defined below) less the exercise price of the warrants, by the historical fair market value. For these purposes, the “historical fair market value” shall mean the average last reported sale price of the MoneyLion Class A Common Stock. Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent.
F-31
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
14. STOCK WARRANTS (cont.)
The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. At the time of the Merger, the Public Warrants assumed by the Company were recorded at fair value within additional paid-in capital in the amount of $
As of December 31, 2021, the aggregate value of the Private Placement Warrants was $
The Private Placement Warrants are measured at fair value on a recurring basis. The Private Placement Warrants were valued using a Black-Scholes Option Pricing Model, which is calculated using Level 3 inputs. The primary unobservable inputs utilized in determining fair value of the Private Placement Warrants is the expected volatility of the MoneyLion Class A Common Stock.
The following table presents the quantitative information regarding Level 3 fair value measurement of warrants:
|
December 31, |
||||
|
Strike price |
$ |
|
|
|
|
Expected Volatility |
|
|
% |
|
|
Expected Dividend |
|
|
||
|
Expected Term in Years |
|
|
|
|
|
Risk Free Interest Rate |
|
|
% |
|
|
Warrant Value Per Share |
|
|
|
|
The following table presents the changes in the fair value of the warrants:
|
December 31, 2021 |
||||
|
Private Placement |
||||
|
Initial Measurement, September 22, 2021 |
$ |
|
|
|
|
Mark-to-market adjustment |
$ |
( |
) |
|
|
Warrants payable balance, December 31, 2021 |
$ |
|
|
|
Legacy MoneyLion Warrants
See Note 3, “Business Combination” for details on the Legacy MoneyLion Warrants.
F-32
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
15. NET LOSS PER SHARE
The following table sets forth the computation of net loss per common share for the twelve months ended December 31, 2021 and 2020:
|
Twelve Months Ended |
||||||||
|
2021 |
2020 |
|||||||
|
Numerator: |
|
|
|
|
||||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
|
Net income attributable to redeemable noncontrolling interests |
|
( |
) |
|
( |
) |
||
|
Accretion of issuance costs on redeemable convertible preferred stock |
|
|
|
|
||||
|
Reversal of previously accrued (accrual of) dividends on redeemable convertible preferred stock |
|
|
|
|
( |
) |
||
|
Net loss attributable to common shareholders |
$ |
( |
) |
$ |
( |
) |
||
|
Denominator: |
|
|
|
|
||||
|
Weighted-average common shares outstanding – basic and diluted(1) |
|
|
|
|
|
|
||
|
Net loss per share attributable to common stockholders – basic and diluted |
$ |
( |
) |
$ |
( |
) |
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion’s Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately
The Company’s potentially dilutive securities, which include stock options, RSUs, preferred stock and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same.
The Company excluded the following potential common shares from the computation of diluted net loss per share because including them would have an anti-dilutive effect for the twelve months ended December 31, 2021 and 2020:
|
December 31, |
||||
|
2021 |
2020 |
|||
|
Conversion of redeemable convertible preferred stock(1) |
|
|||
|
Warrants to purchase common stock and redeemable convertible preferred stock(1) |
|
|
||
|
RSUs and options to purchase common stock(1) |
|
|
||
|
Right to receive Earnout Shares |
|
|||
|
Total common stock equivalents |
|
|
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately
16. COMMITMENTS AND CONTINGENCIES
Lease Commitments — The Company leases various office space, including the corporate office location, from third parties under non-cancellable agreements which require various minimum annual rentals. Certain of the leases also require the payment of normal maintenance, utilities and related real estate taxes on the properties.
F-33
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
16. COMMITMENTS AND CONTINGENCIES (cont.)
The total minimum lease payments as of December 31, 2021 are as follows:
|
2022 |
$ |
|
|
|
2023 |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
Thereafter |
|
||
|
$ |
|
Rent expense totaled $
Legal Matters — The Company is subject to regulatory examination by the California Department of Financial Protection and Innovation (the “CA DFPI”). With respect to its activities in California, the Company received a report of examination in 2020 from the CA DFPI regarding MoneyLion of California, LLC, MoneyLion’s subsidiary, and a follow-up request for information in May 2021. This matter is ongoing, and the Company intends to continue to fully cooperate with the CA DFPI in this matter. In addition, the CA DFPI is currently conducting an industry-wide investigation of companies that provide earned wage access products and services, including Instacash. The Company intends to continue cooperating fully in this investigation and to that end entered into a memorandum of understanding (“MOU”) with the CA DFPI on February 23, 2021. The MOU requires the Company to regularly provide certain information to the CA DFPI and adhere to certain best practices regarding Instacash while the CA DFPI continues to investigate. Any potential impacts on the Company’s financial condition or operations relating to these CA DFPI matters are unknown at this time.
With respect to the Company’s activities in Minnesota, the Company received information requests in 2019, 2020 and 2021 from the Minnesota Department of Commerce (“Minnesota DOC”) regarding an investigation relating to the Company’s lending activity in Minnesota and its membership program. The Minnesota DOC previously informed the Company that it was no longer pursuing the investigation regarding the Company’s membership program but continued the investigation into lending activity. In December 2021, the Company signed a settlement order with the Minnesota DOC, which had no material impact on the Company’s financial condition or operations.
The Company is also in the process of responding to Civil Investigative Demands (“CIDs”) or other investigatory requests relating to its provision of consumer financial services from the office of the Attorney General of the Commonwealth of Virginia, the New York Attorney General’s Office, as well as the Colorado Department of Law. The Company is cooperating with each of these state regulators and intends to take any corrective actions required to maintain compliance with applicable state laws. The Company cannot predict the outcome or any potential impact on its financial condition or operations at this time.
In 2019, 2020 and 2021, the Company received CIDs from the Consumer Financial Protection Bureau (the “CFPB”) relating to the Company’s compliance with the Military Lending Act and its membership model. The Company will continue to provide to the CFPB all of the information and documents required by the CIDs and intends to continue to fully cooperate with the CFPB in this investigation. The investigation is ongoing and any potential impact on the Company’s financial condition or operations are unknown at this time.
In February and March 2021, the Company received investigative subpoenas from the Securities and Exchange Commission concerning IIA, which primarily held assets from institutional investors and was the Company’s primary source of funding for originated receivables through the end of the fourth quarter of 2021. The Company is cooperating with the investigation and cannot predict its outcome or any potential impact on the Company’s financial condition or operations.
F-34
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
17. MERGERS AND ACQUISITIONS
MALKA — On November 15, 2021, MoneyLion completed its acquisition (the “MALKA Acquisition”) of MALKA. MALKA is a creator network and content platform that provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors. The MALKA Acquisition accelerates MoneyLion’s ability to engage with consumers across all digital and emerging channels, allowing MoneyLion to directly connect with communities natively inside and outside of its existing platform. MoneyLion intends for MALKA to operate as an indirect, wholly-owned subsidiary of MoneyLion Inc. with MALKA’s pre-acquisition management team leading day-to-day operations.
The total purchase price of the MALKA Acquisition was approximately $
As of December 31, 2021, the payable in restricted shares based on 2021 and 2022 operating performance was valued at $
The fair value of MALKA’s acquired assets and liabilities were as follows:
|
November 15, |
|||
|
Assets |
|
||
|
Cash and cash equivalents |
$ |
|
|
|
Property and equipment |
|
|
|
|
Intangible assets |
|
|
|
|
Goodwill |
|
|
|
|
Other assets |
|
|
|
|
Total assets |
|
|
|
|
Liabilities and Equity |
|
||
|
Liabilities: |
|
||
|
Accounts payable and accrued liabilities |
|
|
|
|
Total liabilities |
|
|
|
|
Net assets and liabilities acquired |
$ |
|
|
Wealth Technologies Inc. — In December 2020, the Company acquired
F-35
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
18. RELATED PARTIES
In the ordinary course of business, we may enter into transactions with directors, principal officers, their immediate families, and affiliated companies in which they are principal stockholders (commonly referred to as “related parties”).
During the year ended December 31, 2020, the Company earned affiliate revenue through an arrangement with an affiliated company in which the Company’s Chief Financial Officer holds a minority financial interest. The revenues related to this agreement included within the consolidated statement of operations were immaterial during the year ended December 31, 2020. The amounts due from the related party were not material as of December 31, 2020. There was no such activity during the year ended December 31, 2021.
In April 2020, the Company entered into a $
In December 2020, the Company acquired
Additionally, some of our directors hold financial interests in separate entities, which the Company utilized in the ordinary course of business during the years ended December 31, 2021 and 2020. The activity during the year ended December 31, 2020 was not material. The Company is party to an Amended and Restated Marketing Consulting Agreement, dated as of May 11, 2021 and as amended from time to time (the “Marketing Consulting Agreement”), with LeadGen Data Services LLC (“LeadGen”), pursuant to which LeadGen provides the Company with certain marketing, consumer acquisition, lead generation and other consulting services. For the year ended December 31, 2021, MoneyLion paid $
19. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through March 17, 2022, the date on which these consolidated financial statements were available to be issued, and concluded that the following subsequent events were required to be disclosed:
Even Financial, Inc. Acquisition — On February 17, 2022, the Company completed its previously announced acquisition (the “Even Acquisition”) of Even Financial Inc., a Delaware corporation (“Even Financial”) pursuant to the Amended and Restated Agreement and Plan of Merger (the “Amended and Restated Merger Agreement”), by and among the Company, Epsilon Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Epsilon”), Even Financial and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as representative of the equityholders of Even Financial (the “Equityholders’ Representative”).
Founded in 2014, Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces.
F-36
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
19. SUBSEQUENT EVENTS (cont.)
The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 financial institution partners and 500 channel partners, covering a breadth of financial services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans.
At the closing of the Even Acquisition, the Company (i) issued to the equityholders of Even Financial an aggregate of
Due to the closing of the Even Acquisition occurring on February 17, 2022, there has not been sufficient time to apply business combination accounting to the opening balance sheet or create the financial disclosures required by U.S. GAAP.
F-37
MONEYLION INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except per share amounts)
(Unaudited)
|
March 31, |
December 31, |
|||||||
|
Assets |
|
|
|
|
||||
|
Cash |
$ |
|
|
$ |
|
|
||
| Restricted cash, including amounts held by variable interest entities (VIEs) of $ |
|
|
|
|
|
|
||
|
Consumer receivables |
|
|
|
|
|
|
||
|
Allowance for credit losses on consumer receivables |
|
( |
) |
|
( |
) |
||
| Consumer receivables, net, including amounts held by VIEs of $ |
|
|
|
|
|
|
||
|
Enterprise receivables |
|
|
|
|
|
|
||
|
Property and equipment, net |
|
|
|
|
|
|
||
|
Intangible assets, net |
|
|
|
|
|
|
||
|
Goodwill |
|
|
|
|
|
|
||
|
Other assets |
|
|
|
|
|
|
||
|
Total assets |
$ |
|
|
$ |
|
|
||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
||||
|
Liabilities: |
|
|
|
|
||||
|
Secured loans |
$ |
|
|
$ |
|
|
||
|
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
Warrant liability |
|
|
|
|
|
|
||
| Other debt, including amounts held by VIEs of $ |
|
|
|
|
|
|
||
|
Other liabilities |
|
|
|
|
|
|
||
|
Total liabilities |
|
|
|
|
|
|
||
|
Commitments and contingencies (Note 16) |
|
|
|
|
||||
| Redeemable convertible preferred stock (Series A), $ |
|
|
|
|
|
|||
|
Stockholders’ equity: |
|
|
|
|
||||
| Class A Common Stock, $ |
|
|
|
|
|
|
||
|
Additional paid-in capital |
|
|
|
|
|
|
||
|
Accumulated deficit |
|
( |
) |
|
( |
) |
||
| Treasury stock at cost, |
|
( |
) |
|
( |
) |
||
|
Total stockholders’ equity |
|
|
|
|
|
|
||
|
Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
$ |
|
|
$ |
|
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-38
MONEYLION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Revenue |
|
|
|
|
||||
|
Service and subscription revenue |
$ |
|
|
$ |
|
|
||
|
Net interest income on loan receivables |
|
|
|
|
|
|
||
|
Total revenue, net |
|
|
|
|
|
|
||
|
Operating expenses |
|
|
|
|
||||
|
Provision for credit losses on consumer receivables |
|
|
|
|
|
|
||
|
Compensation and benefits |
|
|
|
|
|
|
||
|
Marketing |
|
|
|
|
|
|
||
|
Direct costs |
|
|
|
|
|
|
||
|
Professional services |
|
|
|
|
|
|
||
|
Technology-related costs |
|
|
|
|
|
|
||
|
Other operating expenses |
|
|
|
|
|
|
||
|
Total operating expenses |
|
|
|
|
|
|
||
|
Net loss before other (expense) income and income taxes |
|
( |
) |
|
( |
) |
||
|
Interest expense |
|
( |
) |
|
( |
) |
||
|
Change in fair value of warrant liability |
|
|
|
|
( |
) |
||
|
Change in fair value of subordinated convertible notes |
|
|
|
( |
) |
|||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
( |
) |
|
|
|||
|
Other (expense) income |
|
( |
) |
|
|
|
||
|
Net loss before income taxes |
|
( |
) |
|
( |
) |
||
|
Income tax (benefit) expense |
|
( |
) |
|
|
|
||
|
Net loss |
|
( |
) |
|
( |
) |
||
|
Net income attributable to redeemable noncontrolling interests |
|
|
|
( |
) |
|||
|
Accrual of dividends on preferred stock |
|
( |
) |
|
( |
) |
||
|
Net loss attributable to common shareholders |
$ |
( |
) |
$ |
( |
) |
||
|
|
|
|
|
|||||
|
Net loss per share, basic and diluted(1) |
$ |
( |
) |
$ |
( |
) |
||
|
Weighted average shares used in computing net loss per share, basic and diluted(1) |
|
|
|
|
|
|
||
____________
(1)
The accompanying notes are an integral part of these consolidated financial statements.
F-39
MONEYLION INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)
(amounts in thousands, except share amounts)
(Unaudited)
|
Redeemable |
Class A |
Additional Paid-in |
Accumulated |
Treasury |
Total |
|||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||
|
Balances at January 1, 2022 |
— |
$ |
|
$ |
|
$ |
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|
|||||||||
|
Stock-based compensation |
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Exercise of stock options and warrants and vesting of RSUs |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Issuance of common stock in connection with earnout and make-whole provisions related to the acquisition of Malka Media Group LLC |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Issuance of options and preferred stock in connection with Even Acquisition |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Accrued dividends on preferred stock |
— |
|
|
— |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||||||||
|
Other |
— |
|
— |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|||||||||||
|
Net loss |
— |
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||||||||
|
Balances at March 31, 2022 |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|
||||||||
|
Redeemable |
Redeemable Noncontrolling |
Class A |
Additional |
Accumulated |
Treasury |
Total |
||||||||||||||||||||||||
|
Shares(1) |
Amount |
Shares(1) |
Amount |
|||||||||||||||||||||||||||
|
Balances at January 1, 2021 |
|
$ |
|
$ |
|
|
|
$ |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|||||||||||
|
Stock-based compensation |
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Exercise of stock options and warrants |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Accrued dividends on redeemable convertible preferred stock |
— |
|
|
|
|
— |
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
||||||||||||
|
Contributions from redeemable noncontrolling interests |
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Redemptions by redeemable noncontrolling interests |
— |
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Distributions to redeemable noncontrolling interests |
— |
|
|
( |
) |
— |
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss) |
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|||||||||||||
|
Balances at March 31, 2021 |
|
$ |
|
$ |
|
|
|
$ |
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|||||||||||
____________
(1)
The accompanying notes are an integral part of these consolidated financial statements.
F-40
MONEYLION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
||||
|
Provision for credit losses on consumer receivables |
|
|
|
|
|
|
||
|
Depreciation and amortization expense |
|
|
|
|
|
|
||
|
Change in deferred fees and costs, net |
|
|
|
|
|
|
||
|
Change in fair value of warrants |
|
( |
) |
|
|
|
||
|
Change in fair value of subordinated convertible notes |
|
|
|
|
|
|||
|
Change in fair value of contingent consideration from mergers and acquisitions |
|
|
|
|
|
|||
|
Losses (gains) on foreign currency translation |
|
|
|
|
( |
) |
||
|
Expenses related to debt modification and prepayments |
|
|
|
|
|
|||
|
Stock compensation expense |
|
|
|
|
|
|
||
|
Deferred income taxes |
|
( |
) |
|
|
|||
|
Changes in assets and liabilities, net of effects of business combination: |
|
|
|
|
||||
|
Accrued interest receivable |
|
( |
) |
|
( |
) |
||
|
Enterprise receivables |
|
|
|
|
|
|
||
|
Other assets |
|
|
|
|
|
|
||
|
Accounts payable and accrued liabilities |
|
( |
) |
|
( |
) |
||
|
Other liabilities |
|
( |
) |
|
|
|||
|
Net cash (used in) provided by operating activities |
|
( |
) |
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Net originations and collections of finance receivables |
|
( |
) |
|
( |
) |
||
|
Purchase of property, equipment and software |
|
( |
) |
|
( |
) |
||
|
Acquisition of Even Financial, net of cash acquired |
|
( |
) |
|
|
|||
|
Net cash used in investing activities |
|
( |
) |
|
( |
) |
||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Repayments to secured/senior lenders |
|
( |
) |
|
( |
) |
||
|
Fees related to debt prepayment |
|
( |
) |
|
|
|||
|
Proceeds from special purpose vehicle credit facilities |
|
|
|
|
|
|||
|
Proceeds from issuance of subordinated convertible notes |
|
|
|
|
|
|||
|
Borrowings from secured lenders |
|
|
|
|
|
|||
|
Payment of deferred financing costs |
|
( |
) |
|
|
|||
|
Proceeds from issuance of common stock related to exercise of stock options and warrants |
|
|
|
|
|
|
||
|
Contributions from redeemable noncontrolling interests |
|
|
|
|
|
|||
|
Distributions to noncontrolling interests |
|
|
|
( |
) |
|||
|
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|||||
|
Net change in cash and restricted cash |
|
|
|
|
|
|
||
|
Cash and restricted cash, beginning of period |
|
|
|
|
|
|
||
|
Cash and restricted cash, end of period |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|||||
|
Supplemental disclosure of cash flow information: |
|
|
|
|
||||
|
Cash paid for interest |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|||||
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
||||
|
Accrued dividends on preferred stock |
$ |
|
|
$ |
|
|
||
|
Lease liabilities incurred in exchange for operating right-of-use assets |
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
F-41
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
On September 22, 2021 (the “Business Combination Closing Date”), MoneyLion Inc., formerly known as Fusion Acquisition Corp. (prior to the Business Combination Closing Date, “Fusion” and after the Business Combination Closing Date, “MoneyLion” or the “Company”), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of February 11, 2021 and amended on June 28, 2021 and September 4, 2021 (the “Merger Agreement”), by and among Fusion, ML Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Fusion (“Merger Sub”), and MoneyLion Technologies Inc., formerly known as MoneyLion Inc. (prior to the Business Combination Closing Date, “MoneyLion” or the “Company”, and after the Business Combination Closing Date, “Legacy MoneyLion”), a Delaware corporation.
Pursuant to the terms of the Merger Agreement, immediately upon the completion of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Business Combination Closing”), each of the following transactions occurred in the following order: (i) Merger Sub merged with and into Legacy MoneyLion, with Legacy MoneyLion surviving the merger as a wholly owned subsidiary of Fusion (the “Merger”); (ii) Legacy MoneyLion changed its name to “MoneyLion Technologies Inc.”; and (iii) Fusion changed its name to “MoneyLion Inc.” Following the Business Combination, MoneyLion Inc. became a publicly traded company, with Legacy MoneyLion, a subsidiary of MoneyLion, continuing the existing business operations. MoneyLion’s Class A common stock, par value $
As previously announced, on February 11, 2021, concurrently with the execution of the Merger Agreement, Fusion entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, Fusion agreed to issue and sell in private placements an aggregate of
MoneyLion was founded in 2013, and the Company’s headquarters is located in New York, New York. The Company operates a personal finance platform (the “Platform”) that provides a mobile app that is designed to help users simplify their personal financial management and improve their financial health, giving users access to credit, investment, banking and other financial services and provide them with a single place to track spending, savings and credit. The Platform is based upon analytical models that power recommendations which are designed to help users achieve their financial goals ranging from building savings, improving credit health and managing unexpected expenses. Investment management services are provided by ML Wealth LLC, a wholly owned subsidiary of the Company, which is a Securities and Exchange Commission (“SEC”) registered investment advisor.
On November 15, 2021, MoneyLion acquired MALKA Media Group LLC (“MALKA”). MALKA is a creator network and content platform that produces digital media and content across entertainment, sports, games, live streaming and other sectors. MALKA’s content capabilities can drive industry-leading customer acquisition and retention at scale to help accelerate MoneyLion’s customer growth. By combining MALKA’s capabilities with MoneyLion’s financial products and extensive first-party data, MoneyLion hopes to turn the MoneyLion mobile application into a daily destination for its customers with personalized content that educates, informs and supports customers’ financial decisions.
On February 17, 2022, MoneyLion acquired Even Financial Inc. (“Even Financial”). Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, bridging Product Partners and Channel
F-42
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (cont.)
Partners (as defined herein) via its application programming interface (“API”) and embedded finance marketplaces. The acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. The acquisition also expands MoneyLion’s addressable market, extends the reach of its own products and diversifies its revenue mix.
Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The consolidated financial statements include the accounts of MoneyLion Inc. and its wholly owned subsidiaries and consolidated variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The Company does not have any items of other comprehensive loss; therefore, there is no difference between net loss and comprehensive loss for the three months ended March 31, 2022 and 2021.
Reclassification — The acquisitions of MALKA and Even Financial and related ongoing integration activities have caused significant changes to the revenue and cost structure of the Company such that the organization of financial statement line items in both the consolidated balance sheets and the consolidated statements of operations used in prior reporting periods are no longer sufficient to properly present the Company’s financial condition and results of operations as of March 31, 2022. Reclassifications have been performed relative to the previous presentation of the consolidated balance sheet as of December 31, 2021 and the consolidated statement of operations for the quarter ended March 31, 2021 to present in a new format that better represents the new revenue and cost structure of the Company. The reclassifications had no impact on previously reported total assets, total liabilities or net income (loss) and an immaterial impact on total revenue, net. There was no impact on the consolidated statements of cash flows or consolidated statements of redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit). There are also related reclassifications and expanded disclosure, where necessary, contained within the notes to the consolidated financial statements.
Receivable funding — Receivables originated on the Company’s platform, including Credit Builder Plus loans and Instacash advances, were primarily funded through Invest in America Credit Fund 1 LLC (“IIA”) until the end of the fourth quarter of 2021. IIA and related special purpose vehicles (“SPVs”) were classified as variable interest entities (“VIEs”) of which the Company had identified itself as the primary beneficiary because it directed the activities of the IIA and the related SPVs that most significantly impacted their economic performance. As the primary beneficiary of the VIEs, the Company consolidated the balances of the VIEs into the financial statements. See Part II, Item 8 “Description of Business and Basis of Presentation” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further discussion of these matters.
Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. For more information on the alternative financing sources, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility and Note 8. “Variable Interest Entities” regarding VIE considerations related to the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of the Company, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments and adjustments to eliminate intercompany transactions and balances, necessary for a fair presentation of its financial position and its results of operations, changes in redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) and cash flows.
F-43
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Company’s accounting policies are set forth in Part II, Item 8 “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 fiscal year ended December 31, 2021. Included herein are certain updates to those policies.
Revenue Recognition and Related Receivables — The following table summarizes revenue by type for the quarters ended March 31, 2022 and 2021:
|
Three Months Ended |
||||||
|
2022 |
2021 |
|||||
|
Consumer revenues |
|
|
||||
|
Service and subscription fees |
$ |
|
$ |
|
||
|
Net interest income on finance receivables |
|
|
|
|
||
|
Total consumer revenues |
|
|
|
|
||
|
Enterprise service revenues |
|
|
|
|
||
|
Total revenue, net |
$ |
|
$ |
|
||
Service and subscription fees — The Credit Builder Plus membership was developed to allow consumer customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. The Credit Builder Plus membership is intended to emphasize the program’s ability to help consumer customers build credit while also saving. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances.
The membership subscription fee is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Subscription receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time.
As the Company performs promised services to members, including those services that the members receive access to as part of the Credit Builder Plus membership, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company evaluates whether it is appropriate to recognize revenue on a gross basis or net of costs associated with the transaction based upon its evaluation of whether the Company obtains control of the specified services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors.
Most service fees are related to the Company’s Instacash advance product. Users may obtain cash from interest-free Instacash advances in 1-3 business days or may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a customer. Instant transfer fees are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer.
With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer.
F-44
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Net interest income on loan receivables — Interest income and the related accrued interest receivables on loan-related receivables are accrued based upon the daily principal amount outstanding except for loans that are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due.
Enterprise service revenues — The Company provides services to enterprise clients to allow them to better connect with existing end-users and reach new potential end-users. These services include lead generation services, advertising services and digital media and content production services custom designed to promote enterprise clients’ products and services.
The Company has a single performance obligation to provide lead generating services to financial institutions and financial service providers (“Product Partners”) whereby qualified consumers are matched with financial solutions offered by the Product Partners based on qualification and preference.
Lead generation fees are earned through the operation of a robust technology platform via an API that connects consumers to financial institutions and financial service providers. The Company’s API platform functions as a powerful definitive search, comparison and ad recommendation engine that provides consumers with personalized financial solution options and matches the demand and supply of financial services. The lead generating services conducted through the API comprise a series of distinct services that are substantially the same and have the same pattern of transfer. The Company is entitled to receive transaction fees that are based on performance structure, including but not limited to cost per funded loan, cost per approved credit card, cost per click or cost per savings accounts, or revenue share based on successful lead conversion. The transaction fees and revenue share are considered revenue from contracts with Product Partners, including financial institutions and other financial service providers. These fees and revenue share to which the Company expects to be entitled are deemed variable consideration because the loan volume over the contractual term is not known. Because the lead generating service performance obligation is a series of distinct services, the Company applies the variable consideration exception and allocates the variable consideration to the period in which the fees are earned, and recognizes revenue over time.
The Company generates advertising fees by displaying ads on the Company’s mobile application and by sending emails or other messages to potential end-users to promote the enterprise clients’ services. For advertising services, the Company enters into agreements with the enterprise clients in the form of a signed contract, which specifies the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the enterprise clients’ arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion.
Digital media and content production services provided to enterprise clients are generally earned and recognized over time as the performance obligations within the contracts are satisfied. Payment terms vary from contract to contract such that collections may occur in advance of services being rendered, as services are rendered or after services are rendered. Contracts for digital media and content production services are typically short-term in duration.
Allowance for Losses on Receivables — An allowance for losses on consumer receivables is established to provide for probable losses incurred in the Company’s consumer receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance 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 consumer’s ability to pay. The allowance is
F-45
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors.
The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable.
The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products.
An allowance for losses on service and subscription fee receivables is established to provide probable losses incurred in the Company’s service and subscription fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements.
Receivables from enterprise services have a low rate of default, and as such the related allowance is not material. The Company monitors enterprise receivable default rates for any indication of a deterioration in average credit quality that may result in more material levels of allowance for losses.
Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three to seven years depending on the nature of the software development. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred.
Stock-Based Compensation — The Company accounts for the restricted stock units (“RSUs”) and performance share units (“PSUs”) granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant. Some PSUs have been granted with a performance condition based on the Company’s operating performance. These performance conditions are assessed each reporting period and expense related to these PSUs is adjusted by a factor consistent with the expected performance as of the reporting date.
The Company accounts for its stock options granted to employees or directors as stock-based compensation expense based on their grant date fair value. The Company uses a Black-Scholes option valuation model to measure the fair value of options at the date of grant.
Some PSU awards are issued with a market condition which are valued on the grant date utilizing a Monte Carlo simulation model.
The Black-Scholes option pricing model and the Monte Carlo simulation model require estimates of future stock price volatility, expected term, risk-free interest rate and forfeitures.
F-46
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The fair value of all awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred.
Valuation of consideration transferred related to mergers and acquisitions — The Company determined that the contingent consideration related to the earnout provision and preferred share equivalents in connection with the MALKA Acquisition and Even Acquisition (each as defined herein) do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA and Even Financial earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA and Even Financial earnout was estimated using a Monte Carlo Simulation Model.
The Company determined that the consideration related to the shares of MoneyLion’s Series A Redeemable Convertible Preferred Stock, par value $
Leases — Effective January 1, 2022, arrangements containing leases are evaluated as an operating or finance lease at lease inception. No finance leases were identified. For operating leases, the Company recognizes an operating right-of-use asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term.
Since an implicit rate of return is not readily determinable for the Company’s leases, an incremental borrowing rate is used in determining the present value of lease payments. The incremental borrowing rate is determined using the rate of interest the Company pays to borrow funds on a collateralized basis, adjusted for differences in the lease term compared to the Company’s debt using the differences in daily U.S. treasury par yield curve that correspond to the terms of the Company’s lease and debt. These rates are updated on a quarterly basis for measurement of new lease obligations. Some leases include renewal options; however, generally it is not reasonably certain that these options will be exercised at lease commencement. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the Company’s balance sheet. The Company separates lease and non-lease components for its real estate leases.
Recently Adopted Accounting Pronouncements — The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), effective January 1, 2022, and applied the changes prospectively, recognizing a cumulative-effect adjustment to the beginning balance of retained earnings as of the adoption date. As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward. Upon adoption of the ASU No. 2016-02, the Company recognized an aggregate lease liability and right-of-use asset of $
Recently Issued Accounting Pronouncements Not Yet Adopted — The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012. Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance.
F-47
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which, along with subsequent related ASUs, creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company believes the adoption impact of ASU 2019-12 will not be material to the consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference London Interbank Offered Rate (“LIBOR”) or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of March 31, 2022. As such, the Company currently does not intend to elect the optional expedients and exceptions.
In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures.
3. BUSINESS COMBINATION
On September 21, 2021, Fusion held a Special Meeting (the “Special Meeting”) at which the Fusion stockholders considered and adopted, among other matters, the Merger Agreement and the transactions contemplated therein (the “Business Combination Transactions”). On September 22, 2021, the parties to the Merger Agreement consummated the Business Combination Transactions and the MoneyLion Class A Common Stock and Public Warrants (as defined herein) began trading on the NYSE under the symbols “ML” and “ML WS”, respectively. See Part II, Item 8 “Business Combination” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 further discussion of these matters.
F-48
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
4. CONSUMER RECEIVABLES
The Company’s finance receivables consist of secured personal loans and principal amounts of Instacash advances. Accrued interest receivables represent the interest accrued on the loan receivables based upon the daily principal amount outstanding. Fees receivables represent the amounts due to the Company for tips and instant transfer fees related to the Instacash advance product. Subscription receivables represent the amounts billed to customers for subscription services. The credit quality and future repayment of consumer receivables are dependent upon the customer’s ability to perform under the terms of the agreement. Factors such as unemployment rates and housing values, among others, may impact the customer’s ability to perform under the loan or advance terms. When assessing provision for losses on consumer receivables, the Company takes into account the composition of the outstanding consumer receivables, charge-off rates to date and the forecasted principal loss rates. The tables below show consumer receivables balances as of March 31, 2022 and December 31, 2021 and the consumer receivables activity, charge-off rates and aging by product for the three months ended March 31, 2022 and 2021.
Consumer receivables consisted of the following:
|
March 31, |
December 31, |
|||||
|
Unsecured personal loan receivables |
$ |
$ |
|
|||
|
Secured personal loan receivables |
|
|
|
|
||
|
Loan receivables |
|
|
|
|
||
|
Instacash receivables |
|
|
|
|
||
|
Finance receivables |
|
|
|
|
||
|
Fees receivable |
|
|
|
|
||
|
Membership receivables |
|
|
|
|
||
|
Deferred loan origination costs |
|
|
|
|
||
|
Accrued interest receivable |
|
|
|
|
||
|
Receivables, before allowance for credit losses |
$ |
|
$ |
|
||
Changes in the allowance for losses on consumer receivables were as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|
||
|
Provision for credit losses on receivables |
|
|
|
|
|
|
||
|
Receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|
||
Changes in the allowance for losses on finance receivables were as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|
||
|
Provision for credit losses on receivables |
|
|
|
|
|
|
||
|
Finance receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|
||
F-49
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
4. CONSUMER RECEIVABLES (cont.)
Changes in the allowance for losses on fees receivable were as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|||
|
Provision for credit losses on receivables |
|
|
|
|
|
|
||
|
Fees receivable charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|||
Changes in the allowance for losses on subscription receivables were as follows:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Beginning balance |
$ |
|
|
$ |
|
|||
|
Provision for credit losses on receivables |
|
|
|
|
|
|
||
|
Membership receivables charged off |
|
( |
) |
|
( |
) |
||
|
Recoveries |
|
|
|
|
|
|
||
|
Ending balance |
$ |
|
|
$ |
|
|||
The following is an assessment of the repayment performance of loans as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the loans receivable portfolio:
|
March 31, 2022 |
December 31, 2021 |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
|
% |
|
|
|
% |
||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Loan receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
The following is an assessment of the repayment performance of Instacash receivables as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the Instacash receivables portfolio:
|
March 31, 2022 |
December 31, 2021 |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
% |
|
|
% |
||||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Instacash receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
F-50
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
4. CONSUMER RECEIVABLES (cont.)
The following is an assessment of the repayment performance of fees receivable as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the fees receivable portfolio:
|
March 31, 2022 |
December 31, 2021 |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
% |
|
|
% |
||||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Fees receivable before allowance for loan |
$ |
|
|
% |
$ |
|
|
% |
||||
The following is an assessment of the repayment performance of subscription receivables as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the subscription receivables portfolio:
|
March 31, 2022 |
December 31, 2021 |
|||||||||||
|
Amount |
Percent |
Amount |
Percent |
|||||||||
|
Current |
$ |
|
|
% |
$ |
|
|
% |
||||
|
|
|
|
|
|||||||||
|
Delinquency: |
|
|
|
|
||||||||
|
31 to 60 days |
|
|
|
% |
|
|
|
% |
||||
|
61 to 90 days |
|
|
|
% |
|
|
|
% |
||||
|
Total delinquency |
|
|
|
% |
|
|
|
% |
||||
|
Membership receivables before allowance for loan losses |
$ |
|
|
% |
$ |
|
|
% |
||||
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
|
March 31, |
December 31, |
|||||||
|
Leasehold improvements |
$ |
|
|
$ |
|
|
||
|
Furniture and fixtures |
|
|
|
|
|
|
||
|
Computers and equipment |
|
|
|
|
|
|
||
|
Construction in process |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Less: accumulated depreciation |
|
( |
) |
|
( |
) |
||
|
Furniture and equipment, net |
$ |
|
|
$ |
|
|
||
Total depreciation expense related to property and equipment was $
F-51
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
6. INTANGIBLE ASSETS
Goodwill as of March 31, 2022 and December 31, 2021 was $
Intangible assets consisted of the following:
|
Useful Life |
March 31, |
December 31, |
||||||||
|
Proprietary technology and capitalized internal-use software |
|
$ |
|
|
$ |
|
|
|||
|
Work in process |
|
|
|
|
|
|
||||
|
Customer relationships |
|
|
|
|
|
|
|
|||
|
Trade names |
|
|
|
|
|
|
|
|||
|
Less: accumulated amortization |
|
( |
) |
|
( |
) |
||||
|
Intangible assets, net |
$ |
|
|
$ |
|
|
||||
For the three months ended March 31, 2022 and 2021, total amortization expense was $
The following table summarizes estimated future amortization expense of intangible assets placed in service at March 31, 2022 for the years ending:
|
Remainder of 2022 |
$ |
|
|
|
2023 |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
Thereafter |
|
|
|
|
$ |
|
7. OTHER ASSETS
Other assets consisted of the following:
|
March 31, |
December 31, |
|||||
|
Receivable from payment processors |
$ |
|
$ |
|
||
|
Prepaid expenses |
|
|
|
|
||
|
Operating lease right-of-use assets |
|
|
|
|||
|
Other |
|
|
|
|
||
|
Total other assets |
$ |
|
$ |
|
||
F-52
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
8. VARIABLE INTEREST ENTITIES
The following table summarizes the VIEs’ assets and liabilities included in the Company’s consolidated financial statements, after intercompany eliminations, as of March 31, 2022 and December 31, 2021:
|
March 31, |
December 31, |
|||||||
|
Assets: |
|
|
|
|
||||
|
Restricted cash |
$ |
|
|
$ |
|
|
||
|
Consumer receivables |
|
|
|
|
|
|
||
|
Allowance for losses on consumer receivables |
|
( |
) |
|
( |
) |
||
|
Consumer receivables, net |
|
|
|
|
|
|
||
|
Total assets |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|||||
|
Liabilities: |
|
|
|
|
||||
|
Other debt |
$ |
|
|
$ |
|
|
||
|
Total liabilities |
$ |
|
|
$ |
|
|
||
Beginning in the fourth quarter of 2021, the Company’s primary source of funding for originated receivables became special purpose vehicle financings from third-party lenders (the “SPV Credit Facilities”). The Company may sell certain loan and Instacash receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (the “SPV Borrowers”), which pledge such receivables as collateral to support the financing of additional receivables. The underlying loan and Instacash receivables are originated and serviced by other wholly owned subsidiaries of the Company. The SPV Borrowers are required to maintain pledged collateral consisting of loan and Instacash receivables with a net asset balance that equals or exceeds
The Company is required to evaluate the SPV Borrowers for consolidation, which the Company has concluded are VIEs. The Company has the ability to direct the activities of the SPV Borrowers that most significantly impact the economic performance of the wholly owned subsidiaries that act as the originators and servicer of the loan and Instacash receivables held by the SPV Borrowers. Additionally, the Company has the obligation to absorb losses related to the pledged collateral in excess of the aggregate principal amount of the receivables and the right to proceeds related to the excess loan and Instacash receivables securing the SPV Credit Facilities once all loans and interest under such SPV Credit Facilities are repaid, which exposes the Company to losses and returns that could potentially be significant to the SPV Borrowers. Accordingly, the Company determined it is the primary beneficiary of the SPV Borrowers and is required to consolidate them as indirect wholly owned VIEs. For more information, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility.
F-53
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
9. DEBT
The Company’s debt as of March 31, 2022 and December 31, 2021 is presented below:
|
March 31, |
December 31, |
|||||||
|
First Lien Loan |
$ |
|
$ |
|
|
|||
|
Second Lien Loan |
|
|
|
|
|
|||
|
Monroe Term Loans |
|
|
|
|
|
|||
|
Unamortized discounts and debt issuance costs |
|
( |
) |
|
( |
) |
||
|
Total secured loans |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|||||
|
ROAR 1 SPV Credit Facility |
$ |
|
|
$ |
|
|
||
|
ROAR 2 SPV Credit Facility |
|
|
|
|
|
|
||
|
Unamortized discounts and debt issuance costs |
|
( |
) |
|
( |
) |
||
|
Total other debt |
$ |
|
|
$ |
|
|
||
For more information regarding debt instruments outstanding as of December 31, 2021, see Part II, Item 8 “Debt” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Monroe Term Loans —
• $70,000 aggregate principal amount of term loans (the “Term A-1 Loans”), available to be drawn at the closing date;
• $20,000 aggregate principal amount of term loans (the “Term A-2 Loans”), as described further below;
• $20,000 aggregate principal amount of delayed draw term loans (the “Term B Loans”), which are available to be drawn for a period of 18-months following the closing date, subject to certain conditions set forth in the Monroe Credit Agreement; and
• subject to certain conditions set forth in the Monroe Credit Agreement, the ability to incur incremental commitments of up to $60,000 million aggregate principal amount of Term A-1 Loans or Term B Loans (the “Incremental Term Loans”; the Term A-1 Loans, the Term A-2 Loans, the Term B Loans and, if applicable, the Incremental Term Loans, collectively, the “Monroe Term Loans”).
In connection with the foregoing, the Company borrowed Term A-1 Loans in an aggregate principal amount of $
F-54
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
9. DEBT (cont.)
The Term A-1 Loans and Term B Loans bear annual interest, payable monthly, at a floating rate measured by reference to, at the Company’s option, either (a) a base rate then in effect (equal to the greater of (i) the federal funds rate plus 0.50%, (ii) the prime rate, (iii) 2.00% and (iv) an adjusted one-month Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 1.00%) plus 1.00%) plus an applicable margin ranging from 6.00% to 8.25% per annum, depending on whether the “EBITDA Trigger Date” has occurred, the Company’s “Enterprise Value” and, once the EBITDA Trigger Date has occurred, its “Total Debt to EBITDA Ratio” (as such terms are defined in the Monroe Credit Agreement) or (b) an adjusted one-month or three-month SOFR (subject to a floor of 1.00%) plus an applicable margin ranging from 7.00% to 9.25% per annum, depending on whether the EBITDA Trigger Date has occurred, the Company’s Enterprise Value and, once the EBITDA Trigger Date has occurred, its Total Debt to EBITDA Ratio. The Term A-2 Loans bear annual interest, payable monthly, at the greater of (i) 12% and (ii) a floating rate measured by reference to the prime rate plus 5.75% per annum, subject to a cap of 15%. The interest rate as of March 31, 2022 on the Term A-1 Loans and Term A-2 Loans was 9.50% and 12.00%, respectively.
The Term A-1 Loans and the Term B Loans mature on March 24, 2026, and the Term A-2 Loans mature on May 1, 2023. The Monroe Term Loans may be prepaid at the Company’s option at any time, in minimum principal amounts, and are subject to mandatory prepayment in an amount equal to
The Monroe Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including financial covenants with respect to minimum adjusted revenue, EBITDA, liquidity and unrestricted cash (all as defined in the Monroe Credit Agreement). The negative covenants, among other things, limit or restrict the ability of the “Loan Parties” (as defined in the Monroe Credit Agreement) and their subsidiaries to: incur additional indebtedness; incur additional liens; make dividends, distributions and other restricted payments; merge, consolidate, sell, transfer, dispose of, convey or lease assets or equity interests; purchase or otherwise acquire assets or equity interests; modify organizational documents; enter into certain transactions with affiliates; enter into restrictive agreements; engage in other business activities; and make investments.
The obligations under the Monroe Credit Agreement are guaranteed by MoneyLion Inc., as parent, and each of its direct and indirect existing and future wholly-owned subsidiary, other than SPVs, certain foreign subsidiaries, certain regulated subsidiaries and certain other excluded subsidiaries (the “Guarantors”). The Monroe Credit Agreement is entered into by MoneyLion Technologies Inc. The Monroe Credit Agreement is secured with a perfected, first-priority security interest in substantially all tangible and intangible assets of MoneyLion Technologies Inc. and each Guarantor, subject to certain customary exceptions.
The settlement of the First Lien Loan was accounted for as a debt extinguishment and the Second Lien Loan was accounted for as a debt modification resulting in total expense recognized of $
F-55
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
10. LEASES
All long-term leases identified by the Company are classified as operating leases. Lease expenses related to long-term leases were $
Maturities of the Company’s long-term operating lease liabilities were as follows:
|
March 31, |
||||
|
Remainder of 2022 |
$ |
|
|
|
|
2023 |
|
|
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total lease payments |
|
|
|
|
|
Less: imputed interest |
|
|
|
|
|
Lease liabilities |
$ |
|
|
|
|
Weighted-average remaining lease term (years) |
|
|
|
|
|
Weighted-average discount rate |
|
|
% |
|
11. INCOME TAXES
During the three months ended March 31, 2022 and 2021, the Company maintained a valuation allowance of $
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by approximately $
The Company’s financial statements included a full valuation allowance against net deferred tax assets before the acquisition of Even Financial. After considering the Even Acquisition, the projected consolidated results, and the available net deferred tax liability from Even Financial of approximately $
Total U.S. federal and state operating loss carryforwards as of March 31, 2022 and December 31, 2021 were approximately $
As of March 31, 2022, the Company’s federal research and development credit carryforwards for income tax purposes were approximately $
F-56
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
11. INCOME TAXES (cont.)
The Company has completed a review to determine whether the future utilization of net operating loss and credit carryforwards will be restricted due to ownership changes that have occurred. The study determined that there will be no limit after December 31, 2025. Due to the net operating loss carryovers, the statute of limitations remains open for federal and state returns.
12. COMMON AND PREFERRED STOCK
MoneyLion Class A Common Stock — Each holder of the shares of MoneyLion Class A Common Stock is entitled to
Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of MoneyLion Class A Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by MoneyLion’s board of directors out of funds legally available therefor.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of MoneyLion’s affairs, the holders of the shares of MoneyLion Class A Common Stock are entitled to share ratably in all assets remaining after payment of MoneyLion’s debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the shares of MoneyLion Class A Common Stock, then outstanding, if any.
The holders of shares of MoneyLion Class A Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the shares of MoneyLion Class A Common Stock. The rights, preferences and privileges of holders of shares of MoneyLion Class A Common Stock will be subject to those of the holders of any shares of the preferred stock MoneyLion may issue in the future.
Series A Redeemable Convertible Preferred Stock — Each holder of the shares of Series A Redeemable Convertible Preferred Stock (other than certain regulated holders subject to the Bank Holding Company Act of 1956, as amended) is entitled to vote as a single class with the holders of the MoneyLion Class A Common Stock and the holders of any other class or series of capital stock of MoneyLion then entitled to vote.
Holders of the Series A Redeemable Convertible Preferred Stock are entitled to a 30 cent cumulative annual dividend per share, payable at the Company’s election in either cash or MoneyLion Class A Common Stock (or a combination thereof), with any dividends on the MoneyLion Class A Common Stock valued based on the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE for the 20 trading days ending on the trading day immediately prior to the date on which the dividend is paid.
Upon a liquidation of the Company, holders of the Series A Redeemable Convertible Redeemable Preferred Stock will be entitled to a liquidation preference of the greater of $
Shares of Series A Convertible Redeemable Preferred Stock are convertible into shares of MoneyLion Class A Common Stock on a one-for-one basis, subject to customary anti-dilution adjustments. The Series A Redeemable Convertible Preferred Stock (i) is convertible at any time upon the holder’s election and (ii) automatically converts into MoneyLion Class A Common Stock if the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE equals or exceeds $
F-57
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
12. COMMON AND PREFERRED STOCK (cont.)
Preferred Stock Issued Before the Business Combination — Each share of Legacy MoneyLion’s redeemable convertible preferred stock was convertible at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into a number of fully paid and non-assessable shares of Legacy MoneyLion Common Stock as could be determined by dividing the applicable original issue price by the applicable conversion price in effect at the time of conversion.
Pursuant to the Merger Agreement, all outstanding shares of Legacy MoneyLion’s redeemable convertible preferred stock automatically converted into
13. STOCK-BASED COMPENSATION
2021 Stock Incentive Plan
At the Special Meeting, Fusion stockholders approved the Company’s Omnibus Incentive Plan (the “2021 Plan”). As of the Business Combination Closing, each Legacy MoneyLion option to purchase shares of Legacy MoneyLion Common Stock (a “Legacy MoneyLion Option”) that was outstanding and unexercised as of immediately prior to the Business Combination Closing Date automatically converted into the right to receive an option to acquire a number of shares of MoneyLion Class A Common Stock equal to the number of shares of Legacy MoneyLion Common Stock subject to such Legacy MoneyLion Option as of immediately prior to the Business Combination Closing Date, multiplied by the Exchange Ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of such Legacy MoneyLion Option in effect immediately prior to the Business Combination Closing Date, divided by the Exchange Ratio (rounded up to the nearest whole cent). The intent behind the terms in the Merger Agreement related to the exchange of the Legacy MoneyLion Options was to provide the holders with awards of equal value to the original awards. Accordingly, the impact of the conversion was such that the number of shares issuable under the modified awards and the related exercise prices were adjusted using the Exchange Ratio with all other terms remaining unchanged. The conversion ratio adjustment was without substance (akin to a stock split), and therefore, the effect of the change in the number of shares and the exercise price and share value were equal and offsetting to one another. As a result, the fair value of the modified awards was equal to the fair value of the awards immediately before the modification and, therefore, there was no incremental compensation expense to be recognized. There were no changes to the vesting period within the 2021 Plan.
Stock-based compensation of $
The number of units awarded under the 2021 Plan are generally based on a weighted average of the MoneyLion Class A Common Stock in the days leading up to the grant. Fair values for options are calculated using a Black-Scholes option pricing model and PSUs with market conditions are fair valued using a Monte Carlo simulation model. Other grants are generally valued using the share price of MoneyLion Class A Common Stock on the day of grant. The following table represents activity within the 2021 Plan for the three months ended March 31, 2022:
|
Type |
Vesting Conditions |
Units Granted |
Weighted |
Weighted |
||||||
|
Restricted Stock Unit |
|
|
$ |
|
|
|||||
|
Performance Stock Unit |
|
|
$ |
|
|
|||||
|
Performance Stock Unit |
|
|
$ |
|
|
|||||
|
Options |
|
|
$ |
|
$ |
|
||||
F-58
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
14. STOCK WARRANTS
Public Warrants and Private Placement Warrants
As a result of the Business Combination, MoneyLion acquired from Fusion, as of September 22, 2021, public warrants outstanding to purchase an aggregate of
The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. At the time of the Business Combination, the Public Warrants assumed by the Company were recorded at fair value within additional paid-in capital in the amount of $
The Private Placement Warrants were valued using a Black-Scholes Option Pricing Model, which is calculated using Level 3 inputs. The primary unobservable input utilized in determining fair value of the Private Placement Warrants is the expected volatility of the MoneyLion Class A Common Stock.
The following table presents the quantitative information regarding Level 3 fair value measurement of the Private Placement Warrants:
|
March 31, |
||||
|
Strike price |
$ |
|
|
|
|
Expected Volatility |
|
|
% |
|
|
Expected Dividend |
|
|
||
|
Expected Term in Years |
|
|
|
|
|
Risk Free Interest Rate |
|
|
% |
|
|
Warrant Value Per Share |
$ |
|
|
|
The following table presents the changes in the liability related to the Private Placement Warrants:
|
March 31, |
||||
|
Warrants payable balance, December 31, 2021 |
$ |
|
|
|
|
Mark-to-market adjustment |
$ |
( |
) |
|
|
Warrants payable balance, March 31, 2022 |
$ |
|
|
|
For more information regarding the Public Warrants and Private Placement Warrants, see Part II, Item 8 “Stock Warrants” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Legacy MoneyLion Warrants
For details on Legacy MoneyLion warrants, see Part II, Item 8 “Business Combination” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
F-59
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
15. NET LOSS PER SHARE
The following table sets forth the computation of net loss per common share for the three months ended March 31, 2022 and 2021:
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Numerator: |
|
|
|
|
||||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
|
Net income attributable to redeemable noncontrolling interests |
|
|
|
( |
) |
|||
|
Accrual of dividends on preferred stock |
|
( |
) |
|
( |
) |
||
|
Net loss attributable to common shareholders |
$ |
( |
) |
$ |
( |
) |
||
|
Denominator: |
|
|
|
|
||||
|
Weighted-average common shares outstanding – basic and diluted(1) |
|
|
|
|
|
|
||
|
Net loss per share attributable to common stockholders – basic and diluted(1) |
$ |
( |
) |
$ |
( |
) |
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion’s Common Stock for MoneyLion Class A Common Stock at the Exchange Ratio of approximately
For the three months ended March 31, 2022 and 2021, the Company’s potentially dilutive securities, which include stock options, RSUs, PSUs, preferred stock, the right to receive earnout shares and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same for the three months ended March 31, 2022 and 2021.
The following potential common shares have been excluded from the computation of diluted net loss per share for the three months ended March 31, 2022 and 2021:
|
March 31, |
||||
|
2022 |
2021 |
|||
|
Conversion of convertible preferred stock(1) |
|
|
||
|
Warrants to purchase common stock and redeemable convertible preferred stock(1) |
|
|
||
|
PSUs, RSUs and options to purchase common stock(1) |
|
|
||
|
Right to receive earnout shares |
|
|||
|
Total common stock equivalents |
|
|
||
____________
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at the Exchange Ratio of approximately
16. COMMITMENTS AND CONTINGENCIES
Legal Matters — The Company is subject to regulatory examination by the California Department of Financial Protection and Innovation (the “CA DFPI”). With respect to its activities in California, the Company received a report of examination in 2020 from the CA DFPI regarding MoneyLion of California, LLC, MoneyLion’s subsidiary, and a follow-up request for information in May 2021. This matter is ongoing, and the Company intends to continue to fully cooperate with the CA DFPI in this matter. In addition, the CA DFPI is currently conducting an industry-wide investigation of companies that provide earned wage access products and services, including Instacash. The Company intends to continue cooperating fully in this investigation and to that end entered into a memorandum of understanding (“MOU”) with the CA DFPI on February 23, 2021. The MOU requires the Company
F-60
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
16. COMMITMENTS AND CONTINGENCIES (cont.)
to regularly provide certain information to the CA DFPI and adhere to certain best practices regarding Instacash while the CA DFPI continues to investigate. Any potential impacts on the Company’s financial condition or operations relating to these CA DFPI matters are unknown at this time.
The Company is also in the process of responding to Civil Investigative Demands (“CIDs”) or other investigatory requests relating to its provision of consumer financial services from the office of the Attorney General of the Commonwealth of Virginia, the New York Attorney General’s Office, as well as the Colorado Department of Law. The Company is cooperating with each of these state regulators and intends to take any corrective actions required to maintain compliance with applicable state laws. The Company cannot predict the outcome or any potential impact on its financial condition or operations at this time.
We have received and are in the process of responding to CIDs from the Consumer Financial Protection Bureau (the “CFPB”) relating to the Company’s compliance with the Military Lending Act and its membership model. The Company will continue to provide to the CFPB all of the information and documents required by the CIDs and intends to continue to fully cooperate with the CFPB in this investigation. The investigation is ongoing and any potential impact on the Company’s financial condition or operations are unknown at this time.
We have received and are in the process of responding to investigative subpoenas from the SEC concerning IIA, which primarily held assets from institutional investors and was the Company’s primary source of funding for originated receivables through the end of the fourth quarter of 2021. The Company is cooperating with the investigation and cannot predict its outcome or any potential impact on the Company’s financial condition or operations.
17. MERGERS AND ACQUISITIONS
Even Financial — On February 17, 2022, the Company completed its previously announced acquisition (the “Even Acquisition”) of Even Financial pursuant to the Amended and Restated Agreement and Plan of Merger, by and among the Company, Epsilon Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company, Even Financial and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as representative of the equityholders of Even Financial.
Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces.
The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans.
At the closing of the Even Acquisition, the Company (i) issued to the equityholders of Even Financial an aggregate of
F-61
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
17. MERGERS AND ACQUISITIONS (cont.)
payment from the Company of up to an aggregate of
The fair value of Even Financial’s acquired assets and liabilities were as follows:
|
February 17, |
|||
|
Assets |
|
||
|
Cash and cash equivalents |
$ |
|
|
|
Enterprise receivables |
|
|
|
|
Property and equipment |
|
|
|
|
Intangible assets |
|
|
|
|
Goodwill |
|
|
|
|
Other assets |
|
|
|
|
Total assets |
|
|
|
|
Liabilities and Equity |
|
||
|
Liabilities: |
|
||
|
Accounts payable and accrued liabilities |
|
|
|
|
Other liabilities |
|
|
|
|
Total liabilities |
|
|
|
|
Net assets and liabilities acquired |
$ |
|
|
The Earnout and Preferred Share Equivalents were valued at $
Due to the closing of the Even Acquisition occurring on February 17, 2022, there has not been sufficient time to finalize business combination accounting and related valuations of assets and liabilities acquired and consideration transferred as required by U.S. GAAP. Therefore, all balances recorded and disclosed as of March 31, 2022 are preliminary and subject to change.
The Company’s pro forma revenue and net loss for the three months ended March 31, 2022 and 2021 below have been prepared as if Even Financial had been purchased on January 1, 2021. The Company made certain pro forma adjustments related to amortization of intangible assets, intercompany activity and interest expense.
|
Three Months Ended |
||||||||
|
2022 |
2021 |
|||||||
|
Revenue |
$ |
|
|
$ |
|
|
||
|
Net loss |
$ |
( |
) |
$ |
( |
) |
||
The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the Even Acquisition had been completed at January 1, 2021. In addition, the unaudited pro forma information above does not attempt to project the Company’s future results.
F-62
MONEYLION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts or as otherwise indicated)
(Unaudited)
17. MERGERS AND ACQUISITIONS (cont.)
MALKA — On November 15, 2021, MoneyLion completed its acquisition (the “MALKA Acquisition”) of MALKA. MALKA is a creator network and content platform that provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors. The MALKA Acquisition accelerates MoneyLion’s ability to engage with consumers across all digital and emerging channels, allowing MoneyLion to directly connect with communities natively inside and outside of its existing platform. MoneyLion intends for MALKA to operate as an indirect, wholly-owned subsidiary of MoneyLion Inc. with MALKA’s pre-acquisition management team leading day-to-day operations.
The total purchase price of the MALKA Acquisition was approximately $
The payable in restricted shares based on 2021 and 2022 operating performance was valued at $
The fair value of MALKA’s acquired assets and liabilities were as follows:
|
November 15, |
|||
|
Assets |
|
||
|
Cash and cash equivalents |
$ |
|
|
|
Other receivables |
|
|
|
|
Property and equipment |
|
|
|
|
Intangible assets |
|
|
|
|
Goodwill |
|
|
|
|
Other assets |
|
|
|
|
Total assets |
|
|
|
|
Liabilities and Equity |
|
||
|
Liabilities: |
|
||
|
Accounts payable and accrued liabilities |
|
|
|
|
Other liabilities |
|
|
|
|
Total liabilities |
|
|
|
|
Net assets and liabilities acquired |
$ |
|
|
18. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through May 16, 2022, the date on which these consolidated financial statements were available to be issued, and concluded that there were no material subsequent events requiring disclosure.
F-63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Indemnification of Directors and Officers.
Section 145 of the DGCL provides, generally, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation may similarly indemnify such person for expenses actually and reasonably incurred by such person in connection with the defense or settlement of any action or suit by or in the right of the corporation, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, in the case of claims, issues and matters as to which such person shall have been adjudged liable to the corporation, provided that a court shall have determined, upon application, that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
In accordance with Section 102(b)(7) of the DGCL, MoneyLion’s Certificate of Incorporation provides that a director will not be personally liable to MoneyLion or MoneyLion’s stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to MoneyLion or MoneyLion’s stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision became effective. Accordingly, these provisions will have no effect on the availability of equitable remedies such as an injunction or rescission based on a director’s breach of his or her duty of care.
MoneyLion’s Certificate of Incorporation provides that it will indemnify its present and former directors and officers to the maximum extent permitted by the DGCL and that such indemnification will not be exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw provision, agreement, vote of stockholders or disinterested directors or otherwise.
MoneyLion has entered into indemnification agreements with each of its current directors, officers and some employees containing provisions which are in some respects broader than the specific indemnification provisions contained in the DGCL. The indemnification agreements require MoneyLion, among other things, to indemnify its directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.
MoneyLion’s Certificate of Incorporation provides for indemnification of MoneyLion’s directors, officers, employees and other agents to the maximum extent permitted by the DGCL, and MoneyLion’s Bylaws provide for indemnification of MoneyLion’s directors, officers, employees and other agents to the maximum extent permitted by the DGCL.
Item 15. Recent Sales of Unregistered Securities.
Within the past three years, we have made sales of the following unregistered securities:
• On June 30, 2020, concurrently with the closing of Legacy MoneyLion’s initial public offering, we consummated the sale of 8,100,000 warrants exercisable for 8,100,000 shares of Legacy MoneyLion Common Stock at a price of $1.00 per warrant in a private placement to Fusion Sponsor LLC, generating total proceeds of $8,100,000.
II-1
• On September 22, 2021, we issued 25,000,000 shares of MoneyLion Class A Common Stock to certain qualified institutional buyers and accredited investors that agreed to purchase such shares in connection with the Business Combination for aggregate consideration of $25,000,000.
• On November 15, 2021 and December 31, 2021, in connection with our acquisition of MALKA, we issued 3,206,167 and 975,274 restricted shares of MoneyLion Class A Common Stock, respectively, to Jeffrey Frommer, Lyusen Krubich, Daniel Fried and Pat Capra, the former shareholders of MALKA, as part of the consideration in exchange for all of the issued and outstanding membership interests of MALKA.
• On December 22, 2021, we issued 123,199 restricted shares of MoneyLion Class A Common Stock to NFP Venture, LLC (“NFP”) in connection with NFP’s achievement of certain performance milestones in connection with our partnership with NFP.
• On February 17, 2022, we issued to the equityholders of Even Financial an aggregate of 28,164,811 shares of Preferred Stock with a face value of $10.00 per share, issued an aggregate of 529,120 shares of Preferred Stock to advisors of Even Financial for transaction expenses and exchanged 8,883,228 options to acquire Even Financial common stock for 5,901,846 options to acquire MoneyLion Class A Common Stock. The equityholders and advisors of Even Financial are also entitled to receive an additional payment from MoneyLion of up to an aggregate of 8.0 million shares of Preferred Stock, with a face value per share equal to the Conversion Price, based on the Even Financial Earnout.
• On March 28, 2022 and March 31, 2022, we issued 1,209,592 and 2,973,345 restricted shares of MoneyLion Class A Common Stock, respectively, to Jeffrey Frommer, Lyusen Krubich, Daniel Fried and Pat Capra, the former shareholders of MALKA, pursuant to the earnout and make-whole provisions of the Membership Interest Purchase Agreement governing the MALKA Acquisition.
The foregoing offers, sales and issuances of the MoneyLion Class A Common Stock were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof. No underwriters were involved in any of the foregoing transactions.
Item 16. Exhibits and Financial Statements.
(a) Exhibits
|
Exhibit |
Description |
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2.1† |
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2.2 |
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2.3 |
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2.4† |
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2.5† |
II-2
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Exhibit |
Description |
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3.1 |
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3.2 |
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3.3 |
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4.1 |
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4.2 |
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5.1** |
Opinion of Davis Polk & Wardwell LLP as to the validity of the securities being registered. |
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10.1 |
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10.2*+ |
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10.3+ |
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10.4† |
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10.5† |
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10.6† |
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10.7† |
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10.8† |
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10.9† |
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10.10† |
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10.11† |
II-3
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Exhibit |
Description |
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10.12† |
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10.13 |
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10.14+ |
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10.15+ |
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10.16+ |
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10.17+ |
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21.1 |
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23.1* |
Consent of RSM US LLP, independent registered public accounting firm to MoneyLion Inc. |
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23.2** |
Consent of Davis Polk & Wardwell LLP (included in Exhibit 5.1 hereto). |
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23.3* |
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23.4* |
Consent of RSM US LLP, independent registered public accounting firm to Even Financial Inc. |
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24.1 |
Power of Attorney (included on signature page to the initial registration statement). |
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24.2** |
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99.1 |
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99.2 |
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101.INS |
Inline XBRL Instance Document. |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
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107** |
____________
* Filed herewith.
** Previously filed.
+ Management contract or compensatory plan or arrangement.
† 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)(iv). The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit or an unredacted copy of the exhibit, as applicable, to the SEC upon request.
II-4
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
II-5
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 1st of July, 2022.
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MONEYLION INC. |
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By: |
/s/ Richard Correia |
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Richard Correia |
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Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on July 1, 2022.
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Name |
Position |
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* |
Chief Executive Officer, President and Director |
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Diwakar Choubey |
(Principal Executive Officer) |
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/s/ Richard Correia |
Chief Financial Officer and Treasurer |
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Richard Correia |
(Principal Financial Officer) |
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* |
Chief Accounting Officer |
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Mark Torossian |
(Principal Accounting Officer) |
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* |
Chair of the Board |
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John Chrystal |
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* |
Director |
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Chris Sugden |
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* |
Director |
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Jeffrey Gary |
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* |
Director |
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Lisa Gersh |
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* |
Director |
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Matt Derella |
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* |
Director |
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Michael Paull |
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* |
Director |
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Annette Nazareth |
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* |
Director |
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Dwight L. Bush |
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/s/ Richard Correia |
* As Attorney-in-Fact |
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Richard Correia |
II-7
Exhibit 10.2
MoneyLion Inc.
AMENDED AND RESTATED OMNIBUS INCENTIVE PLAN
Amended and restated as of June 15, 2022
Section 1. Purpose. The purpose of the MoneyLion Inc. Amended and Restated Omnibus Incentive Plan (as amended from time to time, the “Plan”) is to promote the long-term success of MoneyLion Inc., a Delaware corporation (the “Company”) by motivating employees and other individuals to perform at the highest level and contributing significantly to the success of the Company, thereby furthering the best interests of the Company and its shareholders. The Plan shall serve as the primary plan under which equity-based incentives are awarded on a worldwide basis to Participants.
Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” means any entity that, directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Company.
(b) “Award” means any Option, SAR, Restricted Stock, RSU, Performance Award, Other Cash-Based Award or Other Stock-Based Award granted under the Plan.
(c) “Award Agreement” means any agreement, contract or other instrument or document (including in electronic form) evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.
(d) “Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.
(e) “Beneficiary” means a Person entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of a Participant’s death. If no such Person can be named or is named by a Participant, or if no Beneficiary designated by a Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at a Participant’s death, such Participant’s Beneficiary shall be such Participant’s estate.
(f) “Board” means the Board of Directors of the Company.
(g) “Cause” is as defined in Participant’s Service Agreement, if any, or Award Agreement or, if not so defined, means: (i) any theft, fraud, embezzlement, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, falsification of any documents or records of the Company or any of its Affiliates, felony or similar act by Participant (whether or not related to Participant’s relationship with the Company); (ii) an act of moral turpitude by Participant, or any act that causes significant injury to, or is otherwise adversely affecting, the reputation, business, assets, operations or business relationship of the Company (or a Subsidiary or Affiliate, when applicable); (iii) any breach by Participant of any material agreement with or of any material duty of Participant to the Company or any Subsidiary or Affiliate thereof (including breach of confidentiality, non-disclosure, non-use non-competition or non-solicitation covenants towards the Company or any of its Affiliates) or failure to abide by code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); or (iv) any act which constitutes a breach of a Participant’s fiduciary duty towards the Company or an Affiliate or Subsidiary, including disclosure of confidential or proprietary information thereof or acceptance or solicitation to receive unauthorized or undisclosed benefits, irrespective of their nature, or funds, or promises to receive either, from individuals, consultants or corporate entities that the Company or a Subsidiary does business with; (v) Participant’s unauthorized use, misappropriation, destruction, or diversion of any tangible or intangible asset or corporate opportunity of the Company or any of its Affiliates (including, without limitation, the improper use or disclosure of confidential or proprietary information); or (vi) any circumstances that constitute grounds for termination for cause under Participant’s Service Agreement with the Company or Affiliate, to the extent applicable. For the avoidance of doubt, the determination as to whether a termination is for Cause for purposes of this Plan, shall be made in good faith by the Committee and shall be final and binding on Participant.
(h) “Change in Control” means the occurrence of any one or more of the following events:
(i) any Person, other than (A) any employee plan established by the Company or any Subsidiary, (B) the Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an entity owned, directly or indirectly, by shareholders of the Company in substantially the same proportions as their ownership of the Company, is (or becomes, during any 12-month period) the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 50% or more of the total voting power of the stock of the Company; provided that the provisions of this subsection (i) are not intended to apply to or include as a Change in Control any transaction that is specifically excepted from the definition of Change in Control under subsection (iii) below;
(ii) a change in the composition of the Board such that, during any 12-month period, the individuals who, as of the beginning of such period, constitute the Board (the “Existing Board”) cease for any reason to constitute at least 50% of the Board; provided, however, that any individual becoming a member of the Board subsequent to the beginning of such period whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors immediately prior to the date of such appointment or election shall be considered as though such individual were a member of the Existing Board; provided further, that, notwithstanding the foregoing, no individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A promulgated under the Exchange Act or successor statutes or rules containing analogous concepts) or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, corporation, partnership, group, associate or other entity or Person other than the Board, shall in any event be considered to be a member of the Existing Board;
(iii) the consummation of a merger, amalgamation or consolidation of the Company with any other corporation or other entity, or the issuance of voting securities in connection with such a transaction pursuant to applicable stock exchange requirements; provided that immediately following such transaction the voting securities of the Company outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity of such transaction or parent entity thereof) 50% or more of the total voting power of the Company’s stock (or, if the Company is not the surviving entity of such merger or consolidation, 50% or more of the total voting power and total fair market value of the stock of such surviving entity or parent entity thereof); and provided, further, that such a transaction effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 50% or more of either the then-outstanding Shares or the combined voting power and total fair market value of the Company’s then-outstanding voting securities shall not be considered a Change in Control; or
(iv) the sale or disposition by the Company of all or substantially all of the Company’s assets in which any Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.
2
Notwithstanding the foregoing, (A) no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Shares immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of the Company immediately prior to such transaction or series of transactions and (B) no Change in Control shall be deemed to have occurred upon the acquisition of additional control of the Company by any Person that is considered to effectively control the Company. In no event will a Change in Control be deemed to have occurred if any Participant is part of a “group” within the meaning of Section 13(d)(3) of the Exchange Act that effects a Change in Control. Notwithstanding the foregoing or any provision of any Award Agreement to the contrary, for any Award that provides for accelerated distribution on a Change in Control of amounts that constitute “deferred compensation” (as defined in Section 409A of the Code), if the event that constitutes such Change in Control does not also constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets (in either case, as defined in Section 409A of the Code), such amount shall not be distributed on such Change in Control but instead shall vest as of such Change in Control and shall be distributed on the scheduled payment date specified in the applicable Award Agreement, except to the extent that earlier distribution would not result in the Participant who holds such Award incurring interest or additional tax under Section 409A of the Code.
(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Code shall include any successor provision thereto.
(j) “Committee” means the compensation committee of the Board unless another committee is designated by the Board If there is no compensation committee of the Board and the Board does not designate another committee, references herein to the “Committee” shall refer to the Board.
(k) “Consultant” means any individual, including an advisor, who is providing bona fide services to the Company or any Subsidiary or who has accepted an offer of service or consultancy from the Company or any Subsidiary. For purposes of the Plan, in the case of a Consultant, references to employment shall be deemed to refer to such Consultant’s service in such capacity, but in no event shall the Plan or any action taken hereunder be construed to create an employer-employee relationship between any such Consultant and the Company or of any of its Affiliates.
(l) “Director” means any member of the Board.
(m) “Effective Date” means the date on which the Plan is adopted by the Board and approved by the shareholders of the Company.
(n) “Employee” means any individual, including any officer, employed by the Company or any Subsidiary or any prospective employee or officer who has accepted an offer of employment from the Company or any Subsidiary, with the status of employment determined based upon such factors as are deemed appropriate by the Committee in its discretion, subject to any requirements of the Code or applicable laws; provided that any such person may not receive any payment or exercise any right relating to an Award until such person has commenced employment or service with the Company or its Subsidiaries. An employee on an approved leave of absence (including maternity leave) shall be considered as still in the employment of the Company or its Subsidiaries for purposes of eligibility for participation in the Plan.
(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Exchange Act shall include any successor provision thereto.
(p) “Fair Market Value” means (i) with respect to Shares, the closing price of a Share on the trading day immediately preceding the date of determination (or, if there is no reported sale on such date, on the last preceding date on which any reported sale occurred), on the principal stock market or exchange on which the Shares are quoted or traded, or if Shares are not so quoted or traded, the fair market value of a Share as determined by the Committee, and (ii) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.
(q) “Incentive Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6, that meets the requirements of Section 422 of the Code.
(r) “Intrinsic Value” with respect to an Option or SAR Award means (i) the excess, if any, of the price or implied price per Share in a Change in Control or other event over (ii) the exercise or hurdle price of such Award multiplied by (iii) the number of Shares covered by such Award.
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(s) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(t) “Non-Qualified Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6, that is not an Incentive Stock Option.
(u) “Option” means an Incentive Stock Option or a Non-Qualified Stock Option.
(v) “Other Cash-Based Award” means an Award granted pursuant to Section 11, including cash awarded as a bonus or upon the attainment of specified performance criteria or otherwise as permitted under the Plan.
(w) “Other Stock-Based Award” means an Award granted pursuant to Section 11 that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, dividend rights or dividend equivalent rights or Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee.
(x) “Participant” means the recipient of an Award granted under the Plan.
(y) “Performance Award” means an Award granted pursuant to Section 10.
(z) “Performance Period” means the period established by the Committee with respect to any Performance Award during which the performance goals specified by the Committee with respect to such Award are to be measured.
(aa) “Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
(bb) “Prior Award” means an award granted prior to the Effective Date under either of the Prior Plans.
(cc) “Prior Plans” mean the MoneyLion Inc. 2014 Equity Incentive Plan and the MoneyLion Inc. Omnibus Incentive Plan.
(dd) “Restricted Stock” means any Share subject to certain restrictions and forfeiture conditions, granted pursuant to Section 8.
(ee) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
(ff) “RSU” means a contractual right granted pursuant to Section 9 that is denominated in Shares. Each RSU represents a right to receive the value of one Share (or a percentage of such value) in cash, Shares or a combination thereof. Awards of RSUs may include the right to receive dividend equivalents.
(gg) “SAR” means a right granted pursuant to Section 7 to receive upon exercise by the Participant or settlement, in cash, Shares or a combination thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise or settlement over (ii) the exercise or hurdle price of the right on the date of grant.
(hh) “Service Agreement” means any employment, severance, consulting or similar agreement between the Company or any of its Affiliates and a Participant.
(ii) “Share” means a share of the Company’s Class A common stock, $0.0001 par value.
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(jj) “Subsidiary” means an entity of which the Company directly or indirectly holds all or a majority of the value of the outstanding equity interests of such entity or a majority of the voting power with respect to the voting securities of such entity. Whether employment by or service with a Subsidiary is included within the scope of the Plan shall be determined by the Committee.
(kk) “Substitute Award” means an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company or other business acquired by the Company or with which the Company combines.
(ll) “Termination of Service” means, in the case of a Participant who is an Employee, cessation of the employment relationship such that the Participant is no longer an employee of the Company or any Subsidiary, or, in the case of a Participant who is a Consultant or Non-Employee Director, the date the performance of services for the Company or any Subsidiary has ended; provided, however, that in the case of a Participant who is an Employee, the transfer of employment from the Company to a Subsidiary, from a Subsidiary to the Company, from one Subsidiary to another Subsidiary or, unless the Committee determines otherwise, the cessation of employee status but the continuation of the performance of services for the Company or a Subsidiary as a Director or Consultant shall not be deemed a cessation of service that would constitute a Termination of Service; provided, further, that a Termination of Service shall be deemed to occur for a Participant employed by, or performing services for, a Subsidiary when such Subsidiary ceases to be a Subsidiary unless such Participant’s employment or service continues with the Company or another Subsidiary. Notwithstanding the foregoing, with respect to any Award subject to Section 409A of the Code (and not exempt therefrom), a Termination of Service occurs when a Participant experiences a “separation of service” (as such term is defined under Section 409A of the Code).
Section 3. Eligibility.
(a) Any Employee, Non-Employee Director or Consultant shall be eligible to be selected to receive an Award under the Plan, to the extent that an offer or receipt of an Award is permitted by applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations.
(b) Holders of equity compensation awards granted by a company that is acquired by the Company (or whose business is acquired by the Company) or with which the Company combines are eligible for grants of Substitute Awards under the Plan to the extent permitted under applicable regulations of any stock exchange on which the Company is listed.
Section 4. Administration.
(a) Administration of the Plan. The Plan shall be administered by the Committee. All decisions of the Committee shall be final, conclusive and binding upon all parties, including the Company, its shareholders, Participants and any Beneficiaries thereof. The Committee may issue rules and regulations for administration of the Plan.
(b) Delegation of Authority. To the extent permitted by applicable law, including under Section 157(c) of the Delaware General Corporation Law, the Committee may delegate to one or more officers of the Company some or all of its authority under the Plan, including the authority to grant Options and SARs or other Awards in the form of Share rights (except that such delegation shall not apply to any Award for a Person then covered by Section 16 of the Exchange Act), and the Committee may delegate to one or more committees of the Board (which may consist of solely one Director) some or all of its authority under the Plan, including the authority to grant all types of Awards, in accordance with applicable law.
(c) Authority of Committee. Subject to the terms of the Plan and applicable law, the Committee (or its delegate) shall have full discretion and authority to: (i) designate Participants; (ii) determine the type or types of Awards (including Substitute Awards) to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) Awards; (iv) determine the terms and conditions of any Award and prescribe the form of each Award Agreement, which need not be identical for each Participant; (v) determine whether, to what extent, under what circumstances and by which methods Awards may be settled or exercised in cash, Shares, other Awards, other property, net settlement (including broker-assisted cashless exercise), or any combination thereof, or canceled, forfeited or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) amend terms or conditions of any outstanding Awards; (viii) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award, in the manner and to the extent it shall deem desirable to carry the Plan into effect; (ix) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents, trustees, brokers, depositories and advisors and determine such terms of their engagement as it shall deem appropriate for the proper administration of the Plan and due compliance with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan and due compliance with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board shall have all of the authority and responsibility granted to the Committee herein.
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(d) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee (or a subcommittee thereof) that consists solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action establishing or modifying the terms of the Award will be approved by the Board or a Committee (or a subcommittee) meeting such requirements to the extent necessary for such exemption to remain available.
Section 5. Shares Available for Awards.
(a) Subject to adjustment as provided in Section 5(c) and except for Substitute Awards, the maximum number of Shares available for issuance under the Plan shall not exceed in the aggregate 14,061,702 Shares and up to 65,235,347 Shares subject to the outstanding Prior Awards as of the Effective Date. The total number of Shares available for issuance under the Plan shall be increased on January 1 of each fiscal year beginning on January 1, 2023 and ending on January 1, 2031 in an amount equal to the lesser of (i) 5% of the total number of shares of all classes of the Company’s voting stock outstanding on the last day of the immediately preceding fiscal year and (ii) such number of Shares as determined by the Committee in its discretion. Shares underlying Substitute Awards and Shares remaining available for grant under a plan of an acquired company or of a company with which the Company combines (whether by way of amalgamation, merger, sale and purchase of shares or other securities or otherwise), appropriately adjusted to reflect the acquisition or combination transaction, shall not reduce the number of Shares remaining available for grant hereunder.
(b) If any Award or Prior Award is forfeited, cancelled, expires, terminates or otherwise lapses or is settled in cash, in whole or in part, without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or lapsed Award or Prior Award shall again be available for grant under the Plan. The following shall become available for issuance under the Plan: (i) any Shares withheld in respect of taxes relating to any Award or Prior Award and (ii) any Shares tendered or withheld to pay the exercise price of Options or Prior Awards.
(c) In the event that the Committee determines that, as a result of any dividend or other distribution (other than an ordinary dividend or distribution), recapitalization, stock split, reverse stock split, reorganization, merger, amalgamation, consolidation, separation, rights offering, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to acquire Shares or other securities of the Company, issuance of Shares pursuant to the anti-dilution provisions of securities of the Company, or other similar corporate transaction or event affecting the Shares, or of changes in applicable laws, regulations or accounting principles, an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, subject to Section 19 and applicable law, adjust equitably so as to ensure no undue enrichment or harm (including by payment of cash), any or all of:
(i) the number and type of Shares (or other securities) which thereafter may be made the subject of Awards, including the aggregate limits specified in Section 5(a) and Section 5(f);
(ii) the number and type of Shares (or other securities) subject to outstanding Awards;
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(iii) the grant, acquisition, exercise or hurdle price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and
(iv) the terms and conditions of any outstanding Awards, including the performance criteria of any Performance Awards;
provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.
(d) Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares acquired by the Company.
(e) The aggregate value of all compensation granted or paid, as applicable, to any individual for service as a Non-Employee Director with respect to any calendar year, including Awards granted and cash fees paid by the Company to such Non-Employee Director, will not exceed (i) $750,000 in total value or (ii) in the event such Non-Employee Director is first appointed or elected to the Board, $1,000,000 in total value during the initial annual period, in each case calculating the value of any equity awards based on the grant date fair value of such equity awards for financial reporting purposes. The limitations in this Section 5(e) shall apply commencing with the first calendar year that begins following September 21, 2021.
(f) Subject to adjustment as provided in Section 5(c)(i), the maximum number of Shares available for issuance with respect to Incentive Stock Options shall be 70,510,395. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Shares with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonqualified Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
Section 6. Options. The Committee is authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) The exercise price per Share under an Option shall be determined by the Committee at the time of grant; provided, however, that, except in the case of Substitute Awards, such exercise price shall not be less than the Fair Market Value of a Share on the date of grant of such Option.
(b) The term of each Option shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such Option.
(c) The Committee shall determine the methods by which, and the forms in which payment of the exercise price with respect thereto may be made or deemed to have been made, including cash, Shares, other Awards, other property, net settlement (including broker-assisted cashless exercise) or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price.
(d) To the extent an Option is not previously exercised as to all of the Shares subject thereto, and, if the Fair Market Value of one Share is greater than the exercise price then in effect, then the Option shall be deemed automatically exercised immediately before its expiration.
(e) No grant of Options may be accompanied by a tandem award of dividend equivalents or provide for dividends, dividend equivalents or other distributions to be paid on such Options (except as provided under Section 5(c)).
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(f) The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. Incentive Stock Options may be granted only to employees of the Company or of a parent or subsidiary corporation (as defined in Section 424 of the Code).
Section 7. Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) SARs may be granted under the Plan to Participants either alone (“freestanding”) or in addition to other Awards granted under the Plan (“tandem”) and may, but need not, relate to a specific Option granted under Section 6.
(b) The exercise or hurdle price per Share under a SAR shall be determined by the Committee; provided, however, that, except in the case of Substitute Awards, such exercise or hurdle price shall not be less than the Fair Market Value of a Share on the date of grant of such SAR.
(c) The term of each SAR shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such SAR.
(d) Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Shares subject to the SAR multiplied by the excess, if any, of the Fair Market Value of one Share on the exercise date over the exercise or hurdle price of such SAR. The Company shall pay such excess in cash, in Shares valued at Fair Market Value, or any combination thereof, as determined by the Committee.
(e) To the extent a SAR is not previously exercised as to all of the Shares subject thereto, and, if the Fair Market Value of one Share is greater than the exercise price then in effect, then the SAR shall be deemed automatically exercised immediately before its expiration.
(f) No grant of SARs may be accompanied by a tandem award of dividend equivalents or provide for dividends, dividend equivalents or other distributions to be paid on such SARs (except as provided under Section 5(c)).
Section 8. Restricted Stock. The Committee is authorized to grant Awards of Restricted Stock to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) The Award Agreement shall specify the vesting schedule.
(b) Awards of Restricted Stock shall be subject to such restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.
(c) Subject to the restrictions set forth in the applicable Award Agreement, a Participant generally shall have the rights and privileges of a shareholder with respect to Awards of Restricted Stock, including the right to vote such Shares of Restricted Stock and the right to receive dividends.
(d) The Committee may, in its discretion, specify in the applicable Award Agreement that any or all dividends or other distributions paid on Awards of Restricted Stock prior to vesting be paid either in cash or in additional Shares and either on a current or deferred basis and that such dividends or other distributions may be reinvested in additional Shares, which may be subject to the same restrictions as the underlying Awards.
(e) Any Award of Restricted Stock may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration.
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(f) The Committee may provide in an Award Agreement that an Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to an Award of Restricted Stock, such Participant shall be required to file promptly a copy of such election with the Company and the applicable Internal Revenue Service office.
Section 9. RSUs. The Committee is authorized to grant Awards of RSUs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) The Award Agreement shall specify the vesting schedule and the delivery schedule (which may include deferred delivery later than the vesting date).
(b) Awards of RSUs shall be subject to such restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.
(c) An RSU shall not convey to a Participant the rights and privileges of a shareholder with respect to the Share subject to such RSU, such as the right to vote or the right to receive dividends, unless and until and to the extent a Share is issued to such Participant to settle such RSU.
(d) The Committee may, in its discretion, specify in the applicable Award Agreement that any or all dividend equivalents or other distributions paid on Awards of RSUs prior to vesting or settlement, as applicable, be paid either in cash or in additional Shares and either on a current or deferred basis and that such dividend equivalents or other distributions may be reinvested in additional Shares, which may be subject to the same restrictions as such Awards.
(e) Shares delivered upon the vesting and settlement of an RSU Award may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration.
(f) The Committee may determine the form or forms (including cash, Shares, other Awards, other property or any combination thereof) in which payment of the amount owing upon settlement of any RSU Award may be made.
Section 10. Performance Awards. The Committee is authorized to grant Performance Awards to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) Performance Awards may be denominated as a cash amount, number of Shares or units or a combination thereof and are Awards that may be earned upon achievement or satisfaction of performance conditions specified by the Committee. In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the grant to a Participant or the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. Subject to the terms of the Plan, the performance goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award granted and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Committee.
(b) Performance criteria may be measured on an absolute (e.g., plan or budget) or relative basis, and may be established on a corporate-wide basis, with respect to one or more business units, divisions, Subsidiaries or business segments, or on an individual basis. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or other events or circumstances render the performance objectives unsuitable, the Committee may modify the performance objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable such that it does not provide any undue enrichment or harm. Performance measures may vary from Performance Award to Performance Award and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative. The Committee shall have the power to impose such other restrictions on Awards subject to this Section 10(b) as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements of any applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations.
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(c) Settlement of Performance Awards shall be in cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined in the discretion of the Committee.
(d) A Performance Award shall not convey to a Participant the rights and privileges of a shareholder with respect to the Share subject to such Performance Award, such as the right to vote (except as relates to Restricted Stock) or the right to receive dividends, unless and until and to the extent a Share is issued to such Participant to settle such Performance Award. The Committee, in its sole discretion, may provide that a Performance Award shall convey the right to receive dividend equivalents on the Shares subject to such Performance Award with respect to any dividends declared during the period that such Performance Award is outstanding, in which case, such dividend equivalent rights shall accumulate and shall be paid in cash or Shares on the settlement date of the Performance Award, subject to the Participant’s earning of the Shares with respect to which such dividend equivalents are paid upon achievement or satisfaction of performance conditions specified by the Committee. Shares delivered upon the vesting and settlement of a Performance Award may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration. For the avoidance of doubt, unless otherwise determined by the Committee, no dividend equivalent rights shall be provided with respect to any Shares subject to Performance Awards that are not earned or otherwise do not vest or settle pursuant to their terms.
(e) The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with a Performance Award.
Section 11. Other Cash-Based Awards and Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant Other Cash-Based Awards (either independently or as an element of or supplement to any other Award under the Plan) and Other Stock-Based Awards. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, and paid for at such times, by such methods and in such forms, including cash, Shares, other Awards, other property, net settlement, broker-assisted cashless exercise or any combination thereof, as the Committee shall determine; provided that the purchase price therefor shall not be less than the Fair Market Value of such Shares on the date of grant of such right.
Section 12. Effect of Termination of Service or a Change in Control on Awards.
(a) The Committee may provide, by rule or regulation or in any applicable Award Agreement, or may determine in any individual case, the circumstances in which, and the extent to which, an Award may be exercised, settled, vested, paid or forfeited in the event of a Participant’s Termination of Service prior to the end of a Performance Period or vesting, exercise or settlement of such Award.
(b) Subject to the last sentence of Section 2(jj), the Committee may determine, in its discretion, whether, and the extent to which, (i) an Award will vest during a leave of absence, (ii) a reduction in service level (for example, from full-time to part-time employment) will cause a reduction, or other change, to an Award and (iii) a leave of absence or reduction in service will be deemed a Termination of Service.
(c) In the event of a Change in Control, the Committee may, in its sole discretion, and on such terms and conditions as it deems appropriate, take any one or more of the following actions with respect to any outstanding Award, which need not be uniform with respect to all Participants and/or Awards:
(i) continuation or assumption of such Award by the Company (if it is the surviving corporation) or by the successor or surviving entity or its parent;
(ii) substitution or replacement of such Award by the successor or surviving entity or its parent with cash, securities, rights or other property to be paid or issued, as the case may be, by the successor or surviving entity (or a parent or subsidiary thereof), with substantially the same terms and value as such Award (including any applicable performance targets or criteria with respect thereto);
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(iii) acceleration of the vesting of such Award and the lapse of any restrictions thereon and, in the case of an Option or SAR Award, acceleration of the right to exercise such Award during a specified period (and the termination of such Option or SAR Award without payment of any consideration therefor to the extent such Award is not timely exercised), in each case, either (A) immediately prior to or as of the date of the Change in Control, (B) upon a Participant’s involuntary Termination of Service (including upon a termination of the Participant’s employment by the Company (or a successor corporation or its parent) without Cause, by a Participant for “good reason” and/or due to a Participant’s death or “disability”, as such terms may be defined in the applicable Award Agreement and/or a Participant’s Service Agreement, as the case may be) on or within a specified period following the Change in Control or (C) upon the failure of the successor or surviving entity (or its parent) to continue or assume such Award;
(iv) in the case of a Performance Award, determination of the level of attainment of the applicable performance condition(s); and
(v) cancellation of such Award in consideration of a payment, with the form, amount and timing of such payment determined by the Committee in its sole discretion, subject to the following: (A) such payment shall be made in cash, securities, rights and/or other property; (B) the amount of such payment shall equal the value of such Award, as determined by the Committee in its sole discretion; provided that, in the case of an Option or SAR Award, if such value equals the Intrinsic Value of such Award, such value shall be deemed to be valid; provided further that, if the Intrinsic Value of an Option or SAR Award is equal to or less than zero, the Committee may, in its sole discretion, provide for the cancellation of such Award without payment of any consideration therefor (for the avoidance of doubt, in the event of a Change in Control, the Committee may, in its sole discretion, terminate any Option or SAR Awards for which the exercise or hurdle price is equal to or exceeds the per Share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor); and (C) such payment shall be made promptly following such Change in Control or on a specified date or dates following such Change in Control; provided that the timing of such payment shall comply with Section 409A of the Code.
Section 13. General Provisions Applicable to Awards.
(a) Awards shall be granted for such cash or other consideration, if any, as the Committee determines; provided that in no event shall Awards be issued for less than such minimal consideration as may be required by applicable law.
(b) Awards may, in the discretion of the Committee, be granted either alone or in addition to or in tandem with any other Award or any award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
(c) Subject to the terms of the Plan, payments or transfers to be made by the Company upon the grant, exercise or settlement of an Award may be made in the form of cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined by the Committee in its discretion at the time of grant, and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.
(d) Except as may be permitted by the Committee or as specifically provided in an Award Agreement, (i) no Award and no right under any Award shall be assignable, alienable, saleable or transferable by a Participant other than by will or pursuant to Section 13(e) and (ii) during a Participant’s lifetime, each Award, and each right under any Award, shall be exercisable only by such Participant or, if permissible under applicable law, by such Participant’s guardian or legal representative. The provisions of this Section 13(d) shall not apply to any Award that has been fully exercised or settled, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms thereof.
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(e) A Participant may designate a Beneficiary or change a previous Beneficiary designation only at such times as prescribed by the Committee, in its sole discretion, and only by using forms and following procedures approved or accepted by the Committee for that purpose.
(f) All certificates, if any, for Shares and/or other securities delivered under the Plan pursuant to any Award or the exercise or settlement thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock market or exchange upon which such Shares or other securities are then quoted, traded or listed, and any applicable securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(g) The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Committee’s satisfaction, (ii) as determined by the Committee, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws, stock market or exchange rules and regulations or accounting or tax rules and regulations and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Committee deems necessary or appropriate to satisfy any applicable laws. The Company’s inability to obtain authority from any regulatory body having jurisdiction, which the Committee determines is necessary to the lawful issuance and sale of any Shares, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
(h) The Committee may impose restrictions on any Award with respect to non-competition, non-solicitation, confidentiality and other restrictive covenants, or requirements to comply with minimum share ownership requirements, as it deems necessary or appropriate in its sole discretion, which such restrictions may be set forth in any applicable Award Agreement or otherwise.
Section 14. Amendments and Terminations.
(a) Amendment or Termination of the Plan. Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan, the Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) shareholder approval if such approval is required by applicable law or the rules of the stock market or exchange, if any, on which the Shares are principally quoted or traded or (ii) subject to Section 5(c) and Section 12, the consent of the affected Participant, if such action would materially adversely affect the rights of such Participant under any outstanding Award, except (x) to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the Plan to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations or (y) to impose any “clawback” or recoupment provisions on any Awards (including any amounts or benefits arising from such Awards) in accordance with Section 18. Notwithstanding anything to the contrary in the Plan, the Committee may amend the Plan, or create sub-plans, in such manner as may be necessary or desirable to enable the Plan to achieve its stated purposes in any jurisdiction in a tax-efficient manner and in compliance with local rules and regulations.
(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award shall terminate immediately prior to the consummation of such action, unless otherwise determined by the Committee.
(c) Terms of Awards. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate any Award theretofore granted (including by substituting another Award of the same or a different type), prospectively or retroactively, without the consent of any relevant Participant or holder or Beneficiary of an Award; provided, however, that, subject to Section 5(c) and Section 12, no such action shall materially adversely affect the rights of any affected Participant or holder or Beneficiary under any Award theretofore granted under the Plan, except (x) to the extent any such action is made to cause the Plan or Award to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations, or (y) to impose any “clawback” or recoupment provisions on any Awards (including any amounts or benefits arising from such Awards) in accordance with Section 18. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of events (including the events described in Section 5(c)) affecting the Company, or the financial statements of the Company, or of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
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(d) No Repricing. Except as provided in Section 5(c), the Committee may not, without shareholder approval, seek to effect any re-pricing of any previously granted “underwater” Option, SAR or similar Award by: (i) amending or modifying the terms of the Option, SAR or similar Award to lower the exercise price; (ii) cancelling the underwater Option, SAR or similar Award and granting either (A) replacement Options, SARs or similar Awards having a lower exercise price or (B) Restricted Shares, RSUs, Performance Awards or Other Share-Based Awards in exchange; or (iii) cancelling or repurchasing the underwater Options, SARs or similar Awards for cash or other securities. An Option, SAR or similar Award will be deemed to be “underwater” at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of the Award.
Section 15. Miscellaneous.
(a) No Employee, Consultant, Non-Employee Director, Participant, or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of employees, Participants or holders or Beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award that does not constitute a promise of future grants. The Company, in its sole discretion, maintains the right to make available future grants under the Plan.
(b) The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or to continue to provide services to, the Company or any Affiliate. Further, the Company or any applicable Affiliate may at any time dismiss a Participant, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement or in any other agreement binding on the parties. The receipt of any Award under the Plan is not intended to confer any rights on the receiving Participant except as set forth in the applicable Award Agreement.
(c) In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an employee of the Company and the Employee has a change in status from a full-time employee to a part-time employee (or serves as a Consultant or Director) or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by applicable law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
(d) As a condition to accepting an Award under the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable, as determined in the Committee’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements, in each case at the Committee’s request.
(e) No payment pursuant to the Plan shall be taken into account in determining any benefits under any severance, pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate, except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
(f) Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, including the grant of options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases.
(e) The Company shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other Awards, other property, net settlement, or any combination thereof) of applicable withholding taxes due in respect of an Award, its exercise or settlement or any payment or transfer under such Award or under the Plan and to take such other action (including providing for elective payment of such amounts in cash or Shares by such Participant) as may be necessary to satisfy all obligations for the payment of such taxes and, unless otherwise determined by the Committee in its discretion, to the extent such withholding would not result in liability classification of such Award (or any portion thereof) pursuant to FASB ASC Subtopic 718-10. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the proper amount.
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(g) If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award Agreement, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award Agreement shall remain in full force and effect.
(h) Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
(i) Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award, the Participant consents to receive documents by electronic delivery and to participate in the Plan through any on-line electronic system established and maintained by the Committee’s or another third party selected by the Committee. The form of delivery of any Shares (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
(j) No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
(k) Awards may be granted to Participants who are non-United States nationals or employed or providing services outside the United States, or both, on such terms and conditions different from those applicable to Awards to Participants who are employed or providing services in the United States as may, in the judgment of the Committee, be necessary or desirable to recognize differences in local law, tax policy or custom. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Participants on assignments outside their home country.
Section 16. Effective Date of the Plan. The Plan shall be effective as of the Effective Date.
Section 17. Term of the Plan. No Award shall be granted under the Plan after the earliest to occur of (i) the 10-year anniversary of September 21, 2021; (ii) the maximum number of Shares available for issuance under the Plan have been issued; or (iii) the Board terminates the Plan in accordance with Section 14(a). However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board to amend the Plan, shall extend beyond such date.
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Section 18. Cancellation or “Clawback” of Awards.
(a) The Committee may specify in an Award Agreement that a Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include a Termination of Service with or without Cause (and, in the case of any Cause that is resulting from an indictment or other non-final determination, the Committee may provide for such Award to be held in escrow or abeyance until a final resolution of the matters related to such event occurs, at which time the Award shall either be reduced, cancelled or forfeited (as provided in such Award Agreement) or remain in effect, depending on the outcome), violation of material policies, breach of non-competition, non-solicitation, confidentiality or other restrictive covenants, or requirements to comply with minimum share ownership requirements, that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.
(b) The Committee shall have full authority to implement any policies and procedures necessary to comply with Section 10D of the Exchange Act and any rules promulgated thereunder and any other regulatory regimes. Notwithstanding anything to the contrary contained herein, any Awards granted under the Plan (including any amounts or benefits arising from such Awards) shall be subject to any clawback or recoupment arrangements or policies the Company has in place from time to time and the Committee may, to the extent permitted by applicable law and stock exchange rules or by any applicable Company policy or arrangement, and shall, to the extent required, cancel or require reimbursement of any Awards granted to the Participant or any Shares issued or cash received upon vesting, exercise or settlement of any such Awards or sale of Shares underlying such Awards.
Section 19. Section 409A of the Code. With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code, and the provisions of the Plan and any Award Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything in the Plan to the contrary, if the Board considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and any amount hereunder is “deferred compensation” subject to Section 409A of the Code, any distribution of such amount that otherwise would be made to such Participant with respect to an Award as a result of such “separation from service” shall not be made until the date that is six months after such “separation from service,” except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If an Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), a Participant’s right to such series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment, and if an Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), a Participant’s right to such dividend equivalents shall be treated separately from the right to other amounts under the Award. Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan or any Award Agreement is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by a Participant on account of non-compliance with Section 409A of the Code.
Section 20. Successors and Assigns. The terms of the Plan shall be binding upon and inure to the benefit of the Company and any successor entity, including any successor entity contemplated by Section 12(c).
Section 21. Data Protection. In connection with the Plan, the Company may need to process personal data provided by the Participant to the Company or its Affiliates, third party service providers or others acting on the Company’s behalf. Examples of such personal data may include, without limitation, the Participant’s name, account information, social security number, tax number and contact information. The Company may process such personal data in its legitimate business interests for all purposes relating to the operation and performance of the Plan, including but not limited to:
(a) administering and maintaining Participant records;
(b) providing the services described in the Plan;
15
(c) providing information to future purchasers or merger partners of the Company or any Affiliate, or the business in which such Participant works; and
(d) responding to public authorities, court orders and legal investigations, as applicable.
The Company may share the Participant’s personal data with (i) Affiliates, (ii) trustees of any employee benefit trust, (iii) registrars, (iv) brokers, (v) third party administrators of the Plan, (vi) third party service providers acting on the Company’s behalf to provide the services described above or (vii) regulators and others, as required by law.
If necessary, the Company may transfer the Participant’s personal data to any of the parties mentioned above in a country or territory that may not provide the same protection for the information as the Participant’s home country. Any transfer of the Participant’s personal data to recipients in a third country will be made subject to appropriate safeguards or applicable derogations provided for under applicable law. Further information on those safeguards or derogations can be obtained through the contact set forth in the Employee Privacy Notice (the “Employee Privacy Notice”) that previously has been provided by the Company or its applicable Affiliate to the Participant. The terms set forth in this Section 21 are supplementary to the terms set forth in the Employee Privacy Notice (which, among other things, further describes the rights of the Participant with respect to the Participant’s personal data); provided that, in the event of any conflict between the terms of this Section 21 and the terms of the Employee Privacy Notice, the terms of this Section 21 shall govern and control in relation to the Plan and any personal data of the Participant to the extent collected in connection therewith.
The Company will keep personal data collected in connection with the Plan for as long as necessary to operate the Plan or as necessary to comply with any legal or regulatory requirements.
A Participant has a right to (i) request access to and rectification or erasure of the personal data provided, (ii) request the restriction of the processing of his or her personal data, (iii) object to the processing of his or her personal data, (iv) receive the personal data provided to the Company and transmit such data to another party, and (v) to lodge a complaint with a supervisory authority.
Section 22. Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.
16
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Post-Effective Amendment No. 2 to the Registration Statement (No. 333-260254) on Form S-1 of MoneyLion Inc. of our report dated March 17, 2022, relating to the consolidated financial statements of MoneyLion Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading “Experts” in such Prospectus.
/s/ RSM US LLP
Austin, Texas
July 1, 2022
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement (No. 333-260254) on Form S-1 of our report dated June 1, 2021 (April 6, 2022, as to Footnote 13 and the subsequent events described in Footnote 17), relating to the financial statements of EVEN Financial, Inc., appearing in the Current Report on Form 8-K/A of MoneyLion Inc. filed on May 5, 2022.
We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ Deloitte & Touche LLP
New York, NY
July 1, 2022
Exhibit 23.4
Consent of Independent Auditor
We consent to the incorporation by reference in Post-Effective Amendment No. 2 to the Registration Statement (No. 333-260254) on Form S-1 of MoneyLion Inc. of our report dated April 6, 2022, relating to the consolidated financial statements of EVEN Financial, Inc., appearing in the Current Report on Form 8-K/A dated May 5, 2022.
We also consent to the reference of our firm under the heading “Experts” in such Registration Statement.
/s/ RSM US LLP
Denver, CO
July 1, 2022
Document And Entity Information |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Document Information Line Items | |
| Entity Registrant Name | MONEYLION INC. |
| Document Type | POS AM |
| Amendment Flag | true |
| Amendment Description | This Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-260254) (as amended, the “Registration Statement”) of MoneyLion Inc. (the “Registrant”), as originally declared effective by the Securities and Exchange Commission (the “SEC”) on October 22, 2021, is being filed pursuant to the undertakings in Item 17 of the Registration Statement to update the information in the Registration Statement to reflect, among other things, the Registrant’s audited results for the year ended December 31, 2021 and its unaudited results for the quarter ended March 31, 2022. The information included in this Post-Effective Amendment No. 2 amends the Registration Statement and the prospectus contained therein. No additional securities are being registered under this Post-Effective Amendment No. 2. All applicable registration fees were paid at the time of the original filing of the Registration Statement. |
| Entity Central Index Key | 0001807846 |
| Entity Filer Category | Non-accelerated Filer |
| Entity Small Business | true |
| Entity Emerging Growth Company | true |
| Entity Ex Transition Period | false |
| Entity Incorporation, State or Country Code | DE |
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Variable interest (in Dollars) | $ 390 | ||
| Restricted cash, including amounts held by VIEs (in Dollars) | $ 61,888 | $ 39,396 | 0 |
| Receivables, net, including amounts held by VIEs (in Dollars) | 128,895 | 92,796 | 52,264 |
| Other debt, including amounts held by VIEs (in Dollars) | $ 152,625 | $ 143,000 | $ 0 |
| Redeemable convertible preferred stock, par value (in Dollars per share) | $ 0.0001 | ||
| Redeemable convertible preferred stock, shares authorized | 7,471,198 | ||
| Redeemable convertible preferred stock, shares issued | 7,085,923 | ||
| Redeemable convertible preferred stock, outstanding | 7,085,923 | ||
| Aggregate liquidation preference (in Dollars) | $ 288,183 | ||
| Treasury stock, shares | 970,000 | 970,000 | 44,924 |
| As Previously Reported | |||
| Variable interest (in Dollars) | $ 0 | ||
| Restricted cash, including amounts held by VIEs (in Dollars) | 39,396 | ||
| Receivables, net, including amounts held by VIEs (in Dollars) | 92,796 | ||
| Other debt, including amounts held by VIEs (in Dollars) | $ 143,000 | ||
| Redeemable convertible preferred stock, par value (in Dollars per share) | $ 0.0001 | ||
| Redeemable convertible preferred stock, shares authorized | 0 | ||
| Redeemable convertible preferred stock, shares issued | 0 | ||
| Redeemable convertible preferred stock, outstanding | 0 | ||
| Aggregate liquidation preference (in Dollars) | $ 0 | ||
| Treasury stock, shares | 970,000 | ||
| Class A Common Stock | |||
| Common Stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 | 0 |
| Common stock, shares issued | 236,520,057 | 231,452,448 | 0 |
| Common stock, shares outstanding | 235,550,057 | 230,482,448 | 0 |
| Class A Common Stock | As Previously Reported | |||
| Common Stock, par value (in Dollars per share) | $ 0.0001 | ||
| Common stock, shares authorized | 2,000,000,000 | ||
| Common stock, shares issued | 231,452,448 | ||
| Common stock, shares outstanding | 230,482,448 | ||
| Series A Preferred Stock | |||
| Redeemable convertible preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |
| Redeemable convertible preferred stock, shares authorized | 45,000,000 | 0 | |
| Redeemable convertible preferred stock, shares issued | 28,693,931 | 0 | |
| Redeemable convertible preferred stock, outstanding | 28,693,931 | 0 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||||||||
| Revenue | ||||||||||||
| Net interest income on loan receivables | $ 2,568 | $ 1,662 | $ 7,002 | $ 4,347 | ||||||||
| Service and subscription revenue | 67,146 | 31,468 | 32,357 | 25,994 | ||||||||
| Affiliates income | 10,900 | 2,234 | ||||||||||
| Fee income | 116,131 | 46,639 | ||||||||||
| Other income | 4,721 | 197 | ||||||||||
| Total revenue, net | 69,714 | 33,130 | 171,111 | 79,411 | ||||||||
| Operating expenses | ||||||||||||
| Provision for credit losses on consumer receivables | 23,044 | 5,708 | ||||||||||
| Compensation and benefits | 22,043 | 7,057 | ||||||||||
| Marketing | 11,416 | 4,363 | 43,170 | 11,060 | ||||||||
| Provision for loss on receivables | 60,749 | 21,294 | ||||||||||
| Direct costs | 21,204 | 9,903 | 8,864 | 4,336 | ||||||||
| Interest expense | (6,174) | (1,471) | 7,251 | 2,950 | ||||||||
| Personnel expenses | 45,878 | 24,200 | ||||||||||
| Underwriting expenses | 8,253 | 6,242 | ||||||||||
| Technology-related costs | 4,505 | 2,199 | 7,488 | 7,041 | ||||||||
| Bank and payment processor fees | 24,565 | 13,737 | ||||||||||
| Change in fair value of warrant liability | 3,910 | (31,230) | 39,629 | 14,419 | ||||||||
| Change in fair value of subordinated convertible notes | (39,939) | 41,877 | 4,000 | |||||||||
| Change in fair value of contingent consideration from mergers and acquisitions | (682) | 6,229 | ||||||||||
| Professional services | 7,288 | 3,586 | 19,847 | 8,396 | ||||||||
| Depreciation and amortization expense | 2,392 | 1,108 | ||||||||||
| Occupancy expense | 997 | 1,233 | ||||||||||
| Gain on foreign currency translation | (431) | (179) | ||||||||||
| Other operating expenses | 10,769 | 1,082 | 19,172 | 1,155 | ||||||||
| Total operating expenses | 100,269 | 33,898 | 335,930 | 120,992 | ||||||||
| Net loss before other (expense) income and income taxes | (30,555) | (768) | ||||||||||
| Other (expense) income | (916) | 27 | ||||||||||
| Net loss before income taxes | (34,417) | (73,381) | (164,819) | (41,581) | ||||||||
| Income tax (benefit) expense | (28,417) | 25 | 56 | 6 | ||||||||
| Net loss | (6,000) | (73,406) | (164,875) | (41,587) | ||||||||
| Net income attributable to redeemable noncontrolling interests | (2,767) | (12,776) | (8,409) | |||||||||
| Accrual of dividends on preferred stock | (1,028) | (4,842) | ||||||||||
| Reversal of previously accrued (accrual of) dividends on redeemable convertible preferred stock | 42,728 | (17,209) | ||||||||||
| Net loss attributable to common shareholders | $ (7,028) | $ (81,015) | $ (134,923) | $ (67,205) | ||||||||
| Net loss per share, basic and diluted (in Dollars per share) | $ (0.03) | [1] | $ (1.68) | [1] | $ (1.39) | [2] | $ (1.49) | [2] | ||||
| Weighted average shares used in computing net loss per share, basic and diluted(1) (in Shares) | 230,737,284 | [1] | 48,348,187 | [1] | 97,158,738 | [2] | 45,177,217 | [2] | ||||
| ||||||||||||
Consolidated Statements of Redeemable Convertible Preferred Stock, Redeemable Noncontrolling Interests and Stockholders’ Equity (Deficit) (Unaudited) - USD ($) $ in Thousands |
Class A
Common Stock
|
Redeemable Convertible Preferred Stock (All Series) |
Redeemable Noncontrolling Interests |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Treasury Stock |
Redeemable Convertible Preferred Stock (Series A) |
Total |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2019 | $ 231,020 | $ 73,977 | $ (262,208) | $ (1,000) | $ (263,208) | |||||||||||
| Balance (in Shares) at Dec. 31, 2019 | [1] | 44,198,935 | 103,598,936 | |||||||||||||
| Stock-based compensation | 1,650 | 1,650 | ||||||||||||||
| Exercise of stock options and warrants | 134 | 134 | ||||||||||||||
| Exercise of stock options and warrants (in Shares) | [1] | 3,671,785 | ||||||||||||||
| Issuance of Series C-1 in connection with the acquisition of WTI | $ 27,929 | |||||||||||||||
| Issuance of Series C-1 in connection with the acquisition of WTI (in Shares) | [1] | 8,853,530 | ||||||||||||||
| Issuance of Series C-1 redeemable convertible preferred stock | $ 12,025 | |||||||||||||||
| Issuance of Series C-1 redeemable convertible preferred stock (in Shares) | [1] | 3,811,908 | ||||||||||||||
| Accrued dividends on redeemable convertible preferred stock | $ 17,209 | (1,784) | (15,425) | (17,209) | ||||||||||||
| Redemption of common stock | ||||||||||||||||
| Redemption of stock options | ||||||||||||||||
| Contributions from redeemable noncontrolling interests | 10,750 | |||||||||||||||
| Redemptions by redeemable noncontrolling interests | (17,489) | |||||||||||||||
| Distributions to redeemable noncontrolling interests | (3,795) | |||||||||||||||
| Net income (loss) | 8,409 | (49,996) | (49,996) | |||||||||||||
| Balances at Dec. 31, 2020 | $ 288,183 | 71,852 | (327,629) | (1,000) | (328,629) | |||||||||||
| Balances (in Shares) at Dec. 31, 2020 | [1] | 47,870,720 | [2] | 116,264,374 | [2] | 47,870,720 | ||||||||||
| Stock-based compensation | 518 | 518 | ||||||||||||||
| Exercise of stock options and warrants | 245 | 245 | ||||||||||||||
| Exercise of stock options and warrants (in Shares) | [2] | 732,444 | ||||||||||||||
| Accrued dividends on redeemable convertible preferred stock | 4,842 | (763) | (4,079) | (4,842) | ||||||||||||
| Contributions from redeemable noncontrolling interests | 21,000 | |||||||||||||||
| Redemptions by redeemable noncontrolling interests | (2,656) | |||||||||||||||
| Distributions to redeemable noncontrolling interests | (1,969) | |||||||||||||||
| Net income (loss) | 2,767 | (76,173) | (76,173) | |||||||||||||
| Balances at Mar. 31, 2021 | $ 293,025 | 90,994 | (407,881) | (1,000) | (408,881) | |||||||||||
| Balances (in Shares) at Mar. 31, 2021 | [2] | 48,603,164 | 116,264,374 | |||||||||||||
| Balance at Dec. 31, 2020 | $ 288,183 | 71,852 | (327,629) | (1,000) | (328,629) | |||||||||||
| Balance (in Shares) at Dec. 31, 2020 | [1] | 47,870,720 | [2] | 116,264,374 | [2] | 47,870,720 | ||||||||||
| Stock-based compensation | 5,039 | 5,039 | ||||||||||||||
| Exercise of stock options and warrants | 252 | 252 | ||||||||||||||
| Exercise of stock options and warrants (in Shares) | [1] | 788,774 | ||||||||||||||
| Accrued dividends on redeemable convertible preferred stock | 14,292 | (2,606) | (11,686) | (14,292) | ||||||||||||
| Preferred stock conversion | $ (302,475) | $ 12 | 250,761 | 51,702 | 302,475 | |||||||||||
| Preferred stock conversion (in Shares) | [1] | (116,264,374) | 116,264,374 | |||||||||||||
| Reverse capitalization on September 22, 2021 | $ 11 | 437,948 | 1,000 | 438,959 | ||||||||||||
| Reverse capitalization on September 22, 2021 (in Shares) | [1] | 62,223,940 | ||||||||||||||
| Redemption of common stock | (9,700) | (9,700) | ||||||||||||||
| Redemption of common stock (in Shares) | [1] | (970,000) | ||||||||||||||
| Redemption of stock options | (12,741) | (12,741) | ||||||||||||||
| Issuance of common stock in connection with the acquisition of Malka Media Group LLC | 28,707 | 28,707 | ||||||||||||||
| Issuance of common stock in connection with the acquisition of Malka Media Group LLC (in Shares) | [1] | 4,181,441 | ||||||||||||||
| Issuance of common stock in connection with business contracts | 815 | 815 | ||||||||||||||
| Issuance of common stock in connection with business contracts (in Shares) | [1] | 123,199 | ||||||||||||||
| Contributions from redeemable noncontrolling interests | 53,000 | |||||||||||||||
| Redemptions by redeemable noncontrolling interests | (127,391) | |||||||||||||||
| Distributions to redeemable noncontrolling interests | (10,237) | |||||||||||||||
| Net income (loss) | 12,776 | (177,651) | (177,651) | |||||||||||||
| Balances at Dec. 31, 2021 | $ 23 | $ 23 | 708,175 | (465,264) | (9,700) | 233,234 | ||||||||||
| Balances (in Shares) at Dec. 31, 2021 | 230,482,448 | 230,482,448 | [1] | |||||||||||||
| Stock-based compensation | 3,268 | 3,268 | ||||||||||||||
| Exercise of stock options and warrants and vesting of RSUs | 421 | 421 | ||||||||||||||
| Exercise of stock options and warrants and vesting of RSUs (in Shares) | 899,901 | |||||||||||||||
| Issuance of common stock in connection with earnout and make-whole provisions related to the acquisition of Malka Media Group LLC | $ 1 | 4,682 | 4,683 | |||||||||||||
| Issuance of common stock in connection with earnout and make-whole provisions related to the acquisition of Malka Media Group LLC (in Shares) | 4,167,708 | |||||||||||||||
| Issuance of options and preferred stock in connection with Even Acquisition | 8,963 | $ 193,647 | 8,963 | |||||||||||||
| Issuance of options and preferred stock in connection with Even Acquisition (in Shares) | 28,693,931 | |||||||||||||||
| Accrued dividends on preferred stock | (1,028) | $ 1,028 | (1,028) | |||||||||||||
| Other | (1,087) | 960 | (127) | |||||||||||||
| Net income (loss) | (6,000) | (6,000) | ||||||||||||||
| Balances at Mar. 31, 2022 | $ 24 | $ 723,394 | $ (470,304) | $ (9,700) | $ 194,675 | $ 243,414 | ||||||||||
| Balances (in Shares) at Mar. 31, 2022 | 235,550,057 | 28,693,931 | ||||||||||||||
| ||||||||||||||||
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Cash flows from operating activities: | ||||
| Net loss | $ (6,000) | $ (73,406) | $ (164,875) | $ (41,587) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Provision for credit losses on consumer receivables | 23,044 | 5,708 | 60,749 | 21,294 |
| Depreciation and amortization expense | 3,421 | 514 | 2,392 | 1,108 |
| Change in deferred fees and costs, net | 259 | 1,694 | 1,827 | 1,103 |
| Change in fair value of warrants | (3,910) | 31,230 | 39,629 | 14,419 |
| Change in fair value of subordinated convertible notes | 39,939 | 41,877 | 4,000 | |
| Change in fair value of contingent consideration from mergers and acquisitions | 682 | 6,229 | ||
| Gain on PPP Loan forgiveness | (3,207) | |||
| Losses (gains) on foreign currency translation | 29 | (4) | (431) | (179) |
| Expenses related to debt modification and prepayments | 730 | |||
| Stock compensation expense | 3,268 | 518 | 5,039 | 1,650 |
| Deferred income taxes | (28,442) | |||
| Changes in assets and liabilities, net of effects of business combination: | ||||
| Accrued interest receivable | (34) | (83) | (449) | 231 |
| Enterprise receivables | 1,658 | 71 | ||
| Other assets | 666 | 11 | (17,050) | (4,199) |
| Accounts payable and accrued liabilities | (2,350) | (2,901) | 19,701 | 5,188 |
| Net cash (used in) provided by operating activities | (8,651) | 3,291 | (8,569) | 3,028 |
| Other liabilities | (1,672) | |||
| Cash flows from investing activities: | ||||
| Net originations and collections of finance receivables | (22,872) | (15,110) | (131,737) | (41,562) |
| Purchase of property, equipment and software | (823) | (35) | (479) | (1,185) |
| Acquisition of Even Financial, net of cash acquired | (18,584) | (12,145) | ||
| Net cash used in investing activities | (42,279) | (15,145) | (144,361) | (42,747) |
| Cash flows from financing activities: | ||||
| Fees related to debt prepayment | (375) | |||
| Repayments to secured/senior lenders | (24,028) | (1,127) | (798) | (18,333) |
| Repayment of related party loan | (5,000) | |||
| Proceeds from issuance of related party loan | 5,000 | |||
| Proceeds from special purpose vehicle credit facilities | 10,000 | 146,000 | ||
| Proceeds from issuance of subordinated convertible notes | 36,750 | 36,750 | 10,000 | |
| Borrowings from secured lenders | 69,300 | 20,000 | 16,697 | |
| Payment of deferred financing costs | (1,625) | (5,147) | ||
| Redemption of founders common stock | (9,700) | |||
| Payment of redeemed stock options | (12,741) | |||
| Proceeds from issuance of common stock related to exercise of stock options and warrants | 421 | 245 | 252 | 134 |
| Proceeds from reverse capitalization, net of transaction costs | 293,239 | |||
| Issuance of Series C-1 preferred stock | 12,025 | |||
| Contributions from redeemable noncontrolling interests | 16,844 | 53,000 | 10,750 | |
| Redemptions by redeemable noncontrolling interests | (127,391) | (17,645) | ||
| Distributions to noncontrolling interests | (1,969) | (10,237) | (3,795) | |
| Net cash provided by financing activities | 53,693 | 50,743 | 378,227 | 14,833 |
| Net change in cash and restricted cash | 2,763 | 38,889 | 225,297 | (24,886) |
| Cash and restricted cash, beginning of year | 246,224 | 20,927 | 20,927 | 45,813 |
| Cash and restricted cash, end of year | 248,987 | 59,816 | 246,224 | 20,927 |
| Supplemental disclosure of cash flow information: | ||||
| Cash paid for interest | 4,990 | 569 | 4,378 | 3,090 |
| Supplemental disclosure of non-cash investing and financing activities: | ||||
| Accrued dividends on preferred stock | 1,028 | 4,842 | ||
| Lease liabilities incurred in exchange for operating right-of-use assets | $ 6,578 | |||
| Accrued dividends on redeemable convertible preferred stock | $ (4,842) | (14,292) | (17,209) | |
| Series C-1 redeemable convertible preferred stock issued to acquire WTI | 27,929 | |||
| Conversion of preferred stock to common stock | 302,475 | |||
| Issuance of common stock related to convertible debt | 92,627 | |||
| Issuance of common stock related to warrants exercised | 85,502 | |||
| Acquisition of private warrants | $ 29,466 | |||
Description of Business and Basis of Presentation |
3 Months Ended | 12 Months Ended |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Description of Business and Basis of Presentation [Abstract] | ||
| DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION On September 22, 2021 (the “Business Combination Closing Date”), MoneyLion Inc., formerly known as Fusion Acquisition Corp. (prior to the Business Combination Closing Date, “Fusion” and after the Business Combination Closing Date, “MoneyLion” or the “Company”), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of February 11, 2021 and amended on June 28, 2021 and September 4, 2021 (the “Merger Agreement”), by and among Fusion, ML Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Fusion (“Merger Sub”), and MoneyLion Technologies Inc., formerly known as MoneyLion Inc. (prior to the Business Combination Closing Date, “MoneyLion” or the “Company”, and after the Business Combination Closing Date, “Legacy MoneyLion”), a Delaware corporation. Pursuant to the terms of the Merger Agreement, immediately upon the completion of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Business Combination Closing”), each of the following transactions occurred in the following order: (i) Merger Sub merged with and into Legacy MoneyLion, with Legacy MoneyLion surviving the merger as a wholly owned subsidiary of Fusion (the “Merger”); (ii) Legacy MoneyLion changed its name to “MoneyLion Technologies Inc.”; and (iii) Fusion changed its name to “MoneyLion Inc.” Following the Business Combination, MoneyLion Inc. became a publicly traded company, with Legacy MoneyLion, a subsidiary of MoneyLion, continuing the existing business operations. MoneyLion’s Class A common stock, par value $0.0001 per share (the “MoneyLion Class A Common Stock”), is listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “ML.” As previously announced, on February 11, 2021, concurrently with the execution of the Merger Agreement, Fusion entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, Fusion agreed to issue and sell in private placements an aggregate of 25,000,000 shares (“PIPE Shares”) of MoneyLion Class A Common Stock to the PIPE Investors for $10.00 per share, for an aggregate commitment amount of $250,000 (the “PIPE Financing”). Pursuant to the Subscription Agreements, Fusion gave certain re-sale registration rights to the PIPE Investors with respect to the PIPE Shares. The PIPE Financing was consummated substantially concurrently with the Business Combination Closing. MoneyLion was founded in 2013, and the Company’s headquarters is located in New York, New York. The Company operates a personal finance platform (the “Platform”) that provides a mobile app that is designed to help users simplify their personal financial management and improve their financial health, giving users access to credit, investment, banking and other financial services and provide them with a single place to track spending, savings and credit. The Platform is based upon analytical models that power recommendations which are designed to help users achieve their financial goals ranging from building savings, improving credit health and managing unexpected expenses. Investment management services are provided by ML Wealth LLC, a wholly owned subsidiary of the Company, which is a Securities and Exchange Commission (“SEC”) registered investment advisor. On November 15, 2021, MoneyLion acquired MALKA Media Group LLC (“MALKA”). MALKA is a creator network and content platform that produces digital media and content across entertainment, sports, games, live streaming and other sectors. MALKA’s content capabilities can drive industry-leading customer acquisition and retention at scale to help accelerate MoneyLion’s customer growth. By combining MALKA’s capabilities with MoneyLion’s financial products and extensive first-party data, MoneyLion hopes to turn the MoneyLion mobile application into a daily destination for its customers with personalized content that educates, informs and supports customers’ financial decisions. On February 17, 2022, MoneyLion acquired Even Financial Inc. (“Even Financial”). Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, bridging Product Partners and Channel Partners (as defined herein) via its application programming interface (“API”) and embedded finance marketplaces. The acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. The acquisition also expands MoneyLion’s addressable market, extends the reach of its own products and diversifies its revenue mix. Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The consolidated financial statements include the accounts of MoneyLion Inc. and its wholly owned subsidiaries and consolidated variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The Company does not have any items of other comprehensive loss; therefore, there is no difference between net loss and comprehensive loss for the three months ended March 31, 2022 and 2021. Reclassification — The acquisitions of MALKA and Even Financial and related ongoing integration activities have caused significant changes to the revenue and cost structure of the Company such that the organization of financial statement line items in both the consolidated balance sheets and the consolidated statements of operations used in prior reporting periods are no longer sufficient to properly present the Company’s financial condition and results of operations as of March 31, 2022. Reclassifications have been performed relative to the previous presentation of the consolidated balance sheet as of December 31, 2021 and the consolidated statement of operations for the quarter ended March 31, 2021 to present in a new format that better represents the new revenue and cost structure of the Company. The reclassifications had no impact on previously reported total assets, total liabilities or net income (loss) and an immaterial impact on total revenue, net. There was no impact on the consolidated statements of cash flows or consolidated statements of redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit). There are also related reclassifications and expanded disclosure, where necessary, contained within the notes to the consolidated financial statements. Receivable funding — Receivables originated on the Company’s platform, including Credit Builder Plus loans and Instacash advances, were primarily funded through Invest in America Credit Fund 1 LLC (“IIA”) until the end of the fourth quarter of 2021. IIA and related special purpose vehicles (“SPVs”) were classified as variable interest entities (“VIEs”) of which the Company had identified itself as the primary beneficiary because it directed the activities of the IIA and the related SPVs that most significantly impacted their economic performance. As the primary beneficiary of the VIEs, the Company consolidated the balances of the VIEs into the financial statements. See Part II, Item 8 “Description of Business and Basis of Presentation” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further discussion of these matters. Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. For more information on the alternative financing sources, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility and Note 8. “Variable Interest Entities” regarding VIE considerations related to the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility. |
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION On September 22, 2021 (the “Business Combination Closing Date”), MoneyLion Inc., formerly known as Fusion Acquisition Corp. (prior to the Business Combination Closing Date, “Fusion” and after the Business Combination Closing Date, “MoneyLion” or the “Company”), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of February 11, 2021 and amended on June 28, 2021 and September 4, 2021 (the “Merger Agreement”), by and among Fusion, ML Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Fusion (“Merger Sub”), and MoneyLion Technologies Inc., formerly known as MoneyLion Inc. (prior to the Business Combination Closing Date, “MoneyLion” or the “Company”, and after the Business Combination Closing Date, “Legacy MoneyLion”), a Delaware corporation. Pursuant to the terms of the Merger Agreement, immediately upon the completion of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Business Combination Closing”), each of the following transactions occurred in the following order: (i) Merger Sub merged with and into Legacy MoneyLion, with Legacy MoneyLion surviving the merger as a wholly owned subsidiary of Fusion (the “Merger”); (ii) Legacy MoneyLion changed its name to “MoneyLion Technologies Inc.”; and (iii) Fusion changed its name to “MoneyLion Inc.” Following the Business Combination, MoneyLion Inc. became a publicly traded company, with Legacy MoneyLion, a subsidiary of MoneyLion, continuing the existing business operations. MoneyLion’s Class A common stock, par value $0.0001 per share (the “MoneyLion Class A Common Stock”), is listed on the New York Stock Exchange under the ticker symbol “ML.” As previously announced, on February 11, 2021, concurrently with the execution of the Merger Agreement, Fusion entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, Fusion agreed to issue and sell in private placements an aggregate of 25,000,000 shares (“PIPE Shares”) of MoneyLion Class A Common Stock to the PIPE Investors for $10.00 per share, for an aggregate commitment amount of $250,000 (the “PIPE Financing”). Pursuant to the Subscription Agreements, Fusion gave certain re-sale registration rights to the PIPE Investors with respect to the PIPE Shares. The PIPE Financing was consummated substantially concurrently with the Business Combination Closing. MoneyLion was founded in 2013, and the Company’s headquarters is located in New York, New York. The Company operates a personal finance platform (the “Platform”) that provides a mobile app that is designed to help users simplify their personal financial management and improve their financial health, giving users access to credit, investment, banking and other financial services and provide them with a single place to track spending, savings and credit. The Platform is based upon analytical models that power recommendations which are designed to help users achieve their financial goals ranging from building savings, improving credit health and managing unexpected expenses. Investment management services are provided by ML Wealth LLC, a wholly owned subsidiary of the Company, which is a Securities and Exchange Commission (“SEC”) registered investment advisor. On November 15, 2021, MoneyLion acquired MALKA Media Group LLC (“MALKA”). MALKA is a creator network and content platform that produces digital media and content across entertainment, sports, games, live streaming and other sectors. MALKA’s content capabilities can drive industry-leading customer acquisition and retention at scale to help accelerate MoneyLion’s customer growth. By combining MALKA’s capabilities with MoneyLion’s financial products and extensive first-party data, MoneyLion hopes to turn the MoneyLion mobile application into a daily destination for its customers with personalized content that educates, informs and supports customers’ financial decisions. Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The consolidated financial statements include the accounts of MoneyLion Inc. and its wholly owned subsidiaries and consolidated variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The Company does not have any items of other comprehensive income (loss); therefore, there is no difference between net loss and comprehensive loss for the twelve months ended December 31, 2021 and 2020. Certain reclassifications have been made to the prior period financial statements to conform to the classification adopted in the current period. Receivables originated on the Company’s platform, including Credit Builder Plus loans and Instacash advances, were primarily financed through Invest in America Credit Fund 1 LLC (“IIA”) until the end of the fourth quarter of 2021. IIA is organized as a Delaware limited liability company and is treated as a partnership for United States income tax purposes. IIA’s membership interests were issued in separately designated series, with each series consisting of Class A Units and Class B Units. IIA investors owned all non-voting Class B Units of the applicable series they invested in, which entitled them to a targeted, non-guaranteed, preferred return of typically 12% per year. ML Capital III LLC (“ML Capital III”), an indirect wholly owned MoneyLion subsidiary, is the managing member of IIA and owned the Class A Units of each series, which entitled ML Capital III to returns that exceeded the targeted preferred return on the Class B Units (if any). IIA used proceeds from the sale of Class B Units to investors to purchase borrower payment dependent promissory notes from Invest in America Notes I SPV LLC (“IIA Notes SPV I”) and Invest in America Notes SPV IV LLC (“IIA Notes SPV IV”) (collectively “IIA Notes SPVs”). The collateral consisted of a portfolio of underlying MoneyLion loans and advance receivables. Investors in Class B Units funded their investment into IIA at the time of subscription, which proceeds were used to finance receivables originated on MoneyLion’s platform. Generally, an IIA investor was able to request redemption of all or a portion of their capital account, after a 120-day notice period, and in increments of $100,000, five days after the expiration of the applicable lock-up period, unless otherwise agreed between investors in a particular series and the Company. Unless a redemption request was made, both the IIA investor’s capital contribution and their related Class B returns were automatically reinvested in new notes. ML Capital III, as the managing member of IIA, had the contractual right to suspend redemptions in certain circumstances and without prior notice to the IIA investors. However, the IIA investors’ right to redemption may not have been entirely within the control of the Company and therefore the IIA investors’ share of the IIA is presented on the Company’s consolidated balance sheet as temporary equity at the redemption value. Redemptions were $127,391 and $17,489 for the twelve months ended December 31, 2021 and 2020, respectively, of which $1,500 was unpaid as of December 31, 2020. Distributions, if any, to IIA investors were made at the discretion of the Company or, if agreed between the Company and a particular IIA investor or series, in accordance with the applicable subscription agreements. The Company had identified IIA, IIA Notes SPV I and IIA Notes SPV IV as variable interest entities (“VIEs”) due to the fact that the Class A Units are entitled to residual income/loss in IIA. The Company had identified itself as the primary beneficiary of these VIEs because it directed the activities of the VIEs that most significantly impacted the VIEs’ economic performance. As the primary beneficiary of the VIEs, the Company had consolidated the balances of the VIEs into the financial statements. The IIA Class B Units are reflected in the Company’s consolidated financial statements as redeemable noncontrolling interests totaling $71,852 as of December 31, 2020. Net income in consolidated VIEs were attributed to redeemable noncontrolling interests based on the investors’ respective interests in the net assets of the consolidated VIE. Net income attributable to the noncontrolling interests in IIA, IIA Notes SPV I and IIA Notes SPV IV represented interest income. Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party institutional lenders. By December 2021, investor balances were returned to all IIA Class B Unit holders and as of December 31, 2021, IIA had no assets. As a result, only Class A units remain which are wholly owned by ML Capital III making IIA and the IIA Notes SPVs indirect wholly owned MoneyLion subsidiaries, and therefore as of December 31, 2021 there was no longer a noncontrolling interest related to IIA and the IIA Notes SPVs. For more information on the alternative financing sources, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility. |
Summary of Significant Accounting Policies |
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Dec. 31, 2021 |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the opinion of the Company, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments and adjustments to eliminate intercompany transactions and balances, necessary for a fair presentation of its financial position and its results of operations, changes in redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) and cash flows. The Company’s accounting policies are set forth in Part II, Item 8 “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 fiscal year ended December 31, 2021. Included herein are certain updates to those policies. Revenue Recognition and Related Receivables — The following table summarizes revenue by type for the quarters ended March 31, 2022 and 2021:
Service and subscription fees — The Credit Builder Plus membership was developed to allow consumer customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. The Credit Builder Plus membership is intended to emphasize the program’s ability to help consumer customers build credit while also saving. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances. The membership subscription fee is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Subscription receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time. As the Company performs promised services to members, including those services that the members receive access to as part of the Credit Builder Plus membership, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company evaluates whether it is appropriate to recognize revenue on a gross basis or net of costs associated with the transaction based upon its evaluation of whether the Company obtains control of the specified services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors. Most service fees are related to the Company’s Instacash advance product. Users may obtain cash from interest-free Instacash advances in 1-3 business days or may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a customer. Instant transfer fees are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer. With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer. Net interest income on loan receivables — Interest income and the related accrued interest receivables on loan-related receivables are accrued based upon the daily principal amount outstanding except for loans that are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due. Enterprise service revenues — The Company provides services to enterprise clients to allow them to better connect with existing end-users and reach new potential end-users. These services include lead generation services, advertising services and digital media and content production services custom designed to promote enterprise clients’ products and services. The Company has a single performance obligation to provide lead generating services to financial institutions and financial service providers (“Product Partners”) whereby qualified consumers are matched with financial solutions offered by the Product Partners based on qualification and preference. Lead generation fees are earned through the operation of a robust technology platform via an API that connects consumers to financial institutions and financial service providers. The Company’s API platform functions as a powerful definitive search, comparison and ad recommendation engine that provides consumers with personalized financial solution options and matches the demand and supply of financial services. The lead generating services conducted through the API comprise a series of distinct services that are substantially the same and have the same pattern of transfer. The Company is entitled to receive transaction fees that are based on performance structure, including but not limited to cost per funded loan, cost per approved credit card, cost per click or cost per savings accounts, or revenue share based on successful lead conversion. The transaction fees and revenue share are considered revenue from contracts with Product Partners, including financial institutions and other financial service providers. These fees and revenue share to which the Company expects to be entitled are deemed variable consideration because the loan volume over the contractual term is not known. Because the lead generating service performance obligation is a series of distinct services, the Company applies the variable consideration exception and allocates the variable consideration to the period in which the fees are earned, and recognizes revenue over time. The Company generates advertising fees by displaying ads on the Company’s mobile application and by sending emails or other messages to potential end-users to promote the enterprise clients’ services. For advertising services, the Company enters into agreements with the enterprise clients in the form of a signed contract, which specifies the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the enterprise clients’ arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion. Digital media and content production services provided to enterprise clients are generally earned and recognized over time as the performance obligations within the contracts are satisfied. Payment terms vary from contract to contract such that collections may occur in advance of services being rendered, as services are rendered or after services are rendered. Contracts for digital media and content production services are typically short-term in duration. Allowance for Losses on Receivables — An allowance for losses on consumer receivables is established to provide for probable losses incurred in the Company’s consumer receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance 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 consumer’s ability to pay. The allowance is developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors. The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable. The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products. An allowance for losses on service and subscription fee receivables is established to provide probable losses incurred in the Company’s service and subscription fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements. Receivables from enterprise services have a low rate of default, and as such the related allowance is not material. The Company monitors enterprise receivable default rates for any indication of a deterioration in average credit quality that may result in more material levels of allowance for losses. Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three to seven years depending on the nature of the software development. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred. Stock-Based Compensation — The Company accounts for the restricted stock units (“RSUs”) and performance share units (“PSUs”) granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant. Some PSUs have been granted with a performance condition based on the Company’s operating performance. These performance conditions are assessed each reporting period and expense related to these PSUs is adjusted by a factor consistent with the expected performance as of the reporting date. The Company accounts for its stock options granted to employees or directors as stock-based compensation expense based on their grant date fair value. The Company uses a Black-Scholes option valuation model to measure the fair value of options at the date of grant. Some PSU awards are issued with a market condition which are valued on the grant date utilizing a Monte Carlo simulation model. The Black-Scholes option pricing model and the Monte Carlo simulation model require estimates of future stock price volatility, expected term, risk-free interest rate and forfeitures. The fair value of all awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred. Valuation of consideration transferred related to mergers and acquisitions — The Company determined that the contingent consideration related to the earnout provision and preferred share equivalents in connection with the MALKA Acquisition and Even Acquisition (each as defined herein) do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA and Even Financial earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA and Even Financial earnout was estimated using a Monte Carlo Simulation Model. The Company determined that the consideration related to the shares of MoneyLion’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A Redeemable Convertible Preferred Stock”), transferred as part of the consideration for the Even Acquisition meets the criteria for equity treatment. The fair value of this consideration was estimated using a Monte Carlo Simulation Model and recorded to equity on the date of issuance. Leases — Effective January 1, 2022, arrangements containing leases are evaluated as an operating or finance lease at lease inception. No finance leases were identified. For operating leases, the Company recognizes an operating right-of-use asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term. Since an implicit rate of return is not readily determinable for the Company’s leases, an incremental borrowing rate is used in determining the present value of lease payments. The incremental borrowing rate is determined using the rate of interest the Company pays to borrow funds on a collateralized basis, adjusted for differences in the lease term compared to the Company’s debt using the differences in daily U.S. treasury par yield curve that correspond to the terms of the Company’s lease and debt. These rates are updated on a quarterly basis for measurement of new lease obligations. Some leases include renewal options; however, generally it is not reasonably certain that these options will be exercised at lease commencement. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the Company’s balance sheet. The Company separates lease and non-lease components for its real estate leases. Recently Adopted Accounting Pronouncements — The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), effective January 1, 2022, and applied the changes prospectively, recognizing a cumulative-effect adjustment to the beginning balance of retained earnings as of the adoption date. As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward. Upon adoption of the ASU No. 2016-02, the Company recognized an aggregate lease liability and right-of-use asset of $3,551, calculated based on the present value of the remaining minimum lease payments for qualifying leases as of January 1, 2022. The cumulative-effect adjustment recognized to the beginning balance of retained earnings was not material. The adoption of the new guidance did not impact the Company’s unaudited consolidated interim statements of operations or cash flows. Recently Issued Accounting Pronouncements Not Yet Adopted — The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012. Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which, along with subsequent related ASUs, creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company believes the adoption impact of ASU 2019-12 will not be material to the consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference London Interbank Offered Rate (“LIBOR”) or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of March 31, 2022. As such, the Company currently does not intend to elect the optional expedients and exceptions. In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the opinion of the Company, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments and adjustments to eliminate intercompany transactions and balances, necessary for a fair presentation of its financial position and its results of operations, changes in redeemable convertible preferred stock, redeemable noncontrolling interests and stockholders’ equity (deficit) and cash flows. Use of Estimates — The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements included, but are not limited to, revenue recognition, provision for transaction losses, accounting for business combinations, determination of useful lives of property and equipment, valuation and useful lives of intangible assets, impairment assessment of goodwill, internal-use software, valuation of common stock, valuation of stock warrants, valuation of convertible notes, stock option valuations, income taxes, and the recognition and disclosure of contingent liabilities. The Company evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements. Revenue Recognition and Related Receivables — The ML Plus membership was developed to allow customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. In 2019 the Company began offering the Credit Builder Plus membership, which is intended to emphasize the program’s ability to help customers build credit while also saving. These programs are offered directly to MoneyLion customers. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances. Revenue is recognized as the Company transfers control of promised goods or services to members, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods or services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors. Based on the Company’s evaluation of these factors, revenue is recorded either gross or net of costs associated with the transaction. Membership subscription revenue is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Membership receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time. Members of the Credit Builder Plus membership program typically receive the cash related to loans and interest-free Instacash advances in 1-3 business days. Members may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a member. Instant transfer fees are recognized gross over the term of the loan or Instacash advance, as the services related to these fees are not distinct from the services of the loan or Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer. With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer. Affiliate revenue is generated by displaying ads on the Company’s mobile application and by sending emails or other messages to customers promoting affiliate services. For affiliate services, the Company enters into agreements with the affiliates in the form of a signed contract, which specify the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the customer arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion. Interest income and the related accrued interest receivables on loan-related finance receivables is accrued based upon the daily principal amount outstanding except for when these loans are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due. Digital media and content production services provided to third parties are generally earned and recognized over time as the performance obligations within the contracts are satisfied. The revenue is recorded in other income in the statement of operations. Contracts for digital media and content production services are typically short-term. Allowance for Losses on Receivables — An allowance for losses on finance receivables and related accrued interest and fee receivables is established to provide for probable losses incurred in the Company’s finance receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of many factors, including changes in the nature, volume, and risk characteristics of the finance receivables portfolio, including trends in delinquency and charge-offs and current economic conditions that may affect the borrower’s ability to pay. The allowance is developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors. The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable. The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products. An allowance for losses on membership and fees receivables is established to provide probable losses incurred in the Company’s membership and fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements. Segment Information — Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has one business activity and there are no segment managers who are held accountable for material operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment. Governmental Regulation — The Company is subject to various state and federal laws and regulations in each of the states in which it operates, which are subject to change and may impose significant costs or limitations on the way the Company conducts or expands its business. The Company’s loans are originated under individual state laws, which may carry different rates and rate limits, and have varying terms and conditions depending upon the state in which they are offered. The Company is licensed or exempt from licensing to make loans in substantially all states in the United States of America. Other governmental regulations include, but are not limited to, imposed limits on certain charges, insurance products and required licensing and qualification. Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
The Company evaluates the significance of transfers between levels based upon the nature of the financial instruments and size of the transfer relative to total net assets available for benefits. For the years ended December 31, 2021 and 2020, there were no transfers in or out of levels 1, 2 or 3. Net Loss Per Share — The Company calculated basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered the redeemable convertible preferred stock to be a participating security as the holders are entitled to receive aggregated accrued and not paid dividends if/when declared by the board of directors at a dividend rate payable in preference and priority to the holders of common stock. Under the two-class method, basic net loss per share attributable to common stockholders was calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. The net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of redeemable convertible preferred stock do not have a contractual obligation to share in losses, which is consistent with the if converted method of calculation. Diluted net loss per share attributable to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted stock units, right to receive Earnout Shares, as defined in Note 3, “Business Combination,” and warrants to purchase redeemable convertible preferred stock and common stock were considered common shares equivalents but had been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was anti-dilutive. In periods in which the Company reports a net loss attributable to all classes of common stockholders, diluted net loss per share attributable to all classes of common stockholders is the same as basic net loss per share attributable to all classes of common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported net losses attributable to common stockholders for the fiscal years ended December 31, 2021 and 2020. Cash — Cash includes cash and cash equivalents held at financial institutions. For purposes of the consolidated financial statements, the Company considers all highly liquid investments purchased with a maturity date of three months or less to be cash equivalents. At times, the Company may maintain deposits with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limits, but management believes any such amounts do not represent a significant credit risk. Restricted Cash — Restricted cash consists of cash required to be held on reserve by the Company’s vendors for purposes of loan or advance processing or funding and cash on hand in the VIEs. All cash accounts are held in federally insured institutions, which may at times exceed federally insured limits. The Company has not experienced losses in such accounts. Management believes the Company’s exposure to credit risk is minimal for these accounts. Goodwill — The Company performs goodwill impairment testing annually, on the last day of the fiscal year or more frequently if indicators of potential impairment exist. The goodwill impairment test is performed at the reporting unit level. The Company first evaluates whether it is more likely than not that the fair value of the reporting unit has fallen below its carrying amount. No indicators of fair value falling below the reporting unit carrying amount were noted on a quantitative or qualitative basis during the fiscal year 2021 assessment. Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three years. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred. Impairment of Long-Lived Assets — Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment charges were recognized during the years ended December 31, 2021 and 2020. Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effects of future tax rate changes are recognized in the period when the enactment of new rates occurs. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the positions taken or the amount of the positions that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of operations. Stock-Based Compensation — The Company accounts for its stock options granted to employees or directors as stock-based compensation expense based on their grant date fair value. The Company uses an option valuation model to measure the fair value of options at the date of grant. The Company accounts for the restricted stock units granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant. The fair value of the awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred. Warrant Liability — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Accounting Standards Codification (“ASC”) 480 and ASC 815. The Company accounts for its outstanding Public Warrants and Private Placement Warrants (as defined in Note 14. “Stock Warrants”) in accordance with the guidance contained in Accounting Standards Codification 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”). The Company determined that the Private Placement Warrants do not meet the criteria for equity treatment thereunder. For issued or modified warrants that do not meet all the criteria for equity treatment, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. As such, each Private Placement Warrant is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model. The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. Subordinated Convertible Notes — As permitted under ASC 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option to account for its Subordinated Convertible Notes (as defined below). In accordance with ASC 825, the Company records these Subordinated Convertible Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the consolidated statement of operations. As a result of applying the fair value option, direct costs and fees related to the Subordinated Convertible Notes were expensed as incurred and were not deferred. The Company concluded that it was appropriate to apply the fair value option to the Subordinated Convertible Notes because there are no non-contingent beneficial conversion options related to the Subordinated Convertible Notes. The Subordinated Convertible Notes were valued using a scenario-based discounted cash flow analysis. The Company estimated the probability and timing of the scenarios based on management’s assumptions and knowledge of specified events at issuance and as of each reporting date. The Subordinated Convertible Notes are classified as Level 3 because of the Company’s reliance on unobservable assumptions. Contingent consideration from mergers and acquisitions — The Company determined that the contingent consideration related to the MALKA earnout provisions do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA earnout was estimated using a Monte Carlo Simulation Model. Property and Equipment — Property and equipment is carried at cost. Depreciation is determined principally under the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are described below:
Debt Issuance Costs — Costs incurred to obtain debt financing are capitalized and amortized into interest expense over the life of the related debt using a method that approximates the effective interest method. Debt issuance costs are recorded as a contra debt balance in the accompanying consolidated financial statements. Marketing Costs — Costs related to marketing activities are expensed as incurred. Recently Adopted Accounting Pronouncements — In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The new guidance provides for the deferral of implementation costs for cloud computing arrangements and expensing those costs over the term of the cloud services arrangement. The new guidance is effective for fiscal years beginning after December 15, 2020 and interim periods in 2021. The adoption of the ASU did not have an impact on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide: (1) financing to the issuer, or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted — The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. In February 2016, the FASB Issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for the Company on January 1, 2022. The Company is in the process of evaluating the impact that the pending adoption of this new guidance will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference LIBOR or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of December 31, 2021. As such, the Company currently does not intend to elect the optional expedients and exceptions. In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures. |
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Business Combination |
3 Months Ended | 12 Months Ended |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Business Combinations [Abstract] | ||
| BUSINESS COMBINATION | 3. BUSINESS COMBINATION On September 21, 2021, Fusion held a Special Meeting (the “Special Meeting”) at which the Fusion stockholders considered and adopted, among other matters, the Merger Agreement and the transactions contemplated therein (the “Business Combination Transactions”). On September 22, 2021, the parties to the Merger Agreement consummated the Business Combination Transactions and the MoneyLion Class A Common Stock and Public Warrants (as defined herein) began trading on the NYSE under the symbols “ML” and “ML WS”, respectively. See Part II, Item 8 “Business Combination” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 further discussion of these matters. |
3. BUSINESS COMBINATION On September 21, 2021, Fusion held a Special Meeting (the “Special Meeting”) at which the Fusion stockholders considered and adopted, among other matters, the Merger Agreement and the transactions contemplated therein (the “Business Combination Transactions”). On September 22, 2021, the parties to the Merger Agreement consummated the Business Combination Transactions. Immediately prior to the time of filing of a certificate of merger with the Secretary of State of the State of Delaware upon consummation of the Merger, all issued and outstanding shares of Legacy MoneyLion preferred stock converted into shares of Legacy MoneyLion common stock (the “Legacy MoneyLion Common Stock”), par value $0.0001 per share (the “Conversion”), in accordance with Legacy MoneyLion’s amended and restated certificate of incorporation. At the Business Combination Closing Date: • all outstanding warrants to purchase shares of Legacy MoneyLion preferred stock or Legacy MoneyLion Common Stock (“Legacy MoneyLion Warrants”) were either exercised and ultimately converted into shares of Legacy MoneyLion Common Stock or terminated; • 11,231,595 outstanding shares of Legacy MoneyLion Common Stock (which includes the shares of Legacy MoneyLion Common Stock issued to former holders of Legacy MoneyLion Warrants) were cancelled in exchange for the right to receive 184,285,695 shares of MoneyLion Class A Common Stock; • 2,360,627 outstanding and unexercised options to purchase shares of Legacy MoneyLion Common Stock (“Legacy MoneyLion Options”) converted into options to acquire 38,732,676 shares of MoneyLion Class A Common Stock, of which 18,861,298 options are vested and 19,871,378 options are unvested; and • each holder of an outstanding share of Legacy MoneyLion Common Stock (following the Conversion) and/or Legacy MoneyLion Options (each such holder, an “Earnout Participant”) also received the right to receive the applicable pro rata portion of MoneyLion Class A Common Stock (the “Earnout Shares”) with respect to each share of MoneyLion Class A Common Stock or option exercisable for shares of MoneyLion Class A Common Stock, contingent upon MoneyLion Class A Common Stock reaching certain price milestones. 7.5 million and 10.0 million shares of MoneyLion Class A Common Stock will be issued if the MoneyLion Class A Common Stock share price equals or is greater than $12.50 and $16.50, respectively, for twenty out of any thirty consecutive trading days within five years of the Business Combination Closing Date. The Earnout Shares meet the conditions for equity classification in accordance with ASC 815-40. In connection with the Business Combination Closing, holders of 25,887,987 shares of Fusion’s Class A common stock sold in its initial public offering (the “public shares”) exercised their right to have such shares redeemed for a pro rata portion of the proceeds from Fusion’s initial public offering held in Fusion’s trust account plus interest, calculated as of two business days prior to the consummation of the Business Combination, or approximately $10.00 per share and approximately $258,896 in the aggregate (the “Redemptions”). The consummation of the Business Combination Transactions resulted in approximately $293,239 in cash proceeds to MoneyLion, net of transaction expenses. Following the Redemptions and the issuance of PIPE Shares in connection with the PIPE Financing, 42,862,013 public shares remained outstanding (consisting of 25,000,000 shares held by PIPE Investors, 8,750,000 shares held by Fusion Sponsor LLC and 9,112,013 shares held by Fusion public stockholders). Upon consummation of the Business Combination Transactions: • each outstanding share of Fusion Class B common stock automatically converted into one share of MoneyLion Class A Common Stock; and • outstanding warrants to purchase the common stock of Fusion automatically converted into warrants to purchase shares of MoneyLion Class A Common Stock. As of the Business Combination Closing Date and following the completion of the sale of 25,000,000 shares of MoneyLion Class A Common Stock in the PIPE Financing, MoneyLion had the following outstanding securities: • 227,147,708 shares of MoneyLion Class A Common Stock; • 38,732,676 MoneyLion options, of which options to purchase 18,861,298 shares of MoneyLion Class A Common Stock were vested and options to purchase 19,871,378 shares of MoneyLion Class A Common stock were unvested; and • 17,500,000 public warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share and 8,100,000 private placement warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share (assumed from Fusion). Conversion of Legacy MoneyLion shares was calculated utilizing the exchange ratio of approximately 16.4078 per share of MoneyLion Class A Common Stock (the “Exchange Ratio”). The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under the guidance in ASC 805, Legacy MoneyLion is treated as the “acquirer” for financial reporting purposes. As such, Legacy MoneyLion is deemed the accounting predecessor of the combined business, and MoneyLion, as the parent company of the combined business, is the successor SEC registrant, meaning that Legacy MoneyLion’s financial statements for previous periods are disclosed in the registrant’s periodic reports filed with the SEC following the Business Combination. The Business Combination had a significant impact on the MoneyLion’s reported financial position and results as a consequence of the reverse recapitalization. The most significant change in MoneyLion’s reported financial position and results was an estimated net increase in cash (as compared to the MoneyLion’s consolidated balance sheet at December 31, 2020) of approximately $293,239. This included approximately $250,000 in proceeds from the PIPE Financing that was consummated substantially simultaneously with the Business Combination, offset by additional transaction costs incurred in connection with the Business Combination. The transaction costs for the Business Combination were approximately $56,638, of which $13,150 represents deferred underwriter fees related to Fusion’s initial public offering. As of December 31, 2021, $3,673 in transaction costs remained unpaid. The transaction closed on September 22, 2021, and on the following day the MoneyLion Class A Common Stock and Public Warrants began trading on the New York Stock Exchange under the symbols “ML” and “ML WS”, respectively, for trading in the public market. |
Consumer Receivables |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSUMER RECEIVABLES | 4. CONSUMER RECEIVABLES The Company’s finance receivables consist of secured personal loans and principal amounts of Instacash advances. Accrued interest receivables represent the interest accrued on the loan receivables based upon the daily principal amount outstanding. Fees receivables represent the amounts due to the Company for tips and instant transfer fees related to the Instacash advance product. Subscription receivables represent the amounts billed to customers for subscription services. The credit quality and future repayment of consumer receivables are dependent upon the customer’s ability to perform under the terms of the agreement. Factors such as unemployment rates and housing values, among others, may impact the customer’s ability to perform under the loan or advance terms. When assessing provision for losses on consumer receivables, the Company takes into account the composition of the outstanding consumer receivables, charge-off rates to date and the forecasted principal loss rates. The tables below show consumer receivables balances as of March 31, 2022 and December 31, 2021 and the consumer receivables activity, charge-off rates and aging by product for the three months ended March 31, 2022 and 2021. Consumer receivables consisted of the following:
Changes in the allowance for losses on consumer receivables were as follows:
Changes in the allowance for losses on finance receivables were as follows:
Changes in the allowance for losses on fees receivable were as follows:
Changes in the allowance for losses on subscription receivables were as follows:
The following is an assessment of the repayment performance of loans as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the loans receivable portfolio:
The following is an assessment of the repayment performance of Instacash receivables as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the Instacash receivables portfolio:
The following is an assessment of the repayment performance of fees receivable as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the fees receivable portfolio:
The following is an assessment of the repayment performance of subscription receivables as of March 31, 2022 and December 31, 2021 and presents the contractual delinquency of the subscription receivables portfolio:
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4. RECEIVABLES The Company’s finance receivables consist of secured personal loans, unsecured personal loans and principal amounts of Instacash advances. Accrued interest receivables represent the interest accrued on the loan receivables based upon the daily principal amount outstanding. Fees receivables represent the amounts due to the Company for tips and instant transfer fees related to the Instacash advance product. Membership receivables represent the amounts billed to customers for membership subscription services. The credit quality and future repayment of finance receivables are dependent upon the customer’s ability to perform under the terms of the agreement. Factors such as unemployment rates and housing values, among others, may impact the customer’s ability to perform under the loan or advance terms. When assessing provision for losses on finance receivables, the Company takes into account the composition of the outstanding finance receivables, charge-off rates to date and the forecasted principal loss rates. Please see the tables below for the finance receivable activity, charge-off rates and aging by product for the twelve months ended December 31, 2021 and 2020. The Company has experienced significant growth in Instacash, a shorter-term advance product with lower charge-off rates than loans. As Instacash has become a larger component of finance receivable activity, the overall charge-off rate has decreased significantly. Receivables consisted of the following:
Changes in the allowance for losses on receivables were as follows:
Changes in allowance for losses on finance receivables were as follows:
Changes in allowance for losses on membership receivables were as follows:
Changes in allowance for losses on fees receivable were as follows:
The following is an assessment of the credit quality of finance receivables as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable portfolio:
The following is an assessment of the credit quality of loans as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable loans portfolio:
The following is an assessment of the credit quality of Instacash as of December 31, 2021 and 2020 and presents the contractual delinquency of the finance receivable Instacash portfolio:
The following is an assessment of the credit quality of membership receivables as of December 31, 2021 and 2020 and presents the contractual delinquency of the membership receivable portfolio:
The following is an assessment of the credit quality of fees receivable as of December 31, 2021 and 2020 and presents the contractual delinquency of the fees receivable portfolio:
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Property and Equipment |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following:
Total depreciation expense related to property and equipment was $230 and $63 for the three months ended March 31, 2022 and 2021, respectively. |
5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following:
Total depreciation expense related to property and equipment was $343 and $317 for the twelve months ended December 31, 2021 and 2020, respectively. |
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Intangible Assets |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS Goodwill as of March 31, 2022 and December 31, 2021 was $161,678 and $52,541, respectively. The increase relates to goodwill acquired from the acquisition of Even Financial. See Note 17, “Mergers and Acquisitions,” for more information regarding goodwill and other intangible assets acquired from Even Financial. Intangible assets consisted of the following:
For the three months ended March 31, 2022 and 2021, total amortization expense was $3,191 and $451, respectively. The following table summarizes estimated future amortization expense of intangible assets placed in service at March 31, 2022 for the years ending:
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6. INTANGIBLE ASSETS Goodwill as of December 31, 2021 and 2020 was $52,541 and $21,565, respectively. The increase relates to goodwill acquired from the acquisition of MALKA. See Note 17, “Mergers and Acquisitions,” for more information regarding goodwill and other intangible assets acquired from MALKA. Intangible assets consisted of the following:
For the twelve months ended December 31, 2021 and 2020, total amortization expense was $2,049 and $791, respectively. The following table summarizes estimated future amortization expense of intangible assets placed in service at December 31, 2021 for the years ending:
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Other Assets |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER ASSETS | 7. OTHER ASSETS Other assets consisted of the following:
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7. OTHER ASSETS Other assets consisted of the following:
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Variable Interest Entities |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VARIABLE INTEREST ENTITIES | 8. VARIABLE INTEREST ENTITIES The following table summarizes the VIEs’ assets and liabilities included in the Company’s consolidated financial statements, after intercompany eliminations, as of March 31, 2022 and December 31, 2021:
Beginning in the fourth quarter of 2021, the Company’s primary source of funding for originated receivables became special purpose vehicle financings from third-party lenders (the “SPV Credit Facilities”). The Company may sell certain loan and Instacash receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (the “SPV Borrowers”), which pledge such receivables as collateral to support the financing of additional receivables. The underlying loan and Instacash receivables are originated and serviced by other wholly owned subsidiaries of the Company. The SPV Borrowers are required to maintain pledged collateral consisting of loan and Instacash receivables with a net asset balance that equals or exceeds 90% of the aggregate principal amounts of the loans financed through the SPV Credit Facilities. Proceeds received from the SPV Credit Facilities can only be used to purchase loan and Instacash receivables. The payments and interest, as applicable, received from the loan and Instacash receivables held by the SPV Borrowers are used to repay obligations under the SPV Credit Facilities. While the SPV Credit Facilities and related agreements provide assurances to the third-party lenders regarding the quality of loan and Instacash receivables and certain origination and servicing functions to be performed by other wholly owned subsidiaries of the Company, the third-party lender may absorb losses in the event that the payments and interest, as applicable, received in connection with the loan and Instacash receivables are not sufficient to repay the loans made through the SPV Credit Facilities. The Company is required to evaluate the SPV Borrowers for consolidation, which the Company has concluded are VIEs. The Company has the ability to direct the activities of the SPV Borrowers that most significantly impact the economic performance of the wholly owned subsidiaries that act as the originators and servicer of the loan and Instacash receivables held by the SPV Borrowers. Additionally, the Company has the obligation to absorb losses related to the pledged collateral in excess of the aggregate principal amount of the receivables and the right to proceeds related to the excess loan and Instacash receivables securing the SPV Credit Facilities once all loans and interest under such SPV Credit Facilities are repaid, which exposes the Company to losses and returns that could potentially be significant to the SPV Borrowers. Accordingly, the Company determined it is the primary beneficiary of the SPV Borrowers and is required to consolidate them as indirect wholly owned VIEs. For more information, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility. |
8. VARIABLE INTEREST ENTITIES The following table summarizes the VIEs’ assets and liabilities included in the Company’s consolidated financial statements, after intercompany eliminations, as of December 31, 2021 and 2020:
By December 2021, IIA and the IIA Notes SPVs became indirect wholly owned MoneyLion subsidiaries, removing the variable interest in those entities. See Note 1. “Description of Business and Basis of Presentation” for more information. Beginning in the fourth quarter of 2021, MoneyLion transitioned its primary source of funding for originated receivables from IIA to special purpose vehicle financings from third-party lenders (the “SPV Credit Facilities”). The Company may sell certain loan and Instacash receivables to wholly owned, bankruptcy-remote special purpose subsidiaries (the “SPV Borrowers”), which pledge such receivables as collateral to support the financing of additional receivables. The underlying loan and Instacash receivables are originated and serviced by other wholly owned subsidiaries of the Company. The SPV Borrowers are required to maintain pledged collateral consisting of loan and Instacash receivables with a net asset balance that equals or exceeds 90% of the aggregate principal amounts of the loans financed through the SPV Credit Facilities. Proceeds received from the SPV Credit Facilities can only be used to purchase loans and Instacash receivables. The payments and interest, as applicable, received from the loans and Instacash receivables held by the SPV Borrowers are used to repay obligations under the SPV Credit Facilities. While the SPV Credit Facilities and related agreements provide assurances to the third-party lenders regarding the quality of loan and Instacash receivables and certain origination and servicing functions to be performed by other wholly owned subsidiaries of the Company, the third-party lender may absorb losses in the event that the payments and interest, as applicable, received in connection with the loan and Instacash receivables are not sufficient to repay the loans made through the SPV Credit Facilities. The Company is required to evaluate the SPV Borrowers for consolidation, which the Company has concluded are VIEs. The Company has the ability to direct the activities of the SPV Borrowers that most significantly impact the economic performance of the wholly owned subsidiaries that act as the originators and servicer of the loan and Instacash receivables held by the SPV Borrowers. Additionally, the Company has the obligation to absorb losses related to the pledged collateral in excess of the aggregate principal amount of the receivables and the right to proceeds related to the excess loan and Instacash receivables securing the SPV Credit Facilities once all loans and interest under such SPV Credit Facilities are repaid, which exposes the Company to losses and returns that could potentially be significant to the SPV Borrowers. Accordingly, the Company determined it is the primary beneficiary of the SPV Borrowers and is required to consolidate them as indirect wholly owned VIEs. For more information, see Note 9. “Debt” for discussion of the ROAR 1 SPV Credit Facility and the ROAR 2 SPV Credit Facility. |
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Debt |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT | 9. DEBT The Company’s debt as of March 31, 2022 and December 31, 2021 is presented below:
For more information regarding debt instruments outstanding as of December 31, 2021, see Part II, Item 8 “Debt” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Monroe Term Loans — In March 2022, the Company entered into a credit agreement (the “Monroe Credit Agreement”) with certain financial institutions from time to time party thereto, as lenders, and Monroe Capital Management Advisors, LLC, as administrative agent and lead arranger (“Monroe Capital”). The Monroe Credit Agreement provides for the following: • $70,000 aggregate principal amount of term loans (the “Term A-1 Loans”), available to be drawn at the closing date; • $20,000 aggregate principal amount of term loans (the “Term A-2 Loans”), as described further below; • $20,000 aggregate principal amount of delayed draw term loans (the “Term B Loans”), which are available to be drawn for a period of 18-months following the closing date, subject to certain conditions set forth in the Monroe Credit Agreement; and • subject to certain conditions set forth in the Monroe Credit Agreement, the ability to incur incremental commitments of up to $60,000 million aggregate principal amount of Term A-1 Loans or Term B Loans (the “Incremental Term Loans”; the Term A-1 Loans, the Term A-2 Loans, the Term B Loans and, if applicable, the Incremental Term Loans, collectively, the “Monroe Term Loans”). In connection with the foregoing, the Company borrowed Term A-1 Loans in an aggregate principal amount of $70.0 million. Proceeds of the Term A-1 Loans were used (a) to repay in full the approximately $24.0 million aggregate principal amount outstanding under the Company’s existing first lien loan facility with Silicon Valley Bank, as lender (the “First Lien Loan”), including accrued and unpaid interest and related fees, (b) to pay transaction-related fees and expenses and (c) for general corporate purposes and working capital needs of the Company and its subsidiaries. With respect to the Term A-2 Loans, pursuant to the Monroe Credit Agreement, the lenders thereunder were deemed to have rolled over their $20.0 million aggregate principal amount of term loans outstanding under the Borrower’s existing second lien loan with affiliates of Monroe Capital (the “Second Lien Loan”) in the same aggregate principal amount as their respective commitments with respect to the Term A-2 Loans, following which all obligations in respect of the Second Lien Loan were deemed to be satisfied and paid in full. The Term A-1 Loans and Term B Loans bear annual interest, payable monthly, at a floating rate measured by reference to, at the Company’s option, either (a) a base rate then in effect (equal to the greater of (i) the federal funds rate plus 0.50%, (ii) the prime rate, (iii) 2.00% and (iv) an adjusted one-month Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 1.00%) plus 1.00%) plus an applicable margin ranging from 6.00% to 8.25% per annum, depending on whether the “EBITDA Trigger Date” has occurred, the Company’s “Enterprise Value” and, once the EBITDA Trigger Date has occurred, its “Total Debt to EBITDA Ratio” (as such terms are defined in the Monroe Credit Agreement) or (b) an adjusted one-month or three-month SOFR (subject to a floor of 1.00%) plus an applicable margin ranging from 7.00% to 9.25% per annum, depending on whether the EBITDA Trigger Date has occurred, the Company’s Enterprise Value and, once the EBITDA Trigger Date has occurred, its Total Debt to EBITDA Ratio. The Term A-2 Loans bear annual interest, payable monthly, at the greater of (i) 12% and (ii) a floating rate measured by reference to the prime rate plus 5.75% per annum, subject to a cap of 15%. The interest rate as of March 31, 2022 on the Term A-1 Loans and Term A-2 Loans was 9.50% and 12.00%, respectively. The Term A-1 Loans and the Term B Loans mature on March 24, 2026, and the Term A-2 Loans mature on May 1, 2023. The Monroe Term Loans may be prepaid at the Company’s option at any time, in minimum principal amounts, and are subject to mandatory prepayment in an amount equal to 100% of the net cash proceeds upon the occurrence of certain asset dispositions and equity and debt offerings, 100% of certain extraordinary cash receipts and 0-50% of certain excess cash flow, in each case as specified in the Monroe Credit Agreement and subject to certain reinvestment rights as set forth in the Monroe Credit Agreement. Upon the occurrence of certain triggering events, including any prepayment of any Monroe Term Loans for any reason (subject to limited exceptions), the Company is required to pay a premium ranging from 0.00% to 3.00% of the principal amount of such prepayment depending on the Monroe Term Loans repaid and the date of the prepayment, plus, in the case of any Monroe Term Loans other than Term A-2 Loans and in the event the prepayment occurs within 12 months after the closing date, all interest that would have otherwise been payable on the amount of the principal prepayment from the date of prepayment to and including the date that is 12 months after the closing date. The Monroe Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including financial covenants with respect to minimum adjusted revenue, EBITDA, liquidity and unrestricted cash (all as defined in the Monroe Credit Agreement). The negative covenants, among other things, limit or restrict the ability of the “Loan Parties” (as defined in the Monroe Credit Agreement) and their subsidiaries to: incur additional indebtedness; incur additional liens; make dividends, distributions and other restricted payments; merge, consolidate, sell, transfer, dispose of, convey or lease assets or equity interests; purchase or otherwise acquire assets or equity interests; modify organizational documents; enter into certain transactions with affiliates; enter into restrictive agreements; engage in other business activities; and make investments. The obligations under the Monroe Credit Agreement are guaranteed by MoneyLion Inc., as parent, and each of its direct and indirect existing and future wholly-owned subsidiary, other than SPVs, certain foreign subsidiaries, certain regulated subsidiaries and certain other excluded subsidiaries (the “Guarantors”). The Monroe Credit Agreement is entered into by MoneyLion Technologies Inc. The Monroe Credit Agreement is secured with a perfected, first-priority security interest in substantially all tangible and intangible assets of MoneyLion Technologies Inc. and each Guarantor, subject to certain customary exceptions. The settlement of the First Lien Loan was accounted for as a debt extinguishment and the Second Lien Loan was accounted for as a debt modification resulting in total expense recognized of $730 comprised of settlement fees and the write off of unamortized deferred financing costs. |
9. DEBT SPV Debt Agreements — In March 2018, and then in April 2018, IIA Notes SPV II LLC and IIA Notes SPV III LLC, indirect wholly owned subsidiaries of the Company, entered into Loan and Security Agreements (the “SPV Debt Agreements”) with separate lenders establishing a total credit facility of a minimum of $20.0 million, which could have been increased to $27.0 million upon mutual agreement between the lenders and the Company. The SPV Debt Agreements matured at various dates through 2020 and carried a total interest rate of 14%. The Company borrowed a total of $22.0 million under these credit facilities. In January 2019, the Company repaid $11.0 million of the secured debt outstanding under the SPV Debt Agreements. In August 2020, IIA Notes SPV III LLC repaid in full the approximately $11.5 million that remained outstanding under the SPV Debt Agreements and terminated the facility. 6.75% Bank Loan — In September 2018, the Company entered into a Loan and Security Agreement (the “6.75% Bank Loan”) with a bank for a 6.75% $20 million loan. Interest only was payable monthly through September 27, 2019. According to the terms of the 6.75% Bank Loan, the outstanding principal on that date was converted to a term loan payable with principal and interest payable in 36 monthly installments, maturing on September 27, 2022. The 6.75% Bank Loan was paid off in 2020. Second Lien Loan — In April 2020, the Company entered into a Loan and Security Agreement (“Second Lien Loan”) with a lender for a second-lien loan facility with an initial principal balance of $5,000. The Second Lien Loan bears interest at the greater of (a) 12%, and (b) a fluctuating rate of interest per annum equal to the Wall Street Journal Prime Rate plus 5.75%, not to exceed 15%. As of December 31, 2021, the interest rate was 12%. Interest only is payable until April 30, 2022, and thereafter outstanding principal will be repaid in twelve equal installments through the facility maturity date of May 1, 2023. The Second Lien Loan is secured by substantially all assets of the Company, including capital stock of all subsidiaries, except for capital stock and assets in certain excluded subsidiaries, as defined, including IIA and all of the related SPVs, ROAR 1 SPV Finance LLC and ROAR 2 SPV Finance LLC. Under the terms of the Second Lien Loan the Company is subject to certain covenants, as defined. The Company used the Second Lien Loan proceeds for general corporate purposes. On August 27, 2021, the Company entered into a Second Amendment to the Loan and Security Agreement that refinanced the Second Lien Loan and increased principal borrowings up to an aggregate principal amount of $25,000, and with Monroe Capital Management Advisors, LLC replacing MLi Subdebt Facility 1 LLC as collateral agent and administrative agent for the lenders. The other material terms of the loan remained the same. Upon the consummation of the Business Combination, the Company repaid the original $5,000 principal balance owed to MLi Subdebt Facility 1 LLC, together with accrued interest and fees. As of December 31, 2021, the $20,000 principal balance owed to affiliates of Monroe Capital Management Advisors, LLC remained outstanding. First Lien Loan — In July 2020, the Company entered into a Loan and Security Agreement (“First Lien Loan”) with a bank for a $25.0 million first-lien loan facility consisting of a $20.0 million revolving credit line and $5.0 million term loan. The revolving line bears interest at the greater of (i) Wall Street Journal Prime Rate plus 2.25% and (ii) 6.50%. As of December 31, 2021, the revolving line interest rate was 6.5%. The revolving line matures on May 1, 2022. The term loan bears interest at the greater of (i) Wall Street Journal Prime Rate plus 3.25% and (ii) 7.50%. As of December 31, 2021, the term loan interest rate was 7.5%. Interest only on the term loan was payable until September 1, 2021, and thereafter outstanding principal is payable in thirty-nine equal instalments through the facility maturity date of May 1, 2024. The First Lien Loan is secured on a first-priority basis by all assets of the Company, including capital stock of all subsidiaries, except for capital stock and assets in certain excluded subsidiaries, as defined, including IIA and all of the related SPVs, ROAR 1 SPV Finance LLC and ROAR 2 SPV Finance LLC. Under the terms of the First Lien Loan, the Company is subject to certain covenants, as defined. Additionally, the Company granted the bank lender warrants to receive 12,792 shares of Legacy MoneyLion Common Stock, at an exercise price as defined in the First Lien Loan, which were exercised as part of the Business Combination. The Company used the First Lien Loan proceeds to repay in full the 6.75% Bank Loan and for general corporate purposes. As of December 31, 2021, $24,028 of principal remained outstanding. Subordinated Convertible Notes — In December 2020, the Company sold to a third-party lender $10,000 of 3% subordinated convertible notes maturing on July 31, 2021, the proceeds of which were used to conduct its business. In January 2021, the Company sold to third-party lenders $36,750 of 3% subordinated convertible notes as part of the same series of notes issued in December 2020 maturing on July 31, 2021 (collectively, the “Subordinated Convertible Notes”), the proceeds of which were used to conduct its business. Upon maturity or certain events, the Subordinated Convertible Notes could have been converted into preferred shares at conversion prices as defined in the Subordinated Convertible Notes. In July 2021, the Subordinated Convertible Note agreements were amended to extend the maturity date to September 30, 2021. The Company elected the fair value option to account for the Subordinated Convertible Notes. The Company recorded the Subordinated Convertible Notes at fair value and subsequently remeasured it to fair value at the reporting date. Changes in fair value were recognized as a component of operating expenses in the consolidated statements of operations under Change in fair value of subordinated convertible notes. On September 22, 2021, the Business Combination was completed and the Subordinated Convertible Notes were converted into a total of 10,068,133 shares of MoneyLion Class A Common Stock. Prior to the conversion, the carrying value of the Subordinated Convertible Notes was $92,627. Other Debt — In August 2016, the Company entered into a $50,000 credit and security agreement (the “2016 Credit Agreement”) with a lender for the funding of finance receivables. The 2016 Credit Agreement allowed for increases in the maximum borrowings under the agreement up to $500,000, bore interest at a rate as defined in the 2016 Credit Agreement and matured in February 2023. The 2016 Credit Agreement also required the Company to adhere to certain financial covenants along with certain other financial reporting requirements. The Company did not meet certain of these covenant requirements as of December 31, 2019, for which it received a waiver from the lender. The 2016 Credit Agreement was terminated upon the Business Combination Closing by mutual agreement of the Company and the lender; there was no outstanding balance under the 2016 Credit Agreement at the time of termination. In connection with the 2016 Credit Agreement, the Company granted warrants allowing the lender to purchase up to 2.5% of Legacy MoneyLion’s outstanding common stock, or 255,402 warrants. All tranches were exercised and converted into MoneyLion Class A Common Stock in connection with the Business Combination. In April 2020, the Company borrowed $3,207 from a bank under the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program introduced as part of the U.S. Government’s COVID-19 relief efforts (the “PPP Loan”). In June 2021, the SBA approved the Company’s application for forgiveness with respect to the entire outstanding balance of the PPP Loan of $3,207 which resulted in a gain which is included as a component of other operating (income) expenses in the consolidated statements of operations during the twelve months ended December 31, 2021. In September 2021, ROAR 1 SPV Finance LLC, an indirect wholly owned subsidiary of the Company (the “ROAR 1 SPV Borrower”), entered into a $100,000 credit agreement (the “ROAR 1 SPV Credit Facility”) with a lender for the funding of finance receivables, which secure the ROAR 1 SPV Credit Facility. The ROAR 1 SPV Credit Facility allows for increases in maximum borrowings under the agreement of up to $200,000, bears interest at a rate of 12.5% and matures in March 2025, unless it is extended to March 2026. Under the terms of the ROAR 1 SPV Credit Facility, the ROAR 1 SPV Borrower is subject to certain covenants. As of December 31, 2021, there was a $78,000 outstanding principal balance under the ROAR 1 SPV Credit Facility. The principal balance is secured by $61,732 of finance receivables. In December 2021, ROAR 2 SPV Finance LLC, an indirect wholly owned subsidiary of the Company (the “ROAR 2 SPV Borrower”), entered into a $125,000 credit agreement (the “ROAR 2 SPV Credit Facility”) with a lender for the funding of finance receivables, which secure the ROAR 2 SPV Credit Facility. The ROAR 2 SPV Credit Facility allows for increases in maximum borrowings under the agreement of up to $300,000, bears interest at a rate of 12.5% and matures in December 2025, unless it is extended to December 2026. Under the terms of the ROAR 2 SPV Credit Facility, the ROAR 2 SPV Borrower is subject to certain covenants. As of December 31, 2021, there was a $68,000 outstanding principal balance under the ROAR 2 SPV Credit Facility. The principal balance is secured by $48,145 of finance receivables. Debt Maturities — Of the principal related to the Company’s debt agreements, $35,000, $8,333, $695 and $146,000 will be repaid during the years ended December 31, 2022, 2023, 2024 and 2025, respectively. |
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Income Taxes |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | 11. INCOME TAXES During the three months ended March 31, 2022 and 2021, the Company maintained a valuation allowance of $63,729 and $81,890, respectively. The valuation allowance was recorded due to the fact that the Company has incurred operating losses to date. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by approximately $18,100 during the three months ended March 31, 2022 and increased by approximately $22,800 million during the three months ended March 31, 2021. The Company’s financial statements included a full valuation allowance against net deferred tax assets before the acquisition of Even Financial. After considering the Even Acquisition, the projected consolidated results, and the available net deferred tax liability from Even Financial of approximately $28,400, the Company was able to release part of the valuation allowance due to the change in the overall net deferred tax asset. While this adjustment is a result of the Even Acquisition, ASC 805 requires that the benefits be recognized in income or equity, as applicable, and not as a component of acquisition accounting. The partially offsetting increase to the valuation allowance of approximately $10,300 was in relation to normal business operations. Total U.S. federal and state operating loss carryforwards as of March 31, 2022 and December 31, 2021 were approximately $704,200 and $517,700, respectively. U.S. federal net operating loss carryforwards begin to expire in 2033, and state operating loss carryforwards begin to expire in 2027. U.S. federal net operating losses of approximately $341,500 million carry forward indefinitely. As of March 31, 2022, the Company’s federal research and development credit carryforwards for income tax purposes were approximately $1,200. If not used, the current carryforwards will expire beginning in 2034. The Company has completed a review to determine whether the future utilization of net operating loss and credit carryforwards will be restricted due to ownership changes that have occurred. The study determined that there will be no limit after December 31, 2025. Due to the net operating loss carryovers, the statute of limitations remains open for federal and state returns. |
10. INCOME TAXES For the years ended December 31, 2021 and 2020, income tax expense computed at the federal statutory income tax rate of 21% differed from the recorded amount of income tax expense due primarily to state income taxes and permanent differences. A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:
The income tax (benefit) expense is as follows:
The tax effects of the primary temporary differences included in net deferred tax assets and liabilities are shown in the following table:
As of December 31, 2021 and 2020, the Company maintained a valuation allowance of $81,860 and $59,099, respectively. The valuation allowance was recorded due to the fact that the Company has incurred operating losses to date and is unable to forecast when such deferred tax assets will be utilized. There was no other activity in the valuation allowance accounting during 2021 and 2020. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $22,761 and $7,566 during the twelve months ended December 31, 2021 and 2020, respectively. Total U.S. federal and state operating loss carryforwards as of December 31, 2021 and 2020 were approximately $517,700 and $377,300, respectively. U.S. federal net operating loss carryforwards begin to expire in 2033, and state operating loss carryforwards begin to expire in 2027. U.S. Federal net operating losses of approximately $248,600 carry forward indefinitely. As of December 31, 2021, the Company’s federal research and development credit carryforwards for income tax purposes were approximately $1,200. If not used, the current carryforwards will expire beginning in 2034. The Company primarily files income tax returns in the United States federal jurisdiction and various states. The Company’s U.S. federal returns and state returns are no longer subject to income tax examinations for taxable years before 2018. The Company has performed a review to determine whether the future utilization of net operating loss and credit carryforwards will be restricted due to ownership changes that have occurred. The study determined that there will be no utilization limit after December 31, 2025. The review did not consider whether the future utilization of net operating loss and credit carryforwards will be restricted under IRC sections 382 and 383 due to ownership changes that occurred in the MALKA acquisition. However, based on the value of the Company at the date of change, the Company believes that there would not be a limitation triggered by the ownership change and therefore would not result in any adjustment to the deferred tax assets. Due to the net operating loss carryforwards, the statute of limitations remains open for federal and state returns. |
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Common Stock |
12 Months Ended |
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Dec. 31, 2021 | |
| Common Stock [Abstract] | |
| COMMON STOCK | 11. COMMON STOCK Following the Business Combination Closing on September 22, 2021, 970,000 shares of MoneyLion Class A Common Stock were redeemed for $9,700. |
Redeemable Convertible Preferred Stock |
12 Months Ended |
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Dec. 31, 2021 | |
| Redeemable Convertible Preferred Stock [Abstract] | |
| REDEEMABLE CONVERTIBLE PREFERRED STOCK | 12. REDEEMABLE CONVERTIBLE PREFERRED STOCK Each share of Legacy MoneyLion’s redeemable convertible preferred stock was convertible at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into a number of fully paid and non-assessable shares of Legacy MoneyLion Common Stock as could be determined by dividing the applicable original issue price by the applicable conversion price in effect at the time of conversion. Pursuant to the Merger Agreement, all outstanding shares of Legacy MoneyLion’s redeemable convertible preferred stock automatically converted into 116,264,374 shares of MoneyLion Class A Common Stock after giving effect to the Exchange Ratio upon the Business Combination Closing. See Note 3, “Business Combination” for additional information on the Business Combination. |
Stock-Based Compensation |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK-BASED COMPENSATION | 13. STOCK-BASED COMPENSATION 2021 Stock Incentive Plan At the Special Meeting, Fusion stockholders approved the Company’s Omnibus Incentive Plan (the “2021 Plan”). As of the Business Combination Closing, each Legacy MoneyLion option to purchase shares of Legacy MoneyLion Common Stock (a “Legacy MoneyLion Option”) that was outstanding and unexercised as of immediately prior to the Business Combination Closing Date automatically converted into the right to receive an option to acquire a number of shares of MoneyLion Class A Common Stock equal to the number of shares of Legacy MoneyLion Common Stock subject to such Legacy MoneyLion Option as of immediately prior to the Business Combination Closing Date, multiplied by the Exchange Ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of such Legacy MoneyLion Option in effect immediately prior to the Business Combination Closing Date, divided by the Exchange Ratio (rounded up to the nearest whole cent). The intent behind the terms in the Merger Agreement related to the exchange of the Legacy MoneyLion Options was to provide the holders with awards of equal value to the original awards. Accordingly, the impact of the conversion was such that the number of shares issuable under the modified awards and the related exercise prices were adjusted using the Exchange Ratio with all other terms remaining unchanged. The conversion ratio adjustment was without substance (akin to a stock split), and therefore, the effect of the change in the number of shares and the exercise price and share value were equal and offsetting to one another. As a result, the fair value of the modified awards was equal to the fair value of the awards immediately before the modification and, therefore, there was no incremental compensation expense to be recognized. There were no changes to the vesting period within the 2021 Plan. Stock-based compensation of $3,268 and $518 was recognized during the three months ended March 31, 2022 and 2021, respectively. The number of units awarded under the 2021 Plan are generally based on a weighted average of the MoneyLion Class A Common Stock in the days leading up to the grant. Fair values for options are calculated using a Black-Scholes option pricing model and PSUs with market conditions are fair valued using a Monte Carlo simulation model. Other grants are generally valued using the share price of MoneyLion Class A Common Stock on the day of grant. The following table represents activity within the 2021 Plan for the three months ended March 31, 2022:
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13. STOCK-BASED COMPENSATION 2014 Stock Option Plan Prior to the Business Combination, MoneyLion’s Amended and Restated 2014 Stock Option Plan (the “2014 Plan”) allowed the Company to provide benefits in the form of stock options. The Company had designated a total of 2,492,060 shares of common stock to the 2014 Plan. Upon the Business Combination Closing, the remaining unallocated share reserve under the 2014 Plan was cancelled and no new awards will be granted under such plan. 2021 Stock Incentive Plan At the Special Meeting, Fusion stockholders approved the Omnibus Incentive Plan (the “2021 Plan”). As of the Business Combination Closing, each Legacy MoneyLion Option that was outstanding and unexercised as of immediately prior to the Business Combination Closing Date automatically converted into the right to receive an option to acquire a number of shares of MoneyLion Class A Common Stock equal to the number of shares of Legacy MoneyLion Common Stock subject to such MoneyLion Option as of immediately prior to the Business Combination Closing Date, multiplied by the Exchange Ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of such Legacy MoneyLion Option in effect immediately prior to the Business Combination Closing Date, divided by the Exchange Ratio (rounded up to the nearest whole cent). The intent behind the terms in the Merger Agreement related to the exchange of the Legacy MoneyLion Options was to provide the holders with awards of equal value to the original awards. Accordingly, the impact of the conversion was such that the number of shares issuable under the modified awards and the related exercise prices were adjusted using the Exchange Ratio with all other terms remaining unchanged. The conversion ratio adjustment was without substance (akin to a stock split), and therefore, the effect of the change in the number of shares and the exercise price and share value were equal and offsetting to one another. As a result, the fair value of the modified awards was equal to the fair value of the awards immediately before the modification and, therefore, there was no incremental compensation expense that should be recognized. There were no changes to the vesting period within the plan. The 2021 Plan permits the Company to deliver up to 56,697,934 shares of MoneyLion Class A Common Stock pursuant to awards issued under the 2021 Plan, including 17,712,158 shares of MoneyLion Class A Common Stock and up to 38,985,776 shares of MoneyLion Class A Common Stock subject to outstanding prior awards. The number of shares of MoneyLion Class A Common Stock reserved for issuance under the 2021 Plan will automatically increase on each of January 1, 2022 and January 1, 2023 by an amount equal to the lesser of (i) 2% of the total number of outstanding shares of MoneyLion Class A Common Stock on December 31st of the immediately preceding calendar year and (ii) such smaller number of shares of MoneyLion Class A Common Stock as determined by the MoneyLion Board. Stock-based compensation of $5,039 and $1,650 was recognized during the twelve months ended December 31, 2021 and 2020, respectively. During 2021, the Company issued 627,228 restricted stock units (“RSUs”) at a weighted average grant date fair value per share of $5.97. All of RSUs remain unvested and outstanding as of December 31, 2021 and have unamortized expense of $3,344 which will be recognized over a weighted average of 2.15 years. The weighted average grant date fair value of options granted during the twelve months ended December 31, 2021 and 2020 was $1.50 and $0.38, respectively. These prices were determined using the Black-Scholes Merton option pricing model, which analyzes volatility, lack of marketability, and comparable companies, among other factors in determining the fair value of each share granted. Options granted generally vest over years and expire years from the grant date. Assumptions used for the options granted during the twelve months ended December 31, 2021 and 2020 are as follows:
The following table represents activity within the 2021 Plan since December 31, 2020:
6,977,038 options vested during the twelve months ended December 31, 2021 with an aggregate intrinsic value of $24,982. Total compensation cost related to unvested options not yet recognized as of December 31, 2021 was $11,911 and will be recognized over a weighted average of 2.8 years. |
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Stock Warrants |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Stock Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK WARRANTS | 14. STOCK WARRANTS Public Warrants and Private Placement Warrants As a result of the Business Combination, MoneyLion acquired from Fusion, as of September 22, 2021, public warrants outstanding to purchase an aggregate of 17,500,000 shares of the MoneyLion Class A Common Stock (the “Public Warrants”) and private placement warrants outstanding to purchase an aggregate of 8,100,000 shares of the MoneyLion Class A Common Stock (the “Private Placement Warrants”). The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. At the time of the Business Combination, the Public Warrants assumed by the Company were recorded at fair value within additional paid-in capital in the amount of $23,275. The Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liability on the consolidated balance sheets. The warrant liability is measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrants liability in the consolidated statement of operations. The Private Placement Warrants were valued using a Black-Scholes Option Pricing Model, which is calculated using Level 3 inputs. The primary unobservable input utilized in determining fair value of the Private Placement Warrants is the expected volatility of the MoneyLion Class A Common Stock. The following table presents the quantitative information regarding Level 3 fair value measurement of the Private Placement Warrants:
The following table presents the changes in the liability related to the Private Placement Warrants:
For more information regarding the Public Warrants and Private Placement Warrants, see Part II, Item 8 “Stock Warrants” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Legacy MoneyLion Warrants For details on Legacy MoneyLion warrants, see Part II, Item 8 “Business Combination” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
14. STOCK WARRANTS Public Warrants and Private Placement Warrants As a result of the Business Combination, MoneyLion acquired from Fusion, as of September 22, 2021, public warrants outstanding to purchase an aggregate of 17,500,000 shares of the MoneyLion Class A Common Stock (the “Public Warrants”) and private placement warrants outstanding to purchase an aggregate of 8,100,000 shares of the MoneyLion Class A Common Stock (the “Private Placement Warrants” and together with the Public Warrants, the “warrants”). Each whole warrant entitles the registered holder to purchase one whole share of MoneyLion Class A Common Stock at a price of $11.50 per share, at any time commencing on 12 months from closing of Fusion’s initial public offering. Redemption of Warrants for Cash The Company may call the warrants for redemption: • in whole and not in part; • at a price of $0.01 per warrant; • upon not less than 30 days’ prior written notice of redemption to each warrant holder; and • if, and only if, the closing price of the MoneyLion Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of MoneyLion Class A Common Stock and equity-linked securities for capital raising purposes in connection with the Business Combination Closing for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders). If and when the warrants become redeemable, the Company may exercise the redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws. The Private Placement Warrants are identical to the Public Warrants except that the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Except as described above, if holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering the warrants for that number of shares of MoneyLion Class A Common Stock equal to the quotient obtained by dividing the product of the number of shares of Money Lion Class A Common Stock underlying the warrants multiplied by the excess of the “historical fair market value” (defined below) less the exercise price of the warrants, by the historical fair market value. For these purposes, the “historical fair market value” shall mean the average last reported sale price of the MoneyLion Class A Common Stock. Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. At the time of the Merger, the Public Warrants assumed by the Company were recorded at fair value within additional paid-in capital in the amount of $23,275. As of December 31, 2021, the aggregate value of the Private Placement Warrants was $8,260, representing Private Placement Warrants outstanding to purchase 8,100,000 shares of MoneyLion Class A Common Stock. The Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrants payable on the consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrants payable in the consolidated statement of operations. The Private Placement Warrants are measured at fair value on a recurring basis. The Private Placement Warrants were valued using a Black-Scholes Option Pricing Model, which is calculated using Level 3 inputs. The primary unobservable inputs utilized in determining fair value of the Private Placement Warrants is the expected volatility of the MoneyLion Class A Common Stock. The following table presents the quantitative information regarding Level 3 fair value measurement of warrants:
The following table presents the changes in the fair value of the warrants:
Legacy MoneyLion Warrants See Note 3, “Business Combination” for details on the Legacy MoneyLion Warrants. |
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Net Loss Per Share |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NET LOSS PER SHARE | 15. NET LOSS PER SHARE The following table sets forth the computation of net loss per common share for the three months ended March 31, 2022 and 2021:
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion’s Common Stock for MoneyLion Class A Common Stock at the Exchange Ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination,” for details. For the three months ended March 31, 2022 and 2021, the Company’s potentially dilutive securities, which include stock options, RSUs, PSUs, preferred stock, the right to receive earnout shares and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same for the three months ended March 31, 2022 and 2021. The following potential common shares have been excluded from the computation of diluted net loss per share for the three months ended March 31, 2022 and 2021:
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at the Exchange Ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination” for details. |
15. NET LOSS PER SHARE The following table sets forth the computation of net loss per common share for the twelve months ended December 31, 2021 and 2020:
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion’s Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination,” for details. Additionally, included within net income attributable to common stockholders for the twelve months ended December 31, 2021 is an adjustment to reflect the reversal of previously accrued dividends on redeemable convertible preferred stock in the amount of $56,931 which were forfeited by the preferred stockholders in conjunction with the Business Combination. The Company’s potentially dilutive securities, which include stock options, RSUs, preferred stock and warrants to purchase shares of common stock and preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares from the computation of diluted net loss per share because including them would have an anti-dilutive effect for the twelve months ended December 31, 2021 and 2020:
(1) Prior period results have been adjusted to reflect the exchange of Legacy MoneyLion Common Stock for MoneyLion Class A Common Stock at an exchange ratio of approximately 16.4078 in September 2021 as a result of the Business Combination. See Note 3, “Business Combination” for details. |
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Commitments and Contingencies |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Legal Matters — The Company is subject to regulatory examination by the California Department of Financial Protection and Innovation (the “CA DFPI”). With respect to its activities in California, the Company received a report of examination in 2020 from the CA DFPI regarding MoneyLion of California, LLC, MoneyLion’s subsidiary, and a follow-up request for information in May 2021. This matter is ongoing, and the Company intends to continue to fully cooperate with the CA DFPI in this matter. In addition, the CA DFPI is currently conducting an industry-wide investigation of companies that provide earned wage access products and services, including Instacash. The Company intends to continue cooperating fully in this investigation and to that end entered into a memorandum of understanding (“MOU”) with the CA DFPI on February 23, 2021. The MOU requires the Company to regularly provide certain information to the CA DFPI and adhere to certain best practices regarding Instacash while the CA DFPI continues to investigate. Any potential impacts on the Company’s financial condition or operations relating to these CA DFPI matters are unknown at this time. The Company is also in the process of responding to Civil Investigative Demands (“CIDs”) or other investigatory requests relating to its provision of consumer financial services from the office of the Attorney General of the Commonwealth of Virginia, the New York Attorney General’s Office, as well as the Colorado Department of Law. The Company is cooperating with each of these state regulators and intends to take any corrective actions required to maintain compliance with applicable state laws. The Company cannot predict the outcome or any potential impact on its financial condition or operations at this time. We have received and are in the process of responding to CIDs from the Consumer Financial Protection Bureau (the “CFPB”) relating to the Company’s compliance with the Military Lending Act and its membership model. The Company will continue to provide to the CFPB all of the information and documents required by the CIDs and intends to continue to fully cooperate with the CFPB in this investigation. The investigation is ongoing and any potential impact on the Company’s financial condition or operations are unknown at this time. We have received and are in the process of responding to investigative subpoenas from the SEC concerning IIA, which primarily held assets from institutional investors and was the Company’s primary source of funding for originated receivables through the end of the fourth quarter of 2021. The Company is cooperating with the investigation and cannot predict its outcome or any potential impact on the Company’s financial condition or operations. |
16. COMMITMENTS AND CONTINGENCIES Lease Commitments — The Company leases various office space, including the corporate office location, from third parties under non-cancellable agreements which require various minimum annual rentals. Certain of the leases also require the payment of normal maintenance, utilities and related real estate taxes on the properties. The total minimum lease payments as of December 31, 2021 are as follows:
Rent expense totaled $997 and $1,233 for the years ended December 31, 2021 and 2020, respectively. Legal Matters — The Company is subject to regulatory examination by the California Department of Financial Protection and Innovation (the “CA DFPI”). With respect to its activities in California, the Company received a report of examination in 2020 from the CA DFPI regarding MoneyLion of California, LLC, MoneyLion’s subsidiary, and a follow-up request for information in May 2021. This matter is ongoing, and the Company intends to continue to fully cooperate with the CA DFPI in this matter. In addition, the CA DFPI is currently conducting an industry-wide investigation of companies that provide earned wage access products and services, including Instacash. The Company intends to continue cooperating fully in this investigation and to that end entered into a memorandum of understanding (“MOU”) with the CA DFPI on February 23, 2021. The MOU requires the Company to regularly provide certain information to the CA DFPI and adhere to certain best practices regarding Instacash while the CA DFPI continues to investigate. Any potential impacts on the Company’s financial condition or operations relating to these CA DFPI matters are unknown at this time. With respect to the Company’s activities in Minnesota, the Company received information requests in 2019, 2020 and 2021 from the Minnesota Department of Commerce (“Minnesota DOC”) regarding an investigation relating to the Company’s lending activity in Minnesota and its membership program. The Minnesota DOC previously informed the Company that it was no longer pursuing the investigation regarding the Company’s membership program but continued the investigation into lending activity. In December 2021, the Company signed a settlement order with the Minnesota DOC, which had no material impact on the Company’s financial condition or operations. The Company is also in the process of responding to Civil Investigative Demands (“CIDs”) or other investigatory requests relating to its provision of consumer financial services from the office of the Attorney General of the Commonwealth of Virginia, the New York Attorney General’s Office, as well as the Colorado Department of Law. The Company is cooperating with each of these state regulators and intends to take any corrective actions required to maintain compliance with applicable state laws. The Company cannot predict the outcome or any potential impact on its financial condition or operations at this time. In 2019, 2020 and 2021, the Company received CIDs from the Consumer Financial Protection Bureau (the “CFPB”) relating to the Company’s compliance with the Military Lending Act and its membership model. The Company will continue to provide to the CFPB all of the information and documents required by the CIDs and intends to continue to fully cooperate with the CFPB in this investigation. The investigation is ongoing and any potential impact on the Company’s financial condition or operations are unknown at this time. In February and March 2021, the Company received investigative subpoenas from the Securities and Exchange Commission concerning IIA, which primarily held assets from institutional investors and was the Company’s primary source of funding for originated receivables through the end of the fourth quarter of 2021. The Company is cooperating with the investigation and cannot predict its outcome or any potential impact on the Company’s financial condition or operations. |
Mergers and Acquisitions |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MERGERS AND ACQUISITIONS | 17. MERGERS AND ACQUISITIONS Even Financial — On February 17, 2022, the Company completed its previously announced acquisition (the “Even Acquisition”) of Even Financial pursuant to the Amended and Restated Agreement and Plan of Merger, by and among the Company, Epsilon Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company, Even Financial and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as representative of the equityholders of Even Financial. Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces. The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 Product Partners and 500 Channel Partners, covering a breadth of financial services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans. At the closing of the Even Acquisition, the Company (i) issued to the equityholders of Even Financial an aggregate of 28,164,811 shares of the Company’s Series A Redeemable Convertible Preferred Stock, along with an additional 529,120 shares of Series A Redeemable Convertible Preferred Stock to advisors of Even Financial for transaction expenses, valued at $193,647, (ii) paid to certain Even Financial management equityholders approximately $14,514 million in cash and (iii) exchanged 8,883,228 options to acquire Even Financial common stock for 5,901,846 options to acquire MoneyLion Class A Common Stock, of which the vested portion at the acquisition date was valued at $8,963. The equityholders and advisors of Even Financial are also entitled to receive an additional payment from the Company of up to an aggregate of 8,000,000 shares of Series A Redeemable Convertible Preferred Stock, based on the attributed revenue of Even Financial’s business during the 13-month period commencing January 1, 2022 (the “Earnout”), and certain recipients of options to acquire shares of the Company’s Class A common stock are entitled to receive dividend equivalents in lieu of receiving Series A Redeemable Convertible Preferred Stock, subject to certain conditions (the “Preferred Stock Equivalents”). The combined value of the Earnout and Preferred Stock Equivalents was $45,336 as of the closing of the Even Acquisition. The total purchase price was approximately $271,030, subject to customary purchase price adjustments for working capital and inclusive of amounts used to repay approximately $5,703 of existing indebtedness of Even Financial and pay $2,868 of seller transaction costs. The fair value of Even Financial’s acquired assets and liabilities were as follows:
The Earnout and Preferred Share Equivalents were valued at $46,424 as of March 31, 2022, and were included in other liabilities on the consolidated balance sheet. The $368 change in fair value for the three months ended March 31, 2022 was included on the consolidated statement of operations as a component of the change in fair value of contingent consideration from mergers and acquisitions. Due to the closing of the Even Acquisition occurring on February 17, 2022, there has not been sufficient time to finalize business combination accounting and related valuations of assets and liabilities acquired and consideration transferred as required by U.S. GAAP. Therefore, all balances recorded and disclosed as of March 31, 2022 are preliminary and subject to change. The Company’s pro forma revenue and net loss for the three months ended March 31, 2022 and 2021 below have been prepared as if Even Financial had been purchased on January 1, 2021. The Company made certain pro forma adjustments related to amortization of intangible assets, intercompany activity and interest expense.
The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the Even Acquisition had been completed at January 1, 2021. In addition, the unaudited pro forma information above does not attempt to project the Company’s future results. MALKA — On November 15, 2021, MoneyLion completed its acquisition (the “MALKA Acquisition”) of MALKA. MALKA is a creator network and content platform that provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors. The MALKA Acquisition accelerates MoneyLion’s ability to engage with consumers across all digital and emerging channels, allowing MoneyLion to directly connect with communities natively inside and outside of its existing platform. MoneyLion intends for MALKA to operate as an indirect, wholly-owned subsidiary of MoneyLion Inc. with MALKA’s pre-acquisition management team leading day-to-day operations. The total purchase price of the MALKA Acquisition was approximately $52,685. MoneyLion issued 4,181,441 restricted shares of MoneyLion Class A Common Stock and paid $10,000 in cash to the sellers in exchange for all of the issued and outstanding membership interests of MALKA. MoneyLion also paid down $2,196 of MALKA debt facilities. The sellers may earn up to an additional $35 million payable in restricted shares of MoneyLion Class A Common Stock if MALKA’s revenue and EBITDA exceeds certain targets in 2021 and 2022. The $35 million payable in restricted shares based on 2021 and 2022 operating performance was valued at $11,782 as of the MALKA Acquisition. The payable in restricted shares based on 2021 and 2022 operating performance was valued at $12,922 and $18,011 as of March 31, 2022 and December 31, 2021, respectively, and was included in other liabilities on the consolidated balance sheets. The $406 change in fair value for the three months ended March 31, 2022 was included on the consolidated statement of operations as a component of the change in fair value of contingent consideration from mergers and acquisitions. The fair value of MALKA’s acquired assets and liabilities were as follows:
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17. MERGERS AND ACQUISITIONS MALKA — On November 15, 2021, MoneyLion completed its acquisition (the “MALKA Acquisition”) of MALKA. MALKA is a creator network and content platform that provides digital media and content production services to us and to its own clients in entertainment, sports, gaming, live streaming and other sectors. The MALKA Acquisition accelerates MoneyLion’s ability to engage with consumers across all digital and emerging channels, allowing MoneyLion to directly connect with communities natively inside and outside of its existing platform. MoneyLion intends for MALKA to operate as an indirect, wholly-owned subsidiary of MoneyLion Inc. with MALKA’s pre-acquisition management team leading day-to-day operations. The total purchase price of the MALKA Acquisition was approximately $52,685. MoneyLion issued 4,181,441 restricted shares of MoneyLion Class A Common Stock and paid $10,000 in cash to the sellers in exchange for all of the issued and outstanding membership interests of MALKA. MoneyLion also paid down $2,196 of MALKA debt facilities. The sellers may earn up to an additional $35 million payable in restricted shares of MoneyLion Class A Common Stock if MALKA’s revenue and EBITDA exceeds certain targets in 2021 and 2022. The $35 million payable in restricted shares based on 2021 and 2022 operating performance was valued at $11,782 as of the acquisition. As of December 31, 2021, the payable in restricted shares based on 2021 and 2022 operating performance was valued at $18,011 and was included in accounts payable and accrued liabilities on the consolidated balance sheet as of December 31, 2021. The $6,229 change in fair value since the MALKA Acquisition was included on the consolidated statement of operations as the change in fair value of contingent consideration from mergers and acquisitions. The fair value of MALKA’s acquired assets and liabilities were as follows:
Wealth Technologies Inc. — In December 2020, the Company acquired 100% of the outstanding common stock and Series A redeemable convertible preferred shares of Wealth Technologies, Inc. in exchange for 539,592 shares of the MoneyLion Series C-1 Redeemable Convertible Preferred Stock, representing total consideration of approximately $27,929, which provided the Company with WTI’s market-leading wealth management decisioning and administration technology. The co-founder and equity holder of WTI was a significant stockholder of Series A redeemable convertible preferred stock of Legacy MoneyLion and was the Chairman of the Legacy MoneyLion board of directors as of the date of the transaction. $6,130 of the total consideration was allocated to proprietary technology and $21,565 was allocated to goodwill. |
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Related Parties |
12 Months Ended |
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Dec. 31, 2021 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTIES | 18. RELATED PARTIES In the ordinary course of business, we may enter into transactions with directors, principal officers, their immediate families, and affiliated companies in which they are principal stockholders (commonly referred to as “related parties”). During the year ended December 31, 2020, the Company earned affiliate revenue through an arrangement with an affiliated company in which the Company’s Chief Financial Officer holds a minority financial interest. The revenues related to this agreement included within the consolidated statement of operations were immaterial during the year ended December 31, 2020. The amounts due from the related party were not material as of December 31, 2020. There was no such activity during the year ended December 31, 2021. In April 2020, the Company entered into a $5,000 secured loan facility with a lender that is controlled by a significant holder of Legacy MoneyLion’s redeemable convertible preferred stock. On August 27, 2021, the Company entered into an amendment that refinanced the secured loan facility with a non-related party lender. Interest expense included within the consolidated statement of operations was $421 during the year ended December 31, 2020. In December 2020, the Company acquired 100% of the outstanding common stock and Series A redeemable convertible preferred shares of WTI. The co-founder and equity holder of WTI was also a significant stockholder of Legacy MoneyLion’s redeemable convertible preferred stock and was the Legacy MoneyLion Chairman as of the date of the transaction. For more information about the transaction, see Note 17, “Mergers and Acquisitions.” Additionally, some of our directors hold financial interests in separate entities, which the Company utilized in the ordinary course of business during the years ended December 31, 2021 and 2020. The activity during the year ended December 31, 2020 was not material. The Company is party to an Amended and Restated Marketing Consulting Agreement, dated as of May 11, 2021 and as amended from time to time (the “Marketing Consulting Agreement”), with LeadGen Data Services LLC (“LeadGen”), pursuant to which LeadGen provides the Company with certain marketing, consumer acquisition, lead generation and other consulting services. For the year ended December 31, 2021, MoneyLion paid $6,624 to LeadGen and earned $7,083 of revenue under the Marketing Consulting Agreement. |
Subsequent Events |
3 Months Ended | 12 Months Ended |
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Subsequent Events [Abstract] | ||
| SUBSEQUENT EVENTS | 18. SUBSEQUENT EVENTS The Company has evaluated subsequent events through May 16, 2022, the date on which these consolidated financial statements were available to be issued, and concluded that there were no material subsequent events requiring disclosure. |
19. SUBSEQUENT EVENTS The Company has evaluated subsequent events through March 17, 2022, the date on which these consolidated financial statements were available to be issued, and concluded that the following subsequent events were required to be disclosed: Even Financial, Inc. Acquisition — On February 17, 2022, the Company completed its previously announced acquisition (the “Even Acquisition”) of Even Financial Inc., a Delaware corporation (“Even Financial”) pursuant to the Amended and Restated Agreement and Plan of Merger (the “Amended and Restated Merger Agreement”), by and among the Company, Epsilon Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Epsilon”), Even Financial and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as representative of the equityholders of Even Financial (the “Equityholders’ Representative”). Founded in 2014, Even Financial digitally connects and matches consumers with real-time personalized financial product recommendations from banks, insurance and fintech companies on mobile apps, websites and other consumer touchpoints through its marketplace technology. Even Financial’s infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial institutions and channel partners via its industry-leading API and embedded finance marketplaces. The Even Acquisition strengthens MoneyLion’s platform by improving consumers’ abilities to find and access the right financial products to help them manage their financial lives. Even Financial’s growing network includes over 400 financial institution partners and 500 channel partners, covering a breadth of financial services including loans, credit cards, mortgages, savings and insurance products. The Even Acquisition also expands MoneyLion’s addressable market, extends the reach of MoneyLion’s own products, diversifies its revenue mix and furthers MoneyLion’s ambition to be the premier financial super app for hardworking Americans. At the closing of the Even Acquisition, the Company (i) issued to the equityholders of Even Financial an aggregate of 28,164,811 shares of the Series A Convertible Preferred Stock, par value $0.0001 per share, of the Company (the “Preferred Stock”), with a face value of $10.00 per share (the “Conversion Price”), (ii) paid to certain Even Financial management equityholders approximately $14.5 million in cash and (iii) exchanged 8,883,228 options to acquire Even Financial common stock for 5,901,846 options to acquire MoneyLion Class A Common Stock. The equityholders of Even Financial are also entitled to receive an additional payment from the Company of up to an aggregate of 8,000,000 shares of Preferred Stock, with a face value per share equal to the Conversion Price, based on the attributed revenue of Even Financial’s business during the 13-month period commencing January 1, 2022 (the “Earnout”). Based on the Conversion Price of the shares of Preferred Stock issued at the closing of the Even Acquisition and to be issued pursuant to the Earnout, the value of the options to acquire MoneyLion Class A Common Stock and the cash paid to the management equityholders, the total purchase price was approximately $440 million, subject to customary purchase price adjustments for working capital and inclusive of amounts used to repay approximately $5.7 million of existing indebtedness of Even Financial. Due to the closing of the Even Acquisition occurring on February 17, 2022, there has not been sufficient time to apply business combination accounting to the opening balance sheet or create the financial disclosures required by U.S. GAAP. |
Leases |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | 10. LEASES All long-term leases identified by the Company are classified as operating leases. Lease expenses related to long-term leases were $620 for the three months ended March 31, 2022. Short-term lease expense, variable lease expense and sublease income were not material for the three months ended March 31, 2022. The right-of-use assets and lease liabilities were $8,722 and $8,977, respectively, and were included in other assets and other liabilities, respectively, on the March 31, 2022 consolidated balance sheet. Maturities of the Company’s long-term operating lease liabilities were as follows:
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Common and Preferred Stock |
3 Months Ended |
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Mar. 31, 2022 | |
| Common And Preferred Stock [Abstract] | |
| COMMON AND PREFERRED STOCK | 12. COMMON AND PREFERRED STOCK MoneyLion Class A Common Stock — Each holder of the shares of MoneyLion Class A Common Stock is entitled to one vote for each share of MoneyLion Class A Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, as provide by the Company’s Certificate of Incorporation (as amended from time to time). The holders of the shares of MoneyLion Class A Common Stock do not have cumulative voting rights in the election of directors. Generally, all matters to be voted on by the holders of MoneyLion Class A Common Stock must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast present in person or represented by proxy, unless otherwise specified by law, the Company’s Certificate of Incorporation or Bylaws (as amended from time to time). Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of MoneyLion Class A Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by MoneyLion’s board of directors out of funds legally available therefor. In the event of any voluntary or involuntary liquidation, dissolution or winding up of MoneyLion’s affairs, the holders of the shares of MoneyLion Class A Common Stock are entitled to share ratably in all assets remaining after payment of MoneyLion’s debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the shares of MoneyLion Class A Common Stock, then outstanding, if any. The holders of shares of MoneyLion Class A Common Stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the shares of MoneyLion Class A Common Stock. The rights, preferences and privileges of holders of shares of MoneyLion Class A Common Stock will be subject to those of the holders of any shares of the preferred stock MoneyLion may issue in the future. Series A Redeemable Convertible Preferred Stock — Each holder of the shares of Series A Redeemable Convertible Preferred Stock (other than certain regulated holders subject to the Bank Holding Company Act of 1956, as amended) is entitled to vote as a single class with the holders of the MoneyLion Class A Common Stock and the holders of any other class or series of capital stock of MoneyLion then entitled to vote. Holders of the Series A Redeemable Convertible Preferred Stock are entitled to a 30 cent cumulative annual dividend per share, payable at the Company’s election in either cash or MoneyLion Class A Common Stock (or a combination thereof), with any dividends on the MoneyLion Class A Common Stock valued based on the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE for the 20 trading days ending on the trading day immediately prior to the date on which the dividend is paid. Upon a liquidation of the Company, holders of the Series A Redeemable Convertible Redeemable Preferred Stock will be entitled to a liquidation preference of the greater of $10.00 per share or the amount per share that such holder would have received had the Series A Redeemable Convertible Preferred Stock been converted into MoneyLion Class A Common Stock immediately prior to the liquidation. Shares of Series A Convertible Redeemable Preferred Stock are convertible into shares of MoneyLion Class A Common Stock on a one-for-one basis, subject to customary anti-dilution adjustments. The Series A Redeemable Convertible Preferred Stock (i) is convertible at any time upon the holder’s election and (ii) automatically converts into MoneyLion Class A Common Stock if the per share volume-weighted average price of the shares of MoneyLion Class A Common Stock on the NYSE equals or exceeds $10.00 on any 20 trading days (which may be consecutive or nonconsecutive) within any consecutive 30 trading day period that ends no later than the last day of the lockup period that applies to such shares of Series A Redeemable Convertible Preferred Stock. Preferred Stock Issued Before the Business Combination — Each share of Legacy MoneyLion’s redeemable convertible preferred stock was convertible at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into a number of fully paid and non-assessable shares of Legacy MoneyLion Common Stock as could be determined by dividing the applicable original issue price by the applicable conversion price in effect at the time of conversion. Pursuant to the Merger Agreement, all outstanding shares of Legacy MoneyLion’s redeemable convertible preferred stock automatically converted into 116,264,374 shares of MoneyLion Class A Common Stock after giving effect to the Exchange Ratio upon the Business Combination Closing. See Part II, Item 8 “Business Combination” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further discussion of the Business Combination. |
Accounting Policies, by Policy (Policies) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates | Use of Estimates — The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements included, but are not limited to, revenue recognition, provision for transaction losses, accounting for business combinations, determination of useful lives of property and equipment, valuation and useful lives of intangible assets, impairment assessment of goodwill, internal-use software, valuation of common stock, valuation of stock warrants, valuation of convertible notes, stock option valuations, income taxes, and the recognition and disclosure of contingent liabilities. The Company evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements. |
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| Revenue Recognition and Related Receivables | Revenue Recognition and Related Receivables — The following table summarizes revenue by type for the quarters ended March 31, 2022 and 2021:
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Revenue Recognition and Related Receivables — The ML Plus membership was developed to allow customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. In 2019 the Company began offering the Credit Builder Plus membership, which is intended to emphasize the program’s ability to help customers build credit while also saving. These programs are offered directly to MoneyLion customers. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances. Revenue is recognized as the Company transfers control of promised goods or services to members, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods or services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors. Based on the Company’s evaluation of these factors, revenue is recorded either gross or net of costs associated with the transaction. Membership subscription revenue is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Membership receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time. Members of the Credit Builder Plus membership program typically receive the cash related to loans and interest-free Instacash advances in 1-3 business days. Members may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a member. Instant transfer fees are recognized gross over the term of the loan or Instacash advance, as the services related to these fees are not distinct from the services of the loan or Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer. With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer. Affiliate revenue is generated by displaying ads on the Company’s mobile application and by sending emails or other messages to customers promoting affiliate services. For affiliate services, the Company enters into agreements with the affiliates in the form of a signed contract, which specify the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the customer arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion. Interest income and the related accrued interest receivables on loan-related finance receivables is accrued based upon the daily principal amount outstanding except for when these loans are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due. Digital media and content production services provided to third parties are generally earned and recognized over time as the performance obligations within the contracts are satisfied. The revenue is recorded in other income in the statement of operations. Contracts for digital media and content production services are typically short-term. |
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| Allowance for Losses on Receivables | Allowance for Losses on Receivables — An allowance for losses on consumer receivables is established to provide for probable losses incurred in the Company’s consumer receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance 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 consumer’s ability to pay. The allowance is developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors. The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable. The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products. An allowance for losses on service and subscription fee receivables is established to provide probable losses incurred in the Company’s service and subscription fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements. Receivables from enterprise services have a low rate of default, and as such the related allowance is not material. The Company monitors enterprise receivable default rates for any indication of a deterioration in average credit quality that may result in more material levels of allowance for losses. |
Allowance for Losses on Receivables — An allowance for losses on finance receivables and related accrued interest and fee receivables is established to provide for probable losses incurred in the Company’s finance receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of many factors, including changes in the nature, volume, and risk characteristics of the finance receivables portfolio, including trends in delinquency and charge-offs and current economic conditions that may affect the borrower’s ability to pay. The allowance is developed on a general basis and each period management assesses each product type by origination cohort in order to determine the forecasted performance of those cohorts and arrive at an appropriate allowance rate for that period. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in any of the factors. The Company’s charge-off policy is to charge-off finance receivables for loans and related accrued interest receivables, net of expected recoveries, in the month in which the account becomes 90 days contractually past due and charge-off finance receivables for advances and related fee receivables in the month in which the account becomes 60 days past due. If an account is deemed to be uncollectable prior to this date, the Company will charge-off the receivable in the month it is deemed uncollectable. The Company determines the past due status using the contractual terms of the finance receivables. This is the credit quality indicator used to evaluate the required allowance for losses on finance receivables for each portfolio of products. An allowance for losses on membership and fees receivables is established to provide probable losses incurred in the Company’s membership and fee receivables at the balance sheet date and is established through a provision for losses on receivables. Charge-offs, net of recoveries, are charged directly to the allowance. The allowance is based on management’s assessment of historical charge-offs and recoveries on these receivables, as well as certain qualitative factors including current economic conditions that may affect the customers’ ability to pay. Prior to the period ended June 30, 2021, the allowance related to these receivables had not been material to the consolidated financial statements. |
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| Segment Information | Segment Information — Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has one business activity and there are no segment managers who are held accountable for material operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment. |
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| Governmental Regulation | Governmental Regulation — The Company is subject to various state and federal laws and regulations in each of the states in which it operates, which are subject to change and may impose significant costs or limitations on the way the Company conducts or expands its business. The Company’s loans are originated under individual state laws, which may carry different rates and rate limits, and have varying terms and conditions depending upon the state in which they are offered. The Company is licensed or exempt from licensing to make loans in substantially all states in the United States of America. Other governmental regulations include, but are not limited to, imposed limits on certain charges, insurance products and required licensing and qualification. |
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| Fair Value Measurements | Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
The Company evaluates the significance of transfers between levels based upon the nature of the financial instruments and size of the transfer relative to total net assets available for benefits. For the years ended December 31, 2021 and 2020, there were no transfers in or out of levels 1, 2 or 3. |
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| Net Loss Per Share | Net Loss Per Share — The Company calculated basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered the redeemable convertible preferred stock to be a participating security as the holders are entitled to receive aggregated accrued and not paid dividends if/when declared by the board of directors at a dividend rate payable in preference and priority to the holders of common stock. Under the two-class method, basic net loss per share attributable to common stockholders was calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. The net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of redeemable convertible preferred stock do not have a contractual obligation to share in losses, which is consistent with the if converted method of calculation. Diluted net loss per share attributable to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, redeemable convertible preferred stock, stock options, restricted stock units, right to receive Earnout Shares, as defined in Note 3, “Business Combination,” and warrants to purchase redeemable convertible preferred stock and common stock were considered common shares equivalents but had been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was anti-dilutive. In periods in which the Company reports a net loss attributable to all classes of common stockholders, diluted net loss per share attributable to all classes of common stockholders is the same as basic net loss per share attributable to all classes of common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported net losses attributable to common stockholders for the fiscal years ended December 31, 2021 and 2020. |
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| Cash | Cash — Cash includes cash and cash equivalents held at financial institutions. For purposes of the consolidated financial statements, the Company considers all highly liquid investments purchased with a maturity date of three months or less to be cash equivalents. At times, the Company may maintain deposits with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limits, but management believes any such amounts do not represent a significant credit risk. |
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| Restricted Cash | Restricted Cash — Restricted cash consists of cash required to be held on reserve by the Company’s vendors for purposes of loan or advance processing or funding and cash on hand in the VIEs. All cash accounts are held in federally insured institutions, which may at times exceed federally insured limits. The Company has not experienced losses in such accounts. Management believes the Company’s exposure to credit risk is minimal for these accounts. |
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| Goodwill | Goodwill — The Company performs goodwill impairment testing annually, on the last day of the fiscal year or more frequently if indicators of potential impairment exist. The goodwill impairment test is performed at the reporting unit level. The Company first evaluates whether it is more likely than not that the fair value of the reporting unit has fallen below its carrying amount. No indicators of fair value falling below the reporting unit carrying amount were noted on a quantitative or qualitative basis during the fiscal year 2021 assessment. |
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| Intangible Assets | Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three to seven years depending on the nature of the software development. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred. |
Intangible Assets — The Company’s intangible assets are made up of internal use software and acquired proprietary technology, customer relationships and trade names. The Company capitalizes qualifying internal use software development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the application development stage internally or externally are capitalized and amortized on a straight-line basis over the expected useful life of three years. Costs related to preliminary project activities and post-implementation operation activities, including training and maintenance, are expensed as incurred. |
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment charges were recognized during the years ended December 31, 2021 and 2020. |
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| Income Taxes | Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effects of future tax rate changes are recognized in the period when the enactment of new rates occurs. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the positions taken or the amount of the positions that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of operations. |
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| Stock-Based Compensation | Stock-Based Compensation — The Company accounts for the restricted stock units (“RSUs”) and performance share units (“PSUs”) granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant. Some PSUs have been granted with a performance condition based on the Company’s operating performance. These performance conditions are assessed each reporting period and expense related to these PSUs is adjusted by a factor consistent with the expected performance as of the reporting date. The Company accounts for its stock options granted to employees or directors as stock-based compensation expense based on their grant date fair value. The Company uses a Black-Scholes option valuation model to measure the fair value of options at the date of grant. Some PSU awards are issued with a market condition which are valued on the grant date utilizing a Monte Carlo simulation model. The Black-Scholes option pricing model and the Monte Carlo simulation model require estimates of future stock price volatility, expected term, risk-free interest rate and forfeitures. The fair value of all awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred. |
-Based Compensation — The Company accounts for its stock options granted to employees or directors as stock-based compensation expense based on their grant date fair value. The Company uses an option valuation model to measure the fair value of options at the date of grant. The Company accounts for the restricted stock units granted to employees or directors as stock-based compensation expense based on their grant date fair value. The grant date fair value is based on the price of MoneyLion Class A Common Stock on the day of the grant. The fair value of the awards is recognized as an expense over the requisite service period in the Company’s consolidated statement of operations. Forfeitures are accounted for as they are incurred. |
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| Warrant Liability | Warrant Liability — The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Accounting Standards Codification (“ASC”) 480 and ASC 815. The Company accounts for its outstanding Public Warrants and Private Placement Warrants (as defined in Note 14. “Stock Warrants”) in accordance with the guidance contained in Accounting Standards Codification 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”). The Company determined that the Private Placement Warrants do not meet the criteria for equity treatment thereunder. For issued or modified warrants that do not meet all the criteria for equity treatment, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. As such, each Private Placement Warrant is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model. The Public Warrants meet the conditions for equity classification in accordance with ASC 815-40. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. |
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| Convertible Notes | Subordinated Convertible Notes — As permitted under ASC 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option to account for its Subordinated Convertible Notes (as defined below). In accordance with ASC 825, the Company records these Subordinated Convertible Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the consolidated statement of operations. As a result of applying the fair value option, direct costs and fees related to the Subordinated Convertible Notes were expensed as incurred and were not deferred. The Company concluded that it was appropriate to apply the fair value option to the Subordinated Convertible Notes because there are no non-contingent beneficial conversion options related to the Subordinated Convertible Notes. The Subordinated Convertible Notes were valued using a scenario-based discounted cash flow analysis. The Company estimated the probability and timing of the scenarios based on management’s assumptions and knowledge of specified events at issuance and as of each reporting date. The Subordinated Convertible Notes are classified as Level 3 because of the Company’s reliance on unobservable assumptions. |
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| Contingent consideration from mergers and acquisitions | Contingent consideration from mergers and acquisitions — The Company determined that the contingent consideration related to the MALKA earnout provisions do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA earnout was estimated using a Monte Carlo Simulation Model. |
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| Property and Equipment | Property and Equipment — Property and equipment is carried at cost. Depreciation is determined principally under the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are described below: |
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| Debt Issuance Costs | Debt Issuance Costs — Costs incurred to obtain debt financing are capitalized and amortized into interest expense over the life of the related debt using a method that approximates the effective interest method. Debt issuance costs are recorded as a contra debt balance in the accompanying consolidated financial statements. |
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| Marketing Costs | Marketing Costs — Costs related to marketing activities are expensed as incurred. |
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| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements — The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), effective January 1, 2022, and applied the changes prospectively, recognizing a cumulative-effect adjustment to the beginning balance of retained earnings as of the adoption date. As permitted by the new guidance, the Company elected the package of practical expedients, which among other things, allowed historical lease classification to be carried forward. Upon adoption of the ASU No. 2016-02, the Company recognized an aggregate lease liability and right-of-use asset of $3,551, calculated based on the present value of the remaining minimum lease payments for qualifying leases as of January 1, 2022. The cumulative-effect adjustment recognized to the beginning balance of retained earnings was not material. The adoption of the new guidance did not impact the Company’s unaudited consolidated interim statements of operations or cash flows. |
Recently Adopted Accounting Pronouncements — In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The new guidance provides for the deferral of implementation costs for cloud computing arrangements and expensing those costs over the term of the cloud services arrangement. The new guidance is effective for fiscal years beginning after December 15, 2020 and interim periods in 2021. The adoption of the ASU did not have an impact on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide: (1) financing to the issuer, or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. |
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| Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted — The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012. Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which, along with subsequent related ASUs, creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company believes the adoption impact of ASU 2019-12 will not be material to the consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference London Interbank Offered Rate (“LIBOR”) or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of March 31, 2022. As such, the Company currently does not intend to elect the optional expedients and exceptions. In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures. |
Recently Issued Accounting Pronouncements Not Yet Adopted — The Company currently qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Accordingly, the Company has the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods applicable to private companies. The Company has elected to adopt new or revised accounting guidance within the same time period as private companies, unless, as indicated below, management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. In February 2016, the FASB Issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for the Company on January 1, 2022. The Company is in the process of evaluating the impact that the pending adoption of this new guidance will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which creates a new credit impairment standard for financial assets measured at amortized cost and available-for-sale debt securities. The ASU requires financial assets measured at amortized cost (including loans, trade receivables and held-to-maturity debt securities) to be presented at the net amount expected to be collected, through an allowance for credit losses that are expected to occur over the remaining life of the asset, rather than incurred losses. The ASU requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. The measurement of credit losses for newly recognized financial assets (other than certain purchased assets) and subsequent changes in the allowance for credit losses are recorded in the statement of income as the amounts expected to be collected change. The ASU is effective for nonpublic entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is in process of evaluating the impact that adoption of this new guidance will have on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitating of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions in which the reference LIBOR or another reference rate is expected to be discontinued as a result of the Reference Rate Reform. This ASU is intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new guidance is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company has no significant contracts based on LIBOR as of December 31, 2021. As such, the Company currently does not intend to elect the optional expedients and exceptions. In August 2020, the FASB issued ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2024; however, early adoption of the ASU is permitted on January 1, 2021. The Company is in process of evaluating the impact that the updated standard will have on its consolidated financial statements and related disclosures. |
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| Service and subscription fees | Service and subscription fees — The Credit Builder Plus membership was developed to allow consumer customers to access affordable credit through asset collateralization, build savings, improve financial literacy and track their financial health. The Credit Builder Plus membership is intended to emphasize the program’s ability to help consumer customers build credit while also saving. Members also receive access to the Company’s banking account, managed investment services, credit tracking services and Instacash advances. The membership subscription fee is recognized on a daily basis throughout the term of the individual subscription agreements, as the control of the membership services is delivered to the customer evenly throughout that term. Subscription receivables are recorded at the amount billed to the customer. The Company policy is to suspend recognition of subscription revenue when the last scheduled subscription payment is 30 days past due, or when, in the Company’s estimation, the collectability of the account is uncertain. Membership subscription revenue is recognized gross over time. As the Company performs promised services to members, including those services that the members receive access to as part of the Credit Builder Plus membership, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company evaluates whether it is appropriate to recognize revenue on a gross basis or net of costs associated with the transaction based upon its evaluation of whether the Company obtains control of the specified services by considering if it is primarily responsible for fulfilment of the promise, and has the latitude in establishing pricing, among other factors. Most service fees are related to the Company’s Instacash advance product. Users may obtain cash from interest-free Instacash advances in 1-3 business days or may elect to receive cash immediately through the Company’s instant transfer option. The Company charges a fee when the instant transfer option is elected by a customer. Instant transfer fees are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. The receivable related to the instant transfer option fee is recorded at the amount billed to the customer. With respect to the Company’s Instacash advance service, the Company provides customers with the option to provide a tip for the offering. Fees earned on tips are recognized gross over the term of the Instacash advance, as the services related to these fees are not distinct from the services of the Instacash advance. Advances typically include a term of 30 days or less, depending on the individual’s pay cycle. The Company’s policy is to suspend the account when an advance is 60 days or more past the scheduled payment date on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain. The receivable related to the tip is recorded at the amount billed to the customer. |
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| Net interest income on loan receivables | Net interest income on loan receivables — Interest income and the related accrued interest receivables on loan-related receivables are accrued based upon the daily principal amount outstanding except for loans that are on nonaccrual status. The Company recognizes interest income using the interest method. The Company’s policy is to suspend recognition of interest income on finance receivables and place the loan on nonaccrual status when the account is 60 days or more past due on a contractual basis or when, in the Company’s estimation, the collectability of the account is uncertain, and the account is less than 90 days contractually past due. |
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| Enterprise service revenues | Enterprise service revenues — The Company provides services to enterprise clients to allow them to better connect with existing end-users and reach new potential end-users. These services include lead generation services, advertising services and digital media and content production services custom designed to promote enterprise clients’ products and services. The Company has a single performance obligation to provide lead generating services to financial institutions and financial service providers (“Product Partners”) whereby qualified consumers are matched with financial solutions offered by the Product Partners based on qualification and preference. Lead generation fees are earned through the operation of a robust technology platform via an API that connects consumers to financial institutions and financial service providers. The Company’s API platform functions as a powerful definitive search, comparison and ad recommendation engine that provides consumers with personalized financial solution options and matches the demand and supply of financial services. The lead generating services conducted through the API comprise a series of distinct services that are substantially the same and have the same pattern of transfer. The Company is entitled to receive transaction fees that are based on performance structure, including but not limited to cost per funded loan, cost per approved credit card, cost per click or cost per savings accounts, or revenue share based on successful lead conversion. The transaction fees and revenue share are considered revenue from contracts with Product Partners, including financial institutions and other financial service providers. These fees and revenue share to which the Company expects to be entitled are deemed variable consideration because the loan volume over the contractual term is not known. Because the lead generating service performance obligation is a series of distinct services, the Company applies the variable consideration exception and allocates the variable consideration to the period in which the fees are earned, and recognizes revenue over time. The Company generates advertising fees by displaying ads on the Company’s mobile application and by sending emails or other messages to potential end-users to promote the enterprise clients’ services. For advertising services, the Company enters into agreements with the enterprise clients in the form of a signed contract, which specifies the terms of the services and fees, prior to running advertising and promotional campaigns. The Company recognizes revenue from the display of impression-based ads and distribution of impression-based emails in the period in which the impressions are delivered in accordance with the contractual terms of the enterprise clients’ arrangements. Impressions are considered delivered when a member clicks on the advertisement or promotion. Digital media and content production services provided to enterprise clients are generally earned and recognized over time as the performance obligations within the contracts are satisfied. Payment terms vary from contract to contract such that collections may occur in advance of services being rendered, as services are rendered or after services are rendered. Contracts for digital media and content production services are typically short-term in duration. |
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| Valuation of consideration transferred related to mergers and acquisitions | Valuation of consideration transferred related to mergers and acquisitions — The Company determined that the contingent consideration related to the earnout provision and preferred share equivalents in connection with the MALKA Acquisition and Even Acquisition (each as defined herein) do not meet the criteria for equity treatment. For provisions that do not meet all the criteria for equity treatment, the contingent consideration is required to be recorded at fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized as a non-cash gain or loss on the statements of operations. As such, the MALKA and Even Financial earnout provision is recorded as a liability and any change in fair value is recognized in the Company’s statements of operations. The fair value of the MALKA and Even Financial earnout was estimated using a Monte Carlo Simulation Model. The Company determined that the consideration related to the shares of MoneyLion’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A Redeemable Convertible Preferred Stock”), transferred as part of the consideration for the Even Acquisition meets the criteria for equity treatment. The fair value of this consideration was estimated using a Monte Carlo Simulation Model and recorded to equity on the date of issuance. |
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| Leases | Leases — Effective January 1, 2022, arrangements containing leases are evaluated as an operating or finance lease at lease inception. No finance leases were identified. For operating leases, the Company recognizes an operating right-of-use asset and operating lease liability at lease commencement based on the present value of lease payments over the lease term. Since an implicit rate of return is not readily determinable for the Company’s leases, an incremental borrowing rate is used in determining the present value of lease payments. The incremental borrowing rate is determined using the rate of interest the Company pays to borrow funds on a collateralized basis, adjusted for differences in the lease term compared to the Company’s debt using the differences in daily U.S. treasury par yield curve that correspond to the terms of the Company’s lease and debt. These rates are updated on a quarterly basis for measurement of new lease obligations. Some leases include renewal options; however, generally it is not reasonably certain that these options will be exercised at lease commencement. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the Company’s balance sheet. The Company separates lease and non-lease components for its real estate leases. |
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Summary of Significant Accounting Policies (Tables) |
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Mar. 31, 2022 |
Dec. 31, 2021 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of the estimated useful lives of property and equipment |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue recognition and related receivables |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer Receivables (Tables) |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of receivables |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in the allowance for losses on consumer receivables |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assessment of the credit quality of finance receivables |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment (Tables) |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
|
|
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Intangible Assets (Tables) |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of intangible assets |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of amortization expense of intangible assets |
|
|
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Other Assets (Tables) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other assets consisted |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities (Tables) |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of consolidated financial statements |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of debt |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reconciliation of the federal statutory income tax rate |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income tax (benefit) expense |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of net deferred tax assets and liabilities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation (Tables) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of weighted average grant date fair value of options granted |
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| Schedule of represents activity within the 2021 Plan |
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Stock Warrants (Tables) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Stock Warrants [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of quantitative information regarding level 3 fair value measurement |
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| Schedule of changes in fair value of the warrants |
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Net Loss Per Share (Tables) |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schdeule of computation of net loss per common share |
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| Schdeule of potential common shares |
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
| Schedule of total minimum lease payments |
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Mergers and Acquisitions (Tables) |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 |
Dec. 31, 2021 |
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| Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of MALKA’s acquired assets and liabilities |
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| Schedule of fair value of even financial’s acquired assets and liabilities |
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| Schedule of the company’s pro forma revenue and net loss |
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long-term operating lease liabilities |
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Description of Business and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Feb. 11, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2022 |
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| Description of Business and Basis of Presentation (Details) [Line Items] | ||||
| Aggregate of shares (in Shares) | 25,000,000 | |||
| Commitment amount | $ 250,000 | |||
| Non guaranteed preferred return percentage | 12.00% | |||
| Increments | $ 100,000 | |||
| Redemptions value | 127,391 | $ 17,489 | ||
| Unpaid amount | $ 1,500 | |||
| Redeemable noncontrolling interest | $ 71,852 | |||
| Class A Common Stock [Member] | ||||
| Description of Business and Basis of Presentation (Details) [Line Items] | ||||
| Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||
| Class A Common Stock [Member] | MoneyLion [Member] | ||||
| Description of Business and Basis of Presentation (Details) [Line Items] | ||||
| Price per share (in Dollars per share) | $ 10 | |||
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Jan. 01, 2022 |
Dec. 31, 2021 |
Mar. 31, 2022 |
Dec. 31, 2020 |
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| Summary of Significant Accounting Policies (Details) [Line Items] | ||||
| Percentage of tax benefit | 50.00% | |||
| Convertible preferred stock, par value | $ 0.0001 | |||
| Lease liability right-of-use asset | $ 3,551 | |||
| Series A Redeemable Convertible Preferred Stock [Member] | ||||
| Summary of Significant Accounting Policies (Details) [Line Items] | ||||
| Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 |
Summary of Significant Accounting Policies (Details) - Schedule of the estimated useful lives of property and equipment |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Minimum [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Leasehold improvements | 5 years |
| Furniture and fixtures | 5 years |
| Computers and equipment | 2 years |
| Maximum [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Leasehold improvements | 15 years |
| Furniture and fixtures | 7 years |
| Computers and equipment | 5 years |
Business Combination (Details) $ / shares in Units, $ in Thousands |
12 Months Ended |
|---|---|
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Dec. 31, 2021
USD ($)
$ / shares
shares
| |
| Business Combination (Details) [Line Items] | |
| Business combination description | • all outstanding warrants to purchase shares of Legacy MoneyLion preferred stock or Legacy MoneyLion Common Stock (“Legacy MoneyLion Warrants”) were either exercised and ultimately converted into shares of Legacy MoneyLion Common Stock or terminated;• 11,231,595 outstanding shares of Legacy MoneyLion Common Stock (which includes the shares of Legacy MoneyLion Common Stock issued to former holders of Legacy MoneyLion Warrants) were cancelled in exchange for the right to receive 184,285,695 shares of MoneyLion Class A Common Stock;• 2,360,627 outstanding and unexercised options to purchase shares of Legacy MoneyLion Common Stock (“Legacy MoneyLion Options”) converted into options to acquire 38,732,676 shares of MoneyLion Class A Common Stock, of which 18,861,298 options are vested and 19,871,378 options are unvested; and• each holder of an outstanding share of Legacy MoneyLion Common Stock (following the Conversion) and/or Legacy MoneyLion Options (each such holder, an “Earnout Participant”) also received the right to receive the applicable pro rata portion of MoneyLion Class A Common Stock (the “Earnout Shares”) with respect to each share of MoneyLion Class A Common Stock or option exercisable for shares of MoneyLion Class A Common Stock, contingent upon MoneyLion Class A Common Stock reaching certain price milestones. 7.5 million and 10.0 million shares of MoneyLion Class A Common Stock will be issued if the MoneyLion Class A Common Stock share price equals or is greater than $12.50 and $16.50, respectively, for twenty out of any thirty consecutive trading days within five years of the Business Combination Closing Date. The Earnout Shares meet the conditions for equity classification in accordance with ASC 815-40. |
| Sale of initial public offering shares (in Shares) | shares | 25,887,987 |
| Cash proceeds | $ 293,239 |
| Redemptions issuance shares (in Shares) | shares | 42,862,013 |
| Upon consummation description | • each outstanding share of Fusion Class B common stock automatically converted into one share of MoneyLion Class A Common Stock; and• outstanding warrants to purchase the common stock of Fusion automatically converted into warrants to purchase shares of MoneyLion Class A Common Stock.As of the Business Combination Closing Date and following the completion of the sale of 25,000,000 shares of MoneyLion Class A Common Stock in the PIPE Financing, MoneyLion had the following outstanding securities:• 227,147,708 shares of MoneyLion Class A Common Stock;• 38,732,676 MoneyLion options, of which options to purchase 18,861,298 shares of MoneyLion Class A Common Stock were vested and options to purchase 19,871,378 shares of MoneyLion Class A Common stock were unvested; and• 17,500,000 public warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share and 8,100,000 private placement warrants, each exercisable for one share of MoneyLion Class A Common Stock at a price of $11.50 per share (assumed from Fusion).Conversion of Legacy MoneyLion shares was calculated utilizing the exchange ratio of approximately 16.4078 per share of MoneyLion Class A Common Stock (the “Exchange Ratio”). |
| Net increase in cash | $ 293,239 |
| Business combination proceeds | 250,000 |
| Underwriter fees | $ 13,150 |
| PIPE [Member] | |
| Business Combination (Details) [Line Items] | |
| Public stockholders shares (in Shares) | shares | 25,000,000 |
| Sponsor [Member] | |
| Business Combination (Details) [Line Items] | |
| Public stockholders shares (in Shares) | shares | 8,750,000 |
| Fusion [Member] | |
| Business Combination (Details) [Line Items] | |
| Public stockholders shares (in Shares) | shares | 9,112,013 |
| Business Combination [Member] | |
| Business Combination (Details) [Line Items] | |
| Common Stock, par value (in Dollars per share) | $ / shares | $ 0.0001 |
| Business combination per share (in Dollars per share) | $ / shares | $ 10 |
| business combination aggregate amount | $ 258,896 |
| Costs for the business combination | 56,638 |
| Transaction costs | $ 3,673 |
Consumer Receivables (Details) - Schedule of receivables - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Schedule of receivables [Abstract] | |||
| Unsecured personal loan receivables | $ 1 | $ 66 | |
| Secured personal loan receivables | 77,491 | 43,804 | |
| Loan receivables | 77,492 | 43,870 | |
| Instacash receivables | 62,783 | 18,888 | |
| Finance receivables | 140,275 | 62,758 | |
| Fees receivable | 9,567 | 8,366 | 2,913 |
| Membership receivables | 3,099 | 1,885 | |
| Deferred loan origination costs | 992 | 929 | 615 |
| Accrued interest receivable | 1,106 | 1,072 | 623 |
| Receivables, before allowance for loan losses | $ 153,634 | $ 153,741 | $ 68,794 |
Consumer Receivables (Details) - Changes in the allowance for losses on consumer receivables - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Losses on receivables [Member] | ||||
| Consumer Receivables (Details) - Changes in the allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | $ 22,323 | $ 9,127 | $ 9,127 | $ 6,613 |
| Provision for loss on receivables | 60,749 | 21,294 | ||
| Receivables charged off | (75,557) | (39,004) | ||
| Recoveries | 28,004 | 20,224 | ||
| Ending balance | 22,323 | 9,127 | ||
| Losses on Finance Receivables [Member] | ||||
| Consumer Receivables (Details) - Changes in the allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 21,625 | 9,127 | 9,127 | 6,613 |
| Provision for loss on receivables | 19,502 | 4,859 | 51,975 | 18,082 |
| Receivables charged off | (32,958) | (12,962) | (65,711) | (33,719) |
| Recoveries | 13,269 | 9,203 | 26,234 | 18,151 |
| Ending balance | 21,438 | 10,227 | 21,625 | 9,127 |
| Losses on Membership Receivables [Member] | ||||
| Consumer Receivables (Details) - Changes in the allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 278 | |||
| Provision for loss on receivables | 3,170 | 1,856 | ||
| Receivables charged off | (3,446) | (3,620) | ||
| Recoveries | 554 | 1,764 | ||
| Ending balance | 278 | |||
| Losses on receivables [Member] | ||||
| Consumer Receivables (Details) - Changes in the allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 420 | |||
| Provision for loss on receivables | 2,001 | 615 | 5,604 | 1,356 |
| Receivables charged off | (2,708) | (948) | (6,400) | (1,665) |
| Recoveries | 779 | 333 | 1,216 | 309 |
| Ending balance | $ 492 | $ 420 | ||
Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Financing Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Current, Amount | $ 122,477 | $ 54,247 | |
| Current, Percent | 87.30% | 86.40% | |
| Total delinquency, Amount | $ 17,798 | $ 8,511 | |
| Total delinquency, Percent | 12.70% | 13.60% | |
| Finance receivables before allowance for loan losses, Amount | $ 140,275 | $ 62,758 | |
| Finance receivables before allowance for loan losses, Percent | 100.00% | 100.00% | |
| Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Current, Amount | $ 60,642 | $ 66,514 | $ 38,133 |
| Current, Percent | 84.70% | 85.80% | 86.90% |
| Total delinquency, Amount | $ 10,968 | $ 10,978 | $ 5,737 |
| Total delinquency, Percent | 15.30% | 14.20% | 13.10% |
| Finance receivables before allowance for loan losses, Amount | $ 71,610 | $ 77,492 | $ 43,870 |
| Finance receivables before allowance for loan losses, Percent | 100.00% | 100.00% | |
| Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Current, Amount | $ 60,364 | $ 55,963 | $ 16,114 |
| Current, Percent | 90.20% | 89.10% | 85.30% |
| Total delinquency, Amount | $ 6,587 | $ 6,820 | $ 2,774 |
| Total delinquency, Percent | 9.80% | 10.90% | 14.70% |
| Finance receivables before allowance for loan losses, Amount | $ 66,951 | $ 62,783 | $ 18,888 |
| Finance receivables before allowance for loan losses, Percent | 100.00% | 100.00% | |
| Membership Receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Current, Amount | $ 2,227 | $ 1,586 | |
| Current, Percent | 71.80% | 84.10% | |
| Total delinquency, Amount | $ 872 | $ 299 | |
| Total delinquency, Percent | 28.20% | 15.90% | |
| Finance receivables before allowance for loan losses, Amount | $ 3,099 | $ 1,885 | |
| Finance receivables before allowance for loan losses, Percent | 100.00% | 100.00% | |
| Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Current, Amount | $ 7,725 | $ 6,682 | $ 2,435 |
| Current, Percent | 80.70% | 79.90% | 83.60% |
| Total delinquency, Amount | $ 1,842 | $ 1,684 | $ 478 |
| Total delinquency, Percent | 19.30% | 20.10% | 16.40% |
| Finance receivables before allowance for loan losses, Amount | $ 9,567 | $ 8,366 | $ 2,913 |
| Finance receivables before allowance for loan losses, Percent | 100.00% | 100.00% | |
| 31 to 60 days [Member] | Financing Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 13,397 | $ 6,148 | |
| Total delinquency, Percent | 9.60% | 9.80% | |
| 31 to 60 days [Member] | Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 5,887 | $ 6,577 | $ 3,374 |
| Total delinquency, Percent | 8.20% | 8.50% | 7.70% |
| 31 to 60 days [Member] | Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 6,587 | $ 6,820 | $ 2,774 |
| Total delinquency, Percent | 9.80% | 10.90% | 14.70% |
| 31 to 60 days [Member] | Membership Receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 514 | $ 168 | |
| Total delinquency, Percent | 16.60% | 9.00% | |
| 31 to 60 days [Member] | Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 1,842 | $ 1,684 | $ 478 |
| Total delinquency, Percent | 19.30% | 20.10% | 16.40% |
| 61 to 90 days [Member] | Financing Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 4,401 | $ 2,363 | |
| Total delinquency, Percent | 3.10% | 3.80% | |
| 61 to 90 days [Member] | Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 5,081 | $ 4,401 | $ 2,363 |
| Total delinquency, Percent | 7.10% | 5.70% | 5.40% |
| 61 to 90 days [Member] | Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | |||
| Total delinquency, Percent | 0.00% | 0.00% | 0.00% |
| 61 to 90 days [Member] | Membership Receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | $ 358 | $ 131 | |
| Total delinquency, Percent | 11.60% | 6.90% | |
| 61 to 90 days [Member] | Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the credit quality of finance receivables [Line Items] | |||
| Total delinquency, Amount | |||
| Total delinquency, Percent | 0.00% | 0.00% | 0.00% |
Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Property, Plant and Equipment [Abstract] | ||||
| Depreciation expense | $ 230 | $ 63 | $ 343 | $ 317 |
Property and Equipment (Details) - Schedule of property and equipment - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | $ 3,361 | $ 3,327 | $ 1,708 |
| Less: accumulated depreciation | (1,221) | (1,526) | (1,206) |
| Furniture and equipment, net | 2,140 | 1,801 | 502 |
| Leasehold improvements [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | 486 | 545 | 464 |
| Furniture and fixtures [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | $ 612 | 573 | 448 |
| Computers and equipment [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | $ 2,209 | $ 796 |
Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Intangible Assets [Abstract] | ||||
| Goodwill | $ 52,541 | $ 21,565 | ||
| Amortization expense | $ 3,191 | $ 451 | 2,049 | $ 791 |
| Goodwill | $ 161,678 | $ 52,541 | ||
Intangible Assets (Details) - Schedule of intangible assets - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Schedule of intangible assets [Abstract] | |||
| Capitalized internal-use software, user life | 3 years | ||
| Capitalized internal-use software | $ 5,493 | $ 5,374 | |
| Work in process | $ 2,291 | 1,481 | 1,481 |
| Proprietary technology, user life | 7 years | ||
| Proprietary technology | 6,130 | 6,130 | |
| Customer relationships, user life | 15 years | ||
| Customer relationships | $ 159,820 | 5,960 | |
| Trade names, user life | 15 years | ||
| Trade names | $ 24,980 | 11,820 | |
| Less: accumulated amortization, user life | (8,934) | (5,760) | (3,710) |
| Intangible assets, net | $ 212,948 | $ 25,124 | $ 9,275 |
Intangible Assets (Details) - Schedule of amortization expense of intangible assets - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of amortization expense of intangible assets [Abstract] | ||
| 2022 | $ 22,219 | $ 2,648 |
| 2023 | 22,087 | 2,221 |
| 2024 | 22,087 | 2,072 |
| 2025 | 22,087 | 2,061 |
| 2026 | 22,087 | 2,061 |
| Thereafter | $ 105,226 | 12,580 |
| Total | $ 23,643 |
Other Assets (Details) - Schedule of other assets consisted - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2022 |
|
| Schedule of other assets consisted [Abstract] | |||
| Receivable from payment processor – Debit card collections | $ 16,681 | $ 5,600 | |
| Receivable from payment processor – Other | 3,156 | 1,936 | |
| Prepaid expenses | 8,836 | 1,591 | $ 8,370 |
| Other | 5,757 | 2,580 | |
| Total other assets | $ 34,430 | $ 11,707 | |
Variable Interest Entities (Details) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Variable Interest Entities [Abstract] | ||
| Exceeds aggregate principal amount percentage | 90.00% | 90.00% |
Variable Interest Entities (Details) - Schedule of consolidated financial statements - VIE [Member] - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Variable Interest Entities (Details) - Schedule of consolidated financial statements [Line Items] | ||
| Cash | $ 390 | |
| Restricted cash | 39,396 | |
| Finance receivables | 109,877 | 60,845 |
| Allowance for losses on finance receivables | (17,081) | (8,581) |
| Finance receivables, net | 92,796 | 52,264 |
| Total assets | 132,192 | 52,654 |
| Liabilities: | ||
| Other debt | 143,000 | |
| Total liabilities | $ 143,000 | |
Debt (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 27, 2021 |
Sep. 27, 2022 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Jan. 31, 2021 |
Aug. 31, 2020 |
Jul. 31, 2020 |
Apr. 30, 2020 |
Jan. 31, 2019 |
Sep. 30, 2018 |
Mar. 31, 2018 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 22, 2021 |
Apr. 30, 2018 |
Aug. 31, 2016 |
|
| Debt (Details) [Line Items] | |||||||||||||||||
| Total interest rate | 14.00% | ||||||||||||||||
| Borrowed credit facilities | $ 22,000 | ||||||||||||||||
| Aggregate principal amount outstanding | $ 11,500 | $ 11,000 | $ 24,000 | ||||||||||||||
| Bank loan interest | 6.75% | ||||||||||||||||
| Loan interest rate | 12.00% | ||||||||||||||||
| Maturity date | May 01, 2023 | ||||||||||||||||
| Aggregate principal amount | $ 20,000 | ||||||||||||||||
| Repaid the original principal balance | $ 5,000 | ||||||||||||||||
| Principal balance | $ 24,028 | ||||||||||||||||
| Term loan | $ 5,000 | ||||||||||||||||
| Line of credit facility, description | The revolving line bears interest at the greater of (i) Wall Street Journal Prime Rate plus 2.25% and (ii) 6.50%. As of December 31, 2021, the revolving line interest rate was 6.5%. The revolving line matures on May 1, 2022. The term loan bears interest at the greater of (i) Wall Street Journal Prime Rate plus 3.25% and (ii) 7.50%. As of December 31, 2021, the term loan interest rate was 7.5%. Interest only on the term loan was payable until September 1, 2021, and thereafter outstanding principal is payable in thirty-nine equal instalments through the facility maturity date of May 1, 2024. | ||||||||||||||||
| Warrants received (in Shares) | 12,792 | ||||||||||||||||
| Company sold to a third-party lender | $ 10,000 | ||||||||||||||||
| Third-party lender percentage | 3.00% | ||||||||||||||||
| Third-party lenders, description | In January 2021, the Company sold to third-party lenders $36,750 of 3% subordinated convertible notes as part of the same series of notes issued in December 2020 maturing on July 31, 2021 (collectively, the “Subordinated Convertible Notes”), the proceeds of which were used to conduct its business. | ||||||||||||||||
| Total shares (in Shares) | 10,068,133 | ||||||||||||||||
| Convertible notes | $ 92,627 | ||||||||||||||||
| Credit and security agreement | $ 50,000 | ||||||||||||||||
| Borrowings under the agreement | $ 70,000 | $ 500,000 | |||||||||||||||
| Granted warrants percentage | 2.50% | ||||||||||||||||
| Warrants outstanding (in Shares) | 255,402 | ||||||||||||||||
| Finance receivables | $ 61,732 | ||||||||||||||||
| Debt maturities principal | 35,000 | ||||||||||||||||
| Debt maturities principal | 8,333 | ||||||||||||||||
| Debt maturities principal | 695 | ||||||||||||||||
| Debt maturities principal | 146,000 | ||||||||||||||||
| Monroe term loans description | In March 2022, the Company entered into a credit agreement (the “Monroe Credit Agreement”) with certain financial institutions from time to time party thereto, as lenders, and Monroe Capital Management Advisors, LLC, as administrative agent and lead arranger (“Monroe Capital”). The Monroe Credit Agreement provides for the following:• $70,000 aggregate principal amount of term loans (the “Term A-1 Loans”), available to be drawn at the closing date;• $20,000 aggregate principal amount of term loans (the “Term A-2 Loans”), as described further below;• $20,000 aggregate principal amount of delayed draw term loans (the “Term B Loans”), which are available to be drawn for a period of 18-months following the closing date, subject to certain conditions set forth in the Monroe Credit Agreement; and• subject to certain conditions set forth in the Monroe Credit Agreement, the ability to incur incremental commitments of up to $60,000 million aggregate principal amount of Term A-1 Loans or Term B Loans (the “Incremental Term Loans”; the Term A-1 Loans, the Term A-2 Loans, the Term B Loans and, if applicable, the Incremental Term Loans, collectively, the “Monroe Term Loans”). | ||||||||||||||||
| Debt description | The Term A-1 Loans and Term B Loans bear annual interest, payable monthly, at a floating rate measured by reference to, at the Company’s option, either (a) a base rate then in effect (equal to the greater of (i) the federal funds rate plus 0.50%, (ii) the prime rate, (iii) 2.00% and (iv) an adjusted one-month Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 1.00%) plus 1.00%) plus an applicable margin ranging from 6.00% to 8.25% per annum, depending on whether the “EBITDA Trigger Date” has occurred, the Company’s “Enterprise Value” and, once the EBITDA Trigger Date has occurred, its “Total Debt to EBITDA Ratio” (as such terms are defined in the Monroe Credit Agreement) or (b) an adjusted one-month or three-month SOFR (subject to a floor of 1.00%) plus an applicable margin ranging from 7.00% to 9.25% per annum, depending on whether the EBITDA Trigger Date has occurred, the Company’s Enterprise Value and, once the EBITDA Trigger Date has occurred, its Total Debt to EBITDA Ratio. The Term A-2 Loans bear annual interest, payable monthly, at the greater of (i) 12% and (ii) a floating rate measured by reference to the prime rate plus 5.75% per annum, subject to a cap of 15%. The interest rate as of March 31, 2022 on the Term A-1 Loans and Term A-2 Loans was 9.50% and 12.00%, respectively. | ||||||||||||||||
| Net cash proceeds percentage | 100.00% | ||||||||||||||||
| Equity and debt offerings percentage | 100.00% | ||||||||||||||||
| Minimum [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Total credit facility | $ 20,000 | ||||||||||||||||
| Extraordinary cash receipts percentage | 0.00% | ||||||||||||||||
| Principal amount percentage | 0.00% | ||||||||||||||||
| Maximum [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Total credit facility | $ 27,000 | ||||||||||||||||
| Extraordinary cash receipts percentage | 50.00% | ||||||||||||||||
| Principal amount percentage | 3.00% | ||||||||||||||||
| Paycheck Protection Program [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Borrowings under the agreement | $ 3,207 | ||||||||||||||||
| Outstanding balance of the PPP loan | $ 3,207 | ||||||||||||||||
| ROAR 1 SPV Finance LLC [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Credit agreement | $ 100,000 | $ 730 | |||||||||||||||
| Maximum borrowings under the agreement | $ 200,000 | ||||||||||||||||
| Bears interest rate | 12.50% | ||||||||||||||||
| Maturity date | 2025-03 | ||||||||||||||||
| Outstanding principal balance | 78,000 | ||||||||||||||||
| ROAR 2 SPV Finance LLC [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Credit agreement | 125,000 | ||||||||||||||||
| Maximum borrowings under the agreement | $ 300,000 | ||||||||||||||||
| Bears interest rate | 12.50% | ||||||||||||||||
| Maturity date | 2025-12 | ||||||||||||||||
| Outstanding principal balance | $ 68,000 | ||||||||||||||||
| Finance receivables | 48,145 | ||||||||||||||||
| 6.75% Bank Loan [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Bank loan interest | 6.75% | 6.75% | 6.75% | ||||||||||||||
| Bank loan | $ 20,000 | ||||||||||||||||
| Second Lien Loan [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Aggregate principal amount outstanding | $ 20,000 | ||||||||||||||||
| Initial principal balance | $ 5,000 | ||||||||||||||||
| Lien Loan bears interest | 12.00% | ||||||||||||||||
| Prime rate interest | 5.75% | ||||||||||||||||
| Interest not to exceed | 15.00% | ||||||||||||||||
| Aggregate principal amount | $ 25,000 | ||||||||||||||||
| Principal balance | $ 20,000 | ||||||||||||||||
| First Lien Loan [Member] | |||||||||||||||||
| Debt (Details) [Line Items] | |||||||||||||||||
| Bank for loan facility | $ 25,000 | ||||||||||||||||
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Taxes (Details) [Line Items] | |||||
| Federal statutory income tax rate | 21.00% | 21.00% | |||
| Valuation allowance | $ 63,729 | $ 81,890 | $ 81,860 | $ 59,099 | |
| Valuation allowance increase (decrease) | 18,100 | $ 22,800,000 | 22,761 | 7,566 | |
| Operating loss carryforwards | 704,200 | 517,700 | $ 377,300 | ||
| Federal research and development credit carryforwards for income tax expense | $ 1,200 | ||||
| Current carryforwards expiration term | If not used, the current carryforwards will expire beginning in 2034. | ||||
| Deferred tax liability | 28,400 | ||||
| Offsetting increase decrease to valuation allowance | $ 10,300 | ||||
| Operating loss carryforwards, description | U.S. federal net operating loss carryforwards begin to expire in 2033, and state operating loss carryforwards begin to expire in 2027. | ||||
| Forecast [Member] | |||||
| Income Taxes (Details) [Line Items] | |||||
| Federal research and development credit carryforwards for income tax expense | $ 1,200 | ||||
| State [Member] | |||||
| Income Taxes (Details) [Line Items] | |||||
| Expiration term | U.S. federal net operating loss carryforwards begin to expire in 2033, and state operating loss carryforwards begin to expire in 2027. | ||||
| U.S. Federal [Member] | |||||
| Income Taxes (Details) [Line Items] | |||||
| Expiration term | $248,600 | ||||
| Net operating losses | $ 341,500,000 | ||||
Income Taxes (Details) - Schedule of reconciliation of the federal statutory income tax rate - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Schedule of reconciliation of the federal statutory income tax rate [Abstract] | ||
| Federal statutory rate | $ (37,290) | $ (14,112) |
| Federal statutory rate, percentage | 21.00% | 21.00% |
| Effect of: | ||
| State taxes, net of federal tax benefit | $ (6,324) | $ (1,377) |
| State taxes, net of federal tax benefit, percentage | 3.56% | 2.05% |
| Deferred rate change | $ (367) | $ (89) |
| Deferred rate change, percentage | 0.21% | 0.13% |
| Change in fair value of subordinated convertible notes | $ 8,794 | |
| Change in fair value of subordinated convertible notes, percentage | (4.95%) | |
| Change in fair value of warrant liability | $ 8,322 | |
| Change in fair value of warrant liability, percentage | (4.69%) | |
| Accrued dividends on redeemable convertible preferred stock | $ 3,614 | |
| Accrued dividends on redeemable convertible preferred stock, percentage | (5.38%) | |
| [Net operating loss return to provision] | $ 3,453 | |
| [Net operating loss return to provision], percentage | (1.94%) | |
| Other permanent differences | $ (473) | $ 3,320 |
| Other permanent differences, percentage | 0.27% | (4.94%) |
| Other | $ 1,180 | $ 1,084 |
| Other, percentage | (0.66%) | (1.61%) |
| Change in valuation allowance | $ 22,761 | $ 7,566 |
| Change in valuation allowance, percentage | (12.83%) | (11.26%) |
| Total | $ 56 | $ 6 |
| Total, percentage | (0.03%) | (0.01%) |
Income Taxes (Details) - Schedule of income tax (benefit) expense - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Current: | ||
| Federal | ||
| State | 56 | 6 |
| Current Federal and State, Tax Expense (Benefit) | 56 | 6 |
| Deferred taxes | ||
| Income tax benefit | $ 56 | $ 6 |
Income Taxes (Details) - Schedule of net deferred tax assets and liabilities - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of net deferred tax assets and liabilities [Abstract] | ||
| Net operating loss carryforwards | $ 72,867 | $ 57,092 |
| Allowance for losses on finance receivables | 6,318 | 2,283 |
| Research and development credit | 1,173 | 1,173 |
| Stock compensation | 326 | 206 |
| Legal reserve | 465 | |
| Other | 2,317 | 387 |
| Total deferred tax assets, gross | 83,466 | 61,141 |
| Less: valuation allowance | (81,860) | (59,099) |
| Total deferred tax assets, net | 1,606 | 2,042 |
| Deferred finance receivable fees and costs, net | (261) | (154) |
| Depreciation of furniture and equipment | (1,312) | (1,888) |
| Other | (33) | |
| Total deferred tax liabilities | (1,606) | (2,042) |
| Total deferred tax assets (liabilities), net |
Common Stock (Details) $ in Thousands |
1 Months Ended |
|---|---|
|
Sep. 22, 2021
USD ($)
shares
| |
| Common Stock [Abstract] | |
| Business Combination shares | shares | 970,000 |
| Common Stock redeemed | $ | $ 9,700 |
Redeemable Convertible Preferred Stock (Details) |
Dec. 31, 2021
shares
|
|---|---|
| Redeemable Convertible Preferred Stock [Abstract] | |
| Redeemable convertible preferred stock | 116,264,374 |
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Stock-Based Compensation (Details) [Line Items] | ||||
| Common stock designated shares | 2,492,060 | |||
| Percentage of total number of outstanding shares | 2.00% | |||
| Stock-based compensation | $ 5,039 | $ 1,650 | ||
| Restricted stock units | 627,228 | |||
| Weighted average grant date fair value per share | $ 5.97 | |||
| Unamortized expense | $ 3,344 | |||
| Weighted average years | 2 years 1 month 24 days | |||
| Options granted vesting expire | 4 years | |||
| Options granted expire | 10 years | |||
| Options vested | 6,977,038 | |||
| Aggregate intrinsic value | $ 24,982 | |||
| Cost related to unvested options | $ 11,911,000 | |||
| Stock-based compensation | $ 3,268 | $ 518 | $ 5,039 | $ 1,650 |
| Incentive Plan [Member] | ||||
| Stock-Based Compensation (Details) [Line Items] | ||||
| Weighted average grant date fair value of options granted | $ 1.5 | $ 0.38 | ||
| Class A Common Stock [Member] | ||||
| Stock-Based Compensation (Details) [Line Items] | ||||
| Common stock pursuant to awards issued | 56,697,934 | |||
| Including common stock shares | 17,712,158 | |||
| Common stock subject outstanding | 38,985,776 | |||
Stock-Based Compensation (Details) - Schedule of weighted average grant date fair value of options granted |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Stock-Based Compensation (Details) - Schedule of weighted average grant date fair value of options granted [Line Items] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 65.00% | 65.00% |
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years 29 days | 6 years 29 days |
| Minimum [Member] | ||
| Stock-Based Compensation (Details) - Schedule of weighted average grant date fair value of options granted [Line Items] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.59% | 0.34% |
| Maximum [Member] | ||
| Stock-Based Compensation (Details) - Schedule of weighted average grant date fair value of options granted [Line Items] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.67% | 1.47% |
Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan $ / shares in Units, $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
$ / shares
shares
| |
| Schedule of represents activity within the 2021 Plan [Abstract] | |
| Number of Shares Options outstanding beginning | shares | 35,453,516 |
| Weighted Average Exercise Options Price Per Share outstanding beginning | $ / shares | $ 0.38 |
| Weighted Average Remaining Contractual Term Options outstanding beginning | 8 years 1 month 6 days |
| Aggregate Intrinsic Value Options outstanding beginning | $ | $ 266,548 |
| Number of Shares Options outstanding ending | shares | 37,458,547 |
| Weighted Average Exercise Options Price Per Share outstanding ending | $ / shares | $ 0.8 |
| Weighted Average Remaining Contractual Term Options outstanding ending | 7 years 7 months 6 days |
| Aggregate Intrinsic Value Options outstanding ending | $ | $ 121,108 |
| Number of Shares Exercisable at September 30, 2021 | shares | 17,764,012 |
| Weighted Average Exercise Options Price Per Share Exercisable at September 30, 2021 | $ / shares | $ 0.36 |
| Weighted Average Remaining Contractual Term Exercisable at September 30, 2021 | 6 years 9 months 18 days |
| Aggregate Intrinsic Value Exercisable at September 30, 2021 | $ | $ 65,265 |
| Number of Shares Unvested at September 30, 2021 | shares | 19,694,535 |
| Weighted Average Exercise Options Price Per Share Unvested at September 30, 2021 | $ / shares | $ 1.19 |
| Number of Shares Options granted | shares | 6,524,723 |
| Weighted Average Exercise Options Price Per Share Options granted | $ / shares | $ 2.57 |
| Number of Shares Options exercised | shares | (2,062,803) |
| Weighted Average Exercise Options Price Per Share Options exercised | $ / shares | $ 0.34 |
| Aggregate Intrinsic Value Options exercised | $ | $ (13,268) |
| Number of Shares Options forfeited | shares | (539,915) |
| Weighted Average Exercise Options Price Per Share Options forfeited | $ / shares | $ 0.93 |
| Number of Shares Options expired | shares | (1,916,974) |
| Weighted Average Exercise Options Price Per Share Options expired | $ / shares | $ 0.2 |
Stock Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2021 |
Mar. 31, 2022 |
Sep. 22, 2021 |
Dec. 31, 2020 |
|
| Stock Warrants (Details) [Line Items] | ||||
| Warrants outstanding | 8,100,000 | |||
| Fair value within additional paid-in capital (in Dollars) | $ 708,175 | $ 723,394 | ||
| Warrant [Member] | ||||
| Stock Warrants (Details) [Line Items] | ||||
| Warrant price per share (in Dollars per share) | $ 0.01 | |||
| Private Placement Warrants [Member] | ||||
| Stock Warrants (Details) [Line Items] | ||||
| Warrants outstanding | 8,100,000 | |||
| Fair value within additional paid-in capital (in Dollars) | $ 23,275 | |||
| Aggregate value (in Dollars) | $ 8,260 | |||
| Public Warrants [Member] | ||||
| Stock Warrants (Details) [Line Items] | ||||
| Fair value within additional paid-in capital (in Dollars) | $ 23,275 | |||
| Class A Common Stock [Member] | ||||
| Stock Warrants (Details) [Line Items] | ||||
| Warrants outstanding | 17,500,000 | |||
| Price per share (in Dollars per share) | $ 11.5 | |||
| MoneyLion [Member] | ||||
| Stock Warrants (Details) [Line Items] | ||||
| Warrant price per share (in Dollars per share) | $ 18 |
Stock Warrants (Details) - Schedule of quantitative information regarding level 3 fair value measurement - Stock Warrants [Member] - $ / shares |
12 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Stock Warrants (Details) - Schedule of quantitative information regarding level 3 fair value measurement [Line Items] | ||
| Strike price (in Dollars per share) | $ 11.5 | $ 11.5 |
| Expected Volatility | 68.00% | 61.00% |
| Expected Dividend | ||
| Expected Term in Years | 4 years 5 months 23 days | 4 years 8 months 23 days |
| Risk Free Interest Rate | 2.43% | 1.22% |
| Warrant Value Per Share (in Dollars per share) | $ 0.54 | $ 1.02 |
Stock Warrants (Details) - Schedule of changes in fair value of the warrants - Public and Private Placement Warrants [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Private Placement Warrants | ||
| Initial Measurement, September 22, 2021 | $ 29,466 | |
| Mark-to-market adjustment | $ (3,910) | (21,206) |
| Warrants payable balance, December 31, 2021 | $ 8,260 |
Net Loss Per Share (Details) $ in Thousands |
1 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2021
USD ($)
|
|
| Net Loss Per Share (Details) [Line Items] | ||
| Exchange ratio | 16.4078 | |
| Convertible preferred stock (in Dollars) | $ 56,931 | |
| Class A Common Stock [Member] | ||
| Net Loss Per Share (Details) [Line Items] | ||
| Exchange ratio | 16.4078 |
Net Loss Per Share (Details) - Schedule of computation of net loss per common share - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||||||||
| Numerator: | ||||||||||||
| Net loss | $ (6,000) | $ (73,406) | $ (164,875) | $ (41,587) | ||||||||
| Net income attributable to redeemable noncontrolling interests | (2,767) | (12,776) | (8,409) | |||||||||
| Accretion of issuance costs on redeemable convertible preferred stock | ||||||||||||
| Reversal of previously accrued (accrual of) dividends on redeemable convertible preferred stock | $ (1,028) | $ (4,842) | 42,728 | (17,209) | ||||||||
| Net loss attributable to common shareholders | $ (134,923) | $ (67,205) | ||||||||||
| Denominator: | ||||||||||||
| Weighted-average common shares outstanding - basic and diluted (in Shares) | 230,737,284 | [1] | 48,348,187 | [1] | 97,158,738 | [2] | 45,177,217 | [2] | ||||
| Net loss per share attributable to common stockholders - basic and diluted (in Dollars per share) | $ (0.03) | [1] | $ (1.68) | [1] | $ (1.39) | $ (1.49) | ||||||
| ||||||||||||
Net Loss Per Share (Details) - Schedule of potential common shares - shares |
3 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||||||||
| Schedule of potential common shares [Abstract] | ||||||||||||
| Conversion of redeemable convertible preferred stock | 28,693,931 | [1] | 116,264,374 | [1] | [2] | 116,264,358 | [2] | |||||
| Warrants to purchase common stock and redeemable convertible preferred stock | 25,599,889 | [1] | 14,738,710 | [1] | 25,599,889 | [2] | 14,738,710 | [2] | ||||
| RSUs and Options to purchase common stock | 65,193,606 | [1] | 41,090,725 | [1] | 38,085,775 | [2] | 35,453,516 | [2] | ||||
| Right to receive Earnout Shares | 17,500,000 | 17,500,000 | ||||||||||
| Total common stock equivalents | 136,987,426 | 172,093,809 | 81,185,664 | 166,456,584 | ||||||||
| ||||||||||||
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Rent expense | $ 997 | $ 1,233 |
Commitments and Contingencies (Details) - Schedule of total minimum lease payments $ in Thousands |
Dec. 31, 2021
USD ($)
|
|---|---|
| Schedule of total minimum lease payments [Abstract] | |
| 2022 | $ 776 |
| 2023 | 788 |
| 2024 | 811 |
| 2025 | 590 |
| 2026 | 140 |
| Thereafter | |
| Total minimum lease | $ 3,105 |
Mergers and Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Debt facilities | $ 2,196 | ||||
| Restricted share amount | 35,000 | $ 35,000 | |||
| Restricted share based amount | 35,000 | ||||
| Operating performance | 12,922 | 18,011 | |||
| Change in fair value | (3,910) | $ 31,230 | $ 39,629 | $ 14,419 | |
| Consideration amount | 406 | 6,130 | |||
| Goodwill allocated | $ 21,565 | ||||
| Series A convertible preferred stock (in Shares) | 116,264,374 | ||||
| Cash paid to equityholders | $ 14,514,000 | ||||
| Exchange of shares (in Shares) | 8,883,228 | ||||
| Common stock option to acquire (in Shares) | 5,901,846 | ||||
| Class A Common stock vested value | $ 8,963 | ||||
| Aggregate shares of series A convertible preferred stock (in Shares) | 8,000,000 | ||||
| Earnout and preferref stock equivalents | $ 45,336 | ||||
| Total purchase price | 271,030 | ||||
| Working capital | 5,703 | ||||
| Transaction costs | 2,868 | ||||
| Preferred share value | 46,424 | ||||
| Change in fair value | $ 368 | ||||
| Shares payable | $ 35,000 | ||||
| Series A Redeemable Convertible Preferred Stock [Member] | |||||
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Series A convertible preferred stock (in Shares) | 28,164,811 | ||||
| Additional shares of series A convertible preferred stock (in Shares) | 529,120,000 | ||||
| Transaction expenses | $ 193,647 | ||||
| Forecast [Member] | |||||
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Operating performance | $ 11,782 | ||||
| MoneyLion [Member] | |||||
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Shares issued (in Shares) | 4,181,441 | 4,181,441 | |||
| Cash paid | $ 10,000 | $ 10,000 | |||
| Debt facilities | 2,196 | ||||
| Total purchase price (in Shares) | 52,685,000 | ||||
| Wealth Technologies Inc [Member] | |||||
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Percentage of outstanding common stock | 100.00% | ||||
| Exchange of shares (in Shares) | 539,592 | ||||
| Consideration amount | $ 27,929 | ||||
| MALKA Acquisition [Member] | |||||
| Mergers and Acquisitions (Details) [Line Items] | |||||
| Purchase price | 52,685 | ||||
| Operating performance | $ 11,782 | ||||
| Accounts payable and accrued liabilities | 18,011 | ||||
| Change in fair value | $ 6,229 | ||||
Mergers and Acquisitions (Details) - Schedule of fair value of MALKA’s acquired assets and liabilities - USD ($) $ in Thousands |
Feb. 17, 2022 |
Nov. 15, 2021 |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | $ 4,501 | $ 51 |
| Property and equipment | 441 | 1,281 |
| Intangible assets | 190,320 | 17,780 |
| Goodwill | 109,375 | 30,976 |
| Other assets | 4,858 | |
| Total assets | 317,854 | 54,946 |
| Liabilities: | ||
| Accounts payable and accrued liabilities | 2,261 | |
| Total liabilities | 46,824 | 2,261 |
| Net assets and liabilities acquired | $ 271,030 | $ 52,685 |
Related Parties (Details) - USD ($) |
1 Months Ended | |||
|---|---|---|---|---|
Aug. 27, 2021 |
Dec. 31, 2020 |
Apr. 30, 2020 |
Dec. 31, 2021 |
|
| Related Parties (Details) [Line Items] | ||||
| Secured loan facility | $ 5,000 | |||
| Interest expense | $ 421 | |||
| MoneyLion paid | $ 6,624 | |||
| Other earned revenue | $ 7,083 | |||
| Series A Redeemable Convertible Preferred Shares [Member] | ||||
| Related Parties (Details) [Line Items] | ||||
| Acquired outstanding | 100.00% | |||
Subsequent Events (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
$ / shares
shares
| |
| Subsequent Events (Details) [Line Items] | |
| Options acquire shares (in Shares) | shares | 8,883,228 |
| Aggregate shares of preferred stock | $ 8,000,000 |
| Working capital | $ 5,700,000 |
| Preferred Stock [Member] | |
| Subsequent Events (Details) [Line Items] | |
| Conversion price per share (in Dollars per share) | $ / shares | $ 10 |
| Common Stock [Member] | |
| Subsequent Events (Details) [Line Items] | |
| Cash | $ 440,000,000 |
| Series A Preferred Stock [Member] | |
| Subsequent Events (Details) [Line Items] | |
| Newly issued shares (in Shares) | shares | 28,164,811 |
| Preferred stock par value (in Dollars per share) | $ / shares | $ 0.0001 |
| Cash | $ 14,500,000 |
| Class A Common Stock [Member] | |
| Subsequent Events (Details) [Line Items] | |
| Options acquire shares (in Shares) | shares | 5,901,846 |
Summary of Significant Accounting Policies (Details) - Schedule of revenue recognition and related receivables - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Consumer revenues | ||
| Service and subscription fees | $ 46,394 | $ 30,472 |
| Net interest income on finance receivables | 2,568 | 1,662 |
| Total consumer revenues | 48,962 | 32,134 |
| Enterprise service revenues | 20,752 | 996 |
| Total revenue, net | $ 69,714 | $ 33,130 |
Consumer Receivables (Details) - Schedule of consumer receivables - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Schedule of consumer receivables [Abstract] | |||
| Unsecured personal loan receivables | $ 1 | $ 66 | |
| Secured personal loan receivables | 71,610 | 77,491 | |
| Loan receivables | 71,610 | 77,492 | |
| Instacash receivables | 66,951 | 62,783 | |
| Finance receivables | 138,561 | 140,275 | |
| Fees receivable | 9,567 | 8,366 | 2,913 |
| Membership receivables | 3,408 | 3,099 | |
| Deferred loan origination costs | 992 | 929 | 615 |
| Accrued interest receivable | 1,106 | 1,072 | 623 |
| Receivables, before allowance for credit losses | $ 153,634 | $ 153,741 | $ 68,794 |
Consumer Receivables (Details) - Schedule of changes in allowance for losses on consumer receivables - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Losses on Consumer Receivables [Member] | ||||
| Consumer Receivables (Details) - Schedule of changes in allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | $ 22,323 | $ 9,127 | $ 9,127 | |
| Provision for credit losses on receivables | 23,044 | 5,708 | ||
| Receivables charged off | (37,284) | (14,436) | ||
| Recoveries | 14,208 | 9,828 | ||
| Ending balance | 22,291 | 10,227 | 22,323 | $ 9,127 |
| Losses on Finance Receivables [Member] | ||||
| Consumer Receivables (Details) - Schedule of changes in allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 21,625 | 9,127 | 9,127 | 6,613 |
| Provision for credit losses on receivables | 19,502 | 4,859 | 51,975 | 18,082 |
| Receivables charged off | (32,958) | (12,962) | (65,711) | (33,719) |
| Recoveries | 13,269 | 9,203 | 26,234 | 18,151 |
| Ending balance | 21,438 | 10,227 | 21,625 | 9,127 |
| Losses on Fees Receivable [Member] | ||||
| Consumer Receivables (Details) - Schedule of changes in allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 420 | |||
| Provision for credit losses on receivables | 2,001 | 615 | 5,604 | 1,356 |
| Receivables charged off | (2,708) | (948) | (6,400) | (1,665) |
| Recoveries | 779 | 333 | 1,216 | 309 |
| Ending balance | 492 | 420 | ||
| Losses on Subscription Receivables [Member] | ||||
| Consumer Receivables (Details) - Schedule of changes in allowance for losses on consumer receivables [Line Items] | ||||
| Beginning balance | 278 | |||
| Provision for credit losses on receivables | 1,541 | 234 | ||
| Receivables charged off | (1,618) | (526) | ||
| Recoveries | 160 | 292 | ||
| Ending balance | $ 361 | $ 278 | ||
Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Current | $ 60,642 | $ 66,514 | $ 38,133 |
| Current | 84.70% | 85.80% | 86.90% |
| Total delinquency | $ 10,968 | $ 10,978 | $ 5,737 |
| Total delinquency | 15.30% | 14.20% | 13.10% |
| Finance receivables before allowance for loan losses | $ 71,610 | $ 77,492 | $ 43,870 |
| Finance receivables before allowance for loan losses | 100.00% | 100.00% | |
| Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Current | $ 60,364 | $ 55,963 | $ 16,114 |
| Current | 90.20% | 89.10% | 85.30% |
| Total delinquency | $ 6,587 | $ 6,820 | $ 2,774 |
| Total delinquency | 9.80% | 10.90% | 14.70% |
| Finance receivables before allowance for loan losses | $ 66,951 | $ 62,783 | $ 18,888 |
| Finance receivables before allowance for loan losses | 100.00% | 100.00% | |
| Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Current | $ 7,725 | $ 6,682 | $ 2,435 |
| Current | 80.70% | 79.90% | 83.60% |
| Total delinquency | $ 1,842 | $ 1,684 | $ 478 |
| Total delinquency | 19.30% | 20.10% | 16.40% |
| Finance receivables before allowance for loan losses | $ 9,567 | $ 8,366 | $ 2,913 |
| Finance receivables before allowance for loan losses | 100.00% | 100.00% | |
| Subscription receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Current | $ 2,486 | $ 2,227 | |
| Current | 72.90% | 71.80% | |
| Total delinquency | $ 922 | $ 872 | |
| Total delinquency | 27.10% | 28.20% | |
| Finance receivables before allowance for loan losses | $ 3,408 | $ 3,099 | |
| Finance receivables before allowance for loan losses | 100.00% | 100.00% | |
| Thirty One To Sixty Days [Member] | Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 5,887 | $ 6,577 | $ 3,374 |
| Total delinquency | 8.20% | 8.50% | 7.70% |
| Thirty One To Sixty Days [Member] | Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 6,587 | $ 6,820 | $ 2,774 |
| Total delinquency | 9.80% | 10.90% | 14.70% |
| Thirty One To Sixty Days [Member] | Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 1,842 | $ 1,684 | $ 478 |
| Total delinquency | 19.30% | 20.10% | 16.40% |
| Thirty One To Sixty Days [Member] | Subscription receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 466 | $ 514 | |
| Total delinquency | 13.70% | 16.60% | |
| Sixty One To Ninety Days [Member] | Loans Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 5,081 | $ 4,401 | $ 2,363 |
| Total delinquency | 7.10% | 5.70% | 5.40% |
| Sixty One To Ninety Days [Member] | Finance Receivable Instacash [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | |||
| Total delinquency | 0.00% | 0.00% | 0.00% |
| Sixty One To Ninety Days [Member] | Fees Receivable [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | |||
| Total delinquency | 0.00% | 0.00% | 0.00% |
| Sixty One To Ninety Days [Member] | Subscription receivables [Member] | |||
| Consumer Receivables (Details) - Schedule of assessment of the repayment performance of loans [Line Items] | |||
| Total delinquency | $ 456 | $ 358 | |
| Total delinquency | 13.40% | 11.60% | |
Property and Equipment (Details) - Schedule of property and equipment - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | $ 3,361 | $ 3,327 | $ 1,708 |
| Less: accumulated depreciation | (1,221) | (1,526) | (1,206) |
| Furniture and equipment, net | 2,140 | 1,801 | 502 |
| Leasehold improvements [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | 486 | 545 | 464 |
| Furniture and fixtures [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | 612 | 573 | $ 448 |
| Computers and equipment [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | 2,230 | 2,209 | |
| Construction in process [Membe] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and equipment, gross | $ 33 |
Intangible Assets (Details) - Schedule of Intangible assets - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Intangible Assets (Details) - Schedule of Intangible assets [Line Items] | |||
| Proprietary technology and capitalized internal-use software, Useful Life | 3 years | ||
| Proprietary technology and capitalized internal-use software | $ 34,791 | $ 11,623 | |
| Work in process | $ 2,291 | 1,481 | $ 1,481 |
| Customer relationships, Useful Life | 15 years | ||
| Customer relationships | $ 159,820 | 5,960 | |
| Trade names | 24,980 | 11,820 | |
| Less: accumulated amortization | (8,934) | (5,760) | (3,710) |
| Intangible assets, net | $ 212,948 | $ 25,124 | $ 9,275 |
| Minimum [Member] | |||
| Intangible Assets (Details) - Schedule of Intangible assets [Line Items] | |||
| Proprietary technology and capitalized internal-use software, Useful Life | 3 years | ||
| Customer relationships, Useful Life | 10 years | ||
| Trade names, Useful Life | 10 years | ||
| Maximum [Member] | |||
| Intangible Assets (Details) - Schedule of Intangible assets [Line Items] | |||
| Proprietary technology and capitalized internal-use software, Useful Life | 7 years | ||
| Customer relationships, Useful Life | 15 years | ||
| Trade names, Useful Life | 15 years |
Intangible Assets (Details) - Schedule of amortization expense of intangible assets - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of amortization expense of intangible assets [Abstract] | ||
| Remainder of 2022 | $ 16,951 | |
| 2023 | 22,219 | $ 2,648 |
| 2024 | 22,087 | 2,221 |
| 2025 | 22,087 | 2,072 |
| 2026 | 22,087 | 2,061 |
| Thereafter | 105,226 | $ 12,580 |
| Total | $ 210,657 |
Other Assets (Details) - Schedule of other assets consisted - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Schedule of other assets consisted [Abstract] | |||
| Receivable from payment processors | $ 18,309 | $ 18,576 | |
| Prepaid expenses | 8,370 | 8,836 | $ 1,591 |
| Operating lease right-of-use assets | 8,722 | ||
| Other | 2,531 | 1,016 | |
| Total other assets | $ 37,932 | $ 28,428 |
Variable Interest Entities (Details) - Schedule of consolidated financial statements - VIE [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Assets: | ||
| Restricted cash | $ 61,888 | $ 39,396 |
| Consumer receivables | 152,491 | 109,877 |
| Allowance for losses on consumer receivables | (23,596) | (17,081) |
| Consumer receivables, net | 128,895 | 92,796 |
| Total assets | 190,783 | 132,192 |
| Liabilities: | ||
| Other debt | 152,625 | 143,000 |
| Total liabilities | $ 152,625 | $ 143,000 |
Debt (Details) - Schedule of debt - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total secured loans | $ 88,290 | $ 43,591 |
| Unamortized discounts and debt issuance costs | (1,710) | (437) |
| Total other debt | 152,625 | 143,000 |
| Unamortized discounts and debt issuance costs | (3,375) | (3,000) |
| ROAR 1 SPV Credit Facility [Member] | ||
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total other debt | 83,000 | 78,000 |
| ROAR 2 SPV Credit Facility [Member] | ||
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total other debt | 73,000 | 68,000 |
| First Lien Loan [Member] | ||
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total secured loans | 24,028 | |
| Second Lien Loan [Member] | ||
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total secured loans | 20,000 | |
| Monroe Term Loan [Member] | ||
| Debt (Details) - Schedule of debt [Line Items] | ||
| Total secured loans | $ 90,000 |
Leases (Details) $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Leases Disclosure [Abstract] | |
| Long-term leases | $ 620 |
| Right-of-use assets | 8,722 |
| Right-of-use lease liabilities | $ 8,977 |
Leases (Details) - Schedule of long-term operating lease liabilities $ in Thousands |
Mar. 31, 2022
USD ($)
|
|---|---|
| Schedule of long-term operating lease liabilities [Abstract] | |
| Remainder of 2022 | $ 1,733 |
| 2023 | 2,870 |
| 2024 | 2,683 |
| 2025 | 2,496 |
| 2026 | 1,268 |
| Thereafter | 1,672 |
| Total lease payments | 12,722 |
| Less: imputed interest | 3,745 |
| Lease liabilities | $ 8,977 |
| Weighted-average remaining lease term (years) | 4 years 9 months 18 days |
| Weighted-average discount rate | 14.30% |
Common and Preferred Stock (Details) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Common and Preferred Stock (Details) [Line Items] | ||
| Common stock voting rights | one | |
| Redeemable convertible preferred stock (in Shares) | 116,264,374 | |
| Series A Redeemable Convertible Preferred Stock [Member] | ||
| Common and Preferred Stock (Details) [Line Items] | ||
| Convertible preferred stock liquidation preference per share | $ 10 | |
| Class A Common Stock [Member] | ||
| Common and Preferred Stock (Details) [Line Items] | ||
| Volume-weighted average price | $ 10 | |
| Redeemable Convertible Preferred Stock [Member] | ||
| Common and Preferred Stock (Details) [Line Items] | ||
| Redeemable convertible preferred stock (in Shares) | 116,264,374 |
Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
$ / shares
shares
| |
| Restricted Stock Unit [Member] | |
| Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan [Line Items] | |
| Vesting Conditions | Service-based |
| Units Granted (in Shares) | shares | 10,990,884 |
| Weighted Average Grant Date Fair Value | $ 2.42 |
| Weighted Average Strike Price | |
| Performance Stock Unit [Member] | |
| Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan [Line Items] | |
| Vesting Conditions | Service and performance-based |
| Units Granted (in Shares) | shares | 2,492,919 |
| Weighted Average Grant Date Fair Value | $ 2.69 |
| Weighted Average Strike Price | |
| Performance Stock Unit One [Member] | |
| Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan [Line Items] | |
| Vesting Conditions | Service and market-based |
| Units Granted (in Shares) | shares | 9,303,278 |
| Weighted Average Grant Date Fair Value | $ 0.92 |
| Weighted Average Strike Price | |
| Options [Member] | |
| Stock-Based Compensation (Details) - Schedule of represents activity within the 2021 Plan [Line Items] | |
| Vesting Conditions | Service-based |
| Units Granted (in Shares) | shares | 822,631 |
| Weighted Average Grant Date Fair Value | $ 2.07 |
| Weighted Average Strike Price | $ 1.14 |
Stock Warrants (Details) - Schedule of quantitative information regarding level 3 fair value measurement of the private placement warrants - Stock Warrants [Member] - $ / shares |
12 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Stock Warrants (Details) - Schedule of quantitative information regarding level 3 fair value measurement of the private placement warrants [Line Items] | ||
| Strike price (in Dollars per share) | $ 11.5 | $ 11.5 |
| Expected Volatility | 68.00% | 61.00% |
| Expected Dividend | ||
| Expected Term in Years | 4 years 5 months 23 days | 4 years 8 months 23 days |
| Risk Free Interest Rate | 2.43% | 1.22% |
| Warrant Value Per Share (in Dollars per share) | $ 0.54 | $ 1.02 |
Stock Warrants (Details) - Schedule of changes in the liability related to the private placement warrants - Private Placement Warrants [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Stock Warrants (Details) - Schedule of changes in the liability related to the private placement warrants [Line Items] | ||
| Warrants payable balance, December 31, 2021 | $ 8,260 | |
| Mark-to-market adjustment | (3,910) | $ (21,206) |
| Warrants payable balance, March 31, 2022 | $ 4,350 | $ 8,260 |
Net Loss Per Share (Details) - Schdeule of computation of net loss per common share - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||||||||
| Numerator: | ||||||||||||
| Net loss | $ (6,000) | $ (73,406) | $ (164,875) | $ (41,587) | ||||||||
| Net income attributable to redeemable noncontrolling interests | (2,767) | (12,776) | (8,409) | |||||||||
| Accrual of dividends on preferred stock | (1,028) | (4,842) | $ 42,728 | $ (17,209) | ||||||||
| Net loss attributable to common shareholders | $ (7,028) | $ (81,015) | ||||||||||
| Denominator: | ||||||||||||
| Weighted-average common shares outstanding - basic and diluted (in Shares) | 230,737,284 | [1] | 48,348,187 | [1] | 97,158,738 | [2] | 45,177,217 | [2] | ||||
| Net loss per share attributable to common stockholders - basic and diluted (in Dollars per share) | $ (0.03) | [1] | $ (1.68) | [1] | $ (1.39) | $ (1.49) | ||||||
| ||||||||||||
Net Loss Per Share (Details) - Schdeule of potential common shares - shares |
3 Months Ended | 12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|||||||||
| Schdeule of potential common shares [Abstract] | ||||||||||||
| Conversion of convertible preferred stock | 28,693,931 | [1] | 116,264,374 | [1] | [2] | 116,264,358 | [2] | |||||
| Warrants to purchase common stock and redeemable convertible preferred stock | 25,599,889 | [1] | 14,738,710 | [1] | 25,599,889 | [2] | 14,738,710 | [2] | ||||
| PSUs, RSUs and options to purchase common stock | 65,193,606 | [1] | 41,090,725 | [1] | 38,085,775 | [2] | 35,453,516 | [2] | ||||
| Right to receive earnout shares | 17,500,000 | 17,500,000 | ||||||||||
| Total common stock equivalents | 136,987,426 | 172,093,809 | 81,185,664 | 166,456,584 | ||||||||
| ||||||||||||
Mergers and Acquisitions (Details) - Schedule of fair value of even financial’s acquired assets and liabilities - USD ($) $ in Thousands |
Feb. 17, 2022 |
Nov. 15, 2021 |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | $ 4,501 | $ 51 |
| Enterprise receivables | 9,863 | |
| Property and equipment | 441 | 1,281 |
| Intangible assets | 190,320 | 17,780 |
| Goodwill | 109,375 | 30,976 |
| Other assets | 3,354 | 98 |
| Total assets | 317,854 | 54,946 |
| Liabilities: | ||
| Accounts payable and accrued liabilities | 9,258 | 1,971 |
| Other liabilities | 37,566 | 290 |
| Total liabilities | 46,824 | 2,261 |
| Net assets and liabilities acquired | $ 271,030 | 52,685 |
| Assets | ||
| Other receivables | $ 4,760 |
Mergers and Acquisitions (Details) - Schedule of the company’s pro forma revenue and net loss - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Schedule of the company’s pro forma revenue and net loss [Abstract] | ||
| Revenue | $ 78,813 | $ 41,603 |
| Net loss | $ (10,369) | $ (82,357) |