What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-14 compared with 2022-03-01 · 278 added, 266 removed, 786 unchanged (41% of the section changed)

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We have audited the accompanying consolidated balance sheets of Oportun Financial Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as 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 each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

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Critical Audit Matter

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Loans Receivable at Fair Value — Refer to Notes 2 and 15 to the financial statements

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The model uses inputs that are not observable and inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value.

We identified loans receivable at fair value as a critical audit matter because of the subjective process in determining significant inputs, assumptions, and judgments used to estimate the fair value.

Auditing management’s assessment of loans receivable at fair value involved exercising subjective and complex judgments, required specialized skills and knowledge, and required an increased extent of audit effort, including obtaining audit evidence of the data sources used to estimate fair value and understanding the assumptions applied and the nature of significant inputs utilized.

We identified the Company’s unsecured personal loans receivable at fair value portfolio as a critical audit matter because of the subjective process in determining significant inputs, assumptions, and judgments used to estimate the fair value.

Auditing management’s assessment of unsecured personal loans receivable at fair value involved exercising subjective and complex judgments, required specialized skills and knowledge, and required an increased extent of audit effort, including obtaining audit evidence of the data sources used to estimate fair value and understanding the assumptions applied and the nature of significant inputs utilized.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of loans receivable at fair value included the following, among others:

• We tested the effectiveness of management’s controls covering the overall estimate and the review of the accuracy and completeness of the underlying loan data utilized in the model calculations.

Our audit procedures related to the valuation of unsecured personal loans receivable at fair value included the following, among others:

• We tested the effectiveness of management’s controls covering the overall estimate and the review of the accuracy and completeness of the underlying unsecured personal loan data utilized in the model calculations.

• We subjected the significant unobservable inputs to sensitivity analyses to evaluate changes in the fair value that would result from changes in the assumptions.

• We tested the accuracy and completeness of the significant unobservable inputs used in the valuation of loans receivable at fair value by detail testing the segmentation of the portfolio and underlying payment history and historical performance of the loans.

• With the assistance of our fair value specialists, we developed independent estimates of the loans receivable at fair value and compared our estimates to the Company’s estimates.

• We performed a retrospective review of management’s ability to accurately estimate the loans receivable at fair value by comparing modeled monthly cash flows to actual past performance.

Business Combination — Refer to Note 6 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Hello Digit, Inc.

for $205.3 million on December 22, 2021.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values.

The final valuation of assets and liabilities recognized as of the acquisition date included approximately $84 million of acquired intangible assets and $104 million of goodwill with total net assets acquired of $17 million.

Of the identified intangible assets acquired, the most significant were the developed technology of $48.5 million and the member relationship intangible assets of $34.5 million.

Management, with the assistance of a valuation specialist, estimated the fair value of developed technology and member relationship intangible assets using the income approach, which determines the fair value as the present value of forecasted future cash flows.

The determination of fair value of the assets involves significant estimates and assumptions related to forecasted future cash flows and the selection of the discount rate.

Given the nature of future expected cash flows and the discount rate utilized in the process to determine the fair value of developed technology and member relationship intangible assets, performing audit procedures to evaluate the reasonableness of these future expected cash flows and the discount rate assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of developed technology and member relationship intangible assets from the Hello Digit, Inc.

acquisition including the following, among others:

• We tested the effectiveness of the controls over the Company’s valuation process, including controls over future expected cash flows and the discount rate.

• We evaluated the reasonableness of the future expected cash flows utilized in determining fair values of developed technology and member relationship intangible assets, tested the accuracy and completeness of significant data underlying those future expected cash flows and assumptions, and made inquiries of management regarding the basis for their key judgments.

• With the assistance of our fair value specialists, we evaluated the methodologies and calculations used by management to determine the fair value of developed technology and member relationship intangible assets by:

▪ Evaluating the reasonableness of the valuation techniques utilized by management’s third-party valuation specialists to value the identified intangibles.

▪ Testing the mathematical accuracy of the valuation model and calculations.

▪ Testing certain valuation assumptions, including the discount rate, by evaluating management’s underlying source information and evaluating such estimates for reasonableness.

• We tested the accuracy and completeness of the significant unobservable inputs used in the valuation of unsecured personal loans receivable at fair value by detail testing the segmentation of the portfolio and underlying payment history and historical performance of the unsecured personal loans.

• With the assistance of our fair value specialists, we developed independent estimates of the unsecured personal loans receivable at fair value and compared our estimates to the Company’s estimates.

• We performed a retrospective review of management’s ability to accurately estimate the unsecured personal loans receivable at fair value by comparing modeled monthly cash flows to actual past performance.

/s/ Deloitte & Touche LLP

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Asset-backed notes at fair value 2,387,674 1,651,706

Acquisition financing 114,092 —

Acquisition and corporate financing 222,879 114,092

Lease liabilities 37,947 47,699

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General, administrative and other 58,838 37,480

Goodwill impairment 108,472 —

Total operating expenses 715,943 467,690

Income (loss) before taxes ( 75,286 ) 62,791

Income tax expense (benefit) 15,377 ( 13,012 )

Income tax expense 2,458 15,377

Net income (loss) $ ( 77,744 ) $ 47,414

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For the Years Ended December 31, 2022 and 2021

Convertible Preferred and Common Stock Warrants Common Stock

Shares Par Value Shares Par Value Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

Shares Par Value Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

Balance – January 1, 2022 32,004,396 $ 6 $ 526,338 $ 83,846 $ ( 6,309 ) $ 603,881

Issuance of common stock upon exercise of stock options — — 240,047 — 3,272 — — 3,272

Issuance of common stock upon exercise of stock options, net of shares withheld 546,312 1 ( 4,636 ) — — ( 4,635 )

Repurchase of stock options ( 2,706 ) — ( 28 ) — — ( 28 )

Stock-based compensation expense — — 30,125 — — 30,125

Vesting of restricted stock units, net of shares withheld 806,605 — ( 4,000 ) — — ( 4,000 )

Issuance of equity on business acquisition — — 3,522,182 — 73,181 — — 73,181

Net income — — — — — 47,414 — 47,414

Net loss — — — ( 77,744 ) — ( 77,744 )

Balance – December 31, 2022 33,354,607 $ 7 $ 547,799 $ 6,102 $ ( 6,309 ) $ 547,599

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Stock-based compensation expense — — 19,888 — — 19,888

Issuance of common stock upon exercise of warrants ( 23,512 ) ( 63 ) 10,972 — 253 — ( 190 ) —

Vesting of restricted stock units, net of shares withheld 562,904 — ( 6,502 ) — — ( 6,502 )

Cumulative effect of adoption of ASU 2019-05 — — — — — 4,835 — 4,835

Net loss — — — — — ( 45,082 ) — ( 45,082 )

Issuance of equity on business acquisition 3,522,182 — 73,181 — — 73,181

Net income — — — 47,414 — 47,414

Balance – December 31, 2021 32,004,396 $ 6 $ 526,338 $ 83,846 $ ( 6,309 ) $ 603,881

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Depreciation and amortization 47,533 27,112

Goodwill impairment 108,472 —

Fair value adjustment, net 218,842 48,632

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Changes in operating assets and liabilities ( 80,738 ) ( 10,417 )

Interest and fee receivable, net ( 8,231 ) ( 4,010 )

Other assets ( 23,913 ) ( 9,926 )

Other liabilities 21,727 ( 20,320 )

Net cash provided by operating activities 247,875 163,447

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Originations of loans ( 2,762,828 ) ( 1,842,211 )

Proceeds from loan sales originated as held for investment 249,271 —

Repayments of loan principal 1,396,896 1,107,850

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Other, net ( 5,995 ) ( 12,296 )

Net cash provided by (used in) investing activities ( 884,786 ) 16,379

Net cash used in investing activities ( 1,171,548 ) ( 884,786 )

Cash flows from financing activities

Borrowings under secured financing 1,972,000 1,291,795

Borrowings under asset-backed notes and acquisition financing 1,479,332 40,244

Payments of secured financing ( 1,144,996 ) ( 284,006 )

Repayment of asset-backed notes ( 875,007 ) ( 360,001 )

Other, net ( 2,183 ) ( 495 )

Borrowings under asset-backed notes, acquisition and corporate financing 1,262,059 1,479,332

Repayments of secured financing ( 2,050,000 ) ( 1,144,996 )

Repayments of asset-backed notes, acquisition and corporate financing ( 232,675 ) ( 875,007 )

Payments of deferred financing costs ( 8,189 ) ( 2,183 )

Net payments related to stock-based activities ( 8,665 ) ( 3,232 )

Net cash provided by (used in) financing activities 745,709 ( 136,799 )

Net cash provided by financing activities 934,530 745,709

Net increase in cash and cash equivalents and restricted cash 10,857 24,370

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Organization and Description of Business

Oportun is a financial technology company and digital banking platform driven by its mission to provide inclusive, affordable financial services that empower its members to build a better future.

Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") takes a holistic approach to serving its members and view it as the Company's purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a path to a financially healthy life.

Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") is a digital banking platform that puts its members’ financial goals within reach.

With intelligent borrowing, savings, budgeting, and spending capabilities, the Company empowers members with the confidence to build a better financial future.

Oportun takes a holistic approach to serving its members and view as its purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a path to a financially healthy life.

With its acquisition of Hello Digit, Inc.

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The Company's credit products include personal loans, secured personal loans and credit cards.

Our digital banking products include digital banking, automated savings, long-term investing and retirement savings.

The Company's digital banking products include automated savings, digital banking, long-term investing and retirement savings.

The Company is headquartered in San Carlos, California.

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Concentration of Credit Risk ‑ Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of loans receivable at fair value.

As of December 31, 2021, 49 %, 27 %, 7 % and 6 % of the owned principal balance related to borrowers from California, Texas, Florida and Illinois, respectively.

As of December 31, 2022, 45 %, 26 %, 9 %, 5 % and 4 % of the owned principal balance related to borrowers from California, Texas, Florida, Illinois and New Jersey, respectively.

Owned principal balance related to borrowers from each of the remaining states of operation continues to be at or below 3 %.

As of December 31, 2020, 56 %, 26 %, 5 % and 5 % of the owned principal balance related to borrowers from California, Texas, Illinois and Florida, respectively, and the owned principal balance related to borrowers from each of the remaining states was at or below 3 %.

As of December 31, 2021, 49 %, 27 %, 7 % and 6 % of the owned principal balance related to borrowers from California, Texas, Florida and Illinois, respectively, and the owned principal balance related to borrowers from each of the remaining states was at or below 3 %.

Cash and Cash Equivalents ‑ Cash and cash equivalents consist of unrestricted cash balances and short-term, liquid investments with a maturity date of three months or less at the time of purchase.

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Restricted Cash ‑ Restricted cash represents cash held at a financial institution as part of the collateral for the Company’s Secured Financing, asset-backed notes and loans designated for sale.

Loans Receivable at Fair Value ‑ The Company elected the fair value option for all loans receivable held for investment.

Under fair value accounting, direct loan origination fees are taken into income immediately and direct loan origination costs are expensed in the period the loan originates.

Loans Receivable at Fair Value ‑ Loans that we have the intent and ability to hold for the foreseeable future or until maturity or payoff are considered as loans held for investment.

The Company elected the fair value option for all loans receivable held for investment.

Under fair value accounting, direct loan origination fees are recognized in income immediately and direct loan origination costs are expensed in the period the loan originates.

In addition, the Company recognizes annual fees on credit card receivables into income immediately upon activation of the credit card by the credit card holder and subsequent annual fees when billed upon the anniversary of the credit card account.

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The Company does not use derivative instruments for trading or speculative purposes.

Based on the agreements entered into with MetaBank, N.A., for all loans originated and retained by MetaBank, MetaBank receives a fixed interest rate.

Based on the agreements entered into with Pathward, N.A.

(formerly known as MetaBank, N.A.) for all loans originated and retained by Pathward, Pathward receives a fixed interest rate.

Oportun bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreements.

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The Company performs impairment testing for goodwill annually or more frequently if an event or change in circumstances indicates that goodwill may be impaired.

The Company first assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value.

The Company first assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying

If the Company concludes the fair value is less than its carrying value a quantitative test is performed.

The Company performs a quantitative goodwill impairment test by determining the fair value of the reporting unit and comparing it to the carrying value of the reporting unit.

value of the reporting unit is greater than the reporting unit's fair value, then the carrying value of the reporting unit is deemed to be recoverable.

If the fair value of the reporting unit is greater than the reporting unit's fair value, then the carrying value of the reporting unit is deemed to be recoverable.

If the carrying value of the reporting unit is greater than the reporting unit's fair value, goodwill is impaired and written down to the reporting unit's fair value.

In response to a sustained decline in the Company's share price primarily driven by macroeconomic conditions, the Company conducted a quantitative test of our goodwill as of September 30, 2022.

As a result of this quantitative test, the Company identified an impairment to goodwill resulting in recognition of a $ 108.5 million non-cash goodwill impairment charge for the year ended December 31, 2022.

There were no goodwill impairment charges during the year ended December 31, 2021.

For further discussion, refer to Note 7, Capitalized Software, Other Intangibles and Goodwill .

Intangible Assets other than Goodwill - At the time intangible assets are initially recognized, a determination is made with regard to each asset as it relates to its useful life.

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An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

The Company determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired for the years ended December 31, 2021 and 2020, except as disclosed in Note 7 , Capitalized Software , Other Intangible s and Goodwill .

The Company determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired for the years ended December 31, 2022 and 2021, except as disclosed in Note 7, Capitalized Software, Other Intangibles and Goodwill .

Asset-Backed Notes at Fair Value ‑ The Company elected the fair value option to account for all asset-backed notes.

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Acquisition Financing ‑ The Acquisition Financing is an asset-backed note carried at amortized cost.

The Company reports issuance costs associated with the financing on its balance sheet as a direct reduction in the carrying amount of the note, and they are amortized over the life of the note using the effective interest method.

The Company reports issuance costs associated with the financing on its balance sheet as a direct reduction in the carrying amount of the note, and they are amortized over the life of the

note using the effective interest method.

The Acquisition Financing was used to fund the cash component of the purchase price for the Digit acquisition and, as a result, the interest payments are recorded to General, administrative and other in the Consolidated Statements of Operations.

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Non-Interest Income

Non-interest income includes gain on loan sales, servicing fees, debit card income, sublease income and other income.

Non-interest income includes subscription revenue, servicing fees, gain on loan sales, debit card income, documentation fees, sublease income and other income.

Subscription Revenue - The Company earns revenue on a subscription basis from users of its platform.

Revenue is recognized ratably over each month as the performance obligation is satisfied over time.

Deferred revenue is recognized when the service period spans into the following month.

Servicing Fees ‑ The Company retains servicing rights on sold loans.

Servicing fees comprise the contractual annual servicing fee based upon the average daily principal balance of loans sold that the Company earns for servicing loans sold to a third-party financial institution.

The servicing fee compensates the Company for the costs incurred in servicing the loans, including providing customer services, receiving borrower payments and performing appropriate collection activities.

Management believes the fee approximates a market rate and accordingly has not recognized a servicing asset or liability.

Gain on Loan Sales ‑ The Company recognizes a gain on sale from the difference between the proceeds received from the purchaser and the carrying value of the loans on the Company’s books.

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The Company records the gain on the sale of a loan at the sale date in an amount equal to the proceeds received less outstanding principal, accrued interest, late fees and net deferred origination costs.

Servicing Fees ‑ The Company retains servicing rights on sold loans.

Servicing fees comprise the 5.0 % per annum servicing fee based upon the average daily principal balance of loans sold that the Company earns for servicing loans sold to a third-party financial institution.

Management believes the fee approximates a market rate and accordingly has not recognized a servicing asset or liability.

Documentation Fees - MetaBank, N.A.

pays the Company on a monthly basis documentation fees as compensation for its role in facilitation of loan originations by MetaBank.

The documentation fees are equivalent to loan origination fees charged by MetaBank to its borrowers.

Debit card income is the revenue from interchange fees when borrowers use our reloadable debit card for purchases as well as the associated card user fees.

Documentation Fees - On a monthly basis Pathward, N.A.

pays the Company documentation fees as compensation for its role in facilitation of loan originations by Pathward.

The documentation fees are equivalent to loan origination fees charged by Pathward to its borrowers.

Documentation fees to which the Company expects to be entitled are variable consideration because loan volume originated over the contractual term is not known at the contract’s inception.

The transaction fee is determined each time a loan is issued based on that loan’s initial principal amount and is recognized when performance is complete and upon the successful origination of a borrower's loan.

Debit card income is the revenue from interchange fees when borrowers use our reloadable debit card for purchases as well as the associated card user fees.

Sublease income is the rental income from subleasing a portion of our headquarters.

Other income includes marketing incentives paid directly to us by the merchant clearing company based on transaction volumes, subscription revenue on our digital banking products, interest earned on cash and cash equivalents and restricted cash, and gain (loss) on asset sales.

Interest expense ‑ Interest expense consists of interest expense associated with the Company’s asset-backed notes and Secured Financing, and it includes origination costs as well as fees for the unused portion of the Secured Financing facility.

Sublease income is the rental income from subleasing a portion of our existing right of use assets.

Other income includes marketing incentives paid directly to us by the merchant clearing company based on transaction volumes, interest earned on cash and cash equivalents and restricted cash, and gain (loss) on asset sales.

Interest expense ‑ Interest expense consists of interest expense associated with the Company’s asset-backed notes, Corporate Financing and Secured Financing, and it includes the amortization of deferred origination costs for the Corporate Financing and Secured Financing facilities as well as fees for the unused portion of the Secured Financing facility.

The Company elected the fair value option for all asset-backed notes.

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Recently Adopted Accounting Standards

Income Taxes - In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020.

Early adoption is permitted.

The Company adopted this ASU effective January 1, 2021 with no impact on its consolidated financial statements and disclosures.

Earnings (Loss) per Share

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Restricted stock units 4,347,899 19,073

Warrants — 10,400

Total anti-dilutive common share equivalents 7,874,995 2,057,095

Variable Interest Entities

Variable interest entities ("VIEs") are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of equity investment at risk lack the ability to direct the entity's activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.

For all VIEs in which we are involved, we assess whether we are the primary beneficiary of the VIE on an ongoing basis.

In circumstances where we have both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, we would conclude that we are the primary beneficiary of the VIE, and we consolidate the VIE.

In situations where we are not deemed to be the primary beneficiary of the VIE, we do not consolidate the VIE and only recognize our interests in the VIE.

Consolidated VIEs

As part of the Company’s overall funding strategy, the Company transfers a pool of designated loans receivable to wholly owned special-purpose subsidiaries ("VIEs") to collateralize certain asset-backed financing transactions.

The Company has determined that it is the primary beneficiary of these VIEs because it has the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb the losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs.

For these VIEs where the Company has determined that it is the primary beneficiary because it has the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb the losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs the VIEs assets and related liabilities are consolidated with the results of the Company.

Such power arises from the Company’s contractual right to service the loans receivable securing the VIEs’ asset-backed debt obligations.

The Company has an obligation to absorb losses or the right to receive benefits that are potentially significant to the VIEs because it retains the residual interest of each asset-backed financing transaction either in the form of an asset-backed certificate or as an uncertificated residual interest.

Accordingly, the Company includes the VIEs’ assets, including the assets securing the financing transactions, and related liabilities in its consolidated financial statements.

Each VIE issues a series of asset-backed securities that are supported by the cash flows arising from the loans receivable securing such debt.

Cash inflows arising from such loans receivable are distributed monthly to the transaction’s noteholders and related service providers in accordance with the transaction’s contractual priority of payments.

Each consolidated VIE issues a series of asset-backed securities that are supported by the cash flows arising from the loans receivable securing such debt.

Cash inflows arising from such loans receivable are distributed monthly to the transaction’s lenders and related service providers in accordance with the transaction’s contractual priority of payments.

The creditors of the VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets.

The Company retains the most subordinated economic interest in each financing transaction through its ownership of the respective residual interest in each VIE.

The Company has no obligation to repurchase loans receivable that initially satisfied the financing transaction’s eligibility criteria but subsequently became delinquent or defaulted loans receivable.

The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s consolidated balance sheets:

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Acquisition financing (1)

85,679 116,000

Total VIE liabilities $ 2,793,353 $ 2,165,706

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See Note 9, Borrowings for additional information.

Loans Held for Sale

Whole Loan Sale Program ‑ In November 2014, the Company entered into a whole loan sale agreement with an institutional investor, which agreement was amended in March 2021 in which the term of the current agreement is set to expire on March 4, 2022.

Pursuant to the agreement, the Company sells at least 10 % of its personal loan originations, with an option to sell an additional 5 %, subject to certain eligibility criteria and minimum and maximum volumes.

In addition, from July 2017 to August 2020, the Company was party to a separate whole loan sale arrangement with an institutional investor providing for a commitment to sell 100 % of the Company’s loans originated under its loan program for borrowers who do not meet the qualifications of the Company's core loan origination program.

The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on August 5, 2020.

Loans Held for Sale and Loans Sold

Structured Loan Sales - On March 31, 2022, the Company participated in a securitization whereby the Company and funds managed by Ellington Management Group both contributed collateral and were co-sponsors of the transaction, which totaled $ 400.0 million in issued asset-backed notes.

As part of the securitization, the Company sold loans to OPTN Funding Grantor Trust 2022-1 through the issuance of amortizing asset-backed notes secured by a pool of its unsecured and secured personal installment loans.

The Company also sold its share of the residual interest in the pool.

The Company's continued involvement in the unconsolidated VIEs is in the form of servicer of these loans.

The Company does not have variable interest in the Grantor Trust or the issuer established for this transaction.

The sold loans were accounted for under the fair value option and had an aggregate unpaid principal balance of approximately $ 227.6 million, a cumulative fair value mark of $ 15.9 million and unpaid interest of $ 1.5 million.

The Company received $ 245.0 million of net proceeds and by selling both its notes and residual interest, the Company derecognized these loans from its Consolidated Balance Sheets.

Other Loan Sales - The Company enters into agreements to sell certain populations of its personal loans and credit card receivables from time to time.

The sold loans were accounted for under the fair value option.

During the year ended December 31, 2022, the Company sold loans that had an aggregate unpaid principal balance, including unpaid interest and fees, of approximately $ 66.2 million, and a cumulative fair value mark of $( 61.9 ) million.

The Company received $ 4.3 million of net proceeds.

The loan sales qualified for sale accounting treatment and the Company derecognized these loans from its Consolidated Balance Sheets when the loans were sold.

Whole Loan Sale Program ‑ In November 2014, the Company entered into a whole loan sale agreement with an institutional investor.

Pursuant to the agreement, the Company sold at least 10 % of its unsecured loan originations, with an option to sell an additional 5 %, subject to certain eligibility criteria and minimum and maximum volumes.

The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.

The originations of loans sold and held for sale during the year ended December 31, 2022 was $ 52.7 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 17.4 million.

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The purchase consideration was allocated to the tangible and intangible assets and liabilities acquired and assumed as of the acquisition date, with the excess recorded to goodwill as shown below.

The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Annual Report on Form 10-K and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available.

Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:

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federal income tax purposes.

The Company recognized acquisition and integration related costs of approximately $ 10.6 million in the year ended December 31, 2021 which are included in the General, administrative and other expense in the Consolidated Statements of Operations.

We recognized a $ 108.5 million non-cash impairment charge for the year ended December 31, 2022.

For details regarding the impairment charge, refer to Note 7, Capitalized Software, Other Intangibles and Goodwill .

The table below summarizes the acquired intangible assets and developed technology, with estimated useful lives, as of the acquisition date:

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The pro forma net loss for the year ended December 31, 2021 was adjusted to exclude nonrecurring acquisition-related costs of $ 29.7 million.

The pro forma net loss for the year ended December 31, 2020 was adjusted to include nonrecurring acquisition-related costs of $ 29.7 million.

Below is the unaudited pro forma financial information of the combined results of operations of the Company and Digit as if the acquisition occurred on January 1, 2020.

(in thousands) 2021

Total revenues

$ 666,158 $ 623,973

Net income (loss) attributable to shareholders

$ 33,971 $ ( 99,109 )

For the year ended December 31, 2021, total net revenue of $ 0.9 million from the Digit acquisition is included in the Company’s Consolidated Statements of Operations.

The Company recognized acquisition and integration related costs of approximately $ 29.7 million and $ 10.6 million in the years ended December 31, 2022 and 2021, respectively, which are included in the General, administrative and other expense in the Consolidated Statements of Operations.

Capitalized Software, Other Intangibles and Goodwill

7 unchanged sentences

Capitalized software, net

Amortization of system development costs for years ended December 31, 2021 and 2020 was $ 16.7 million and $ 10.8 million, respectively.

Amortization of acquired developed technology for the year ended December 31, 2021 was $ 0.2 million and reflects 10 days of expense after the acquisition of Digit.

There was no amortization for acquired developed technology for the year ended December 31, 2020.

Amortization of system development costs and acquired developed technology for years ended December 31, 2022 and 2021 was $ 34.2 million and $ 16.9 million, respectively.

System development costs capitalized in the years ended December 31, 2022 and 2021 were $ 51.5 million and $ 77.1 million, respectively.

Acquired developed technology was $ 48.5 million and is related to the acquisition of Digit on December 22, 2021.

In November 2020, the Company decided to cease originating direct auto loans used to purchase a vehicle.

Accordingly, the Company recorded an impairment charge of $ 1.8 million related to system development costs and $ 1.9 million related to fixed assets.

The impairment loss was included in Technology and facilities on the Consolidated Statements of Operations for the year ended December 31, 2020.

Acquired developed technology was $ 48.5 million and is related to the acquisition of Digit.

Intangible Assets

The gross carrying amount and accumulated amortization, in total and by major intangible asset class are as follows:

December 31, 2021

(in thousands, except years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount

December 31, December 31,

(in thousands) 2022 2021

Intangible assets:

Member relationships 34,500 $ 34,500

1 unchanged sentence

Other 3,000 3,000

Total $ 43,864 $ ( 300 ) $ 43,564

December 31, 2020

(in thousands, except years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Trademarks $ 64 $ — $ 64

Total $ 64 $ — $ 64

Amortization of intangible assets for the year ended December 31, 2021 was $ 0.3 million.

There were no intangible assets subject to amortization for the year ended December 31, 2020.

Accumulated amortization

( 8,249 ) $ ( 300 )

Total intangible assets, net

35,677 $ 43,564

Amortization of intangible assets for the years ended December 31, 2022 and 2021 was $ 7.9 million and $ 0.3 million.

Expected future amortization expense for intangible assets as of December 31, 2022 is as follows:

1 unchanged sentence

Thereafter 4,780

The table below presents changes to the carrying amount of goodwill:

(in thousands) December 31, 2020 Goodwill Acquired December 31, 2021

Goodwill $ — $ 104,014 $ 104,014

The goodwill acquired during the twelve months ended December 31, 2021 is associated with the acquisition of Digit.

There was no impairment for the periods presented.

The Company recorded goodwill of $ 104.0 million arising from the acquisition of Digit on December 22, 2021.

The Company recorded increases to goodwill of $ 4.5 million, during the twelve months ended December 31, 2022, as part of the twelve-month measurement period.

These increases were primarily due to changes in deferred taxes resulting from the filing of Digit's pre-acquisition tax returns.

Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed.

The Company performs impairment tests related to its goodwill on an annual basis or when certain triggering events or circumstances are identified that would more likely than not reduce the estimated fair value of the goodwill below its carrying amount.

In response to a sustained decline in the Company’s share price primarily driven by macroeconomic conditions, the Company conducted a quantitative test of its goodwill as of September 30, 2022.

The Company considered the income approach, the guideline public company multiples approach and the market approach in determining a fair value for the Company which was determined to be the only reporting unit for purposes of testing the goodwill.

Given the uncertain macroeconomic environment there was a wide range of indications of fair value across the approaches.

Although the corresponding value was the lowest in the range, the Company utilized the market approach because it was based on market observable inputs.

The market approach estimates fair value using the market capitalization of the Company as a basis.

As of September 30, 2022, the market capitalization plus the estimated control premium was less than the carrying value of the Company.

As a result, the Company recognized a non-cash pre-tax impairment charge of $ 108.5 million during the year ended December 31, 2022 to write down the carrying value of goodwill.

The non-cash impairment charge is included in Goodwill impairment in the Consolidated Statements of Operations for the year ended December 31, 2022.

There were no goodwill impairment charges during the year ended December 31, 2021.

The following table represents the changes in goodwill since December 31, 2021:

(in thousands) Goodwill

Balance as of December 31, 2021 $ 104,014

Measurement adjustments during period

Impairment ( 108,472 )

Balance as of December 31, 2022

Other assets consist of the following:

(in thousands) 2022 2021

Computer and office equipment $ 13,658 $ 11,182

Furniture and fixtures 8,553 11,072

Purchased software 2,073 1,992

Leasehold improvements 19,816 29,543

Total cost 44,100 53,789

Total fixed assets $ 48,212 $ 44,100

Accumulated depreciation ( 37,688 ) ( 34,185 )

8 unchanged sentences

The following table presents information regarding the Company's Secured Financing facilities:

December 31, 2021

Variable Interest Entity Current Balance Commitment Amount Maturity Date Interest Rate

December 31, 2022 December 31, 2021

Variable Interest Entity Facility Amount Maturity Date Interest Rate Balance Balance

(in thousands)

1 unchanged sentence

$ 150,000 December 1, 2023 Variable (1)

$ 76,574 $ 40,108

Oportun PLW Trust 600,000 September 1, 2024 LIBOR (minimum of 0.00 % ) + 2.17 %

240,994 353,781

Total secured financing $ 750,000 $ 317,568 $ 393,889

(1) The interest rate on the Secured Financing - CCW facility is LIBOR (minimum of 1.00 %) plus 6.00 % on the first $ 18.8 million of principal outstanding and LIBOR (minimum of 0.00 %) plus 3.41 % on the remaining outstanding principal balance.

(2) The Credit Card Warehouse has an aggregate borrowing capacity of up to $ 150.0 million;

comprised of $ 75.0 million committed purchase amount and $ 75.0 million uncommitted purchase amount.

December 31, 2020

Variable Interest Entity Current Balance Commitment Amount Maturity Date Interest Rate

(in thousands)

Oportun Funding V, LLC $ 246,385 $ 400,000 October 1, 2021 LIBOR (minimum of 0.00 % ) + 2.45 %

The Company elected the fair value option for all asset-backed notes issued on or after January 1, 2018.

The following table presents information regarding asset-backed notes:

December 31, 2022

Variable Interest Entity Initial note amount issued (a)

Initial collateral balance (b)

Current balance (a)

Current collateral balance (b)

Variable Interest Entity Initial note amount issued (1)

Initial collateral balance (2)

Current balance (1)

Current collateral balance (2)

Weighted average interest

2 unchanged sentences

Asset-backed notes recorded at fair value:

Oportun Issuance Trust (Series 2022-3) $ 300,000 $ 310,993 $ 285,218 $ 301,967 8.43 % N/A

Oportun Issuance Trust (Series 2022-2) 400,000 410,212 313,689 344,218 7.03 % N/A

Oportun Issuance Trust (Series 2022-A) 400,000 410,211 380,313 414,293 5.44 % 2 years

Oportun Issuance Trust (Series 2021-C) 500,000 512,762 435,951 518,929 2.48 % 3 years

4 unchanged sentences

December 31, 2021

Variable Interest Entity Initial note amount issued (a)

Initial collateral balance (b)

Current balance (a)

Current collateral balance (b)

Weighted average interest rate (c)

Variable Interest Entity Initial note amount issued (1)

Initial collateral balance (2)

Current balance (1)

Current collateral balance (2)

Weighted average interest rate (3)

Original revolving period (4)

1 unchanged sentence

Asset-backed notes recorded at fair value:

Oportun Issuance Trust (Series 2021-C) $ 500,000 $ 512,762 $ 497,774 $ 525,436 2.48 % 3 years

Oportun Issuance Trust (Series 2021-B) 500,000 512,759 498,487 521,174 2.05 % 3 years

Oportun Funding XIV, LLC (Series 2021-A) 375,000 383,632 374,363 391,325 1.79 % 2 years

Oportun Funding XIII, LLC (Series 2019-A) 279,412 294,118 281,082 299,310 3.46 % 3 years

Oportun Funding XII, LLC (Series 2018-D) 175,002 184,213 178,182 187,570 4.50 % 3 years

Oportun Funding X, LLC (Series 2018-C) 275,000 289,474 279,171 294,710 4.39 % 3 years

Oportun Funding IX, LLC (Series 2018-B) 225,001 236,854 226,653 241,237 4.18 % 3 years

Oportun Funding VIII, LLC (Series 2018-A) 200,004 222,229 200,004 226,242 3.83 % 3 years

Total asset-backed notes recorded at fair value:

$ 1,654,412 $ 1,703,271 $ 1,651,706 $ 1,737,245

(a) Initial note amount issued includes notes retained by the Company as applicable.

(1) Initial note amount issued includes notes retained by the Company as applicable.

The current balances are measured at fair value for asset-backed notes recorded at fair value.

(b) Includes the unpaid principal balance of loans receivable, cash, cash equivalents and restricted cash pledged by the Company.

The following table presents information regarding the Company's Acquisition Financing:

December 31, 2021

Variable Interest Entity Current Balance Original Balance Maturity Date Interest Rate

(2) Includes the unpaid principal balance of loans receivable, the balance of required reserve funds, cash, cash equivalents and restricted cash pledged by the Company.

(3) Weighted average interest rate excludes notes retained by the Company.

There were no notes retained by the Company as of December 31, 2022.

The weighted average interest rate for Series 2022-2 and Series 2022-3 will change over time as the notes pay sequentially (in class priority order).

(4) The revolving period for Series 2019-A ended on August 1, 2022 and the asset-backed notes have been amortizing since then.

Series 2022-2 and Series 2022-3 are both amortizing deals with no revolving period.

The following table presents information regarding the Company's Acquisition and Corporate Financings:

December 31, 2022 December 31, 2021

Entity Original Balance (1)

Maturity Date (2)

Interest Rate (3)

Balance Balance

(in thousands)

Oportun RF, LLC $ 114,092 $ 116,000 October 01, 2024

LIBOR (minimum of 0.00 %) + 8.00 %

On March 8, 2021, the Company redeemed all $ 200.0 million of outstanding Series 2018-A Notes, plus accrued and unpaid interest, and announced the issuance of $ 375.0 million of two-year fixed-rate asset-backed notes by Oportun Funding XIV, LLC, a wholly-owned subsidiary of the Company and secured by a pool of its unsecured personal installment loans (the “2021-A Securitization”).

Oportun Financial Corporation $ 150,000 September 14, 2026 SOFR (minimum of 0.00 % + 9.00 %

$ 141,957 $ —

Oportun RF, LLC 116,000 May 1, 2024 SOFR (minimum of 0.00 %) + 8.00 %

80,922 114,092

Total acquisition and corporate financing $ 266,000 $ 222,879 $ 114,092

(1) The Acquisition Financing Facility (Oportun RF, LLC) was amended on May 24, 2022 and upsized for an additional $ 20.9 million and was amended again on July 28, 2022 and upsized for an additional $ 9.1 million.

(2) Pursuant to an amendment on November 2, 2022, the maturity date of the Acquisition Financing Facility (Oportun RF, LLC) was changed from October 2024 to June 2024.

The Acquisition Financing Facility was further amended on December 2, 2022 to change the maturity date to May 2024.

(3) The interest rate on the Acquisition Financing Facility (Oportun RF, LLC) was LIBOR (minimum of 0.00 %) plus 8.00 % as of December 31, 2021.

On May 24, 2022 the Company completed the issuance of $ 400.0 million of two-year asset-backed notes in a private asset-backed securitization secured by a pool of its unsecured and secured personal installment loans (the “2022-A Securitization”).

The 2022-A Securitization included four classes of fixed rate notes:

Class A, Class B, Class C and Class D notes, which were priced with a weighted average interest rate of 1.79 % per annum.

The proceeds from this securitization were used to fund the redemption of 2018-A and paid down our Secured Financing facility.

On April 8, 2021, the Company redeemed all $ 225.0 million of outstanding Series 2018-B Notes, plus the accrued and unpaid interest.

The redemption price was funded by drawing upon our Secured Financing facility and using unrestricted cash.

On May 10, 2021, the Company announced the issuance of $ 500.0 million of three-year fixed-rate asset-backed notes by Oportun Issuance Trust 2021-B, a wholly-owned subsidiary of the Company and secured by a pool of its unsecured and secured personal installment loans (the "2021-B Securitization").

The 2021-B Securitization included four classes of fixed-rate notes:

Class A, Class B, Class C and Class D notes, which were priced with a weighted average fixed interest rate of 2.05 % per annum.

On July 8, 2021, the Company redeemed all $ 275.0 million of outstanding Series 2018-C Notes, plus the accrued and unpaid interest.

The redemption was funded by drawing upon the Company's VFN facility, utilizing funds from the Company's 2021-B securitization transaction and using unrestricted cash.

On September 8, 2021, the Company closed on a Personal Loan Warehouse facility ("PLW").

In connection with the PLW facility, the Company's wholly-owned subsidiary Oportun PLW Trust entered into a Loan and Security Agreement to borrow up to $ 600.0 million committed through September 2024.

Borrowings under the PLW facility accrue interest at a rate equal to one-month LIBOR plus a spread of 2.17 %.

September 8, 2021, the Company's wholly-owned subsidiary, Oportun Funding V, LLC, as issuer under the Variable Funding Note Warehouse ("VFN") facility, terminated the VFN facility.

Final payment was made on the VFN facility in the amount of $ 219.0 million, plus the accrued and unpaid interest, which is the amount sufficient to satisfy and discharge Oportun Funding V, LLC's obligations under the VFN facility notes and the indenture.

The final payment was funded by drawing upon the Company's PLW facility.

Also on September 8, 2021, the Company redeemed all $ 175.0 million of outstanding Series 2018-D Notes, plus the accrued and unpaid interest.

The redemption was funded by drawing upon the Company's Personal Loan Warehouse facility.

On October 28, 2021, the Company announced the issuance of $ 500.0 million of three-year fixed-rate asset-backed notes by Oportun Issuance Trust 2021-C, a wholly-owned subsidiary of the Company and secured by a pool of its unsecured and secured personal installment loans (the "2021-C Securitization").

The 2021-C Securitization included four classes of fixed-rate notes:

Class A, Class B, Class C and Class D notes, which were priced with a weighted average fixed interest rate of 2.48 % per annum.

On December 20, 2021, the Company closed on a $ 150.0 million Credit Card Warehouse facility ("CCW") secured by credit card receivables.

In connection with the CCW Facility, our wholly-owned subsidiary Oportun CCW Trust issued two-year variable funding asset-backed notes pursuant to the Indenture dated December 20, 2021.

The interest rate is LIBOR, with a floor of 1.00 %, plus 6.00 % on the first $ 18.8 million of principal outstanding and LIBOR, with a floor of 0.00 %, plus 3.41 % on the remaining outstanding principal balance.

On December 20, 2021, Oportun RF, LLC, a wholly-owned subsidiary of the Company issued a $ 116.0 million asset-backed floating rate variable funding note (the "Acquisition Financing"), and an asset-backed residual certificate, both of which are secured by certain residual cash flows from the Company's securitizations and guaranteed by Oportun, Inc.

The note and the certificate were issued pursuant to the Indenture dated as of December 20, 2021.

The note was used to fund the cash consideration paid for the acquisition of Digit and bears interest at a rate of one-month LIBOR plus 8.00 %.

The Acquisition Financing is structured to pay down based on an amortization schedule, with a final payment in October 2024.

As of December 31, 2021 and 2020, the Company was in compliance with all covenants and requirements of the Secured Financing facilities, Acquisition Financing note and asset-backed notes.

Class A, Class B, Class C and Class D notes.

The Class A, Class B and Class C notes were priced with a weighted average yield of 5.68 % per annum.

The Class D notes were initially retained by an affiliate of the Company and subsequently sold to third parties on July 28, 2022.

Also on May 24, 2022, and subsequently on July 28, 2022, pursuant to amended indentures, Oportun RF, LLC, a wholly owned subsidiary of the Company issued an additional $ 20.9 million and $ 9.1 million asset-backed floating rate variable funding notes, and asset-backed residual certificates, both of which are secured by certain cash flows from the Company's securitizations and guaranteed by Oportun, Inc., increasing the size of the Acquisition Financing facility to $ 119.5 million The amendments also replaced the interest rate based on LIBOR with an interest rate based on SOFR plus 8.00 %.

The Acquisition Financing facility was scheduled to pay down based on an amortization schedule with a final payment in May 2024.

Subsequently, on February 10, 2023, the Acquisition Financing facility was further amended, including among other things, revising the interest rate to SOFR plus 11.00 % and adjusting the amortization schedule to defer $ 42.0 million in principal payments through July 2023, with final payment in October 2024.

On July 22, 2022 the Company completed the issuance of $ 400.0 million of Series 2022-2 fixed rate asset-backed notes in a private asset-backed securitization transaction secured by a pool of unsecured and secured installment loans.

The notes were priced with a weighted average yield of 8.00 % per annum and weighted average interest rate over the term of the transaction of 7.77 % per annum.

On September 14, 2022, the Company entered into a credit agreement to borrow $ 150.0 million of a senior secured term loan (the “Corporate Financing”).

The term loan bears interest, payable in cash, at an amount equal to 1-month term SOFR plus 9.00 %.

The term loan is scheduled to mature on September 14, 2026, and is not subject to amortization.

Certain prepayments of the term loan is subject to a prepayment premium.

The obligations under the credit agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the term loan, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions.

On March 10, 2023 we upsized and amended our Corporate Financing facility to be able to borrow up to an additional $ 75 million.

At closing and as part of the Incremental Tranche A-1, we borrowed $ 20.8 million and will receive an additional $ 4.2 million in Incremental Tranche A-2 loans on or about March 27, 2023.

We may borrow up to an aggregate additional amount of $ 50.0 million on an uncommitted basis, in two $ 25.0 million tranches, expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.

The term loan now bears interest at an amount payable in cash equal to 1-month term SOFR plus 9.00 % plus an amount payable in cash or in kind, at the Company’s option, equal to 3.00 %.

On November 3, 2022, the Company completed the issuance of $ 300 million of Series 2022-3 fixed rate asset-backed notes in a private asset-backed securitization transaction secured by a pool of unsecured and secured installment loans.

The notes were priced with a weighted average yield of 10.94 % per annum and weighted average interest rate of 9.51 % per annum.

On March 8, 2023, the Credit Card Warehouse was amended.

This amendment, among other things, extends the revolving period by a year, to December 31, 2024, and reduces the commitment from $ 150.0 million to $ 120.0 million.

As of December 31, 2022 and 2021, the Company was in compliance with all covenants and requirements of the Secured Financing, Acquisition Financing and Corporate Financing facilities and asset-backed notes.

Other Liabilities

15 unchanged sentences

As of December 31, 2021, 32,276,419 and 32,004,396 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

Warrants - On June 9, 2020, 10,972 shares of common stock were issued in connection with the cashless exercise of the outstanding common stock warrants.

No warrants were outstanding as of December 31, 2021 or 2020.

Equity Compensation and Other Benefits

21 unchanged sentences

Generally, all regular employees, including executive officers, employed by the Company or by any of its designated affiliates, will be eligible to participate in the ESPP and may contribute, normally through payroll deductions, up to 15 % of their earnings (as defined in the ESPP) for the purchase of common stock under the ESPP.

Unless otherwise determined by the Board, common stock will be purchased for the accounts of employees participating in the ESPP at a price per share equal to the lower of (a) 85 % of the fair market value of a share of the Company's common stock on the first date of an offering or (b) 85 % of the fair market value of a share of the common stock on the date of purchase.

Unless otherwise determined by the Board, common stock will be purchased for the accounts of

employees participating in the ESPP at a price per share equal to the lower of (a) 85 % of the fair market value of a share of the Company's common stock on the first date of an offering or (b) 85 % of the fair market value of a share of the common stock on the date of purchase.

2021 Inducement Equity Incentive Plan

22 unchanged sentences

• Expected Dividend - The Company has no plans to pay dividends.

Stock Option Activity - A summary of the Company's stock option activity under the 2005 Plan, the 2015 Plan, and the 2019 Plan at December 31, 2021 is as follows:

Stock Option Activity - A summary of the Company's stock option activity under the 2005 Plan, 2015 Plan, and 2019 Plan at December 31, 2022 is as follows:

(in thousands, except share and per share data) Options Outstanding Options Weighted-Average Exercise Price Weighted Average Remaining Life

13 unchanged sentences

Cash received from options exercised, net (1)

( 4,636 ) 3,272

Aggregate intrinsic value of options exercised 11,884 2,380

Fair value of shares vested 3,863 4,974

(1) The amount reflected for the year ended December 31, 2022 is the net of cash received from options exercised of $ 1.6 million and the cash paid for employee tax withholding settled in shares of $ 6.2 million.

As of December 31, 2022 and 2021, the Company’s total unrecognized compensation cost related to nonvested stock-based option awards granted to employees was, $ 6.2 million and $ 6.9 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.6 years and 2.2 years, respectively.

4 unchanged sentences

Stock-based compensation cost for RSUs is measured based on the fair market value of the Company’s common stock on the date of grant.

As part of the merger consideration for the Digit acquisition, 501,906 shares of the Company’s restricted stock units were issued to certain Digit employees to replace the outstanding unvested stock options that were previously issued to the employees of Digit.

As part of the Digit acquisition in 2021, 501,906 shares of the Company’s restricted stock units were issued to certain Digit employees to replace the outstanding unvested stock options that were previously issued to the employees of Digit.

The RSUs are subject to the same service-based requirements as the historical stock option grants.

14 unchanged sentences

4,420,579 14.45

(1) The Company allows its Board of Directors to defer all or a portion of monetary remuneration paid to the Director.

(1) The Company allows its Board to defer all or a portion of monetary remuneration paid to the Director.

As of December 31, 2022, there were 74,368 restricted stock units vested for which the holders elected to defer delivery of the Company's shares.

10 unchanged sentences

Cash flows from the tax shortfalls or benefits for tax deductions resulting from the exercise of stock options in comparison to the compensation expense recorded for those options are required to be classified as cash from financing activities.

The total income tax expense (benefit) recognized in the income statement for share-based compensation arrangements was $( 0.2 ) million and $ 2.6 million for the years ended December 31, 2021 and 2020, respectively.

The Company recognized $ 8.1 million and $ 5.4 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively.

Additionally, the total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $ 3.3 million and $( 0.2 ) million for the years ended December 31, 2022 and 2021, respectively.

Retirement Plan

4 unchanged sentences

All employee and employer contributions will be invested according to participants’ individual elections.

The Company remits employee contributions to plan with each bi-weekly payroll.

Interest Income - Total interest income included in the Consolidated Statements of Operations is as follows:

11 unchanged sentences

Servicing fees 19,928 13,253

Subscription revenue 31,186 813

Other income 19,614 10,127

17 unchanged sentences

Total deferred $ ( 57 ) $ 16,451

Total provision (benefit) for income taxes $ 15,377 $ ( 13,012 )

Income tax expense (benefit) was $ 15.4 million and $( 13.0 ) million for the years ended December 31, 2021 and 2020, which represents an effective tax rate of 24.5 % and 22.4 %, respectively.

Total provision for income taxes $ 2,458 $ 15,377

Income tax expense was $ 2.5 million and $ 15.4 million for the years ended December 31, 2022 and 2021, which represents an effective tax rate of ( 3.3 )% and 24.5 %, respectively.

A reconciliation of income tax expense with the amount computed by applying the statutory U.S.

2 unchanged sentences

(in thousands) 2022 2021

Income tax expense (benefit) computed at U.S.

Income tax (benefit) expense computed at U.S.

federal statutory rate $ ( 15,810 ) $ 13,186

6 unchanged sentences

Return to provision adjustment ( 5,798 ) ( 2,812 )

US Base Erosion Anti-Abuse Tax (BEAT) — 1,333

Nondeductible acquisition costs 1,458 —

Non-deductible acquisition costs — 1,458

Goodwill impairment 22,779 —

Fines and penalties 578 6

Other ( 194 ) ( 25 )

8 unchanged sentences

Share-based compensation 8,335 7,410

Depreciation and amortization — 1,967

Fair value adjustment - Bonds Payable — 2,372

CARES Act payroll taxes — 536

12 unchanged sentences

As provided for in the Tax Cuts and Jobs Act of 2017, our historical earnings were subject to the one-time transition tax and can now be repatriated to the U.S.

with a de minimis tax cost.

with a de minimis tax cost due to the participation exemption put in place by the 2017 Tax Act.

The Company continues to assert that both its historical and current earnings in its foreign subsidiaries are permanently reinvested and therefore no deferred taxes have been provided.

1 unchanged sentence

This transaction was considered a stock acquisition for tax purposes.

On the transaction date, Digit estimated a $ 92.1 million federal net operating loss carryforward, all of which is available to offset future taxable income during the carryforward periods based on limitations under IRC Section 382.

The tax attributes acquired were updated during the year due to the twelve-month measurement period.

Digit has a $ 53.3 million federal net operating loss carryforward, all of which is available to offset future taxable income during the carryforward periods based on limitations under IRC Section 382.

The Company also acquired state NOLs of $ 27.4 million.

The Company has not recorded a valuation allowance as it believes that it is more likely than not that the deferred tax assets acquired will be realized.

The Company has not recorded a valuation allowance on the federal or state net operating loss balances as it believes that it is more likely than not that the deferred tax assets will be realized.

As of December 31, 2022, the Company had federal net operating loss carryforwards of $ 135.2 million, of which $ 17.7 million expires beginning in 2033 and $ 117.5 million carries forward indefinitely.

Additionally, the Company had state net operating loss carryforwards of $ 119.1 million which are set to begin expiring in 2031.

As of December 31, 2021, the Company had California research and development tax credit carryforwards of $ 1.6 million, which are not subject to expiration.

As of December 31, 2022, the Company had federal and California research and development tax credit carryforwards of $ 5.2 million and $ 5.0 million, respectively.

The federal research and development tax credit expires beginning in 2041, and the California research and development tax credits are not subject to expiration.

The following table summarizes the activity related to the unrecognized tax benefits:

3 unchanged sentences

Increases related to current year tax positions 894 680

Decreases related to current year tax positions — —

Increases related to prior year tax positions 544 638

3 unchanged sentences

The Company’s policy is to recognize interest and penalties associated with income taxes in income tax expense.

The Company expects to release $ 0.4 million of uncertain tax positions within the next twelve months due to the expiration of various statute of limitations at the end of 2022.

The total amount of unrecognized tax benefits, net of associated deferred tax benefit, that would impact the effective tax rate, if recognized, is $ 3.3 million.

The Company does not expect to release any of the uncertain tax positions within the next twelve months.

The total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, is $ 4.5 million.

Due to the net operating loss carryforwards, the Company’s United States federal and significant state returns are open to examination by the Internal Revenue Service and state jurisdictions for years ended December 31, 2012 and 2013, respectively, and forward.

3 unchanged sentences

Financial Instruments at Fair Value

The Company elected the fair value option for all loans receivable held for investment ("Fair Value Loans"), and for all asset-backed notes (the "Fair Value Notes").

The Company elected the fair value option for all loans receivable held for investment and for all asset-backed notes.

Loans that the Company designates for sale will continue to be accounted for as held for sale and recorded at the lower of cost or fair value until the loans receivable are sold .

In connection with Oportun's agreement with Metabank, N.A., the Company recognizes a derivative instrument related to excess interest proceeds it expects to receive on loans retained by Metabank.

Based on the agreement entered into with MetaBank, for all loans originated and retained by MetaBank, MetaBank receives a fixed interest rate.

Oportun bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreement.

The balance of the derivative instrument is not considered in the tables below as the balance is considered immaterial as of December 31, 2021.

The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances as of the dates shown:

1 unchanged sentence

(in thousands) Unpaid Principal Balance Fair Value Unpaid Principal Balance Fair Value

Loans receivable $ 2,272,864 $ 2,386,807 $ 1,639,626 $ 1,696,526

Loans receivable - personal loans $ 2,967,266 $ 3,027,401 $ 2,205,537 $ 2,321,150

Loans receivable - credit cards 131,343 116,252 67,327 65,657

Total loans receivable $ 3,098,609 $ 3,143,653 $ 2,272,864 $ 2,386,807

Asset-backed notes $ 2,582,025 $ 2,387,674 $ 1,654,412 $ 1,651,706

The Company calculates the fair value of the Fair Value Notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures.

The Company calculates the fair value of the asset-backed notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures.

The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows.

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The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value.

The personal loan receivables balance at fair value as of 12/31/2022, consists of $ 2,903.2 million of unsecured personal loan receivables and $ 124.2 million of secured personal loan receivables.

December 31, 2022 December 31, 2021 (3)

Minimum Maximum Weighted Average (3)

Personal Loan Receivables Minimum Maximum Weighted Average (2)

Minimum Maximum Weighted Average (2)

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— % 33.59 % 28.73 % — % 44.25 % 32.47 %

Average life (years) 0.05 1.52 1.01 0.22 1.51 0.87

Discount rate 11.34 % 11.34 % 11.34 % 6.90 % 6.90 % 6.90 %

(1) Figure disclosed as a percentage of outstanding principal balance.

(2) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of borrower, original loan maturity terms) .

(3) The weighted average amounts disclosed for remaining cumulative charge-offs, average life and discount rate and the minimum and maximum discount rate as of December 31, 2021 differ from what was previously disclosed for comparability to amounts disclosed as of December 31, 2022.

The amounts disclosed previously as of December 31, 2021 included aggregated inputs for both personal loan receivables and credit card receivables.

This disclosure has been disaggregated as of December 31, 2022.

December 31, 2022 December 31, 2021

Credit Card Receivables Range Range

Remaining cumulative charge-offs (1)

22.80 % 11.81 %

Principal payment rate (1)

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(1) Figure disclosed as a percentage of outstanding principal balance.

(2) Remaining cumulative prepayments are estimated to calculate fair value on the unsecured and secured loan receivables and principal payment rates are estimated on the credit card receivables.

(3) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of borrower, original loan maturity terms) .

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the years ended December 31, 2022 and 2021.

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When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

The Company developed an internal model to estimate the fair value of the Fair Value Loans.

To generate future expected cash flows, the model combines receivable characteristics with assumptions about borrower behavior based on the Company’s historical loan performance.

For personal loan receivables, the Company developed an internal model to estimate the fair value of loans receivable held for investment.

To generate future expected cash flows, the model combines receivable characteristics with assumptions about borrower behavior based on the

Company’s historical loan performance.

These cash flows are then discounted using a required rate of return that management estimates would be used by a market participant.

The Company tested the unsecured personal loan fair value model by comparing modeled cash flows to historical loan performance to ensure that the model was complete, accurate and reasonable for the Company’s use.

The Company also engaged a third party to create an independent fair value estimate for the Fair Value Loans, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.

Their model generates expected cash flows which were then aggregated and compared to the Company’s actual cash flows within an acceptable range.

The Company's internal valuation committee provides governance and oversight over the fair value pricing calculations and related financial statement disclosures.

Additionally, this committee provides a challenge of the assumptions used and outputs of the model, including the appropriateness of such measures and periodically reviews the methodology and process to determine the fair value pricing.

Any significant changes to the process must be approved by the committee.

The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.

For credit card receivables, the Company uses historical data to derive assumptions about certain loan portfolio characteristics such as principal payment rates, interest yields and fee yields.

Similar to the model used for personal loan receivables, the Company engaged a third party to create an independent fair value estimate, which provides a range of fair values that are compared for reasonableness.

The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:

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Balance – beginning of period $ 2,386,807 $ 1,696,526

Adjustment upon adoption of ASU 2019-05 — 43,323

Principal disbursements 3,111,276 2,052,280

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Gross charge-offs ( 310,701 ) ( 142,985 )

Net increase (decrease) in fair value 57,044 ( 25,548 )

Net (decrease) increase in fair value ( 68,897 ) 57,044

Balance ‑ end of period $ 3,143,653 $ 2,386,807

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Restricted cash 105,000 105,000 105,000 — —

Loans held for sale (Note 5) 491 547 — — 547

Accounts payable 9,670 9,670 9,670 — —

Secured financing (Note 9) 320,000 306,574 — 306,574 —

Acquisition financing (Note 9) 116,000 116,000 — 116,000 —

Acquisition and corporate financing (Note 9) 235,679 233,166 — 233,166 —

December 31, 2021

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Secured financing (Note 9) 398,000 396,081 — 396,081 —

Acquisition and corporate financing (Note 9) 116,000 116,000 — 116,000 —

The Company uses the following methods and assumptions to estimate fair value:

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• Loans held for sale ‑ The fair values of loans held for sale are based on a negotiated agreement with the purchaser.

• Secured Financing and Acquisition Financing ‑ The fair value of the Secured financing - PLW has been calculated using discount rates based on the yields of comparable debt securities, which is a Level 2 input measure.

As of December 31, 2021, the fair value of the Secured financing - CCW and the Acquisition Financing was par, because they were issued in December.

• Secured financing and acquisition and corporate financing ‑ The fair values of the secured financing and acquisition and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

There were no transfers in or out of Level 3 assets and liabilities for the years ended December 31, 2022 and 2021.

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Leases - The Company’s leases are primarily for real property consisting of retail locations and office space and have remaining lease terms of 10 years or less.

As a result of the retail network optimization plan, for the year ended December 31, 2021, we incurred $ 12.8 million in expenses related to retail location closures.

During the first quarter of 2022, the Company made the decision to close an additional 27 retail locations in April 2022.

The Company incurred $ 1.4 million in expenses related to the accelerated amortization of right-of-use assets for the year ended December 31, 2022.

The retail location closures were substantially completed in the second quarter of 2022 and the Company does not expect any additional expenses to be incurred.

As a result of the retail network optimization plan, for the year ended December 31, 2021, the Company incurred $ 12.8 million in expenses related to retail location closures.

$ 5.2 million of the expenses related to the retail location closures for the year ended December 31, 2021 relate to the accelerated amortization of right-of-use assets and the renegotiation of lease liabilities.

The initial retail network optimization plan was substantially completed in the third quarter of 2021.

Most of the Company’s existing lease arrangements are classified as operating leases.

The Company has elected the practical expedient to keep leases with terms of 12 months or less off the balance sheet as no recognition of a lease liability and a right-of-use asset is required.

Operating lease expense is recognized on a straight-line basis over the lease term in "Technology and facilities" in the Consolidated Statements of Operations.

All of the Company’s existing lease arrangements are classified as operating leases.

At the inception of a contract, the Company determines if the contract is or contains a lease.

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Total leases $ 37,947

Sublease income

2022 $ ( 896 )

2023 and thereafter —

Total lease payments ( 896 )

Imputed interest 11

Total sublease income $ —

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The Company’s purchase obligations are $ 26.4 million in 2023, $ 14.1 million in 2024, $ 5.5 million in 2025, $ 2.0 million in 2026, and $ 0.0 million in 2027 and thereafter.

Credit Card Program and Servicing Agreement ‑ On February 5, 2021, the Company entered into a Receivables Retention Facility Agreement, a Servicing Agreement and other related documents with WebBank, providing it with additional funding to expand its credit card product (the "Retention Facility").

Under the Retention Facility agreements, WebBank originated, funded and retained credit card receivables up to $ 25.0 million, and further amended to temporarily increase the maximum size of the Retention Facility to $ 38.5 million.

The Company purchased any excess receivables originated above the maximum size of the facility, in addition to certain ineligible receivables and charged-off receivables.

Upon the closing of the CCW and in connection with the termination of the Retention Facility, the Company drew $ 41.0 million from the CCW to purchase such retained receivables.

Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with MetaBank, N.A.

Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with Pathward, N.A.

on August 11, 2020.

In accordance with the agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by MetaBank based on thresholds specified in the agreements.

In accordance with the agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by Pathward based on thresholds specified in the agreements.

Lending under the partnership was launched in August of 2021 and as of December 31, 2022, the Company has a commitment to purchase an additional $ 0.6 million of program loans based on originations through December 31, 2022.

Pursuant to this agreement, the Company has a commitment to sell to a third-party institutional investor 10 % of its unsecured loan originations that satisfy certain eligibility criteria, and an additional 5 % at the Company’s sole option.

Whole Loan Sale Program ‑ Through March 4, 2022, the Company had a commitment to sell to a third-party institutional investor 10 % of its unsecured loan originations that satisfy certain eligibility criteria, and an additional 5 % at the Company’s sole option.

The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.

For details regarding the whole loan sale program, refer to Note 5, Loans Held for Sale .

Access Loan Sale Program ‑ From July 2017 to August 2020, the Company was party to a separate whole loan sale arrangement with an institutional investor with a commitment to sell 100 % of the loans originated pursuant to the Company’s loan program for borrowers who do not meet the qualifications of its core loan origination program and service the sold loans.

For details regarding this program, refer to Note 5 , Loans Held for Sale .

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at December 31, 2022 and 2021 were $ 45.0 million and $ 39.8 million, respectively.

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however, pursuant to the Receivables Purchase Agreement between WebBank and Oportun, Inc., the Company has the obligation to purchase receivables from WebBank representing these unfunded amounts.

Legal Proceedings Resolved in 2020 and 2021

On June 13, 2017, a complaint, captioned Atinar Capital II, LLC and James Gutierrez v.

David Strohm, et.

al., CGC 17-559515, was filed by plaintiffs James Gutierrez and Atinar Capital II, LLC (an LLC controlled by Gutierrez), in the Superior Court of the State of California, County of San Francisco, against certain of the Company's current and former directors and officers, and certain of the Company's stockholders alleging that the defendants breached their fiduciary duties, or aided and abetted such breaches, in connection with certain of the Company's convertible preferred stock financing rounds.

In October 2020, the Company executed a settlement agreement and established an $ 8.8 million litigation reserve.

On November 17, 2020, Company paid $ 5.8 million related to the settlement and the parties filed a stipulation of dismissal and order to dismiss all claims.

As of December 31, 2020, the Company had a remaining liability of $ 3.0 million within Other liabilities on the Consolidated Balance Sheets as of December 31, 2020 which was paid in January 2021.

The income statement impact of $ 8.8 million was recorded in General, administrative and other on the Consolidated Statements of Operations for the year ended December 31, 2020.

On January 2, 2018, a complaint, captioned Opportune LLP v.

Oportun, Inc.

and Oportun, LLC, Civil Action No.

4:18-cv-00007 ("the Opportune Lawsuit") was filed by plaintiff Opportune LLP in the United States District Court for the Southern District of Texas, against the Company and its wholly-owned subsidiary, Oportun, LLC.

The complaint alleged various claims for trademark infringement, unfair competition, trademark dilution and misappropriation against the Company and Oportun, LLC and called for injunctive relief requiring the Company and Oportun, LLC to cease using its marks, as well as monetary damages related to the claims.

On December 10, 2021, the Company executed a settlement agreement to resolve the Opportune Lawsuit and dismiss all claims.

Pursuant to the terms of the settlement agreement, the Company paid the plaintiff $ 8.5 million for the acquisition of any rights held by the plaintiff, and any associated goodwill, in the disputed trademarks necessary for Oportun to use the trademarks without any further threat of litigation.

The Company capitalized the trademark rights based on the fair value at $ 5.5 million.

The remaining $ 3.0 million had been reserved for in 2019 due to the ongoing negotiations;

therefore, no expense was recorded for the year ended December 31, 2021.

Of the remaining $ 3.0 million, $ 2.2 million had been recorded previously as an insurance recovery receivable, of which $ 2.0 million was received in January 2022.

Regulatory Proceedings

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The stated purpose of the CID is to determine whether small-dollar lenders or associated persons, in connection with lending and debt-collection practices, have failed to comply with certain federal consumer protection laws over which the CFPB has jurisdiction.

The Company has received additional information requests related to the CID.

The Company received additional information requests related to the CID.

The information requests are focused on the Company's legal collection practices from 2019 to 2021 and hardship treatments offered to members during the COVID-19 pandemic.

On September 15, 2022, the Company received a Notice and Opportunity to Respond and Advise (“NORA”) letter from the staff of the CFPB in connection with the CID, stating that it is considering whether to recommend that the CFPB take legal action against the Company based on alleged violations focused on the Company's failure to timely dismiss certain lawsuits and the hardship treatments offered during the COVID-19 pandemic, including credit reporting related thereto.

On October 14, 2022, the Company provided the CFPB with its written response to the NORA letter disputing the allegations.

The Company is cooperating fully with the CFPB with respect to this matter and the Company believes that its business practices have been in full compliance with applicable laws.

Because the CFPB has broad authority to determine what it views as potentially unfair, deceptive or abusive acts or practices, at this time, the Company is unable to predict the ultimate outcome of this matter.

Digit received a CID from the CFPB in June 2020.

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The stated purpose of the CID is to determine whether Digit, in connection with offering its products or services, misrepresented the terms, conditions, or costs of the products or services in a manner that is unfair, deceptive, or abusive.

The Company, including Digit, are cooperating fully with the CFPB with respect to both of these matters and, although the Company believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, because the CFPB has broad authority to determine what it views as potential unfair, deceptive or abusive acts or practices, at this time, the Company is unable to predict the outcomes of these CFPB investigations.

While the Company believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, in the interest of resolving this matter, on August 11, 2022, Digit agreed to a consent order with the CFPB resolving such CID.

In connection with such consent order, Digit agreed to implement a redress and compliance plan to pay at least $ 68,145 in consumer redress to consumers who may have been harmed and paid a $ 2.7 million civil penalty to the CFPB in the third quarter of 2022.

The Company had previously established a reserve for the redress and civil penalty in the second quarter of 2022 .

From time to time, the Company may bring or be subject to other legal proceedings and claims in the ordinary course of business, including legal proceedings with third parties asserting infringement of their intellectual property rights, consumer litigation, and regulatory proceedings.

The Company is not presently a party to any other legal proceedings that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, financial condition, cash flows or results of operations.

Subsequent Events

On February 9, 2023, the Company announced that it is taking a series of measures to streamline its operations, including reducing the size of its corporate staff by 10 %, impacting approximately 155 employees, and reducing its expenditures on external contractors.

In relation to these and other personnel related activities, management expects to incur non-recurring, pre-tax charges of $ 6 to $ 7 million in the first quarter of 2023.

The estimates of the charges and expenditures that the Company expects to incur in connection with these activities, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially from estimates.

The Company may also incur charges and expenditures not currently contemplated due to unanticipated events that may occur in connection with these measures.

On February 10, 2023, the Acquisition Financing facility was further amended.

This fifth amendment, among other things, revises the interest rate from SOFR plus 8.00 % to SOFR plus 11.00 % and adjusts the amortization schedule to defer $ 42.0 million in principal payments through July 2023, with a final payment in October 2024.

On March 8, 2023, the Credit Card Warehouse was further amended.

This amendment, among other things, extends the revolving period by a year, to December 31, 2024, and reduces the commitment from $150.0 million to $120.0 million.

On March 10, 2023 (the “Second Amendment Closing Date”), the Company amended its Corporate Financing facility by entering into an Amendment No.

2 (the “Second Amendment”) by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain affiliates of Neuberger Berman Specialty Finance as lenders, and Wilmington Trust, National Association, as administrative agent and collateral agent (the “Agent”), which amended the Credit Agreement, dated as of September 14, 2022 (as amended, supplemented or otherwise modified, including by the Second Amendment, the “Amended Credit Agreement”), by and among the Company, the lenders from time to time party thereto and the Agent.

On the Second Amendment Closing Date, the Company borrowed $ 20.8 million of incremental term loans (the “Incremental Tranche A-1 Loans”) and intends to borrow an additional $ 4.2 million of incremental term loans (the “Incremental Tranche A-2 Loans”) on or about March 27, 2023, which amount has been committed by the applicable lenders.

Under the Amended Credit Agreement, the Company may borrow up to an aggregate additional amount of $ 50.0 million on an uncommitted basis, in two $ 25.0 million tranches (the “Incremental Tranche B Loans” and the “Incremental Tranche C Loans”) expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.

The loans (the “Loans”) and other obligations under the Amended Credit Agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the Loans, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions.

Following the Second Amendment Closing Date the Loans bear interest, at (a) an amount equal to 1-month term SOFR plus 9.00 % plus (b) an amount payable in cash or in kind, at the Company's option, equal to 3.00 %.

The Loans are scheduled to mature on September 14, 2026, and are not subject to amortization.

Certain prepayments of the Loans are subject to a prepayment premium.

On the Second Amendment Closing Date, pursuant to the Second Amendment, the Company issued warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 Loans to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

In addition, (a) in connection with the funding of the Incremental Tranche A-2 Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock, (b) in connection with the funding of the Incremental Tranche B Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche B loans to purchase 1,048,363 shares of the Company's common stock, and (c) in connection with the funding of the Incremental Tranche C Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363 shares of the Company’s common stock, in each case, at an exercise price of $ 0.01 per share.

The Company also entered into a Registration Rights Agreement with the applicable lenders on the Second Amendment Closing Date (the “Registration Rights Agreement”), which stipulates that the Company will file a registration statement with the Securities and Exchange Commission with respect to the shares underlying the Warrants.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data