Sezzle (SEZL) 10-Q 14 Nov 23 2023 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 13, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-56267
Entity Registrant Name	SEZZLE INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-0971660
Entity Address, Address Line One	700 Nicollet Mall
Entity Address, Address Line Two	Suite 640
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55402
Country Region	+1
City Area Code	651
Local Phone Number	504 5294
Title of 12(b) Security	Common Stock, par value $0.00001 per share
Trading Symbol	SEZL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,695,227
Entity Central Index Key	0001662991
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31

Consolidated Balance Sheets (un

Consolidated Balance Sheets (unaudited) - USD ($)		Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents		$ 65,150,280	$ 68,279,539
Restricted cash, current		1,580,418	1,223,119
Notes receivable		111,146,024	103,581,855
Allowance for credit losses		(8,597,942)	(10,223,451)
Notes receivable, net		102,548,082	93,358,404
Other receivables, net		2,055,649	2,532,710
Prepaid expenses and other current assets		4,868,559	4,737,688
Total current assets		176,202,988	170,131,460
Non-Current Assets
Internally developed intangible assets, net		1,791,784	1,322,836
Property and equipment, net		166,264	281,605
Operating right-of-use assets		1,028,165	86,715
Restricted cash, non-current		82,000	20,000
Other assets		632,158	733,922
Total Assets		179,903,359	172,576,538
Current Liabilities
Merchant accounts payable		68,182,563	83,020,739
Operating lease liabilities, current		52,117	79,312
Accrued liabilities		7,832,651	10,448,872
Other payables		5,300,675	4,129,371
Deferred revenue		2,070,231	1,516,228
Total current liabilities		83,438,237	99,194,522
Long Term Liabilities
Long term debt		250,000	250,000
Operating lease liabilities, non-current		998,316	0
Line of credit, net of unamortized debt issuance costs of $763,362 and $1,222,525, respectively		75,136,638	63,777,475
Warrant liabilities		590,563	511,295
Other non-current liabilities		1,515,550	0
Total Liabilities		161,929,304	163,733,292
Commitments and Contingencies (see Note 7)
Stockholders' Equity
Common stock, $0.00001 par value; 750,000,000 shares authorized; 5,816,031 and 5,507,108 shares issued, respectively; 5,690,087 and 5,478,470 shares outstanding, respectively	[1]	2,085	2,083
Additional paid-in capital	[1]	184,993,376	179,054,368
Treasury stock, at cost: 125,944 and 28,638 shares, respectively	[1]	(5,718,668)	(4,072,752)
Accumulated other comprehensive loss	[1]	(843,560)	(643,974)
Accumulated deficit	[1]	(160,459,178)	(165,496,479)
Total Stockholders' Equity	[1]	17,974,055	8,843,246
Total Liabilities and Stockholders' Equity		$ 179,903,359	$ 172,576,538
[1]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts (excluding shares authorized and par value) have been retroactively restated

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (unaudited) (Parentheticals)	Sep. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Statement of Financial Position [Abstract]
Unamortized debt issuance costs | $	$ 763,362	$ 1,222,525
Common stock par value (in usd per share) | $ / shares	$ 0.00001	$ 0.00001
Common stock authorized (shares)	750,000,000	750,000,000
Common stock issued (shares)	5,816,031	5,507,108
Common stock outstanding (shares)	5,690,087	5,478,470
Treasury stock at cost (shares)	125,944	28,638

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues [Abstract]
Total income		$ 40,844,201	$ 30,408,249	$ 110,455,297	$ 87,294,249
Operating Expenses
Personnel		11,079,174	11,586,551	34,670,235	40,288,070
Transaction expense		9,936,804	9,319,823	26,121,338	31,229,450
Third-party technology and data		2,002,515	2,177,376	5,655,321	6,282,651
Marketing, advertising, and tradeshows		3,615,339	3,857,393	10,128,175	15,402,963
General and administrative		2,184,076	2,287,595	6,679,915	14,231,719
Provision for credit losses		6,676,548	5,679,953	12,667,346	24,036,357
Reimbursement of merger-related costs		0	(11,000,000)	0	(11,000,000)
Total operating expenses		35,494,456	23,908,691	95,922,330	120,471,210
Operating Income (Loss)		5,349,745	6,499,558	14,532,967	(33,176,961)
Other Income (Expense)
Net interest expense		(4,143,258)	(2,191,995)	(11,453,751)	(5,477,164)
Other income (expense), net		14,560	47,688	1,206,800	(25,315)
Fair value adjustment on warrants		89,227	0	(79,268)	0
Income (Loss) before taxes		1,310,274	4,355,251	4,206,748	(38,679,440)
Income tax expense		15,874	10,827	48,024	48,626
Net Income (Loss)		1,294,400	4,344,424	4,158,724	(38,728,066)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment		(358,465)	(1,354,622)	(199,586)	(1,614,763)
Total Comprehensive Income (Loss)		$ 935,935	$ 2,989,802	$ 3,959,138	$ (40,342,829)
Net income (loss) per share
Basic (in usd per share)	[1]	$ 0.23	$ 0.80	$ 0.75	$ (7.13)
Diluted (in usd per share)	[1]	$ 0.23	$ 0.73	$ 0.74	$ (7.13)
Weighted-average shares outstanding
Basic (shares)	[1]	5,667,430	5,464,484	5,576,233	5,433,775
Diluted (shares)	[1]	5,729,665	5,977,786	5,651,221	5,433,775
[1]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share and per-share amounts have been retroactively restated.

Consolidated Statements of Op_2

Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) (Parentheticals)	May 11, 2023
Income Statement [Abstract]
Reverse stock split ratio	0.02631579

Consolidated Statements of Stoc

Consolidated Statements of Stockholders’ Equity (unaudited) - USD ($)		Total		Adoption of Accounting Standards Update No. 2016-13	Common Stock	Additional Paid-in Capital	Stock Subscriptions	Treasury Stock, At Cost	Accumulated Other Comprehensive Income	Accumulated Deficit	Accumulated Deficit Adoption of Accounting Standards Update No. 2016-13
Beginning balance (shares) at Dec. 31, 2021	[1]				5,374,499
Beginning balance at Dec. 31, 2021		$ 37,792,038			$ 2,044	$ 168,338,673	$ (18,545)	$ (3,691,322)	$ 563,911	$ (127,402,723)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation		6,237,440				6,237,440
Stock option exercises (shares)	[1]				38,156
Stock option exercises		99,738			$ 15	99,723
Restricted stock issuances and vesting of awards (shares)	[1]				31,188
Restricted stock issuances and vesting of awards		1,967,454			$ 12	1,967,442
Stock subscriptions receivable related to stock option exercises (shares)	[1]				35,362
Stock subscriptions receivable related to stock option exercises		0			$ 13	305,820	(305,833)
Stock subscriptions collected related to stock option exercises		324,378					324,378
Repurchase of common stock (shares)	[1]				(9,765)
Repurchase of common stock		(349,203)			$ (4)			(349,199)
Foreign currency translation adjustment		(1,614,763)							(1,614,763)
Net income (loss)		(38,728,066)								(38,728,066)
Ending balance (shares) at Sep. 30, 2022	[2]				5,469,440
Ending balance at Sep. 30, 2022		5,729,016			$ 2,080	176,949,098	0	(4,040,521)	(1,050,852)	(166,130,789)
Beginning balance (shares) at Dec. 31, 2021	[1]				5,374,499
Beginning balance at Dec. 31, 2021		37,792,038			$ 2,044	168,338,673	(18,545)	(3,691,322)	563,911	(127,402,723)
Ending balance (shares) at Dec. 31, 2022	[1]				5,478,470
Ending balance at Dec. 31, 2022		$ 8,843,246	[3]	$ 878,577	$ 2,083	179,054,368	0	(4,072,752)	(643,974)	(165,496,479)	$ 878,577
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible Enumeration]		Accounting Standards Update 2016-13 [Member]
Beginning balance (shares) at Jun. 30, 2022	[2]				5,460,695
Beginning balance at Jun. 30, 2022		$ 147,735			$ 2,077	174,333,629	0	(4,016,528)	303,770	(170,475,213)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation		2,032,549				2,032,549
Stock option exercises (shares)	[2]				5,118
Stock option exercises		1,705			$ 2	1,703
Restricted stock issuances and vesting of awards (shares)	[2]				5,482
Restricted stock issuances and vesting of awards		581,219			$ 2	581,217
Repurchase of common stock (shares)	[2]				(1,855)
Repurchase of common stock		(23,994)			$ (1)			(23,993)
Foreign currency translation adjustment		(1,354,622)							(1,354,622)
Net income (loss)		4,344,424								4,344,424
Ending balance (shares) at Sep. 30, 2022	[2]				5,469,440
Ending balance at Sep. 30, 2022		5,729,016			$ 2,080	176,949,098	0	(4,040,521)	(1,050,852)	(166,130,789)
Beginning balance (shares) at Dec. 31, 2022	[1]				5,478,470
Beginning balance at Dec. 31, 2022		8,843,246	[3]	$ 878,577	$ 2,083	179,054,368	0	(4,072,752)	(643,974)	(165,496,479)	$ 878,577
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation		2,639,574				2,639,574
Stock option exercises (shares)	[1]				13,784
Stock option exercises		26,996			$ 0	26,996
Restricted stock issuances and vesting of awards (shares)	[1]				288,894
Restricted stock issuances and vesting of awards		3,272,441			$ 3	3,272,438
Issuance of additional shares related to reverse stock split (in shares)	[1]				6,245
Repurchase of common stock (shares)	[1]				(97,306)
Repurchase of common stock		(1,645,917)			$ (1)			(1,645,916)
Foreign currency translation adjustment		(199,586)							(199,586)
Net income (loss)		4,158,724								4,158,724
Ending balance (shares) at Sep. 30, 2023	[2]				5,690,087
Ending balance at Sep. 30, 2023		17,974,055	[3]		$ 2,085	184,993,376	0	(5,718,668)	(843,560)	(160,459,178)
Beginning balance (shares) at Jun. 30, 2023	[2]				5,635,084
Beginning balance at Jun. 30, 2023		16,278,144			$ 2,084	183,892,873	0	(5,378,140)	(485,095)	(161,753,578)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation		(57,582)				(57,582)
Stock option exercises (shares)	[2]				7,273
Stock option exercises		14,527			$ 0	14,527
Restricted stock issuances and vesting of awards (shares)	[2]				71,105
Restricted stock issuances and vesting of awards		1,143,559			$ 1	1,143,558
Issuance of additional shares related to reverse stock split (in shares)	[2]				0
Repurchase of common stock (shares)	[2]				(23,375)
Repurchase of common stock		(340,528)			$ 0			(340,528)
Foreign currency translation adjustment		(358,465)							(358,465)
Net income (loss)		1,294,400								1,294,400
Ending balance (shares) at Sep. 30, 2023	[2]				5,690,087
Ending balance at Sep. 30, 2023		$ 17,974,055	[3]		$ 2,085	$ 184,993,376	$ 0	$ (5,718,668)	$ (843,560)	$ (160,459,178)
[1]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts have been retroactively restated.[2]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts have been retroactively restated.[3]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts (excluding shares authorized and par value) have been retroactively restated

Consolidated Statements of St_2

Consolidated Statements of Stockholders’ Equity (unaudited) (Parentheticals)	May 11, 2023
Statement of Stockholders' Equity [Abstract]
Reverse stock split ratio	0.02631579

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (unaudited) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Operating Activities:
Net income (loss)	$ 1,294,400	$ 4,344,424	$ 4,158,724	$ (38,728,066)
Adjustments to reconcile net income (loss) to net cash (used for) provided from operating activities:
Depreciation and amortization			624,608	649,343
Provision for credit losses	6,676,548	5,679,953	12,667,346	24,036,357	$ 29,437,179
Provision for other credit losses			2,067,268	6,833,033
Equity based compensation and restricted stock vested			5,912,015	8,204,894
Amortization of debt issuance costs			534,638	821,770
Fair value adjustment on warrants	(89,227)	0	79,268	0
Impairment losses on long-lived assets			42,248	26,109
Loss on sale of fixed assets			17,644	0
Changes in operating assets and liabilities:
Notes receivable			(20,945,172)	17,155,162
Other receivables			(1,590,055)	(4,103,107)
Prepaid expenses and other assets			(23,191)	(307,559)
Merchant accounts payable			(14,869,007)	(12,171,770)
Other payables			1,166,248	2,361,293
Accrued liabilities			(1,101,420)	1,750,462
Deferred revenue			554,005	531,092
Operating leases			29,667	12,107
Net Cash (Used for) Provided from Operating Activities			(10,675,166)	7,071,120
Investing Activities:
Purchase of property and equipment			(53,533)	(12,404)
Internally developed intangible asset additions			(984,176)	(774,139)
Net Cash Used for Investing Activities			(1,037,709)	(786,543)
Financing Activities:
Proceeds from line of credit			28,900,000	5,000,000
Payments to line of credit			(18,000,000)	(29,791,614)
Payments of debt issuance costs			(75,475)	(60,853)
Proceeds from stock option exercises			26,996	99,738
Stock subscriptions collected related to stock option exercises			0	324,378
Repurchase of common stock			(1,645,917)	(349,203)
Net Cash Provided From (Used for) Financing Activities			9,205,604	(24,777,554)
Effect of exchange rate changes on cash			(202,689)	(1,632,131)
Net decrease in cash, cash equivalents, and restricted cash			(2,507,271)	(18,492,977)
Cash, cash equivalents, and restricted cash, beginning of period			69,522,658	78,890,168	78,890,168
Cash, cash equivalents, and restricted cash, end of period	$ 66,812,698	$ 58,765,060	66,812,698	58,765,060	$ 69,522,658
Noncash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets			1,059,263	0
Supplementary disclosures:
Interest paid			11,859,913	4,865,371
Income taxes paid			$ 72,600	$ 24,298

Significant Accounting Policies

Significant Accounting Policies	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies Basis of Presentation and Principles of Consolidation These unaudited consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these consolidated financial statements and the accompanying notes thereof reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These consolidated financial statements and their accompanying notes should be read in conjunction with the consolidated financial statement disclosures in our 2022 annual consolidated financial statements. The disclosures in Note 3 supplement updates to the accounting policies previously disclosed in Note 1 of our Annual Report on Form 10-K for the year ended December 31, 2022. The updates reflect the adoption of the Financial Accounting Standards Board (FASB) Accounting Standards Updates (ASU) 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments”, referred to as ASC 326 or, more commonly, referred to as Current Expected Credit Losses (CECL). Operating results reported for the three and nine months ended September 30, 2023 might not be indicative of the results for any subsequent period or the entire year ending December 31, 2023. Sezzle Inc. (the “Company”, “Sezzle”, “we”, “us”, or “our”) uses the same accounting policies in preparing quarterly and annual consolidated financial statements. We consolidate the accounts of subsidiaries for which we have a controlling financial interest. The accompanying consolidated financial statements include all the accounts and activity of Sezzle Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Fair Value Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: • Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets; • Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and • Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk. We measure the value of our money market securities at each reporting date. The fair value of our money market securities, totaling $2,274,125 and $333,158 as of September 30, 2023 and December 31, 2022, respectively, are based on Level 1 inputs and are included within cash and cash equivalents on the consolidated balance sheets. We also measure the value of our warrant liabilities at each reporting date. The fair value of our warrant liabilities are determined using the Black-Scholes valuation model, which includes our common stock price on the Nasdaq and the Australian Securities Exchange (ASX), a Level 1 input. The fair value of the warrant liabilities totaled $590,563 and $511,295 as of September 30, 2023 and December 31, 2022, respectively. Our financial instruments—which includes cash, restricted cash, notes receivables, long-term debt, and our line of credit—are recognized at amortized cost, which approximates their fair value. If these financial instruments were measured at fair value in our consolidated financial statements, our cash would be classified as Level 1, restricted cash and long-term debt would be classified as Level 2, and notes receivables and our line of credit would be classified as Level 3 in the fair value hierarchy. Segments We conduct our operations through a single operating segment and, therefore, one reportable segment. There are no significant concentrations by state or geographical location. Reverse Stock Split Our Board of Directors approved a reverse stock split of our issued shares of common stock at a ratio of 1-for-38 (the “Reverse Stock Split”). The Reverse Stock Split became effective on May 11, 2023. All share and per share amounts for all periods presented in these consolidated financial statements and their accompanying notes have been adjusted, on a retrospective basis, to reflect the Reverse Stock Split, unless otherwise stated. The number of authorized shares and the par value of the shares remained unaffected. Recent Accounting Pronouncements Recently Adopted Accounting Guidance Standard Description Date of Adoption Effect on Consolidated Financial Statements ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments This ASU replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The standard also requires expanded disclosures related to credit losses and credit quality indicators. January 1, 2023 The adoption of this ASU resulted in a decrease in our allowance for credit losses and an increase in retained earnings of approximately $0.9 million. The decrease in our allowance for credit losses was related to the inclusion of future recoveries in our estimate. There was no impact to our net deferred tax asset given the full valuation allowance recorded. We have updated the presentation of our consolidated balance sheets and consolidated statements of operations and comprehensive income (loss) to conform with the requirements of this ASU. Additionally, we have updated our disclosures in Note 3 of the accompanying notes to the consolidated financial statements to meet the disclosure requirements of this ASU, including information on credit quality indicators and gross charge-offs. ASU No. 2022-02 , Financial Instruments – Credit Losses: Troubled Debt Restructurings and Vintage Disclosures This ASU requires an entity to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. January 1, 2023 The impact of adopting this amendment is included within the impact of adoption of ASU No. 2016-13.

Total Income

Total Income	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Total Income	Total Income Total income for the three months ended September 30, 2023 and 2022 was $40,844,201 and $30,408,249, respectively, and $110,455,297 and $87,294,249 for the nine months ended September 30, 2023 and 2022, respectively. Total income in the fourth quarter has historically been strongest for us, in line with consumer spending habits during the holiday shopping season. Our total income is classified into two categories: transaction income and income from other services. Transaction Income Transaction income is comprised of all income earned from merchants, consumers, and other third-parties that relate to placing and processing orders on the Sezzle Platform. This primarily includes merchant processing fees, virtual card interchange income, and convenience fees. We earn our income primarily from fees paid by merchants in exchange for our payment processing services. These merchant processing fees are applied to the underlying sales of consumers passing through our platform, and are predominantly based on a percentage of the consumer order value plus a fixed fee per transaction. We also earn income on interchange fees through our virtual card solution. Virtual card interchange income is recognized at the time a virtual card transaction is processed. We further earn income in the form of convenience fees when a consumer chooses to make an installment payment, excluding the first installment, using a card pursuant to state law. We recognize convenience fees at the time the consumer makes the installment payment. Transaction income is reduced by direct loan origination fees. Such costs are comprised of costs paid to third-parties to obtain data for underwriting consumers which result in a successful transaction. Such costs which result in a declined order are recorded within third-party technology and data on the consolidated statements of operations and comprehensive income (loss). Income from Other Services Income from other services includes all other incomes earned from merchants, consumers, and other third-parties not included in transaction income. This primarily includes account reactivation fees, reschedule fees, subscription revenue, and merchant gateway fees. We earn income from consumers in the form of account reactivation fees. These fees are assessed to consumers who fail to make a timely payment. Account reactivation fees are applied to principal installments that are delinquent for more than 48 hours (or longer depending on the regulations within a specific state jurisdiction) after the scheduled installment payment date. Account reactivation fees are recognized at the time the fee is charged to the consumer to the extent they are reasonably collectible by us. We also earn income from consumers in the form of reschedule fees. Consumers are allowed to reschedule their initial installment one time without incurring a reschedule fee and the principal of a rescheduled payment is not considered to be delinquent. If consumers reschedule a payment more than once in the same order cycle they are subject to a reschedule fee. Additionally, we offer our consumers the ability to subscribe to two paid services: Sezzle Premium and Sezzle Anywhere. Sezzle Premium allows consumers to shop at select large, non-integrated premium merchants, along with other benefits, for a recurring fee. Sezzle Anywhere allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions, for a recurring fee. Subscription fees are recognized straight-line over the subscription period. We also earn income from other services in the form of merchant gateway fees. Merchant gateway fees are charged to certain low-volume merchants for access to our Sezzle Platform, consumer base, and merchant store directory. Such fees are recognized at the time the fee is charged to merchants to the extent they are reasonably collectible by us. Disaggregation of Total Income Our total income by category for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Transaction income $ 27,046,209 $ 25,062,708 $ 78,870,463 $ 72,879,496 Income from other services 13,797,992 5,345,541 31,584,834 14,414,753 Total income $ 40,844,201 $ 30,408,249 $ 110,455,297 $ 87,294,249 Within total income, $16,180,970 and $2,336,364 do not fall under the scope of the Accounting Standards Codification (“ASC”) Topic 310, Receivables, for the three months ended September 30, 2023 and 2022, respectively. $38,091,808 and $2,913,351 do not fall under ASC Topic 310, Receivables, for the nine months ended September 30, 2023 and 2022, respectively. Such income relates to revenue from contracts with customers and is within the scope of ASC 606. Total income that falls under the scope of ASC Topic 310 (excluding account reactivation fees) is initially recorded as a reduction to notes receivable, net, within the consolidated balance sheets. The income is then recognized over the average duration of the note using the effective interest rate method. Total income to be recognized over the duration of existing notes receivable outstanding was $3,225,739 and $4,068,332 as of September 30, 2023 and December 31, 2022, respectively. Total income that falls under the scope of ASC Topic 606, Revenue from Contracts with Customers, generally comprises a single performance obligation. For performance obligations that occur over a period of time (e.g. consumers’ ability to access the features of Sezzle Premium over the subscription term), we recognize total revenue straight-line over the duration of the performance obligation. All performance obligations that are not immediately satisfied are fully satisfied within one year of receiving payment. Total income to be recognized over the remaining duration of outstanding performance obligations was $2,070,231 and $1,516,228 as of September 30, 2023 and December 31, 2022, respectively.

Notes Receivable and Allowance

Notes Receivable and Allowance for Credit Losses	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
Notes Receivable and Allowance for Credit Losses	Notes Receivable and Allowance for Credit Losses Our notes receivable represent amounts due from consumers for outstanding principal and reschedule fees on installment payment plans made on our platform. Consumers installment payment plans are interest-free, and typically consist of four installments, with the first payment made at the time of purchase and subsequent payments coming due every two weeks thereafter. Our notes receivable are generally due within 42 days. We classify all of our notes receivable as held for investment, as we have the intent and ability to hold these investments for the foreseeable future or until maturity or payoff. Since our portfolio is comprised of one product segment, point-of-sale unsecured installment loans, we evaluate our notes receivable as a single, homogenous portfolio and make merchant-specific or other adjustments as necessary. Our notes receivable are reported at amortized cost, which include unpaid principal and reschedule fee balances, adjusted for unearned transaction income, direct loan origination costs, and charge-offs. The amortized cost is adjusted for the allowance for credit losses within notes receivable, net. As of September 30, 2023, our notes receivable at amortized cost was comprised of the following: September 30, 2023 Notes receivable, gross $ 114,371,763 Deferred transaction income (3,225,739) Notes receivable, amortized cost $ 111,146,024 The following table summarizes our notes receivable, net, as of December 31, 2022 prior to the adoption of ASU 2016-13: December 31, 2022 Notes receivable, gross $ 107,650,187 Less allowance for uncollectible accounts: Balance at beginning of year (23,114,173) Provision (29,437,179) Charge-offs, net of recoveries totaling $5,040,041 42,327,901 Total allowance for uncollectible accounts (10,223,451) Notes receivable, net of allowance 97,426,736 Deferred transaction income (4,068,332) Notes receivable, net $ 93,358,404 Deferred transaction income is comprised of unrecognized merchant fees and consumer reschedule fees net of direct note origination costs, which are recognized over the duration of the note with the consumer and are recorded as an offset to transaction income on the consolidated statements of operations and comprehensive income (loss). Our notes receivable had a weighted average days outstanding of 34 days, consistent with the prior year’s duration. We closely monitor credit quality for our notes receivable to manage and evaluate our related exposure to credit risk. When assessing the credit quality and risk of our portfolio, we monitor a variety of internal risk indicators and combine these factors to establish an internal, proprietary score as a credit quality indicator (the “Prophet Score”). We evaluate the credit risk of our portfolio by grouping Prophet Scores into three buckets that range from A to C, with receivables having an “A” rating representing the highest credit quality and lowest likelihood of loss. Receivables assigned “No score” represent consumers who have not placed at least two orders. The Prophet Score machine learning model analyzes a variety of risk indicators and consumer attributes that are shown to be predictive of ability and willingness to repay. Our risk and fraud team closely monitors the distribution of Prophet Scores for signs of changes in credit risk exposure and portfolio performance. The risk and fraud team also regularly evaluates the integrity of the Prophet Score machine learning model and updates it as necessary, but at least annually. The amortized cost basis of our notes receivable by Prophet Score and year of origination as of September 30, 2023 is as follows: September 30, 2023 Amortized cost basis by year of origination 2023 2022 Total A $ 39,189,038 $ 644 $ 39,189,682 B 36,430,263 1,974 36,432,237 C 28,060,553 5,647 28,066,200 No score 7,446,534 11,371 7,457,905 Total amortized cost $ 111,126,388 $ 19,636 $ 111,146,024 Our notes receivable are considered past due when the principal has not been received within one calendar day of when they are due in accordance with the agreed upon contractual terms. Any amounts delinquent after 90 days are charged-off with an offsetting reversal to the allowance for credit losses. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged-off immediately. Principal payments recovered after 90 days are recognized as a reduction to the allowance for credit losses in the period the receivable is recovered. The amortized cost basis of our notes receivable by delinquency status as of September 30, 2023 is as follows: September 30, 2023 Current $ 100,196,148 1–28 days past due 5,539,980 29–56 days past due 2,965,975 57–90 days past due 2,443,921 Total amortized cost $ 111,146,024 The following table summarizes our gross notes receivable and related allowance for uncollectible accounts as of December 31, 2022 prior to the adoption of ASU 2016-13: December 31, 2022 Gross Receivables Less Allowance Net Receivables Current $ 96,923,113 $ (3,348,558) $ 93,574,555 Days past due: 1–28 5,516,812 (2,146,103) 3,370,709 29–56 2,513,755 (2,063,131) 450,624 57–90 2,696,507 (2,665,659) 30,848 Total $ 107,650,187 $ (10,223,451) $ 97,426,736 We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on principal and reschedule fee receivables from consumers. The allowance for credit losses is determined based on our current estimate of expected credit losses over the remaining contractual term and incorporates evaluations of known and inherent risks in our portfolio, historical credit losses, consumer payment trends, estimates of recoveries, current economic conditions, and reasonable and supportable forecasts. We regularly assess the adequacy of our allowance for credit losses and adjust the allowance as necessary to reflect changes in the credit risk of our notes receivable. Any adjustment to the allowance for credit losses is recognized in net income (loss) through the provision for credit losses on our consolidated statements of operations and comprehensive income (loss). While we believe our allowance for credit losses is appropriate based on the information available, actual losses could differ from the estimate. Effective January 1, 2023, we adopted accounting guidance which replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. Upon adoption, we decreased our allowance for credit losses and increased retained earnings through a cumulative-effect adjustment. In estimating the allowance for credit losses, we utilize a roll rate analysis of delinquent and current notes receivable. Roll rate analysis is a technique used to estimate the likelihood that a loan progresses through various stages of delinquency and eventually charges off. We segment our notes receivable into delinquency statuses and semi-monthly vintages for purposes of evaluating historical performance and determining the future likelihood of default. The activity in the allowance for credit losses, including the provision for credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Balance at beginning of period $ 6,494,092 $ 15,124,901 $ 10,223,451 $ 23,114,173 Adoption of Accounting Standards Update No. 2016-13 — — (878,577) — Provision for credit losses 6,676,548 5,679,953 12,667,346 24,036,357 Charge-offs (5,239,171) (10,610,683) (16,416,612) (39,802,109) Recoveries of charged-off receivables 666,473 1,125,180 3,002,334 3,970,930 Balance at end of period $ 8,597,942 $ 11,319,351 $ 8,597,942 $ 11,319,351 Net charge-offs by year of origination for the nine months ended September 30, 2023 is as follows: 2023 2022 2021 2020 2019 Total Current period gross charge-offs $ (7,827,328) $ (8,570,864) $ (17,563) $ (650) $ (207) $ (16,416,612) Current period recoveries 154,331 1,713,229 806,145 250,964 77,665 3,002,334 Current period net charge-offs $ (7,672,997) $ (6,857,635) $ 788,582 $ 250,314 $ 77,458 $ (13,414,278)

Other Receivables

Other Receivables	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
Other Receivables	Other Receivables As of September 30, 2023 and December 31, 2022, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of September 30, 2023 December 31, 2022 Account reactivation fees receivable, net $ 434,521 $ 209,734 Receivables from merchants, net 1,621,128 2,322,976 Other receivables, net $ 2,055,649 $ 2,532,710 Account reactivation fees are applied to principal installments that are delinquent for more than 48 hours, subject to regulations within specific state jurisdictions, after the scheduled installment payment date. Any account reactivation fees associated with a delinquent payment are considered to be the same number of days delinquent as the principal payment. Account reactivation fees receivable, net, is comprised of outstanding account reactivation fees that we reasonably expect to collect from our consumers. As of September 30, 2023 and December 31, 2022, gross account reactivation fees receivable totaled $1,450,961 and $1,190,447, respectively. We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on account reactivation fee receivables from our consumers. Any amounts delinquent after 90 days are charged-off with an offsetting reversal to the allowance for credit losses. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged-off immediately. Any adjustment to the allowance for credit losses is recognized in net income (loss) through an offset to total income on our consolidated statements of operations and comprehensive income (loss). Payments recovered after 90 days are recognized as a reduction to the allowance for credit losses in the period the receivable is recovered. As of September 30, 2023 and December 31, 2022, the allowance for credit losses on account reactivation fees receivable totaled $1,016,440 and $980,713, respectively. The activity in the allowance for credit losses related to account reactivation fees, including the provision for other credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Balance at beginning of period $ 768,602 $ 1,480,332 $ 980,713 $ 1,691,071 Provision for other credit losses 917,226 1,594,776 2,067,268 6,352,570 Charge-offs (783,784) (2,240,902) (2,539,804) (7,910,133) Recoveries of charged-off receivables 114,396 277,243 508,263 977,941 Balance at end of period $ 1,016,440 $ 1,111,449 $ 1,016,440 $ 1,111,449 Receivables from merchants primarily represent merchant fees receivable for orders settled with our virtual card solution. Virtual card transactions are settled with the merchant for the full purchase price at the point of sale and we separately invoice the merchant for the merchant fees due to us. There is no allowance for credit losses recorded against merchant fees receivable.

Merchant Accounts Payable

Merchant Accounts Payable	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Merchant Accounts Payable	Merchant Accounts Payable Merchant accounts payable represents amounts owed to merchants related to orders placed on the Sezzle Platform. Merchant accounts payable in total were $68,182,563 and $83,020,739 as of September 30, 2023 and December 31, 2022, respectively, as disclosed in the consolidated balance sheets. We offer our merchants an interest bearing program in which merchants may defer payment from us in exchange for interest. Within merchant accounts payable, $51,883,816 and $66,469,982 were recorded within the merchant interest program balance as of September 30, 2023 and December 31, 2022, respectively. Effective March 20, 2023, all deferred payments retained in the program bear interest at fixed rate of 5.20% on an annual basis, compounding daily. Prior to that, during 2023 deferred payments retained in the program bore interest at a fixed rate of 3.80% on an annual basis, compounding daily. The average annual percentage yield and related interest expense was 5.21% and $679,012, and 3.87% and $646,507 for the three months ended September 30, 2023 and 2022, respectively. The average annual percentage yield and related interest expense was 4.32% and $1,917,378, and 3.45% and $1,835,044 for the nine months ended September 30, 2023 and 2022, respectively. Deferred payments are due on demand, up to $250,000 during any seven day period, at the request of the merchant. Any request larger than $250,000 is processed within seven to ten days. We reserve the right to impose additional limits on the program and make changes to the program without notice or limits. These limits and changes to the program can include but are not limited to: maximum balances, withdrawal amount limits, and withdrawal frequency.

Line of Credit

Line of Credit	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Line of Credit	Line of Credit We fund our consumer receivables through the use of a secured line of credit. We had an outstanding principal balance on our line of credit totaling $75,900,000 and $65,000,000 as of September 30, 2023 and December 31, 2022, respectively. Our revolving credit facilities are secured by a pool of pledged, eligible notes receivable. As of September 30, 2023 and December 31, 2022, we had pledged $101,220,136 and $89,797,068 of eligible gross notes receivable, respectively. We had an unused borrowing capacity of $15,102 and $477,606 as of September 30, 2023 and December 31, 2022, respectively. Expenses related to our lines of credit for the three and nine months ended September 30, 2023 and 2022 are as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Interest expense on utilization $ 3,471,806 $ 1,111,022 $ 9,611,867 $ 2,737,061 Interest expense on unused daily amounts 25,555 59,981 90,639 229,088 Amortization of debt issuance costs 183,073 448,502 534,638 821,770 For the three months ended September 30, 2023 and 2022, our lines of credit carried an effective annual interest rate of 20.70% and 7.95%, respectively. For the nine months ended September 30, 2023 and 2022, our lines of credit carried an effective annual interest rate of 18.19% and 5.50%, respectively.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Merchant Contract Obligations We have entered into several agreements with third-parties in which we will reimburse these third-parties for mutually agreed upon co-branded marketing and advertising costs. As of September 30, 2023 and December 31, 2022, we had outstanding agreements that stipulate we will commit to spend up to approximately $1.3 million and $19.4 million, respectively, in marketing and advertising spend in future periods. These agreements have remaining contractual terms of less than one year. Expenses incurred relating to these agreements totaled $3,267,411 and $3,484,407 for the three months ended September 30, 2023 and 2022, respectively, and $9,506,236 and $13,936,420 for the nine months ended September 30, 2023 and 2022, respectively. These expenses are included within marketing, advertising, and tradeshows on the consolidated statements of operations and comprehensive income (loss).

Net Income (Loss) Per Share

Net Income (Loss) Per Share	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Net Income (Loss) Per Share	Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of shares outstanding during the period, including repurchases carried as treasury stock. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding adjusted for the dilutive effect of all potential shares of stock, including the exercise of employee stock options and assumed vesting of restricted stock units (if dilutive). In periods where we reported a net loss, the diluted net loss per share is the same as basic net loss per share because the impact of including assumed exercises of stock options and vesting of restricted stock units would have an anti-dilutive impact. The following table presents the calculation of basic and diluted net income (loss) per share: Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 1,294,400 $ 4,344,424 $ 4,158,724 $ (38,728,066) Denominator*: Basic shares: Weighted-average shares outstanding 5,667,430 5,464,484 5,576,233 5,433,775 Diluted shares: Stock options 60,299 77,868 67,351 — Restricted stock units — 435,434 — — Warrants 1,936 — 7,637 — Weighted-average shares outstanding 5,729,665 5,977,786 5,651,221 5,433,775 Net income (loss) per share: Basic $ 0.23 $ 0.80 $ 0.75 $ (7.13) Diluted $ 0.23 $ 0.73 $ 0.74 $ (7.13) * Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts have been retroactively restated. Because their effect would have been anti-dilutive, 564,802 and 442,847 shares were excluded from the denominator of diluted net income per share for the three and nine months ended September 30, 2023, respectively. Similarly, 301,518 shares were excluded from the denominator of diluted net income per share for the three months ended September 30, 2022 because their effect would have been anti-dilutive.

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income (loss)	$ 1,294,400	$ 4,344,424	$ 4,158,724	$ (38,728,066)

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended	9 Months Ended
	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Amin Sabzivand [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On September 26, 2023, Amin Sabzivand, the Company’s Chief Operating Officer, adopted a Rule 10b5-1 trading arrangement (the “Plan”) that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The Plan provides for the potential sale of up to 7,000 shares of the Company’s common stock, between an estimated start date of December 26, 2023 until termination of the Plan on June 24, 2024, or earlier if all transactions under the Plan are completed.
Name	Amin Sabzivand
Title	Chief Operating Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	September 26, 2023
Arrangement Duration	181 days
Aggregate Available	7,000	7,000

Significant Accounting Polici_2

Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	These unaudited consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these consolidated financial statements and the accompanying notes thereof reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These consolidated financial statements and their accompanying notes should be read in conjunction with the consolidated financial statement disclosures in our 2022 annual consolidated financial statements. The disclosures in Note 3 supplement updates to the accounting policies previously disclosed in Note 1 of our Annual Report on Form 10-K for the year ended December 31, 2022. The updates reflect the adoption of the Financial Accounting Standards Board (FASB) Accounting Standards Updates (ASU) 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments”, referred to as ASC 326 or, more commonly, referred to as Current Expected Credit Losses (CECL). Operating results reported for the three and nine months ended September 30, 2023 might not be indicative of the results for any subsequent period or the entire year ending December 31, 2023.
Principles of Consolidation	We consolidate the accounts of subsidiaries for which we have a controlling financial interest. The accompanying consolidated financial statements include all the accounts and activity of Sezzle Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.
Fair Value	Fair Value Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: • Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets; • Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and • Level 3 — Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.
Segments	Segments We conduct our operations through a single operating segment and, therefore, one reportable segment. There are no significant concentrations by state or geographical location.
Reverse Stock Split	Reverse Stock Split Our Board of Directors approved a reverse stock split of our issued shares of common stock at a ratio of 1-for-38 (the “Reverse Stock Split”). The Reverse Stock Split became effective on May 11, 2023. All share and per share amounts for all periods presented in these consolidated financial statements and their accompanying notes have been adjusted, on a retrospective basis, to reflect the Reverse Stock Split, unless otherwise stated. The number of authorized shares and the par value of the shares remained unaffected.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Recently Adopted Accounting Guidance Standard Description Date of Adoption Effect on Consolidated Financial Statements ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments This ASU replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The standard also requires expanded disclosures related to credit losses and credit quality indicators. January 1, 2023 The adoption of this ASU resulted in a decrease in our allowance for credit losses and an increase in retained earnings of approximately $0.9 million. The decrease in our allowance for credit losses was related to the inclusion of future recoveries in our estimate. There was no impact to our net deferred tax asset given the full valuation allowance recorded. We have updated the presentation of our consolidated balance sheets and consolidated statements of operations and comprehensive income (loss) to conform with the requirements of this ASU. Additionally, we have updated our disclosures in Note 3 of the accompanying notes to the consolidated financial statements to meet the disclosure requirements of this ASU, including information on credit quality indicators and gross charge-offs. ASU No. 2022-02 , Financial Instruments – Credit Losses: Troubled Debt Restructurings and Vintage Disclosures This ASU requires an entity to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. January 1, 2023 The impact of adopting this amendment is included within the impact of adoption of ASU No. 2016-13.

Total Income (Tables)

Total Income (Tables)	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregation of Total Income	Our total income by category for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Transaction income $ 27,046,209 $ 25,062,708 $ 78,870,463 $ 72,879,496 Income from other services 13,797,992 5,345,541 31,584,834 14,414,753 Total income $ 40,844,201 $ 30,408,249 $ 110,455,297 $ 87,294,249

Notes Receivable and Allowanc_2

Notes Receivable and Allowance for Credit Losses (Tables)	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
Schedule of Notes Receivable	As of September 30, 2023, our notes receivable at amortized cost was comprised of the following: September 30, 2023 Notes receivable, gross $ 114,371,763 Deferred transaction income (3,225,739) Notes receivable, amortized cost $ 111,146,024 The following table summarizes our notes receivable, net, as of December 31, 2022 prior to the adoption of ASU 2016-13: December 31, 2022 Notes receivable, gross $ 107,650,187 Less allowance for uncollectible accounts: Balance at beginning of year (23,114,173) Provision (29,437,179) Charge-offs, net of recoveries totaling $5,040,041 42,327,901 Total allowance for uncollectible accounts (10,223,451) Notes receivable, net of allowance 97,426,736 Deferred transaction income (4,068,332) Notes receivable, net $ 93,358,404 As of September 30, 2023 and December 31, 2022, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of September 30, 2023 December 31, 2022 Account reactivation fees receivable, net $ 434,521 $ 209,734 Receivables from merchants, net 1,621,128 2,322,976 Other receivables, net $ 2,055,649 $ 2,532,710 The activity in the allowance for credit losses related to account reactivation fees, including the provision for other credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Balance at beginning of period $ 768,602 $ 1,480,332 $ 980,713 $ 1,691,071 Provision for other credit losses 917,226 1,594,776 2,067,268 6,352,570 Charge-offs (783,784) (2,240,902) (2,539,804) (7,910,133) Recoveries of charged-off receivables 114,396 277,243 508,263 977,941 Balance at end of period $ 1,016,440 $ 1,111,449 $ 1,016,440 $ 1,111,449
Schedule of Amortized Cost Basis of Our Notes Receivable by Prophet Score and Year of Origination	The amortized cost basis of our notes receivable by Prophet Score and year of origination as of September 30, 2023 is as follows: September 30, 2023 Amortized cost basis by year of origination 2023 2022 Total A $ 39,189,038 $ 644 $ 39,189,682 B 36,430,263 1,974 36,432,237 C 28,060,553 5,647 28,066,200 No score 7,446,534 11,371 7,457,905 Total amortized cost $ 111,126,388 $ 19,636 $ 111,146,024 Net charge-offs by year of origination for the nine months ended September 30, 2023 is as follows: 2023 2022 2021 2020 2019 Total Current period gross charge-offs $ (7,827,328) $ (8,570,864) $ (17,563) $ (650) $ (207) $ (16,416,612) Current period recoveries 154,331 1,713,229 806,145 250,964 77,665 3,002,334 Current period net charge-offs $ (7,672,997) $ (6,857,635) $ 788,582 $ 250,314 $ 77,458 $ (13,414,278)
Schedule of Gross Notes Receivable and Related Allowance by Aging	The amortized cost basis of our notes receivable by delinquency status as of September 30, 2023 is as follows: September 30, 2023 Current $ 100,196,148 1–28 days past due 5,539,980 29–56 days past due 2,965,975 57–90 days past due 2,443,921 Total amortized cost $ 111,146,024 The following table summarizes our gross notes receivable and related allowance for uncollectible accounts as of December 31, 2022 prior to the adoption of ASU 2016-13: December 31, 2022 Gross Receivables Less Allowance Net Receivables Current $ 96,923,113 $ (3,348,558) $ 93,574,555 Days past due: 1–28 5,516,812 (2,146,103) 3,370,709 29–56 2,513,755 (2,063,131) 450,624 57–90 2,696,507 (2,665,659) 30,848 Total $ 107,650,187 $ (10,223,451) $ 97,426,736
Schedule of Allowance for Credit Loss	The activity in the allowance for credit losses, including the provision for credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Balance at beginning of period $ 6,494,092 $ 15,124,901 $ 10,223,451 $ 23,114,173 Adoption of Accounting Standards Update No. 2016-13 — — (878,577) — Provision for credit losses 6,676,548 5,679,953 12,667,346 24,036,357 Charge-offs (5,239,171) (10,610,683) (16,416,612) (39,802,109) Recoveries of charged-off receivables 666,473 1,125,180 3,002,334 3,970,930 Balance at end of period $ 8,597,942 $ 11,319,351 $ 8,597,942 $ 11,319,351

Other Receivables (Tables)

Other Receivables (Tables)	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
Schedule of Other Receivables, Net	As of September 30, 2023, our notes receivable at amortized cost was comprised of the following: September 30, 2023 Notes receivable, gross $ 114,371,763 Deferred transaction income (3,225,739) Notes receivable, amortized cost $ 111,146,024 The following table summarizes our notes receivable, net, as of December 31, 2022 prior to the adoption of ASU 2016-13: December 31, 2022 Notes receivable, gross $ 107,650,187 Less allowance for uncollectible accounts: Balance at beginning of year (23,114,173) Provision (29,437,179) Charge-offs, net of recoveries totaling $5,040,041 42,327,901 Total allowance for uncollectible accounts (10,223,451) Notes receivable, net of allowance 97,426,736 Deferred transaction income (4,068,332) Notes receivable, net $ 93,358,404 As of September 30, 2023 and December 31, 2022, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of September 30, 2023 December 31, 2022 Account reactivation fees receivable, net $ 434,521 $ 209,734 Receivables from merchants, net 1,621,128 2,322,976 Other receivables, net $ 2,055,649 $ 2,532,710 The activity in the allowance for credit losses related to account reactivation fees, including the provision for other credit losses, charge-offs, and recoveries for the three and nine months ended September 30, 2023 and 2022 is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Balance at beginning of period $ 768,602 $ 1,480,332 $ 980,713 $ 1,691,071 Provision for other credit losses 917,226 1,594,776 2,067,268 6,352,570 Charge-offs (783,784) (2,240,902) (2,539,804) (7,910,133) Recoveries of charged-off receivables 114,396 277,243 508,263 977,941 Balance at end of period $ 1,016,440 $ 1,111,449 $ 1,016,440 $ 1,111,449

Line of Credit (Tables)

Line of Credit (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Schedule of Expenses Related to Line of Credit	Expenses related to our lines of credit for the three and nine months ended September 30, 2023 and 2022 are as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Interest expense on utilization $ 3,471,806 $ 1,111,022 $ 9,611,867 $ 2,737,061 Interest expense on unused daily amounts 25,555 59,981 90,639 229,088 Amortization of debt issuance costs 183,073 448,502 534,638 821,770

Net Income (Loss) Per Share (Ta

Net Income (Loss) Per Share (Tables)	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Schedule of Basic and Diluted Net Income (Loss) Per Share	The following table presents the calculation of basic and diluted net income (loss) per share: Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 1,294,400 $ 4,344,424 $ 4,158,724 $ (38,728,066) Denominator*: Basic shares: Weighted-average shares outstanding 5,667,430 5,464,484 5,576,233 5,433,775 Diluted shares: Stock options 60,299 77,868 67,351 — Restricted stock units — 435,434 — — Warrants 1,936 — 7,637 — Weighted-average shares outstanding 5,729,665 5,977,786 5,651,221 5,433,775 Net income (loss) per share: Basic $ 0.23 $ 0.80 $ 0.75 $ (7.13) Diluted $ 0.23 $ 0.73 $ 0.74 $ (7.13) * Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts have been retroactively restated.

Significant Accounting Polici_3

Significant Accounting Policies (Details)		9 Months Ended
	May 11, 2023	Sep. 30, 2023 USD ($) segment		Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)		Sep. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Disaggregation of Revenue [Line Items]
Warrant liabilities		$ 590,563			$ 511,295
Number of reportable segments | segment		1
Number of operating segments | segment		1
Increase in retained earnings upon ASU adoption		$ 17,974,055	[1]	$ 16,278,144	8,843,246	[1]	$ 5,729,016	$ 147,735	$ 37,792,038
Reverse stock split ratio	0.02631579
Accumulated Deficit
Disaggregation of Revenue [Line Items]
Increase in retained earnings upon ASU adoption		(160,459,178)		$ (161,753,578)	(165,496,479)		$ (166,130,789)	$ (170,475,213)	$ (127,402,723)
Adoption of Accounting Standards Update No. 2016-13
Disaggregation of Revenue [Line Items]
Increase in retained earnings upon ASU adoption					878,577
Adoption of Accounting Standards Update No. 2016-13 | Accumulated Deficit
Disaggregation of Revenue [Line Items]
Increase in retained earnings upon ASU adoption					878,577
Level 1
Disaggregation of Revenue [Line Items]
Warrant liabilities		590,563			511,295
Money Market Securities | Level 1
Disaggregation of Revenue [Line Items]
Money market securities		$ 2,274,125			$ 333,158
[1]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share amounts (excluding shares authorized and par value) have been retroactively restated

Total Income - Narratives (Deta

Total Income - Narratives (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Total income	$ 40,844,201	$ 30,408,249	$ 110,455,297	$ 87,294,249
Total income do not fall under the Asc topic 310	16,180,970	$ 2,336,364	38,091,808	$ 2,913,351
Deferred income	3,225,739		3,225,739		$ 4,068,332
Outstanding performance obligation, amount	$ 2,070,231		$ 2,070,231		$ 1,516,228

Total Income - Disaggregation o

Total Income - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total income	$ 40,844,201	$ 30,408,249	$ 110,455,297	$ 87,294,249
Transaction income
Disaggregation of Revenue [Line Items]
Total income	27,046,209	25,062,708	78,870,463	72,879,496
Income from other services
Disaggregation of Revenue [Line Items]
Total income	$ 13,797,992	$ 5,345,541	$ 31,584,834	$ 14,414,753

Notes Receivable and Allowanc_3

Notes Receivable and Allowance for Credit Losses - Narrative (Details)	9 Months Ended
	Sep. 30, 2023 installment order product
Receivables [Abstract]
Number of installments | installment	4
Installment period	14 days
Receivables generally due	42 days
Number of product segments | product	1
Weighted average days outstanding of notes receivable	34 days
Credit quality score, minimum order threshold | order	2

Notes Receivable and Allowanc_4

Notes Receivable and Allowance for Credit Losses - Schedule of Notes Receivable (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Notes receivable, gross	$ 114,371,763	$ 107,650,187
Deferred transaction income	(3,225,739)	(4,068,332)
Notes receivable, amortized cost	$ 111,146,024	$ 103,581,855

Notes Receivable and Allowanc_5

Notes Receivable and Allowance for Credit Losses - Schedule of Notes Receivable (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Receivables [Abstract]
Notes receivable, gross	$ 114,371,763		$ 114,371,763		$ 107,650,187
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	(6,494,092)	$ (15,124,901)	(10,223,451)	$ (23,114,173)	(23,114,173)
Provision	(6,676,548)	(5,679,953)	(12,667,346)	(24,036,357)	(29,437,179)
Charge-offs, net of recoveries totaling $5,040,041					42,327,901
Total allowance for uncollectible accounts	(8,597,942)	(11,319,351)	(8,597,942)	(11,319,351)	(10,223,451)
Notes receivable, net of allowance					97,426,736
Deferred transaction income	(3,225,739)		(3,225,739)		(4,068,332)
Notes receivable, net	102,548,082		102,548,082		93,358,404
Recoveries	$ 666,473	$ 1,125,180	$ 3,002,334	$ 3,970,930	$ 5,040,041

Notes Receivable and Allowanc_6

Notes Receivable and Allowance for Credit Losses - Schedule of Amortized Cost Basis of Our Notes Receivable by Prophet Score and Year of Origination (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
2023	$ 111,126,388
2022	19,636
Notes receivable, amortized cost	111,146,024	$ 103,581,855
A
Financing Receivable, Past Due [Line Items]
2023	39,189,038
2022	644
Notes receivable, amortized cost	39,189,682
B
Financing Receivable, Past Due [Line Items]
2023	36,430,263
2022	1,974
Notes receivable, amortized cost	36,432,237
C
Financing Receivable, Past Due [Line Items]
2023	28,060,553
2022	5,647
Notes receivable, amortized cost	28,066,200
No score
Financing Receivable, Past Due [Line Items]
2023	7,446,534
2022	11,371
Notes receivable, amortized cost	$ 7,457,905

Notes Receivable and Allowanc_7

Notes Receivable and Allowance for Credit Losses - Schedule of Aging Past Due (Details) - USD ($)	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Notes receivable, amortized cost	$ 111,146,024		$ 103,581,855
Gross Receivables	114,371,763		107,650,187
Less Allowance	(8,597,942)	$ (6,494,092)	(10,223,451)	$ (11,319,351)	$ (15,124,901)	$ (23,114,173)
Notes receivable, net of allowance			97,426,736
Current
Financing Receivable, Past Due [Line Items]
Notes receivable, amortized cost	100,196,148
Gross Receivables			96,923,113
Less Allowance			(3,348,558)
Notes receivable, net of allowance			93,574,555
1–28 days past due
Financing Receivable, Past Due [Line Items]
Notes receivable, amortized cost	5,539,980
Gross Receivables			5,516,812
Less Allowance			(2,146,103)
Notes receivable, net of allowance			3,370,709
29–56 days past due
Financing Receivable, Past Due [Line Items]
Notes receivable, amortized cost	2,965,975
Gross Receivables			2,513,755
Less Allowance			(2,063,131)
Notes receivable, net of allowance			450,624
57–90 days past due
Financing Receivable, Past Due [Line Items]
Notes receivable, amortized cost	$ 2,443,921
Gross Receivables			2,696,507
Less Allowance			(2,665,659)
Notes receivable, net of allowance			$ 30,848

Notes Receivable and Allowanc_8

Notes Receivable and Allowance for Credit Losses - Schedule of Provision for Credit Losses, Charge-Offs, and Recoveries (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Financing Receivable Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 6,494,092	$ 15,124,901	$ 10,223,451	$ 23,114,173	$ 23,114,173
Provision for credit losses	6,676,548	5,679,953	12,667,346	24,036,357	29,437,179
Charge-offs	(5,239,171)	(10,610,683)	(16,416,612)	(39,802,109)
Recoveries of charged-off receivables	666,473	1,125,180	3,002,334	3,970,930	5,040,041
Balance at end of period	8,597,942	11,319,351	8,597,942	11,319,351	10,223,451
Adoption of Accounting Standards Update No. 2016-13
Financing Receivable Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 0	$ 0	$ (878,577)	$ 0	0
Balance at end of period					$ (878,577)

Notes Receivable and Allowanc_9

Notes Receivable and Allowance for Credit Losses - Schedule of Net Charge-offs by Origination Year (Details)	9 Months Ended
	Sep. 30, 2023 USD ($)
Current period gross charge-offs
2023	$ (7,827,328)
2022	(8,570,864)
2021	(17,563)
2020	(650)
2019	(207)
Total	(16,416,612)
Current period recoveries
2023	154,331
2022	1,713,229
2021	806,145
2020	250,964
2019	77,665
Total	3,002,334
Current period net charge-offs
2023	(7,672,997)
2022	(6,857,635)
2021	788,582
2020	250,314
2019	77,458
Total	$ (13,414,278)

Other Receivables - Schedule of

Other Receivables - Schedule of Other Receivables, Net (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other receivables, net	$ 2,055,649		$ 2,055,649		$ 2,532,710
Allowance for Credit Loss, Receivable, Other, Current [Roll Forward]
Provision for other credit losses			2,067,268	$ 6,833,033
Account reactivation fees receivable, net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other receivables, net	434,521		434,521		209,734
Allowance for Credit Loss, Receivable, Other, Current [Roll Forward]
Balance at beginning of period	768,602	$ 1,480,332	980,713	1,691,071
Provision for other credit losses	917,226	1,594,776	2,067,268	6,352,570
Charge-offs	(783,784)	(2,240,902)	(2,539,804)	(7,910,133)
Recoveries of charged-off receivables	114,396	277,243	508,263	977,941
Balance at end of period	1,016,440	$ 1,111,449	1,016,440	$ 1,111,449
Receivables from merchants, net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other receivables, net	$ 1,621,128		$ 1,621,128		$ 2,322,976

Other Receivables - Narrative (

Other Receivables - Narrative (Details) - Account reactivation fees receivable, net - USD ($)	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross reactivation fees receivable	$ 1,450,961		$ 1,190,447
Allowance for credit losses on other receivables	$ 1,016,440	$ 768,602	$ 980,713	$ 1,111,449	$ 1,480,332	$ 1,691,071

Merchant Accounts Payable (Deta

Merchant Accounts Payable (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Mar. 20, 2023	Mar. 19, 2023	Dec. 31, 2022 USD ($)
Payables and Accruals [Line Items]
Merchant accounts payable	$ 68,182,563		$ 68,182,563				$ 83,020,739
Net interest expense	4,143,258	$ 2,191,995	11,453,751	$ 5,477,164
Merchant Interest Program
Payables and Accruals [Line Items]
Merchant accounts payable	$ 51,883,816		$ 51,883,816				$ 66,469,982
Spread on fixed rate (percent)					0.0520	0.0380
Average yield (percent)	5.21%	3.87%	4.32%	3.45%
Net interest expense	$ 679,012	$ 646,507	$ 1,917,378	$ 1,835,044
Deferred payments due on demand (maximum per 7 days)	$ 250,000		$ 250,000

Line of Credit - Narrative (Det

Line of Credit - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Notes receivable	$ 111,146,024		$ 111,146,024		$ 103,581,855
Asset Pledged as Collateral without Right
Debt Instrument [Line Items]
Notes receivable	$ 101,220,136		$ 101,220,136		89,797,068
Receivables Funding Facility
Debt Instrument [Line Items]
Annual effective interest rate	20.70%	7.95%	18.19%	5.50%
Receivables Funding Facility | Line of Credit
Debt Instrument [Line Items]
Outstanding line of credit balance	$ 75,900,000		$ 75,900,000		65,000,000
Remaining borrowing capacity	$ 15,102		$ 15,102		$ 477,606

Line of Credit - Schedule of Ex

Line of Credit - Schedule of Expenses Related to Line of Credit (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Line of Credit Facility [Line Items]
Interest expense on utilization	$ 4,143,258	$ 2,191,995	$ 11,453,751	$ 5,477,164
Amortization of debt issuance costs			534,638	821,770
Line of Credit
Line of Credit Facility [Line Items]
Interest expense on utilization	3,471,806	1,111,022	9,611,867	2,737,061
Interest expense on unused daily amounts	25,555	59,981	90,639	229,088
Amortization of debt issuance costs	$ 183,073	$ 448,502	$ 534,638	$ 821,770

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Other Commitments [Line Items]
Marketing, advertising, and tradeshows	$ 3,615,339	$ 3,857,393	$ 10,128,175	$ 15,402,963
Co-Branded Marketing and Advertising Spend
Other Commitments [Line Items]
Marketing and advertising spend commitment	1,300,000		$ 1,300,000		$ 19,400,000
Term of agreement			1 year
Marketing, advertising, and tradeshows	$ 3,267,411	$ 3,484,407	$ 9,506,236	$ 13,936,420

Net Income (Loss) Per Share - S

Net Income (Loss) Per Share - Schedule of Basic and Diluted Net Income (Loss) Per Share (Details)			3 Months Ended		9 Months Ended
		May 11, 2023	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares
Numerator:
Net income (loss) | $			$ 1,294,400	$ 4,344,424	$ 4,158,724	$ (38,728,066)
Basic shares:
Basic weighted average shares outstanding (shares)	[1]		5,667,430	5,464,484	5,576,233	5,433,775
Diluted shares:
Diluted weighted average shares outstanding (shares)	[1]		5,729,665	5,977,786	5,651,221	5,433,775
Net income (loss) per share
Basic (in usd per share) | $ / shares	[1]		$ 0.23	$ 0.80	$ 0.75	$ (7.13)
Diluted (in usd per share) | $ / shares	[1]		$ 0.23	$ 0.73	$ 0.74	$ (7.13)
Reverse stock split ratio		0.02631579
Anti-dilutive weighted average (shares)			564,802	301,518	442,847
Stock options
Diluted shares:
Dilutive effect of share-based Payment arrangements (shares)			60,299	77,868	67,351	0
Restricted stock units
Diluted shares:
Dilutive effect of share-based Payment arrangements (shares)			0	435,434	0	0
Warrants
Diluted shares:
Dilutive effect of share-based Payment arrangements (shares)			1,936	0	7,637	0
[1]Effective May 11, 2023, we performed a 1-for-38 reverse stock split. Share and per-share amounts have been retroactively restated.