CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Three Months Ended June 30, 2022 Compared to the Predecessor's Three Months Ended June 30, 2021

The Six Months Ended June 30, 2022 Compared to the Predecessor's Six Months Ended June 30, 2021

Platform Fee Loans. Indicates loans facilitated by Sunlight on which it earns platform fees in a given period (as described further under "Revenue" below).

Net Income. Net income is a financial measure used to measure Sunlight's performance from period-to-period on a consistent basis.

Key Factors Affecting Operating Results

Growth in the Number of Contractors and in the Number of Loans Funded for the Customers of Each Contractor

Availability of Capital to Fund Loans; Funded Loan Volume

Competition to Acquire and Maintain Contractor Relationships

Competition to Acquire Capital to Fund Loans

Industry Trends and General Economic Conditions; Cost of Power

Sunlight conducts business through one operating segment, and Sunlight operates in one geographic region, the United States. See Notes 1 and 2 of the accompanying consolidated financial statements of Sunlight for more information.

Components of Results of Operations

Property and technology. Property and technology expenses comprise rent, information technology services to support the Orange® infrastructure and operation, as well as other Sunlight technology requirements, and noncapitalizable costs to internally develop software as incurred.

Other realized losses, net. Other realized losses primarily relate to losses Sunlight incurred in connection with certain Indirect Channel Loans.

Business Combination expenses. The expenses Sunlight incurs that are not considered operating expenses. These costs primarily represent legal and other professional costs Sunlight incurred in connection with the Business Combination.

Income tax benefit (expense). The income taxes Sunlight incurs on the taxable income, or income tax benefit in periods of taxable loss, not allocable to noncontrolling interests in Sunlight Financial LLC.

This section includes a summary of our results of operations, followed by detailed comparisons of our results for the three and six months ended June 30, 2022 and 2021 (USD in thousands, except percentages):

The Three Months Ended June 30, 2022 Compared to the Predecessor's Three Months Ended June 30, 2021

The following table provides the components of Sunlight's revenue for three months ended June 30, 2022 and 2021 (USD in thousands, except percentages):

Provision for loss expense increased by $3.6 million, or 827.1% for the three months ended June 30, 2022 when compared to the three months ended June 30, 2021. Such increase was due primarily to an allowance Sunlight

Sunlight's Predecessor is a limited liability company not subject to income taxes. During the three months ended June 30, 2022, the $1.7 million income tax benefit reflects an effective tax rate of 19.3%.

Noncontrolling Interests in Consolidated Subsidiaries

The Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021 (Predecessor)

The following table provides the components of Sunlight's revenue for six months ended June 30, 2022 and 2021 (USD in thousands, except percentages):

The following table presents averages weighted by original loan balance of capital provider discounts, contractor fees and platform fees.

Noncontrolling Interests in Consolidated Subsidiaries

As of June 30, 2022, Sunlight had $68.9 million of unrestricted cash on hand and had drawn $20.6 million available to it under its $30.0 million credit facility.

Relationships with Contractors and Capital Providers

Cash Flow and Liquidity Analysis

The Six Months Ended June 30, 2022 Compared to the Six Ended June 30, 2021 (Predecessor)

The following provides a summary of cash flow data for the six months ended June 30, 2022 and 2021 (in thousands):

Cash Flow from Operating Activities

Cash Flow from Investing Activities

Cash Flow from Financing Activities

Other Changes in Financial Position

Other Factors Affecting Liquidity and Capital Resources

Tax Receivable Agreement ("TRA") (Successor)

Available Liquidity and Capital Resources

The following table presents a calculation of Adjusted Net Income per diluted Class A Share (USD in thousands, except per share amounts):

Critical Accounting Policies and Estimates

In accordance with Sunlight's policies, Sunlight regularly evaluates its estimates, assumptions and judgments, and bases its estimates, assumptions and judgments on its historical experience and on factors Sunlight believes reasonable under the circumstances. The results involve judgments about the carrying values of assets and liabilities not readily apparent from other sources. If Sunlight's assumptions or conditions change, the actual results Sunlight reports may significantly differ from these estimates.

Advances made to contractors under Sunlight's contractor advances program or prefunding program are created at par and do not bear, and therefore do not accrue, interest income.

Sunlight accounts for uncertain tax positions by reporting a liability for unrecognizable tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Sunlight recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Recent Accounting Pronouncements Issued, But Not Yet Adopted

See Note 2 "-Summary of Significant Accounting Policies" in the notes accompanying Sunlight's consolidated financial statements.

See Note 9 "-Transactions with Affiliates and Affiliated Entities" in the notes accompanying Sunlight's consolidated financial statements.

© Edgar Online, source Glimpses