References to the "Company," "Figure Acquisition Corp. I.," "our," "us" or "we"
refer to Figure Acquisition Corp. I. The following discussion and analysis of
the Company's financial condition and results of operations should be read in
conjunction with the unaudited interim condensed financial statements and the
notes thereto contained elsewhere in this report. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings.
Overview
We are a blank check company incorporated in Delaware on December 15, 2020. We
were formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination").
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Our Sponsor is Fintech Acquisition LLC, a Delaware limited liability company.
The registration statement for the Initial Public Offering was declared
effective on February 18, 2021. On February 23, 2021, we consummated the Initial
Public Offering of 28,750,000 Units, at $10.00 per Unit, generating gross
proceeds of $287.5 million, and incurring offering costs of approximately $16.3
million, inclusive of approximately $10.1 million in deferred underwriting
commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 5,166,667 Private Placement Warrants, at a price of
$1.50 per Private Placement Warrant to our Sponsor, generating gross proceeds to
us of approximately $7.75 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$287.5 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement was placed in the
Trust Account and was invested in permitted United States "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940, as amended, having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act that invest only in direct U.S. government treasury
obligations.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
We will only have 24 months from the closing of the Initial Public Offering, or
February 23, 2023, to complete our initial Business Combination (the
"Combination Period"). If we do not complete a Business Combination within this
period of time, we will (i) cease all operations except for the purposes of
winding up; (ii) as promptly as reasonably possible, but not more than ten
business days thereafter, redeem the Public Shares for a per share pro rata
portion of the Trust Account, including interest and not previously released to
us to fund our working capital requirements (subject to an annual limit of
$500,000) (less taxes payable and up to $100,000 of such net interest to pay
dissolution expenses) and (iii) as promptly as possible following such
redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders, as part of our plan of dissolution and liquidation. Our
Sponsor and our executive officers and independent director nominees (the
"initial stockholders") entered into a letter agreement with us, pursuant to
which they have waived their rights to participate in any redemption with
respect to their Founder Shares; however, if the initial stockholders or any of
our officers, directors or affiliates acquire shares of common stock in or after
the Initial Public Offering, they will be entitled to a pro rata share of the
Trust Account upon our redemption or liquidation in the event we do not complete
a Business Combination within the required time period. In the event of such
distribution, it is possible that the per share value of the residual assets
remaining available for distribution (including Trust Account assets) will be
less than the Initial Public Offering price per Unit in the Initial Public
Offering.
Recent Developments
On April 12, 2021, the Staff of the Securities and Exchange Commission ("SEC")
released the Staff Statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies ("SPACs") (the
"Statement"). The SEC Staff Statement addresses certain accounting and reporting
considerations related to warrants of a kind similar to those issued by the
Company at the time of its IPO in February 2021.
The Warrants were classified as equity in the Company's previously issued
audited balance sheet as of February 23, 2021. In light of the Statement and
guidance in Accounting Standards Codification ("ASC") 815-40, "Derivatives and
Hedging - Contracts in Entity's Own Equity", in particular as applicable to
certain provisions in the Warrants related to tender or exchange offer
provisions as well as provisions that provided for potential changes to the
settlement amounts dependent upon the characteristics of the holder of the
warrant, the Company evaluated the terms of the Warrant Agreement entered into
in connection with the Company's IPO and concluded that the Company's Warrants
include provisions that, based on ASC 815-40, preclude the Warrants from being
classified as components of equity. The Warrants are not eligible for an
exception from derivative accounting, and therefore should be classified as a
liability measured at fair value, with changes in fair value reported each
period in earnings.
Results of Operations
For the six months ended June 30, 2021, we had a net income of approximately $.8
million, which included a loss from operations of $.2 million, offering cost
expense allocated to warrants of $.6 million, and offset mainly by a gain from
the change in fair value of warrant liabilities of $1.7 million.
Our business activities from inception to June 30, 2021 consisted primarily of
our formation and completing our IPO, and since the offering, our activity has
been limited to identifying and evaluating prospective acquisition targets for a
Business Combination.
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Liquidity and Capital Resources
As of June 30, 2021, we had approximately $1.0 million in our operating bank
account and working capital of approximately $1.1 million.
Prior to the completion of the Initial Public Offering, our liquidity needs have
been satisfied through the cash receipt of $25,000 from our Sponsor in exchange
for the issuance of the Founder Shares, and an up to $300,000 note agreement
issued to our Sponsor, which was repaid by us on February 25, 2021. Subsequent
to the consummation of the Initial Public Offering and Private Placement, our
liquidity needs have been satisfied with the proceeds from the consummation of
the Private Placement not held in the Trust Account. In addition, in order to
finance transaction costs in connection with a Business Combination, our Sponsor
may, but are not obligated to, provide us Working Capital Loans. To date, there
were no Working Capital Loans outstanding.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of a Business Combination or one year from this
filing. Over this time period, we will be using these funds to pay existing
accounts payable, identifying and evaluating prospective initial Business
Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
the balance sheet. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities
Registration Rights
The initial stockholders and holders of the Private Placement Warrants will be
entitled to registration rights pursuant to a registration rights agreement. The
initial stockholders and holders of the Private Placement Warrants will be
entitled to make up to three demands, excluding short form registration demands,
that register such securities for sale under the Securities Act. In addition,
these holders will have "piggy-back" registration rights to include their
securities in other registration statements filed by us. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
We agreed to pay the underwriters an additional fee (the "Deferred Underwriting
Fees") of 3.5% of the gross proceeds of the IPO, or $10,062,500 in the
aggregate. The deferred fee will become payable to the underwriters from the
amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities in our
unaudited condensed financial statements. On an ongoing basis, we evaluate our
estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Except as set forth below, there have been no significant changes in our
critical accounting policies as discussed in the final prospectus filed by us
with the SEC on February 22, 2021.
Warrants Liability
We evaluated the Warrants in accordance with ASC 815-40, "Derivatives and
Hedging - Contracts in Entity's Own Equity", and concluded that a provision in
the Warrant Agreement related to certain tender or exchange offers as well as
provisions that provided for potential changes to the settlement amounts
dependent upon the characteristics of the holder of the warrant, precludes the
Warrants from being accounted for as components of equity. As the Warrants meet
the definition of a derivative as contemplated in ASC 815 and are not eligible
for an exception from derivative accounting, the Warrants are recorded as
derivative liabilities on the Balance Sheet and measured at fair value at
inception (on the date of the IPO) and at each reporting date in accordance with
ASC 820, "Fair Value Measurement", with changes in fair value recognized in the
Statement of Operations in the period of change.
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Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the Public Company
Accounting Oversight Board regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and (iv)
disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of the CEO's
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of our Initial Public Offering or
until we are no longer an "emerging growth company," whichever is earlier.
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