References to the "Company," "Figure Acquisition Corp. I.," "our," "us" or "we"
refer to Figure Acquisition Corp. I. The following discussion and analysis of
our financial condition and results of operations should be read in conjunction
with the unaudited 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 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").
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, subject to the approval and implementation of the Proxy
Proposal, 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 November 3, 2022, we filed with the SEC preliminary proxy materials with
respect to a proposed special meeting of stockholders seeking approval of, among
other matters, a proposal to (x) extend the date by which we must consummate an
initial Business Combination from February 23, 2023 to a to-be-determined date
in 2023 or such earlier date as determined by the Company's board of directors
(the "Proposed Extension"); and/or (y) change the date on which Continental
Stock Transfer & Trust Company must commence liquidation of the Trust Account,
established in connection with the Company's IPO, to an amended termination date
(the "Proposed Amendment to the Termination Date" and, together with the
Proposed Extension, the "Proxy Proposal"). Our board of directors may determine
at any time not to proceed with the Proposed Extension. There can be no
assurance that definitive proxy materials will be filed and distributed to our
stockholders as of the record date for such proposed meeting or, if the Proposed
Extension and other related proposals are approved by our stockholders, that our
board of directors will ultimately determine to implement the Proposed
Extension. If the Proposed Extension is approved and implemented, our public
stockholders will be entitled to redeem their properly tendered public shares
for a pro rata portion of the amount in the trust account established for the
benefit of our public stockholders (the "Trust Account"), in accordance with our
charter.
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Results of Operations
For the three months ended September 30, 2022, we had a net income of
approximately $2.1 million, which included a gain from the change in fair value
of warrant liabilities of $1.5 million and interest earned on marketable
securities held in trust account of $1.3 million, partially offset by a loss
from operations of $0.4 million and provision for income taxes of $0.3 million.
For the nine months ended September 30, 2022, we had a net income of
approximately $14.1 million, which included a gain from the change in fair value
of warrant liabilities of $13.7 million and interest earned on marketable
securities held in trust account of $1.8 million, offset mainly by a loss from
operations of $1.1 million and provision for income tax of $0.3 million.
For the three months ended September 30, 2021, we had a net income of
approximately $3.9 million, which included interest earned on marketable
securities held in trust account of $20,526 and gain from the change in fair
value of warrant liabilities of $4.2 million, partially offset by a loss from
operations of $0.2 million and fair value of private warrants in excess of
proceeds received of $0.2 million.
For the nine months ended September 30, 2021, we had a net income of
approximately $4.7 million, which included interest earned on marketable
securities held in trust account of $24,018 and gain from the change in fair
value of warrant liabilities of $5.9 million, offset by a loss from operations
of $0.45 million, offering costs allocated to warrants of $0.6 million and fair
value of private warrants in excess of proceeds received of $0.2 million.
Our business activities from inception to September 30, 2022 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.
Liquidity, Capital Resources, and Going Concern
As of September 30, 2022, we had approximately $0.3 million in our operating
bank account and working capital deficit of approximately $4,000, net of
franchise and income taxes payable and taxes paid out of operating funds not yet
reimbursed by the Trust, as applicable, of approximately $0.3 million.
For the nine months ended September 30, 2022, net cash used in operating
activities was approximately $0.8 million. Net income of $14.1 million was
attributable to the change in fair value of warrant liabilities of $13.7
million, interest earned on marketable securities held in the Trust Account of
$1.8 million and changes in operating assets and liabilities which provided $0.7
million in cash from operating activities.
For the nine months ended September 30, 2021, net cash used in operating
activities was approximately $0.7 million. Net income of $4.7 million was
attributable to the change in fair value of warrant liability of $5.9 million,
interest earned on marketable securities held in the Trust Account of $24,018,
offset by offering costs allocated to warrants of $0.6 million, the fair value
of private warrants in excess of proceeds received of $0.2 million, and changes
in operating assets and liabilities, which used $0.2 million in cash from
operating activities.
As of September 30, 2022, we had cash and marketable securities held in the
Trust Account of approximately $288.7 million. We may withdraw interest to pay
franchise and income taxes. Through September 30, 2022, cash withdrawn from the
Trust Account to pay franchise and income taxes totaled $317,039 which was
withdrawn during the nine months ended September 30, 2022. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of September 30, 2022, we had cash of approximately $0.3 million held outside
of our Trust Account.
Our liquidity needs up to February 23, 2021 had been satisfied through a capital
contribution from the Sponsor of $25,000 (see Note 5) for the Founder shares and
Class L shares, and the loan under an unsecured promissory note from the Sponsor
of up to $300,000 which was paid in full on February 23, 2021 from the IPO
proceeds (see Note 5).
Subsequent to the consummation of the IPO, our liquidity needs have been
satisfied through the net proceeds from the consummation of the Private
Placement not held in the Trust Account. In order to finance transaction costs
in connection with a Business Combination, our Sponsor or certain of our
officers and directors may, but are not obligated to, provide us working capital
loans. Additionally, an affiliate of our Sponsor entered into a commitment
letter with us whereby the affiliate of our Sponsor agreed to provide working
capital loans sufficient for us to satisfy our obligations as they come due
until the earlier of: (a) the completion of the initial Business Combination, or
(b) liquidation. Any such working capital loan under the commitment letter will
be repaid to the affiliate of our Sponsor by us upon the completion of the
initial Business Combination or, in the event of liquidation prior to the
completion of the initial Business Combination, forgiven by the affiliate of our
Sponsor upon liquidation. The Sponsor advanced an aggregate of $535,885 which
was repaid in full during the nine-months ended September 30, 2022. As of
September 30, 2022 and December 31, 2021, there were no amounts outstanding
under any working capital loan and we did not have any off-balance sheet
arrangements.
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If we do not consummate an initial business combination by February 23, 2023,
subject to the approval and implementation of the Proxy Proposal, there will be
a mandatory liquidation and subsequent dissolution of the Company. Management
has determined that the mandatory liquidation, should an initial business
combination not occur, and potential subsequent dissolution raises substantial
doubt about our ability to continue as a going concern. The Company intends to
consummate an initial business combination prior to February 23, 2023, subject
to the approval and implementation of the Proxy Proposal; however, it is
uncertain whether the Company will be able to do so by this time or that the
Proxy Proposal will be approved and implemented. The unaudited condensed
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
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 unaudited condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these
unaudited condensed financial statements and the specific impact on our
financial condition, results of operations, and cash flows is also not
determinable as of the date of these unaudited condensed financial statements.
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 Underwriting Fees will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.
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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, income 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.
There have been no changes in our critical accounting policies as discussed in
our Annual Report on Form 10-K for the year ended December 31, 2021 as filed
with the Securities and Exchange Commission (the "SEC") on April 13, 2022 (the
"Annual Report").
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts
in an Entity's Own Equity ("ASU 2020-06"), which simplifies accounting for
convertible instruments by removing major separation models required under
current GAAP. ASU 2020-06 also removes certain settlement conditions that are
required for equity-linked contracts to qualify for scope exception, and it
simplifies the diluted earnings per share calculation in certain areas. We early
adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact our
financial position, results of operations or cash flows.
We do not believe that any other recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
our unaudited condensed financial statements.
Inflation
We do not believe that inflation had a material impact on our business 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 unaudited condensed
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we intend to rely on the other reduced reporting requirements
provided by the JOBS Act. Subject to certain conditions set forth in the JOBS
Act, we will 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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