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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-39641

 

img221709002_0.jpg 

Offerpad Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-2800538

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2150 E. Germann Road, Suite 1, Chandler, Arizona

85286

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (844) 388-4539

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

 

OPAD

 

The New York Stock Exchange

Warrants to purchase Class A common stock, at an exercise price of $11.50 per share

 

OPADWS

 

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of July 27, 2022, there were 232,152,677 shares of Offerpad’s Class A common stock outstanding and 14,816,236 shares of Offerpad’s Class B common stock outstanding.

 

 

 


 

OFFERPAD SOLUTIONS INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

 

 

Page

Cautionary Note Regarding Forward-Looking Statements

3

 

 

 

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Deficit)

6

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4.

Controls and Procedures

43

 

 

 

PART II.

OTHER INFORMATION

44

Item 1.

Legal Proceedings

44

Item 1A.

Risk Factors

44

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 3.

Defaults Upon Senior Securities

44

Item 4.

Mine Safety Disclosures

44

Item 5.

Other Information

44

Item 6.

Exhibits

45

 

 

 

SIGNATURES

46

 

 

 


 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes statements that express Offerpad Solutions Inc.’s (the “Company,” “Offerpad,” “we,” “us,” or “our”) opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They may appear in a number of places throughout this Quarterly Report on Form 10-Q, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our future results of operations, financial condition and liquidity, our prospects, growth, strategies, macroeconomic trends and the markets in which Offerpad operates.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:

our ability to respond to general economic conditions;
the health of the U.S. residential real estate industry;
our ability to grow market share in our existing markets or any new markets we may enter;
the impact of the COVID-19 pandemic;
our ability to manage our growth effectively;
our ability to accurately value and manage inventory, and to maintain an adequate and desirable supply of inventory;
our ability to successfully launch new product and service offerings, and to manage, develop and refine our technology platform;
our ability to maintain and enhance our products and brand, and to attract customers;
our ability to achieve and maintain profitability in the future; and
the success of strategic relationships with third parties.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.

 

 

 

Offerpad Solutions Inc. | Second Quarter 2022 Form 10-Q | 3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Balance Sheets

 

 

 

 

 

June 30,

 

 

December 31,

 

(in thousands, except par value per share) (Unaudited)

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

$

155,464

 

 

$

169,817

 

Restricted cash

 

 

 

 

44,474

 

 

 

24,616

 

Accounts receivable

 

 

 

 

12,929

 

 

 

6,165

 

Inventory

 

 

 

 

1,289,426

 

 

 

1,132,571

 

Prepaid expenses and other current assets

 

 

 

 

12,966

 

 

 

9,808

 

Total current assets

 

 

 

 

1,515,259

 

 

 

1,342,977

 

Property and equipment, net

 

 

 

 

5,622

 

 

 

5,146

 

Other non-current assets

 

 

 

 

5,914

 

 

 

4,959

 

TOTAL ASSETS

 

(1)

 

$

1,526,795

 

 

$

1,353,082

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

 

$

10,705

 

 

$

6,399

 

Accrued and other current liabilities

 

 

 

 

45,412

 

 

 

35,027

 

Secured credit facilities and notes payable, net

 

 

 

 

1,054,455

 

 

 

861,762

 

Secured credit facilities and notes payable - related party

 

 

 

 

87,456

 

 

 

164,434

 

Total current liabilities

 

 

 

 

1,198,028

 

 

 

1,067,622

 

Warrant liabilities

 

 

 

 

5,860

 

 

 

24,061

 

Other long-term liabilities

 

 

 

 

4,226

 

 

 

3,830

 

Total liabilities

 

(2)

 

 

1,208,114

 

 

 

1,095,513

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 232,150 and 224,154 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

 

 

23

 

 

 

22

 

Class B common stock, $0.0001 par value; 20,000 shares authorized; 14,816 shares issued and outstanding as of June 30, 2022 and December 31, 2021

 

 

 

 

2

 

 

 

2

 

Additional paid in capital

 

 

 

 

398,166

 

 

 

389,601

 

Accumulated deficit

 

 

 

 

(79,510

)

 

 

(132,056

)

Total stockholders’ equity

 

 

 

 

318,681

 

 

 

257,569

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

$

1,526,795

 

 

$

1,353,082

 

________________

(1)
Our consolidated assets as of June 30, 2022 and December 31, 2021 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Restricted cash, $44,474 and $24,616; Accounts receivable, $11,862 and $4,845; Inventory, $1,289,426 and $1,132,571; Prepaid expenses and other current assets, $5,143 and $2,871; Total assets of $1,350,905 and $1,164,903, respectively.
(2)
Our consolidated liabilities as of June 30, 2022 and December 31, 2021 include the following liabilities for which the VIE creditors do not have recourse to Offerpad: Accounts payable, $6,909 and $2,810; Accrued and other current liabilities, $3,553 and $3,537; Secured credit facilities and notes payable, net, $1,141,911 and $1,026,196; Total liabilities, $1,152,373 and $1,032,543, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

Offerpad Solutions Inc. | Second Quarter 2022 Form 10-Q | 4


 

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands, except per share data) (Unaudited)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

1,079,531

 

 

$

378,647

 

 

$

2,453,368

 

 

$

662,619

 

Cost of revenue

 

 

986,550

 

 

 

327,783

 

 

 

2,228,245

 

 

 

578,218

 

Gross profit

 

 

92,981

 

 

 

50,864

 

 

 

225,123

 

 

 

84,401

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales, marketing and operating

 

 

65,239

 

 

 

31,595

 

 

 

135,127

 

 

 

56,671

 

General and administrative

 

 

16,121

 

 

 

5,137

 

 

 

30,778

 

 

 

9,871

 

Technology and development

 

 

3,243

 

 

 

2,603

 

 

 

6,425

 

 

 

4,886

 

Total operating expenses

 

 

84,603

 

 

 

39,335

 

 

 

172,330

 

 

 

71,428

 

Income from operations

 

 

8,378

 

 

 

11,529

 

 

 

52,793

 

 

 

12,973

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

 

12,537

 

 

 

 

 

 

18,201

 

 

 

 

Interest expense

 

 

(7,771

)

 

 

(2,257

)

 

 

(14,967

)

 

 

(4,175

)

Other income, net

 

 

24

 

 

 

7

 

 

 

28

 

 

 

248

 

Total other income (expense)

 

 

4,790

 

 

 

(2,250

)

 

 

3,262

 

 

 

(3,927

)

Income before income taxes

 

 

13,168

 

 

 

9,279

 

 

 

56,055

 

 

 

9,046

 

Income tax expense

 

 

(1,610

)

 

 

(89

)

 

 

(3,509

)

 

 

(89

)

Net income

 

$

11,558

 

 

$

9,190

 

 

$

52,546

 

 

$

8,957

 

Net income per share, basic

 

$

0.05

 

 

$

0.15

 

 

$

0.22

 

 

$

0.15

 

Net income per share, diluted

 

$

0.04

 

 

$

0.04

 

 

$

0.20

 

 

$

0.04

 

Weighted average common shares outstanding, basic

 

 

245,845

 

 

 

59,391

 

 

 

242,998

 

 

 

58,981

 

Weighted average common shares outstanding, diluted

 

 

260,746

 

 

 

224,630

 

 

 

260,192

 

 

 

224,264

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

Offerpad Solutions Inc. | Second Quarter 2022 Form 10-Q | 5


 

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Deficit)

 

 

 

Common Stock

 

Additional
Paid in

 

Accumulated

 

Total
Stockholders’

 

(in thousands) (Unaudited)

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

 

Balance at March 31, 2022

 

 

244,793

 

$

25

 

$

394,470

 

$

(91,068

)

$

303,427

 

Issuance of common stock upon exercise of stock options

 

 

2,170

 

 

 

 

1,299

 

 

 

 

1,299

 

Issuance of common stock upon vesting of restricted stock units

 

 

3

 

 

 

 

(3

)

 

 

 

(3

)

Stock-based compensation expense

 

 

 

 

 

 

2,400

 

 

 

 

2,400

 

Net income

 

 

 

 

 

 

 

 

11,558

 

 

11,558

 

Balance at June 30, 2022

 

 

246,966

 

$

25

 

$

398,166

 

$

(79,510

)

$

318,681

 

 

 

Temporary Equity

 

 

 

Stockholders’ (Deficit) Equity

 

 

Series A
Convertible
Preferred Stock

 

Series A-1
Convertible
Preferred Stock

 

Series A-2
Convertible
Preferred Stock

 

Series B
Convertible
Preferred Stock

 

Series C
Convertible
Preferred Stock

 

Total
Temporary

 

 

 

Common Stock

 

Additional
Paid in

 

Accumulated

 

Treasury Stock

 

Total
Stockholders’
(Deficit)

 

(in thousands) (Unaudited)

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Equity

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Shares

 

Amount

 

Equity

 

Balance at March 31, 2021

 

2,775

 

$

14,921

 

 

1,448

 

$

7,470

 

 

1,105

 

$

7,463

 

 

7,751

 

$

49,845

 

 

5,308

 

$

104,424

 

$

184,123

 

 

 

 

7,846

 

$

 

$

6,766

 

$

(138,749

)

 

636

 

$

(10,650

)

$

(142,633

)

Retroactive conversion of shares due to Business Combination

 

18,132

 

 

 

 

9,457

 

 

 

 

7,217

 

 

 

 

50,639

 

 

 

 

34,677

 

 

 

 

 

 

 

 

51,255

 

 

 

 

 

 

 

 

4,158

 

 

 

 

 

Balance at March 31, 2021, as converted

 

20,907

 

 

14,921

 

 

10,905

 

 

7,470

 

 

8,322

 

 

7,463

 

 

58,390

 

 

49,845

 

 

39,985

 

 

104,424

 

 

184,123

 

 

 

 

59,101

 

 

 

 

6,766

 

 

(138,749

)

 

4,794

 

 

(10,650

)

 

(142,633

)

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

559

 

 

 

 

174

 

 

 

 

 

 

 

 

174

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

 

 

64

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

649

 

 

 

 

 

 

 

 

649

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,190

 

 

 

 

 

 

9,190

 

Balance at June 30, 2021

 

20,907

 

$

14,921

 

 

10,905

 

$

7,470

 

 

8,322

 

$

7,463

 

 

58,390

 

$

49,845

 

 

39,985

 

$

104,424

 

$

184,123

 

 

 

 

59,660

 

$

 

$

7,653

 

$

(129,559

)

 

4,794

 

$

(10,650

)

$

(132,556

)

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Offerpad Solutions Inc. | Second Quarter 2022 Form 10-Q | 6


 

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Deficit) (continued)

 

 

 

Common Stock

 

Additional
Paid in

 

Accumulated

 

Total
Stockholders’

 

(in thousands) (Unaudited)

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

 

Balance at December 31, 2021

 

 

238,970

 

$

24

 

$

389,601

 

$

(132,056

)

$

257,569

 

Issuance of common stock upon exercise of stock options

 

 

7,993

 

 

1

 

 

4,540

 

 

 

 

4,541

 

Issuance of common stock upon vesting of restricted stock units

 

 

3

 

 

 

 

(3

)

 

 

 

(3

)

Stock-based compensation expense

 

 

 

 

 

 

4,028

 

 

 

 

4,028

 

Net income

 

 

 

 

 

 

 

 

52,546

 

 

52,546

 

Balance at June 30, 2022

 

 

246,966

 

$

25

 

$

398,166

 

$

(79,510

)

$

318,681

 

 

 

Temporary Equity

 

 

 

 

Stockholders’ (Deficit) Equity

 

 

Series A
Convertible
Preferred Stock

 

Series A-1
Convertible
Preferred Stock

 

Series A-2
Convertible
Preferred Stock

 

Series B
Convertible
Preferred Stock

 

Series C
Convertible
Preferred Stock

 

Total
Temporary

 

 

 

 

Common Stock

 

Additional
Paid in

 

Accumulated