Oppfi Inc. annual report, FY2020

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Business context and reporting period

Filing identity differs from request metadata: This is FG New America Acquisition Corp.’s Form 10-K, not an operating-company 10-K filed under OppFi Inc. It covers the fiscal year ended December 31, 2020, from the company’s June 24, 2020 inception. FG New America was a shell company/SPAC formed to pursue a business combination; it had no operating business or operating revenue in 2020.

The company completed its IPO in October 2020 and held its proceeds in trust while searching for a target. On February 9, 2021, after year-end, it signed a business combination agreement with Opportunity Financial, LLC (OppFi). The proposed combination had not closed as of this filing.

Financial results and position

  • Revenue: No operating revenue. Trust-account investment income was $5,833.
  • Profitability: Operating expenses were $191,470 and net loss was $185,637; basic and diluted loss per share was $0.03.
  • Cash flow: Cash used in operating activities was $278,454 for the inception-to-year-end period. Financing activities provided $244.8 million; cash at year-end was $1.14 million outside the trust.
  • Assets and liquidity: Total assets were $244.75 million, including $243.38 million in trust-account investments and $228,465 of prepaid expenses. The trust balance represented approximately $10.24 per public share at December 31, 2020.
  • Debt and liabilities: Total liabilities were $135,648, all current accounts payable. The company reported no long-term debt or off-balance-sheet financing arrangements. A pre-IPO sponsor promissory note was repaid at the IPO closing.
  • Equity and redemptions: $238.37 million of Class A shares were classified as temporary equity because of redemption rights. Stockholders’ equity was $6.24 million.
  • Audit: The auditor gave an unqualified opinion on the financial statements. It did not express an opinion on internal-control effectiveness.

Material changes versus the prior comparable period

No prior-year operating period is available for comparison: the company was incorporated in June 2020 and began its IPO and trust-account activity in October 2020. The principal post-year-end development was the OppFi transaction agreement announced in February 2021.

Outlook, transaction terms, and key risks

  • The proposed OppFi transaction assigns OppFi an equity value of $743 million. Assuming no public-share redemptions and subject to adjustments, the SPAC expected to own approximately 38% of OppFi units immediately after closing, excluding earnout units and warrants, while serving as OppFi’s sole manager.
  • The agreement provides for 25.5 million earnout units, subject to achievement of specified targets and potential forfeiture. It also contemplates an Up-C structure and a tax receivable agreement under which the company would pay OppFi members 90% of specified tax savings.
  • OppFi’s obligation to close is conditioned, among other things, on at least $200 million of Available Closing Date Cash, as well as stockholder approval and other customary conditions. Redemptions, transaction expenses, and OppFi cash affect closing cash; the filing does not state a final cash consideration amount.
  • The SPAC had until October 2, 2022 to complete a business combination. If it failed, public shares were to be redeemed from trust, while warrants would expire worthless. Redemptions and third-party claims could reduce cash available for the transaction or redemption.
  • Other key risks include transaction execution and approval, the minimum-cash condition, potential dilution from founder shares and warrants, conflicts of interest, limited operating history, competition for targets, COVID-19 disruption, and dependence on external financing if needed.
  • Management said it believed funds outside the trust would cover operating needs through the deadline, but cautioned that actual search, diligence, and transaction costs could exceed estimates. Sponsor or management loans were possible but not committed.

Most important facts for investors to verify

  • Confirm the issuer and filing: the document is FG New America Acquisition Corp.’s SPAC 10-K, not OppFi Inc.’s operating-company 10-K.
  • Review subsequent filings for the OppFi transaction’s closing status, final consideration, redemptions, Available Closing Date Cash, and satisfaction or waiver of the $200 million condition.
  • Examine the full transaction documents for earnout targets, exchange rights, dilution, governance, lockups, and the 90% tax receivable obligation.
  • Reconcile trust assets, redeemable shares, and cash outside trust; assess potential claims against trust funds and the sponsor’s ability to meet its indemnity.
  • Review the audited financial statements and disclosures on related-party payments, warrant terms, and the absence of an auditor attestation on internal controls.