Forge(FRGE) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Motive Capital Corp's unaudited condensed financial statements and management's discussion for the period Item 1. Condensed Financial Statements This section presents Motive Capital Corp's unaudited condensed financial statements for Q1 2021 and the prior year-end balance sheet Condensed Balance Sheets This section provides the condensed balance sheets as of March 31, 2021, and December 31, 2020 Condensed Balance Sheet Data | Metric | March 31, 2021 (Unaudited) | December 31, 2020 | | :-------------------------------- | :--------------------------- | :------------------ | | Cash | $1,230,502 | $1,674,650 | | Prepaid expenses | $552,011 | $651,605 | | Investments held in Trust Account | $414,080,084 | $414,020,525 | | Total Assets | $415,862,597 | $416,346,780 | | Accounts payable | $51,255 | $961 | | Accrued expenses | $93,450 | $415,560 | | Total current liabilities | $144,705 | $416,521 | | Deferred underwriting commissions | $14,490,000 | $14,490,000 | | Derivative warrant liabilities | $19,402,100 | $40,532,280 | | Total liabilities | $34,036,805 | $55,438,801 | | Class A ordinary shares subject to possible redemption | $376,825,790 | $355,907,970 | | Total shareholders' equity | $5,000,002 | $5,000,009 | | Total Liabilities and Shareholders' Equity | $415,862,597 | $416,346,780 | Unaudited Condensed Statement of Operations This section presents the unaudited condensed statement of operations for the three months ended March 31, 2021 Unaudited Condensed Statement of Operations Data | Metric | Three Months Ended March 31, 2021 | | :------------------------------------------------ | :-------------------------------- | | General and administrative expenses | $271,926 | | Loss from operations | $(271,926) | | Change in fair value of derivative warrant liabilities | $21,130,180 | | Gain on marketable securities, dividends and interest held in Trust Account | $59,559 | | Net income | $20,917,813 | | Basic and diluted net income per share, Class A redeemable ordinary shares | $0.00 | | Basic and diluted net income per share, non-redeemable ordinary shares | $2.02 | Unaudited Condensed Statement of Changes in Shareholders' Equity This section details the unaudited condensed statement of changes in shareholders' equity Unaudited Condensed Statement of Changes in Shareholders' Equity Data | Metric | December 31, 2020 | March 31, 2021 | | :-------------------------------- | :---------------- | :------------- | | Total Shareholders' Equity | $5,000,009 | $5,000,002 | | Net income | - | $20,917,813 | | Shares subject to possible redemption impact | - | $(20,917,820) | - The company reported a net income of $20,917,813 for the three months ended March 31, 2021, which was offset by a $20,917,820 reduction due to shares subject to possible redemption, resulting in a slight decrease in total shareholders' equity from $5,000,009 to $5,000,002[13] Unaudited Condensed Statement of Cash Flows This section outlines the unaudited condensed statement of cash flows for the three months ended March 31, 2021 Unaudited Condensed Statement of Cash Flows Data | Metric | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | | Net income | $20,917,813 | | Net cash used in operating activities | $(444,148) | | Cash - beginning of the period | $1,674,650 | | Cash - end of the period | $1,230,502 | | Change in value of Class A common shares subject to possible redemption | $20,917,820 | - Despite a net income of $20.9 million, the company experienced a net cash outflow from operating activities of $444,148, primarily due to adjustments for non-cash items like the change in fair value of derivative warrant liabilities and gain on marketable securities[15] Notes to Unaudited Condensed Financial Statements This section provides comprehensive notes on the company's organization, accounting policies, and financial instruments Note 1—Description of Organization and Business Operations This note describes Motive Capital Corp's formation as a blank check company and its operational objectives - Motive Capital Corp is a blank check company incorporated in September 2020, formed to effect a business combination[17][18] - The company completed its IPO on December 15, 2020, raising $414 million, which was placed in a Trust Account[19] - Operations are currently limited to searching for a target business, generating non-operating income from interest on Trust Account investments[21] - The company has until December 15, 2022, to consummate a Business Combination, or it will redeem 100% of public shares and liquidate[26] Selected Financial Data | Metric | March 31, 2021 | | :---------------- | :------------- | | Cash | $1.2 million | | Working Capital | $1.6 million | Note 2—Basis of Presentation and Summary of Significant Accounting Policies This note outlines the financial statement preparation basis and key accounting policies, including fair value and derivatives - The financial statements are prepared in accordance with GAAP for interim information, with the company electing the extended transition period for new accounting standards as an 'emerging growth company'[32][34][35][36] - Investments in the Trust Account are classified as trading securities and measured at fair value, consisting of U.S. government securities or money market funds[39] - Derivative instruments, including warrants and the forward purchase agreement, are recognized as liabilities at fair value and re-measured each reporting period, with changes recognized in the statement of operations[45][46] - Class A ordinary shares subject to possible redemption are classified as temporary equity, outside of shareholders' equity, due to redemption rights outside the company's control[49] - The company is an exempted Cayman Islands company and is not subject to income taxes in the Cayman Islands or the United States, resulting in a zero tax provision[52] - Net income per ordinary share is calculated using the two-class method, with warrants and the forward purchase agreement being anti-dilutive and not included in diluted EPS[53][54] Note 3—Initial Public Offering This note details the proceeds and structure of the company's Initial Public Offering - The company sold 41,400,000 Units in its IPO at $10.00 per Unit, generating $414,000,000, with each Unit including one Class A ordinary share and one-third of one redeemable Public Warrant[57] Note 4—Private Placement This note describes the private placement of warrants to the Sponsor and the use of proceeds - Simultaneously with the IPO, the Sponsor purchased 7,386,667 Private Placement Warrants at $1.50 each, totaling $11,080,000, with proceeds added to the Trust Account[58] Note 5—Related Party Transactions This note discloses transactions and agreements with the company's Sponsor and affiliates - The Sponsor holds 10,350,000 Class B ordinary shares (Founder Shares), subject to transfer restrictions until one year after a Business Combination or certain share price thresholds are met[59][61] - The Sponsor or affiliates may provide 'Working Capital Loans' to finance Business Combination costs, repayable from Trust Account proceeds if a combination closes, or convertible into warrants[62] - The company had a $300,000 unsecured promissory note with the Sponsor, of which $130,492 was borrowed and repaid in full on December 16, 2020[63] - An administrative support agreement with the Sponsor for up to $10,000 monthly fees was in place, but no fees were incurred as of March 31, 2021, as the Sponsor waived them[64] Note 6—Commitments and Contingencies This note outlines registration rights, deferred underwriting commissions, and COVID-19 impact assessment - Holders of Founder Shares, Private Placement Warrants, and Working Capital Loan warrants have registration rights for their securities[65] - Deferred underwriting commissions of $14,490,000 are payable to underwriters only upon completion of a Business Combination[67] - Management is evaluating the impact of the COVID-19 pandemic, noting potential negative effects on financial position and search for a target company, though the specific impact is not yet determinable[68] Note 7—Derivative Liabilities This note details the company's outstanding public warrants, private placement warrants, and forward purchase agreement - As of March 31, 2021, the company had 13,800,000 Public Warrants, 7,386,667 Private Placement Warrants, and a forward purchase agreement for up to 14,000,000 forward purchase units outstanding[69] - Public Warrants become exercisable 30 days after a Business Combination or one year from IPO closing, expiring five years from Business Combination completion[69] - The company may redeem Public Warrants at $0.01 per warrant if the Class A ordinary share price equals or exceeds $18.00 for 20 trading days within a 30-day period[72] - The company may also redeem Public Warrants at $0.10 per warrant if the Class A ordinary share price equals or exceeds $10.00, allowing cashless exercise prior to redemption[73] - Private Placement Warrants are identical to Public Warrants but are non-transferable/assignable for 30 days post-Business Combination and are exercisable on a cashless basis and non-redeemable as long as held by initial purchasers or permitted transferees[77] - A forward purchase agreement with sponsor affiliates commits to purchase 14,000,000 forward purchase units for $140,000,000 concurrently with a Business Combination, subject to investment committee approval and capital sufficiency[78] Note 8—Shareholders' Equity This note describes the authorized and outstanding preference, Class A, and Class B ordinary shares - The company is authorized to issue 5,000,000 preference shares, but none were issued or outstanding as of March 31, 2021, and December 31, 2020[80] - As of March 31, 2021, there were 3,717,421 Class A ordinary shares issued and outstanding (excluding 37,682,579 subject to redemption), and 10,350,000 Class B ordinary shares issued and outstanding[81][82] - Class B ordinary shares will automatically convert into Class A ordinary shares on a one-for-one basis upon consummation of a Business Combination, subject to adjustment to ensure they represent 20% of total Class A ordinary shares outstanding post-conversion[84] Note 9—Fair Value Measurements This note provides details on the fair value measurement of derivative liabilities and their impact on financial results Derivative Liability Fair Value Changes | Derivative Liability | December 31, 2020 | March 31, 2021 | Change in Fair Value | | :-------------------------------- | :------------------ | :------------- | :------------------- | | Warrant liabilities – Public | $21,390,000 | $12,144,000 | $(9,246,000) | | Warrant liabilities – Private | $11,449,330 | $6,500,270 | $(4,949,060) | | Forward purchase agreement | $7,692,950 | $757,830 | $(6,935,120) | | Total Derivative Liabilities | $40,532,280 | $19,402,100 | $(21,130,180) | - The company recognized a non-operating gain of approximately $21.1 million for the three months ended March 31, 2021, due to a decrease in the fair value of derivative liabilities[88] - Public Warrants were transferred from Level 3 to Level 1 fair value measurement in February 2021 due to active market listing, while Private Placement Warrants were transferred from Level 3 to Level 2[85][86] Note 10—Subsequent Events This note confirms no subsequent events requiring adjustment or disclosure were identified - The company did not identify any subsequent events requiring adjustment or disclosure in the unaudited condensed financial statements up to the date of issuance[90] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for Q1 2021 Overview This section provides a general overview of Motive Capital Corp's nature as a blank check company and its IPO - Motive Capital Corp is a blank check company formed in September 2020 to effect a business combination[94][95] - Its IPO in December 2020 raised $414 million, placed in a Trust Account[97] - The company has until December 15, 2022, to complete a Business Combination, after which it will liquidate and redeem public shares if unsuccessful[99] Results of Operations This section analyzes the company's financial performance, including net income and expenses, for the reporting period - For the three months ended March 31, 2021, the company reported a net income of approximately $20.9 million, primarily driven by a $21.1 million non-operating gain from the change in fair value of derivative liabilities and $60,000 in investment income from the Trust Account, partially offset by $272,000 in general and administrative expenses[101] - The company's activity has been limited to searching for a prospective initial Business Combination, and it will not generate operating revenues until after its completion[100] Liquidity and Capital Resources This section discusses the company's cash position, working capital, and ability to meet its financial obligations Selected Financial Data | Metric | March 31, 2021 | | :---------------- | :------------- | | Cash | $1.2 million | | Working Capital | $1.6 million | - Management believes the company has sufficient working capital and borrowing capacity to meet its needs through the earlier of a Business Combination or one year from filing, utilizing funds outside the Trust Account for operational expenses and due diligence[104] - The Sponsor or affiliates may provide 'Working Capital Loans' to finance transaction costs, repayable from Trust Account proceeds upon Business Combination completion or convertible into warrants[103] Contractual Obligations This section outlines the company's contractual commitments and long-term liabilities - The company reported no long-term debt, capital lease, operating lease, purchase obligations, or long-term liabilities as of March 31, 2021[106] Critical Accounting Policies This section details the significant accounting policies and estimates used in preparing the financial statements - The company's critical accounting policies involve estimates and judgments, particularly regarding the fair value of financial instruments and accrued expenses[107] - Derivative instruments (warrants and forward purchase agreements) are recognized as liabilities at fair value and re-measured each period, with changes impacting the statement of operations[108][109] - Class A ordinary shares subject to possible redemption are classified as temporary equity due to redemption rights outside the company's control[110] - Net income per ordinary share is computed using the two-class method, with warrants and the forward purchase agreement being anti-dilutive[112][113] - The company early adopted ASU 2020-06 on January 1, 2021, which simplifies accounting for convertible instruments, with no impact on financial position, results of operations, or cash flows[114] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of March 31, 2021, the company did not have any off-balance sheet arrangements[116] JOBS Act This section discusses the company's status as an 'emerging growth company' and its election regarding accounting standards - The company qualifies as an 'emerging growth company' under the JOBS Act and has elected to delay the adoption of new or revised accounting standards, which may affect comparability with other public companies[117] - The company is evaluating other reduced reporting requirements provided by the JOBS Act, including exemptions from auditor attestation on internal controls, certain executive compensation disclosures, and PCAOB requirements[118] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Motive Capital Corp is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[119] Item 4. Controls and Procedures This section addresses the effectiveness of disclosure controls and changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section evaluates the effectiveness of the company's disclosure controls and procedures, noting any material weaknesses - The company's disclosure controls and procedures were not effective as of March 31, 2021, due to a material weakness in internal control over financial reporting, as described in its Annual Report on Form 10-K/A[120] - Despite the material weakness, management performed additional analysis to ensure the unaudited interim financial statements were prepared in accordance with GAAP and fairly present the financial position, results of operations, and cash flows[120] Changes in Internal Control over Financial Reporting This section reports on any changes in internal control over financial reporting during the period - No change in internal control over financial reporting occurred during the three months ended March 31, 2021, that materially affected, or is reasonably likely to materially affect, internal control over financial reporting[122] - Management has implemented remediation steps to address the material weakness related to the presentation of warrants as equity instead of liability and enhanced supervisory review of accounting procedures[122] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Motive Capital Corp reported no legal proceedings as of the filing date - There are no legal proceedings[125] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K/A - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K/A filed on June 2, 2021[127] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section details the use of proceeds from the company's Initial Public Offering and Private Placement - The IPO, declared effective on December 10, 2020, involved the sale of 41,400,000 Units at $10.00 per Unit, generating gross proceeds of $414,000,000[128] - A total of $414,000,000 from the net proceeds of the IPO and Private Placement was placed in a trust account[129] - Transaction costs amounted to approximately $23,700,000, including underwriting fees and deferred underwriting fees[129] - There has been no material change in the planned use of proceeds as described in the company's registration statement on Form S-1[129] Item 3. Defaults Upon Senior Securities Motive Capital Corp reported no defaults upon senior securities - There are no defaults upon senior securities[130] Item 4. Mine Safety Disclosures This item is not applicable to Motive Capital Corp - This item is not applicable[131] Item 5. Other Information Motive Capital Corp reported no other information required under this item - There is no other information to report[132] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL data files - The exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) and 18 U.S.C. Section 1350[133][136] - XBRL Instance Document, Taxonomy Extension Schema Document, Calculation Linkbase Document, Definition Linkbase Document, Label Linkbase Document, and Presentation Linkbase Document are included as exhibits[133][138] SIGNATURES This section contains the official signatures for the report - The report was signed on behalf of Motive Capital Corp by Blythe Masters, Chief Executive Officer, on June 7, 2021[140][141]