(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

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.

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 ~~December 4, 2020, 40,250,000~~July 26, 2023, there were 27,225,511 shares of Offerpad’s Class A common stock ~~par value $0.0001 per share, and 10,062,500 shares of Class B common stock, par value $0.0001 per share, were issued and outstanding, respectively.~~outstanding.

~~The accompanying notes are an integral part~~Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Offerpad,” the “Company,” “we,” “us,” and “our,” and similar references refer to the business and operations of ~~these unaudited condensed financial statements.~~

~~The accompanying notes are an integral part~~Offerpad Solutions Inc. and its consolidated subsidiaries following the consummation of ~~these unaudited condensed financial statements.~~

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

~~Note 1—Description of organization,~~ business ~~operations and basis of presentation~~

combination (the “Business Combination”) with Supernova Partners Acquisition Company, Inc. ~~(the “Company”~~(“Supernova”) is a blank check company incorporated in Delaware on August 31, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from August 31, 2020 (inception) through September 30, 2020 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is Supernova Partners LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on October 20, 2020. On October 23, 2020, the Company consummated its Initial Public Offering of 40,250,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 5,250,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $402.5 million, and incurring offering costs of approximately $22.8 million, inclusive of approximately $14.1 million in deferred underwriting commissions (Note 5).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,700,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $10.1 million (Note 4).

Upon the closing of the Initial Public Offering and the Private Placement, $402.5 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding any deferred underwriters fees and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

The Company will provide the holders (the “Public Stockholders”) of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Initial Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, subject to applicable law and stock exchange

listing requirements. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per- share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination only if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination or don’t vote at all. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

The Certificate of Incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor and the Company’s officers and directors (the “initial stockholders”) will agree not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to allow redemptions in connection with its initial Business Combination or redeem 100% of the Public Shares if the Company does not complete a Business Combination within the initial Combination Period (as defined below) or with respect to any other provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 23, 2022 (as such period may be extended by the Company’s stockholders in accordance with the Certificate of Incorporation, the “Combination Period”), the Company will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

The initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the

other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. 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 only $10.00 or potentially less. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”OfferPad, Inc. (“Old Offerpad”)~~, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share~~ and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) not will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Affiliates of the Company’s Co-Chairs (the “forward purchasers”) have entered into forward purchase agreements with the Company which provides for the purchase by the forward purchasers of shares of Class A common stock in an aggregate share amount equal to 5,000,000 shares of Class A common stock, plus an aggregate of 1,666,667 warrants exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment, for an aggregate purchase price of $50,000,000, or $10.00 for one share of Class A common stock and one-third of one warrant, in a private placement to occur concurrently with the closing of the initial business combination. The warrants to be issued as part of the forward purchase agreements will be identical to the warrants sold as part of the units in the initial public offering. The obligations under the forward purchase agreements do not depend on whether any shares of Class A common stock are redeemed by the Company’s public stockholders.

The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the period from August 31, 2020 (inception) through September 30, 2020 are not necessarily indicative of the results that may be expected through December 31, 2020.

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 8-K and the final prospectus filed by the Company with the SEC on October 29, 2020 and October 22, 2020, respectively.

~~As of October 23, 2020, the Company had approximately $1.8 million in cash, and working capital of approximately $1.5 million (not taken into account tax obligations).~~

Prior to September 30, 2020, the Company’s liquidity needs were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering costs on behalf of the Company in exchange for issuance of Founders Shares (as defined in Note 4), and loan proceeds from the Sponsor of approximately $99,000 under the Note (Note 4). Subsequent to September 30, 2020, the Company’s liquidity has been satisfied with additional loan from the net proceeds of approximately $84,000, for a total of approximately $183,000 under the Note, and the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. The Company repaid the Note in full on October 23, 2020.

~~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, the Company will be using the funds held outside of the Trust Account for paying 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.

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000. At October 23, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account.

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Deferred offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related to the Initial Public Offering and that were charged to stockholders’ equity upon the completion of the Initial Public Offering in October 2020.

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares at September 30, 2020 were reduced for the effect of an aggregate of 1,312,500 shares of common stock that are subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Notes 4 and 6). At September 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented. The underwriter exercised its over-allotment option in full on October 23, 2020; thus, these 1,312,500 shares of Class B common stock were no longer subject to forfeiture.

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were deemed immaterial as of September 30, 2020.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

On October 23, 2020, the Company consummated its Initial Public Offering of 40,250,000 Units, including 5,250,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $402.5 million, and incurring offering costs of approximately $22.8 million, inclusive of approximately $14.1 million in deferred underwriting commissions.

Each Unit consists of one share of Class A common stock, and one-third of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).

On September 9, 2020, the Sponsor paid $25,000 to cover for certain offering costs on behalf of the Company in exchange for issuance of 11,500,000 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”). On September 14, 2020, the Company effectuated an 0.75-for-1 reverse split of the Founder Shares, resulting in an aggregate outstanding amount of 8,625,000 Founder Shares. On October 20, 2020, the Company effectuated a 6-for-7 stock split of the founder shares, resulting in an aggregate outstanding amount of

10,062,500 Founder Shares (see Note 7). All shares and associated amounts have been adjusted to reflect the stock splits. The initial stockholders agreed to forfeit, after giving effect to the stock split that occurred on October 20, 2020, up to 1,312,500 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter exercised its over-allotment option in full on October 23, 2020; thus, these 1,312,500 Founder Shares were no longer subject to forfeiture.

The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (1) one year after the completion of the initial Business Combination and (2) the date on which the Company consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction after the initial Business Combination that results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last reported sale price of the common stock shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the lock-up.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,700,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $10.1 million.

Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash (except in certain limited circumstances) and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.

The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

On September 9, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This loan is non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed approximately $183,000 under the Note and fully repaid the Note in full on October 23, 2020.

In addition, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital Loans.

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or approximately $8.1 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $14.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions.

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.

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Class A Common Stock—The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of October 23, 2020,~~ ~~there were no shares of Class A common stock issued or outstanding.~~

~~Class B Common Stock~~—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. On September 9, 2020, the Company issued 11,500,000 shares of Class B common stock. On September 14, 2020, the Company effectuated an 0.75-for-1 reverse split of the Founder Shares, resulting in an aggregate outstanding amount of 8,625,000 Founder Shares. On October 20, 2020, the Company effectuated a 6-for-7 stock split of the founder shares, resulting in an aggregate outstanding amount of 10,062,500 Founder Shares. All shares and associated amounts have been adjusted to reflect the stock splits. Of these, up to 1,312,500 shares of Class B common stock are subject to forfeiture, to the Company by the initial stockholders for no consideration to the extent that the underwriter’s over-allotment option is not exercised in full or in part, so that the number of shares of Class B common stock would collectively equal 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. The underwriter exercised its over-allotment option in full on October 23, 2020; thus, these 1,312,500 shares of Class B common stock were no longer subject to forfeiture.

~~Only holders of Class B common stock will have the right to elect directors or remove directors~~consolidated subsidiaries prior to the ~~completion of the initial~~ Business Combination. These provisions in the amended and restated certificate of incorporation may only be amended by a resolution passed by the holders of a majority of the Class B common stock. Holders of the Class A common stock and holders of the Class B common stock of record are entitled to one vote for each share held on all other matters to be voted on by stockholders, including any vote in connection with the initial Business Combination, and vote together as a single class, except as required by law or the applicable rules of the NYSE.

The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to increase in respect of the issuance of certain securities, as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amount issued in the Initial Public Offering and related to the closing of the initial Business

Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the aggregate number of all shares of common stock outstanding upon the completion of the Initial Public Offering, plus the aggregate number of shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (net of the number of shares of Class A common stock redeemed in connection with the initial Business Combination), excluding the forward purchase securities and any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor, an affiliate of our sponsor or any of the Company’s officers or director.

~~Preferred Stock~~—The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2020, there were no shares of preferred stock issued or outstanding.

~~Warrants~~—Public Warrants may only be exercised in whole and only for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The warrants have an exercise price of $11.50 per share, subject to adjustments. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities (excluding the potential forward purchase securities as described in the prospectus) for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume-weighted average trading price of the Class A common stock during the 10-trading day period starting on the trading day after the day on which the Company consummated the initial business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption of warrants when the price per

share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees, except in certain limited circumstances. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

~~Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00:~~ ~~Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):~~

The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act.

~~Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00:~~ ~~Once the warrants become exercisable, the Company may redeem the outstanding warrants:~~

The “fair market value” of Class A common stock shall mean the volume-weighted average price of Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment).

In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

The Company evaluated subsequent events and transactions that occurred up to the date unaudited condensed financial statements were available to be issued. Based upon this review, the Company determined that, except as disclosed above and in Note 3 and 4, there have been no events that have occurred that would require adjustments to the disclosures in the unaudited condensed financial statements.

References in this report (the “Quarterly Report”) to the “Company,” “Supernova Partners Acquisition Company, Inc.,” “Supernova,” “our,” “us” or “we” refer to Supernova Partners Acquisition Company, Inc. 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 Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

This Quarterly Report on Form 10-Q includes ~~“forward-looking statements” within~~statements that express Offerpad’s 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. We intend such forward-looking statements to be covered by the ~~meaning of~~safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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. These forward-looking~~events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements ~~are subject to~~involve known and unknown risks, uncertainties and ~~assumptions about us~~other important factors 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 the forward-looking statements, including, but not limited to:

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, 2022.

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.

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

Note 1. Nature of Operations and Significant Accounting Policies

Description of Business

Offerpad was founded in 2015 and together with its subsidiaries, is a customer-centric, home buying and selling platform that provides customers with the ultimate home transaction experience, offering convenience, control, certainty, and value. The Company is headquartered in Chandler, Arizona and operates in over 1,700 cities and towns in 25 metropolitan markets across 15 states as of June 30, 2023.

Basis of Presentation and Interim Financial Information

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to GAAP and SEC rules and regulations. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by GAAP for complete financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022 included in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC on February 28, 2023.

The accompanying financial information reflects all adjustments which are, in the opinion of the Company’s management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Reverse Stock Split

On June 8, 2023, the Company’s stockholders approved a reverse stock split of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and Class B common stock, par value $0.0001 per share (“Class B Common Stock” and together with Class A Common Stock, “Common Stock”) at a ratio ranging from any whole number between 1-for-10 and 1-for-60, as determined by the Company’s Board of Directors (the “Board”) in its discretion. Following the Company’s 2023 annual meeting of stockholders (the “Annual Meeting”), the Board approved a 1-for-15 reverse stock split (the “Reverse Stock Split”) of the Company’s Common Stock. On June 12, 2023, the Company filed a certificate of amendment to its Third Restated Certificate of Incorporation (as amended from time to time, the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, and the Company’s Class A Common Stock began trading on a split-adjusted basis at market open on June 13, 2023 under the existing symbol “OPAD”.

As a result of the Reverse Stock Split, every 15 shares of the Company’s Common Stock issued and outstanding as of the effective time of the Reverse Stock Split were automatically converted into one share of Common Stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, each stockholder received a cash payment in lieu thereof at a price equal to the fraction of one share to which the stockholder would otherwise be entitled multiplied by the closing price per share of Class A Common Stock (as adjusted for the Reverse Stock Split) on the New York Stock Exchange (“NYSE”) on June 12, 2023, the last trading day immediately preceding the effective time of the Reverse Stock Split.

Further, proportionate adjustments were made to the number of shares of Common Stock underlying the Company’s outstanding equity awards and the number of shares issuable under the Company’s equity incentive plans and existing agreements, as well as the exercise price and/or any stock price goals, as applicable. The Reverse Stock Split did not affect the number of authorized shares of Common Stock or the par value of the Common Stock. The Company’s publicly traded warrants continue to be traded on the NYSE under the symbol “OPADWS”. However, pursuant to the terms of the applicable warrant agreement, the number of shares of Class A Common Stock issuable on exercise of each warrant was proportionately decreased. Specifically, following effectiveness of the Reverse Stock Split, every 15 shares of Class A Common Stock that may be purchased pursuant to the exercise of public warrants now represents one share of Class A Common Stock that may be purchased pursuant to such warrants. Accordingly, for the Company’s warrants trading under the symbol “OPADWS”, every 15 warrants are exercisable for one share of Class A Common Stock at an exercise price of $172.50 per share.

All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 9

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Significant estimates include those related to the net realizable value of real estate inventory, among others. Actual results could differ from those estimates.

Principles of Consolidation

The Company’s condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company, its wholly owned operating subsidiaries and variable interest entities where the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

Real Estate Inventory

Real estate inventory consists of acquired homes and is stated at the lower of cost or net realizable value, with cost and net realizable value determined by the specific identification of each home. Costs include initial purchase costs and renovation costs, as well as holding costs and interest incurred during the renovation period, prior to the listing date. Selling costs, including commissions and holding costs incurred after the listing date, are expensed as incurred and included in sales, marketing and operating expenses.

The Company reviews real estate inventory for valuation adjustments on a quarterly basis, or more frequently if events or changes in circumstances indicate that the carrying value of real estate inventory may not be recoverable. The Company evaluates real estate inventory for indicators that net realizable value is lower than cost at the individual home level. The Company generally considers multiple factors in determining net realizable value for each home, including recent comparable home sale transactions in the specific area where the home is located, the residential real estate market conditions in both the local market in which the home is located and in the U.S. in general, the impact of national, regional or local economic conditions and expected selling costs. When evidence exists that the net realizable value of real estate inventory is lower than its cost, the difference is recognized as a real estate inventory valuation adjustment in cost of revenue and the related real estate inventory is adjusted to its net realizable value.

For individual homes or portfolios of homes under contract to sell as of the real estate inventory valuation assessment date, if the carrying value exceeds the contract price less expected selling costs, the carrying value of these homes are adjusted to the contract price less expected selling costs. For all other homes, if the carrying value exceeds the expected sale price less expected selling costs, the carrying value of these homes are adjusted to the expected sale price less expected selling costs. Changes in the Company’s pricing assumptions may lead to a change in the outcome of the real estate inventory valuation analysis, and actual results may differ from the Company’s assumptions.

The Company recorded real estate inventory valuation adjustments of $0.2 million and $21.2 million during the three months ended June 30, 2023 and 2022, respectively, and $7.5 million and $22.2 million during the six months ended June 30, 2023 and 2022, respectively. Refer to Note 3. Real Estate Inventory, for further details.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 10

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Derivative Financial Instruments

From time to time, the Company uses derivative financial instruments to manage risks related to its ongoing business operations. The Company’s derivative financial instruments are not designated as hedging instruments, but rather, are used as economic hedges to manage risks that are principally associated with interest rate fluctuations. The Company records these derivatives that are not designated as accounting hedges at fair value in Prepaid expenses and other current assets in the condensed consolidated balance sheets, and changes in fair value are recognized in Other income, net in the condensed consolidated statements of operations.

Refer to Note 4. Derivative Financial Instruments, for further details.

Recent Accounting Standards

The Company has adopted all applicable accounting standards that are in effect as of June 30, 2023. The Company does not believe that there are any other new accounting standards that have been issued, but not yet adopted that might have a material impact on its condensed consolidated financial statements.

Note 2. Business Combination

On September 1, 2021, the Company was formed through a business combination (the “Business Combination”) with Supernova Partners Acquisition Company, Inc. (“Supernova”). In connection with the closing of the Business Combination, Supernova changed its name to Offerpad Solutions Inc.

At the closing of the Business Combination, each share of common stock and preferred stock of Old Offerpad that was issued and outstanding immediately prior to the effective time of the Business Combination (other than excluded shares as contemplated by the merger agreement) was cancelled and converted into the right to receive shares of Offerpad Solutions Inc. common stock.

We accounted for the Business Combination as a reverse recapitalization whereby Old Offerpad was determined as the accounting acquirer and Supernova as the accounting acquiree. Accordingly, the Business Combination was treated as the equivalent of Old Offerpad issuing stock for the net assets of Supernova, accompanied by a recapitalization. The net assets of Supernova are stated at historical cost, with no goodwill or other intangible assets recorded.

Upon the closing of the Business Combination, Offerpad Solutions received total gross proceeds of $284.0 million. Total transaction costs were $51.2 million, which principally consisted of advisory, legal and other professional fees.

Note 3. Real Estate Inventory

The components of real estate inventory, net of applicable lower of cost or net realizable value adjustments, consist of the following as of the respective period ends:


	June 30,		December 31,
($ in thousands)	2023		2022
Homes preparing for and under renovation	$	97,832	$	54,499
Homes listed for sale		57,213		440,862
Homes under contract to sell		56,074		169,336
Real estate inventory	$	211,119	$	664,697

Note 4. Derivative Financial Instruments

During the six months ended June 30, 2023, the Company entered into derivative arrangements pursuant to which the Company paid a cumulative $1.9 million to acquire options on U.S. Treasury futures. These options provide the Company with the right, but not the obligation, to purchase U.S. Treasury futures at a predetermined notional amount and stated term in the future. The majority of the outstanding options mature in September 2023.

The Company recorded the $1.9 million premiums paid for the derivative instruments as derivative assets on the date the respective derivative arrangement was executed. During the three and six months ended June 30, 2023, the Company recorded changes in the fair value of the derivative instruments of ($0.1) million and ($0.7) million, respectively, in Other income, net in the condensed consolidated statements of operations. As of June 30, 2023, the fair value of the derivative instruments was $1.2 million and the gross notional amount of the outstanding derivative instruments was $157.8 million.

Note 5. Property and Equipment

Property and equipment consist of the following as of the respective period ends:


	June 30,			December 31,
($ in thousands)	2023			2022
Rooftop solar panel systems	$	5,075		$	5,075
Leasehold improvements		1,130			1,087
Office equipment and furniture		889			736
Software systems		386			386
Computers and equipment		265			265
Construction in progress		—			136
Property and equipment, gross		7,745			7,685
Less: accumulated depreciation		(2,871	)		(2,491	)
Property and equipment, net	$	4,874		$	5,194

Depreciation expense totaled $0.2 million during each of the three months ended June 30, 2023 and 2022, respectively, and $0.4 million and $0.3 million during the six months ended June 30, 2023 and 2022, respectively.

Note 6. Leases

The Company’s operating lease arrangements consist of its corporate headquarters in Chandler, Arizona and field office facilities in most of the metropolitan markets in which the Company operates in the United States. These leases typically have original lease terms of 1 year to 6 years, and some leases contain multiyear renewal options. The Company does not have any finance lease arrangements.

The Company’s operating lease costs are included in operating expenses in the accompanying condensed consolidated statements of operations. During the three months ended June 30, 2023 and 2022, operating lease costs were $0.6 million and $0.5 million, respectively, and variable and short-term lease costs were less than $0.1 million and $0.1 million, respectively. During the six months ended June 30, 2023 and 2022, operating lease cost was $1.2 million and $0.9 million, respectively, and variable and short-term lease costs were less than $0.1 million and $0.2 million, respectively.

Cash payments for amounts included in the measurement of operating lease liabilities were $0.6 million and $0.5 million, during the three months ended June 30, 2023 and 2022, respectively, and $1.2 million and $0.9 million during the six months ended June 30, 2023 and 2022, respectively. There were no right-of-use assets obtained in exchange for new or acquired operating lease liabilities during both of the three and six months ended June 30, 2023. Right-of-use assets obtained in exchange for new or acquired operating lease liabilities were $0.4 million and $1.7 million during the three and six months ended June 30, 2022, respectively.

As of June 30, 2023 and December 31, 2022, the Company’s operating leases had a weighted-average remaining lease term of 2.2 years and 2.7 years, respectively, and a weighted-average discount rate of 4.3% and 4.2%, respectively.

The Company’s operating lease liability maturities as of June 30, 2023 are as follows:


($ in thousands)
Remainder of 2023	$	1,239
2024		2,373
2025		1,103
2026		269
2027		79
2028		—
Thereafter		—
Total future lease payments		5,063
Less: Imputed interest		(222	)
Total lease liabilities	$	4,841

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 12

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company’s operating lease right-of-use assets and operating lease liabilities, and the associated financial statement line items, are as follows as of the respective period ends:


		June 30,		December 31,
($ in thousands)	Financial Statement Line Items	2023		2022
Right-of-use assets	Other non-current assets	$	4,415	$	5,469
Lease liabilities:
Current liabilities	Accrued and other current liabilities		2,298		2,264
Non-current liabilities	Other long-term liabilities		2,543		3,689
Total lease liabilities		$	4,841	$	5,953

Note 7. Accrued and Other Liabilities

Accrued and other current liabilities consist of the following as of the respective period ends:


	June 30,		December 31,
($ in thousands)	2023		2022
Payroll and other employee related expenses	$	5,164	$	10,670
Marketing		4,362		4,161
Home renovation		2,726		3,168
Operating lease liabilities		2,298		2,264
Legal and professional obligations		1,445		1,035
Interest		1,112		4,360
Other		2,165		2,594
Accrued and other current liabilities	$	19,272	$	28,252

The Company incurred advertising expenses of $10.9 million and $16.2 million during the three months ended June 30, 2023 and 2022, respectively, and $18.9 million and $30.9 million during the six months ended June 30, 2023 and 2022, respectively.

Other long-term liabilities as of June 30, 2023 and December 31, 2022 consist of the non-current portion of our operating lease liabilities.

Note 8. Credit Facilities and Other Debt

The carrying value of the Company’s credit facilities and other debt consists of the following as of the respective period ends:


	June 30,			December 31,
($ in thousands)	2023			2022
Credit facilities and other debt, net
Senior secured credit facilities with financial institutions	$	151,714		$	471,860
Senior secured credit facility with a related party		11,761			17,398
Senior secured debt - other		694			89,024
Mezzanine secured credit facilities with financial institutions		11,722			49,626
Mezzanine secured credit facilities with a related party		17,013			42,778
Warehouse lending facility with a related party		1,152			—
Debt issuance costs		(2,814	)		(4,621	)
Total credit facilities and other debt, net		191,242			666,065
Current portion - credit facilities and other debt, net
Total credit facilities and other debt, net		161,316			605,889
Total credit facilities and other debt - related party		29,926			60,176
Total credit facilities and other debt, net	$	191,242		$	666,065

The Company utilizes inventory financing facilities consisting of senior secured credit facilities, mezzanine secured credit facilities and other senior secured borrowing arrangements to provide financing for the Company’s real estate inventory purchases and renovation. Borrowings under the Company’s credit facilities and other debt are classified as current liabilities

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 13

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

on the accompanying condensed consolidated balance sheets as amounts drawn to purchase and renovate homes are required to be repaid as the related real estate inventory is sold, which is expected to be within 12 months.

As of June 30, 2023, the Company had total borrowing capacity of $1,557.5 million under its senior secured credit facilities and mezzanine secured credit facilities, of which $627.5 million was committed. Any borrowings above the committed amounts are subject to the applicable lender’s discretion.

Under the Company’s senior secured credit facilities and mezzanine secured credit facilities, amounts can be borrowed, repaid and borrowed again during the revolving period. The borrowing capacity is generally available until the end of the applicable revolving period as reflected in the tables below. Outstanding amounts drawn under each senior secured credit facility and mezzanine secured credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default or other mandatory repayment event.

The Company’s senior secured credit facilities and mezzanine secured credit facilities have aggregated borrowing bases, which increase or decrease based on the cost and value of the properties financed under a given facility and the time that those properties are in the Company’s possession. When the Company resells a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities. The borrowing base for a given facility may be reduced as properties age beyond certain thresholds or the performance of the properties financed under that facility declines, and any borrowing base deficiencies may be satisfied through contributions of additional properties or partial repayment of the facility.

Senior Secured Credit Facilities

The following summarizes certain details related to the Company’s senior secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity						Outstanding		Weighted- Average Interest			End of Revolving / Withdrawal	Final Maturity
As of June 30, 2023	Committed		Uncommitted		Total		Amount		Rate			Period	Date
Senior financial institution 1	$	200,000	$	200,000	$	400,000	$	87,971		7.53	%	June 2025	June 2025
Senior financial institution 2		100,000		100,000		200,000		61,527		7.22	%	September 2023	March 2024
Senior financial institution 3		125,000		375,000		500,000		—		7.09	%	December 2023	December 2023
Related party		50,000		25,000		75,000		11,761		9.76	%	March 2024	September 2024
Senior financial institution 4		30,000		45,000		75,000		2,216		7.74	%	August 2024	February 2025
Senior secured credit facilities	$	505,000	$	745,000	$	1,250,000	$	163,475


	Borrowing Capacity						Outstanding		Weighted- Average Interest
As of December 31, 2022	Committed		Uncommitted		Total		Amount		Rate
Senior financial institution 1	$	300,000	$	300,000	$	600,000	$	228,823		4.74	%
Senior financial institution 2		200,000		200,000		400,000		123,478		4.11	%
Senior financial institution 3		125,000		375,000		500,000		119,559		4.48	%
Related party		50,000		25,000		75,000		17,398		6.46	%
Senior secured credit facilities	$	675,000	$	900,000	$	1,575,000	$	489,258

As of June 30, 2023, the Company had five senior secured credit facilities, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock. Borrowings under the senior secured credit facilities accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate, plus a margin which varies by facility. The Company may also pay fees on its senior secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity, as defined in the respective credit agreements.

Borrowings under the Company’s senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against the Company with limited exceptions. The Company has, however, provided limited non-recourse carve-out guarantees under its senior and mezzanine secured credit facilities for certain of the SPEs’ obligations in situations involving “bad acts” by an Offerpad entity and certain other limited circumstances that are generally under the Company’s control. Each senior secured facility contains eligibility requirements that govern whether a property can be financed.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 14

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Mezzanine Secured Credit Facilities

The following summarizes certain details related to the Company’s mezzanine secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity						Outstanding		Weighted- Average Interest			End of Revolving / Withdrawal	Final Maturity
As of June 30, 2023	Committed		Uncommitted		Total		Amount		Rate			Period	Date
Related party facility 1	$	65,000	$	32,500	$	97,500	$	14,324		11.00	%	June 2024	June 2024
Mezzanine financial institution 1		22,500		22,500		45,000		11,722		12.50	%	September 2023	March 2024
Mezzanine financial institution 2		—		112,500		112,500		—		9.50	%	December 2023	December 2023
Related party facility 2		35,000		17,500		52,500		2,689		13.00	%	March 2024	September 2024
Mezzanine secured credit facilities	$	122,500	$	185,000	$	307,500	$	28,735


	Borrowing Capacity						Outstanding		Weighted- Average Interest
As of December 31, 2022	Committed		Uncommitted		Total		Amount		Rate
Related party facility 1	$	65,000	$	32,500	$	97,500	$	38,937		11.00	%
Mezzanine financial institution 1		45,000		45,000		90,000		31,239		9.55	%
Mezzanine financial institution 2		18,387		94,113		112,500		18,387		9.50	%
Related party facility 2		35,000		17,500		52,500		3,841		11.05	%
Mezzanine secured credit facilities	$	163,387	$	189,113	$	352,500	$	92,404

As of June 30, 2023, the Company had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock. Borrowings under the Company’s mezzanine secured credit facilities accrue interest at fixed rates, which vary by facility and range from 9.5% to 13.0%. The Company may also pay fees on its mezzanine secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity, as defined in the respective credit agreements.

Borrowings under the Company’s mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse to Offerpad with limited exceptions.

The Company’s mezzanine secured credit facilities are structurally and contractually subordinated to the related senior secured credit facilities.

Maturities

As of June 30, 2023, certain of the Company’s senior secured credit facilities and mezzanine secured credit facilities mature within the next twelve months following the date these condensed consolidated financial statements are issued. The Company expects to enter into new financing arrangements or amend existing arrangements to meet its obligations as they come due, which the Company believes is probable based on its history of prior credit facility renewals. The Company believes cash on hand, together with proceeds from the resale of homes and cash from future borrowings available under each of the Company’s existing credit facilities or the entry into new financing arrangements will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these condensed consolidated financial statements are issued.

Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities

The secured credit facilities include customary representations and warranties, covenants and events of default. Financed properties are subject to customary eligibility criteria and concentration limits. The terms of these facilities and related financing documents require the Company to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth).

As of June 30, 2023, the Company was in compliance with all covenants and no event of default had occurred.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 15

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Senior Secured Debt - Other

As of June 30, 2023, the Company has a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. As of June 30, 2023 and December 31, 2022, the weighted-average interest rates under the Company’s other senior secured debt were 11.26% and 7.23%, respectively.

Warehouse Lending Facility with a Related Party

The Company has a warehouse lending facility with a related party that is used to fund mortgage loans the Company originates and then sells to third-party mortgage servicers. As of June 30, 2023, the outstanding balance on the warehouse lending facility was $1.2 million. Refer to Note 16. Related-Party Transactions for further details.

Note 9. Warrant Liabilities

Prior to the Reverse Stock Split, the Company had public warrants outstanding to purchase a total of 16.1 million shares of Class A common stock and private placement warrants outstanding to purchase a total of 5.7 million shares of Class A common stock, with each whole warrant being exercisable to purchase one share of Class A common stock at $11.50 per share.

As a result of the Reverse Stock Split, and pursuant to the terms of the applicable warrant agreement, the number of shares of Class A Common Stock issuable on exercise of each warrant was proportionately decreased. Specifically, following effectiveness of the Reverse Stock Split, every 15 shares of Class A Common Stock that may be purchased pursuant to the exercise of warrants now represents one share of Class A Common Stock that may be purchased pursuant to such warrants. Accordingly, every 15 warrants are exercisable for one share of Class A Common Stock at an exercise price of $172.50 per share.

Public Warrants

The public warrants became exercisable on October 23, 2021. A holder may exercise its warrants only for a whole number of shares of Class A common stock. The public warrants will expire September 1, 2026, or earlier upon redemption or liquidation. Pursuant to the terms of the warrant agreements, the Company may call the public warrants for redemption for cash or redeem the outstanding warrants for shares of Class A common stock under certain scenarios.

Private Placement Warrants

The private placement warrants are not redeemable by the Company so long as they are held by the Supernova Sponsor or its permitted transferees, except in certain limited circumstances. The Supernova Sponsor, or its permitted transferees, has the option to exercise the private placement warrants on a cashless basis and the Supernova Sponsor and its permitted transferees has certain registration rights related to the private placement warrants (including the shares of Class A common stock issuable upon exercise of the private placement warrants). Except as described in this section, the private placement warrants have terms and provisions that are identical to those of the public warrants. If the private placement warrants are held by holders other than the Supernova Sponsor or its permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by the holders on the same basis as the public warrants.

Note 10. Fair Value Measurements

The fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and certain prepaid and other current assets and accrued expenses approximate carrying values because of their short-term nature. The Company’s credit facilities are carried at amortized cost and the carrying value approximates fair value because of their short-term nature.

The Company’s assets and liabilities that are measured at fair value on a recurring basis consist of the following (in thousands):


As of June 30, 2023	Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivative financial instrument	$	1,157	$	—	$	—
Liabilities
Public warrant liabilities	$	322	$	—	$	—
Private placement warrant liabilities	$	—	$	—	$	171

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 16

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


As of December 31, 2022	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Public warrant liabilities	$	343	$	—	$	—
Private placement warrant liabilities	$	—	$	—	$	196

Derivative Financial Instrument

The fair value of the Company’s options on U.S. Treasury futures is determined based on the quoted market price of such options on the valuation date.

Public Warrants

The public warrants were initially recognized as a liability in connection with the Business Combination on September 1, 2021. The fair value of the public warrants is estimated based on the quoted market price of such warrants on the valuation date. The Company recorded changes in the fair value of the public warrants of ($0.3) million and ($6.9) million during the three months ended June 30, 2023 and 2022, respectively, and ($0.02) million and ($10.4) million during the six months ended June 30, 2023 and 2022, respectively. These changes are recorded in Change in fair value of warrant liabilities in our Condensed Consolidated Statements of Operations.

Private Placement Warrants

The private placement warrants were initially recognized as a liability in connection with the Business Combination on September 1, 2021. The following summarizes the changes in the Company’s private placement warrant liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the respective periods:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands)	2023			2022			2023			2022
Beginning balance	$	285		$	7,530		$	196		$	9,705
Change in fair value of private placement warrants included in net (loss) income		(114	)		(5,633	)		(25	)		(7,808	)
Ending balance	$	171		$	1,897		$	171		$	1,897

The Company generally uses the Black-Scholes-Merton option-pricing model to determine the fair value of the private placement warrants, with assumptions including expected volatility, expected life of the warrants, associated risk-free interest rate, and expected dividend yield.

There were no transfers between Levels 1, 2, and 3 during the three and six months ended June 30, 2023 and 2022.

Note 11. Stockholders’ Equity

Authorized Capital Stock

Prior to the Annual Meeting on June 8, 2023, the Company’s Certificate of Incorporation authorized the issuance of 2,370,000,000 shares of capital stock, which consisted of 2,000,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock, 250,000,000 shares of Class C common stock and 100,000,000 shares of preferred stock.

On January 31, 2023, Brian Bair, the Chief Executive Officer and Founder of the Company, notified the Board of his intention to convert all 14,816,236 shares of Class B common stock beneficially owned by him to an equivalent number of shares of Class A common stock (the “Voluntary Class B Conversion”) immediately following the conclusion of the Annual Meeting. On June 8, 2023, following the conclusion of the Annual Meeting, Mr. Bair effected the Voluntary Class B Conversion.

In connection with the Voluntary Class B Conversion, the Board approved amendments to the Certificate of Incorporation to, among other things, eliminate the authorization of and references to Class B common stock and Class C common stock, and make related technical, non-substantive and conforming changes. Upon the recommendation of the Board, the Company’s stockholders approved the amendments at the Annual Meeting. As a result of the amendments, the Company is no longer authorized to issue any shares of Class B Common Stock or Class C Common Stock.

On June 13, 2023, the Company filed a Certificate of Amendment with the Secretary of State of the State of Delaware, at which point the amendments became effective. The Company subsequently filed a Fourth Restated Certificate of Incorporation with the Secretary of State of the State of Delaware incorporating the amendments.

Following these amendments, the Company is authorized to issue of 2,100,000,000 shares of capital stock, which consists of 2,000,000,000 shares of Class A common stock and 100,000,000 shares of preferred stock.

Class A Common Stock

Subsequent to the closing of the Business Combination, our Class A common stock and public warrants began trading on the NYSE under the symbols “OPAD” and “OPADWS,” respectively. Pursuant to the Company’s Certificate of Incorporation, the Company is authorized to issue 2,000,000,000 shares of Class A common stock, par value $0.0001 per share. The Reverse Stock Split did not affect the number of authorized shares or the par value of our Class A common stock.

During January 2023, we entered into a pre-funded warrants subscription agreement with the investors named therein (the “Investors”) pursuant to which we sold and issued to the Investors an aggregate of 160.7 million pre-funded warrants (the “Pre-funded Warrants”) to purchase shares of our Class A Common Stock. Each Pre-funded Warrant was sold at a price of $0.5599 per Pre-funded Warrant and had an initial exercise price of $0.0001 per Pre-funded Warrant, subject to certain customary anti-dilution adjustment provisions. The exercise price for the Pre-funded Warrants could be paid in cash or on a cashless basis, and the Pre-funded Warrants had no expiration date. The aggregate gross proceeds to us was approximately $90.0 million, which is being used for general corporate purposes, including working capital.

The Pre-funded Warrants became exercisable during March 2023. During the six months ended June 30, 2023, all of the Pre-funded Warrants were exercised, upon which, 10.7 million shares of our Class A common stock were issued. As of June 30, 2023, there were no remaining Pre-funded Warrants outstanding.

As of June 30, 2023, we had 27,225,312 shares of Class A common stock issued and outstanding.

We also have outstanding private and public warrants to purchase shares of our Class A common stock. Refer to Note 9. Warrant Liabilities.

Preferred Stock

Pursuant to the Company’s Certificate of Incorporation, the Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.0001 per share. Our Board has the authority without action by the stockholders, to designate and issue shares of preferred stock in one or more classes or series, and the number of shares constituting any such class or series, and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, including, without limitation, dividend rights, conversion rights, redemption privileges and liquidation preferences, which rights may be greater than the rights of the holders of the common stock. As of June 30, 2023, there were no shares of preferred stock issued and outstanding.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 18

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Dividends

Our Class A common stock is entitled to dividends if and when any dividend is declared by our Board, subject to the rights of all classes of stock outstanding having priority rights to dividends. We have not paid any cash dividends on common stock to date. We may retain future earnings, if any, for the further development and expansion of our business and have no current plans to pay cash dividends for the foreseeable future. Any future determination to pay dividends will be made at the discretion of our Board and will depend on, among other things, our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our Board may deem relevant.

Note 12. Stock-Based Awards

2016 Stock Plan

Prior to the closing of the Business Combination, the Company maintained the OfferPad 2016 Stock Option and Grant Plan (the “2016 Plan”) that allowed for granting of incentive and non-qualified stock options to employees, directors, and consultants.

In connection with the Business Combination, each option granted under the 2016 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, was assumed and converted into an option to purchase a number of shares of Class A common stock. Stock option activity prior to the Business Combination was retroactively adjusted to reflect this conversion.

Awards outstanding under the 2016 Plan were assumed by Offerpad Solutions upon the closing of the Business Combination and continue to be governed by the terms and conditions of the 2016 Plan and applicable award agreement. Shares of our common stock subject to awards granted under the 2016 Plan that expire unexercised or are cancelled, terminated, or forfeited in any manner without issuance of shares thereunder following the effective date of the 2021 Plan (as defined below), will not again become available for issuance under the 2016 Plan or the 2021 Plan.

In connection with the completion of the Business Combination and the adoption of the 2021 Plan, no additional awards will be granted under the 2016 Plan.

As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of common stock underlying the outstanding equity awards under the 2016 Plan, as well as the exercise price associated with the awards.

2021 Equity Incentive Plans

In connection with the Business Combination, our Board adopted, and our stockholders approved, the Offerpad Solutions Inc. 2021 Incentive Award Plan (the “2021 Plan”) under which 26,333,222 shares of Class A common stock were initially reserved for issuance. As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of common stock underlying the Company’s outstanding equity awards under the 2021 Plan and the number of shares issuable under the Company’s 2021 Plan and existing agreements, as well as the exercise price and/or any stock price goals, as applicable. Following the Reverse Stock Split, there are 1,755,548 shares reserved for issuance under the 2021 Plan.

The 2021 Plan allows for the issuance of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock or cash based awards. The number of shares of the Company’s Class A common stock available for issuance under the 2021 Plan increases annually on the first day of each calendar year, beginning on and including January 1, 2022 and ending on and including January 1, 2031 equal to the lesser of (i) a number of shares such that the aggregate number of shares of Class A common stock available for grant under the 2021 Plan immediately following such increase shall be equal to 5% of the number of fully-diluted shares on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as is determined by the Company’s Board. As of June 30, 2023, the Company has granted stock options, restricted stock units (“RSUs”) and performance-based RSUs (“PSUs”) under the 2021 Plan.

In connection with the close of the Business Combination, our Board adopted, and our stockholders approved, the Offerpad Solutions Inc. 2021 Employee Stock Purchase Plan (“ESPP”) under which 2,633,322 shares of Class A common stock were initially reserved for issuance. As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares issuable under the ESPP. Following the Reverse Stock Split, there are 175,554 shares reserved for issuance under the ESPP.

The number of shares of the Company’s Class A common stock available for issuance under the ESPP increases annually on the first day of each calendar year, beginning on and including January 1, 2022 and ending on and including January 1, 2031,

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 19

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

by the lesser of (a) a number of shares such that the aggregate number of shares of Class A common stock available for grant under the ESPP immediately following such increase shall be equal to 1% of the number of fully-diluted shares on the final day of the immediately preceding calendar year and (b) such smaller number of shares of Class A common stock as determined by the Company’s Board; provided that, no more than 3,333,333 shares of Class A common stock may be issued under the ESPP. As of June 30, 2023, no shares have been issued under the ESPP.

Stock Options

The Company did not grant any stock option awards during the six months ended June 30, 2023.

During the six months ended June 30, 2022, the Company granted stock option awards with a service vesting condition that is generally four years. The assumptions used in the Black-Scholes-Merton option pricing model to determine the fair value of stock option awards granted during the six months ended June 30, 2022 are as follows:


Expected term (in years)		6.25
Risk-free interest rate		1.63% - 2.97%
Expected volatility		57.8% - 59.1%
Dividend yield		0.0%
Fair value on grant date		$72.45 - $76.65

The following summarizes stock option activity during the six months ended June 30, 2023:


	Number of Shares (in thousands)			Weighted- Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2022		1,182		$	12.47		5.82	$	953
Granted		—			—
Exercised		(14	)		3.72
Forfeited, canceled or expired		(51	)		19.71
Outstanding as of June 30, 2023		1,117			12.25		5.18		3,401
Exercisable as of June 30, 2023		973			11.18		4.82		3,401
Vested and expected to vest as of June 30, 2023		1,117			12.25		5.18		3,401

The total intrinsic value of stock options exercised during the six months ended June 30, 2023 and 2022 was $0.1 million and $35.8 million, respectively.

The weighted-average grant date fair value per option granted during the six months ended June 30, 2022 was $42.38. No stock options were granted during the six months ended June 30, 2023.

As of June 30, 2023, the Company had unrecognized stock-based compensation expense related to unvested stock options of $2.1 million. This expense is expected to be recognized over a weighted average period of 1.53 years. The fair value of stock options that vested during the six months ended June 30, 2023 and 2022 were $1.1 million and $1.1 million, respectively.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 20

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Restricted Stock Units

During the six months ended June 30, 2023, the Company granted RSU awards with service vesting conditions to non-employee members of our Board.

During the six months ended June 30, 2022, the Company granted RSUs with service vesting conditions to employees and non-employee members of our Board. The vesting period for RSUs granted to employees is generally three years, subject to continued employment, and the vesting period for RSUs granted to non-employee members of our Board generally ranges from three months to three years, subject to continued service on the Board.

The following summarizes RSU award activity during the six months ended June 30, 2023:


	Number of RSUs (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2022		131		$	70.92
Granted		33			10.09
Vested and settled		(23	)		75.93
Forfeited		(9	)		74.55
Outstanding as of June 30, 2023		132			54.54

As of June 30, 2023, less than 0.1 million RSUs have vested, but have not yet been settled in shares of the Company’s Class A common stock, pursuant to elections made by certain non-employee members of our Board to defer settlement thereof under the Offerpad Solutions Inc. Deferred Compensation Plan for Directors.

As of June 30, 2023, the Company had $4.1 million of unrecognized stock-based compensation expense related to unvested RSUs. This expense is expected to be recognized over a weighted average period of 1.38 years. The fair value of RSUs that vested and settled during the six months ended June 30, 2023 and 2022 were $2.5 million and less than $0.1 million, respectively.

Performance-Based Restricted Stock Units

The Company did not grant any PSUs during the six months ended June 30, 2023.

During the six months ended June 30, 2022, the Company granted PSUs which include both a service vesting condition and a performance vesting condition that is associated with the share price of the Company’s Class A common stock. Subject to the employee’s continued employment or service through the end of the performance period, the PSUs will vest based on the achievement of pre-determined price per share goals over the performance period calculated based on the average price per share over any 60 consecutive calendar-day period during the performance period. Shares earned under the PSU awards are transferred to the award holders upon the completion of the requisite service period of three years. If the average price per share does not meet the minimum price per share goal as of the last day of the performance period, the PSUs automatically will be forfeited and terminated without consideration.

The assumptions used in the Monte Carlo simulation model to determine the fair value of the PSU awards granted during the six months ended June 30, 2022 are as follows:


Risk-free interest rate		1.47%
Expected stock price volatility		60.0%
Expected dividend yield		0.0%
Fair value on grant date		$76.65

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 21

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following summarizes PSU award activity during the six months ended June 30, 2023:


	Number of PSUs (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2022		129		$	70.81
Granted		—			—
Vested		—			—
Forfeited		(2	)		70.81
Outstanding as of June 30, 2023		127			70.81

As of June 30, 2023, the Company had $5.0 million of unrecognized stock-based compensation expense related to unvested PSUs. This expense is expected to be recognized over a weighted average period of 1.67 years.

Stock-based Compensation Expense

The following details stock-based compensation expense for the respective periods:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Sales, marketing and operating	$	501	$	616	$	829	$	964
General and administrative		1,469		1,592		2,913		2,731
Technology and development		85		192		156		333
Stock-based compensation expense	$	2,055	$	2,400	$	3,898	$	4,028

Note 13. Variable Interest Entities

The Company formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties. Each SPE is a wholly owned subsidiary of the Company and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities, and the Company is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within the Company’s condensed consolidated financial statements.

The following summarizes the assets and liabilities related to the VIEs as of the respective period ends:


	June 30,		December 31,
($ in thousands)	2023		2022
Assets
Restricted cash	$	6,558	$	42,958
Accounts receivable		296		1,841
Real estate inventory		211,119		664,697
Prepaid expenses and other current assets		606		212
Total assets	$	218,579	$	709,708
Liabilities
Accounts payable	$	1,942	$	1,976
Accrued and other current liabilities		1,138		4,408
Secured credit facilities and other debt, net		190,090		666,065
Total liabilities	$	193,170	$	672,449

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 22

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 14. Earnings Per Share

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares plus the incremental effect of dilutive potential common shares outstanding during the period. In periods when losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

The components of basic and diluted earnings per share are as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands, except per share data)	2023			2022		2023			2022
Numerator:
Net (loss) income	$	(22,344	)	$	11,558	$	(81,791	)	$	52,546
Denominator:
Weighted average common shares outstanding, basic		27,258			16,390		25,470			16,200
Dilutive effect of stock options (1)		—			993		—			1,146
Dilutive effect of restricted stock units (1)		—			—		—			—
Weighted average common shares outstanding, diluted		27,258			17,383		25,470			17,346
Net (loss) income per share, basic	$	(0.82	)	$	0.71	$	(3.21	)	$	3.24
Net (loss) income per share, diluted	$	(0.82	)	$	0.66	$	(3.21	)	$	3.03
Anti-dilutive securities excluded from diluted (loss) income per share:
Anti-dilutive stock options (1)		1,029			72		1,048			68
Anti-dilutive restricted stock units (1)		69			132		75			123
Anti-dilutive performance-based restricted stock units		127			141		127			141
Anti-dilutive warrants issued in connection with Business Combination		1,452			1,452		1,452			1,452

(1) Due to the net loss during the three and six months ended June 30, 2023, no dilutive securities were included in the calculation of diluted loss per share because they would have been anti-dilutive.

Note 15. Income Taxes

The Company determines its interim tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to its income (loss) before income taxes for the period. The Company’s effective tax rate is dependent on several factors, such as tax rates in state jurisdictions and the relative amount of income the Company earns in the respective jurisdiction.

The Company recorded income tax expense of $0.04 million and $1.6 million during the three months ended June 30, 2023 and 2022, respectively, and $0.2 million and $3.5 million during the six months ended June 30, 2023 and 2022, respectively. The Company’s effective tax rate was an expense of 0.2% and 12.2% for the three months ended June 30, 2023 and 2022, respectively, and 0.2% and 6.3% for the six months ended June 30, 2023 and 2022, respectively. The Company’s effective tax rate during the three and six months ended June 30, 2023 differed from the federal statutory rate of 21% primarily due to net operating loss carryforwards, stock-based compensation, state taxes and changes in the fair value of warrant liabilities. The valuation allowance recorded against our net deferred tax assets was $82.0 million as of June 30, 2023.

As of June 30, 2023, we continue to have a full valuation allowance recorded against all deferred tax assets and will continue to evaluate our valuation allowance in future periods for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods if estimates of future taxable income during the carryforward period are increased, if objective negative evidence in the form of cumulative losses is no longer present, and if we employ tax planning strategies in the future.

The Internal Revenue Code contains provisions that limit the utilization of net operating loss carryforwards and tax credit carryforwards if there has been an ownership change. Such ownership change, as described in Section 382 of the Internal Revenue Code, may limit the Company’s ability to utilize its net operating loss carryforwards and tax credit carryforwards on a yearly basis. To the extent that any single-year limitation is not utilized to the full amount of the limitation, such unused amounts are carried over to subsequent years until the earlier of utilization or the expiration of the relevant carryforward period. The Company determined that an ownership change occurred on February 10, 2017. An analysis was performed and while utilization of net operating losses would be limited in years prior to December 31, 2020, subsequent to that date, there is

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 23

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

no limitation on the Company’s ability to utilize its net operating losses. As such, the ownership change has no impact to the carrying value of the Company’s net operating loss carryforwards or ability to use them in future years.

Note 16. Related-Party Transactions

LL Credit Facilities

As of June 30, 2023, we have one senior secured credit facility with a related party and two mezzanine secured credit facilities with a related party. The following summarizes certain details related to these facilities:


	As of June 30, 2023				As of December 31, 2022
($ in thousands)	Borrowing Capacity		Outstanding Amount		Borrowing Capacity		Outstanding Amount
Senior secured credit facility with a related party	$	75,000	$	11,761	$	75,000	$	17,398
Mezzanine secured credit facilities with a related party	$	150,000	$	17,013	$	150,000	$	42,778

Since October 2016, we have been party to a loan and security agreement (the “LL Funds Loan Agreement”), with LL Private Lending Fund, L.P. and LL Private Lending Fund II, L.P., both of which are affiliates of LL Capital Partners I, L.P., which holds more than 5% of our Class A common stock. Additionally, Roberto Sella, who is a member of our Board and holds more than 5% of our Class A common stock, is the managing partner of LL Funds. The LL Funds Loan Agreement is comprised of a senior secured credit facility and a mezzanine secured credit facility, under which we may borrow funds up to a maximum principal amount of $75.0 million and $52.5 million, respectively. The LL Funds Loan Agreement also provides us with the option to borrow above the fully committed borrowing capacity, subject to the lender’s discretion. Refer to Note 8. Credit Facilities and Other Debt, for further details about the facilities under the LL Funds Loan Agreement.

Since March 2020, we have also been party to a mezzanine loan and security agreement (the “LL Mezz Loan Agreement”), with LL Private Lending Fund II, L.P., which is an affiliate of LL Capital Partners I, L.P. Under the LL Mezz Loan Agreement, we may borrow funds up to a maximum principal amount of $97.5 million. Refer to Note 8. Credit Facilities and Other Debt, for further details about the mezzanine facility under the LL Mezz Loan Agreement.

We paid interest for borrowings under the LL facilities of $0.7 million and $1.4 million during the three months ended June 30, 2023 and 2022, respectively, and $2.2 million and $4.4 million during the six months ended June 30, 2023 and 2022.

Use of First American Financial Corporation’s Services

First American Financial Corporation (“First American”), which holds more than 5% of our Class A common stock, through its subsidiaries is a provider of title insurance and settlement services for real estate transactions and a provider of property data services. Additionally, Kenneth DeGiorgio, who is a member of the Company’s Board, is the chief executive officer of First American. We use First American’s services in the ordinary course of our home-buying and home-selling activities. We paid First American $1.6 million and $5.2 million during the three months ended June 30, 2023 and 2022, respectively, and $4.3 million and $10.9 million during the six months ended June 30, 2023 and 2022, respectively, for its services, inclusive of the fees for property data services.

Pre-Funded Warrants

During the six months ended June 30, 2023, the Company entered into a pre-funded warrants subscription agreement with the investors named therein (the “Investors”) pursuant to which the Company sold and issued to the Investors pre-funded warrants to purchase shares of the Company’s Class A common stock. The Investors included Brian Bair, Roberto Sella, First American, and Kenneth DeGiorgio. Refer to Note 11. Stockholders’ Equity, for further details.

Warehouse Lending Facility with FirstFunding, Inc.

During July 2022, Offerpad Mortgage, LLC (“Offerpad Home Loans” or “OPHL”), a wholly-owned subsidiary of the Company, entered into a warehouse lending facility with FirstFunding, Inc. (“FirstFunding”), a wholly-owned subsidiary of First American, which holds more than 5% of our Class A common stock. Offerpad Home Loans uses the warehouse lending facility to fund mortgage loans it originates and then sells to third-party mortgage servicers. The committed amount under the facility is $15.0 million and OPHL pays certain customary and ordinary course fees to FirstFunding under the facility, including a funding fee per loan and interest. As of June 30, 2023, there was $1.2 million outstanding under the facility and amounts paid under the facility were immaterial during the three and six months ended June 30, 2023.

Offerpad Solutions Inc. | Second Quarter 2023 Form 10-Q | 24

OFFERPAD SOLUTIONS INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Compensation of Immediate Family Members of Brian Bair

Offerpad employs two of Brian Bair’s brothers, along with Mr. Bair’s sister-in-law. The following details the total compensation paid to Mr. Bair’s brothers and Mr. Bair’s sister-in-law, which includes both base salary and annual performance-based cash incentives, during the respective year-to-date periods:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2023		2022		2023		2022
Mr. Bair’s brother 1	$	99	$	115	$	468	$	418
Mr. Bair’s brother 2		92		108		440		394
Mr. Bair’s sister-in-law		29		32		80		62
	$	220	$	255	$	988	$	874

During the six months ended June 30, 2022, Mr. Bair’s brothers and Mr. Bair’s sister-in-law received grants of equity awards under the 2021 Plan, which included awards of restricted stock units (“RSUs”), performance-based RSUs (“PSUs”) and/or stock options, as follows:


	Number of RSUs		Number of Target PSUs		Number of Stock Options
Mr. Bair’s brother 1		5,624		8,436		—
Mr. Bair’s brother 2		5,293		7,940		—
Mr. Bair’s sister-in-law		200		—		400
		11,117		16,376		400

Note 17. Commitments and Contingencies

Homes Purchase Commitments

As of June 30, 2023, the Company was under contract to purchase 481 homes for an aggregate purchase price of $132.5 million.

Lease Commitments

The Company has entered into operating lease agreements for its corporate headquarters in Chandler, Arizona and field office facilities in most of the metropolitan markets in which the Company operates in the United States. Refer to Note 6. Leases, for further details.

Note 18. Subsequent Events

The Company has determined that there have been no events that have occurred that would require recognition in the condensed consolidated financial statements or additional disclosure herein.

Item 2. Management’s Discussion and Analysis of ~~historical fact~~Financial Condition and Results of Operations.

The following discussion and analysis provides information that Offerpad’s management believes is relevant to an assessment and understanding of Offerpad’s consolidated results of operations and financial condition. The discussion should be read together with the unaudited interim condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and accompanying notes included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023.

This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q. Offerpad’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in Part I, Item 1A of Offerpad’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Offerpad is a customer-centric, home buying and selling platform that provides customers with the ultimate home transaction experience, offering convenience, control, certainty, and value. Since our founding in 2015, we have created a pioneering iBuying company and leading on-demand real estate marketplace that has transacted on homes representing approximately $10.2 billion of aggregate revenue through June 30, 2023.

We are headquartered in Chandler, Arizona and operate in over 1,700 cities and towns in 25 metropolitan markets across 15 states as of June 30, 2023. As we expand further into our existing markets, launch new markets, and develop a wide range of new ancillary services, we look forward to bringing our mission of providing your best way to buy and sell a home to even more homeowners and prospective home purchasers across the country.

Current Economic Conditions and Health of the U.S. Residential Real Estate Industry

Our business and operating results are impacted by the general economic conditions and the health of the U.S. residential real estate industry, particularly the single-family home resale market. Our business model primarily depends on a high volume of residential real estate transactions throughout the markets in which we operate. This transaction volume affects substantially all of the ways that we generate revenue, including our ability to acquire new homes and generate associated fees, and our ability to sell homes that we own.

During the second quarter of 2023, the residential real estate market conditions showed signs of stabilization and improvement compared to the first quarter of 2023 and the second half of 2022, during which the combination of the rapid rise to relatively high mortgage interest rates, increased inflation in the broader economy, volatility in the stock market, and various other macroeconomic and geopolitical concerns negatively impacted consumer demand for residential real estate.

Although the residential real estate market conditions continue to be less favorable compared to the conditions during the first half of 2022, which directly contributed to our quarter-over-quarter revenue declines during the past year, our gross profit margin improved to 9.7% during the second quarter of 2023, which is the second consecutive quarter-over-quarter improvement and a level not achieved since prior to the market shift that began at the end of the second quarter of 2022. Additionally, during the second quarter of 2023, our net loss improved for the second consecutive quarter and we achieved quarter-over-quarter increases in acquisitions and inventory. Further, the average holding period for our homes in real estate inventory improved compared to the first quarter of 2023.

While the residential real estate market conditions have recently shown signs of stabilization and improvement compared to the first quarter of 2023 and the second half of 2022, mortgage interest rates and inflation remain elevated and the supply of single-family resale homes continues to be low. We anticipate that the ongoing higher mortgage interest rate environment, combined with economic uncertainties as well as affordability pressures will continue to impact consumer demand for residential real estate during the third quarter of 2023.

On November 15, 2022, we were notified by the New York Stock Exchange (“NYSE”) that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 over a consecutive 30 trading-day period. The notice did not result in the immediate delisting of our Class A common stock from the NYSE.

On November 16, 2022, we notified the NYSE that we intend to cure the price condition and to return to compliance with the NYSE continued listing standard. On June 8, 2023, at the 2023 Annual Meeting of Stockholders, the Company’s stockholders

approved a reverse stock split of the Company’s Class A common stock in order to regain compliance with the minimum closing price requirement. On June 12, 2023, the Company filed a certificate of amendment to its Third Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-15 reverse stock split, and the Company’s Class A common stock began trading on a split-adjusted basis at market open on June 13, 2023.

Under the NYSE’s rules, the price condition is deemed cured if the price promptly exceeds $1.00 per share, and the price remains above that level for at least the following 30 trading days. On July 27, 2023, we were notified by the NYSE that the average closing price of our Class A common stock exceeded $1.00 per share for at least 30 trading days. Accordingly, as of July 27, 2023, the minimum price condition was deemed cured and the Company is in compliance with Section 802.01C of the NYSE Listed Company Manual. However, there is also no assurance that the Company will maintain compliance with this or the other listing standards of the NYSE.

We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including ~~without limitation, statements~~those discussed below.

Residential real estate is one of the largest industries, with roughly $2.3 trillion in value of homes transacted in 2022 in the United States, and is highly fragmented with over 100,000 real estate brokerages, according to the National Association of Realtors (NAR). In 2022, we estimate that we captured roughly 0.9% market share across our then active 28 markets. Given this high degree of fragmentation, we believe that bringing a solutions-oriented approach to the market with multiple buying and selling services to meet the unique needs of customers could lead to continued market share growth and accelerated adoption of the digital model. We have demonstrated higher market share in certain markets, providing the backdrop to grow our overall market penetration as our offerings expand and evolve. By providing a consistent, transparent, and unique experience, we expect to continue to build upon our past success and further strengthen our brand and consumer adoption.

Since our launch in 2015 and through December 31, 2022, we expanded into 28 markets, which covered roughly 24% of the 5.6 million homes sold in the United States in 2022. Given this market coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion, although new market expansion typically generates lower initial margins as we begin operations that increase as we scale volumes. Also, because of our strategic approach to renovations, as well as the listing and buyer representation of our listing service product, we believe a significant portion of the total addressable market is serviceable with our business model.

While we intend to be flexible in assessing market entry points, we will generally look to expand into new markets with qualities similar to our existing markets, including median price point, annual transaction count, as well as strong presence of new homebuilders. We believe the scale and versatility of our platform will allow us to continue to expand into new markets, with our primary barriers to entry consisting largely of capital needed to expand operations and the tendency of consumers to adopt our real estate offerings.

Given the recent volatility in the residential real estate market, we did not expand into any new markets during the first half of 2023 and we currently do not anticipate expanding into any new markets during the remainder of 2023.

Core to our long-term strategy is a suite of offerings to meet the unique needs of our customers. As such, we view adding both additional products and services as well as additional product specific features as critical to supporting this strategy. We aim to deliver our offerings to customers in a smooth, efficient, digital driven platform, focused on transparency and ease of use. The primary goal is to be able to offer multiple services tied to the core real estate transaction, allowing customers to bundle and save. Although further developing these products and services will require significant investment, growing our current offerings and offering additional ancillary products and services, potentially including energy efficiency solutions, smart home technology, insurance, moving services, and home warranty services, we believe will strengthen our unit economics and allow us to better optimize pricing. Generally, the revenue and margin profiles of our ancillary products and services are different from our cash offering service that accounts for the vast majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.

We continue to pursue opportunities that enable us to grow our service offerings, and have recently begun offering a program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers. We expect this program will allow us to help more homeowners sell their home, while also expanding our ability to reach more customers.

We recently expanded our renovation services to other businesses allowing more homeowners and other companies to utilize our renovations department to update their portfolio of homes for rent or to sell. Through this offering, we are able to leverage our existing logistics, operation and skill-sets to provide renovation services that we believe can be an important part of our business over time.

We view Contribution Margin and Contribution Margin after Interest (see “—Non-GAAP Financial Measures”) as key performance indicators for unit economic performance, which are currently primarily driven by our cash offer transactions. Future financial performance improvements are expected to be driven by expanding unit level margins through initiatives such as:

We utilize our technology and product teams to design systems and workflows to make our operations teams more efficient and able to support and scale with the business. Many positions are considered volume based, and as our business grows, we focus on developing more automation tools to gain additional leverage. Additionally, in periods when our business is growing, we expect to be able to gain operating leverage on portions of our cost structure that are more fixed in nature as opposed to purely variable. These types of costs include general and administrative expenses and certain marketing and information technology expenses, which grow at a slower pace than proportional to revenue growth.

Our business model requires significant capital to purchase real estate inventory. Inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases. The loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance. See “—Liquidity and Capital Resources—Financing Activities.”

The residential real estate market is seasonal and varies from market to market. Typically, the greatest number of transactions occur in the spring and summer, with fewer transactions occurring in the fall and winter. Our financial results, including revenue, margins, real estate inventory, and financing costs, have historically had seasonal characteristics generally consistent with the residential real estate market, a trend we expect to continue in the future, subject to the market conditions discussed above.

Our business model is based upon acquiring homes at a price which will allow us to provide a competitive offer to the consumer, while being able to add value through the renovation process, and relist the home so that it sells at a profit and in a relatively short period of time. We have invested significant resources into our underwriting and asset management systems. Our real estate operations team, including our pricing team, together with our software engineering and data science teams are responsible for underwriting accuracy, portfolio health, and workflow optimization. Our underwriting tools are constantly updated with inputs from third-party data sources, proprietary data sources as well as internal data to adjust to the latest market conditions. This allows us to assess and adjust to changes in the local housing market conditions based on our technology, analysis and local real estate experience, in order to mitigate our risk exposure. Further, our listed homes are typically in market-ready and move-in ready condition following the repairs and renovations we conduct.

Historically, we have been able to manage our portfolio risk in part by our ability to manage holding periods for our real estate inventory. Traditionally, resale housing pricing moves gradually through cycles; therefore, shorter real estate inventory holding periods limit pricing exposure. As we increased our scale and improved our workflow optimization in prior years, our average real estate inventory holding period of homes sold improved from 138 days in 2016 to 76 days during 2021, which was primarily due to the favorable housing market conditions across our markets in 2021.

During the second half of 2022 and continuing through the first quarter of 2023, consumer demand for residential real estate was negatively impacted by the combination of the rapid rise to relatively high mortgage interest rates, increased inflation in the broader economy, volatility in the stock market, and various other macroeconomic and geopolitical concerns. Given our focus on risk management, and in response to this softening consumer demand, we adjusted our home purchase criteria through more conservative acquisition underwriting, resulting in higher expected internal rates of return based on then current market conditions. These actions resulted in a significant reduction in our home acquisition pace to allow us to manage overall real estate inventory growth. This, in turn, led to the average holding period of homes sold increasing to 101 days during 2022, which is consistent with our expected average real estate inventory holding period and our historical norm, and further temporarily increased to 185 days during the first quarter of 2023 as we sold through our aged real estate inventory.

During the second quarter of 2023, the residential real estate market conditions showed signs of stabilization and improvement compared to the first quarter of 2023 and the second half of 2022. As a result, we increased our home acquisition pace during the second quarter of 2023 and our overall real estate inventory mix shifted to include a greater composition of newer acquired homes. This resulted in a decrease in the average real estate inventory holding period to 138 days during the second quarter of 2023. To the extent residential real estate market conditions continue to improve, we anticipate our average real estate inventory holding period will decline further in the third quarter of 2023.

In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.

Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins)

To provide investors with additional information regarding our margins, we have included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. We believe that

Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities) attributable to homes sold during a reporting period. We believe these measures facilitate meaningful period over period comparisons and illustrate our ability to generate returns on assets sold after considering the costs directly related to the assets sold in a presented period.

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest (and related margins) are supplemental measures of our operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in real estate inventory at the end of the period, costs required to be recorded under GAAP in the same period.

Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.

We calculate Adjusted Gross Profit as gross profit under GAAP adjusted for (1) net real estate inventory valuation adjustment plus (2) interest expense associated with homes sold in the presented period and recorded in cost of revenue. Net real estate inventory valuation adjustment is calculated by adding back the real estate inventory valuation adjustment charges recorded during the period on homes that remain in real estate inventory at period end and subtracting the real estate inventory valuation adjustment charges recorded in prior periods on homes sold in the current period. We define Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.

We view this metric as an important measure of business performance, as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess performance across the key phases of processing a home (acquisitions, renovations, and resale) for a specific resale cohort.

We calculate Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily composed of interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments. The composition of our holding costs is described in the footnotes to the reconciliation table below. We define Contribution Margin as Contribution Profit as a percentage of revenue.

We view this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflow directly associated with a specific resale cohort.

We define Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under our senior and mezzanine secured credit facilities incurred on homes sold during the period. This includes interest expense recorded in prior periods in which the sale occurred. Our senior and mezzanine secured credit facilities are secured by our homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. See “—Liquidity and Capital Resources—Financing Activities.” We define Contribution Margin After Interest as Contribution Profit After Interest as a percentage of revenue.

We view this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with costs of financing.

The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest to our Gross Profit, which is the most directly comparable GAAP measure, for the periods indicated:

We also present Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures, which our management team uses to assess our underlying financial performance. We believe these measures provide insight into period over period performance, adjusted for non-recurring or non-cash items.

We calculate Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. We define Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.

We calculate Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for interest expense, amortization of capitalized interest, taxes, depreciation and amortization and stock-based compensation expense. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental to our operating performance measures calculated in accordance with GAAP and have important limitations. For example, Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact of certain costs required to be recorded under GAAP and could differ substantially from similarly titled measures presented by other companies in our industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated:

The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022.

Revenue decreased by $849.4 million, or 78.7%, to $230.1 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The decrease was primarily attributable to lower sales volumes and a slightly lower average sales price. We sold 650 homes during the three months ended June 30, 2023 compared to 2,888 homes during the three months ended June 30, 2022, representing a decrease of 77%. Additionally, the average resale home price decreased slightly from $372,000 in the three months ended June 30, 2022 to $357,000 in the three months ended June 30, 2023. These decreases were the result of the considerable softening in consumer demand for residential real estate, which began toward the end of the second quarter of 2022 and continued through the first quarter of 2023, as compared to the generally strong residential real estate market conditions during the three months ended June 30, 2022. The decreases were also due to the impact of our significant reduction in home acquisition pace to allow us to manage overall real estate inventory growth during the second half of 2022 and throughout the first quarter of 2023.

Cost of revenue decreased by $778.6 million, or 78.9%, to $207.9 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. This decrease was primarily attributable to lower sales volumes and a decrease in the real estate inventory valuation adjustment.

Gross profit margin was 9.7% for the three months ended June 30, 2023 compared to 8.6% for the three months ended June 30, 2022. The increase in gross profit margin was primarily due to the decrease in the real estate inventory valuation adjustment during the respective periods. We recorded real estate inventory valuation adjustments of $0.2 million during the three months ended June 30, 2023 as compared to $21.2 million during the three months ended June 30, 2022. This decrease in real estate inventory valuation adjustments was primarily due to the residential real estate market conditions showing signs of stabilization and improvement during the three months ended June 30, 2023 as compared to the impact of the softening consumer demand for residential real estate that began toward the end of the second quarter of 2022 and continued through the first quarter of 2023, which caused the net realizable value for certain homes in real estate inventory to be lower than their respective cost. The increase in gross profit margin was partially offset by a decrease in the difference between the average home resale price and the average home acquisition price during the three months ended June 30, 2023 compared to the three months ended June 30, 2022. This decrease was primarily due to the impact of the considerable softening in consumer demand for residential real estate that began toward the end of the second quarter of 2022.

Sales, marketing and operating expense decreased by $36.2 million, or 55.5%, to $29.0 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. This represented an increase as a percentage of revenue of 660 basis points to 12.6%. The decrease in expense was primarily attributable to the decrease in variable costs associated with the decrease in homes sold and lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate. Additionally, advertising expense decreased by $5.3 million as we continued to reduce marketing efforts in the second quarter of 2023 in response to the softening consumer demand for residential real estate.

General and administrative expense decreased by $3.4 million, or 21.1%, to $12.7 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. This represented an increase as a percentage of revenue of 410 basis points to 5.6%. The decrease in expense was primarily attributable to lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate, and decreased insurance costs. This decrease in expense was partially offset by an increase in fees associated with our credit facilities and overall inflationary increases.

Technology and development expense decreased by $0.9 million, or 28.7%, to $2.3 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. This represented an increase as a percentage of revenue of 70 basis points. The decrease in expense was primarily attributable to lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate.

Change in fair value of warrant liabilities for the three months ended June 30, 2023 and 2022 represents gains of $0.4 million and $12.5 million, respectively, as a result of the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination.

Interest expense decreased by $5.9 million, or 76.0%, to $1.9 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The decrease in expense was primarily attributable to a $813.7 million decrease in the average outstanding balance of our senior and mezzanine secured credit facilities, from $966.3 million during the three months ended June 30, 2022 to $152.6 million during the three months ended June 30, 2023. This decrease was partially offset by a 3.99% increase in the weighted average variable interest rates associated with these senior and mezzanine secured credit facilities.

Other income, net during the three months ended June 30, 2023 principally represents interest income earned on our cash and cash equivalents, which is partially offset by the loss that was recorded as a result of the fair value adjustment of the derivative financial instruments that were entered into to manage risks that are principally associated with interest rate fluctuations.

We recorded income tax expense of $0.04 million and $1.6 million during the three months ended June 30, 2023 and 2022, respectively, and our effective tax rate was an expense of 0.2% and 12.2% for the respective periods. Our effective tax rate during the three months ended June 30, 2023 differed from the federal statutory rate of 21% primarily due to net operating loss carryforwards, stock-based compensation, state taxes and changes in the fair value of warrant liabilities.

Revenue decreased by $1,613.6 million, or 65.8%, to $839.7 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease was primarily attributable to lower sales volumes and a slightly lower average sales price. We sold 2,259 homes during the six months ended June 30, 2023 compared to 6,490 homes during the six months ended June 30, 2022, representing a decrease of 65%. Additionally, the average resale home price decreased slightly from $377,000 in the six months ended June 30, 2022 to $374,000 in the six months ended June 30, 2023. These decreases were the result of the considerable softening in consumer demand for residential real estate, which began toward the end of the second quarter of 2022 and continued through the first quarter of 2023, as compared to the generally strong residential real estate market conditions during the six months ended June 30, 2022. The decreases were also due to the impact of our significant reduction in home acquisition pace to allow us to manage overall real estate inventory growth during the second half of 2022 and throughout the first quarter of 2023.

Cost of revenue decreased by $1,418.0 million, or 63.6%, to $810.2 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This decrease was primarily attributable to lower sales volumes and a decrease in the real estate inventory valuation adjustment.

Gross profit margin was 3.5% for the six months ended June 30, 2023 compared to 9.2% for the six months ended June 30, 2022. The decrease in gross profit margin was primarily due to a decrease in the difference between the average home resale price and the average home acquisition price during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This decrease was primarily due to the impact of the considerable softening in consumer demand for residential real estate that began toward the end of the second quarter of 2022. The decrease in gross profit margin was partially offset by a decrease in the real estate inventory valuation adjustment during the respective periods. We recorded real estate inventory valuation adjustments of $7.5 million during the six months ended June 30, 2023 as compared to $22.2 million during the six months ended June 30, 2022. This decrease in real estate inventory valuation adjustments was primarily due to the residential real estate market conditions showing signs of stabilization and improvement during the latter half of the six months ended June 30, 2023 as compared to the impact of the softening consumer demand for residential real estate that began toward the end of the second quarter of 2022 and continued through the first quarter of 2023, which caused the net realizable value for certain homes in real estate inventory to be lower than their respective cost.

Sales, marketing and operating expense decreased by $63.7 million, or 47.2%, to $71.4 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This represented an increase as a percentage of revenue of 300 basis points to 8.5%. The decrease in expense was primarily attributable to the decrease in variable costs associated with the decrease in homes sold, and lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate. Additionally, advertising expense decreased by $12.0 million as we reduced marketing efforts in the first half of 2023 in response to the softening consumer demand for residential real estate.

General and administrative expense decreased by $3.6 million, or 11.7%, to $27.2 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This represented an increase as a percentage of revenue of 200 basis points to 3.2%. The decrease in expense was primarily attributable to lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate, and decreased insurance costs. This decrease in expense was partially offset by an increase in fees associated with our credit facilities and overall inflationary increases.

Technology and development expense decreased by $1.9 million, or 29.1%, to $4.6 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This represented an increase as a percentage of revenue of 30 basis points. The decrease in expense was primarily attributable to lower employee compensation costs associated with decreased average employee headcount as a result of the softening consumer demand for residential real estate.

Change in fair value of warrant liabilities for the six months ended June 30, 2023 and 2022 represents gains of less than $0.1 million and $18.2 million, respectively, as a result of the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination.

Interest expense decreased by $5.7 million, or 37.9%, to $9.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease in expense was primarily attributable to a $686.6 million decrease in the average outstanding balance of our senior and mezzanine secured credit facilities, from $1,073.5 million during the six months ended June 30, 2022 to $386.9 million during the six months ended June 30, 2023. This decrease was partially offset by a 3.97% increase in the weighted average variable interest rates associated with these senior and mezzanine secured credit facilities.

Other income during the six months ended June 30, 2023 principally represents interest income earned on our cash and cash equivalents, which is partially offset by the loss that was recorded as a result of the fair value adjustment of the derivative financial instruments that were entered into to manage risks that are principally associated with interest rate fluctuations.

We recorded income tax expense of $0.2 million and $3.5 million during the six months ended June 30, 2023 and 2022, respectively, and our effective tax rate was an expense of 0.2% and 6.3% for the respective periods. Our effective tax rate during the six months ended June 30, 2023 differed from the federal statutory rate of 21% primarily due to net operating loss carryforwards, stock-based compensation, state taxes and changes in the fair value of warrant liabilities.

Cash and cash equivalents balances consist of operating cash on deposit with financial institutions. Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities. As of June 30, 2023, we had cash and cash equivalents of $115.6 million and had a total undrawn borrowing capacity of $1,365.3 million, $435.3 million of which is committed and $930.0 million uncommitted.

With the exception of the year ended December 31, 2021, during which we generated net income, we have incurred losses each year from inception and during the three and six months ended June 30, 2023, and may incur additional losses in the future. We continued to invest in the development and expansion of our operations. These investments include improvements in infrastructure and a continual improvement to our software, as well as investments in sales and marketing as we increase penetration in our existing markets.

We expect our working capital requirements to continue to increase over the long term, as we seek to increase our real estate inventory and expand into more markets across the United States. We believe our cash on hand, together with proceeds from the resale of homes and cash from future borrowings available under each of our existing credit facilities, or the entry into new debt financing arrangements or the issuance of equity instruments, will be sufficient to meet our short-term working capital and capital expenditure requirements for at least the next twelve months. However, our ability to fund our working capital and capital expenditure requirements will depend in part on the residential real estate market conditions in the markets in which we operate and in the U.S. in general, and various other general economic, financial, competitive, legislative, regulatory and other conditions that may be beyond our control. Depending on these and other market conditions, we may seek additional financing. Volatility in the credit markets, rising interest rates and softening consumer demand for residential real estate may have an adverse effect on our ability to obtain debt financing on favorable terms or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, or may require us to agree to unfavorable terms, and our existing stockholders may experience significant dilution.

(“First American”), a holder of more than 10% of our outstanding Class A Common Stock; and Kenneth DeGiorgio, a member of our Board and chief executive officer of First American.

Our financing activities primarily include borrowing under our senior secured credit facilities, mezzanine secured credit facilities and new issuances of equity (including the issuance of Pre-funded Warrants, as discussed above). Historically, we have required access to external financing resources in order to fund growth, expansion into new markets and strategic initiatives, and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.

Buying and selling high-valued assets, such as single-family residential homes, is very cash intensive and has a significant impact on our liquidity and capital resources. We use non-recourse secured credit facilities, consisting of both senior secured credit facilities and mezzanine secured credit facilities, to finance a significant portion of our real estate inventory and related home renovations. Our senior and mezzanine secured credit facilities, however, are not fully committed, meaning the applicable lender may not be obligated to advance new loan funds if they choose not to do so. Our ability to obtain and maintain access to these or similar kinds of credit facilities is significant for us to operate the business.

The following summarizes certain details related to our senior secured credit facilities (in thousands, except interest rates):

As of June 30, 2023, we had five senior secured credit facilities that we use to fund the purchase of homes and build our real estate inventory, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock. Borrowings under the senior secured credit facilities accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate, plus a margin which varies by facility.

Borrowings under our senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against us with limited exceptions. We have, however, provided limited non-recourse carve-out guarantees under our senior and mezzanine secured credit facilities for certain of the SPEs’ obligations in situations involving “bad acts” by an Offerpad entity and certain other limited circumstances that are generally under our control. Each senior secured facility contains eligibility requirements that govern whether a property can be financed. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities.

In addition to the senior secured credit facilities, we use mezzanine secured credit facilities which are structurally and contractually subordinated to the related senior secured credit facilities. The following summarizes certain details related to our mezzanine secured credit facilities (in thousands, except interest rates):

As of June 30, 2023, we had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock. Borrowings under the mezzanine secured credit facilities accrue interest at fixed rates, which vary by facility and range from 9.5% to 13.0%.

Borrowings under our mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse against us with limited exceptions. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities.

Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities

As of June 30, 2023, we were in compliance with all covenants and no event of default had occurred.

As of June 30, 2023, we have a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. As of June 30, 2023, the weighted-average interest rate under our other senior secured debt was 11.26%.

We have a warehouse lending facility with a related party that is used to fund mortgage loans that we originate and then sell to third-party mortgage servicers. As of June 30, 2023, the outstanding balance on the warehouse lending facility was $1.2 million.

The following summarizes our cash flows for the six months ended June 30, 2023 and 2022:

Net cash provided by operating activities was $371.5 million and net cash used in operating activities was ($112.5) million for the six months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023, net cash provided by operating activities primarily resulted from a $446.1 million decrease in real estate inventory due to an intentional reduction in real estate inventory levels given the dramatic decline in consumer demand for residential real estate, which began toward the end of the second quarter of 2022 and continued through the first quarter of 2023. During this period of time, we focused on selling our existing real estate inventory of homes acquired in the first half of 2022 and significantly reduced the number of new homes acquired in the second half of 2022 and throughout the first quarter of 2023. Net cash provided by operating activities during the six months ended June 30, 2023 was also impacted by the $81.8 million net loss during the period, which included a $7.5 million non-cash real estate inventory valuation adjustment as a result of the softening consumer demand for residential real estate.

For the six months ended June 30, 2022, net cash used in operating activities primarily resulted from a $179.1 million increase in real estate inventory due to the execution of our growth plan and generally favorable housing market conditions across our markets. This use of cash was partially offset by cash inflows from net income of $52.5 million, which included a $22.2 million non-cash real estate inventory valuation adjustment as a result of the softening consumer demand for residential real estate toward the end of the second quarter of 2022 and an $18.2 million non-cash gain as a result of the fair value adjustment of the warrant liabilities, and a net increase in non-real estate inventory working capital balances.

Net cash used in investing activities was $2.0 million and $0.7 million during the six months ended June 30, 2023 and 2022, respectively. Net cash used in investing activities during the six months ended June 30, 2023 principally represents the purchases of derivative instruments.

Net cash used in investing activities during the six months ended June 30, 2022 represents purchases of property and equipment.

Net cash used in financing activities was $387.6 million and net cash provided by financing activities was $118.7 million during the six months ended June 30, 2023 and 2022, respectively. Net cash used in financing activities during the six months ended June 30, 2023 primarily consisted of $889.8 million of repayments of credit facilities and other debt, which was partially offset by $412.0 million of borrowings from credit facilities and other debt. This net decrease in credit facility funding of $477.8 million was directly related to the decrease in financed real estate inventory during the period. This was partially offset by $90.0 million of proceeds from the issuance of pre-funded warrants, net of issuance costs of $0.8 million.

Net cash provided by financing activities during the six months ended June 30, 2022 primarily consisted of $2,132.2 million of borrowings from credit facilities and other debt, which was partially offset by $2,018.0 million of repayments of credit facilities and other debt. This net increase in credit facility funding of $114.2 million was directly related to financing the increase in real estate inventory during the period.

Information regarding our material cash requirements and other obligations is provided in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are 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.~~

~~We are a blank check company formed under the laws of the State of~~ ~~Delaware~~Annual Report on ~~August 31, 2020~~Form 10-K for the ~~purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).~~ fiscal year ended December 31, 2022.

There have been no material changes in our material cash requirements and other obligations since December 31, 2022 through June 30, 2023.

We ~~are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.~~

~~Our~~ Sponsor is Supernova Partners LLC, a Delaware limited liability company. The registration statement for the Initial Public Offering was declared effective on October 20, 2020. On October 23, 2020, we consummatedprepare our Initial Public Offering of 40,250,000 Units, including 5,250,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $402.5 million, and incurring offering costs of approximately $22.8 million, inclusive of approximately $14.1 million in deferred underwriting commissions.

Upon the closing of the Initial Public Offering and the Private Placement, $402.5 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 23, 2022 (as such period may be extended by the stockholdersconsolidated financial statements in accordance with GAAP. In doing so, we make certain estimates, judgments and assumptions that affect the ~~Certificate~~reported amounts of ~~Incorporation,~~assets and liabilities and the ~~“Combination Period”), we will (1) cease all operations except for the purpose~~disclosure of ~~winding up; (2)~~contingent assets and liabilities as ~~promptly as reasonably possible but not~~

~~more than 10 business days thereafter, redeem 100%~~ of the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approvaldate of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

~~As of October 23, 2020, we had approximately $1.8 million in cash, and working capital of approximately $1.5 million (not taken into account tax obligations).~~

On October 23, 2020, we consummated the Initial Public Offering of 40,250,000 Units, including 5,250,000 Over-Allotment Units, at a price of $10.00 per unit, generating net proceeds of $402.5 million. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 6,700,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds of approximately $10.1 million.

Prior to September 30, 2020, our liquidity needs were satisfied through the payment of $25,000 from our Sponsor to cover for certain offering costs on our behalf in exchange for issuance of Founders Shares, and loan proceeds from our Sponsor of approximately $99,000 under the Note. Subsequent to September 30, 2020, our liquidity has been satisfied with additional loan from the net proceeds of approximately $84,000, for a total of approximately $183,000 under the Note, and the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. We repaid the Note in full on October 23, 2020.

Based on the foregoing, management believes that we 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 the funds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures to and from the office, plants or similar locations of prospective Business Combination candidates, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Our entire activity since inception up to September 30, 2020 was in preparation for our formation and the Initial Public Offering. We will not be generating any operating revenues until the closing and completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial ~~reporting, accounting and auditing compliance),~~statements, as well as the reported amounts of revenues and expenses during the periods presented. Although we believe our estimates, judgments and assumptions are reasonable, actual results may differ from our estimates under different assumptions, judgments or conditions given the inherent uncertainty involved with such matters, which would impact our financial statements. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis

There have been no material changes to the critical accounting estimates included in our Annual Report on Form 10-K for ~~due diligence expenses.~~the fiscal year ended December 31, 2022.

Our significant accounting policies and methods used in the preparation of our condensed consolidated financial statements are described in Note 1. Nature of Operations and Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Quarterly Report on Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For a discussion of recent accounting pronouncements, refer to Note 1. Nature of Operations and Significant Accounting Policies in the ~~period from August~~Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Quarterly Report on Form 10-Q.

There have been no material changes to our exposure to market risk since December 31, ~~2020 (inception) through September 30, 2020, we had net loss~~2022. For a discussion of ~~approximately $25,000, which consisted~~our exposure to market risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Limitations on Effectiveness of ~~approximately $8,800 in general~~Disclosure Controls and ~~administrative expenses~~Procedures

~~The holders~~evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of ~~Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of Class A common stock issuable upon~~achieving the ~~exercise~~desired control objectives. In addition, the design of the ~~Private Placement Warrants~~disclosure controls and ~~warrants~~procedures must reflect the fact that ~~may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares),~~there are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Deferred offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related to the Initial Public Offering~~resource constraints and that ~~were charged to stockholders’ equity upon the completion of the Initial Public Offering in October 2020.~~

We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares at September 30, 2020 were reduced for the effect of an aggregate of 1,312,500 shares of common stock that are subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. At September 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented. The underwriter exercised its over-allotment option in full on October 23, 2020; thus, these 1,312,500 shares of Class B common stock were no longer subject to forfeiture.

~~As of September 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

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 standardsmanagement 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~~apply judgment in ~~the process of~~ evaluating the benefits of ~~relying on the other reduced reporting requirements provided by the JOBS Act. Subject~~possible controls and procedures relative 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 PCAOB 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.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. As of September 30, 2020, we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering, including amounts in the Trust Account, will be invested in U.S. government securities with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.their costs.

~~We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.~~

~~Under the supervision and~~Our management, with the participation of our ~~management, including our~~ principal executive officer and our principal financial officer, ~~we conducted an evaluation~~evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures ~~as of the end of the fiscal quarter ended September 30, 2020, as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act.~~Act). Based on ~~this~~that evaluation, our principal executive officer and our principal financial officer ~~has~~have concluded that, ~~during the period covered by this report,~~as of June 30, 2023, our disclosure controls and procedures were ~~effective.~~effective at the reasonable assurance level.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There ~~was~~were no ~~change~~changes in our internal control over financial reporting, as identified in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that occurred during the ~~fiscal quarter~~three months ended ~~September~~June 30, ~~2020 covered by this Quarterly Report on Form 10-Q~~2023 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. We are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, results of operations and cash flows.

The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition, results of operations or cash flows for that reporting period could be adversely impacted, perhaps materially.

The Company’s risk factors are described in Part I, Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes ~~from~~to the Company’s risk factors ~~previously disclosed in~~since the Company’s ~~final prospectus~~Annual Report on Form 10-K for the ~~Initial Public Offering as filed with~~fiscal year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

We did not repurchase shares of our Class A common stock during the ~~SEC on October 22, 2020.~~three months ended June 30, 2023.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

~~On September 9, 2020, our Sponsor paid $25,000 to cover for certain offering costs~~(a) None.

(c) During the three months ended June 30, 2023, no director or “officer” (as defined in ~~exchange for 11,500,000 Founder Shares, or approximately $0.002 per share. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2)~~Rule 16a-1(f) of the ~~Securities Act. On September 14, 2020, we effectuated an 0.75-for-1 reverse split~~Exchange Act) of the ~~Founder Shares, resulting~~Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in ~~an aggregate outstanding amount~~Item 408(a) of 8,625,000 Founder Shares. On September 24, 2020, the Sponsor transferred 34,500 founder shares to each of the five independent director nominees. On October 20, 2020, we effectuated a 6-for-7 stock split of the Founder Shares, resulting in an aggregate outstanding amount of 10,062,500 Founder Shares.Regulation S-K.

On October 23, 2020, we consummated the Initial Public Offering of 40,250,000 Units, including 5,250,000 Over-Allotment Units. The Units sold were sold at an offering price of $10.00 per unit, generating total gross proceeds of $402.5 million. J.P. Morgan Securities LLC and Jefferies LLC acted as representatives for the several underwriters. The securities in the offering were registered under the Securities Act on a registration statement on

Offerpad Solutions Inc. | Second Quarter 2023 Form ~~S-1 (No. 333-249053). The Securities and Exchange Commission declared the registration statement effective on October 20, 2020.~~10-Q | 42

Simultaneous with the consummation of the Initial Public Offering and the full exercise of the over-allotment option, we consummated the private placement of an aggregate of 6,700,000 warrants at a price of $1.50 per Private Placement Warrant, generating total proceeds of approximately $10.1 million. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.Item 6. Exhibits.

The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Of the gross proceeds received from the Initial Public Offering, the full exercise of the over-allotment option and the sale of the Private Placement Warrants, $402.5 million was placed in the Trust Account.** Furnished herewith.

~~We paid a total of $14.1 million in underwriting discounts and commissions and $22.8 million for other offering costs related to the Initial Public Offering.~~

For a description of the use of the proceeds generated in our Initial Public Offering, the sale of the Private Placement Warrants and the sale of the Founder Shares, see Part I, Item 2 of this Quarterly Report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~Quarterly Report~~report to be signed on its behalf by the undersigned ~~hereunto~~thereunto duly authorized.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Units, each consisting of one share of~~ Class A common stock, ~~and one-third of one warrant~~$0.0001 par value per share	~~SPNV.U~~OPAD	The New York Stock Exchange
Warrants to purchase Class A common stock ~~par value $0.0001 per share~~	~~SPNV~~OPADWS	The New York Stock Exchange
~~Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share~~	~~SPNV WS~~	~~The New York Stock Exchange~~


		Page
~~PART I. FINANCIAL INFORMATION~~Cautionary Note Regarding Forward-Looking Statements		3

~~Item 1.~~PART I.	~~Financial Statements (Unaudited)~~FINANCIAL INFORMATION	14
Item 1.	Financial Statements	4
	~~Unaudited~~ Condensed Consolidated Balance ~~Sheet as of September 30, 2020~~Sheets	14
	Condensed Consolidated Statements of Operations	5
	~~Unaudited~~ Condensed ~~Statement of Operations for the period from August 31, 2020 (inception) through September 30, 2020~~	2

	~~Unaudited Condensed Statement~~Consolidated Statements of Changes in Stockholders’ ~~Deficit for the period from August 31, 2020 (inception) through September 30, 2020~~Equity	36
	Condensed Consolidated Statements of Cash Flows	8
	~~Unaudited~~Notes to Condensed ~~Statement of Cash Flows for the period from August 31, 2020 (inception) through September 30, 2020~~Consolidated Financial Statements	49

Item 2.	~~Notes to Unaudited Condensed Financial Statements~~	5

~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1526

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

~~Item 4.~~	~~Controls and Procedures~~40	18

~~PART II. OTHER INFORMATION~~Item 4.	Controls and Procedures	41

~~Item 1.~~PART II.	~~Legal Proceedings~~OTHER INFORMATION	1942
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	1942

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, ~~from Registered~~and Issuer Purchases of Equity Securities	1942
Item 3.	Defaults Upon Senior Securities	42
Item 6.4.	~~Exhibits~~Mine Safety Disclosures	2042
Item 5.	Other Information	42
Item 6.	Exhibits	43

SIGNATURES		44

Assets:
Deferred offering costs associated with initial public offering	$	467,656
Total Assets	$	467,656

Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable	$	24,450
Accrued expenses		293,375
Franchise tax payable		16,488
Note payable - related party		98,599
Total current liabilities		432,912
Deferred legal fees		35,000
Total Liabilities		467,912

Commitments and Contingencies

Stockholders' Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		-
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; none issued and outstanding		-
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 10,062,500 shares issued and outstanding (1)(2)		1,006
Additional paid-in capital		23,994
Accumulated deficit		(25,256	)
Total stockholders' deficit		(256	)
Total Liabilities and Stockholders' Deficit	$	467,656

General and administrative expenses	$	8,768
Franchise tax expenses		16,488
Net loss	$	(25,256	)

Weighted average shares outstanding, basic and diluted ⁽¹⁾⁽²⁾		8,750,000

Basic and diluted net loss per share	$	(0.00	)

	Common Stock
	Class A				Class B				Additional Paid-In		Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance - August 31, 2020 (inception)		-	$	-		-	$	-	$	-	$	-		$	-
Issuance of Class B common stock to Sponsor (1)(2)		-		-		10,062,500		1,006		23,994		-			25,000
Net loss		-		-		-		-		-		(25,256	)		(25,256	)
Balance - September 30, 2020 (unaudited)		-	$	-		10,062,500	$	1,006	$	23,994	$	(25,256	)	$	(256	)


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


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


Large accelerated filer	☐	~~Accelerated filer~~☐	☐	Accelerated filer		☒
Non-accelerated filer	☒	☐		Smaller reporting company	☒	☐
Emerging growth company	☒	☐

Cash Flows from Operating Activities:
Net loss	$	(25,256	)
Adjustments to reconcile net loss to net cash used in operating activities:
General and administrative expenses paid by Sponsor under note payable		1,568
Changes in operating assets and liabilities:
Accrued expenses		7,200
Franchise tax payable		16,488
Net cash used in operating activities		0

Cash Flows from Financing Activities:
Proceeds from note payable to related party		97,031
Offering costs paid		(97,031	)
Net cash provided by financing activities		-

Net increase in cash		-

Cash - beginning of the period		-
Cash - end of the period	$	-

Supplemental disclosure of noncash activities:
Deferred offering costs paid by Sponsor in exchange for issuance of Class B common stock	$	25,000
Deferred offering costs included in accrued expenses	$	286,175
Deferred offering costs included in accounts payable	$	24,450
Deferred legal fees	$	35,000


		June 30,			December 31,
(in thousands, except par value per share) (Unaudited)		2023			2022
ASSETS
Current assets:
Cash and cash equivalents		$	115,599		$	97,241
Restricted cash			6,658			43,058
Accounts receivable			1,479			2,350
Real estate inventory			211,119			664,697
Prepaid expenses and other current assets			8,731			6,833
Total current assets			343,586			814,179
Property and equipment, net			4,874			5,194
Other non-current assets			4,641			5,696
TOTAL ASSETS	(1)	$	353,101		$	825,069
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	6,340		$	4,647
Accrued and other current liabilities			19,272			28,252
Secured credit facilities and other debt, net			161,316			605,889
Secured credit facilities and other debt - related party			29,926			60,176
Total current liabilities			216,854			698,964
Warrant liabilities			493			539
Other long-term liabilities			2,543			3,689
Total liabilities	(2)		219,890			703,192
Commitments and contingencies (Note 17)
Stockholders’ equity:
Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 27,225 and 15,491 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively			3			2
Class B common stock, zero shares authorized, issued and outstanding as of June 30, 2023; and $0.0001 par value, 20,000 shares authorized; 988 shares issued and outstanding as of December 31, 2022			—			—
Additional paid in capital			495,668			402,544
Accumulated deficit			(362,460	)		(280,669	)
Total stockholders’ equity			133,211			121,877
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	353,101		$	825,069


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share data) (Unaudited)	2023			2022			2023			2022
Revenue	$	230,147		$	1,079,531		$	839,726		$	2,453,368
Cost of revenue		207,916			986,550			810,210			2,228,245
Gross profit		22,231			92,981			29,516			225,123
Operating expenses:
Sales, marketing and operating		29,040			65,239			71,391			135,127
General and administrative		12,713			16,121			27,192			30,778
Technology and development		2,312			3,243			4,553			6,425
Total operating expenses		44,065			84,603			103,136			172,330
(Loss) income from operations		(21,834	)		8,378			(73,620	)		52,793
Other income (expense):
Change in fair value of warrant liabilities		435			12,537			46			18,201
Interest expense		(1,867	)		(7,771	)		(9,299	)		(14,967	)
Other income, net		965			24			1,247			28
Total other (expense) income		(467	)		4,790			(8,006	)		3,262
(Loss) income before income taxes		(22,301	)		13,168			(81,626	)		56,055
Income tax expense		(43	)		(1,610	)		(165	)		(3,509	)
Net (loss) income	$	(22,344	)	$	11,558		$	(81,791	)	$	52,546
Net (loss) income per share, basic	$	(0.82	)	$	0.71		$	(3.21	)	$	3.24
Net (loss) income per share, diluted	$	(0.82	)	$	0.66		$	(3.21	)	$	3.03
Weighted average common shares outstanding, basic		27,258			16,390			25,470			16,200
Weighted average common shares outstanding, diluted		27,258			17,383			25,470			17,346


	Common Stock				Additional Paid in			Accumulated			Total Stockholders’
(in thousands) (Unaudited)	Shares		Amount		Capital			Deficit			Equity
Balance at March 31, 2023		26,507	$	3	$	493,614		$	(340,116	)	$	153,501
Issuance of common stock upon exercise of stock options		1		—		4			—			4
Issuance of common stock upon vesting of restricted stock units		3		—		(5	)		—			(5	)
Exercise of pre-funded warrants		714		—		—			—			—
Stock-based compensation expense		—		—		2,055			—			2,055
Net loss		—		—		—			(22,344	)		(22,344	)
Balance at June 30, 2023		27,225	$	3	$	495,668		$	(362,460	)	$	133,211


	Six Months Ended
	June 30,
($ in thousands) (Unaudited)	2023			2022
Cash flows from operating activities:
Net (loss) income	$	(81,791	)	$	52,546
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation		380			249
Amortization of debt financing costs		1,980			1,546
Real estate inventory valuation adjustment		7,454			22,205
Stock-based compensation		3,898			4,028
Change in fair value of warrant liabilities		(46	)		(18,201	)
Change in fair value of derivative instrument		715			—
Loss on disposal of property and equipment		30			—
Changes in operating assets and liabilities:
Accounts receivable		871			(6,764	)
Real estate inventory		446,124			(179,060	)
Prepaid expenses and other assets		313			(5,847	)
Accounts payable		1,693			4,306
Accrued and other liabilities		(10,126	)		12,513
Net cash provided by (used in) operating activities		371,495			(112,479	)
Cash flows from investing activities:
Purchases of property and equipment		(90	)		(725	)
Purchases of derivative instruments		(1,872	)		—
Net cash used in investing activities		(1,962	)		(725	)
Cash flows from financing activities:
Borrowings from credit facilities and other debt		411,990			2,132,189
Repayments of credit facilities and other debt		(889,773	)		(2,017,985	)
Payment of debt financing costs		(172	)		(35	)
Borrowings from warehouse lending facility		18,488			—
Repayments of warehouse lending facility		(17,336	)		—
Proceeds from issuance of pre-funded warrants		90,000			—
Proceeds from exercise of pre-funded warrants		11			—
Issuance cost of pre-funded warrants		(784	)		—
Proceeds from exercise of stock options		53			4,775
Payments for taxes related to stock-based awards		(52	)		(235	)
Net cash (used in) provided by financing activities		(387,575	)		118,709
Net change in cash, cash equivalents and restricted cash		(18,042	)		5,505
Cash, cash equivalents and restricted cash, beginning of period		140,299			194,433
Cash, cash equivalents and restricted cash, end of period	$	122,257		$	199,938
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents	$	115,599		$	155,464
Restricted cash		6,658			44,474
Total cash, cash equivalents and restricted cash	$	122,257		$	199,938
Supplemental disclosure of cash flow information:
Cash payments for interest	$	13,932		$	19,941


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except percentages and homes sold, unaudited)	2023			2022			2023				2022
Gross profit (GAAP)	$	22,231		$	92,981		$	29,516			$	225,123
Gross margin		9.7	%		8.6	%		3.5	%			9.2	%
Homes sold		650			2,888			2,259		��		6,490
Gross profit per home sold	$	34.2		$	32.2		$	13.1			$	34.7
Adjustments:
Real estate inventory valuation adjustment - current period (1)		169			20,995			290				21,233
Real estate inventory valuation adjustment - prior period (2)		(13,679	)		(287	)		(58,030	)			(1,205	)
Interest expense capitalized (3)		1,358			2,793			6,035				7,071
Adjusted gross profit (loss)	$	10,079		$	116,482		$	(22,189	)		$	252,222
Adjusted gross margin		4.4	%		10.8	%		(2.6	)%			10.3	%
Adjustments:
Direct selling costs (4)		(5,743	)		(23,524	)		(23,804	)			(55,378	)
Holding costs on sales - current period (5)(6)		(269	)		(1,293	)		(1,811	)			(3,723	)
Holding costs on sales - prior period (5)(7)		(567	)		(526	)		(2,158	)			(907	)
Other income, net (8)		965			24			1,247				28
Contribution profit (loss)	$	4,465		$	91,163		$	(48,715	)		$	192,242
Contribution margin		1.9	%		8.4	%		(5.8	)%			7.8	%
Homes sold		650			2,888			2,259				6,490
Contribution profit (loss) per home sold	$	6.9		$	31.6		$	(21.6	)		$	29.6
Adjustments:
Interest expense capitalized (3)		(1,358	)		(2,793	)		(6,035	)			(7,071	)
Interest expense on homes sold - current period (9)		(1,292	)		(4,115	)		(8,631	)			(11,149	)
Interest expense on homes sold - prior period (10)		(3,709	)		(1,999	)		(13,899	)			(3,721	)
Contribution (loss) profit after interest	$	(1,894	)	$	82,256		$	(77,280	)		$	170,301
Contribution margin after interest		(0.8	)%		7.6	%		(9.2	)%			6.9	%
Homes sold		650			2,888			2,259				6,490
Contribution (loss) profit after interest per home sold	$	(2.9	)	$	28.5		$	(34.2	)		$	26.2


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except percentages, unaudited)	2023			2022			2023			2022
Net (loss) income (GAAP)	$	(22,344	)	$	11,558		$	(81,791	)	$	52,546
Change in fair value of warrant liabilities		(435	)		(12,537	)		(46	)		(18,201	)
Adjusted net (loss) income	$	(22,779	)	$	(979	)	$	(81,837	)	$	34,345
Adjusted net (loss) income margin		(9.9	)%		(0.1	)%		(9.7	)%		1.4	%
Adjustments:
Interest expense		1,867			7,771			9,299			14,967
Amortization of capitalized interest (1)		1,358			2,793			6,035			7,071
Income tax expense		43			1,610			165			3,509
Depreciation and amortization		178			130			380			249
Amortization of stock-based compensation		2,055			2,400			3,898			4,028
Adjusted EBITDA	$	(17,278	)	$	13,725		$	(62,060	)	$	64,169
Adjusted EBITDA margin		(7.5	)%		1.3	%		(7.4	)%		2.6	%


	Three Months Ended June 30,
													% of Revenue
(in thousands, except percentages)	2023			2022			$ Change			% Change			2023			2022
Revenue	$	230,147		$	1,079,531		$	(849,384	)		(78.7	)%		100.0	%		100.0	%
Cost of revenue		207,916			986,550			(778,634	)		(78.9	)%		90.3	%		91.4	%
Gross profit		22,231			92,981			(70,750	)		(76.1	)%		9.7	%		8.6	%
Operating expenses:
Sales, marketing and operating		29,040			65,239			(36,199	)		(55.5	)%		12.6	%		6.0	%
General and administrative		12,713			16,121			(3,408	)		(21.1	)%		5.6	%		1.5	%
Technology and development		2,312			3,243			(931	)		(28.7	)%		1.0	%		0.3	%
Total operating expenses		44,065			84,603			(40,538	)		(47.9	)%		19.2	%		7.8	%
(Loss) income from operations		(21,834	)		8,378			(30,212	)		(360.6	)%		(9.5	)%		0.8	%
Other income (expense):
Change in fair value of warrant liabilities		435			12,537			(12,102	)		(96.5	)%		0.2	%		1.1	%
Interest expense		(1,867	)		(7,771	)		5,904			(76.0	)%		(0.8	)%		(0.7	)%
Other income, net		965			24			941		*				0.4	%		0.0	%
Total other (expense) income		(467	)		4,790			(5,257	)		(109.7	)%		(0.2	)%		0.4	%
(Loss) income before income taxes		(22,301	)		13,168			(35,469	)		(269.4	)%		(9.7	)%		1.2	%
Income tax expense		(43	)		(1,610	)		1,567			(97.3	)%		0.0	%		(0.1	)%
Net (loss) income	$	(22,344	)	$	11,558		$	(33,902	)		(293.3	)%		(9.7	)%		1.1	%


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Fourth Restated Certificate of Incorporation, dated June 13, 2023	8-K	001-39641	3.1	6/13/23
3.2	Amended and Restated Bylaws	8-K	001-39641	3.3	6/13/23
10.1	Amendment Number Three, dated June 16, 2023, to Third Amended and Restated Master Loan and Security Agreement dated as of June 7, 2022, by and among Citibank, N.A., OP SPE Borrower Parent, LLC, OP SPE PHX1, LLC, OP SPE TPA1, LLC and Wells Fargo Bank, N.A.	8-K	001-39641	10.1	6/20/23
10.2	Bonus Letter Agreement, dated July 3, 2023, by and between Benjamin Aronovitch and Offerpad Solutions Inc.	8-K	001-39641	10.3	7/6/23
10.3	Employment Agreement, effective as of July 10, 2023, by and between Jawad Ahsan and Offerpad Solutions Inc.	8-K	001-39641	10.1	7/6/23
10.4	Form of 2023 Long Term Incentive Award Agreement (under the 2021 Incentive Award Plan)	8-K	001-39641	10.2	7/6/23
10.5*	Offerpad Solutions Inc. Non-Employee Director Compensation Program
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~Exhibit~~ ~~Number~~		~~Description~~

31.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		~~Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
32.2*		~~Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~101.INS~~		~~XBRL Instance Document~~
~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~


~~Dated: December 4, 2020~~	~~SUPERNOVA PARTNERS ACQUISITION COMPANY,~~	OFFERPAD SOLUTIONS INC.

Date: August 2, 2023	~~By:~~	By:	/s/ ~~Robert D. Reid~~Brian Bair
	~~Name:~~	~~Robert D. Reid~~	Brian Bair
	~~Title:~~		Chief Executive Officer and Chairman of the Board (Principal Executive Officer)

Date: August 2, 2023		By:	/s/ Jawad Ahsan
			Jawad Ahsan
			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)