Commitments, Contingencies and Related Party Transactions

9 Months Ended

Sep. 30, 2021

Commitments Contingencies And Related Party Transactions [Abstract]

Commitments, Contingencies and Related Party Transactions

Commitment: The Company leases its office facilities under a non-cancelable operating lease agreement with an unrelated party. On November 26, 2019, the Company amended the lease agreement to rent additional office space. The amendment reduced the required deposit of a letter of credit from $1,500 thousand to $1,000 thousand, which would be paid to the lessor in the event of default. On June 29, 2021, the required deposit of a letter of credit associated with the agreement was increased to $1,750 thousand. As of September 30, 2021 and December 31, 2020, there were no outstanding balances on the letter of credit. The amendment also extended the expiration date of the lease to September 2030.

Rent expense, which is included in occupancy expense in the consolidated statements of operations, totaled $998 thousand and $835 thousand for the three months ended September 30, 2021 and 2020, respectively, and $2,748 thousand and $2,239 thousand for the nine months ended September 30, 2021 and 2020, respectively.

Future minimum lease payments as of September 30, 2021 are as follows (in thousands):


Year	Amount
Remainder of 2021	$	562
2022	2,271
2023	2,339
2024	2,410
2025	2,482
Thereafter	12,840
Total	$	22,904

Legal contingencies: Due to the nature of its business activities, the Company is subject to extensive regulations and threatened legal action which arises in the normal course of business.

The Company has received inquiries from certain agencies and states on its lending compliance, the validity of the bank partnership model, and its ability to facilitate the servicing of bank originated loans. Management is confident that its lending practices and the bank partnership structure, in addition to the Company’s technologies, services, and overall relationship with its bank partners, complies with state and federal laws. However, the inquiries are still in process and the outcome is unknown at this time.

In the opinion of management, there is no pending or threatened legal action of any material consequence as of September 30, 2021 and December 31, 2020 and any reasonably possible losses in addition to amounts accrued are not material to the financial statements.

Related party transactions: OppFi-LLC previously had an unsecured line of credit agreement with SCG with a maximum available amount of $4,000 thousand, which was paid in full on March 30, 2021. Interest expense related to this related party transaction was $141 thousand for the three months ended September 30, 2020. Interest expense was $137 thousand and $420 thousand for the nine months ended September 30, 2021 and 2020, respectively.

In August 2020, OppFi-LLC entered into a Management Fee Agreement (the “Management Fee Agreement”) with SCG. Pursuant to the terms of the Management Fee Agreement, SCG provided board and advisory services. Effective upon the Closing, OppFi-LLC terminated the Management Fee Agreement and incurred $3,000 thousand in transaction costs, which has been offset against additional paid-in capital in the consolidated balance sheets. For the three months ended September 30, 2020, management fees under the Management Fee Agreement totaled $280 thousand. For the nine months ended September 30, 2021 and 2020, management fees under the Management Fee Agreement totaled $350 thousand and $280 thousand, respectively.

In connection with the Business Combination, OppFi entered into the TRA with the Members.