What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-10 compared with 2021-08-11 · 365 added, 221 removed, 774 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands, except s hare data)

September 30,

2021 December 31,

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Accounts payable and other accrued liabilities $ 156,030 $ 25,270

Current portion of credit facilities and other secured borrowings 1,690,878 346,322

Warrant liabilities - current 38,669 —

Non-recourse asset-backed debt - current portion 4,049,812 339,173

Other secured borrowings 19,728 7,149

Interest payable 9,746 1,081

1 unchanged sentence

Total current liabilities 4,239,953 393,389

CREDIT FACILITIES – Net of current portion 595,579 135,467

NON-RECOURSE ASSET-BACKED DEBT – Net of current portion 1,367,989 135,467

CONVERTIBLE SENIOR NOTES 952,415 —

WARRANT LIABILITIES — 47,349

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Accumulated deficit ( 1,514,509 ) ( 1,043,449 )

Accumulated other comprehensive income — 41

Accumulated other comprehensive (loss) income ( 108 ) 41

Total shareholders’ equity 2,362,861 1,552,658

1 unchanged sentence

________________

(1) The Company’s consolidated assets at June 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs:

(1) The Company’s consolidated assets at September 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs:

Cash and cash equivalents, $ 11,567 and $ 15,849 ;

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and Total assets of $ 6,760,172 and $ 564,666 , respectively.

(2) The Company’s consolidated liabilities at June 30, 2021 and December 31, 2020 include the following liabilities for which the VIE creditors do not have recourse to Opendoor:

(2) The Company’s consolidated liabilities at September 30, 2021 and December 31, 2020 include the following liabilities for which the VIE creditors do not have recourse to Opendoor:

Accounts payable and other accrued liabilities, $ 66,134 and $ 2,335 ;

Interest payable, $ 9,413 and $ 1,059 ;

Current portion of credit facilities and other secured borrowings, $ 1,666,522 and $ 339,173 ;

Credit facilities, net of current portion, $ 599,000 and $ 135,467 ;

Current portion of non-recourse asset-backed debt, $ 4,049,812 and $ 339,173 ;

Non-recourse asset-backed debt, net of current portion, $ 1,367,989 and $ 135,467 ;

and Total liabilities, $ 5,493,348 and $ 478,034 , respectively.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Unrealized (loss) gain on marketable securities ( 106 ) ( 158 ) ( 147 ) 126

Currency translation adjustment ( 2 ) — ( 2 ) —

COMPREHENSIVE LOSS $ ( 56,927 ) $ ( 81,011 ) $ ( 471,209 ) $ ( 198,842 )

18 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

BALANCE-March 31, 2021 — — — — — — — — — — 585,691,729 58 3,697,382 ( 1,313,885 ) 6 2,383,561

BALANCE-June 30, 2021 — — — — — — — — — — 593,838,919 59 3,875,552 ( 1,457,690 ) — 2,417,921

Issuance of common stock in connection with the February 2021 Offering — — — — — — — — — — — — — — — —

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Exercise of stock options — — — — — — — — — — 2,549,414 — 4,532 — — 4,532

Purchases of Capped Calls related to the 2026 Notes — — — — — — — — — — — — ( 118,766 ) — — ( 118,766 )

Stock-based compensation — — — — — — — — — — — — 64,318 — — 64,318

1 unchanged sentence

Net loss — — — — — — — — — — — — — ( 56,819 ) — ( 56,819 )

BALANCE–June 30, 2021 — $ — — $ — — $ — — $ — — $ — 593,838,919 $ 59 $ 3,875,552 $ ( 1,457,690 ) $ — $ 2,417,921

BALANCE–September 30, 2021 — $ — — $ — — $ — — $ — — $ — 607,215,233 $ 60 $ 3,877,418 $ ( 1,514,509 ) $ ( 108 ) $ 2,362,861

Temporary Equity Shareholders’ Equity (Deficit)

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Exercise of stock options — — — — — — — — — — 6,791,489 1 11,268 — — 11,269

Purchases of Capped Calls related to the 2026 Notes — — — — — — — — — — — — ( 118,766 ) — — ( 118,766 )

Stock-based compensation — — — — — — — — — — — — 474,085 — — 474,085

1 unchanged sentence

Net loss — — — — — — — — — — — — — ( 471,060 ) — ( 471,060 )

BALANCE–June 30, 2021 — $ — — $ — — $ — — $ — — $ — 593,838,919 $ 59 $ 3,875,552 $ ( 1,457,690 ) $ — $ 2,417,921

BALANCE–September 30, 2021 — $ — — $ — — $ — — $ — — $ — 607,215,233 $ 60 $ 3,877,418 $ ( 1,514,509 ) $ ( 108 ) $ 2,362,861

OPENDOOR TECHNOLOGIES INC.

16 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

BALANCE-March 31, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 84,427,317 — $ 60,794 $ ( 852,679 ) $ ( 281 ) $ ( 792,166 )

BALANCE-June 30, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 84,983,061 — $ 64,777 $ ( 908,598 ) $ 302 $ ( 843,519 )

Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes — — — — — — — — — — — — 212,940 — — 212,940

Vesting of restricted stock — — — — — — — — — — 336,665 — 21 — — 21

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Net loss — — — — — — — — — — — — — ( 80,853 ) — ( 80,853 )

BALANCE–June 30, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 84,983,061 $ — $ 64,777 $ ( 908,598 ) $ 302 $ ( 843,519 )

BALANCE–September 30, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 85,482,847 $ — $ 280,657 $ ( 989,451 ) $ 144 $ ( 708,650 )

Temporary Equity Shareholders’ Equity (Deficit)

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BALANCE-December 31, 2019 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 83,748,443 — $ 57,362 $ ( 790,483 ) $ 18 $ ( 733,103 )

Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes — — — — — — — — — — — — 212,940 — — 212,940

Vesting of restricted stock — — — — — — — — — — 1,123,200 — 95 — — 95

3 unchanged sentences

Net loss — — — — — — — — — — — — — ( 198,968 ) — ( 198,968 )

BALANCE–June 30, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 84,983,061 $ — $ 64,777 $ ( 908,598 ) $ 302 $ ( 843,519 )

BALANCE–September 30, 2020 40,089,513 $ 9,763 23,840,816 $ 20,049 29,070,700 $ 80,519 63,470,884 $ 257,951 157,952,523 $ 1,013,220 85,482,847 $ — $ 280,657 $ ( 989,451 ) $ 144 $ ( 708,650 )

See accompanying notes to condensed consolidated financial statements.

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(In t housands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Changes in fair value of derivative instruments ( 243 ) 22,568

Changes in fair value of marketable equity securities ( 51,013 ) —

Payment-in-kind interest — 3,910

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Purchase of non-marketable equity securities ( 15,100 ) —

Acquisitions, net of cash acquired ( 20,110 ) —

Net cash used in investing activities ( 431,825 ) ( 50,820 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of convertible senior notes, net of issuance costs 953,066 —

Purchase of capped calls related to the convertible senior notes ( 118,766 ) —

Proceeds from exercise of stock options 11,268 1,078

2 unchanged sentences

Issuance cost of common stock ( 28,876 ) —

Proceeds from credit facilities and other secured borrowings 3,241,692 824,597

Principal payments on credit facilities and other secured borrowings ( 1,438,136 ) ( 1,723,443 )

Proceeds from non-recourse asset-backed debt 7,782,076 912,082

Principal payments on non-recourse asset-backed debt ( 2,837,436 ) ( 1,949,165 )

Proceeds from other secured borrowings 150,748 85,996

Principal payments on other secured borrowings ( 138,169 ) ( 74,720 )

Payment of loan origination fees and debt issuance costs ( 9,274 ) ( 3,068 )

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during the period for interest $ 57,151 $ 47,977

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In t housands)

DISCLOSURES OF NONCASH FINANCING ACTIVITIES:

Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes $ — $ 212,940

Issuance of common stock in extinguishment of warrant liabilities $ ( 35,170 ) $ —

RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS:

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Opendoor streamlines the home selling and buying transaction and creates an end-to-end experience online.

Since its inception through June 30, 2021, the Company had completed over 100,000 home transactions.

As of June 30, 2021, the Company operated in 39 markets across the United States.

The Company was incorporated in Delaware on December 30, 2013.

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The change in fair value from the Closing Date through December 31, 2020 amounted to a gain of $ 33.8 million.

The impact of the misstatement as of December 31, 2020 resulted in an understatement of the private warrants liability of $ 47.3 million, and an overstatement of accumulated deficit and additional paid-in capital of $ 33.8 million and $ 81.1 million respectively.

The impact of the misstatement as of December 31, 2020 resulted in an understatement of the warrant liability of $ 47.3 million, and an overstatement of accumulated deficit and additional paid-in capital of $ 33.8 million and $ 81.1 million respectively.

The Company evaluated the impact of error related to the accounting treatment of Sponsor Warrants with respect to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and determined, based on consideration of quantitative and qualitative factors, that the error had an immaterial impact, individually and in aggregate.

As such, the Company corrected its accounting for Sponsor Warrants in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

As such, the Company corrected its accounting for Sponsor Warrants in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021.

The following table provides the impact of the correction on the Company's consolidated balance sheet as of December 31, 2020, as presented herein (in thousands):

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The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to generally accepted accounting principles in the United States of America (“GAAP”).

The condensed consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the three and six month periods ended June 30, 2021 and 2020 include the accounts of Opendoor, its wholly owned subsidiaries and VIEs where the Company is the primary beneficiary.

The condensed consolidated financial statements as of September 30, 2021 and December 31, 2020 and for the three and nine month periods ended September 30, 2021 and 2020 include the accounts of Opendoor, its wholly owned subsidiaries and VIEs where the Company is the primary beneficiary.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements herein.

Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period's presentation.

As a result of the Business Combination completed on December 18, 2020, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted.

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Actual results may differ materially from such estimates.

Significant estimates, assumptions and judgments made by management include, among others, the determination of the fair value of common stock, share-based awards, warrants, derivatives, convertible notes, and inventory impairment (“real estate inventory valuation adjustment”).

Significant estimates, assumptions and judgments made by management include, among others, the determination of the fair value of common stock, share-based awards, warrants, derivatives, convertible senior notes, and inventory impairment (“real estate inventory valuation adjustment”).

Management believes that the estimates and judgments upon which they rely are reasonable based upon information available to them at the time that these estimates and judgments are made.

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its rates of revenue growth;

its ability to manage advertising inventory or pricing;

its ability to manage inventory;

engagement and usage of its products;

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Description of Business and Accounting Policies” in the Annual Report.

There have been no changes to these significant accounting policies for the six month period ended June 30, 2021, except as noted below.

There have been no changes to these significant accounting policies for the nine month period ended September 30, 2021, except as noted below.

Marketable Securities

The Company's investments in marketable securities consist of debt securities classified as available-for-sale as well as marketable equity securities.

The Company's available-for-sale debt securities are measured at fair value with unrealized gains and losses included in Accumulated other comprehensive income (loss) in shareholder's equity and realized gains and losses included in Other income.

The Company's marketable equity securities are measured at fair value with changes in fair value recognized in Other income.

See “Note 4 — Cash, Cash Equivalents, and Investments” for further discussion.

Convertible Senior Notes

The 0.25 % convertible senior notes due in 2026 (the "2026 Notes") issued by the Company are accounted for wholly as debt in accordance with ASU 2020-06.

The 2026 Notes have an initial carrying value equal to the net proceeds from issuance.

Issuance costs associated with the 2026 Notes are amortized over the term using the effective interest method.

Conversions are settled through payment of cash or a combination of cash and stock, at the Company's option.

Upon conversion, the carrying amount of the 2026 Notes, including any unamortized debt issuance costs, is reduced by cash paid, with any difference being reflected as a change in equity.

There will not be any gains or losses recognized upon a conversion.

The Company purchased certain capped calls in connection with the issuance of the 2026 Notes in August 2021 which it expects to reduce potential dilution from conversions of the 2026 Notes.

The capped calls were determined to be freestanding financial instruments that meet the criteria for classification in equity;

as such, the capped calls were recorded as a reduction of Additional paid-in capital within shareholders' equity and will not be subsequently remeasured.

Derivative Instruments

The Company’s derivative instruments are comprised of interest rate caps, interest rate lock commitments (“IRLCs”), and embedded conversion options related to the convertible notes.

The Company’s derivative instruments are comprised of interest rate caps, interest rate lock commitments (“IRLCs”), and embedded conversion options related to the convertible notes issued in 2019 (the "2019 Convertible Notes").

The Company’s derivative instruments are freestanding in nature and some are utilized as economic hedges.

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All gains and losses on these investments, realized and unrealized, are recorded in Other income-net on the Company's condensed consolidated statements of operations.

The Company assesses whether an impairment loss on its non-marketable equity securities has occurred due to declines in fair value or other market conditions.

The Company assesses whether an impairment loss on its non-marketable equity securities has occurred due to declines in fair value or other

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

market conditions.

If any impairment is identified for non-marketable equity securities, the Company writes down the investment to its fair value.

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If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent the carrying amount of the underlying asset exceeds its fair value.

Impairment loss of $ 0.9 million and $ 3.5 million was recognized for the three and six months ended June 30, 2021, respectively.

Of these amounts, $ 0.6 million and $ 2.5 million are included in Technology and development for the three and six months ended June 30, 2021, respectively, and $ 0.3 million and $ 1.0 million are included in General and administrative for the three and six months ended June 30, 2021, respectively.

Impairment loss of $ 1.8 million was recognized for each of the three and six months ended June 30, 2020.

Of this amount, $ 0.9 million is included in Technology and development and $ 0.9 million is included in General and administrative, for both the three and six months ended June 30, 2020, respectively.

The impairment loss recognized for the three and six months ended June 30, 2021 is related to abandonment of property and equipment and sublease of certain right of use assets.

Impairment loss of $ 0.7 million and $ 4.2 million was recognized for the three and nine months ended September 30, 2021, respectively.

Of these amounts, $ 0.7 million and $ 3.2 million are included in Technology and development for the three and nine months ended September 30, 2021, respectively, and $ 0.0 million and $ 1.0 million are included in General and administrative for the three and nine months ended September 30, 2021, respectively.

There was no impairment loss recognized for the three months ended September 30, 2020 while impairment loss of $ 1.8 million was recognized for the nine months ended September 30, 2020.

Of this amount, $ 0.9 million is included in Technology and development and $ 0.9 million is included in General and administrative.

The impairment loss recognized for the three and nine months ended September 30, 2021 is related to abandonment of property and equipment, impairment and abandonment of certain internally developed software projects, and sublease of certain right of use assets.

Public and Sponsor Warrants

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Each whole warrant entitled the holder to purchase one share of Class A common stock at an exercise price of $ 11.50 per share (the “Public Warrants”).

Simultaneously with the closing of the IPO, SCH completed the private sale of 6,133,333 warrants to SCH’s

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

sponsor at a price of $ 1.50 per warrant (the “Sponsor Warrants”).

Simultaneously with the closing of the IPO, SCH completed the private sale of 6,133,333 warrants to SCH’s sponsor at a price of $ 1.50 per warrant (the “Sponsor Warrants”).

Each Sponsor Warrant allowed the sponsor to purchase one share of Class A common stock at $ 11.50 per share.

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Since the holder of the instrument is not an input to a standard option pricing model (a consideration with respect to the indexation guidance), the fact that a change in the holder could impact the value of the Sponsor Warrants means the Sponsor Warrants were not indexed to the Company’s own stock.

Since the Private Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period.

Since the Sponsor Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period.

The Company concluded that the Public Warrants, which do not have the same exercise and settlement features as the Sponsor Warrants, meet the criteria to be classified in shareholders' equity.

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The end of the redemption period was July 9, 2021, at which time the Company redeemed all unexercised warrants at a price of $ 0.10 per Warrant.

See “Note 18 — Subsequent Events” for further information.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In August 2020, the FASB issued ASU 2020-06, to simplify accounting for certain financial instruments.

This guidance eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

The standard also amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

The Company adopted this ASU as of January 1, 2021 using the modified retrospective method.

The adoption of this ASU did not have a material impact to the Company’s condensed consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

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This accounting treatment is equivalent to Opendoor Labs Inc.

issuing stock for the net assets of SCH, accompanied by a recapitalization whereby no goodwill or other intangible

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

assets are recorded.

issuing stock for the net assets of SCH, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.

Operations prior to the Business Combination are those of Opendoor Labs Inc.

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For periods prior to the Business Combination, the reported share and per share amounts have been retroactively converted (“Retroactive Conversion”) by applying the Exchange Ratio.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

In connection with the Business Combination, the Company incurred approximately $ 43.6 million of equity issuance costs, consisting of underwriting, legal, and other professional fees, which are recorded to additional paid-in capital as a reduction of proceeds.

Other Acquisitions

On September 3, 2021, the Company acquired 100 % of the outstanding equity of Services Labs, Inc., including its consolidated subsidiaries (“Pro.com”), in exchange for $ 21.8 million in cash consideration.

The Company acquired Pro.com, a construction project platform, for its technology and talent.

Acquired intangible assets consist of developed technology valued at $ 4.2 million which will be amortized over one year .

REAL ESTATE INVENTORY

The following table presents the components of inventory, net of applicable real estate inventory valuation adjustments, as of the dates presented (in thousands):

September 30,

2021 December 31,

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CASH, CASH EQUIVALENTS, AND INVESTMENTS

The amortized cost, gross unrealized gains and losses, and fair value of cash, cash equivalents, and marketable securities as of June 30, 2021 and December 31, 2020, are as follows (in thousands):

June 30, 2021

The amortized cost, gross unrealized gains and losses, and fair value of cash, cash equivalents, and marketable securities as of September 30, 2021 and December 31, 2020, are as follows (in thousands):

September 30, 2021

Fair Value Cash and Cash

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Time deposit 300,225 — — 300,225 300,225 —

Corporate debt securities 205,805 17 ( 120 ) 205,702 — 205,702

Mutual fund 200,264 — — 200,264 — 200,264

Equity securities 61,013 — — 61,013 — 61,013

Asset-backed securities 4,907 — ( 1 ) 4,906 — 4,906

Certificates of deposit 4,750 — — 4,750 — 4,750

Sovereign bonds 4,418 — ( 2 ) 4,416 — 4,416

Total $ 1,839,932 $ 17 $ ( 123 ) $ 1,839,826 $ 1,358,775 $ 481,051

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Total $ 1,460,260 $ 48 $ ( 6 ) $ 1,460,302 $ 1,412,665 $ 47,637

The Company has no debt securities with unrealized losses at June 30, 2021.

A summary of debt securities with unrealized losses aggregated by period of continuous unrealized loss at December 31, 2020 is as follows (in thousands):

A summary of debt securities with unrealized losses aggregated by period of continuous unrealized loss is as follows (in thousands):

Less than 12 Months 12 Months or Greater Total

September 30, 2021 Fair Value Unrealized

Fair Value Unrealized

Corporate debt securities $ 174,669 $ ( 120 ) $ — $ — $ 174,669 $ ( 120 )

Asset-backed securities 4,906 ( 1 ) — — 4,906 ( 1 )

Certificate of deposit 4,750 — — — 4,750 —

Sovereign bonds 4,416 ( 2 ) — — 4,416 ( 2 )

Total $ 188,741 $ ( 123 ) $ — $ — $ 188,741 $ ( 123 )

Less than 12 Months 12 Months or Greater Total

December 31, 2020 Fair Value Unrealized

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Total $ 31,445 $ ( 6 ) $ — $ — $ 31,445 $ ( 6 )

As of June 30, 2021, the Company had $ 10.0 million of non-marketable equity securities without a readily determinable fair value, measured using the Measurement Alternative.

The scheduled contractual maturities of marketable securities as of September 30, 2021 are as follows (in thousands):

September 30, 2021 Fair Value Within

Corporate debt securities $ 205,702 $ 58,452 $ 147,250

Asset-backed securities 4,906 2,044 2,862

Certificate of deposit 4,750 4,750 —

Sovereign bonds 4,416 4,416 —

Total $ 219,774 $ 69,662 $ 150,112

As of September 30, 2021, the Company had $ 5.1 million of non-marketable equity securities without a readily determinable fair value, measured using the Measurement Alternative.

The Company did not record any adjustments to the carrying value of its non-marketable equity securities.

As of December 31, 2020, the Company had no non-marketable equity securities without a readily determinable fair value.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

DERIVATIVE INSTRUMENTS

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The interest rate risk associated with the fluctuations in market interest rates between commitment date and funding date with respect to IRLCs is mitigated as the Company operates under the best effort basis whereby at the time of commitment, the Company enters into a sales commitment with a third-party for the same prospective loan.

The fair value of

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

interest rate lock commitments is presented in Other current assets.

The fair value of interest rate lock commitments is presented in Other current assets.

The change in fair value on IRLCs is a component of Other revenue.

Embedded Conversion Options

In connection with the Company’s issuance of convertible notes in 2019 (the “Convertible Notes”), the Company bifurcated the embedded conversion features associated with the Convertible Notes.

The Company bifurcated the embedded conversion features associated with the 2019 Convertible Notes.

The 2019 Convertible Notes and the related bifurcated embedded conversion options were extinguished in September 2020.

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Fair Value Derivatives

June 30, 2021 Asset Liability

September 30, 2021 Asset Liability

Interest rate lock commitments $ 34,146 $ 616 $ —

2 unchanged sentences

Interest rate lock commitments $ 15,130 $ 373 $ —

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

The following table presents the net gains and losses recognized on derivatives within the respective line items in the statement of operations for the periods indicated (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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The Company has a potentially significant variable interest in the entities based upon the equity interest the Company holds in the VIEs.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

The following table summarizes the assets and liabilities related to the VIEs consolidated by the Company as of June 30, 2021 and December 31, 2020 (in thousands):

The following table summarizes the assets and liabilities related to the VIEs consolidated by the Company as of September 30, 2021 and December 31, 2020 (in thousands):

September 30,

2021 December 31,

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Real estate inventory 6,131,362 460,680

141,938 6,729

Total assets $ 6,760,172 $ 564,666

Credit facilities $ 2,265,522 $ 474,640

Non-recourse asset-backed debt $ 5,417,801 $ 474,640

Total liabilities $ 5,493,348 $ 478,034

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See “Note 7 — Credit Facilities and Long-Term Debt” for further discussion of the recourse obligations with respect to the VIEs.

CREDIT FACILITIES AND LONG-TERM DEBT

Non-Recourse Asset-backed Financing Facilities

The Company utilizes inventory financing facilities consisting of asset-backed senior credit facilities and asset-backed mezzanine term debt facilities to provide financing for the Company’s real estate inventory purchases and renovation.

The credit facilities are secured by the assets and equity of one or more SPEs.

Each SPE is a consolidated subsidiary of Opendoor and a separate legal entity.

Neither the assets nor credit of any such SPE are generally available to satisfy the debts and other obligations of any other Opendoor entities, except to the extent other Opendoor entities are also a party to the financing arrangements.

These facilities are non-recourse to Opendoor and, with limited exceptions, non-recourse to other Opendoor subsidiaries.

These SPEs are variable interest entities and Opendoor is determined to be the primary beneficiary based on its power to direct the activities that most significantly impact the economic outcomes of the entities through its role in designing the entities and managing the real estate inventory purchased and sold by the entities.

The Company has potentially significant variable interest in the entities based upon the equity interest the Company holds in the VIEs.

Asset-backed Senior Credit Facilities

The Company classifies the senior revolving credit facilities as current liabilities on the Company’s condensed consolidated balance sheets as amounts drawn to acquire and renovate homes are required to be repaid as the related real estate inventory is sold, which the Company expects to occur within 12 months.

The Company classifies its senior term debt facility as a long-term liability on the Company's condensed consolidated balance sheets because its borrowings under this facility are

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

generally not required to be repaid until the final maturity date.

The following table summarizes certain details related to the Company’s credit facilities outstanding as of June 30, 2021 and December 31, 2020 (in thousands, except interest rates):

June 30, 2021 Borrowing

CREDIT FACILITIES AND LONG-TERM DEBT

The following tables summarize certain details related to the Company's credit facilities and long-term debt as of September 30, 2021 and December 31, 2020 (in thousands, except interest rates):

Outstanding Amount

September 30, 2021 Borrowing

Current Non-Current Weighted

Interest Rate

End of Revolving / Withdrawal Period

Final Maturity

Non-Recourse Asset-Backed Debt:

Asset-Backed Senior Credit Facilities

Revolving Facility 2018-2 $ 1,000,000 $ 999,206 $ — 2.84 % September 23, 2022 December 23, 2022

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Revolving Facility 2019-3 925,000 627,938 — 3.25 % August 22, 2022 August 21, 2023

Revolving Facility 2021-1 125,000 112,096 — 2.15 % October 31, 2022 October 31, 2022

Term Debt Facility 2021-S1 400,000 — 250,000 3.48 % April 1, 2024 April 1, 2025

Term Debt Facility 2021-S2 600,000 — 500,000 3.20 % September 10, 2024 September 10, 2025

Total $ 5,730,000 $ 4,049,812 $ 750,000

December 31, 2020 Outstanding

Weighted Average

Issuance Costs ( 3,234 )

Carrying Value $ 746,766

Asset-Backed Mezzanine Term Debt Facilities

Term Debt Facility 2016-M1 $ 324,000 $ — $ 324,000 10.00 % October 31, 2023 March 31, 2025

Term Debt Facility 2020-M1 300,000 — 300,000 10.00 % January 23, 2023 January 23, 2026

Total $ 624,000 $ — $ 624,000

Issuance Costs ( 2,777 )

Carrying Value $ 621,223

Total Non-Recourse Asset-Backed Debt $ 6,354,000 $ 4,049,812 $ 1,367,989

Recourse Debt - Other Secured Borrowings:

Mortgage Financing

Repo Facility 2019-R1 $ 100,000 $ 19,728 $ — 1.84 % May 26, 2022 May 26, 2022

Total Recourse Debt $ 100,000 $ 19,728 $ —

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Outstanding Amount

December 31, 2020 Current Non-Current Weighted

Interest Rate

Non-Recourse Asset-Backed Debt:

Asset-Backed Senior Credit Facilities

Revolving Facility 2018-1 $ — $ — 4.28 %

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Total $ 339,173 $ —

Asset-Backed Mezzanine Term Debt Facilities

Term Debt Facility 2016-M1 $ — $ 40,000 10.00 %

Term Debt Facility 2020-M1 — 100,000 10.00 %

Total $ — $ 140,000

Issuance Costs ( 4,533 )

Carrying Value $ 135,467

Total Non-Recourse Asset-Backed Debt $ 339,173 $ 135,467

Recourse Debt - Other Secured Borrowings:

Mortgage Financing

Repo Facility 2019-R1 $ 7,149 $ — 1.94 %

Total Recourse Debt $ 7,149 $ —

Non-Recourse Asset-backed Debt

The credit facilities are secured by the assets and equity of one or more SPEs.

Each SPE is a consolidated subsidiary of Opendoor and a separate legal entity.

These facilities are non-recourse to Opendoor and, with limited exceptions, non-recourse to other Opendoor subsidiaries.

The Company has potentially significant variable interest in the entities based upon the equity interest the Company holds in the VIEs.

Asset-backed Senior Credit Facilities

The Company classifies its senior term debt facilities as long-term liabilities on the Company's condensed consolidated balance sheets because its borrowings under these facilities are generally not required to be repaid until the final maturity date.

Undrawn borrowing capacity amounts under the senior credit facilities as reflected in the table above are in some cases not fully committed and any borrowings above the fully committed amounts are subject to the applicable lender’s discretion.

As of June 30, 2021, the Company had fully committed borrowing capacity with respect to the Company’s senior credit facilities of $ 2,057.7 million.

As of September 30, 2021, the Company had fully committed borrowing capacity with respect to the Company’s senior credit facilities of $ 3,837.4 million.

The total outstanding amount presented above includes $ 4,049.8 million of current liabilities and $ 750.0 million of non-current liabilities;

the carrying value of the non-current liabilities is reduced by issuance costs of $ 267 thousand.

the carrying value of the non-current liabilities is reduced by issuance costs of $ 3.2 million.

Outstanding amounts drawn under each senior credit facility are required to be repaid on the facility maturity date

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

or earlier if accelerated due to an event of default or other mandatory repayment event.

The final maturity dates and revolving/withdrawal period end dates reflected in the table above are inclusive of any extensions that are at the sole discretion of the Company.

These facilities may also have extensions subject to lender discretion that are not reflected in the table above.

These borrowings are collateralized by cash, equity in the real estate owning SPEs, and the real estate inventory funded by the relevant facility.

The lenders have legal recourse only to the real estate-owning SPE borrowers, certain SPE guarantors, and the assets securing the debt, and do not have general recourse to the Company.

The senior revolving credit facilities are typically structured with an initial 24 month revolving period during which time amounts can be borrowed, repaid and borrowed again.

The borrowing capacity is generally available until the end of the applicable revolving period as reflected in the table above.

For the senior term debt facility, the outstanding principal is generally not required to be repaid when homes financed through that facility are sold and instead is intended to remain outstanding until final maturity.

Outstanding amounts drawn under each senior revolving 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 final maturity dates and revolving period end dates reflected in the table above are inclusive of any extensions that are at the sole discretion of the Company.

The Company’s senior revolving credit facilities may also have extensions subject to lender discretion that are not reflected in the table above.

Borrowings under the senior revolving credit facilities accrue interest at a rate based on a LIBOR reference rate plus a margin that varies by facility.

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These facilities are generally fully prepayable at any time without penalty other than customary LIBOR breakage costs.

Borrowings under the senior term debt facility accrue interest at a fixed rate.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

These borrowings are collateralized by cash, equity in the real estate owning SPEs, and the real estate inventory funded by the relevant revolving credit facility.

The lenders have legal recourse only to the real estate-owning SPE borrowers, certain SPE guarantors, and the assets securing the debt, and do not have general recourse to the Company.

The senior revolving 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.

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The borrowing base for a given facility may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties or partial repayment of the facility.

The senior term debt facility has an aggregated property borrowing base, which increases or decreases based on the cost and the value of the properties financed under the facility, how long the Company has possessed such properties and the amount of cash collateral pledged by the SPE borrower.

The borrowing base for the facility may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties, cash or through partial repayment of the facility.

The senior term debt facilities are typically structured with an initial 36 month withdrawal period during which the outstanding principal amounts are generally not required to be repaid when homes financed through those facilities are sold and instead are intended to remain outstanding until final maturity for each facility.

Borrowings under the senior term debt facility accrue interest at a fixed rate.

The Company's senior term debt facilities may include upfront issuance costs that are capitalized as part of the facilities' respective carrying values.

These facilities are fully prepayable at any time but may be subject to certain customary prepayment penalties.

The senior term debt facilities have aggregated property borrowing bases, which increase or decrease based on the cost and the value of the properties financed under the facilities, how long the Company has possessed such properties and the amount of cash collateral pledged by the SPE borrowers.

The borrowing bases for the facilities may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties, cash or through partial repayment of the facilities.

Asset-backed Mezzanine Term Debt Facilities

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These facilities are structurally and contractually subordinated to the related senior revolving credit facilities.

The following table summarizes certain details related to the Company’s mezzanine term debt facilities as of June 30, 2021 (in thousands, except interest rates):

June 30, 2021 Borrowing

Term Debt Facility 2016-M1 $ 149,000 $ 149,000 10.00 % October 31, 2023 March 31, 2025

Term Debt Facility 2020-M1 300,000 300,000 10.00 % January 23, 2023 January 23, 2026

Total $ 449,000 $ 449,000

Issuance Costs ( 3,154 )

Carrying Value $ 445,846

As of June 30, 2021, there were no undrawn amounts under the mezzanine term debt facilities.

As of September 30, 2021, there were no undrawn amounts under the mezzanine term debt facilities.

Any amounts repaid reduce total borrowing capacity as repaid amounts are not available to be reborrowed.

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The Company’s mezzanine term debt facilities may also have extensions subject to lender discretion that are not reflected in the table above.

See Note 18 — Subsequent Events” for further information regarding the amendment of the Company's asset-backed mezzanine term debt facilities.

Borrowings under a given term debt facility accrue interest at a fixed rate.

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These facilities are fully prepayable at any time but may be subject to certain prepayment penalties.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

These borrowings are collateralized by cash and equity in certain holding companies that own the Company’s real estate owning SPEs.

2 unchanged sentences

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

The Company’s inventory financing facilities include customary representations and warranties, covenants and events of default.

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The terms of these inventory financing facilities and related financing documents require Opendoor 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 equity).

As of June 30, 2021, the Company was in compliance with all financial covenants and no event of default had occurred.

As of September 30, 2021, the Company was in compliance with all financial covenants and no event of default had occurred.

Mortgage Financing

The following tables summarize certain details related to the Company’s mortgage financing (in thousands, except interest rates):

June 30, 2021 Borrowing

Weighted Average Interest Rate End of Revolving Period Final

Repo Facility 2019-R1 $ 50,000 $ 24,355 1.85 % May 26, 2022 May 26, 2022

December 31, 2020 Outstanding Amount Weighted Average Interest Rate

Repo Facility 2019-R1 $ 7,149 1.94 %

To provide capital for Opendoor Home Loans, the Company utilizes a master repurchase agreement (the “Repurchase Agreement”) which is classified as a current liability on its condensed consolidated balance sheets.

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is the guarantor with respect to the Repurchase Agreement and the obligation to repurchase loans previously transferred under the arrangement for the benefit of the lender.

As of June 30, 2021, the Repurchase Agreement has a borrowing capacity of $ 50.0 million, of which $ 20.0 million is fully committed.

As of September 30, 2021, the Repurchase Agreement has a borrowing capacity of $ 100.0 million, of which $ 20.0 million is fully committed.

The Repurchase Agreement includes customary representations and warranties, covenants and provisions regarding events of default.

As of June 30, 2021, $ 25.4 million in mortgage loans were financed under the facility, and Opendoor was in compliance with all financial covenants and no event of default had occurred.

As of September 30, 2021, $ 20.6 million in mortgage loans were financed under the facility, and Opendoor was in compliance with all financial covenants and no event of default had occurred.

Transactions under the Repurchase Agreement bear interest at a rate based on one-month LIBOR plus an applicable margin, as defined in the Repurchase Agreement, and are secured by residential mortgage loans available for sale.

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The Repurchase Agreement is recourse to Opendoor Labs Inc.

FAIR VALUE DISCLOSURES

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

Following is a discussion of the fair value hierarchy and the valuation methodologies used for assets and liabilities recorded at fair value on a recurring and nonrecurring basis and for estimating fair value for financial instruments not recorded at fair value.

OPENDOOR TECHNOLOGIES INC.

1 unchanged sentence

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Convertible Senior Notes

In August 2021, the Company issued the 2026 Notes in an aggregate principal amount of $ 977.5 million.

The tables below summarizes certain details related to the 2026 Notes (in thousands, except interest rates):

September 30, 2021 Aggregate Principal Amount

Unamortized Debt Issuance Costs Net Carrying Amount

2026 Notes $ 977,500 $ ( 25,085 ) $ 952,415

September 30, 2021 Maturity Date Stated Cash Interest Rate Effective Interest Rate Semi-Annual Interest Payment Dates Conversion Rate Conversion Price

2026 Notes August 15, 2026 0.25 % 0.77 % February 15;

August 15 51.9926 $ 19.23

The 2026 Notes will be convertible at the option of the holders before February 15, 2026 only upon the occurrence of certain events.

Beginning on August 20, 2024, the Company has the option to redeem the 2026 Notes upon meeting certain conditions related to price of the Company's common stock.

Beginning on February 15, 2026 and until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2026 Notes are convertible at any time at election of each holder.

The conversion rate and conversion price are subject to customary adjustments under certain circumstances.

In addition, if certain corporate events that constitute a make-whole fundamental change occur, then the conversion rate will be adjusted in accordance with the make-whole table within the Indenture.

Upon conversion, the Company may satisfy its conversion obligation by paying cash or providing a combination of cash and the Company's common stock, at the Company's election, based on the applicable conversion rate.

For the three and nine months ended September 30, 2021, total interest expense on the Company's convertible senior notes were $ 694 thousand, with coupon interest of $ 278 thousand and amortization of debt issuance costs of $ 416 thousand.

In August 2021, in connection with the issuance of the 2026 Notes, the Company purchased capped calls (the "Capped Calls") from certain financial institutions at a cost of $ 118.8 million.

The Capped Calls cover, subject to customary adjustments, the number of shares of the Company's common stock underlying the 2026 Notes.

By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event of a conversion of the 2026 Notes settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the 2026 Notes its common stock price exceeds the conversion price.

The Capped Calls have an initial strike price of $ 19.23 per share and an initial cap price of $ 29.59 per share or a cap price premium of 100 %.

FAIR VALUE DISCLOSURES

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

Fair Value Hierarchy

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Level 1 — Fair value determined based on quoted prices in active markets for identical assets or liabilities.

Level 2 — Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.

Level 3 — Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Level 3 — Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

Estimation of Fair Value

The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Asset/Liability Class Valuation Methodology, Inputs and

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Level 1 recurring fair value measurement.

Equity securities Price is quoted given the securities traded on an exchange Level 1 recurring fair value measurement.

Mortgage loans held for sale pledged under agreements to repurchase Fair value is estimated based on observable market data including quoted market prices, deal price quotes, and sale commitments.

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Level 2 non-recurring fair value measurement for fair value based on transaction price.

Credit facilities and other secured borrowings

Non-recourse asset-backed debt

Credit facilities Fair value is estimated using discounted cash flows based on current lending rates for similar credit facilities with similar terms and remaining time to maturity.

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Estimated fair value classified as Level 2.

Loans sold under agreements to repurchase Fair value is estimated using discounted cash flows based on current lending rates for similar asset-backed financing facilities with similar terms and remaining time to maturity.

Other secured borrowings

Loans sold under agreements to repurchase Fair value is estimated using discounted cash flows based on current lending rates for similar asset-backed debt with similar terms and remaining time to maturity.

Carried at amortized cost.

Estimated fair value classified as Level 2.

Convertible senior notes Fair value is estimated using broker quotes and other observable market inputs.

Carried at amortized cost.

Estimated fair value classified as Level 2.

Warrant liabilities

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The following tables present the levels of the fair value hierarchy for the Company’s assets measured at fair value on a recurring basis (in thousands).

June 30, 2021 Balance at Fair Value Level 1 Level 2 Level 3

September 30, 2021 Balance at Fair Value Level 1 Level 2 Level 3

Marketable securities:

Corporate debt securities $ 205,702 $ — $ 205,702 $ —

Mutual fund 200,264 200,264 — —

Equity securities 61,013 61,013 — —

Asset-backed securities 4,906 — 4,906 —

Certificates of deposit 4,750 — 4,750 —

Sovereign bonds 4,416 — 4,416 —

Mortgage loans held for sale pledged under agreements to repurchase 22,858 — 22,858 —

2 unchanged sentences

Total assets $ 504,525 $ 261,277 $ 242,632 $ 616

Warrant liabilities - current:

Sponsor Warrants 38,669 — 38,669 —

Total liabilities $ 38,669 $ — $ 38,669 $ —

December 31, 2020 Balance at Fair Value Level 1 Level 2 Level 3

11 unchanged sentences

Total liabilities $ 47,349 $ — $ 47,349 $ —

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Fair Value of Financial Instruments

The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company’s financial instruments other than assets and liabilities measured at fair value on a recurring basis (in thousands).

June 30, 2021

September 30, 2021

Fair Value Level 1 Level 2

3 unchanged sentences

Non-marketable equity securities 5,100 5,100 — 5,100

Credit facilities and other secured borrowings $ 2,286,457 $ 2,289,878 $ — $ 2,289,878

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Non-recourse asset-backed debt $ 5,417,802 $ 5,423,812 $ — $ 5,423,812

Other secured borrowings 19,728 19,728 — 19,728

Convertible senior notes 952,415 1,226,332 — 1,226,332

December 31, 2020

3 unchanged sentences

Credit facilities and other secured borrowings $ 481,789 $ 486,322 $ — $ 486,322

The following tables show a reconciliation from the opening balances to the closing balances for Level 3 Fair values for the three and six months ended June 30, 2021 and 2020 (in thousands):

The following tables show a reconciliation from the opening balances to the closing balances for Level 3 Fair values for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Warrants Embedded

Conversion Option Interest rate lock commitments

Balance as of March 31, 2021 $ — $ — $ 414

Balance as of June 30, 2021 $ — $ — $ 811

Additions — — 1,524

1 unchanged sentence

Net change in fair value — — 361

Balance as of June 30, 2021 $ — $ — $ 811

Balance as of September 30, 2021 $ — $ — $ 616

Balance as of December 31, 2020 — — $ —

2 unchanged sentences

Net change in fair value — — 491

Balance as of June 30, 2021 $ — $ — $ 811

Balance as of September 30, 2021 $ — $ — $ 616

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Warrants Embedded Conversion Option Interest rate lock commitments

Balance as of March 31, 2020 $ 5,550 $ 41,697 $ —

Net change in fair value ( 122 ) — —

Balance as of June 30, 2020 $ 5,428 $ 41,697 $ —

Settlement of convertible senior notes — ( 65,014 ) —

Net change in fair value 1,012 23,317 —

Balance as of September 30, 2020 $ 6,440 $ — $ —

Balance as of December 31, 2019 4,538 41,697 $ —

Settlement of convertible senior notes — ( 65,014 ) —

Net change in fair value 1,902 23,317 —

Balance as of June 30, 2020 $ 5,428 $ 41,697 $ —

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Balance as of September 30, 2020 $ 6,440 $ — $ —

PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2021 and December 31, 2020, consisted of the following (in thousands):

Property and equipment as of September 30, 2021 and December 31, 2020, consisted of the following (in thousands):

September 30,

2021 December 31,

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Property and equipment – net $ 38,321 $ 29,228

Depreciation and amortization expense of $ 6.1 million and $ 11.7 million was recorded for the three and six months ended June 30, 2021, respectively.

Depreciation and amortization expense of $ 5.9 million and $ 10.9 million was recorded for the three and six months ended June 30, 2020, respectively.

Depreciation and amortization expense of $ 7.2 million and $ 18.9 million was recorded for the three and nine months ended September 30, 2021, respectively.

Depreciation and amortization expense of $ 6.1 million and $ 17.0 million was recorded for the three and nine months ended September 30, 2020, respectively.

GOODWILL AND INTANGIBLE ASSETS

There were no additions to goodwill for the six months ended June 30, 2021 or twelve months ended December 31, 2020.

No impairment of goodwill was identified for the three and six months ended June 30, 2021 and 2020.

Intangible assets subject to amortization consisted of the follow as of June 30, 2021 and December 31, 2020, respectively (in thousands, except years):

June 30, 2021 Gross

For the nine months ended September 30, 2021 the carrying amount of goodwill increased by $ 16.2 million due to the acquisition of Pro.com.

For further information on the acquisition, see “Note 2 — Business Combinations”.

There were no additions to goodwill for the twelve months ended December 31, 2020.

No impairment of goodwill was identified for the three and nine months ended September 30, 2021 and 2020.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Intangible assets subject to amortization consisted of the following as of September 30, 2021 and December 31, 2020, respectively (in thousands, except years):

September 30, 2021 Gross

Remaining Weighted Average Useful Life

Developed technology 7,911 ( 3,357 ) 4,554 0.9

Customer relationships $ 7,400 $ ( 3,597 ) $ 3,803 2.9

Trademarks 5,400 ( 2,417 ) 2,983 2.9

Developed technology 3,161 ( 2,932 ) 229 1.0

Non-competition agreements 100 ( 100 ) — 0

7 unchanged sentences

Intangible assets – net $ 15,821 $ ( 7,295 ) $ 8,526

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

The Company also has domain name intangible assets, which are not subject to amortization, with a carrying amount of $ 0.2 million as of both June 30, 2021 and December 31, 2020, respectively.

Amortization expense for intangible assets was $ 0.6 million and $ 1.2 million for the three and six months ended June 30, 2021, respectively.

Amortization expense for intangible assets was $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, expected amortization of intangible assets is as follows:

The Company also has domain name intangible assets, which are not subject to amortization, with a carrying amount of $ 0.2 million as of both September 30, 2021 and December 31, 2020, respectively.

Amortization expense for intangible assets was $ 1.0 million and $ 2.2 million for the three and nine months ended September 30, 2021, respectively.

Amortization expense for intangible assets was $ 0.9 million and $ 3.1 million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, expected amortization of intangible assets is as follows:

Fiscal Years (In thousands)

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For further information on the RSUs, see “ Note 12 — Share-Based Awards”.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

SHARE-BASED AWARDS

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Incentive stock options granted to a 10% shareholder are exercisable over a maximum term of five years from the date of grant.

A summary of the stock option activity for the six months ended June 30, 2021, is as follows:

A summary of the stock option activity for the nine months ended September 30, 2021, is as follows:

(in thousands)

2 unchanged sentences

Balance-December 31, 2020 24,158 $ 1.91 5.4 $ 502,767

Granted 150 15.00

Exercised ( 6,791 ) 1.68

1 unchanged sentence

Expired ( 3 ) 3.02

Balance-June 30, 2021 19,741 $ 1.84 5.0 $ 310,914

Exercisable-June 30, 2021 16,305 $ 1.66 4.5 $ 261,938

There were no options granted during the six months ended June 30, 2021.

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Beginning in 2021, RSUs typically vest upon a service-based requirement, generally over a four year period.

Balance-September 30, 2021 16,740 $ 2.05 4.8 $ 309,327

Exercisable-September 30, 2021 14,386 $ 1.70 4.4 $ 270,848

RSUs typically vest upon a service-based requirement, generally over a four year period.

Prior to 2021, certain awards also had a performance condition to vesting, which was satisfied upon completion of the February 2021 Offering and triggered the recognition of compensation expense for certain RSUs for which the time-based vesting condition had been satisfied or partially satisfied.

Subsequent to the February 2021 Offering, the RSUs are only subject to time-based vesting conditions.

The vesting requirements of the RSUs typically have a maximum term of seven years from the date of grant.

A summary of the RSU activity for the six months ended June 30, 2021, is as follows:

Subsequent to the February 2021 Offering, these RSUs are only subject to time-based vesting conditions.

A summary of the RSU activity for the nine months ended September 30, 2021, is as follows:

(in thousands)

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Forfeited ( 2,239 ) 8.69

Unvested and outstanding-June 30, 2021 55,548 $ 16.48

Unvested and outstanding-September 30, 2021 56,404 $ 17.63

Restricted Shares

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The Restricted Shares vest upon satisfaction of a service condition, which generally ranges from three to four years .

A summary of the Restricted Shares activity for the six months ended June 30, 2021 is as follows:

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

A summary of the Restricted Shares activity for the nine months ended September 30, 2021 is as follows:

Restricted Shares

2 unchanged sentences

Vested ( 932 ) 3.58

Unvested-June 30, 2021 1,527 $ 3.80

Vested and outstanding-June 30, 2021 — —

Unvested-September 30, 2021 1,216 $ 3.86

Stock-based compensation expense

Stock-based compensation expense is allocated based on the cost center to which the award holder belongs.

The following table summarizes total stock-based compensation expense by function as presented in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020, as follows (in thousands):

The following table summarizes total stock-based compensation expense by function as presented in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020, as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Total stock-based compensation expense $ 62,011 $ 2,522 $ 465,059 $ 9,162

During the six months ended June 30, 2021, the Company issued market condition RSUs to certain executives with a grant-date fair value of $ 22.4 million, which will be recognized over a requisite service period ranging from six months to three years .

There were no market condition RSUs granted in the three months ended June 30, 2021.

The Company recognized

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

$ 117.7 million and $ 250.9 million of compensation expense during the three and six months ended June 30, 2021, respectively, related to all market condition awards outstanding.

In June 2021, the market condition for two market condition awards was satisfied, which resulted in the accelerated recognition of $ 2.2 million of stock based compensation expense in the three months ended June 30, 2021.

As of June 30, 2021, there was $ 613.9 million of unamortized stock-based compensation costs related to unvested RSUs, stock options, and Restricted Shares.

During the nine months ended September 30, 2021, the Company issued market condition RSUs to certain executives with a grant-date fair value of $ 22.4 million, which will be recognized over a requisite service period ranging from six months to three years .

There were no market condition RSUs granted in the three months ended September 30, 2021.

The Company recognized $ 20.0 million and $ 270.9 million of compensation expense during the three and nine months ended September 30, 2021, respectively, related to all market condition awards outstanding.

In June 2021, the market condition for two market condition awards was satisfied, which resulted in the accelerated recognition of $ 2.2 million of stock-based compensation expense in the nine months ended September 30, 2021.

During the three months ended September 30, 2021, no market condition awards satisfied their market condition.

As of September 30, 2021, there was $ 632.4 million of unamortized stock-based compensation costs related to unvested RSUs, stock options, and Restricted Shares.

The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately three years .

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The Black-Scholes Model used to value stock options incorporates the following assumptions:

Fair value $ 15.00

Volatility 73 %

Risk-free rate 1.09 %

Expected life (in years) 7

Expected dividend $ —

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Fair Value of Common Stock

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(v) general economic conditions and (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale, given prevailing market conditions.

The expected stock price volatilities are estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company does not have sufficient history of trading its common stock.

Prior to the Company's common stock becoming publicly traded, the expected stock price volatilities were estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company did not have sufficient history of trading its common stock.

Subsequent to the Company's stock becoming publicly traded, the expected stock price volatilities were determined based on the volatilities implied by the price of he Company's publicly traded call options in its common stock.

Risk-Free Interest Rate

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and (v) and the lack of marketability of the Company’s common stock.

For financial reporting purposes, the Company considers the amount of time between the valuation

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

date and the grant date to determine whether to use the latest common stock valuation or a straight-line interpolation between the two valuation dates.

For financial reporting purposes, the Company considers the amount of time between the valuation date and the grant date to determine whether to use the latest common stock valuation or a straight-line interpolation between the two valuation dates.

The determination includes an evaluation of whether the subsequent valuation indicates that any significant change in valuation had occurred between the previous valuation and the grant date.

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Upon Closing, the Company assumed the Warrants.

Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share, subject to adjustments.

Each whole warrant entitles the holder to purchase one share

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

of the Company’s common stock at a price of $ 11.50 per share, subject to adjustments.

The Warrants are exercisable at any time commencing the later of a) 30 days after the completion of the Business Combination and b) 12 months from the date of the closing of the SCH’s initial public offering on April 30, 2020, and terminating five years after the Business Combination.

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This Registration Statement relates to the issuance of an aggregate of up to 19,933,333 shares of common stock issuable upon the exercise of its publicly-traded warrants.

As of June 30, 2021, there were 19.4 million warrants outstanding and 0.5 million warrants have been exercised.

As of June 30, 2021, the Company had current warrant liabilities of $ 38.7 million related to the Sponsor Warrants and recorded a Derivative and warrant fair value adjustment of $ 24.0 million and $ 8.7 million for the change in fair value of the Sponsor Warrants for the three and six months ended June 30, 2021, respectively.

On June 9, 2021, the Company filed a notice of redemption of all outstanding Public Warrants and Sponsor Warrants.

The end of the redemption period was July 9, 2021, at which time the Company redeemed all unexercised warrants at a price of $ 0.10 per Warrant.

See “Note 18 — Subsequent Events” for further information.

On July 9, 2021, the Company completed the redemption of all of its outstanding Public and Sponsor Warrants to purchase shares of the Company's common stock, par value $ 0.0001 per share, that were issued under the Warrant Agreement, dated April 27, 2020.

Of the 13,799,947 Public Warrants that were outstanding as of the time of the Business Combination, 874,739 were exercised for cash at an exercise price of $ 11.50 per share of Common Stock and 12,521,776 were exercised on a cashless basis in exchange for an aggregate of 4,452,659 shares of Common Stock.

In addition, of the 6,133,333 Sponsor Warrants that were outstanding as of the date of the Business Combination, 1,073,333 were exercised for cash at an exercise price of $ 11.50 per share of Common Stock and 5,060,000 were exercised on a cashless basis in exchange for an aggregate of 1,799,336 shares of Common Stock.

Total cash proceeds to the Company generated from exercises of the Warrants were $ 22.4 million.

In connection with the redemption, the Public Warrants stopped trading on the Nasdaq Global Select Market on July 9, 2021.

The Company recorded a decrease to the Derivative and warrant fair value adjustment of $( 3.5 ) million and $( 12.2 ) million for the change in fair value of the Sponsor Warrants for the three and nine months ended September 30, 2021, respectively.

Warrants to Purchase Series D Preferred Stock

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On November 12, 2020, the Penny Warrants were exercised and the Company issued 485,262 shares of Series D Preferred Stock in exchange for proceeds of $ 3.0 thousand.

As of June 30, 2021, there were no Penny Warrants outstanding.

As of September 30, 2021, there were no Penny Warrants outstanding.

Commitment to Issue Warrants

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The Warrant Commitment obligates the Company to issue warrants on an annual basis until 2025 (“Issuance Date”).

The Warrant Commitment and the Company’s obligation to issue warrants was terminated upon the consummation of the Business Combination through notice provided by the Company and acknowledged by the counterparty.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Commitment and the Company’s obligation to issue warrants was terminated upon the consummation of the Business Combination through notice provided by the Company and acknowledged by the counterparty.

On each Warrant Commitment Issuance date in June 2019 and June 2020, the Company issued warrants to purchase 121,356 shares and 242,713 shares of Series E Preferred Stock at a price of $ 5.92 per share (“Series E Warrants”).

On November 7, 2020 the Series E Warrants were exercised and the Company issued 364,069 shares of Series E in exchange for proceeds of $ 2.2 million.

As of June 30, 2021, there were no Series E Warrants or Warrant Commitments outstanding.

As of September 30, 2021, there were no Series E Warrants or Warrant Commitments outstanding.

The Penny Warrants, the Warrant Commitment, and the Series E Warrants have been determined to be liabilities under ASC 480 as the underlying preferred shares have certain liquidation preferences in the event of a deemed liquidation.

For the Penny Warrants, the Warrant Commitment, and the Series E Warrants, the Company recorded no warrant fair value adjustments for the three and six months ended June 30, 2021 and a (decrease) increase to the warrant fair value adjustments of $( 0.1 ) million and $ 0.9 million for the three and six months ended June 30, 2020, respectively.

For the Penny Warrants, the Warrant Commitment, and the Series E Warrants, the Company recorded no warrant fair value adjustments for the three and nine months ended September 30, 2021 and an increase to the warrant fair value adjustments of $ 1.0 million and $ 1.9 million for the three and nine months ended September 30, 2020, respectively.

The Company’s provision for income taxes has not been historically significant to the business as the Company has incurred operating losses to date.

Due to projected and actual losses in the current and prior years, the Company believes that based on the weight of available evidence, it is more likely than not that all of the deferred tax assets will not be realized and recorded a full valuation allowance on its net deferred tax assets as of June 30, 2021 and December 31, 2020.

The Company’s provision for income taxes, which was primarily composed of state tax expense, was $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2021, respectively, with an effective tax rate of ( 0.13 )% and ( 0.07 )%, respectively.

The Company's provision for income taxes was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020, respectively, with an effective tax rate of ( 0.14 )% and ( 0.17 )%, respectively.

The Company’s provision for income taxes, which was primarily composed of state tax expense, was $ 0.3 million and $ 0.6 million for the three and nine months ended September 30, 2021, respectively, with an effective tax rate of ( 0.58 )% and ( 0.17 )%, respectively.

The Company's provision for income taxes was $ 0.03 million and $ 0.23 million for the three and nine months ended September 30, 2020, respectively, with an effective tax rate of ( 0.04 )% and ( 0.12 )%, respectively.

The effective tax rate differs from the U.S.

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RELATED PARTIES

Prior to the Business Combination, one of the Preferred Stock investors held more than a 10 % interest in the Company and had one seat as a member of the board of directors and another seat as an observer of the board of directors.

In 2018, an executive early exercised their option to purchase 1,479,459 shares of unvested common stock at a price per share of $ 1.01 by issuing a promissory note to the Company for a total price of $ 1.5 million with an interest rate of 2.31 % per annum.

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During the periods when there is a net loss, potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.

No dividends were declared or paid for the three and six months ended June 30, 2021 or 2020.

No dividends were declared or paid for the three and nine months ended September 30, 2021 or 2020.

For applicable periods, the Company uses the two-class method to calculate net loss per share and apply the more dilutive of the two-class method, treasury stock method or if-converted method to calculate diluted net loss per share.

Undistributed earnings for each period are allocated to participating securities, including the Preferred Stock for applicable periods, based on the contractual participation rights of the security to share in the current earnings as if all current period earnings had been distributed.

As there is no contractual obligation for the Preferred Stock to share in losses, the Company’s

As there is no contractual obligation for the Preferred Stock to share in losses, the Company’s basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average shares of common stock outstanding during periods with undistributed losses.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average shares of common stock outstanding during periods with undistributed losses.

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common shareholders for the three and six months ended June 30, 2021 and 2020 (in thousands):

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common shareholders for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Purchase Commitments

As of June 30, 2021, the Company was in contract to purchase 8,158 homes for an aggregate purchase price of $ 2,962.3 million.

As of September 30, 2021, the Company was in contract to purchase 6,231 homes for an aggregate purchase price of $ 2,259.9 million.

Lease Commitments

During the nine months ended September 30, 2021, the Company did not enter into any material new leases, lease renewals, or lease modifications.

On September 25, 2020, the Company exercised an option to early terminate the San Francisco headquarters lease, effective September 30, 2021.

In September 2020, the Company did not anticipate returning to the San Francisco space, so the Company accelerated amortization of the right-of-use asset and incurred and paid early

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

Lease Commitments

During the six months ended June 30, 2021, the Company did not enter into any material new leases, lease renewals, or lease modifications.

On September 25, 2020, the Company exercised an option to early terminate the San Francisco headquarters lease, effective September 30, 2021.

In September 2020, the Company did not anticipate returning to the San Francisco space, so the Company accelerated amortization of the right-of-use asset and incurred and paid early termination fees.

In January 2021, the Company terminated the San Francisco lease prior to the anticipated termination date of September 30, 2021, which resulted in a $ 5.2 million gain recognized in the condensed consolidated statements of operations for the six months ended June 30, 2021.

termination fees.

Legal Matters

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SUBSEQUENT EVENTS

In addition, of the 6,133,333 Private Warrants that were outstanding as of the date of the Business Combination, 1,073,333 were exercised for cash at an exercise price of $ 11.50 per share of Common Stock and 5,060,000 were exercised on a cashless basis in exchange for an aggregate of 1,799,336 shares of Common Stock.

Total cash proceeds to the Company generated from exercises of the Warrants were $ 22.4 million.

In connection with the redemption, the Public Warrants stopped trading on the Nasdaq Global Select Market and were delisted after close of market on July 9, 2021.

On July 30, 2021, the Company entered into a senior revolving credit facility, Revolving Facility 2021-1, which has a final maturity date of October 31, 2022.

As a result of entering in this new senior revolving credit facility and other amendments to existing credit facilities, the Company has an aggregate borrowing capacity of $ 3,980.0 million and fully committed borrowing capacity of $ 2,255.0 million for its senior credit facilities.

On October 1, 2021, a subsidiary of the Company entered into an amended and restated mezzanine term debt facility, with $ 3.0 billion in borrowing capacity, of which $ 2.3 billion is committed, and a final maturity date of April 1, 2026.

This non-recourse facility refinances the previously outstanding mezzanine term debt facilities on substantially similar economic terms.

As a result of this facility and an incremental $ 895.0 million in borrowing capacity from other recent amendments to existing senior credit facilities , the Company has an aggregate borrowing capacity of $ 9.6 billion and fully committed borrowing capacity of $ 6.7 billion for its non-recourse asset-backed debt facilities.

On November 3, 2021, the Company paid $ 12.5 million in cash to acquire RedDoor, a digital-first mortgage brokerage operating in California.

The Company is in the process of finalizing the accounting for the acquisition.

OPENDOOR TECHNOLOGIES INC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements