Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Off Balance Sheet ItemsThe Company organizes a series of investment funds, each of which is represented by a limited liability company (“LLC”) within Forge Investments LLC and by portfolio companies within Forge Investments SPC and Forge Investments II SPC. The funds were formed for the purpose of investing in securities relating to a single private company. Each series of funds consists of a separate and distinct portfolio of investments owned by different investors. The Company utilizes third-party fund administrators to manage the funds and has no ownership interest nor participation in the gains or losses of the entities represented by the funds. The Company paid for the expenses incurred by these entities, including fund insurance expenses of $80 and $331, and fund management expenses of $21 and $30 for the three months ended March 31, 2022 and 2021, respectively, included in transaction-based expenses in condensed consolidated statements of operations and comprehensive (loss) income. Also, the Company paid fund audit fees of $315 and $461 during the three months ended March 31, 2022 and 2021, respectively, included in professional services in condensed consolidated statements of operations and comprehensive (loss) income. The Company did not consolidate Forge Investments LLC and Forge Investment SPC, or the investment funds, because the Company has no direct or indirect interest in Forge Investments LLC and Forge Investment SPC, or the investment funds, and the expenses that the Company pays on behalf of Forge Investments LLC and Forge Investment SPC, or the investment funds, are not significant to those entities. The Company believes its maximum exposure to loss resulting from its involvement with those entities is limited to the payment of future insurance expenses, management expenses and audit fees.Related Party Transactions

In October 2019, Legacy Forge issued convertible notes to investors, of which $2,400 was received from certain directors and employees of Legacy Forge. As of December 31, 2020, Legacy Forge had a $2,400 related party balance on convertible notes outstanding. The notes were fully repaid in January 2021.

Legacy Forge entered into client engagement agreements with certain companies to serve as exclusive transaction agent to help facilitate private purchases of shares of issuers. These companies are identified as related parties who are holders of either Legacy Forge’s common stock or redeemable convertible preferred stock. The Company recognized $631 in placement fee revenue in the condensed consolidated statements of operations and comprehensive (loss) income for trade executed with the underlying LLCs and portfolio

companies for the three months ended March 31, 2022. The associated revenue recognized for the three months ended March 31, 2021 is immaterial.

The Company obtains insurance coverage from Munich Re, a shareholder of the Company, to indemnify Forge Investments for its contractual obligations to funds investors if shareholders fail to transfer ownership interests upon certain trigger events. During the three months ended March 31, 2022 and 2021, the Company incurred $80 and $331 in insurance premiums, respectively, and are included in transaction-based expenses in the condensed consolidated statements of operations and comprehensive (loss) income.

Financial Technology Partners LP (“Financial Technology Partners”), a shareholder of the Company, serves as financial and strategic advisor to the Company on its financing, merger, and acquisition transactions. During the three months ended March 31, 2022, the Company incurred $18,283 in fees to Financial Technology Partners, of which $17,356 was related to common stock issued during the Merger and was recorded as a reduction to additional paid-in capital. The remaining $927 was related to issuance of Public and Private Placement Warrants, including warrants issued to A&R FPA investors, and was expensed immediately upon consummation of the Merger as acquisition-related transaction cost in the condensed consolidated statements of operations and comprehensive (loss) income.

The Company leases one of its office spaces from the former owner of IRA Services. The former owner became a shareholder of the Company upon the acquisition of IRA Services which subsequently renamed as Forge Trust. IRA Services was a non-depository trust company authorized to act as a custodian of self-directed individual retirement accounts. The Company incurred $94 in rent to this shareholder during the three months ended March 31, 2022 and 2021, respectively, and are included in rent and occupancy in the condensed consolidated statements of operations and comprehensive (loss) income.

James Herbert, II, one of the Company's directors, through the James and Cecillia Herbert 1994 Revocable Trust, purchased 75,000 shares of the Company's’s common stock (for a purchase price of $750) in the PIPE Investment, concurrently and in connection with the closing of the Business Combination. Mr. Herbert's transaction was on the same terms as the other investors who purchased shares in the PIPE Investment pursuant to certain subscription agreements dated September 13, 2021.

Prior to the Business Combination, one of Legacy Forge's directors was also a director of Temasek Holding (Private) Limited ("Temasek"). Temasek, through its wholly-owned subsidiary, Ossa Investments Pte. Ltd, purchased 1,000,000 shares of the Company's’s common stock (for a purchase price of $10,000) in the PIPE Investment, concurrently and in connection with the closing of the Business Combination. This transaction was on the same terms as the other investors who purchased shares in the PIPE Investment pursuant to certain subscription agreements dated September 13, 2021.