The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
Simon Property Group Acquisition Holdings, Inc. was incorporated in Delaware on
December 17, 2020. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or
similar Business Combination with one or more businesses. The Company is not
limited to a particular industry or sector for purposes of consummating a
Business Combination. The Company is an early stage and emerging growth company
and, as such, the Company is subject to all of the risks associated with early
stage and emerging growth companies. We completed our Initial Public Offering on
February 23, 2021. As of December 31, 2021, we had not identified any Business
Combination target.
We presently have no revenue and have had no operations other than the active
solicitation of a target business with which to complete a Business Combination.
We have relied upon the sale of our securities to fund our operations.
Since completing our Initial Public Offering, we have reviewed, and continue to
review, a number of opportunities to enter into a Business Combination with an
operating business, but we are not able to determine at this time whether we
will complete a Business Combination with any of the target businesses that we
have reviewed or with any other target business. We intend to effectuate our
Business Combination using cash from the proceeds of our Initial Public Offering
and the sale of the Private Placement Warrants, our capital stock, debt, or a
combination of cash, stock and debt.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through December 31, 2021 were
organizational activities and those necessary to prepare for the IPO, described
below, and our search for a target business for a Business Combination. We do
not expect to generate any operating revenues until after the completion of our
initial Business Combination. We generate non-operating income in the form of
interest income on marketable securities held after the IPO. We expect that we
will incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses in connection with searching for, and completing, a Business
Combination.
For the year ended December 31, 2021, we had a net income of $6,815,225,
primarily as a result of non-cash favorable change in the fair value of our
derivative liabilities of $10,010,000, and interest earned on marketable
securities held in the Trust Account of $19,104, offset by change in fair value
of the convertible promissory note of $12,850, other expenses associated with
the private warrant liability of $771,333, offering costs attributable to
warrant liabilities of $645,069, and formation and operational costs of
$1,784,627.
For the period from December 17, 2020 (inception) through December 31, 2020, we
had a net loss of $1,000, which consisted of formation and operational costs.
As indicated in the accompanying financial statements, at December 31, 2021, we
had $461,064 in cash and deferred underwriting discount of $12,075,000. Further,
we expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete our Business
Combination will be successful.
Liquidity, Capital Resources and Going Concern
As of December 31, 2021, the Company had $461,064 in operating cash,
$345,019,104 in securities held in the Trust Account to be used for a Business
Combination or to repurchase or redeem its common stock in connection therewith
and working capital of
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$472,819. Until the consummation of a Business Combination, the Company will be
using the funds not held in the Trust Account for identifying and evaluating
prospective acquisition candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business
to acquire, and structuring, negotiating and consummating the Business
Combination. The Company may need to raise additional capital through loans or
additional investments from its Sponsor or third parties as discussed in Note 5
of the accompanying Notes to the Financial Statements.
In connection with the Company's assessment of going concern, management has
determined that the mandatory liquidation and subsequent dissolution, should the
Company be unable to complete a Business Combination, raises substantial doubt
about the Company's ability to continue as a going concern. The Company has
until February 23, 2023, to consummate a Business Combination. It is uncertain
that the Company will be able to consummate a Business Combination by this time.
If a Business Combination is not consummated by this date without an extension
to the acquisition period, there will be a mandatory liquidation and subsequent
dissolution.
On December 28, 2020, the Sponsor purchased 8,625,000 Founder Shares for an
aggregate purchase price of $25,000, or approximately $0.0029 per share. The
Founder Shares included an aggregate of up to 1,125,000 shares subject to
forfeiture to the extent that the underwriter's option to purchase additional
units was not exercised in full or in part, so that the number of Founder Shares
will equal, on an as-converted basis, approximately 20% of our issued and
outstanding common stock after the Initial Public Offering. As a result of the
underwriters' election to fully exercise their over-allotment option, no Founder
Shares are currently subject to forfeiture.
On December 28, 2020, the Sponsor issued an unsecured promissory note to the
Company (the "Promissory Note"), pursuant to which the Company may borrow up to
an aggregate principal amount of $300,000. The Promissory Note is non-interest
bearing and payable on the earlier of December 31, 2021 or the consummation of
the Initial Public Offering. As of February 23, 2021, there was $250 outstanding
under the Promissory Note. Of the outstanding balance under the Promissory Note
of $107,197, $106,947 was repaid at the closing of the Initial Public Offering
on February 23, 2021 and $250 was repaid on February 25, 2021.
On February 23, 2021, we consummated our Initial Public Offering of 34,500,000
Units at a price of $10.00 per Unit, including 4,500,000 Units as a result of
the underwriter's partial exercise of its over-allotment option, generating
gross proceeds of $345,000,000. On the Initial Public Offering Closing Date, we
completed the private sale of an aggregate of 5,933,333 Private Placement
Warrants, each exercisable to purchase one share of Common Stock at $11.50 per
share, to our Sponsor, at a price of $1.50 per Private Placement Warrant,
generating gross proceeds, before expenses, of $8,900,000. After deducting the
underwriting discounts and commissions (excluding the Deferred Discount, which
amount will be payable upon consummation of the Business Combination, if
consummated) and the estimated offering expenses, the total net proceeds from
our Initial Public Offering and the sale of the Private Placement Warrants were
$346,464,342, of which $345,000,000 (or $10.00 per share sold in the Initial
Public Offering) was placed in the Trust Account. The amount of proceeds not
deposited in the Trust Account on February 23, 2021 was $770,292 at the closing
of our Public Offering. Interest earned on the funds held in the Trust Account
may be released to us to fund our Regulatory Withdrawals, for a maximum of 24
months and/or additional amounts necessary to pay our franchise and income
taxes.
For the year ended December 31, 2021, net cash used in operating activities was
$1,778,278. Net income of $6,815,225 was affected by interest earned on
marketable securities held in the Trust Account of $19,104, non-cash favorable
change in the fair value of our derivative liabilities of $10,010,000, non-cash
change in fair value of the convertible promissory note of $12,850, fair value
of private warrant liability in excess of proceeds of $771,333 and offering
costs attributable to warrant liabilities of $645,069. Changes in operating
assets and liabilities provided $6,349 of cash for operating activities.
For the period from December 17, 2020 (inception) through December 31, 2020, net
cash used in operating activities was $0. Net loss of $1,000 was affected by the
changes in operating assets and liabilities.
As of December 31, 2021, we had cash held outside of the Trust Account of
approximately $461,064, which is available to fund our working capital
requirements. Additionally, interest earned on the funds held in the Trust
Account may be released to us to fund our Regulatory Withdrawals, for a maximum
of 24 months and/or additional amounts necessary to pay our franchise and income
taxes. At December 31, 2021, the Company had current liabilities of $412,391 and
working capital of $472,819.
We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Common Stock
upon completion of a Business Combination. Subject to compliance with applicable
securities laws, we would only
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complete such financing simultaneously with the completion of our Business
Combination. If we are unable to complete our Business Combination because we do
not have sufficient funds available to us, we will be forced to cease operations
and liquidate the Trust Account. In addition, following our Business
Combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations. To the extent that our capital stock
or debt is used, in whole or in part, as consideration to consummate our
Business Combination, the remaining proceeds held in our Trust Account, if any,
will be used as working capital to finance the operations of the target business
or businesses, make other acquisitions and pursue our growth strategy.
On September 8, 2021, the Sponsor agreed to loan us an aggregate of up to
$2,000,000 pursuant to a new promissory note (the "Working Capital Loan"). The
Working Capital Loan is non-interest bearing and payable upon consummation of
our initial Business Combination. At the lender's discretion, the Working
Capital Loan may be repayable in warrants of the post Business Combination
entity at a price of $1.50 per warrant. At December 31, 2021, there was $750,000
of borrowings under the Working Capital Loan. This note was valued using the
fair value method as discussed in Note 11. The fair value of the note as of
December 31, 2021, was $762,850, which resulted in a change in fair value of the
convertible promissory note of $12,850 recorded in the statement of operations
for the year ended December 31, 2021.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
As of December 31, 2021, we did not have any long-term debt obligations, capital
lease obligations, operating lease obligations, purchase obligations or
long-term liabilities. The Company agreed, commencing on February 18, 2021
through the earlier of the Company's consummation of a Business Combination and
its liquidation, to pay an affiliate of the Sponsor a total of $9,500 per month
for office space, administrative and support services.
The underwriter is entitled to underwriting discounts and commissions of 5.5%
($18,975,000), of which 2.0% ($6,900,000) was paid at the closing of the Public
Offering, and 3.5% ($12,075,000) was deferred. The Deferred Discount will become
payable to the underwriter from the amounts held in the Trust Account solely in
the event that the Company completes a Business Combination, subject to the
terms of the underwriting agreement. The underwriter is not entitled to any
interest accrued on the Deferred Discount.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting estimates:
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Warrant Liabilities
We account for the warrants in accordance with ASC 815-40 under which the
warrants do not meet the criteria for equity classification and must be recorded
as liabilities. The warrants are subject to remeasurement at each balance sheet
date and any change in fair value is recognized in the statements of operations.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded as a derivative liability at their initial
fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash
gain or loss in the statements of operations.
Convertible Promissory Note - Related Party
We account for the convertible promissory note under ASC Topic 815. Under ASC
815-15-25, the election can be made at the inception of a financial instrument
to account for the instrument under the fair value option under ASC 825. Using
the fair value option, the convertible promissory note is required to be
recorded at its initial fair value on the date of issuance, and each balance
sheet date thereafter. Changes in the estimated fair value of the note are
recognized as non-cash gains or losses in the statements of operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible conversion in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of Class A common stock
subject to mandatory redemption is classified as a liability instrument and
measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Our common stock
features certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly,
common stock subject to possible redemption is presented at redemption value as
temporary equity, outside of the stockholders' (deficit) equity section of our
balance sheets.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of redeemable common stock to equal the redemption value at
the end of each reporting period. Increases or decreases in the carrying amount
of redeemable common stock are affected by charges against additional paid in
capital and accumulated deficit.
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