The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the condensed notes related thereto which are included in
"Item 1. Financial Statements" of this Quarterly Report on Form 10-Q.
Cautionary note regarding forward-looking statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10-Q including, without limitation, statements under
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. When used in this Quarterly Report on Form 10-Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on the Company's
behalf are qualified in their entirety by this paragraph.
Overview
Simon Property Group Acquisition Holdings, Inc. (the "Company") 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
"Business Combination"). 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 Public Offering on February 23, 2021. As of September 30, 2022, 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 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 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 September 30, 2022 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 three months ended September 30, 2022, we had a net income of
$2,517,753, which consisted of a change in fair value of our derivative
liabilities of $1,527,166, interest income in bank of $813 and interest earned
on marketable securities held in the Trust Account of $1,560,069, offset by
formation and operational costs of $249,361, change in fair value of the
convertible promissory note of $3,649, and provision for income tax of $317,285.
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For the nine months ended September 30, 2022, we had a net income of
$11,015,318, which consisted of a change in fair value of our derivative
liabilities of $10,074,166, change in fair value of the convertible promissory
note of $34,726, interest income in bank of $1,276 and interest earned on
marketable securities held in the Trust Account of $2,078,248, offset by
formation and operational costs of $807,547 and provision for income tax of
$365,551.
For the three months ended September 30, 2021, we had a net income of
$5,176,438, which consisted of a change in the fair value of our derivative
liabilities of $6,269,000, and interest earned on marketable securities held in
the Trust Account of $5,301, offset by formation and operational costs of
$1,068,215 and a change in fair value of the convertible promissory note of
$29,648.
For the nine months ended September 30, 2021, we had net income of $5,315,873,
which consisted of a change in fair value of our derivative liabilities of
$8,154,000, and interest earned on marketable securities held in the Trust
Account of $12,561, offset by formation and operational costs of $1,404,638, a
change in fair value of the convertible promissory note of $29,648, offering
costs attributable to warrant liabilities of $645,069 and other expenses
associated with the private warrant liability of $771,333.
Liquidity, Capital Resources and Going Concern
As of September 30, 2022, the Company had $152,365 in operating cash,
$347,097,352 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 $597,494. 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 $0.003 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 the Company's 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.
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On February 23, 2021, the Company consummated its 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 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 nine months ended September 30, 2022, net cash used in operating
activities was $908,699. Net income of $11,015,318 was affected by interest
earned on marketable securities held in the Trust Account of $2,078,248, change
in fair value of our derivative liabilities of $10,074,166, non-cash change in
fair value of the convertible promissory note of $34,726. Changes in operating
assets and liabilities provided $263,123 of cash for operating activities.
For the nine months ended September 30, 2021, net cash used in operating
activities was $1,586,495. Net income of $5,315,873 was affected by interest
earned on marketable securities held in the Trust Account of $12,561, change in
fair value of our derivative liabilities of $8,154,000, fair value of private
warrant liability in excess of proceeds of $771,333, change in fair value of
convertible promissory note - related party of $29,648 and offering costs
attributable to warrant liabilities of $645,069. Changes in operating assets and
liabilities used $181,857 of cash for operating activities.
At September 30, 2022, we had cash held outside of the Trust Account of
approximately $152,365, 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 September 30, 2022, the Company had current liabilities of $439,952
and working capital of $597,494.
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 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 September 30, 2022, there was
$1,350,000 of borrowings under the Working Capital Loan. This note was valued
using the fair value method as discussed in Note 9. The fair value of the note
as of September 30, 2022, was $1,328,124, which resulted in an increase in fair
value of the convertible promissory note of $3,649 and a decrease in fair value
of $34,726 recorded in the statement of operations for the three and nine months
ended September 30, 2022, respectively.
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Off-balance Sheet Financing Arrangements
We had no obligations, assets or liabilities which would be considered
off-balance sheet arrangements at September 30, 2022. 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 had not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or entered into any non-financial agreements involving assets.
Contractual Obligations
As of September 30, 2022, 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
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 condensed 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:
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.
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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 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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SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC. 
