UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
FOR THE TRANSITION PERIOD FROM TO
Commission File Number:
(Exact name of registrant as specified in its Charter)
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(Address of principal executive offices) | (Zip Code) |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
As of August [ ], 2022, there were
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION | ||
Item 1. | Unaudited Condensed Financial Statements | |
Condensed Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021 | 1 | |
2 | ||
3 | ||
Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (Unaudited) | 4 | |
5 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | |
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28 |
i
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
CONDENSED BALANCE SHEETS
June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
ASSETS | (Unaudited) | |||||
Current assets: | ||||||
Cash | $ | | $ | | ||
Prepaid expenses |
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Total current assets | | | ||||
Marketable Securities held in Trust Account | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | | $ | | ||
Income taxes payable | | — | ||||
Total current liabilities | | | ||||
Convertible promissory note - related party | | | ||||
Deferred underwriting discount | | | ||||
Derivative liability - public warrants |
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Derivative liability - private warrants |
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Total liabilities |
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Commitments and contingencies (see Note 6) |
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Class A common stock, $ | | | ||||
Stockholders’ deficit: |
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Preferred stock, $ |
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Class B common shares, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total stockholders’ deficit |
| ( |
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Total liabilities and stockholders’ deficit | $ | | $ | |
See accompanying notes to the unaudited, interim financial statements.
1
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Formation and operational costs | $ | | $ | | $ | | $ | |||||
Loss from operations | ( | ( | ( | ( | ||||||||
Other income (expense): | ||||||||||||
Change in fair value of derivative liability - public warrants | | ( | | | ||||||||
Change in fair value of derivative liability - private warrants | | | | | ||||||||
Change in fair value of convertible promissory note - related party | | — | | — | ||||||||
Offering costs attributable to warrant liabilities | — | — | — | ( | ||||||||
Other expense – private warrant liability | — | — | — | ( | ||||||||
Interest income - bank | | — | | — | ||||||||
Interest earned on Marketable Securities held in trust account | | | | | ||||||||
Other income (expense), net | | ( | | | ||||||||
Income (loss) before provision for income taxes | | ( | | | ||||||||
Provision for income taxes | ( | — | ( | — | ||||||||
Net income (loss) | $ | | $ | ( | $ | | $ | | ||||
Basic and diluted weighted average shares outstanding, Class A common stock |
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Basic and diluted net income (loss) per share, Class A common stock | | ( | | | ||||||||
Basic and diluted weighted average shares outstanding, Class B common stock |
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Basic and diluted net income (loss) per share, Class B common stock | | ( | | |
See accompanying notes to the unaudited, interim financial statements.
2
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
THREE AND SIX MONTHS ENDED JUNE 30, 2022
Class B | Additional | Total | ||||||||||||
Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||
Balance at January 1, 2022 | | $ | | $ | — | $ | ( | $ | ( | |||||
Change in value of Class A common stock subject to possible redemption | — | — | — | ( | ( | |||||||||
Net income | — | — | — | | | |||||||||
Balance at March 31, 2022 | | $ | | $ | — | $ | ( | $ | ( | |||||
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Change in value of Class A common stock subject to possible redemption | — | — | — | ( | ( | |||||||||
Net income | — | — | — | | | |||||||||
Balance at June 30, 2022 |
| | $ | | $ | — | $ | ( | $ | ( |
THREE AND SIX MONTHS ENDED JUNE 30, 2021
Total | ||||||||||||||
Class B | Additional | Stockholders’ | ||||||||||||
| Common Stock | Paid-In | Accumulated | Equity | ||||||||||
Shares |
| Amount |
| Capital |
| Deficit |
| (Deficit) | ||||||
Balance at January 1, 2021 | | $ | | $ | | $ | ( | $ | | |||||
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Accretion for Class A ordinary shares to redemption amount | — | — | ( | ( | ( | |||||||||
Net income |
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Balance at March 31, 2021 | | $ | | $ | — | $ | ( | $ | ( | |||||
Accretion for Class A ordinary shares to redemption amount | — | — | — | ( | ( | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance at June 30, 2021 |
| | $ | | $ | — | $ | ( | $ | ( |
See accompanying notes to the unaudited, interim financial statements
3
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
Cash Flows from Operating Activities: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
Fair value of private warrant liability in excess of proceeds |
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| — | ||
Interest earned on marketable securities held in Trust Account | ( | ( | ||||
Non-cash change in fair value of derivative liability – public warrants | ( | ( | ||||
Non-cash change in fair value of derivative liability – private warrants | ( | ( | ||||
Non-cash change in fair value of convertible promissory note - related party | ( | — | ||||
Compensation expense on Private Placement warrants | — | | ||||
Transaction costs incurred in connection with IPO | — | | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses | | ( | ||||
Accrued expenses | ( | | ||||
Income taxes payable | | — | ||||
Net cash used in operating activities | $ | ( | $ | ( | ||
Cash Flows from Investing Activities: | ||||||
Investment of cash into Trust Account | $ | — | $ | ( | ||
Net cash used in investing activities | $ | — | $ | ( | ||
Cash Flows from Financing Activities: |
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Proceeds from sale of Class A common stock to public, net of underwriting discounts paid | $ | — | $ | | ||
Proceeds from sale of Private Placement Warrants | — | | ||||
Payment of offering costs |
| — |
| ( | ||
Proceeds from promissory note | — | | ||||
Repayment of promissory note |
| — |
| ( | ||
Proceeds from convertible promissory note - related party | | — | ||||
Net cash provided by financing activities | $ | | $ | | ||
Net Change in Cash | $ | ( | $ | | ||
Cash – Beginning | | | ||||
Cash – Ending | $ | | $ | | ||
Supplemental disclosure of non-cash financing activities | ||||||
Change in value of Class A common stock subject to possible redemption | $ | | $ | | ||
Deferred underwriting discount | $ | — | $ | |
See accompanying notes to the unaudited, interim financial statements.
4
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
CONDENSED NOTES TO THE UNAUDITED, INTERIM FINANCIAL STATEMENTS
1. Description of Organization and Business Operations
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
All activity for the period from December 17, 2020 (inception) through June 30, 2022 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below, and identifying a target company for an initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
On February 23, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
Following the closing of the Initial Public Offering on February 23, 2021, an amount of $
5
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least
The Company will provide the holders of the outstanding Public Shares (the “Public stockholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $
The Company will not redeem Public Shares in an amount that would cause the Company’s net tangible assets to be less than $
6
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem
The Company will have until February 23, 2023 (the “Combination Period”) to complete a Business Combination. If the Company has not completed a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($
7
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s condensed financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Liquidity, Financial Condition and Going Concern
As of June 30, 2022, the Company had $
In connection with the Company’s assessment of going concern in accordance with the authoritative guidance in ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a 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. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 23, 2023.
8
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
2. Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the condensed financial position as of June 30, 2022 and the results of operations and cash flows for the periods presented. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the full year or any other period.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant liabilities and the convertible promissory note. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
9
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with and the credit quality of the financial institutions with which it invests. Periodically, the Company may maintain balances in various operating accounts in excess of federally insured limits.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption 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 is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2022 and December 31, 2021, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
The Company recognizes 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution as well as the Trust Account, which at times, may exceed the Federal depository insurance coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 9.)
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. As of June 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was
10
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and $
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Investments and Cash Held in Trust Account
At June 30, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds, which are invested primarily in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Warrant Liabilities
The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as derivative liabilities at fair value on the balance sheet. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in the Company’s 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. The fair value of the warrants was estimated using a Monte Carlo model, as further discussed in Note 9.
Convertible Promissory Note – Related Party
The Company accounts for the convertible promissory note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 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. The Company has made such election for the convertible promissory note. 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 condensed consolidated statements of operations.
11
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Net Income Per Common Share
The Company complies with accounting and disclosure requirements of Financial Accounting Standards Board ASC Topic 260, “Earnings Per Share”. Net income per common stock is computed by dividing net income by the weighted average number of common stocks outstanding for the period. The Company applies the two-class method in calculating net income per common share. Accretion associated with the redeemable shares of Class A common stocks is excluded from net income per share as the redemption value approximates fair value.
The calculation of diluted income per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, (ii) the private placement, or the warrants issued as a result of the convertible promissory note since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase
The following table reflects the calculation of basic and diluted net income per common share (in dollars, except per share amounts):
Three Months Ended June 30, | ||||||||||||
| 2022 |
| 2021 | |||||||||
Class A |
| Class B | Class A |
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Basic and diluted net income (loss) per common stock |
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Numerator: |
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Allocation of net income (loss), as adjusted | $ | | $ | | $ | ( | $ | ( | ||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net income (loss) per common stock | | | ( | ( |
Six Months Ended June 30, | ||||||||||||
| 2022 |
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Class A |
| Class B | Class A |
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Basic and diluted net income per common stock |
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Numerator: |
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Allocation of net income, as adjusted | $ | | $ | | $ | | $ | | ||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net income per common stock | | | |
12
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Offering Costs
The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to our Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A common stock issued were initially charged to temporary equity and then accreted to common stock subject to redemption upon the completion of the Initial Public Offering. Accordingly, we had total offering costs of $
Recently Issued 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 the Company’s condensed financial statements.
3. Initial Public Offering
Pursuant to the Initial Public Offering, the Company sold
4. Private Placements
Simultaneously with the closing of the Initial Public Offering, the Sponsor has agreed to purchase an aggregate of
5. Related Party Transactions
Founder Shares
On December 28, 2020, the Sponsor purchased
13
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
The sale of the Founder Shares is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. As of December 31, 2021, the Company determined that a Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares multiplied times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares. Management has concluded that any potential grant date fair value associated with Founders Shares transferred to the independent director nominees was de minimis.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A)
Promissory Note — Related Party
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 $
Convertible Promissory Note — Related Party
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $
14
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
On September 8, 2021, the Sponsor agreed to loan the Company an aggregate of up to $
Administrative Services Agreement
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 $
6. Commitments and Contingencies
Registration Rights
Pursuant to a registration rights agreement entered into on February 18, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to
Underwriting Agreement
The underwriter is entitled to a deferred fee of $
7. Stockholders’ deficit
Preferred Stock
The Company is authorized to issue
15
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Class A Common Stock
The Company is authorized to issue
Class B Common Stock
The Company is authorized to issue
Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as otherwise required by law. In connection with our initial business combination, we may enter into a stockholder’s agreement or other arrangements with the stockholders of the target or other investors to provide for voting or other corporate governance arrangements that differ from those in effect upon completion of this offering.
The shares of Class B common stock will automatically convert into Class A common stock at the time of a Business Combination, or earlier at the option of the holder, on a
8. Warrant Liabilities
Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a)
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
16
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
The Company has agreed that as soon as practicable, but in no event later than
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
● | in whole and not in part; |
● | at a price of $ |
● | upon a minimum of |
● | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ |
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
● | in whole and not in part; |
● | at a price of $ |
● | upon a minimum of |
● | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ |
● | if the closing price of the Class A common stock for any |
17
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until
18
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
9. Fair Value Measurement
The Company complies with FASB ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. ASC 820 determines fair value to be the price that would be received to sell an asset or world be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability:
Significant | Significant | |||||||
Other | Other | |||||||
Quoted Prices in | Observable | Unobservable | ||||||
June 30, | Active Markets | Inputs | Inputs | |||||
Description |
| 2022 |
| (Level 1) |
| (Level 2) |
| (Level 3) |
Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalent held in Trust Account |
| |
| |
| — |
| — |
Liabilities: |
|
|
|
|
|
| ||
Derivative liability - public warrants |
| |
| |
| — |
| — |
Derivative liability - private warrants |
| |
| — |
| |
| — |
Convertible promissory note - related party | | — | — | |
|
|
| Significant |
| Significant | |||
Other | Other | |||||||
Quoted Prices in | Observable | Unobservable | ||||||
December 31, | Active Markets | Inputs | Inputs | |||||
Description |
| 2021 |
| (Level 1) |
| (Level 2) |
| (Level 3) |
Assets: | ||||||||
Marketable Securities held in Trust Account |
| |
| |
| — |
| — |
Liabilities: | ||||||||
Derivative liability - public warrants |
| |
| |
| — |
| — |
Derivative liability - private warrants |
| |
| — |
| |
| — |
Convertible promissory note - related party |
| |
| — |
| — |
| |
Warrant Liabilities
The warrants issued in connection with the Company’s initial public offering on February 23, 2021 are subject to treatment as a derivative liability. When Level 1 inputs are not available, the Company utilizes a Monte Carlo simulation methodology to value the warrants at each reporting period with changes recognized in the statements of operations. The estimated fair value of the warrant liability is determined using Level 1 and Level 2 inputs. The key assumptions in the option pricing model utilized are assumptions related to expected share-price volatility, risk-free interest rate, dividend yield, and expected term. The expected volatility at each reporting period was selected based on the average volatility of SPACs that are searching for an acquisition target. SPAC volatility is based upon historical stock prices over a -year lookback period, or all historical data if less than six years is available. The risk-free interest rate is based on interpolation of U.S. Treasury yields with a term commensurate with the term of the warrants. The Company
19
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
anticipates the dividend yield to be
The key inputs into the option model for the Private Placement Warrants and Public Warrants as of February 23, 2021, December 31, 2021 and June 30, 2022 were as follows:
As of |
| |||||||||
| February 23, 2021 |
| December 31, 2021 |
| June 30, 2022 |
| ||||
Implied volatility |
| | % | | % | | % | |||
Risk-free interest rate |
| | % | | % | | % | |||
Warrant exercise price | $ | | $ | | $ | | ||||
Expected term |
| | |
| |
The Warrants are measured at fair value on a recurring basis.
As of February 23, 2021, the values of the Public Warrants and Private Warrants were $
As of December 31, 2021, the values of the Public Warrants and Private Warrants were $
As of June 30, 2022, the values of the Public Warrants and Private Warrants were $
The initial fair value measurement of the private warrants reflects an increase of $
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. As of February 23, 2021, the Public and Private Warrants were classified as Level 2 due to the use of both observable inputs in an active market as well as quoted prices in active markets for similar assets and liabilities. As of June 30, 2021, the Public Warrants were classified as Level 1 due to the use of quoted prices in active markets, and the Private Warrants were classified as Level 2.
20
SIMON PROPERTY GROUP ACQUISITION HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2022
(Unaudited)
Convertible Promissory Note – Related Party
The Company utilizes a binomial lattice model to estimate fair value of the convertible promissory note at each reporting period with changes recognized in the statements of operations. The key assumptions in the model relate to expected share-price volatility, risk-free interest rate, exercise price, expected term and the probability of occurrence of the transaction. The expected volatility was based on the average volatility of SPACs that are searching for an acquisition target. SPAC volatility is based upon historical stock prices over a six-year lookback period, or all historical data if less than six years is available. The risk-free interest rate is based on interpolation of U.S. Treasury yields with a term commensurate with the term of the warrants. The Company anticipates the dividend yield to be zero. The expected term of the warrants is assumed to be the estimated date of a Business Combination.
The estimated fair value of the convertible promissory note was based on the following significant inputs:
At September 8, 2021, the date of the convertible promissory note draw, the estimated fair value was $
| September 8, 2021 |
| December 31, 2021 |
| June 30, 2022 |
| ||||
Risk-free interest rate | | % | | % | | % | ||||
Term | | |
| | ||||||
Expected volatility | | % | | % |
| | % | |||
Exercise price | $ | | $ | | $ | | ||||
Stock Price | $ | | $ | | $ | | ||||
Probability of transaction | | % | | % |
| | % |
The following table presents the changes in the fair value of the Level 3 convertible promissory note:
| Convertible | ||
Promissory | |||
Note | |||
Fair value as of January 1, 2022 | $ | | |
Proceeds received through convertible promissory note |
| — | |
Change in valuation inputs or other assumptions |
| ( | |
Fair value as of March 31, 2022 | $ | | |
Change in valuation inputs or other assumptions | ( | ||
Draw on convertible promissory note | | ||
Fair value as of June 30, 2022 | $ | |
There were
10. Subsequent Events
Management has performed an evaluation of subsequent events through the date of issuance of the condensed financial statements. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.