Business context and reporting period
This is SVF Investment Corp. 3’s Form 10-K for the year ended December 31, 2021, not an operating-company 10-K filed by Symbotic Inc. The filing covers a SPAC that had no operations or operating revenue and was pursuing a proposed merger with Symbotic. The proposed business combination was announced December 12, 2021 and remained subject to approvals and closing conditions.
Financial performance and position
- SVF 3 reported a 2021 net loss of $6.48 million, compared with a $18,846 loss for the short period from inception on December 11, 2020 through December 31, 2020. The 2021 loss primarily reflected $6.39 million of general and administrative expense and $100,000 of related-party expense, partly offset by $16,430 of trust investment income.
- Operating cash outflow was $3.38 million in 2021. Investing cash outflow was $320.0 million, principally the deposit into the trust account; financing cash inflow was $324.2 million, principally IPO and private-placement proceeds.
- At December 31, 2021, the trust account held $320.02 million and cash outside the trust was $812,884. The filing reports a working-capital deficit of approximately $2.5 million and identifies approximately $813,000 as available for working capital.
- SVF 3 had no borrowings under its working-capital loan commitment at year-end; the Sponsor’s commitment had been increased to $3.0 million. The filing reports $11.2 million of deferred underwriting commissions, payable only if a business combination closes. The balance-sheet transcription contains an apparent inconsistency in the current-liabilities total, so that figure is not clear from the filing text provided.
- Profit margins and operating cash flow for Symbotic are not stated clearly in this SPAC’s financial statements. Separately, the filing’s risk discussion reports Symbotic net losses of $122.3 million for its fiscal year ended September 25, 2021 and $109.5 million for the fiscal year ended September 26, 2020, with accumulated deficits of $1,154.9 million and $856.9 million, respectively. It does not provide Symbotic revenue or margin figures in the supplied text.
Material changes versus the prior comparable period
SVF 3’s 2021 results reflect its March 2021 IPO and search for a merger target, whereas the 2020 comparison covers only its initial period after incorporation. The IPO raised $320.0 million gross, and the Sponsor’s private placement raised $10.4 million. The company placed $320.0 million in trust. These periods are not directly comparable as operating periods.
Outlook, risks, contingencies, and unusual items
- The auditor included a going-concern explanatory paragraph: SVF 3 had to complete a business combination by March 11, 2023 or liquidate, and its limited funds meant additional financing was needed to sustain operations. Management stated that this raised substantial doubt about its ability to continue as a going concern.
- The proposed transaction contemplated $205 million of PIPE subscriptions at $10 per share and a $150 million committed forward purchase, with the investor electing an additional $50 million in March 2022. Completion depended on multiple conditions, including shareholder and unitholder approvals, minimum cash and NASDAQ listing requirements. Estimated transaction costs were $69 million, including $11.2 million of deferred underwriting fees.
- Symbotic disclosed substantial customer concentration: Walmart represented approximately 67% of Symbotic revenue for the fiscal year ended September 25, 2021; C&S Wholesale Grocers, Albertsons, Giant Tiger and Target together represented approximately 33%. The filing also describes supply-chain, component-shortage, execution, competition, cybersecurity, product-defect, personnel and growth risks.
- SVF 3 disclosed a material weakness in controls over accounting for complex financial instruments, restatements of interim financial information, and ineffective disclosure controls as of December 31, 2021. The auditor did not opine on internal-control effectiveness.
- The merger structure would substantially dilute SVF 3 shareholders’ ownership, with the filing estimating approximately 14% ownership of New Symbotic Holdings units with no redemptions and 9% with maximum redemptions. It also describes dual-class voting, related-party and founder-control risks, and a proposed tax receivable agreement under which 85% of certain realized tax savings would be paid to specified holders.
Most important facts for investors to verify
- Confirm the filing and issuer: these are SVF 3 SPAC financials, not Symbotic Inc.’s operating-company financial statements; obtain Symbotic’s underlying audited statements for revenue, margins, cash flow and debt.
- Verify the merger’s closing status, actual redemptions, cash delivered, PIPE and forward-purchase funding, and final transaction costs and dilution.
- Review the financial-statement restatements, the material weakness remediation, and the apparent current-liabilities inconsistency in the supplied filing text.
- Assess Symbotic’s dependence on Walmart and other large customers, contract terms, backlog conversion, supplier availability and capital needs.
- Examine the going-concern disclosure, trust-account creditor protections, and the terms and potential cash burden of the tax receivable agreement.