Filing summary
Registrant clarification: The supplied filing is Spring Valley Acquisition Corp.’s Form 10-Q, not a filing by NuScale Power Corp. It covers the quarter ended September 30, 2021; the financial statements are unaudited.
Business context and reporting period
Spring Valley was a blank-check company seeking a business combination and had not begun operating business activities or generating operating revenue. On March 25, 2021, it agreed to combine with Dream Holdings, Inc. in a transaction involving AeroFarms. After quarter-end, on October 14, 2021, the parties mutually terminated the agreement and decided not to pursue the merger; the company said it planned to withdraw its Form S-4 registration statement.
Financial results and position
| Metric | Three months ended September 30, 2021 | Nine months ended September 30, 2021 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating costs | $441,400 | $1,125,437 |
| Net income (loss) | $(1,926,408) | $2,375,076 |
| Basic and diluted earnings (loss) per share | $(0.07) | $0.08 |
| Cash used in operating activities | Not separately presented | $691,041 |
The filing’s MD&A reports quarterly net loss of $1,926,407 and nine-month net income of $2,375,077, each differing by $1 from the financial statements. Results were materially affected by noncash changes in the fair value of warrant liabilities: a $1.488 million loss in the quarter and a $3.486 million gain over nine months. Interest and investment income was $2,992 for the quarter and $14,513 for the nine-month period. Operating margins are not meaningful because the company had no operating revenue.
At September 30, 2021, total assets were $233.615 million, including $1.190 million of cash and $232.316 million of investments held in a brokerage account. The balance sheet reports no investment in a trust account at that date; the MD&A describes $232.316 million as held in the trust account. Current liabilities were $356,000; total liabilities were $38.580 million, including $30.174 million of derivative warrant liabilities and $8.050 million of deferred underwriting fees. The company reported no long-term debt. Class A shares subject to possible redemption were $232.300 million, presented outside shareholders’ deficit; shareholders’ deficit was $37.264 million.
Cash decreased $716,041 during the nine months, ending at $1.190 million. The company stated it expected to use cash outside the trust primarily for target identification and transaction costs. It reported no off-balance-sheet arrangements and no material market or interest-rate risk.
Changes, outlook, and risks
- Accounting revision: The company revised previously issued financial statements to classify all 23 million redeemable Class A shares at their $232.3 million redemption value as temporary equity and revised earnings-per-share allocation. It said total assets, liabilities, and operating results were unchanged; the revision reduced reported shareholders’ equity and increased accumulated deficit.
- Business combination deadline: The company initially had until May 27, 2022 to complete a business combination. It could extend the period once by six months if the sponsor or permitted parties purchased 2.3 million additional private placement warrants for $2.3 million and deposited the proceeds in the trust account. No assurance was given that a combination would be completed.
- Going concern: Management cited uncertain completion by the deadline and potentially insufficient liquidity to fund working capital needs through one year after issuance of the financial statements. It concluded these conditions raised substantial doubt about the company’s ability to continue as a going concern. Failure to complete a deal would require redemption of public shares and liquidation; warrants could expire worthless.
- Other risks and contingencies: The filing noted possible adverse effects of COVID-19 on the company’s financial position and target search, with impact not readily determinable. It also warned that negative interest rates could reduce trust assets and public-share redemption amounts. The deferred underwriting fee is payable only upon completion of a business combination. No legal proceedings were reported.
- Controls: Management concluded disclosure controls were effective. A previously identified material weakness was reported as remediated by September 30, 2021.
Important facts for investors to verify
- Confirm the registrant and filing identity: this 10-Q is for Spring Valley Acquisition Corp., not NuScale Power Corp.
- Review subsequent filings for the terminated AeroFarms transaction, any replacement target, and the status of the planned Form S-4 withdrawal.
- Reconcile the $1 net-income differences between the financial statements and MD&A, and clarify the reported location and status of the $232.316 million investment balance.
- Monitor cash available outside the trust, transaction spending, any sponsor or working-capital loans, and the May 27, 2022 combination deadline or extension.
- Assess the implications of the restatement/revision, warrant-liability valuation volatility, and management’s going-concern warning.