Business context and reporting period
This is Spring Valley Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2022—not an operating-company filing for NuScale Power Corp. Spring Valley was a blank-check company searching for a business combination and had not begun operations or generated operating revenue. It had agreed to combine with NuScale Power, LLC; the proposed post-combination company was to be named NuScale Power Corporation and expected to list on the NYSE under “SMR.”
Financial results and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | No operating revenue | No operating revenue |
| General and administrative expense | $5.15 million | $0.30 million |
| Net income (loss) | $(15.96) million | $8.73 million |
| Basic and diluted loss per share | $(0.56) | Net income per share of $0.30 |
| Net cash used in operating activities | $0.41 million | $0.22 million |
| Cash outside trust | $0.58 million at March 31 | $0.99 million at December 31, 2021 |
| Trust investments | $232.34 million | $232.32 million at December 31, 2021 |
| Total liabilities | $53.09 million | $37.54 million at December 31, 2021 |
The quarterly loss largely reflected a $10.84 million non-cash increase in the fair value of derivative warrant liabilities; the comparable 2021 period included a $9.03 million gain from warrant revaluation. The trust earned approximately $23,000. Working capital deficit was approximately $4.4 million. The filing reports no long-term debt; liabilities included $8.05 million of deferred underwriting fees payable only if a business combination closes. No operating margin is meaningful because the company had no operating revenue.
Material changes, transaction and outlook
- General and administrative expenses rose about $4.85 million year over year. Accrued expenses increased to $4.95 million from $40,000 at year-end, contributing to the higher current liabilities.
- Spring Valley had until May 27, 2022 to complete a business combination, with a possible six-month extension requiring the Sponsor or permitted designees to buy 2.3 million additional warrants for $2.3 million and place the proceeds in trust. Management stated it intended to close the NuScale transaction before the deadline but cautioned that completion was not assured.
- The filing disclosed anticipated PIPE proceeds of $235 million: $211 million under initial subscriptions, $10 million from SailingStone, and a further $15 million subscription from Nucor announced April 4. The investments were subject to customary conditions and closing of the proposed transaction.
- The proxy statement/prospectus became effective April 7, and the shareholder meeting was scheduled for April 28. The filing does not state the meeting’s outcome or whether the transaction subsequently closed.
- Management concluded that limited cash, uncertainty about closing by the deadline, and possible liquidation raised substantial doubt about the company’s ability to continue as a going concern. If no transaction or extension occurred by the deadline, public shares were subject to redemption and warrants could expire worthless.
- Disclosure controls were not effective because of a material weakness in accounting for complex equity and equity-linked instruments and earnings-per-share presentation. The weakness had resulted in prior-period restatements. Management reported additional review procedures and ongoing remediation efforts.
- The filing noted potential uncertainties from COVID-19 and the Russia-Ukraine conflict, but said their specific effects were not determinable. No legal proceedings were reported.
Important facts for investors to verify
- Whether the proposed NuScale transaction received shareholder approval and closed, and the final listing and transaction terms.
- Whether all $235 million of anticipated PIPE subscriptions funded, and the amount of trust cash remaining after redemptions and transaction costs.
- Whether Spring Valley obtained an extension or faced the May 27, 2022 liquidation deadline; this quarter’s filing does not establish the subsequent outcome.
- Management’s liquidity and going-concern assessment, including cash needs and any sponsor or other financing.
- Remediation of the material weakness, the accuracy of warrant-liability fair values, and potential dilution from warrants and transaction securities.