Business context and reporting period
This is Spring Valley Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2021—not a NuScale Power filing. Spring Valley was a blank-check company with no operating business or operating revenue. On March 25, 2021, it entered into a merger agreement with Dream Holdings, Inc. for a proposed business combination involving AeroFarms.
Financial results and position
- Results: The statement of operations reports a $299,060 operating loss and $8,734,669 net income for the quarter. The net income primarily reflects a $9,028,000 noncash gain from a decline in the fair value of warrant liabilities, plus $5,729 of trust-account interest. No operating revenue was reported.
- Cash flow: Operating cash use was $221,914; financing cash use was $25,000; cash decreased $246,914 to $1,659,434.
- Liquidity and assets: The trust account held $232,307,702, invested in U.S. Treasury securities or qualifying money-market funds. Total assets were $234,164,226.
- Liabilities and equity: Total liabilities were $32,769,082, including $24,632,000 of warrant liabilities and an $8,050,000 deferred underwriting fee payable only if a business combination closes. Shareholders’ equity was $5,000,001. The filing reports no long-term debt.
- Margins: Not meaningful for this pre-combination company; there was no operating revenue.
Changes and comparability
Against December 31, 2020, cash fell from $1,906,348 to $1,659,434, and warrant liabilities declined from $33,660,000 to $24,632,000. Redeemable Class A shares increased from 18,582,720 to 19,445,064. The filing does not provide a comparable prior-year quarter’s operating results; the company had been formed in August 2020.
Outlook, risks, and unusual items
- Management expected ongoing costs to pursue a business combination and said it could not assure a successful transaction. The company had until May 27, 2022 to complete a combination, with a possible six-month extension subject to sponsor funding.
- Public shareholders could redeem shares in connection with a business combination. If no combination is completed by the deadline, the company must wind up and redeem public shares; warrants may expire worthless.
- The filing identifies a material weakness in internal control over financial reporting related to warrant classification. Following an SEC statement issued April 12, 2021, the company concluded warrants should be liabilities rather than equity; disclosure controls were deemed ineffective as of March 31, 2021. Management described remediation efforts but gave no assurance they would prevent future deficiencies.
- The filing notes COVID-19 could adversely affect the company or its search for a target, though the impact was not determinable. It also warns that negative interest rates could reduce trust-account redemption value.
Important facts for investors to verify
- Confirm the filing entity: the supplied filing is for Spring Valley Acquisition Corp., not NuScale Power Corp.
- Reconcile inconsistent earnings disclosures: the financial statements report net income of $8,734,669, while MD&A calls the same amount a net loss; the statement reports a $9,028,000 warrant remeasurement gain, while MD&A cites $9,208,000.
- Review the warrant accounting change, related material weakness, and the status and effectiveness of remediation.
- Review the Dream Holdings/AeroFarms merger terms, redemption levels, financing needs, and transaction completion conditions.
- Assess the trust-account balance, deferred underwriting fee, deadline and extension requirements, and risks to public-share redemption proceeds.