Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2012, for Silverwood Acquisition Corporation (a Delaware corporation). The registrant is a development-stage shell company formed to engage in mergers and acquisitions to provide a vehicle for private companies to become public reporting entities. As of the reporting date, the company had no active operations other than administrative activities and the search for a target business.
Key Financial Metrics
| Metric | Value |
|---|---|
| Revenue | $0 (No revenue generated since inception) |
| Net Loss (3 months ended June 30, 2012) | $(750) |
| Net Loss (6 months ended June 30, 2012) | $(1,500) |
| Accumulated Deficit | $(2,843) |
| Cash and Cash Equivalents | $2,000 |
| Total Assets | $2,000 |
| Total Liabilities | $0 |
| Shares Outstanding | 20,000,000 Common Stock |
Material Changes vs. Prior Period
- Liabilities: Accrued liabilities decreased from $400 as of December 31, 2011, to $0 as of June 30, 2012.
- Equity: Additional paid-in capital increased from $943 to $2,843, offset by an increase in the accumulated deficit.
- Cash Flow: Net cash used in operating activities for the six months ended June 30, 2012, was $(1,900), funded entirely by financing activities (stockholder contributions) of $1,900.
- Operations: The company remains in the development stage with no change in its fundamental lack of operating revenue.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's continuation as a going concern is dependent on its ability to obtain additional financing and successfully locate a target company. There is no assurance of profitability.
- Financial Support: Tiber Creek Corporation, an entity affiliated with management, has agreed to pay all expenses incurred by Silverwood until a business combination is effected, without repayment.
- Potential Business Combination: On April 16, 2012, Tiber Creek Corporation entered into negotiations with American Performance Technologies, LLC. The proposed transaction involves redeeming shares of current shareholders (leaving 75,000 shares each), resigning current directors, and issuing shares to American Performance Technologies. As of June 30, 2012, this change in control had not yet occurred.
- Risks: The company has no capital to provide to acquisition targets. Success depends entirely on finding a target willing to merge. If a combination is not achieved, the company may cease operations.
Investor Verification Checklist
- Shell Status: Verify the company's status as a shell company with no independent operations or revenue.
- Merger Progress: Confirm the current status of the negotiations with American Performance Technologies, LLC, as the filing notes the change in control had not occurred as of June 30, 2012.
- Capital Adequacy: Note that the company relies entirely on Tiber Creek Corporation for expense coverage and has minimal cash ($2,000).
- Share Structure: Verify the potential dilution or redemption of the 20,000,000 currently outstanding shares if the proposed merger proceeds.