References to the "Company," "our," "us" or "we" refer to SILVERspac Inc.The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Cautionary Note Regarding
Forward-Looking Statements and Risk Factor Summary," "Item 1A. Risk Factors" and
elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on January 21, 2021 formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our Business
Combination using cash derived from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our shares, debt or a
combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from January 21, 2021 (inception) through December 31, 2021
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and, subsequent to the Initial Public
Offering, identifying a target company for a Business Combination. We do not
expect to generate any operating revenues until after the completion of our
Business Combination. We generate non-operating income in the form of interest
income on marketable securities held in the Trust Account. We incur expenses as
a result of being a public company (for legal, financial reporting, accounting
and auditing compliance), as well as for due diligence expenses.
For the period from January 21, 2021 (inception) through December 31, 2021, we
had a net income of $972,688, which consists of the change in fair value of
warrant liabilities of $2,340,000 and interest earned on marketable securities
held in the Trust Account of $5,680, offset by formation and operational costs
of $550,877 and transaction costs associated with the Initial Public Offering of
$822,115.
Liquidity and Going Concern
On September 14, 2021, we consummated the Initial Public Offering of 25,000,000
Units, at $10.00 per Unit, generating gross proceeds of $250,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 4,666,667 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant in a private placement to the Sponsor, generating gross
proceeds of $7,000,000.
Following the closing of the Initial Public Offering and the sale of the Private
Placement Warrants, a total of $250,000,000 was placed in the Trust Account. We
incurred $15,082,415 in Initial Public Offering related costs, including
$5,000,000 of underwriting fees, $8,750,000 of deferred underwriting fees and
$1,332,415 of other costs.
For the period from January 21, 2021 (inception) through December 31, 2021, cash
used in operating activities was $967,720. Net income of $970,388 was affected
by formation cost paid by Sponsor in exchange for the issuance of Founder Shares
of $5,000, change in fair value of warrant liability of $2,340,000, interest
earned on marketable securities held in the Trust Account of $5,680, and
transaction costs associated with the Initial Public Offering of $822,115.
Changes in operating assets and liabilities used $419,543 of cash from operating
activities.
As of December 31, 2021, we had marketable securities held in the Trust Account
of $250,005,680 (including $5,680 of interest income) consisting of money market
funds which are invested in U.S. Treasury Securities. We may withdraw interest
from the Trust Account to pay taxes, if any. We intend to use substantially all
of the funds held in the Trust Account, including any amounts representing
interest earned on the Trust Account (less income taxes payable and excluding
deferred underwriting commissions), to complete our Business Combination. To the
extent that our ordinary shares or debt is used, in whole or in part, as
consideration to complete our Business Combination, the remaining proceeds held
in the Trust Account will be used as working capital to finance the operations
of the target business or businesses, make other acquisitions and pursue our
growth strategies.
As of December 31, 2021, we had cash of $407,210. We intend to use the funds
held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, structure, negotiate
and complete a Business Combination, and to pay taxes to the extent the interest
earned on the Trust Account is not sufficient to pay our taxes.
In order to finance transaction costs in connection with a Business Combination,
the Sponsor, or certain of our officers and directors or their respective
affiliates may, but are not obligated to, loan us funds as may be required. If
we complete a Business Combination, we may repay such loaned amounts out of the
proceeds of the Trust Account released to us. Otherwise, such loans may be
repaid only out of funds held outside the Trust Account. In the event that a
Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from
our Trust Account would be used for such repayment. Up to $2,000,000 of such
loans may be convertible into warrants at a price of $1.50 per warrant at the
option of the lender. The warrants would be identical to the Private Placement
Warrants issued to our Sponsor.
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In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") Topic 205-40, "Basis of Presentation - Going
Concern," management has determined that the expected shortfall in working
capital over the period of time between the date these financial statements are
issued and its estimated business combination date raises substantial doubt
about the Company's ability to continue as a going concern until the earlier of
the consummation of the Business Combination or the date the Company is required
to liquidate. Based on the above factors, management determined there is
substantial doubt about the Company's ability to continue as a going concern
within one year after the date the financial statements are issued. The
financial statements do not include any adjustment that might be necessary if
the Company is unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay Silverstein
Properties a total of up to $12,000 per year for office space. As of December
31, 2021, we have not made any payments to Silverstein Properties pursuant to
the Amended Office Space and Indemnification Agreement. The Amended Office Space
and Indemnification Agreement will terminate upon the earlier of our
consummation of a Business Combination or our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,750,000
in the aggregate. The deferred fee will become payable to the underwriters from
the amounts held in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America (GAAP) requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815-40 under which the
Warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the Warrants as liabilities at their fair
value and adjust the Warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations.
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Class A Ordinary Shares Subject to Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares that feature
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' equity section of our balance sheet.
Net Loss Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net loss by the
weighted average number of ordinary shares outstanding during the period. We
apply the two-class method in calculating earnings per share. Accretion
associated with the redeemable shares of Class A ordinary shares is excluded
from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company adopted ASU 2020-06 effective as of
January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the
Company's financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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