References in this report (the "Quarterly Report") to "we," "us," "our" or the
"Company" refer to SILVERspac Inc., except where the context requires otherwise.
References to our "management" or our "management team" refer to our officers
and directors, and references to the "Sponsor" refer to SILVERspac Sponsor LLC.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Business Combination, the Company's financial position,
business strategy and the plans and objectives of management for future
operations, are forward-looking statements. Words such as "expect," "believe,"
"anticipate," "intend," "estimate," "seek" and variations and similar words and
expressions are intended to identify such forward-looking statements, but the
absence of these words does not mean that a statement is not forward-looking.
Such forward-looking statements relate to future events or future performance,
but reflect management's current beliefs, based on information currently
available. A number of factors could cause actual events, performance or results
to differ materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's most recent Annual Report on Form 10-K filed with the SEC. The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
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.
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 March 31, 2022
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 three months ended March 31, 2022, we had a net income of $3,478,382,
which consists of the change in fair value of warrant liabilities of $3,734,901
and interest earned on marketable securities held in the Trust Account of
$16,419, offset by operating and formation costs of $272,938.
For the period from January 21, 2021 (inception) through March 31, 2021, we had
a net loss of $6,250 which consisted of operating and formation costs.
Liquidity and Capital Resources
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 three months ended March 31, 2022, net cash used in operating activities
was $128,310. Net income of $3,478,382 was affected by change in fair value of
warrant liabilities of $3,734,901 and interest earned on marketable securities
held in the Trust Account of $16,419. Changes in operating assets and
liabilities provided $144,628 of cash from operating activities.
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For the period from January 21, 2021 (inception) through March 31, 2021, net
cash used in operating activities was $2,500. Net loss of $6,250 was affected by
formation cost of $5,000 paid by the Sponsor in exchange for the issuance of
Founder Shares. Changes in operating assets and liabilities used $1,250 of cash
from operating activities.
As of March 31, 2022, we had marketable securities held in the Trust Account of
$250,022,099 (including $22,099 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 March 31, 2022, we had cash of $273,900. 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, if any, to the extent the interest
earned on the Trust Account is not sufficient to pay any applicable 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.
In connection with the Company's assessment of going concern considerations in
accordance with ASC 205-40, management has determined that the expected
shortfall in working capital over the period of time between the date these
financial statement 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 Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. 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 March 31,
2022, 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.
In connection with the closing of the Initial Public Offering, the Company
became obligated to pay its attorneys a deferred legal fee of $681,933 upon
consummation of a Business Combination, of which such amount is included in
accrued expenses in the accompanying condensed balance sheet at March 31, 2022
and December 31, 2021. The deferred fee will be forfeited by the attorneys in
the event that the Company fails to complete a Business Combination.
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:
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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 statements of
operations.
Class A Ordinary Shares Subject to Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in ASC 480. 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' deficit section of our condensed balance sheets.
Net Income (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, 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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