NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Prospector Capital Corp. (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on September 18, 2020. The Company was incorporated for the
purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
one or more businesses or entities (a “Business Combination”).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,
the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from September 18, 2020 (inception) through September 30, 2021 relates to the Company’s
formation and the initial public offering (“Initial Public Offering”), which is described below, and identifying a target
company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial
Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on January 7, 2021. On January 12, 2021, the Company consummated the Initial Public Offering
of 32,500,000 units (the “Units”), which includes the partial exercise by the underwriter of its over-allotment option in
the amount of 2,500,000 Units, at $10.00 per Unit, generating gross proceeds of $325,000,000 which is described in Note 4.
Transaction costs amounted to $18,391,778, consisting
of $6,500,000 of underwriting fees, $11,375,000 of deferred underwriting fees and $516,778 of other offering costs.
Following the closing of the Initial Public Offering
on January 12, 2021, an amount of $325,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the private placement warrants (the “Private Placement Warrants”) was placed in a trust account (the
“Trust Account”), and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money
market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act of 1940,
as amended (the “Investment Company Act”), as determined by the Company, until the earliest of: (i) the completion of
a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described
below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The stock
exchange listing rules require that the Business Combination must be with one or more operating businesses or assets with a fair market
value equal to at least 80% of the assets held in the Trust Account (excluding the amount of deferred underwriting commissions and taxes
payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-Business Combination
company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling
interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company
Act.
The Company will provide the holders of the public
shares (the “Public Shareholders” and, with respect to the Class A ordinary shares included in the Units being offered, the
“Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of the Business
Combination, either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of
a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer
will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares, equal to
the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business
Combination (initially $10.00 per Public Share), including interest (which interest shall be net of taxes payable), divided by the number
of then issued and outstanding public shares, subject to certain limitations as described in the prospectus. The per-share amount to be
distributed to the Public Shareholders who properly redeem their shares will not be reduced by the deferred underwriting commissions the
Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination
with respect to the Company’s warrants.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, it receives an ordinary
resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders
who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold
a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles
of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”),
and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior
to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, Prospector
Sponsor LLC (the “Sponsor”) has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during
or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to
redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business
Combination.
Notwithstanding the foregoing, if the Company
seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules,
a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert
or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares without
the Company’s prior written consent.
The Sponsor has agreed (a) to waive its redemption
rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and
(b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance
or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or
to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined
below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity,
unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on
the Trust account and not previously released to pay taxes, divided by the number of then issued and outstanding Public Shares.
The Company will have until January 12, 2023 to
consummate a Business Combination (the “Combination Period”). However, if the Company has not completed a Business Combination
within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem 100% of the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned and not previously released to
us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding
Public Shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right
to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of the Company’s remaining Public Shareholders and its Board of Directors, liquidate and dissolve, subject in each
case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless
if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its rights to
liquidating distributions from the Trust Account with respect to the Founder Shares it will receive if the Company fails to complete a
Business Combination within the Combination Period. However, if the Sponsor or any of its respective affiliates acquire Public Shares,
such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note
6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the
Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account
to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Account as of
the date of the liquidation of the Trust Account, if less than $10.00 per Public Share, due to reductions in the value of trust assets,
in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who
executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the Company’s indemnity of
the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies
held in the Trust Account.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Liquidity and Capital Resources
As of September 30, 2021, the Company had $658,112
in its operating bank accounts and working capital of $385,427. In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide
the Company Working Capital Loans (see Note 5). As of September 30, 2021 and December 31, 2020, there were no amounts outstanding under
any Working Capital Loans.
The Company may raise additional capital through
loans or additional investments from the Sponsor or its shareholders, officers, directors, or third parties. The Company’s officers
and directors and the Sponsor may but are not obligated to (except as described above), loan the Company funds, from time to time, in
whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Based on the foregoing,
the Company believes it will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or
certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination
or at least one year from the date that the financial statements were issued.
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
In connection with the preparation of the Company’s
unaudited condensed financial statements as of and for the quarterly period ended September 30, 2021, the Company concluded it should
restate its financial statements to classify all Public Shares in temporary equity. In accordance with ASC 480, paragraph 10-S99, redemption
provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent
equity. The Company previously determined the Class A ordinary shares subject to possible redemption be equal to the redemption value
of $10.00 per Class A ordinary share while also taking into consideration a redemption cannot result in net tangible assets being less
than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets.
Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets.
Accordingly, effective with this filing, the Company presents all redeemable Class A ordinary shares as temporary equity and recognizes
accretion from the initial book value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480.
As a result, management has noted a reclassification
adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Class
A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated
deficit and Class A ordinary shares.
In connection with the change in presentation
for the Class A ordinary shares subject to redemption, the Company also restated its income (loss) per ordinary share calculation to allocate
net income (loss) evenly to Class A and Class B ordinary shares. This presentation contemplates a Business Combination as the most likely
outcome, in which case, both classes of ordinary shares share pro rata in the income (loss) of the Company.
There has been no change in the Company’s
total assets, liabilities or operating results.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The impact of the restatement on the Company’s
financial statements is reflected in the following table.
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Condensed Balance Sheet as of March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
303,672,030
|
|
|
$
|
21,327,970
|
|
|
$
|
325,000,000
|
|
Class A ordinary shares
|
|
$
|
213
|
|
|
$
|
(213
|
)
|
|
$
|
—
|
|
Additional paid-in capital
|
|
$
|
9,070,166
|
|
|
$
|
(9,070,166
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
(4,071,188
|
)
|
|
$
|
(12,257,591
|
)
|
|
$
|
(16,328,779
|
)
|
Total Shareholders’ Equity (Deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(21,327,970
|
)
|
|
$
|
(16,327,966
|
)
|
Shares subject to redemption
|
|
|
30,367,203
|
|
|
|
2,132,797
|
|
|
|
32,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Balance Sheet as of June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
309,499,860
|
|
|
$
|
15,500,140
|
|
|
$
|
325,000,000
|
|
Class A ordinary shares
|
|
$
|
155
|
|
|
$
|
(155
|
)
|
|
$
|
—
|
|
Additional paid-in capital
|
|
$
|
8,625,728
|
|
|
$
|
(8,625,728
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
(3,626,689
|
)
|
|
$
|
(6,874,257
|
)
|
|
$
|
(10,500,946
|
)
|
Total Shareholders’ Equity (Deficit)
|
|
$
|
5,000,007
|
|
|
$
|
(15,500,140
|
)
|
|
$
|
(10,500,133
|
)
|
Shares subject to redemption
|
|
|
30,949,986
|
|
|
|
1,550,014
|
|
|
|
32,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Operations for the Three Months Ended March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A redeemable ordinary shares
|
|
|
32,500,000
|
|
|
|
(4,333,333
|
)
|
|
|
28,166,667
|
|
Basic and diluted net loss per share, Class A redeemable ordinary shares
|
|
$
|
—
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.11
|
)
|
Weighted average shares outstanding of Class B redeemable ordinary shares
|
|
|
8,027,778
|
|
|
|
—
|
|
|
|
8,027,778
|
|
Basic and diluted net income (loss) per share, Class B
redeemable ordinary shares
|
|
$
|
(0.51
|
)
|
|
$
|
0.40
|
|
|
$
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Operations for the Three Months Ended June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A redeemable ordinary shares
|
|
|
32,500,000
|
|
|
|
—
|
|
|
|
32,500,000
|
|
Basic and diluted net income per share, Class A redeemable ordinary shares
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Weighted average shares outstanding of Class B redeemable ordinary shares
|
|
|
8,125,000
|
|
|
|
—
|
|
|
|
8,125,000
|
|
Basic and diluted net income (loss) per share, Class B
redeemable ordinary shares
|
|
$
|
0.05
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Operations for the Six Months Ended June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A redeemable ordinary shares
|
|
|
32,500,000
|
|
|
|
(2,154,696
|
)
|
|
|
30,345,304
|
|
Basic and diluted net loss per share, Class A redeemable
ordinary shares
|
|
$
|
—
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
Weighted average shares outstanding of Class B redeemable ordinary shares
|
|
|
8,076,657
|
|
|
|
—
|
|
|
|
8,076,657
|
|
Basic and diluted net income (loss) per share, Class B redeemable ordinary shares $
|
|
|
(0.45
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 32,500,000 Units, net of underwriting discounts
|
|
$
|
306,608,222
|
|
|
$
|
(306,608,222
|
)
|
|
$
|
—
|
|
Class A ordinary shares subject to redemption
|
|
$
|
(303,672,030
|
)
|
|
$
|
303,672,030
|
|
|
$
|
—
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
2,936,192
|
|
|
$
|
(2,936,192
|
)
|
|
$
|
—
|
|
Accretion for Class A ordinary shares subject to redemption amount
|
|
$
|
—
|
|
|
$
|
(18,391,778
|
)
|
|
$
|
(18,391,778
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Changes in Shareholders’ Equity for the Three Months Ended June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
(5,827,830
|
)
|
|
$
|
5,827,830
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 32,500,000 Units, net of underwriting discounts
|
|
$
|
306,608,222
|
|
|
$
|
(306,608,222
|
)
|
|
$
|
—
|
|
Class A ordinary shares subject to redemption
|
|
$
|
(303,672,030
|
)
|
|
$
|
303,672,030
|
|
|
$
|
—
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
(2,891,638
|
)
|
|
$
|
2,891,638
|
|
|
$
|
—
|
|
Accretion for Class A ordinary shares subject to redemption amount
|
|
$
|
—
|
|
|
$
|
(18,391,778
|
)
|
|
$
|
(18,391,778
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Cash Flows for the Three Months Ended March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of Class A ordinary shares subject to redemption
|
|
$
|
304,121,550
|
|
|
$
|
20,878,450
|
|
|
$
|
325,000,000
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
(449,520
|
)
|
|
$
|
449,520
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of Class A ordinary shares subject to redemption
|
|
$
|
310,128,220
|
|
|
$
|
14,871,780
|
|
|
$
|
325,000,000
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
(628,360
|
)
|
|
$
|
628,360
|
|
|
|
—
|
|
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A, as amended on July 26, 2021, for the period
ended December 31, 2020. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of
the results to be expected for the year ending December 31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Use of Estimates
The preparation of the condensed financial statements
in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed financial
statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current
information becomes available and accordingly the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of September 30, 2021 and December 31, 2020.
Offering Costs
Offering costs consisted of legal, accounting
and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs
were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs allocated to warrant liabilities were expensed as incurred in the condensed statements of operations.
Offering costs associated with the Class A ordinary shares issued were initially charged to temporary equity and then accreted to ordinary
shares subject to redemption upon the completion of the Initial Public Offering. Offering costs amounting to $18,391,778 were charged
to shareholders’ equity upon the completion of the Initial Public Offering. The Company’s deferred underwriting commissions
are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require
the creation of current liabilities.
Class A Ordinary Shares Subject to Possible
Redemption
The Company accounts for its Class A ordinary
shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480,
“Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability
instrument and are measured at redemption 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
the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, Class A ordinary shares subject to possible
redemption is presented as temporary equity, outside of the shareholders’ equity (deficit) section of the Company’s condensed
balance sheets.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each
reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional
paid in capital and accumulated deficit.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
At September 30, 2021, the Class A ordinary shares
reflected in the condensed balance sheet are reconciled in the following table:
Gross proceeds
|
|
$
|
325,000,000
|
|
Less:
|
|
|
|
|
Class A ordinary shares issuance costs
|
|
|
(18,391,778
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
18,391,778
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
325,000,000
|
|
Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for the
Public Warrants and Private Placement Warrants (together with the Public Warrants, the “Warrants”) in accordance with the
guidance contained in ASC 815-40. Previously, the Private Placement Warrants did not meet the criteria for equity treatment and were recorded
as liabilities. Accordingly, the Company classified the Private Placement Warrants as liabilities at their fair value and adjusted the
Private Placement Warrants to fair value at each reporting period. This liability was subject to re-measurement at each balance sheet
date until exercised, and any change in fair value was recognized in our statements of operations. The Private Placement Warrants for
periods where no observable traded price was available were valued using a Modified Black-Scholes model. On June 30, 2021, the Company
executed an agreement whereby the holders of the private warrants will not transfer their warrants to non-affiliated holders. The private
warrants are now considered to be indexed to the Company’s ordinary shares in the manner contemplated by ASC Section 815-40-15 and
therefore qualify for equity treatment.
Income Taxes
The Company accounts for income taxes under ASC
Topic 740, “Income Taxes,” which prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined
that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as income tax expense. As of September 30, 2021 and December 31, 2020, there were no unrecognized tax benefits
and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its position. The Company’s management does not expect the total amount
of unrecognized tax benefits will materially change over the next twelve months.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per ordinary share is computed by dividing net
income (loss) by the weighted average number of ordinary shares outstanding for the period. The Company applies the two-class method in
calculating income (loss) per ordinary share. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from
income (loss) per ordinary share as the redemption value approximates fair value.
The calculation of diluted income (loss) per ordinary
share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement
since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 16,500,000
Class A ordinary shares in the aggregate. As of September 30, 2021 and 2020, the Company did not have any dilutive securities or other
contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a
result, diluted net income (loss) per ordinary share is the same as basic net income (loss) per ordinary share for the periods presented.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The following table reflects the calculation of
basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
|
|
Three Months Ended
September 30, 2021
|
|
|
Nine Months Ended
September 30, 2021
|
|
|
For the Period from
September 18, 2020
(Inception) Through
September 30, 2020
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per ordinary share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss, as adjusted
|
|
$
|
(380,653
|
)
|
|
$
|
(95,163
|
)
|
|
$
|
(3,278,375
|
)
|
|
$
|
(819,130
|
)
|
|
$
|
—
|
|
|
$
|
(5,000
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
32,500,000
|
|
|
|
8,125,000
|
|
|
|
32,390,110
|
|
|
|
8,092,949
|
|
|
|
—
|
|
|
|
7,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per ordinary share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
—
|
|
|
$
|
(0.00
|
)
|
(1)
|
For the three and nine months ended September 30, 2021, basic and diluted ordinary shares are the same as there are no non-redeemable securities that are dilutive to the Company’s shareholders.
|
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal
Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). Carrying values for prepaids, accounts payable and accrued expenses
approximate fair value.
The following fair value hierarchy is used to
classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the
fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
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 is currently assessing
the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
financial statements.
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 32,500,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 2,500,000
Units, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and one-third of one redeemable warrant
(“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise
price of $11.50 per whole share (see Note 8).
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares and Private Placement Warrants
On September 28, 2020, pursuant to a Securities
Purchase Agreement, the Sponsor purchased 10,062,500 Class B ordinary shares (the “Founder Shares”) and 10,050,000 Private
Placement Warrants for an aggregate purchase price of $10,075,000. On December 16, 2020, pursuant to the Securities Purchase Agreement
Amendment (the “SPA Amendment”), the Sponsor returned 2,875,000 Founder Shares and 2,300,000 Private Placement Warrants to
the Company for $2,300,000. In January 2021, the Sponsor forfeited an additional 2,583,333 Private Placement Warrants for no consideration,
resulting in 7,187,500 Founder Shares and 5,166,667 Private Placement Warrants outstanding. On January 7, 2021, the Company effected a
1:1.2 share capitalization of its Class B ordinary shares, resulting in an aggregate of 8,625,000 Founder Shares outstanding, all of which
are held by the Sponsor.
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 500,000 Private Placement Warrants for an aggregate purchase price of $750,000,
or $1.50 per Private Placement Warrant.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Founder Shares included an aggregate of up
to 1,125,000 shares that were subject to forfeiture in the event that, and to the extent to which, the underwriters’ option to purchase
additional Units was exercised, so that the number of Founder Shares would equal, on an as-converted basis, 20% of the Company’s
issued and outstanding ordinary shares after the Initial Public Offering. As a result of the underwriters’ election to partially
exercise their over-allotment option and the forfeiture of the remaining option, 500,000 Founder Shares were forfeited and there are now
8,125,000 Class B ordinary shares issued and outstanding.
Each Private Placement Warrant is exercisable
to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 8). A portion of the proceeds
from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company
does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will
be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants
will expire worthless.
The Sponsor has agreed, subject to limited exceptions,
not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a Business
Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals
or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination,
or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in
all of the Public Shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
Administrative Services Agreement
The Company entered into an agreement, commencing
on January 7, 2021 through the earlier of the consummation of a Business Combination or the Company’s liquidation, to pay the Sponsor
a monthly fee of $10,000 for office space, utilities, secretarial and administrative services. For the three and nine months ended September
30, 2021, the Company incurred $30,000 and $90,000 in fees for these services, respectively. At September 30, 2021 there were $90,000
included in accrued expenses in the accompanying condensed balance sheets. There were no amounts included in accrued expenses at December
31, 2020.
Promissory Note — Related Party
On September 18, 2020, the Company issued an unsecured
promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) June 30, 2021 and (ii) the
completion of the Initial Public Offering. The outstanding amount of $10,000 was repaid on January 22, 2021. Borrowings under the Promissory
Note are no longer available.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such
Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants
would be identical to the Private Placement Warrants. As of September 30, 2021 and December 31, 2020, there were no amounts outstanding
under the Working Capital Loans.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of
the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Registration Rights
Pursuant to a registration and shareholders rights
agreement entered into on January 7, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be
issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement
Warrants and warrants that may be issued upon conversion of the Working Capital Loans) will have registration rights to require the Company
to register a sale of any of the securities held by them. The holders of these securities are entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination. The registration rights agreement
does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled to a deferred fee
of $0.35 per Unit, or $11,375,000 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 the Company completes a Business Combination, subject to the terms of the underwriting agreement.
NOTE 7. SHAREHOLDERS’ EQUITY (DEFICIT)
Preference Shares — The Company
is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2021 and December 31,
2020, there were no preference shares issued or outstanding.
Class A Ordinary Shares —
The Company is authorized to issue 200,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A
ordinary shares are entitled to one vote for each share. At September 30, 2021, there were 32,500,000 Class A ordinary shares issued and
outstanding, all of which are subject to possible redemption and are presented as temporary equity. At December 31, 2020, there were no
Class A ordinary shares issued or outstanding.
Class B Ordinary Shares —
The Company is authorized to issue 20,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B
ordinary shares are entitled to one vote for each share. At September 30, 2021 and December 31, 2020, there were 8,125,000 and 8,625,000
Class B ordinary shares issued and outstanding, respectively.
Holders of Class A ordinary shares and Class B
ordinary shares will vote together as a single class on all other matters submitted to a vote of shareholders, except as required by law.
The Class B ordinary shares will automatically
convert into Class A ordinary shares concurrently with or immediately following the consummation of a Business Combination on a one-for-one
basis, subject to adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed
issued in connection with a Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares
will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving
effect to any redemptions of Class A ordinary shares by Public Shareholders), including the total number of Class A ordinary
shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued,
by the Company in connection with or in relation to the consummation of a Business Combination, excluding any Class A ordinary shares
or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in
a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital
Loans; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 8. WARRANTS
Public Warrants may only be exercised for a whole
number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable
on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Initial
Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption
or liquidation.
The Company will not be obligated to deliver any
Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective
and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid
exemption from registration is available. No warrant will be exercisable and the Company will not be obligated to issue a Class A
ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered,
qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable,
but in no event later than 20 business days, after the closing of a Business Combination, it will use its best efforts to file with the
SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise
of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such
registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions
of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants
is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until
such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. Notwithstanding the above, if our Class A ordinary shares are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, the Company will not
be required to file or maintain in effect a registration statement, and in the event the Company do not so elect, the Company will use
its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when the price per
Class A ordinary share equals or exceeds $18.00. Once the warrants become exercisable, the Company may call the warrants for redemption
(except as described with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
|
|
|
|
|
●
|
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends to the notice of redemption to the warrant holders (the “Reference Value”).
|
If and when the warrants become redeemable by
the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Redemption of warrants when the price per
Class A ordinary share equals or exceeds $10.00. Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at $0.10 per warrant
|
|
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A ordinary shares except as otherwise described below;
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●
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if, and only if, the Reference Value equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and
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●
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if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
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If the Company calls the Public Warrants for redemption,
as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on
a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon
exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend
or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted
for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash
settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company
liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public
Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such
Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional
Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue
price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or
its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total
equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business
Combination (net of redemptions), and (z) the volume weighted average trading price of its Class A ordinary shares during the
20 trading day period starting on the trading day prior to the day on which the Company consummates its Business Combination (such price,
the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to
be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will
be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price and the $10.00 per
share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued
Share Price.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A
ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days
after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will
be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers
or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted
transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the
Public Warrants.
On June 30, 2021, the Company executed an agreement
whereby the holders of the private warrants will not transfer their warrants to non-affiliated holders. The private warrants are now considered
to be indexed to the Company’s ordinary shares in the manner contemplated by ASC Section 815-40-15. Therefore, the Public and Private
Placement Warrants are accounted for as equity in the balance sheets.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 9. FAIR VALUE MEASUREMENTS
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320, “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
Securities invested in money market funds are recorded based on quoted market prices in active market.
At September 30, 2021, assets held in the Trust
Account were comprised of $325,013,624 in money market funds which are invested primarily in U.S. Treasury Securities. At December 31,
2020 there were no assets held in the Trust Account. Through September 30, 2021, the Company did not withdraw any interest income from
the Trust Account.
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021 and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
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|
Level
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|
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September 30,
2021
|
|
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December 31,
2020
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Assets:
|
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|
|
|
|
|
|
|
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Investments held in Trust Account
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|
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1
|
|
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$
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325,013,624
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|
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$
|
—
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Liabilities:
|
|
|
|
|
|
|
|
|
|
|
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Warrant Liability – Private Placement Warrants
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|
|
3
|
|
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$
|
—
|
|
|
$
|
2,790,000
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|
The Private Placement Warrants were accounted
for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the condensed balance sheets at December
31, 2021 There was no warrant liability at September 30, 2021.
The warrant liabilities were measured at fair
value at inception and on a recurring basis, with changes in fair value presented in the condensed statements of operations. On June 30,
2021, the Company executed an agreement whereby the holders of the private warrants will not transfer their warrants to non-affiliated
holders. The private warrants are now considered to be indexed to the Company’s ordinary shares in the manner contemplated by ASC
Section 815-40-15 and therefore qualify for equity treatment. On June 30, 2021, the Private Placement Warrants were valued using the Public
Warrant price right before they were transferred into equity.
The Private Placement Warrants were valued using
a Modified Black-Scholes model, which is considered to be a Level 3 fair value measurement. However, inherent uncertainties are involved.
If factors or assumptions change, the estimated fair values could be materially different.
The Modified Black-Scholes model’s primary
unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the ordinary
shares. The expected volatility was derived from observable public warrant pricing on comparable ‘blank-check’ companies without
an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own Public Warrant
pricing.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
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January 12,
2021
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|
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December 31,
2020
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|
Exercise price
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|
$
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11.50
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$
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11.50
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Stock price
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|
$
|
10.00
|
|
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$
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10.00
|
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Expected volatility
|
|
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20.0
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%
|
|
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18.0
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%
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Expected Term
|
|
|
5.00
|
|
|
|
5.00
|
|
Risk-free interest rate
|
|
|
0.50
|
%
|
|
|
0.36
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%
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.0
|
%
|
Probability of Business Combination
|
|
|
80.0
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%
|
|
|
80.0
|
%
|
The following table presents the changes in the
fair value of Level 3 warrant liabilities:
|
|
Private
Placement
|
|
Fair value as of December 31, 2020
|
|
$
|
2,790,000
|
|
Initial measurement of 500,000 Private Placement Warrants issued on January 12, 2021 (Initial Public Offering)
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|
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530,000
|
|
Cancellation of 2,583,333 Private Placement Warrants
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|
|
(930,000
|
)
|
Change in fair value
|
|
|
3,730,000
|
|
Fair value as of March 31, 2021
|
|
|
6,120,000
|
|
Change in fair value
|
|
|
(736,666
|
)
|
Transfer to Equity
|
|
|
(5,383,334
|
)
|
Fair value as of June 30, 2021
|
|
|
—
|
|
Change in fair value
|
|
|
—
|
|
Fair value as of September 30, 2021
|
|
|
—
|
|
Transfers to/from Levels 1, 2 and 3 are recognized
at the beginning of the reporting period in which a change in valuation technique or methodology occurs. During the nine months ended
September 30, 2021, the balance of the Private Placement Warrant liability was transferred to equity.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review,
other than the restatement discussed in Note 2, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the condensed financial statements.