UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No. 1
to
FORM
10-Q/A
(MARK
ONE)
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarter ended September 30, 2023
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
file number: 001-39854
PROSPECTOR
CAPITAL CORP.
(Exact
Name of Registrant as Specified in Its Charter)
Cayman Islands | | N/A |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
1250
Prospect Street, Suite 200
La
Jolla, California 92037
(Address
of principal executive offices)
(650)
396-7700
(Issuer’s
telephone number)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbols | | Name of each exchange on which registered |
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-third of one redeemable warrant | | PRSRU | | The Nasdaq Stock Market LLC |
Class A ordinary shares, par value $0.0001 per share | | PRSR | | The Nasdaq Stock Market LLC |
Redeemable warrants, each warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share | | PRSRW | | The Nasdaq Stock Market LLC |
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller
reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of November 29, 2023, there were 2,194,056
Class A ordinary shares, $0.0001 par value and 8,125,000 Class B ordinary shares, $0.0001 par value, issued and outstanding.
Explanatory Note
Prospector Capital Corp. (the “Company,”
“we,” “us” or “our”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the
quarterly period ended September 30, 2023 (this “Quarterly Report”) solely for the purpose of correcting an inadvertent error
in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 originally filed with the Securities and Exchange
Commission (the “SEC”) on November 28, 2023 (the “Original Quarterly Report”) regarding the funds held in our
trust account (the “Trust Account”). The Original Quarterly Report inadvertently noted the funds held in our Trust Account
were held in U.S. government securities or money market funds as of September 30, 2023. As previously disclosed in our Current Report
on Form 8-K filed with the SEC on September 20, 2023, on September 15, 2023, we instructed Continental Stock Transfer & Trust Company
(“CST”), as trustee, to liquidate the U.S. government securities or money market funds previously held in the Trust Account
and deposit such funds in an interest-bearing demand deposit bank account. The liquidation and deposit of such funds in the interest-bearing
demand deposit bank account was completed on September 18, 2023. We are filing this Quarterly Report to accurately reflect how the funds
in the Trust Account are being held.
Items Amended In This Quarterly Report
For the convenience of the reader, this Quarterly
Report sets forth the Original Quarterly Report in its entirety, as amended to accurately reflect the holding of funds in the Trust Account
in an interest-bearing demand deposit bank account. No attempt has been made in this Form 10-Q/A to update other disclosures presented
in the Original Quarterly Report, except as required to reflect the effects of this change. The following items have been amended:
| ● | Part
I – Item 1. Condensed Financial Statements. |
| ● | Part
I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations. |
| ● | Part I –
Item 4. Controls and Procedures. |
| ● | Part II –
Item 1A. Risk Factors. |
This Quarterly Report does not reflect adjustments
for events occurring after November 28, 2023, the date of the filing of the Original Quarterly Report, except to the extent they are
otherwise required to be included and discussed herein and did not substantively modify or update the disclosures herein other than as
required to reflect the adjustments described above. Accordingly, this Quarterly Report should be read in conjunction with the Original
Quarterly Report and our filings with the SEC subsequent to the date of the Original Quarterly Report.
In addition, the Company’s Chief Executive Officer and Chief
Financial Officer have provided new certifications dated as of the date of this Quarterly Report (Exhibits 31.1, 31.2, 32.1 and 32.2).
PROSPECTOR
CAPITAL CORP.
FORM
10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
Item
1. Condensed Financial Statements.
PROSPECTOR
CAPITAL CORP.
CONDENSED
BALANCE SHEETS
| |
September
30, 2023 | | |
December 31,
2022 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | |
| |
Current assets | |
| | |
| |
Cash | |
$ | 26,121 | | |
$ | 18,401 | |
Prepaid expenses | |
| 69,583 | | |
| — | |
Total Current Assets | |
| 95,704 | | |
| 18,401 | |
| |
| | | |
| | |
Cash and investments held in Trust
Account | |
| 23,750,947 | | |
| 329,783,734 | |
TOTAL ASSETS | |
$ | 23,846,651 | | |
$ | 329,802,135 | |
| |
| | | |
| | |
LIABILITIES, REDEEMABLE ORDINARY SHARES
AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accrued expenses | |
$ | 5,660,531 | | |
$ | 787,909 | |
Due to Sponsor | |
| 199 | | |
| 199 | |
Total Current Liabilities | |
| 5,660,730 | | |
| 788,108 | |
| |
| | | |
| | |
Convertible Promissory Note – Related Party | |
| 1,238,623 | | |
| 157,000 | |
Warrant liability | |
| 800,000 | | |
| — | |
Total Liabilities | |
| 7,699,353 | | |
| 945,108 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
Class A ordinary shares subject to possible redemption, $0.0001 par value; 2,194,056 and 32,500,000 shares at $10.83 and $10.15 per share redemption value at September 30, 2023 and December 31, 2022, respectively | |
| 23,750,947 | | |
| 329,783,734 | |
| |
| | | |
| | |
Shareholders’ Deficit | |
| | | |
| | |
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| — | | |
| — | |
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued or outstanding; excluding 2,194,056 and 32,500,000 shares subject to redemption at September 30, 2023 and December 31, 2022, respectively | |
| — | | |
| — | |
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 8,125,000 shares issued and outstanding at September 30, 2023 and December 31, 2022 | |
| 813 | | |
| 813 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (7,604,462 | ) | |
| (927,520 | ) |
Total Shareholders’
Deficit | |
| (7,603,649 | ) | |
| (926,707 | ) |
TOTAL LIABILITIES,
REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | |
$ | 23,846,651 | | |
$ | 329,802,135 | |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PROSPECTOR
CAPITAL CORP.
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
Three Months
Ended September 30, | | |
Nine Months
Ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
General and administrative
expenses | |
$ | 1,035,704 | | |
$ | 196,521 | | |
$ | 5,876,943 | | |
$ | 690,133 | |
Loss from operations | |
| (1,035,704 | ) | |
| (196,521 | ) | |
| (5,876,943 | ) | |
| (690,133 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income: | |
| | | |
| | | |
| | | |
| | |
Change in fair value of warrant liability | |
| 1,120,000 | | |
| — | | |
| 320,000 | | |
| — | |
Interest earned on cash and investments
held in Trust Account | |
| 288,519 | | |
| 1,479,369 | | |
| 1,587,561 | | |
| 1,958,356 | |
Total other income | |
| 1,408,519 | | |
| 1,479,369 | | |
| 1,907,561 | | |
| 1,958,356 | |
| |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | 372,815 | | |
$ | 1,282,848 | | |
$ | (3,969,382 | ) | |
$ | 1,268,223 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A ordinary shares | |
| 2,194,056 | | |
| 32,500,000 | | |
| 4,858,315 | | |
| 32,500,000 | |
Basic and diluted net income (loss) per share, Class A ordinary shares | |
$ | 0.04 | | |
$ | 0.03 | | |
$ | (0.31 | ) | |
$ | 0.03 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding, Class B ordinary shares | |
| 8,125,000 | | |
| 8,125,000 | | |
| 8,125,000 | | |
| 8,125,000 | |
Basic and diluted net income (loss) per share, Class B ordinary shares | |
$ | 0.04 | | |
$ | 0.03 | | |
$ | (0.31 | ) | |
$ | 0.03 | |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PROSPECTOR
CAPITAL CORP.
CONDENSED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| |
Class A Ordinary Shares | | |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance — January 1, 2023 | |
| — | | |
$ | — | | |
| 8,125,000 | | |
$ | 813 | | |
$ | — | | |
$ | (927,520 | ) | |
$ | (926,707 | ) |
Accretion of Class A ordinary shares to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,025,595 | ) | |
| (1,025,595 | ) |
Initial Classification of Warrant Liabilities (as restated) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,120,000 | ) | |
| (1,120,000 | ) |
Net loss (as restated) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (480,390 | ) | |
| (480,390 | ) |
Balance – March 31, 2023 (as restated) | |
| — | | |
| — | | |
| 8,125,000 | | |
| 813 | | |
| — | | |
| (3,553,505 | ) | |
| (3,552,692 | ) |
Accretion of Class A ordinary shares to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (273,447 | ) | |
| (273,447 | ) |
Net loss (as restated) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,861,807 | ) | |
| (3,861,807 | ) |
Balance – June 30, 2023 (as restated) | |
| — | | |
| — | | |
| 8,125,000 | | |
| 813 | | |
| — | | |
| (7,688,759 | ) | |
| (7,687,946 | ) |
Accretion of Class A ordinary shares to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (288,518 | ) | |
| (288,518 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 372,815 | | |
| 372,815 | |
Balance – September 30, 2023 | |
| — | | |
$ | — | | |
| 8,125,000 | | |
$ | 813 | | |
$ | — | | |
$ | (7,604,462 | ) | |
$ | (7,603,649 | ) |
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| |
Class A Ordinary Shares | | |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance — January 1, 2022 | |
| — | | |
$ | — | | |
| 8,125,000 | | |
$ | 813 | | |
$ | — | | |
$ | (11,282,591 | ) | |
$ | (11,281,778 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (274,560 | ) | |
| (274,560 | ) |
Balance – March 31, 2022 | |
| — | | |
| — | | |
| 8,125,000 | | |
| 813 | | |
| — | | |
$ | (11,557,151 | ) | |
| (11,556,338 | ) |
Accretion of Class A ordinary shares to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 10,876,720 | | |
| 10,876,720 | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 259,935 | | |
| 259,935 | |
Balance – June 30, 2022 | |
| — | | |
| — | | |
| 8,125,000 | | |
$ | 813 | | |
| — | | |
$ | (420,496 | ) | |
| (419,683 | ) |
Accretion of Class A ordinary shares to redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,479,369 | ) | |
| (1,479,369 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,282,848 | | |
| 1,282,848 | |
Balance – September 30, 2022 | |
| — | | |
$ | — | | |
| 8,125,000 | | |
$ | 813 | | |
$ | — | | |
$ | (617,017 | ) | |
$ | (616,204 | ) |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PROSPECTOR
CAPITAL CORP.
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Nine Months Ended September
30, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Cash Flows from Operating Activities: | |
| | |
| |
Net (loss) income | |
$ | (3,969,382 | ) | |
$ | 1,268,223 | |
Adjustments to reconcile net (loss) income to net cash
used in operating activities: | |
| | | |
| | |
Interest earned on cash and investments held in Trust
Account | |
| (1,587,561 | ) | |
| (1,958,356 | ) |
Change in fair value of warrant liability | |
| (320,000 | ) | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| (69,582 | ) | |
| (120,500 | ) |
Accrued expenses | |
| 4,872,622 | | |
| 46,603 | |
Net cash used
in operating activities | |
| (1,073,903 | ) | |
| (764,030 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Cash withdrawn from Trust Account
in connection with redemption | |
| 307,620,347 | | |
| — | |
Net cash provided
by investing activities | |
| 307,620,347 | | |
| — | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from Convertible Promissory Note – Related
Party | |
| 1,081,623 | | |
| 157,000 | |
Repayment of advances from related party | |
| — | | |
| (70,000 | ) |
Advance from Sponsor | |
| — | | |
| 70,000 | |
Redemption of ordinary shares | |
| (307,620,347 | ) | |
| — | |
Net cash (used
in) provided by financing activities | |
| (306,538,724 | ) | |
| 157,000 | |
| |
| | | |
| | |
Net Change in Cash | |
| 7,720 | | |
| (607,030 | ) |
Cash – Beginning of period | |
| 18,401 | | |
| 627,632 | |
Cash – Ending of period | |
$ | 26,121 | | |
$ | 20,602 | |
| |
| | | |
| | |
Non-cash investing and financing activities: | |
| | | |
| | |
Initial classification of Warrant
Liability | |
$ | 1,120,000 | | |
$ | — | |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2023, the Company had not
commenced any operations. All activity for the period from September 18, 2020 (inception) through September 30, 2023 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 generates any operating revenues until after the completion of a Business Combination,
at the earliest. The Company generates 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. On June 30, 2022,
the underwriter waived its $11,375,000 deferred underwriting fee. As a result, the Company derecognized the deferred underwriting fee
payable of $11,375,000 and recorded the forgiveness of the deferred underwriting fee allocated to Public Shares to the carrying value
of the shares of Class A ordinary shares.
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, 2023
(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 (the “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, divided by the number of then issued and outstanding Public Shares.
The Company had until January 12, 2023 to consummate
a Business Combination. On January 5, 2023, the Company held an extraordinary general meeting in lieu of the annual general meeting of
shareholders. In this meeting the shareholders approved amendments to the Amended and Restated Memorandum and Articles of Association
to extend the date by which the Company must complete a Business Combination from January 12, 2023 to December 31, 2023 (the “Combination
Period”). In connection with this meeting, shareholders holding an aggregate of 30,305,944 shares of the Company’s Class A
ordinary shares exercised their right to redeem their shares for $10.15 per share of the funds held in the Company’s Trust Account
for total redemption amount of $307,620,347, leaving approximately $22.3 million in the Trust Account after such redemption.
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 (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).
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
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. 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.
Liquidity and Capital Resources
At September 30, 2023, the Company had $26,121
in its operating bank account and working capital deficit of $5,565,026. 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 Convertible Promissory Note (see Note 5). At September 30, 2023 and December 31, 2022, there were amounts of $1,238,623
and $157,000 outstanding under Convertible Promissory Note–Related Party, respectively.
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Update
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
December 31, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination
by this time. Additionally, the Company may not have sufficient liquidity to fund the working capital needs of the Company through the
Company’s liquidation date or one year from the issuance of these financial statements. Management intends to complete a Business
Combination to alleviate any potential liquidity issues presented to the Company in its search to complete a Business Combination. If
a Business Combination is not consummated by the liquidation date, there will be a mandatory liquidation and subsequent dissolution of
the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur,
and potential subsequent dissolution, raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 31, 2023. There
can be no assurance that the Company will be able to consummate any Business Combination by December 31, 2023.
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s
condensed financial statements as of and for the period ended September 30, 2023, management identified an error in its previously filed
Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023 (the “Affected Quarterly Periods”).
The Company determined that based on its review of its accounting treatment for Public and Private Placement Warrants (together, the “Warrants”)
under ASC 815, as a result of the redemptions that occurred on January 24, 2023 in connection with the Company’s extraordinary general
meeting to extend the date by which it must consummate an initial business combination, its accounting for the Warrants was incorrectly
presented as part of equity and the Warrants should be instead presented as liabilities, with changes in value of such liabilities reported
in earnings. The Company’s management determined that such redemptions resulted in the possibility for the tender offer provision
contained in Section 4.4 of the warrant agreement, dated as of January 7, 2021, between the Company and Continental Stock Transfer &
Trust Company (the “Warrant Agreement”), to be triggered without the requirement that a change in control also be triggered,
which resulted in the determination that the Warrants no longer qualify for equity treatment.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
In accordance with SEC Staff Accounting
Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”; the Company evaluated the
changes and has determined that the related impact was material to previously presented financial statements and related omitted
disclosures of the Affected Quarterly Periods. Therefore, the Company concluded that the Affected Quarterly Periods should be
restated. As such, the Company is reporting these restatements to the Affected Quarterly Period in this Quarterly Report on Form
10-Q. The previously presented Affected Quarterly Periods should no longer be relied upon.
The impact of the restatement on the Company’s
unaudited condensed financial statements are reflected in the following tables:
| |
As Previously Reported | | |
Adjustment | | |
As Restated | |
Condensed Balance Sheet as of March 31, 2023 (unaudited) | |
| | |
| | |
| |
| |
| | |
| | |
| |
Warrant Liability | |
$ | — | | |
$ | 1,440,000 | | |
$ | 1,440,000 | |
Total Liabilities | |
$ | 2,308,157 | | |
$ | 1,440,000 | | |
$ | 3,748,157 | |
Accumulated deficit | |
$ | (2,113,505 | ) | |
$ | (1,440,000 | ) | |
$ | (3,553,505 | ) |
Total Shareholders’ Deficit | |
$ | (2,112,692 | ) | |
$ | (1,440,000 | ) | |
$ | (3,552,692 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Operations for the three months ended March 31, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Change in fair value of warrant liability | |
$ | — | | |
$ | 320,000 | | |
$ | 320,000 | |
Total other income (expense) | |
$ | 1,025,595 | | |
$ | (320,000 | ) | |
$ | 705,595 | |
Net Income (loss) | |
$ | (160,390 | ) | |
$ | (320,000 | ) | |
$ | (480,390 | ) |
Basic and diluted net loss per share, Class A ordinary shares | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.03 | ) |
Basic and diluted net loss per share, Class B ordinary shares | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.03 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Equity for the three months ended March 31, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | (160,390 | ) | |
$ | (320,000 | ) | |
$ | (480,390 | ) |
Initial Classification of Warrant Liability | |
$ | — | | |
$ | 1,120,000 | | |
$ | 1,120,000 | |
Accumulated deficit | |
$ | (2,113,505 | ) | |
$ | (1,440,000 | ) | |
$ | (3,553,505 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Cash Flows for the three months ended March 31, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | (160,390 | ) | |
$ | (320,000 | ) | |
$ | (480,390 | ) |
Change in fair value of warrant liability | |
$ | — | | |
$ | 320,000 | | |
$ | 320,000 | |
Non-cash investing and financing activities: | |
| | | |
| | | |
| | |
Initial classification of warrant liability | |
$ | — | | |
$ | 1,120,000 | | |
$ | 1,120,000 | |
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
| |
As Previously Reported | | |
Adjustment | | |
As Restated | |
Condensed Balance Sheet as of June 30, 2023 (unaudited) | |
| | |
| | |
| |
| |
| | |
| | |
| |
Warrant Liability | |
$ | — | | |
$ | 1,920,000 | | |
$ | 1,920,000 | |
Total Liabilities | |
$ | 5,916,032 | | |
$ | 1,920,000 | | |
$ | 7,836,032 | |
Accumulated deficit | |
$ | (5,768,759 | ) | |
$ | (1,920,000 | ) | |
$ | (7,688,759 | ) |
Total Shareholders’ deficit | |
$ | (5,767,946 | ) | |
$ | (1,920,000 | ) | |
$ | (7,687,946 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Operations for the three months ended June 30, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Change in fair value of warrant liability | |
$ | — | | |
$ | 480,000 | | |
$ | 480,000 | |
Total other income (expense) | |
$ | 273,447 | | |
$ | (480,000 | ) | |
$ | (206,553 | ) |
Net Income (loss) | |
$ | (3,381,807 | ) | |
$ | (480,000 | ) | |
$ | (3,861,807 | ) |
Basic and diluted net loss per share, Class A ordinary shares | |
$ | (0.33 | ) | |
$ | (0.04 | ) | |
$ | (0.37 | ) |
Basic and diluted net loss per share, Class B ordinary shares | |
$ | (0.33 | ) | |
$ | (0.04 | ) | |
$ | (0.37 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Operations for the six months ended June 30, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Change in fair value of warrant liability | |
$ | — | | |
$ | 800,000 | | |
$ | 800,000 | |
Total other income (expense) | |
$ | 1,299,042 | | |
$ | (800,000 | ) | |
$ | 499,042 | |
Net Income (loss) | |
$ | (3,542,197 | ) | |
$ | (800,000 | ) | |
$ | (4,342,197 | ) |
Basic and diluted net loss per share, Class A ordinary shares | |
$ | (0.25 | ) | |
$ | (0.05 | ) | |
$ | (0.30 | ) |
Basic and diluted net loss per share, Class B ordinary shares | |
$ | (0.25 | ) | |
$ | (0.05 | ) | |
$ | (0.30 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Equity for the three months ended June 30, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | (3,381,807 | ) | |
$ | (480,000 | ) | |
$ | (3,861,807 | ) |
Accumulated deficit | |
$ | (5,768,759 | ) | |
$ | (1,920,000 | ) | |
$ | (7,688,759 | ) |
| |
| | | |
| | | |
| | |
Condensed Statement of Cash Flows for the six months ended June 30, 2023 (unaudited) | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | (3,542,197 | ) | |
$ | (800,000 | ) | |
$ | (4,342,197 | ) |
Change in fair value of warrant liability | |
$ | — | | |
$ | 800,000 | | |
$ | 800,000 | |
Non-cash investing and financing activities: | |
| | | |
| | | |
| | |
Initial classification of warrant liability | |
$ | — | | |
$ | 1,120,000 | | |
$ | 1,120,000 | |
The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at
March 30, 2023 and June 30, 2023 indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
Description | |
Level | | |
March 30, 2023 | | |
June 30, 2023 | |
Liabilities: | |
| | |
| | |
| |
Warrant Liabilities – Public Warrants | |
1 | | |
$ | 975,000 | | |
$ | 1,300,000 | |
Warrant Liabilities – Private Warrants | |
2 | | |
$ | 465,000 | | |
$ | 620,000 | |
Bifurcated Derivative | |
3 | | |
$ | — | | |
| — | |
The Public Warrants are actively trading in the open market, as such they
are classified as Level 1 due to the use of an observable market quote in an active market under the ticker PRSRW. The Private Placement
Warrants are classified as Level 2 due to the use of an observable market quote for a similar asset in an active market.
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.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
The
accompanying unaudited condensed financial statements should be read in conjunction with
the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed
with SEC on March 31, 2023. The interim results for the three and nine months ended September
30, 2023 are not necessarily indicative of the results to be expected for the year ending
December 31, 2023 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.
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 unaudited condensed financial statements
and the reported amounts of 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 condensed financial statements, which management considered in formulating its estimate, could change
in the near term due to one or more future confirming events. 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, 2023 and December 31, 2022.
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 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 temporary equity upon the completion of the Initial Public Offering.
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” (“ASC 480”). 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, 2023
and December 31, 2022, Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’
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, to the extent available, and accumulated deficit.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
At September 30, 2023 and December 31, 2022, the
Class A ordinary shares reflected in the condensed balance sheets 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 at December 31, 2021 | |
| 325,000,000 | |
| |
| | |
Plus: | |
| | |
Waiver of Class A shares issuance costs | |
| 11,375,000 | |
Less: | |
| | |
Accretion of carrying value to redemption value | |
| (6,591,266 | ) |
| |
| | |
Class A ordinary shares subject to possible redemption at December 31, 2022 | |
| 329,783,734 | |
| |
| | |
Less: | |
| | |
Redemption of ordinary shares | |
| (307,620,347 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 1,587,560 | |
| |
| | |
Class A ordinary shares subject to possible redemption at September 30, 2023 | |
$ | 23,750,947 | |
Warrants
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 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 the condensed
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. Beginning June 30, 2021 and thereafter, the private warrants were 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.
In connection with the preparation of the condensed financial statements of the Company as of and for the period ended September 30, 2023,
the Company’s management identified an error in its condensed financial statements for the periods ending March 31, 2023 and June
30, 2023. The Company determined that, based on its review of its accounting treatment under ASC 815 of the Warrants, as a result of the
January 24, 2023 redemptions in connection with the Company’s extraordinary general meeting to extend the date by which it must
consummate an initial business combination, its accounting for the Warrants was incorrectly presented as part of equity and the Warrants
should be instead presented as liabilities, with changes in value of such liabilities reported in earnings. The Company’s management
determined that such redemptions resulted in the possibility for the tender offer provision contained in Section 4.4 of the Warrant Agreement,
to be triggered without the requirement that a change in control also be triggered, which resulted in the determination that the Warrants
no longer 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, 2023 and December 31, 2022, 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.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
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 periods presented.
ASC 740 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 recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of September 30, 2023 and December 31, 2022. 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 has been subject to income tax examinations by major taxing authorities since inception.
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. 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. At September 30, 2023 and 2022, 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.
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, | | |
Nine Months Ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per ordinary share | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 79,269 | | |
$ | 293,546 | | |
$ | 1,026,278 | | |
$ | 256,570 | | |
$ | (1,485,330 | ) | |
$ | (2,484,052 | ) | |
$ | 1,014,578 | | |
$ | 253,645 | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 2,194,056 | | |
| 8,125,000 | | |
| 32,500,000 | | |
| 8,125,000 | | |
| 4,858,315 | | |
| 8,125,000 | | |
| 32,500,000 | | |
| 8,125,000 | |
Basic and diluted net income (loss) per ordinary share | |
$ | 0.04 | | |
$ | 0.04 | | |
$ | 0.03 | | |
$ | 0.03 | | |
$ | (0.31 | ) | |
$ | (0.31 | ) | |
$ | 0.03 | | |
$ | 0.03 | |
(1) | For
the three and nine months ended September 30, 2023 and 2022, 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
Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant
adverse impact on the Company’s financial condition, results of operation and cash flows.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
Fair Value of Financial Instruments
The Company utilizes ASC Topic 820 “Fair
Value Measurement” to determine the relative fair value of financial instruments other than derivate 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 prepaid, accounts
payable and accrued expenses approximate fair value, primarily due to their short-term nature.
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. |
Recent Accounting Standards
Management does not believe that any 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 7).
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 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.
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 was 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.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
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, 2023 and 2022, the Company incurred $30,000 and $90,000 in fees for these services, respectively. As of September 30, 2023 and December
31, 2022, $330,000 and $240,000, respectively, of such fees are included in accrued expenses in the accompanying condensed balance sheets.
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.
Advance from Sponsor
On February 16, 2022, the Sponsor deposited $25,000
as an advance payment into the Company’s operating bank account to cover operating expenses. An additional $45,000 was deposited
as an advance payment to the Company’s operating bank account on May 16, 2022. As of September 30, 2023, the full $70,000 of the
advance has been repaid and no amounts remain outstanding.
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, 2023 and December 31, 2022, there were no amounts outstanding
under the Working Capital Loans.
Convertible Promissory Notes
On May 16, 2022, the Company entered into a convertible
promissory note with the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $1,500,000 (the “Convertible
Promissory Note”). The Convertible Promissory Note is non-interest bearing and due on the earlier of December 31, 2023 and the date
on which the Company consummates its initial business combination. If the Company completes a business combination, it would repay such
additional loaned amounts, without interest, upon consummation of the business combination. In the event that a business combination does
not close, the Company may use a portion of the working capital held outside the Trust Account to repay such additional loaned amounts
but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such additional loans (if any) may be convertible
into warrants, at a price of $1.50 per warrant at the option of the Sponsor. The warrants would be identical to the Private Placement
Warrants, including as to exercise price, exercisability and exercise period. Except for the foregoing, the terms of such additional loans
(if any) have not been determined and no written agreements exist with respect to such loans. If the Company fully draws down on the Convertible
Promissory Note and requires additional funds for working capital purposes, the Sponsor, an affiliate of the Sponsor, or the Company’s
officers and directors may, but are not obligated to, loan the Company such additional funds as may be required. The issuance of the Convertible
Promissory Note was approved by the board of directors and the audit committee on May 16, 2022. The conversion feature included in the
convertible note was analyzed under ASC 815. The conversion feature does not qualify for the exception from derivative. Accordingly, the
conversion feature was required to be bifurcated. The fair value of the embedded derivative was deemed to have a zero value at issuance
and as of September 30, 2023. As of September 30, 2023 and December 31, 2022, there were amounts of $1,238,623 and $157,000 outstanding
under the Convertible Promissory Note-Related Party, respectively.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and current global conflicts and has concluded that while it is reasonably possible that these events 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.
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 or Convertible Promissory Note (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 or Convertible
Promissory Note) 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.
In June 2022, the Company and the underwriters executed a waiver letter confirming the underwriter’s waiver of its deferred fee
under the terms of the underwriting agreement. As a result, the Company derecognized $11,375,000 of the deferred underwriting commissions
and recorded an adjustment to the carrying value of the shares of Class A ordinary shares subject to redemption.
Business Combination Agreement
On June 12, 2023, Prospector Capital Corp., a
Cayman Islands exempted company, entered into a Business Combination Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the “BCA”), with LeddarTech Inc., a corporation existing under the
laws of Canada (“LeddarTech”), and LeddarTech Holdings Inc., a company incorporated under the laws of Canada and a wholly
owned subsidiary of LeddarTech (“Newco”). LeddarTech, founded in 2007 and headquartered in Québec, Canada, is an automotive
advanced driver assistance and autonomous driving software company that offers low-level sensor fusion and perception solutions. In its
first ten years, LeddarTech focused its business on software and signal processing for smart sensing solutions. Commencing in 2022, LeddarTech
began to focus its business on pure-play automotive software for low-level fusion and perception. The BCA and the transactions contemplated
thereby were unanimously approved by the boards of directors of each of Prospector and LeddarTech.
Financial Advisor Agreement
On April 11, 2023, the Company engaged a financial
advisor in connection with the proposed Business Combination with LeddarTech Inc. Payment is contingent on the on the close of a Business
Combination at which point the Company agrees to pay the advisor $3,000,000 and out-of-pocket expenses not to exceed $250,000.
NOTE 7. SHAREHOLDERS’ 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, 2023 and December 31,
2022, 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, 2023 and December 31, 2022, there were 2,194,056 and 32,500,000
Class A ordinary shares issued and outstanding, all of which are subject to possible redemption and are presented as temporary equity,
respectively.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
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, 2023 and December 31, 2022, there were 8,125,000 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, 78.7% 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.
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”). |
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
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.
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; |
|
|
|
|
● |
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 |
|
|
|
|
● |
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. |
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
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 were 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 were accounted for as equity in the condensed balance sheets. The Company determined that, based on its review of its accounting
treatment under ASC 815 of the Warrants, as a result of the January 24, 2023 redemptions in connection with the Company’s extraordinary
general meeting to extend the date by which it must consummate an initial business combination, its accounting for the Warrants was incorrectly
presented as part of equity for the quarters ended March 31, 2023 and June 30, 2023, and the Warrants should be instead presented as liabilities,
with changes in value of such liabilities reported in earnings. The Company’s management determined that such redemptions resulted
in the possibility for the tender offer provision contained in Section 4.4 of the Warrant Agreement, to be triggered without the requirement
that a change in control also be triggered, which resulted in the determination that the Warrants no longer qualify for equity treatment.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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 condensed balance sheets 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, 2023, assets held in the
Trust Account were comprised of $23,750,947 in cash held in an interest-bearing demand deposit bank account. Through September 30, 2023,
the Company withdrew $307,620,347 from the Trust Account in connection with redemption.
At December 31, 2022, assets held in the Trust
Account were comprised of $329,783,734 in money market funds which are invested primarily in U.S. Treasury securities. Through December
31, 2022, 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, 2023 and December 31,
2022 indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | | |
September 30, 2023 | | |
December 31, 2022 | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account | |
1 | | |
$ | — | | |
$ | 329,783,734 | |
Liabilities: | |
| | |
| | | |
| | |
Warrant Liabilities – Public Warrants | |
2 | | |
$ | 541,667 | | |
$ | — | |
Warrant Liabilities – Private Warrants | |
2 | | |
$ | 258,333 | | |
$ | — | |
Bifurcated Derivative | |
3 | | |
$ | — | | |
| n/a | |
Measurement
Warrants
In connection with the preparation of the condensed financial statements
of the Company as of and for the period ended September 30, 2023, the Company’s management identified an error in its condensed
financial statements for the periods ending March 31, 2023 and June 30, 2023. The Company determined that, based on its review of its
accounting treatment under ASC 815 of the Warrants, as a result of the January 24, 2023 redemptions in connection with the Company’s
extraordinary general meeting to extend the date by which it must consummate an initial business combination, its accounting for the Warrants
was incorrectly presented as part of equity and the Warrants should be instead presented as liabilities, with changes in value of such
liabilities reported in earnings. The Company’s management determined that such redemptions resulted in the possibility for the
tender offer provision contained in Section 4.4 of the Warrant Agreement, to be triggered without the requirement that a change in control
also be triggered, which resulted in the determination that the Warrants no longer qualify for equity treatment.
The Public Warrants have limited trading activity in the open and observable
market as of the measurement date, as such they are classified as Level 2. When the observable market quote under the ticker PRSRW is
active, then Public Warrants are classified as Level 1. The Private Placement Warrants are classified as Level 2 due to the use of an
observable market quote for a similar asset in an active market.
PROSPECTOR CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
Convertible Note Bifurcated Derivative
The Company established the initial fair value
for the Convertible Note Bifurcated Derivative as of January 26, 2023, which was the date the Convertible Note was executed.
The Convertible Note Bifurcated Derivative was
classified within Level 3 of the fair value hierarchy at the initial measurement dates and as of September 30, 2023 and January 26, 2023
due to the use of unobservable inputs. The key inputs into the Monte Carlo simulation model for the Convertible Note Bifurcated Derivative
were as follows at September 30, 2023 and January 26, 2023:
| |
January 26,
2023 | | |
September 30,
2023 | |
Volatility | |
| 6.70 | % | |
| 3.70 | % |
Risk Free Rate | |
| 4.77 | % | |
| 5.55 | % |
Probability of completing a business combination by July 31, 2023 | |
| 30 | % | |
| — | % |
Probability of completing a business combination by August 31, 2023 | |
| 40 | % | |
| — | % |
Probability of completing a business combination by September 31, 2023 | |
| 30 | % | |
| — | % |
Probability of completing a business combination by October 31, 2023 | |
| — | % | |
| 10 | % |
Probability of completing a business combination by November 30, 2023 | |
| — | % | |
| 60 | % |
Probability of completing a business combination by December 31, 2023 | |
| — | % | |
| 30 | % |
The following table presents the changes in the
fair value of warrant liabilities and the bifurcated derivative for the period ended September 30, 2023:
| |
Private | | |
Public | | |
Bifurcated | |
| |
Warrants | | |
Warrants | | |
Derivative | |
Initial value as of January 24, 2023 for warrants and January 26, 2023 for Bifurcated Derivative | |
$ | 361,667 | | |
$ | 758,333 | | |
$ | — | |
Change in valuation inputs or other assumptions | |
| 103,333 | | |
| 216,667 | | |
| — | |
Fair value as of March 31, 2023 | |
$ | 465,000 | | |
$ | 975,000 | | |
$ | — | |
Change in valuation inputs or other assumptions | |
| 155,000 | | |
| 325,000 | | |
| — | |
Fair value as of June 30, 2023 | |
$ | 620,000 | | |
$ | 1,300,000 | | |
$ | — | |
Change in valuation inputs or other assumptions | |
| (361,667 | ) | |
| (758,333 | ) | |
| — | |
Fair value as of September 30, 2023 | |
$ | 258,333 | | |
$ | 541,667 | | |
$ | — | |
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. There were no transfers between
levels during the three and nine months ended September 30, 2023 and 2022.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the condensed balance sheet date up to the date that the condensed financial statements were issued. Based upon this
review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial
statements.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,”
“us” or the “Company” refer to Prospector Capital Corp. References to our “management” or our “management
team” refer to our officers and directors, and references to the “Sponsor” refer to Prospector Sponsor LLC. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed
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.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933 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 proposed Business Combination
(as defined below), 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. 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, including that the conditions of the proposed Business
Combination (as defined below) are not satisfied. 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 Annual
Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”)
on March 31, 2023 (the “Annual Report”). 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 in the
Cayman Islands on September 18, 2020 formed 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”). 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.
Trust Agreement Amendment
On September 15, 2023, we entered into an amendment
(the “Trust Agreement Amendment”) to the Investment Management Trust Agreement, dated as of January 7, 2021 with Continental
Stock Transfer & Trust Company (“CST”), relating to the Company’s trust account (the “Trust Account”)
to permit CST, as trustee, to effectuate our instructions to liquidate the U.S. government securities or money market funds previously
held in the Trust Account and to subsequently hold such funds in an interest-bearing demand deposit bank account. Our intention to provide
such instructions to CST was previously disclosed in our definitive proxy statement filed with the U.S. Securities and Exchange Commission
on December 13, 2022.
Proposed Business Combination
Business Combination Agreement
On June 12, 2023, we entered into a Business Combination
Agreement (the “BCA” and such transactions contemplated by the BCA, the “Business Combination”) with LeddarTech
Inc., a corporation existing under the laws of Canada (“LeddarTech”), and LeddarTech Holdings Inc., a company incorporated
under the laws of Canada and a wholly owned subsidiary of LeddarTech (“Newco”), pursuant to which, we will continue as a corporation
existing under the laws of Canada (the “Continuance” and the Company as so continued, “Prospector Canada”), and,
immediately following the Continuance, Prospector Canada and Newco will amalgamate (the “Prospector Amalgamation” and Prospector
Canada and Newco as so amalgamated, “Amalco”).
In connection with the closing of the proposed
Business Combination (the “Closing”), the preferred shares of LeddarTech will convert into common shares of LeddarTech and,
on the terms and subject to the conditions set forth in a plan of arrangement, Amalco will acquire all of the issued and outstanding common
shares of LeddarTech from LeddarTech’s shareholders in exchange for common shares of Amalco having an aggregate equity value of
$200 million (valued at $10.00 per share) plus an amount equal to the aggregate exercise price of LeddarTech’s outstanding “in
the money” options immediately prior to the Prospector Amalgamation plus additional Amalco “earnout” shares (the “Equity
Value”). LeddarTech and Amalco will subsequently amalgamate (LeddarTech and Amalco as so amalgamated, the “Surviving Company”).
Amendment to Business Combination Agreement
On September 25, 2023, we entered into the
first amendment to the BCA (the “BCA Amendment”), which:
| ● | clarifies
that the equity awards with respect to shares of the Surviving Company (the “Rollover Equity Awards”) shall be subject to
the same terms and conditions, other than vesting provisions, that applied to the corresponding outstanding options to purchase Class
M shares of LeddarTech (the “Company M-Option”) immediately prior to the time the Plan of Arrangement is effective (the “Arrangement
Effective Time”), with each Rollover Equity Award vesting after a 6-month period following the issuance thereof. |
| ● | clarifies
that for Canadian income tax purposes, the parties intend that the exchange of LeddarTech shares for Amalco shares (the “Share
Exchange”) will occur on a tax deferred basis for certain Canadian resident shareholders who make a joint tax election with Amalco
under subsections 85(1) or (2) of the Tax Act. |
| ● | provides
that a shareholder of LeddarTech common shares (a “Company Common Shareholder”) that is (a) a resident of Canada for purposes
of the Tax Act and not exempt from tax under Part I of the Tax Act, or (b) a partnership, any member of which is a resident of Canada
for purposes of the Tax Act and not exempt from tax under Part I of the Tax Act (an “Eligible Holder”) who receives the aggregate
number of common shares of Amalco equal to (a) the Equity Value divided by (b) $10.00 (the “Exchange Consideration”) shall
be entitled to make joint tax elections with Amalco under subsections 85(1) or (2) of the Tax Act or any equivalent provincial legislation
with respect to the Share Exchange, subject to and in accordance with the Plan of Arrangement, and clarifies that Amalco will not be
responsible for any taxes, interest or penalties resulting from the failure by a former Company Common Shareholder to properly complete
or file the election forms in the form and manner within the time prescribed by the Tax Act (or any applicable provincial legislation). |
| ● | redefines
“Option Pool” to mean five million (5,000,000) common shares of the Surviving Company (the “Surviving Company Common
Shares”) reserved for grant under the Surviving Company Equity Incentive Plan. |
Redemption Offer
We will be providing the holders of our Class
A ordinary shares, the right to redeem all or a portion of the Class A ordinary shares in connection with the Business Combination (the
“Prospector Shareholder Redemption”).
We will issue at the Closing, as a dividend, following
the Prospector Shareholder Redemption and prior to the Continuance, to each holder of the Class A ordinary shares that elects not to participate
in the redemption one additional Class A ordinary share for each non-redeemed Prospector Class A Share held by such Non- Redeeming Shareholder.
Following the Prospector Shareholder Redemption
but prior to the Prospector Share Issuance, the Prospector Class A Shares and the warrants comprising each issued and outstanding unit
of Prospector immediately prior to the Prospector Share Issuance shall be automatically separated.
Financing
Prior to the execution of the BCA, LeddarTech
entered into a subscription agreement (the “Subscription Agreement”) with certain investors (the “Investors”),
pursuant to which the Investors agreed to purchase convertible notes of LeddarTech and Newco in an aggregate principal amount of at least
$43,000,000 (the “Financing”). FS LT Holdings LP (“FS Investors”), an affiliate of the Sponsor, and the Sponsor
are participants in the Financing and are investing $17,025,000 in the Financing. Derek Aberle, our Chief Executive Officer, is investing
$210,000 in the Financing. Existing shareholders of LeddarTech and their affiliates (including the Sponsor) have agreed to purchase all
of the securities issued in the Financing.
The issuance of the first tranche (“Tranche
A”) of the Financing occurred on June 13, 2023 (with one Investor funding on June 14, 2023) and was contingent upon, among other
things, the execution of the BCA. The Subscription Agreement provides that each Tranche A Investor received (a) a secured convertible
note issued by LeddarTech in a principal amount equal to such Investor’s Tranche A investment and convertible into Class D-1 preferred
shares of LeddarTech before the Closing or if the Closing does not occur (the “Class D-1 Preferred Shares”) or into common
shares of the Surviving Company after the Closing, as its successor, as provided in the Subscription Agreement, and (b) a warrant certificate
entitling such Investor to purchase Class D-1 Preferred Shares at an exercise price of $0.01 per share at any time prior to the date that
is fourteen calendar days after the conditions of LeddarTech and the Investors to consummate the Tranche A transaction have been met,
representing 2.75 Class D-1 Preferred Shares for each $100.00 of the Tranche A investment paid by such Investor under the Subscription
Agreement.
The issuance of the second tranche (“Tranche
B”) of the Financing is contingent upon, among other things, the substantially concurrent consummation of the Business Combination.
The Subscription Agreement provides that each Tranche B Investor will receive a secured convertible note issued by LeddarTech in a principal
amount equal to such Investor’s Tranche B investment and convertible into common shares of the Surviving Company, at an initial
conversion price of $10.00 per share as provided in the Subscription Agreement.
Amendment to Financing and Subscription Agreement
On October 30, 2023, LeddarTech and certain of
the Investors in the Tranche B Notes (the “Tranche B-1 Investors”) entered into an amendment to the Subscription Agreement
(the “Subscription Agreement Amendment”).
Pursuant to the Subscription Agreement Amendment,
the Tranche B-1 Investors agreed to accelerate the timing of funding of the purchase of approximately $4.1 million of the Tranche B Notes
(the “Tranche B-1 Notes”) to October 31, 2023, with the remaining $17.9 million of the Tranche B Notes (the “Tranche
B-2 Notes”) to be issued upon completion of the Business Combination. The Tranche B-1 Investors received and exercised warrants
to purchase approximately 24,000 Class D-1 Preferred Shares (0.6 Class D-1 Preferred Shares per $100 principal amount of Tranche B-1 Notes).
No issuance of warrants in respect of the Tranche B Notes was initially contemplated by the Subscription Agreement prior to the Subscription
Agreement Amendment and no warrants will be issued in connection with the issuance of the Tranche B-2 Notes.
Additionally, in connection with the amended Financing
terms, LeddarTech entered into an amending agreement (the “Desjardins Amendment”) with respect to its existing credit facility
(the “Credit Facility”) with Desjardins Capital Management Inc. (“Desjardins”). The Credit Facility required LeddarTech
to maintain a minimum cash balance of (i) CAD$2.5 million through the completion of the Business Combination, (ii) CAD$10.0 million from
the completion of the Business Combination through October 31, 2024, (iii) CAD$7.5 million from November 1, 2024 through December 31,
2024, (iv) CAD$5.0 million from January 1, 2025 through September 30, 2025, and (v) CAD$3.5 million at all times thereafter. Under the
Credit Facility, as amended by the Desjardins Amendment, LeddarTech is now required to maintain a minimum cash balance of (i) CAD$1.5
million through the completion of the Business Combination, and (ii) CAD$5.0 million thereafter. The Desjardins Amendment also lowered
the applicable interest rate under the Credit Facility from Canadian prime rate + 9.0% to Canadian prime rate + 4.0%, and reduced certain
pre-payment obligations with respect to the Financing and the Business Combination. The Desjardins Amendment also provides that LeddarTech
will issue to Desjardins warrants that ultimately will entitle Desjardins to purchase 250,000 common shares of Newco (upon closing of
the Business Combination).
Sponsor Letter Agreement
Concurrently with the execution of the BCA, the
Sponsor entered into a Sponsor Letter Agreement (the “Sponsor Letter Agreement”) with us, LeddarTech, FS Investors and Newco,
pursuant to which the Sponsor agreed to, among other things, (i) vote or cause to be voted (whether in person, by proxy or by action by
written consents, as applicable) all of its Class B ordinary shares in favor of the Business Combination; (ii) be bound by certain other
covenants and agreements related to the Business Combination and (iii) waive the anti-dilution protection with respect to the Class B
ordinary shares (whether resulting from the Financing or otherwise), in each case, on the terms and subject to the conditions set forth
in the Sponsor Letter Agreement.
Results of Operations
We have neither engaged in any operations
nor generated any revenues to date. Our only activities from September 18, 2020 (inception) through September 30, 2023 were organizational
activities, those necessary to prepare for the Initial Public Offering, described below, and 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 cash and investments 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 September 30, 2023,
we had a net income of $372,815, which consists of interest earned on cash and investments held in the Trust Account of $288,519 and
change in fair value of warrant liability of $1,120,000, offset by operating costs of $1,035,704.
For the nine months ended September 30, 2023,
we had a net loss of $3,969,382, which consists of operating costs of $5,876,943, offset by interest earned on cash and investments held
in the Trust Account of $1,587,561 and change in fair value of warrant liability of $320,000.
For the three months ended September 30, 2022,
we had a net income of $1,282,848, which consists of interest earned on investments held in the Trust Account of $1,479,369, offset by
operating costs of $196,521.
For the nine months ended September 30, 2022,
we had a net income of $1,268,223, which consists of interest earned on investments held in the Trust Account of $1,958,356, offset by
operating costs of $690,133.
Liquidity and Capital Resources
On January 12, 2021, we consummated the Initial
Public Offering of 32,500,000 Units at $10.00 per Unit, generating gross proceeds of $325,000,000 which is described in Note 4. Simultaneously
with the closing of the Initial Public Offering, we consummated the sale of 500,000 Private Placement Warrants to the Sponsor at a price
of $1.50 per Private Placement Warrant, generating gross proceeds of $750,000.
Following the Initial Public Offering, the partial
exercise of the over-allotment option, and the sale of the Private Placement Warrants, a total of $325,000,000 was placed in the Trust
Account. We incurred $18,391,778 in transaction costs, including $6,500,000 of underwriting fees, $11,375,000 of deferred underwriting
fees and $516,778 of other costs. On June 30, 2022, the underwriter waived its $11,375,000 deferred underwriting fee which reduce the
total offering cost incurred.
For the nine months ended September 30, 2023,
cash used in operating activities was $1,073,903. Net loss of $3,969,382 was affected by interest earned on cash and investments held
in the Trust Account of $1,587,561 and change in fair value of warrant liability of $320,000. Changes in operating assets and liabilities
provided $4,803,040 of cash for operating activities.
For the nine months ended September 30, 2022,
cash used in operating activities was $764,030. Net income of $1,268,223 was affected by interest earned on cash and investments held
in the Trust Account of $1,958,356. Changes in operating assets and liabilities used $73,897 of cash for operating activities.
At September 30, 2023, we had cash held in
the Trust Account of $23,750,947 (including $6,371,294 of interest income) included in an interest-bearing demand deposit bank account.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the
Trust Account, to complete our Business Combination. To the extent that our share capital 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.
At September 30, 2023, we had cash of $26,121.
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, and structure, negotiate
and complete a Business Combination.
In order to fund working capital deficiencies
or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their
affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such
loaned amounts. 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 $1,500,000 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.
Going Concern
We have until December 31, 2023 to consummate
a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination
is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. We may not have sufficient liquidity
to fund the working capital needs of the Company through our liquidation date or one year from the issuance of these financial statements.
We have determined that the liquidity condition and the mandatory liquidation, should a Business Combination not occur, and potential
subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate after December 31, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of September 30, 2023. 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 the Sponsor a monthly fee of $10,000
for office space, utilities and secretarial and administrative services. We began incurring these fees on January 7, 2021 and will continue
to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
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.
On June 30, 2022, the underwriter waived its $11,375,000 deferred underwriting fee which is no longer payable.
Critical Accounting Estimates and 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 condensed 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:
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 condensed 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 condensed 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 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.
Warrants
We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks. We evaluates all of our financial instruments, including issued stock purchase
warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Accounting
Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and
the Financial Accounting Standard Board’s (“FASB”) ASC Topic 815, “Derivatives and Hedging” (“ASC
815”). We account 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, we 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,
we executed an agreement whereby the holders of the Private Placement Warrants will not transfer their warrants to non-affiliated holders.
The Private Placement Warrants were then 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.
In connection with the preparation of the Company’s condensed
financial statements as of and for the period ended September 30, 2023, management identified an error in its March 31, 2023 and June
30, 2023 condensed financial statements. The Company determined that based on its review of its accounting treatment for Public and Private
Placement Warrants under ASC 815, as a result of the redemptions that occurred on January 24, 2023 in connection with the Company’s
extraordinary general meeting to extend the date by which it must consummate an initial business combination, its accounting for the Warrants
was incorrectly presented as part of equity and the Warrants should be instead presented as liabilities, with changes in value of such
liabilities reported in earnings.. The Company’s management determined that such redemptions resulted in the possibility for the
tender offer provision contained in Section 4.4 of the Warrant Agreement, to be triggered without the requirement that a change in control
also be triggered, which resulted in the determination that the Warrants no longer qualify for equity treatment.
Derivative Financial Instruments
We evaluate our 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.
Class A Ordinary Shares Subject to Possible
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’
deficit section of our condensed balance sheets.
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. 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. At September 30, 2023 and 2022, 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.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to
our management, including our principal executive officer and principal financial officer or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and
Chief Financial Officer carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of September 30, 2023. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures were not effective because of material weaknesses in our
internal control over financial reporting. A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis. Specifically, the Company’s
management has concluded that our control around the interpretation and accounting for extinguishment
of a significant contingent obligation was not effectively designed or maintained, thus the
accounting for warrants resulted in restatement of the March 31, 2023 and June 30, 2023 financial
statements and the inaccurate disclosure of the trust account assets as of September 30,
2023 resulted in errors to respective financial statements. In light of these material weaknesses,
we performed additional analysis as deemed necessary to ensure that our financial statements
were prepared in accordance with GAAP. Accordingly, management believes that the financial
statements included in this Form 10-Q present fairly in all material respects our financial
position, results of operations and cash flows for the period presented.
Remediation of a Material Weakness in Internal
Control over Financial Reporting
We recognize the importance of the control environment
as it sets the overall tone for the Company and is the foundation for all other components of internal control. Consequently, we designed
and implemented remediation measures to address the material weakness previously identified and enhance our internal control over financial
reporting. In light of the material weakness, we enhanced our processes to identify and appropriately apply applicable accounting requirements
to better evaluate and understand the nuances of the complex accounting standards that apply to our condensed financial statements,
including providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel
and third-party professionals with whom we consult regarding complex accounting applications.
Changes in Internal Control over Financial
Reporting
There were no changes in our internal control
over financial reporting, except as discussed above, (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during
the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in
our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 31, 2023. Any of these factors could
result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently
known to us or that we currently deem immaterial may also impair our business or results of operations. Other than the below, as of the
date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for
the year ended December 31, 2022 as filed with the SEC on March 31, 2023.
We have identified material weaknesses
in our internal control over financial reporting. If we are unable to develop and maintain an effective system of internal control over
financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor
confidence in us and materially and adversely affect our business and operating results.
As described elsewhere in this Quarterly Report
on Form 10-Q, we have identified a material weakness in our internal control over financial reporting; specifically, that our control
around the interpretation and accounting for extinguishment of a significant contingent obligation was not effectively designed or maintained,
thus the accounting for warrants being incorrectly presented as part of equity rather than as liabilities resulted in restatement of
the March 31, 2023 and June 30, 2023 financial statements and the inaccurate disclosure of the trust account assets as of September 30,
2023 resulted in errors to respective financial statements. As a result of these material weaknesses, our management has concluded that
our disclosure controls and procedures were not effective as of September 30, 2023. See “Note 2—Restatement of Previously
Issued Financial Statements” to the accompanying financial statements, as well as Part I. Item 4. Controls and Procedures included
in this Quarterly Report on Form 10-Q. We have taken a number of measures to remediate the material weaknesses described herein. However,
if we are unable to remediate our material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable
to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. Likewise,
if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange
on which our shares of Class A ordinary shares are listed, the SEC or other regulatory authorities. The existence of material weaknesses
in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a
negative effect on the trading price of our shares. We can give no assurance that the measures we have taken and plan to take in the
future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results
will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention
of these controls. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures
may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent
or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial
statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic
reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our
share price may decline as a result. We cannot assure you that any measures we may take in the future, will be sufficient to avoid potential
future material weaknesses.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
On January 12, 2020, we consummated the Initial
Public Offering of 32,500,000 Units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $325,000,000.
Goldman Sachs & Co. LLC acted as sole book-running manager of the Initial Public Offering. The securities in the offering were
registered under the Securities Act on registration statement on Form S-1 (No. 333-251523). The Securities and Exchange Commission
declared the registration statements effective on January 7, 2021.
Simultaneous with the consummation of the Initial
Public Offering, the Sponsor consummated the private placement of an aggregate of 500,000 Warrants at a price of $1.50 per Private Placement
Warrant, generating total proceeds of $750,000. Each whole Private Placement Warrant is exercisable to purchase one share of ordinary
shares at an exercise price of $11.50 per share. The issuance was made pursuant to the exemption from registration contained in Section
4(a)(2) of the Securities Act.
The Private Placement Warrants are identical to
the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable,
assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial
Public Offering, the exercise of the over-allotment option and the Private Placement Warrants, an aggregate of $325,000,000 was placed
in the Trust Account.
We paid a total of $6,500,000 in underwriting
discounts and commissions and $516,778 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters
agreed to defer $11,375,000 in underwriting discounts and commissions.
On May 16, 2022, the Company entered into a convertible
promissory note with the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $1,500,000 (the “Convertible
Promissory Note”). The Convertible Promissory Note is non-interest bearing and due on the earlier of December 31, 2023 and the date
on which the Company consummates its initial business combination. If we complete a business combination, we would repay such additional
loaned amounts, without interest, upon consummation of the business combination. 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 additional loaned amounts but no proceeds from
our trust account would be used for such repayment. Up to $1,500,000 of such additional loans (if any) may be convertible into warrants,
at a price of $1.50 per warrant at the option of the Sponsor. The warrants would be identical to the Private Placement Warrants, including
as to exercise price, exercisability and exercise period. Except for the foregoing, the terms of such additional loans (if any) have not
been determined and no written agreements exist with respect to such loans. If we fully draw down on the Convertible Promissory Note and
require additional funds for working capital purposes, the Sponsor, an affiliate of the Sponsor, or our officers and directors may, but
are not obligated to, loan us such additional funds as may be required. The issuance of the Convertible Promissory Note was approved by
our board of directors and our audit committee on May 16, 2022. As of September 30, 2023, there was $1,238,623 outstanding under the Convertible
Promissory Note.
For a description of the use of the proceeds generated
in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
Item 6. Exhibits
The following exhibits are filed as part of, or
incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
|
Description of Exhibit |
2.1 |
|
Amendment No. 1, dated September 25, 2023, to the Business Combination Agreement, dated as of June 12, 2023, by and among Prospector Capital Corp., LeddarTech Inc. and LeddarTech Holdings Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Prospector Capital Corp. (File No. 001-39854), as filed on September 28, 2023). |
10.1 |
|
Amendment No. 1 to the Investment Management Trust Agreement, dated September 15, 2023, by and between Prospector Capital Corp. and Continental Stock Transfer & Trust Company, as trustee (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Prospector Capital Corp. (File No. 001-39854), as filed on September 20, 2023). |
10.2† |
|
Amendment No.1, dated October 30, 2023, to the Subscription Agreement, dated as of June 12, 2023, by and among LeddarTech Inc. and each investor thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Prospector Capital Corp. (File No. 001-39854), as filed on November 2, 2023). |
10.3 |
|
Letter Agreement, dated June 30, 2021, by and between Prospector Capital Corp. and Prospector Sponsor LLC (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Prospector Capital Corp. (File No. 001-39854), as filed on November 28, 2023). |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS* |
|
Inline XBRL Instance Document |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
† |
Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request. |
SIGNATURES
In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
PROSPECTOR
CAPITAL CORP. |
|
|
|
Date: November 29, 2023 |
By: |
/s/
Derek Aberle |
|
Name: |
Derek Aberle |
|
Title: |
Chief Executive Officer |
|
|
(Principal Executive Officer) |
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In connection with the Quarterly Report of Prospector
Capital Corp. (the “Company”) on Form 10-Q/A for the quarterly period ended September 30, 2023, as filed with the Securities
and Exchange Commission (the “Report”), I, Derek Aberle, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
In connection with the Quarterly Report of Prospector
Capital Corp. (the “Company”) on Form 10-Q/A for the quarterly period ended September 30, 2023, as filed with the Securities
and Exchange Commission (the “Report”), I, Nick Stone, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: