SecProbe.io

CORRESP
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November 3, 2023

VIA
EDGAR

United States
Securities and Exchange Commission

Division
of Corporation Finance

Office of
Energy & Transportation

100 F Street
NE

Washington, D.C. 20549

Attn:  Shannon Buskirk and Joanna Lam   White & Case LLC

                                                                                1221 Avenue of the Americas

                                                                                New York, NY 10020-1095

                                                                                T
                                            +1 212 819 8200

                                                                                whitecase.com

    Re:
    Prospector Capital Corp.

    Form 10-K for the Fiscal Year Ended December 31,
    2022

    Filed March 31, 2023

    File No. 001-39854

Dear Ms.
Buskirk and Ms. Lam:

On
behalf of our client, Prospector Capital Corp., a Cayman Islands exempted company (the “Company”), we are writing
to submit the Company’s supplemental response to the comment of the staff of the Division of Corporation Finance (the “Staff”)
of the United States Securities and Exchange Commission with respect to the above-referenced Form 10-K for the fiscal year ended December
31, 2022, filed on March 31, 2023 (the “Form 10-K”), delivered telephonically on October 19, 2023.

Set
forth below is the Company’s supplemental response to its response letter previously filed on November 3, 2023. The Company’s
response below is preceded by the Staff’s comment for ease of reference. Capitalized terms used but not defined herein have the
meanings given to them in the Form 10-K.

Form
10-K for the Fiscal Year Ended December 31, 2022

Financial
Statements

Note
8, Warrants, page F-16

 1. We
                                            note that you previously entered into a side letter with your Sponsor whereby the Sponsor
                                            agreed it would not transfer the private placement warrants held by it to non-affiliates.
                                            Please provide analysis as to why this side letter may or may not be enforceable, including
                                            whether there is adequate consideration.

Response:
The Company respectfully acknowledges receipt of the Staff’s comment and supplementally provides the SAB 99 memorandum as Exhibit
A to this response letter.

*
* *

United States
Securities and Exchange Commission

November
3, 2023

Please
do not hesitate to contact Joel Rubinstein at (212) 819-7642 of White & Case LLP with any questions or comments regarding this letter.

    Sincerely,

    /s/ White & Case LLP

    White & Case LLP

    cc:Derek Aberle, Prospector Capital Corp.

    2

United States
Securities and Exchange Commission

November
3, 2023

Exhibit
A

    To:
    Prospector
    Capital Corp

    Date:
    October 13, 2023

    Re:
    SAB 99 Private Placement Warrant Classification
    Assessment (i.e., equity vs. liability classification post redemptions)

Purpose

The
purpose of this memorandum is to document management’s analysis and conclusion on the materiality of an error identified related
to the classification of Private Placement Warrants post redemptions for Prospector Capital Corp (“the Company”).

Guidance
Applied

The
Company’s assessment is based on the following guidance resources:

 1. SEC
                                            Staff Accounting Bulletin No. 99 (’SAB 99’), Materiality

 2. AS
                                            2201 – Evaluating deficiencies, significant deficiencies, and material weaknesses

 3. AS
                                            2201 “An Audit of Internal Control Over Financial Reporting That Is Integrated with
                                            An Audit of Financial Statements”

Authoritative
language in black italicized text.

Excerpts
from the private placement warrant agreement in blue text.

Management’s
analysis in red text.

Question
#1: Does Section 4.4 result in liability classification of the Private Placement Warrants?

Section
4.4 If reorganization is a tender offer accepted by holders of ordinary shares in which the maker will own more than 65% of ordinary
shares, the Private Placement Warrant holders would be entitled to receive the highest amount of settlement receivable as if they were
a shareholder. That is the highest amount of cash, securities, or other property to which such holder would actually have been entitled
as a shareholder if such Private Placement Warrant holder had exercised the Private Placement Warrant prior to the expiration of such
tender or exchange offer, accepted such offer and all of the Ordinary Shares held by such holder had been purchased pursuant to such
tender or exchange offer.

If
less than 70% of consideration receivable by ordinary shareholders is payable in the form of listed shares/stock in the successor entity,
and Private Placement Warrant holders want to exercise within 30 days of the reorganization, the Private Placement Warrant price will
be reduced by an amount equal to the difference of (i) the Private Placement Warrant Price in effect prior to such reduction minus (ii)
(A) the Per Share Consideration minus (B) the Black-Scholes Private Placement Warrant Value.

    3

United States
Securities and Exchange Commission

November
3, 2023

ASC
815-40-55-2 states that an event that causes a change in control of an entity is not within the entity’s control and, therefore,
if a contract requires net cash settlement upon a change in control, the contract generally must be classified as an asset or a liability.

ASC
815-40-55-3 then states, however, if a change-in-control provision requires that the counterparty receive, or permits the counterparty
to deliver upon settlement, the same form of consideration (for example, cash, debt, or other assets) as holders of the shares underlying
the contract, permanent equity classification would not be precluded as a result of the change-in-control provision. In that circumstance,
if the holders of the shares underlying the contract were to receive cash in the transaction causing the change in control, the counterparty
to the contract could also receive cash based on the value of its position under the contract.

Further
SEC Staff noted “We recently evaluated a fact pattern involving Private Placement Warrants issued by a SPAC. The terms of those
Private Placement Warrants included a provision that in the event of a tender or exchange offer made to and accepted by holders of more
than 50% of the outstanding shares of a single class of common stock, all holders of the Private Placement Warrants would be entitled
to receive cash for their Private Placement Warrants. In other words, in the event of a qualifying cash tender offer (which could be
outside the control of the entity), all Private Placement Warrant holders would be entitled to cash, while only certain of the holders
of the underlying shares of common stock would be entitled to cash. OCA staff concluded that, in this fact pattern, the tender offer
provision would require the Private Placement Warrants to be classified as a liability measured at fair value, with changes in fair value
reported each period in earnings.”

Ordinary
shares are defined in the Company’s Private Placement Warrant agreement as Class A shares. The Class A and Class B shares have
rights that rank Pari-passu in all respects and vote together as same class on one-to-one basis. In tender offer transaction, if the
maker obtains at least 65% of ordinary shares (65% of 32 million Class A Shares is 20.8 million which makes up more than 50% of the voting
interest inclusive of Class A and Class B shares), the maker will effectively hold more than 50% of the Company’s voting interest
resulting in a change in control. ASC 815-40 allows for cash settlement of a Private Placement Warrant in circumstances in which holders
of the underlying shares also would receive cash. Specifically, ASC 815-40-55-3 stated that “if a change-in-control provision requires
that the counterparty receive, or permits the counterparty to deliver upon settlement, the same form of consideration (for example, cash,
debt, or other assets) as holders of the shares underlying the contract, permanent equity classification would not be precluded as a
result of the change-in-control provision.” As the tender offer provision in Section 4.4 of the Private Placement Warrant Agreement
requires a change of more than 65% of ordinary shares (effectively more than 50% of the voting control) of the Company, it would be considered
a change of control and therefore compliant with the SEC Staff Statement. Therefore, equity classification for the Public Warrants and
Private Placement Warrants would not be prohibited.

In
the event of a Private Placement Warrant price reduction by means of a mathematical formula because less than 70% of consideration receivable
by ordinary shareholders is payable in the form of listed shares/stock in the successor entity, the guidance under ASC 815-40-55-42 states
that for these types of events, if the adjustment to the strike price is based on a mathematical formula that determines the direct effect
that the occurrence of such dilutive events should have on price of the underlying shares, this does not preclude an instrument from
being considered indexed to the Company’s own stock, as the only variables that could affect the settlement amount would be inputs
to the fair value of a fixed-for-fixed option on equity shares. Therefore, this provision does not preclude the Private Placement Warrants
from being considered indexed to the Company’s own stock.

    4

United States
Securities and Exchange Commission

November
3, 2023

Subsequent
to year end, the redemptions effectively flipped the percentages such that 65% of the Class A shares no longer make up more than 50%
of the voting interest. None of the Private Placement Warrants would be exercisable in advance of a de-spac transaction, thus at the
time the Public Warrants could be tendered for cash consideration, all of the Class B shares would have been converted into Class A shares.
The warrant agreement reads,” if a
tender, exchange or redemption offer shall have been made to and accepted by the holders of the Ordinary Shares … under circumstances
in which, upon completion of such tender or exchange offer, the maker thereof … own[s] beneficially … more than 65% of
the outstanding Ordinary Shares, the holder of a Warrant shall be entitled to receive as the Alternative Issuance, the highest amount
of cash, securities or other property to which such holder would actually have been entitled as a shareholder if such Warrant holder
had exercised the Warrant prior to the expiration of such tender or exchange offer”. The 65% test,
should it be satisfied at the time of warrant exercisability, would mean that sufficient shares would have been tendered that a change
of control would have occurred and therefore would be compliant with the SEC Staff Statement. However, on advice of counsel, it is not
possible to rule out the possibility that a Private Placement Warrant holder could assert that, even in the face of a failed 65% test
at the time of warrant presentation for cash consideration, such Private Placement Warrant must be deemed to be exercisable because the
65% might at one point in the past have been met and therefore demand cash compensation. Without taking a view as to the probability
of prevailing on such a claim, it is clearly more conservative to assume that such a claim could succeed. As such this conservative interpretation
of the 65% test would preclude the Private Placement Warrants from receiving equity treatment and under such conservative interpretation
should have been reclassified to liability based on the fair value of the Private Placement Warrants on January 24, 2023, the date the
redemptions occurred and subsequently carried at fair value with changes in fair value reflected in the statement of operations. See
SAB 99 workbook for impact on materiality on a quantitative basis.

Question
#1 Conclusion

As
a result of further evaluation surrounding the Company’s accounting treatment for Private Placement Warrants under ASC 815, it
was identified that as a result of the redemptions that occurred on January 24, 2023, the Private Placement Warrants will be conservatively
assumed to no longer qualify for equity classification. The redemptions resulted in the possibility for the tender offer provision listed
within the Private Placement Warrant agreement referenced above to be triggered without a change in control also being triggered.

Question
#2: Does the change in classification of the Private Placement Warrants result in a material modification to the Company’s financial
statements?

In
accordance with SEC Staff Accounting Bulletin No. 99, Materiality:

1.
Assessing Materiality

Facts:
During the course of preparing or auditing year-end financial statements, financial management or the registrant’s independent auditor
becomes aware of misstatements in a registrant’s financial statements. When combined, the misstatements result in a 4% overstatement
of net income and a $.02 (4%) overstatement of earnings per share. Because no item in the registrant’s consolidated financial statements
is misstated by more than 5%, management and the independent auditor conclude that the deviation from generally accepted accounting principles
(“GAAP”) is immaterial and that the accounting is permissible.

    5

United States
Securities and Exchange Commission

November
3, 2023

Question:
Each Statement of Financial Accounting Standards adopted by the Financial Accounting Standards Board (“FASB”) states, “The
provisions of this Statement need not be applied to immaterial items.” In the staff’s view, may a registrant or the auditor of its
financial statements assume the immateriality of items that fall below a percentage threshold set by management or the auditor to determine
whether amounts and items are material to the financial statements?

Interpretive
Response: No. The staff is aware that certain registrants, over time, have developed quantitative thresholds as “rules
of thumb” to assist in the preparation of their financial statements, and that auditors also have used these thresholds in their
evaluation of whether items might be considered material to users of a registrant’s financial statements. One rule of thumb in particular
suggests that the misstatement or omission of an item that falls under a 5% threshold is not material in the absence of particularly
egregious circumstances, such as self-dealing or misappropriation by senior management. The staff reminds registrants and the auditors
of their financial statements that exclusive reliance on this or any percentage or numerical threshold has no basis in the accounting
literature or the law.

The
use of a percentage as a numerical threshold, such as 5%, may provide the basis for a preliminary assumption that – without considering
all relevant circumstances – a deviation of less than the specified percentage with respect to a particular item on
the registrant’s financial statements is unlikely to be material. The staff has no objection to such a “rule of thumb” as an
initial step in assessing materiality. But quantifying, in percentage terms, the magnitude of a misstatement is only the beginning
of an analysis of materiality; it cannot appropriately be used as a substitute for a full analysis of all relevant considerations.
Materiality concerns the significance of an item to users of a registrant’s financial statements. A matter is “material”
if there is a substantial likelihood that a reasonable person would consider it important. In its Statement of Financial Accounting
Concepts No. 2, the FASB stated the essence of the concept of materiality as follows:

The
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