NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, AND LIQUIDITY
Springwater Special Situations Corp. (the “Company”)
is a blank check company incorporated as a Delaware company on October 2, 2020. The Company was 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”).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,
the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from October 2, 2020 (inception) through September 30, 2021 relates to the Company’s
formation, the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after
the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income
from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on August 25, 2021. On August 30, 2021, the Company consummated the Initial Public Offering
of 15,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public
Shares”), at $10.00 per Unit, generating gross proceeds of $150,000,000, which is described in Note 4.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 645,000 units (the “Private Units”) at a price of $10.00 per Private
Unit in a private placement to Special Sits General Partner I SA (the “Sponsor”), generating gross proceeds of $6,450,000,
which is described in Note 5.
On September 3, 2021, the underwriters notified
the Company of their intention to partially exercise their over-allotment option and will forfeit the remaining balance on September 7,
2021. The Company consummated the sale of an additional 2,118,624 Units, at $10.00 per Unit, and the sale of an additional 63,559 Private
Placement Units, at $10.00 per Private Placement Unit, generating total gross proceeds of $21,821,830. A total of $21,398,105 was deposited
into the Trust Account, bringing the aggregate gross proceeds held in the Trust Account to $172,898,105.
Transaction costs amounted to $16,579,547, consisting
of $3,423,725 of underwriting fees, $12,704,424 for the fair value of the Founder Shares attributable to the Anchor Investors (see Note
7) and $451,398 of other offering costs.
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 Units, 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 (as defined below) (less 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.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company will provide the holders of the public
shares (the “Public Stockholders”) 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 stockholder approval of a Business Combination or conduct a
tender offer will be made by the Company, solely in its discretion. The Public Stockholders 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 anticipated to be $10.10 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 Stockholders 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.
If a stockholder vote is not required by applicable
law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the
Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct
the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender
offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required
by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant
to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed
to vote its Founder Shares (as defined in Note 6), EBC founder shares (as defined in Note 7) and any Public Shares purchased during or
after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem
their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against the Proposed Business Combination.
Notwithstanding the foregoing, if the Company
seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate
of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder 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 prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption
rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to
waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within 18 months
from the closing of the Initial Public Offering and (c) not to propose an amendment to the Certificate of Incorporation (i) to
modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to
redeem 100% of its 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 stockholders’ rights or pre-business combination activity, unless the
Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. However,
if the Sponsor acquires Public Shares in or after the Initial Public Offering, 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 Company will have until February 28, 2023
to complete a Business Combination (the “Combination Period”). 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 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 on the funds held in the Trust Account and not
previously released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (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 stockholders and the Company’s board of directors, dissolve and liquidate, subject in
each case to the Company’s obligations under Delaware 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.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Sponsor has agreed to waive their rights to
liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the Sponsor or any of their 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. 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 ($10.10).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party 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 (i) $10.10 per Public Share and (ii) 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 $10.10 per public Share due
to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply
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”). Moreover, 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 (except for the Company’s independent registered public accounting firm),
prospective target businesses and 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.
Risks and Uncertainties
In March 2020, the World Health Organization
declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States and the world.
As of the date the financial statement was issued, there was considerable uncertainty around the expected duration of this pandemic. The
Company has concluded that while it is reasonably possible that COVID-19 could have a negative effect on identifying a target company
for a Business Combination, the specific impact is not readily determinable as of the date of this financial statement. The financial
statement does not include any adjustments that might result from the outcome of this uncertainty.
Liquidity and Capital Resources
As of September 30, 2021, the Company had cash of
$562,448 not held in the Trust Account and available for working capital purposes. The Company has positive cash flow projections as of
September 30, 2021 and does not believe it will need to raise additional funds in order to meet the expenditures required for operating
its business. However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating
a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate
its business prior to a Business Combination. Moreover, the Company may need to obtain additional financing or draw on the Working Capital
Loans (as defined below) either to complete a Business Combination or because it becomes obligated to redeem a significant number of the
Public Shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in
connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such
financing simultaneously with the completion of our Business Combination. If the Company is unable to complete the Business Combination
because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In
addition, following the Business combination, if cash on hand is insufficient, the Company may need to obtain additional financing in
order to meet its obligations.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s
financial statements as of September 30, 2021, management identified errors made in its historical financial statements where, at
the closing of the Company’s Initial Public Offering, the Company improperly valued its common stock subject
to possible redemption. The Company previously determined the common stock subject to possible redemption to be equal to the
redemption value, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management
determined that the Public Shares underlying the Units issued during the Initial Public Offering can be
redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore,
management concluded that the redemption value should include all shares of common stock subject to possible redemption,
resulting in the common stock subject to possible redemption being equal to their redemption value. As a result, management
has noted a restatement related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying
value of the common stock subject to possible redemption with the offset recorded to additional paid-in capital and common
stock.
There has been no change in the Company’s
total assets, liabilities or operating results.
The impact of the restatement on the Company’s financial statements is reflected
in the following table.
Balance Sheet as of August 30, 2021
|
|
As Previously Reported
|
|
|
Restatement
|
|
|
As Restated
|
|
Common stock subject to possible redemption
|
|
$
|
148,024,471
|
|
|
$
|
3,475,529
|
|
|
$
|
151,500,000
|
|
Common stock
|
|
$
|
568
|
|
|
$
|
(35
|
)
|
|
$
|
533
|
|
Additional paid-in capital
|
|
$
|
5,001,293
|
|
|
$
|
(3,475,495
|
)
|
|
$
|
1,525,798
|
|
Total Stockholders’ Equity
|
|
$
|
5,000,001
|
|
|
$
|
(3,475,529
|
)
|
|
$
|
1,524,472
|
|
Number of shares subject to possible redemption
|
|
|
14,655,888
|
|
|
|
344,112
|
|
|
|
15,000,000
|
|
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on
August 30, 2020, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on August 30, 2020. The interim results
for the three months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December
31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder 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 statement 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.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Use of Estimates
The preparation of the condensed financial statements
in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of September 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At September 30, 2021, substantially all of the
assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury Bills. All of the Company’s
investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair
value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account
are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations.
The estimated fair values of investments held in Trust Account are determined using available market information.
Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class
A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, the 17,118,624 shares of Class A common stock subject to possible redemption at September 30,
2021, are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated
balance sheets.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption
amount value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid
in capital and accumulated deficit.
At September 30, 2021, the common stock reflected
in the balance sheets are reconciled in the following table:
Gross proceeds
|
|
$
|
171,186,240
|
|
Less:
|
|
|
|
|
Common stock issuance costs
|
|
|
(5,586,988
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
5,586,988
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
$
|
171,186,240
|
|
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
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, 2021. 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 is subject to income
tax examinations by major taxing authorities since inception. The effective tax rate differs from the statutory tax rate of 21% for the
three and nine months ended September 30, 2021, due to the valuation allowance recorded on the Company’s net operating losses.
Net Income (Loss) per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, Earnings Per Share. Net income (loss) per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Accretion associated with the redeemable shares of common stock is excluded
from earnings per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per 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. As of September 30, 2021, the Company did not have
any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the
earnings of the Company. As a result, diluted net loss per common stock is the same as basic net loss per common stock for the periods
presented.
The following table reflects the calculation of
basic and diluted net loss per common share (in dollars, except per share amounts):
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2021
|
|
|
September 30, 2021
|
|
|
|
Redeemable
|
|
|
Non-redeemable
|
|
|
Redeemable
|
|
|
Non-redeemable
|
|
Basic and diluted net loss per common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss, as adjusted
|
|
$
|
(33,835
|
)
|
|
$
|
(27,060
|
)
|
|
$
|
(18,871
|
)
|
|
$
|
(42,074
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common stock outstanding
|
|
|
5,676,118
|
|
|
|
4,539,461
|
|
|
|
1,912,831
|
|
|
|
4,264,672
|
|
Basic and diluted net loss per common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which
simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes
certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies
the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December
15, 2023, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2020-06 effective as
of January 1, 2021. The adoption of ASU 2020-06 did not have an impact on our financial statements.
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. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 15,000,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one-half of one redeemable warrant
(“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50
per share, subject to adjustment (see Note 9).
On September 7, 2021, the Company consummated
the sale of an additional 2,118,624 Units pursuant to the partial exercise of the underwriters’ over-allotment option and the sale
of an additional 63,559 Private Placement Units.
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the
Initial Public Offering, the Sponsor purchased an aggregate of 645,000 Private Units at a price of $10.00 per Private Unit, for an
aggregate purchase price of $6,450,000. On September 3, 2021, the underwriters notified the Company of their intention to partially
exercise their over-allotment option and forfeited the remaining balance on September 7, 2021. The Company consummated the sale of
an additional 63,559 Private Placement Units, at $10.00 per Private Placement Unit. Each whole Private Warrant is exercisable for
one whole share of common stock at a price of $11.50 per share, subject to adjustment. The proceeds from the Private Units were
added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of
the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. There will be no
redemption rights or liquidating distributions from the Trust Account with respect to the Private Warrants.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
In October 2020, the Sponsor paid $25,000
to cover certain offering costs of the Company in consideration for 2,875,000 of the Company’s common stock (the “Founder
Shares”). As of February 16, 2021, the Company effected a dividend of 0.5 shares for each outstanding share of common stock, resulting
in there being an aggregate of 4,312,500 Founder Shares outstanding. The Founder Shares included an aggregate of up to 562,500 shares
that were subject to forfeiture. depending on the extent to which the underwriters’ over-allotment option was exercised, so that
the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding common
stock after the Initial Public Offering (assuming the Initial Stockholder did not purchase any Public Shares in the Initial Public Offering
and excluding the EBC founder shares) (see Note 7). As a result of the underwriters’ election to partially exercise their over-allotment
option on September 7, 2021, a total of 529,656 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares until, with respect to 50% of the Founder Shares, the earlier of
one year after the consummation of a Business Combination and the date on which the closing price of the common stock equals or exceeds
$12.50 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30-trading day period commencing after a Business Combination and, with respect to the remaining 50% of the Founder Shares, until
the one year after the consummation of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the
Company completes a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders
having the right to exchange their common stock for cash, securities or other property.
Administrative Services Agreement
The Company entered into an agreement, commencing
on August 30, 2021. Upon completion of the Business Combination or the Company’s liquidation, Graubard Miller shall make available
to the Company certain office space and administrative and support services as may be required by the Company from time to time, situated
at 405 Lexington Avenue, 11th Floor, New York, New York 10174 (or any successor location) free of charge.
Promissory Note — Related Party
On December 17, 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 $150,000. The Promissory Note was non-interest bearing and, as of September 30, 2021, there was no outstanding balance.
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 units of the post-Business Combination entity at a price of $10.00 per unit. The units
would be identical to the Private Units. At September 30, 2021, there are no Working capital Loans outstanding.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 7. COMMITMENTS
Registration Rights
The holders of the Founder Shares, EBC founder
shares, Private Units and underlying common stock and any securities issued upon conversion of Working Capital Loans will be entitled
to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders
of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the
majority of the Founders’ Shares can elect to exercise these registration rights at any time commencing three months prior to the
date on which these shares of common stock are to be released from escrow. The holders of a majority of the EBC founder shares, Private
Units and units issued to the Sponsor, officers, directors or their affiliates in payment of Working Capital Loans made to the Company
(or underlying securities) can elect to exercise these registration rights at any time after the consummation of a Business Combination.
Notwithstanding anything to the contrary, the underwriters may only make a demand on one occasion and only during the five-year period
beginning on the effective date of the registration statement of which this prospectus forms a part. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business
Combination; provided, however, that the underwriter may participate in a “piggy-back” registration only during the seven-year
period beginning on the effective date of the registration statement of which this prospectus forms a part. 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 Company will grant the underwriters a 45-day
option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting
discounts and commissions (see Note 8).
The underwriters were entitled to a cash underwriting
discount of $0.20 per Unit, or $3,000,000 in the aggregate paid upon the closing of the Initial Public Offering. Pursuant to the underwriting
agreement, the Company will grant the representative of the underwriters, for a period of three years from the commencement of sales of
the Initial Public Offering, the right to act as co-underwriter for the next U.S. registered public offering of securities undertaken
by any of the Company’s officers for the purpose of raising capital and placing 90% or more of the proceeds in a trust or escrow
account to be used to acquire one or more operating businesses that have not been identified at the time of such public offering. The
terms of such offering shall be mutually determined in good faith by the applicable insider(s) and the representative and will be based
on the prevailing market for similar offerings.
Business Combination Marketing Agreement
The Company engaged EarlyBirdCapital, the representative
of underwriter in the Initial Public Offering, as an advisor in connection with its Business Combination to assist in holding meetings
with the shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to
potential investors that are interested in purchasing securities in connection with the Initial Business Combination, assist in obtaining
shareholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the
Business Combination. The Company will pay EarlyBirdCapital a cash fee for such services upon the consummation a Business Combination
in an aggregate amount equal to 3.5% of the gross proceeds of the Initial Public Offering. Additionally, the Company will pay EarlyBirdCapital
a cash fee equal to 1.0% of the total consideration payable in the Business Combination if it introduces the Company to the target business
with which it completes a Business Combination, provided that the foregoing fee will not be paid prior to the date that is 60 days from
the effective date of the Initial Public Offering.
EBC founder shares
In December 2020 and July 2021, the Company issued
to the designees of the underwriter 375,000 shares of common stock (after giving effect to the stock dividend discussed in Note 5) (the
“EBC founder shares”). The Company accounted for the EBC founder shares as an offering cost of the Initial Public Offering,
with a corresponding credit to stockholders’ equity. The Company estimated the fair value of the EBC founder shares to be $30 based
upon the price of the Founder Shares issued to the Sponsor. The holders of the EBC founder shares have agreed not to transfer, assign
or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their conversion
rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination
and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails
to complete a Business Combination within the Combination Period.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The EBC founder shares have been deemed compensation
by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration
statement related to the Initial Public Offering pursuant to FINRA Rule 5110(e)(1). Pursuant to FINRA Rule 5110(e)(1), these
securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic
disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration
statements related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period
of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering except
to any underwriter and selected dealer participating in the Initial Public Offering and their officers or partners, associated persons
or affiliates.
NOTE 8. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share, with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2021, there
were no preferred stock issued or outstanding.
Common Stock — The Company
is authorized to issue 50,000,000 shares of common stock, with a par value of $0.0001 per share. Holders of the common stock are entitled
to one vote for each share. At September 30, 2021, there were 5,363,215 shares of common stock issued and outstanding, excluding 17,118,624
shares of common stock subject to possible redemption, which are presented as temporary equity. As of December 31, 2020, there were 4,125,000
shares issued and outstanding.
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 30 days after the completion of a Business Combination. 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
shares of common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise
unless a registration statement under the Securities Act covering the issuance of the shares of common stock issuable upon exercise of
the warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations
with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless
basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of
the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
is available.
The Company has agreed that as soon as practicable,
but in no event later than 15 business days, after the closing of a Business Combination, it will use its commercially reasonable efforts
to file with the SEC a registration statement covering the issuance, under the Securities Act, of the shares of common stock issuable
upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within
60 business days after the closing of a Business Combination 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.
Once the warrants become exercisable, the Company
may redeem the outstanding Public Warrants:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per Public Warrant;
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each warrant holder and
|
|
●
|
if,
and only if, the last reported sale price of the common stock for any 20 trading days within a 30 trading day period ending on the third
trading day prior to the date on which the Company sends the notice of redemption to warrant holders equals or exceeds $18.00 per share
(as adjusted for dividends, share capitalizations, reorganizations, recapitalizations and the like).
|
If and when the warrants become redeemable by
the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities
for sale under all applicable state securities laws.
The exercise price and number of common 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 common 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.
SPRINGWATER SPECIAL SITUATIONS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
In addition, if (x) the Company issues additional
Class A common 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 common 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 common 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, $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 $18.00 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 Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering.
On April 12, 2021, the SEC Staff issued a statement
with respect to the accounting for warrants issued by special purpose acquisition companies. In light of the SEC Staff’s statement
and upon further review of the warrant agreement, management concluded that the Public Warrants and Private Warrants to be issued pursuant
to the warrant agreement qualify for equity accounting.
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for
its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
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). 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.
|
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at September 30, 2021, and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
September 30,
2021
|
|
Assets:
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
172,906,206
|
|
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review,
the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.