References to the "company," "our," "us" or "we" refer to Corner Growth
Acquisition Corp. 2. The following discussion and analysis of the company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed financial statements and the notes thereto contained
elsewhere in this Quarterly Report on Form 10-Q. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). When used in this Quarterly Report on Form 10-Q,
words such as "may," "should," "could," "would," "expect," "plan," "anticipate,"
"believe," "estimate," "continue," or the negative of such terms or other
similar expressions, as they relate to us or our management, identify forward
looking statements. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other filings with the
Securities and Exchange Commission ("SEC"). Such forward looking statements are
based on the beliefs of management, as well as assumptions made by, and
information currently available to, our management. No assurance can be given
that results in any forward-looking statement will be achieved and actual
results could be affected by one or more factors, which could cause them to
differ materially. The cautionary statements made in this Quarterly Report on
Form 10-Q should be read as being applicable to all forward-looking statements
whenever they appear in this Quarterly Report. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in our filings with the SEC. All subsequent written
or oral forward-looking statements attributable to us or persons acting on our
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on February 10, 2021 (inception) as a
Cayman Islands exempted company for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (a "Business Combination"). While we may
pursue an acquisition opportunity in any business, industry, sector or
geographical location, we focus on industries that complement our management
team's background, and in our search for targets for our Business Combination
seek to capitalize on the ability of our management team to identify and acquire
a business, focusing on the technology industry in the United States and other
developed countries.
The registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on June 16, 2021. On June 21, 2021, we
consummated our Initial Public Offering of 18,500,000 units, at $10.00 per unit,
generating gross proceeds of $185,000,000, and incurring offering costs of
approximately $698,351, inclusive of $6,475,000 in deferred underwriting
commissions. Each unit consists of one Class A ordinary share, par value $0.0001
per share (the "Class A ordinary shares") and one-third of one redeemable
warrant, each whole public warrant entitling the holder thereof to purchase one
Class A ordinary share at a price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement of 4,950,000 private placement warrants at a price of
$1.50 per private placement warrant (the "Private Placement") to our sponsor,
generating gross proceeds of $7,425,000. Each private placement warrant is
exercisable for one Class A ordinary share at a price of $11.50 per share.
Transaction costs amounted to $10,873,351, consisting of $3,700,000 of
underwriting discount, $6,475,000 of deferred underwriting discount, and
$698,351 of other offering costs.
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Upon the closing of the Initial Public Offering and private placement,
$185,000,000 ($10.00 per unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the private placement were placed in the
trust account, located in the United States at UBS Financial Services Inc., with
Continental Stock Transfer & Trust Company acting as trustee, and are only
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 selected by us meeting the conditions of paragraphs (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by
us, until the earlier of: (i) the completion of a Business Combination and
(ii) the distribution of the assets held in the trust account. Our management
has broad discretion with respect to the specific application of the net
proceeds of the Initial Public Offering and the private placement, although
substantially all of the net proceeds are intended to be applied toward
consummating an initial Business Combination.
If we are unable to complete a Business Combination within 12 months from the
closing of the Initial Public Offering, or June 21, 2022, we 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 us to pay for our income
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 shareholders' rights as shareholders (including the right to
receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining shareholders and our board of directors,
proceed to commence a voluntary liquidation and thereby a formal dissolution of
our company, subject in each case to our obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
The Company filed a preliminary proxy statement which began the process for the
shareholders to consider and vote on a proposal to approve the extension of the
date by which the Company must consummate a Business Combination for a total of
up to nine months to March 21, 2023. However, there is no assurance that the
shareholders will ultimately approve an extension.
Liquidity, Capital Resources and Going Concern
As indicated in the accompanying financial statements, at March 31, 2022, we had
$1,001,044 in our operating bank account, and working capital of $989,990, and
$15,481 of unrealized gains on the proceeds deposited in the trust account. We
expect to continue to incur significant costs in pursuit of our initial Business
Combination plans.
Our liquidity needs prior to the consummation of the Initial Public Offering
were satisfied through the proceeds of $25,000 from the sale of the founder
shares, and loans from our sponsor of $100,000. The loan was repaid in full on
August 9, 2021. Subsequent to the consummation of the Initial Public Offering,
our liquidity has been satisfied through the net proceeds received from the
consummation of the Initial Public Offering and the Private Placement that were
not placed in the trust account.
Based on the foregoing, management believes that we may not have sufficient
working capital to meet its needs through the consummation of a Business
Combination. Over this time period, we will be using these funds for paying
existing accounts payable, identifying and evaluating prospective initial
Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
In connection with our assessment of going concern considerations in accordance
with FASB ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," management has determined that the date for
mandatory liquidation and dissolution raise substantial doubt about our ability
to continue as a going concern for a period of time which is considered to be
one year from the issuance of these financial statements. No adjustments have
been made to the carrying amounts of assets or liabilities should the company be
required to liquidate after June 21, 2022, our scheduled liquidation date if we
do not complete the Business Combination prior to such date. The Company filed a
preliminary proxy statement which began the process for the shareholders to
consider and vote on a proposal to approve the extension of the date by which
the Company must consummate a Business Combination for a total of up to nine
months to March 21, 2023. However, there is no assurance that the shareholders
will ultimately approve an extension.
Results of Operations
Our entire activity since inception through March 31, 2022 related to our
formation, Initial Public Offering and, since the closing of our Initial Public
Offering, the search for initial Business Combination candidates. As of March
31, 2022, $1,001,044 was
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held outside the trust account and was being used to fund the company's
operating expenses. We are not generating any operating revenues until the
closing and completion of our initial Business Combination.
For the three months ended March 31, 2022, we had a net income of $7,293,078
which consisted of $15,481 in unrealized gains on marketable securities held in
the trust account, a change in the fair value of warrant liabilities of
$7,830,735, partially offset by $553,138 in operating and formation costs.
For the period February 10, 2021 (inception) to March 31, 2021, we had a net
loss of $10,368 which consisted of operating and formation costs.
Related Party Transactions
Founder Shares
On February 18, 2021, the Sponsor paid $25,000, or approximately $0.005 per
share, to cover certain offering costs in consideration for 5,031,250 Class B
ordinary shares, par value $0.0001 per share (the "Founder Shares"). In March
2021, the Sponsor transferred 50,000 Class B ordinary shares to each of the
company's three independent directors.
The Founder Shares will automatically convert into Class A ordinary shares on
the first business day following the completion of a Business Combination, or
earlier at the option of the holder, on a one-for-one basis, subject to certain
adjustments, as described in Note 7. As a result of the underwriter's election
to partially exercise their over-allotment option, 406,250 Founder Shares were
forfeited for no consideration on June 24, 2021, resulting in 4,625,000 Class B
ordinary shares outstanding. The per share price of the Founder Shares was
determined by dividing the amount contributed to the Company by the number of
Founder Shares issued. The Founder Shares will be worthless if we do not
complete an initial business combination.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign
or sell any of its Founder Shares or Class A ordinary shares received upon
conversion thereof until the earlier of: (A) one year after the completion of a
Business Combination and (B) subsequent to a Business Combination, (x) if the
last reported sale price of the Class A ordinary shares equals or exceeds $12.00
per share (as adjusted for share splits, share dividends, rights issuances,
subdivisions, 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, amalgamation, share exchange, reorganization or other
similar transaction that results in all of the company's shareholders having the
right to exchange their Class A ordinary shares for cash, securities or other
property.
The Company's Founder Shares are subject to transfer restrictions pursuant to
lock-up provisions in a letter agreement with the Company entered into by the
initial shareholders, and officers and directors. The Sponsor has the right to
transfer its ownership in the Founder Shares at any time, and to any transferee,
to the extent that the sponsor determines, in good faith, that such transfer is
necessary to ensure that it and/or any of its parents, subsidiaries or
affiliates are in compliance with the Investment Company Act of 1940. Any
permitted transferees will be subject to the same restrictions and other
agreements of the initial shareholders with respect to any Founder Shares. Prior
to the closing of the IPO, our Sponsor transferred 150,000 Founder Shares to our
three independent directors in recognition of and as compensation for their
future services to the Company. The transfer of Founder Shares to these
directors is within the scope of FASB ASC Topic 718, "Compensation-Stock
Compensation" ("ASC 718"). Under ASC 718, stock-based compensation associated
with equity-classified awards is measured at fair value upon the grant date.
Compensation expense related to the Founder Shares is recognized only when the
performance condition (i.e. the remediation of the lock-up provision) is
probable of achievement under the applicable accounting literature. Stock-based
compensation would be recognized at the date the lock-up provisions have been
remediated, or are probable to be remediated, in an amount equal to the number
of Founder Shares times the grant date fair value per share (unless subsequently
modified) less the amount initially received for the transfer of the Founder
Shares. As of March 31, 2022, the Company has not yet entered into any
definitive agreements in connection with any Business Combination and as such,
the lock-up provisions have not been remediated and are not probable to be
remediated. Any such agreements may be subject to certain conditions to closing,
such as, for example, approval by the Company's shareholders. As a result, the
Company determined that, taking into account that there is a possibility that a
Business Combination might not happen, no stock-based compensation expense
should be recognized.
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Related Party Loans
In order to finance transaction costs in connection with a Business Combination,
our sponsor or an affiliate of our sponsor, or certain of our officers and
directors may, but are not obligated to, loan us funds as may be required
("Working Capital Loans"). If we complete a Business Combination, we would repay
the Working Capital Loans out of the proceeds of the trust account released to
us. Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the trust account. In the event that a Business Combination is not
completed, we may use a portion of the 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 March 31, 2022, there were no outstanding
Working Capital Loans under this arrangement.
Administrative Support Agreement
We agreed, commencing on the effective date of the Initial Public Offering
through the earlier of the company's consummation of a Business Combination and
its liquidation, to pay our sponsor a total of $40,000 per month for office
space, utilities and secretarial and administrative support. We recognized
$120,000 in expenses incurred in connection with the aforementioned arrangements
with the related parties on our Condensed Statements of Operations for the three
months ended March 31, 2022, which is included in operating and formation costs
on the condensed statements of operations. As of March 31, 2022 and December 31,
2021, there were $60,000 in fees outstanding for these services, which is
included in accrued expenses on the condensed balance sheets.
Contractual Obligations
Registration and Shareholder Rights
The holders of founder shares, private placement warrants and warrants that may
be issued upon conversion of Working Capital Loans, if any, will be entitled to
registration rights (in the case of the founder shares, only after conversion of
such shares into Class A ordinary shares) pursuant to a registration and
shareholder rights agreement entered into during the consummation of the Initial
Public Offering. These holders are entitled to certain demand and "piggyback"
registration and shareholder rights. However, the registration and shareholder
rights agreement provides that we will not permit any registration statement
filed under the Securities Act to become effective until the termination of the
applicable lock-up period for the securities to be registered. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The underwriter was entitled to underwriting discounts of $0.20 per unit sold in
the Initial Public Offering, or $3,700,000 in the aggregate, paid upon the
closing of the Initial Public Offering. An additional fee of $0.35 per unit sold
in the Initial Public Offering, or $6,475,000 in the aggregate will be payable
to the underwriter for deferred underwriting commissions. The deferred
underwriting commissions will become payable to the underwriter from the amounts
held in the Trust Account solely in the event that we complete a Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles
("GAAP"). The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of income and expenses during the
reported period. In accordance with GAAP, we base our estimates on historical
experience and on various other assumptions that we believe are reasonable under
the circumstances. Actual results may differ from these estimates under
different assumptions or conditions.
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Our significant accounting policies are fully described in Note 2 to our
unaudited condensed financial statements appearing elsewhere in this Quarterly
Report, and are fully described in Note 2 in our Annual Report on Form 10-K. We
believe those accounting policies are critical to the process of making
significant judgments and estimates in the preparation of these financial
statements. There have been no changes to our significant accounting policies
from our Form 10-K.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements
For the three months ended March 31, 2022, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have
any commitments or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the Public Company Accounting Oversight Board regarding
mandatory audit firm rotation or a supplement to the auditor's report providing
additional information about the audit and the financial statements (auditor
discussion and analysis) and (iv) disclose certain executive compensation
related items such as the correlation between executive compensation and
performance and comparisons of the principal executive officer's compensation to
median employee compensation. These exemptions will apply for a period of
five years following the completion of our Initial Public Offering or until we
are no longer an "emerging growth company," whichever is earlier.
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