References to the "company," "Corner Growth," "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 financial statements and the notes thereto contained
elsewhere in this Annual Report on Form 10-K. 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
All statements other than statements of historical fact included in this Annual
Report on Form 10-K including, without limitation, statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking
statements. When used in this Annual Report on Form 10-K, 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 SEC filings. 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
Annual Report on Form 10-K should be read as being applicable to all
forward-looking statements whenever they appear in this Annual Report on Form
10-K. For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act. 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 (the "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 was declared
effective on June 16, 2021. On June 21, 2021, we consummated the 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 $10,873,351, inclusive of
$6,475,000 in deferred underwriting commissions. Each Unit consists of one Class
A ordinary share and one-half of one redeemable warrant. Each whole public
warrant entitles the holder to purchase one Class A ordinary share at a price of
$11.50 per share, subject to adjustment.
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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 to the 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.
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 J.P. Morgan Chase Bank, N.A.,
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.
On May 17, 2022, the Company entered into a non-binding letter of intent (the
"Letter of Intent") with a differentiated food tech platform (the "Target") for
an initial business combination. The Target is a vertically integrated producer
of premium bulk grains, value-added ingredients, and CPG goods, driving
fundamental change with significant attention around supply chain certainty,
food security, plant-based foods and ESG, and the Company believes the Target is
a compelling investment opportunity given its vertical integration, commercial
opportunity and macro tailwinds. The Company is continuing to pursue this
opportunity.
On June 15, 2022, the Extraordinary General Meeting which amended the amended
and restated memorandum and articles of association to extend the date by which
the Company must consummate its initial business combination from June 21, 2022
(the "Original Termination Date") to March 21, 2023 (the "First Extended Date").
As part of the Extraordinary General Meeting, shareholders elected to redeem
11,093,735 Class A ordinary shares, resulting in redemption payments out of the
Trust Account totaling $111,062,537, or approximately $10.01 per share which
includes $125,817 of earnings in the Trust Account not previously withdrawn.
Subsequent to the redemptions, 7,406,265 Class A ordinary shares remained issued
and outstanding. In order to support the extension to consummate an initial
Business Combination to the First Extended Date, our sponsor agreed to deposit
$244,407 into the Trust Account, which is an aggregate of $0.033 per Class A
ordinary share for each month of the extension period up to and until October
21, 2022, pro-rated for partial months during the extension period, resulting in
a maximum contribution of $977,627, or $0.132 per share of Class A ordinary
shares that was not redeemed in connection with the Extraordinary General
Meeting. Contributions in the amount of $0.033 per Class A ordinary shares were
funded on each of June, July, August and September 21, 2022. If the Company did
not consummate its initial business combination as of October 21, 2022, the
holders of Class A ordinary shares then outstanding will be provided with the
opportunity to redeem their Class A ordinary shares on or about October 21,
2022. On October 21, 2022, the Company launched the Tender Offer to purchase and
redeem its Class A ordinary shares at a purchase price of $10.21 per share of
Class A ordinary shares, net to seller in cash and without interest upon the
terms and subject to the conditions set forth in the Tender Offer. The Tender
Offer expired at 5:00 p.m., Eastern time, on January 6, 2023. A total of
4,101,830 Class A ordinary shares were validly tendered and not withdrawn in the
Tender Offer. The Company accepted for purchase all such Class A ordinary shares
at a purchase price of $10.21 per share for an aggregate purchase price of
approximately $41,879,684.30.
If we are unable to complete a business combination by the Second Extended Date,
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.
Liquidity, Capital Resources and Going Concern
As indicated in the accompanying financial statements, at December 31, 2022, we
had $117,686 our operating bank account, and working capital deficit of
$2,388,329, and $1,188,378 of earnings and realized gain on marketable
securities held in the trust account. We expect to continue to incur significant
costs in pursuit of our initial Business Combination plans.
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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 of the
private placement warrants that were not placed in the trust account.
In connection with our assessment of going concern considerations in accordance
with FASB ASC Subtopic 205-40, "Presentation of Financial Statements -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. The Company demonstrates adverse
conditions that raise substantial doubt about the Company's ability to continue
as a going concern for one year following the issuance of these financial
statements. These adverse conditions are negative financial trends, specifically
working capital deficiency and other adverse key financial ratios. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after the Second Extended Date.
Critical Accounting Policies
Class A Ordinary Shares subject to possible redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities
from Equity" ("ASC 480"). Class A ordinary shares subject to mandatory
redemption (if any) are classified as liability instruments and are measured at
fair value. Conditionally redeemable Class A ordinary shares (including Class A
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, Class A ordinary shares are classified as shareholders' equity. Our
Class A ordinary shares feature certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of December 31, 2022, 7,406,265 Class A ordinary shares
subject to possible redemption at the redemption amount are presented as
temporary equity, outside of the shareholders' equity section of our balance
sheet.
Immediately upon the closing of the Initial Public Offering, we recognized the
accretion from initial carrying value to redemption amount. The change in the
carrying value of redeemable shares of Class A ordinary shares resulted in
charges against additional paid-in capital and accumulated deficit.
Warrant Liabilities
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in FASB ASC 480 and ASC
815. The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the
Company's own ordinary shares and whether the warrant holders could potentially
require "net cash settlement" in a circumstance outside of the Company's
control, among other conditions for equity classification. This assessment,
which requires the use of professional judgment, is conducted at the time of
warrant issuance and as of each subsequent quarterly period end date while the
warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations.
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Net Income Per Ordinary Share
We have two classes of shares: Class A ordinary shares and Class B ordinary
shares. Income and losses are shared pro rata between the two classes of shares.
Net income per ordinary share is computed by dividing net income by the
weighted-average number of ordinary shares outstanding during the periods. We
have not considered the effect of the warrants sold in the Initial Public
Offering and the Private Placement to purchase an aggregate of 11,116,667, of
the Company's Class A ordinary shares in the calculation of diluted net income
per share, because their exercise is contingent upon future events and their
inclusion would be anti-dilutive under the treasury stock method. As a result,
diluted net income per share is the same as basic net income per share for the
years ended December 31, 2022 and 2021. Remeasurement associated with the Class
A ordinary shares subject to possible redemption is excluded from earnings per
share as the redemption value approximates fair value.
Results of Operations
All activity during the year ended December 31, 2022, was in preparation for our
formation, the Initial Public Offering and, since the closing of our Initial
Public Offering, a search for initial Business Combination candidates. As of
December 31, 2022, $117,686 was 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 year ended December 31, 2022, we had a net income of $6,808,587 which
consisted of $1,188,378 in earnings and realized gain on marketable securities
held in the trust account, a change in the fair value of warrant liabilities of
$9,670,963, partially offset by $4,050,754 in operating and formation costs.
For the period February 10, 2021 (inception) through December 31, 2021, we had a
net income of $1,752,760, which consisted of $20,263 in earnings and realized
gain on marketable securities held in the trust account, realized gain on
extinguishment of overallotment liability of 185,409, a change in the fair value
of warrant liabilities of $3,384,315, partially offset by $1,389,224 in
operating and formation costs and transaction costs allocable to warrant
liabilities of $448,003.
Related Party Transactions
Founder Shares
On February 18, 2021, our sponsor paid $25,000, or approximately $0.005 per
share, to cover certain expenses on our behalf in consideration of 5,031,250
Class B ordinary shares, par value $0.0001. In March 2021, our sponsor
transferred 50,000 Class B ordinary shares to each of our independent directors.
The number of founder shares issued was determined based on the expectation that
such founder shares would represent 20% of the issued and outstanding shares
upon completion of the Initial Public Offering. Up to 656,250 of the Class B
ordinary shares outstanding were subject to forfeiture by our sponsor to the
extent that the underwriters' over-allotment in connection with the Initial
Public Offering was not exercised in full or in part. As a result of the
underwriters' election to partially exercise their over-allotment option, the
sponsor forfeited 406,250 Class B ordinary shares for no consideration,
resulting in an aggregate of 4,625,000 Class B ordinary shares outstanding as of
December 31, 2022. On March 10, 2023, pursuant to the terms of the amended and
restated memorandum and articles of association of the Company, the sponsor
elected to convert its 4,475,000 shares of Class B ordinary shares on a
one-for-one basis into Class A ordinary shares of the Company, with immediate
effect. In connection with the conversion, the Sponsor has agreed to certain
transfer restrictions, a waiver of redemption rights, a waiver of any right to
receive funds from the trust account and the obligation to vote in favor of an
initial business combination. The founder shares (including the Class A ordinary
shares issuable upon exercise thereof) may not, subject to certain limited
exceptions, be transferred, assigned or sold by the holder.
The initial shareholders agreed, subject to limited exceptions, not to transfer,
assign or sell any of their founder shares until the earlier to occur of: (A)
one year after the completion of the initial Business Combination or (B)
subsequent to the initial Business Combination, (x) if the last sale price of
the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for
share splits, share dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150
days after the initial Business Combination, or (y) the date on which we
complete a liquidation, merger, share exchange or other similar transaction that
results in all of our shareholders having the right to exchange their ordinary
shares for cash, securities or other property.
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The 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 Initial Public Offering, 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 December 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.
Private Placement Warrants
Concurrently with the closing of the Initial Public Offering, our sponsor
purchased 4,950,000 private placement warrants at a price of $1.50 per private
placement warrant, generating proceeds of $7,425,000 in the private placement.
Each private placement warrant is exercisable for one Class A ordinary share at
a price of $11.50 per share. A portion of the proceeds from the sale of the
private placement warrants was added to the proceeds from the Initial Public
Offering held in the trust account. If we do not complete a business combination
within 12 months after the closing of our Initial Public Offering, the private
placement warrants will expire worthless. The private placement warrants will be
non-redeemable and exercisable on a cashless basis so long as they are held by
our sponsor or its permitted transferees.
Our sponsor and our officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their private placement
warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On February 24, 2021, the Sponsor agreed to loan the Company up to $300,000 to
cover expenses related to the Initial Public Offering pursuant to a promissory
note (the "Note"). This loan is non-interest bearing and payable on the earlier
of September 30, 2021 or the completion of the Initial Public Offering. As of
December 31, 2022, the Company has no amount outstanding under the Note.
In addition, 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 the filing December 31,
2022, there were no outstanding Working Capital Loans under this arrangement.
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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 (A) $40,000 per month and
continuing monthly until the termination Date, and (B) on the termination Date,
an amount equal to $480,000 less any amounts previously paid by the Company for
office space, utilities and secretarial and administrative support. We
recognized $259,333 and $220,667 in expenses incurred in connection with the
aforementioned arrangements with the related parties on our statements of
operations for the period from February 10, 2021 (inception) to December 31,
2021 and for the year ended December 31, 2022, respectively, which is included
in operating and formation costs on the condensed statements of operations. As
of December 31, 2021 and December 31, 2022, there were $60,000 and $0,
respectively in fees outstanding for these services, which is included in due to
related party on the balance sheets.
Operating and Formation Costs
During the year ended December 31, 2022, our sponsor and affiliates of our
sponsor also paid operating and formation costs of $237,500 on behalf of the
Company. These amounts are included in due to related party on the condensed
balance sheet as of December 31, 2022.
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, are 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 upon 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 may 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
We granted the underwriters a 45-day option from the date of the final
prospectus relating to the Initial Public Offering to purchase up to 2,625,000
additional Units to cover over-allotments, if any, at $10.00 per Unit, less
underwriting discounts and commissions. The underwriters partially exercised
their option and purchased an additional 1,000,000 Units.
The underwriters were entitled to underwriting discounts of $0.20 per Unit, or
$3,700,000 in the aggregate, paid upon the closing of the Initial Public
Offering. An additional fee of $0.35 per Unit, or $6,475,000 in the aggregate
will be payable to the underwriters for deferred underwriting commissions. The
deferred underwriting commissions will become payable to the underwriters 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.
Off-Balance Sheet Arrangements
As of December 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
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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 PCAOB 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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CORNER GROWTH ACQUISITION CORP. 2 