CORNER GROWTH ACQUISITION CORP.

(COOL)
Delayed Nasdaq  -  03:45 2022-06-30 pm EDT
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CORNER GROWTH ACQUISITION CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

03/31/2022 | 05:01pm EDT
References to the "company," "Corner Growth," "our," "us" or "we" refer to
Corner Growth Acquisition Corp. 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.

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Table of Contents

Overview

We are a blank check company incorporated on October 20, 2020 (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 December 16, 2020. On December 21, 2020, we consummated the Initial
Public Offering of 40,000,000 Units at $10.00 per Unit, generating gross
proceeds of $400,000,000, and incurring offering costs of approximately
$22,766,000, inclusive of $14,000,000 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.

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 7,600,000 private placement warrants at a price of $1.50 per private placement warrant to the sponsor, generating gross proceeds of $11,400,000. 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, $400,000,000 ($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. and Morgan Stanley, 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 180 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 24 months from the
closing of the Initial Public Offering, or December 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.

Liquidity, Capital Resources and Going Concern

As indicated in the accompanying financial statements, at December 31, 2021, we had $646,558 our operating bank account, and working capital of $810,686, and $142,570 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 have been satisfied prior to the completion of the Initial Public Offering through receipt of a $25,000 capital contribution from our sponsor in exchange for the issuance of the founder shares to our sponsor and a commitment from our sponsor to loan up to $300,000 to us to cover our expenses in connection with our Initial Public Offering. Our sponsor loaned us $120,000 to cover expenses on our behalf under the note agreement. On December 22, 2020, the Company repaid the Note in full.

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 through December 21, 2022, our scheduled liquidation date if we do not complete the Business Combination prior to such date. We intend to complete a Business Combination by December 21, 2022 but cannot guarantee such event. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 21, 2022.

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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, at December 31, 2021 and 2020, 40,000,000 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.

Results of Operations

All activity during the year ended December 31, 2021, was for a search for initial Business Combination candidates. As of December 31, 2021, approximately $647,000 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, 2021, we had a net income of $5,551,863, which consisted of $1,709,425 in general and administrative costs offset by $136,865 in unrealized gains on securities held in the trust account, change in the fair value of warrant liabilities of $7,041,333 and a realized gain on extinguishment of overallotment liability of $83,090.

For the period from October 20, 2020 (inception) to December 31, 2020, we had a net loss of $1,130,197, which consisted of $138,809 in general and administrative costs offset by $5,705 in unrealized gains on securities held in the trust account, transaction costs allocable to warrant liabilities of $787,760, and a change in the fair value of warrant liabilities of $209,333.

Related Party Transactions

Founder Shares

On October 28, 2020, our sponsor paid $25,000, or approximately $0.003 per share, to cover certain expenses on our behalf in consideration of 8,625,000 Class B ordinary shares, par value $0.0001. In November 2020, our sponsor transferred 50,000 Class B ordinary shares to each of our independent directors. On December 16, 2020, we effected a share capitalization of 1,437,500 Class B ordinary shares, resulting in an aggregate of 10,062,500 Class B ordinary shares outstanding. 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 this offering. Up to 1,312,500 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 62,500 Class B ordinary shares for no consideration, resulting in an aggregate of 10,000,000 Class B ordinary shares outstanding as of December 31, 2021. 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.

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Table of Contents

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.

Private Placement Warrants

Concurrently with the closing of the Initial Public Offering, our sponsor purchased 7,600,000 private placement warrants at a price of $1.50 per private placement warrant, generating proceeds of $11,400,000 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 24 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 October 28, 2020, 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 was
non-interest bearing
and payable on the earlier of June 30, 2021 or the completion of the Initial
Public Offering. On October 27, 2020 and December 17, 2020, the Company borrowed
$115,000 and $55,000, respectively, under the Note. On December 22, 2020, the
Company repaid the Note in full. As of December 31, 2021, the Company had no
outstanding balance 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 December 31, 2021, 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 accrued approximately $480,000 and $40,000 in these fees for the year ended December 31, 2021 and for the period from October 20, 2020 (inception) through December 31, 2020, respectively.

On November 18, 2021, the Sponsor permanently waived its right to receive any of the Company's outstanding, and all of the Company's remaining, payment obligations under the administrative services agreement.

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.

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  Table of Contents

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 5,250,000 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
5,000,000 Units.

The underwriters were entitled to underwriting discounts of $0.20 per Unit, or $8,000,000 in the aggregate, paid upon the closing of the Initial Public Offering. An additional fee of $0.35 per Unit, or $14,000,000 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.

Net Income (Loss) 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 (loss) per ordinary share is computed by dividing net income (loss) 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 20,933,333, of the Company's Class A ordinary shares in the calculation of diluted net income (loss) 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 (loss) per share is the same as basic net income (loss) per share for the years ended December 31, 2021 and 2020. Accretion associated with the Class A ordinary shares subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value.


Off-Balance
Sheet Arrangements

As of December 31, 2021, 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
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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