References to the "company," "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 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 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 (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 December 16, 2020. On December 21, 2020, we
consummated our 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, 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 7,600,000 private placement warrants at a price of
$1.50 per private placement warrant (the "Private Placement") to our 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
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
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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 March 31, 2022, we had
$223,735 in our operating bank account, and working capital of $223,735, and
approximately $33,752 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 approximately $120,000. The loan was
repaid in full on December 22, 2020. Subsequent from 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.
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 through a reasonable period of time, which is
considered one year from the issuance of these financial statements. Our
scheduled liquidation date is December 21, 2022. 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.
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, $261,199 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 at the
earliest.
For the three months ended March 31, 2022, we had a net income of $7,896,134,
which consisted of $33,752 in unrealized gains on marketable securities held in
the trust account, a change in the fair value of warrant liabilities of
$8,449,333, and $586,951 in operating and formation costs.
For the three months ended March 31, 2021, we had a net income of $408,648,
which consisted of $69,530 in unrealized gains on marketable securities held in
the trust account, a change in the fair value of warrant liabilities of
$837,333, and $498,215 in operating and formation costs.
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Related Party Transactions
Founder Shares
On October 28, 2020, the Sponsor paid $25,000, or approximately $0.003 per
share, to cover certain offering costs in consideration for 8,625,000 Class B
ordinary shares, par value $0.0001 per share (the "Founder Shares"). In November
2020, the Sponsor transferred 50,000 Class B ordinary shares to each of the
Company's independent directors. On December 16, 2020, the Company effected a
share capitalization, resulting in 10,062,500 Founder Shares issued and
outstanding as of such date. 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 underwriters' election to partially exercise their over-allotment option,
62,500 Founder Shares were forfeited for no consideration on December 23, 2020,
resulting in 10,000,000 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 stockholders, 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 stockholders 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.
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. On November 18,
2021, the Sponsor waived its right to receive any of the Company's remaining,
payment obligations under the Administrative Services Agreement. For the three
months ended March 31, 2022 and 2021, the Company incurred $120,000 in fees for
these services, 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 $0 in fees outstanding for these services.
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 will be 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 $8,000,000 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 $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.
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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 condensed 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.
Our significant accounting policies are fully described in Note 2 to our
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 our condensed 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 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
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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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