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.
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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.
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.
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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.
Liquidity, Capital Resources and Going Concern
As indicated in the accompanying financial statements, at December 31, 2021, we
had $1,268,509 our operating bank account, and working capital of $1,403,792,
and $20,263 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. As of December 31, 2021, the
Company has no amounts outstanding under such loan.
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 June 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 June 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 June 21, 2022.
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, 18,500,000 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.
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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 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, 2021, $1,268,509 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 period from February 10, 2021 (inception) to December 31, 2021, we had a
net income of $1,752,760, which consisted of $1,389,224 in general and
administrative costs offset by $20,263 in unrealized gains on securities held in
the trust account, transaction costs allocable to warrant liabilities of
$448,003, a realized gain on the extinguishment of overallotment liability of
$185,409, and a change in the fair value of warrant liabilities of $3,384,315.
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 this 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, 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.
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 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.
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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, 2021, 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 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 recognized
$259,333 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.
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.
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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
11,116,667, 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.
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.
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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