UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (Commission | (I.R.S. Employer |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading |
| Name of each exchange |
N/A | ||||
N/A | ||||
N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 14, 2024,
CORNER GROWTH ACQUISITION CORP. 2
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
i
PART I—FINANCIAL INFORMATION
Item 1.Financial Statements.
CORNER GROWTH ACQUISITION CORP. 2
CONDENSED BALANCE SHEETS
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
(unaudited) | ||||||
ASSETS |
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Current assets |
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Cash | $ | | $ | | ||
Prepaid expenses |
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Total current assets |
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Cash and marketable securities held in trust account |
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Total Assets | $ | | $ | | ||
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT |
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Current liabilities |
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Accounts payable | $ | | $ | | ||
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Accrued expenses |
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Total current liabilities | | | ||||
Warrant liabilities |
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Deferred underwriting fee payable |
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Total Liabilities | | | ||||
COMMITMENTS AND CONTINGENCIES |
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Class A ordinary shares subject to possible redemption, | | | ||||
Shareholders’ Deficit |
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Preference Shares, $ |
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Class A ordinary Shares, $ |
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Class B ordinary Shares, $ |
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Additional paid-in capital |
| — |
| — | ||
Accumulated deficit |
| ( |
| ( | ||
Total Shareholders’ Deficit | ( | ( | ||||
TOTAL LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO REDEMPTION AND SHAREHOLDERS’ DEFICIT | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements
1
CORNER GROWTH ACQUISITION CORP. 2
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
For the three | For the six | For the three | For the six | |||||||||
months ended | months ended | months ended | months ended | |||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||
| 2024 |
| 2024 |
| 2023 |
| 2023 | |||||
Operating and formation costs | $ | ( |
| $ | ( |
| $ | ( |
| $ | ( | |
Loss from operations | ( | ( | ( | ( | ||||||||
Other income (loss): |
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Earnings and realized gain on marketable securities held in Trust Account | | | | | ||||||||
Change in fair value of warrant liabilities |
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Net income (loss) | $ | | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted weighted average shares outstanding of Class A redeemable ordinary shares |
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Basic and diluted net income (loss) per Class A redeemable ordinary share | $ | | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted weighted average shares outstanding of Class A nonredeemable ordinary shares and Class B ordinary shares |
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Basic and diluted net income (loss) per Class A nonredeemable ordinary share and Class B ordinary share | $ | | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements
2
CORNER GROWTH ACQUISITION CORP. 2
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Class A | Class B | Total | |||||||||||||||||
Ordinary Shares | Ordinary Shares | Additional Paid- | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| in Capital |
| Deficit |
| Equity (Deficit) | ||||||
Balance, January 1, 2024 | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income (loss) | — | — | — | — | — | ( | ( | ||||||||||||
Balance, March 31, 2024 |
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| | | — | ( | ( | ||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income (loss) | — | — | — | — | — | | | ||||||||||||
Balance, June 30, 2024 | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
Balance, January 1, 2023 | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||
Conversion of Class B ordinary shares to Class A ordinary shares | | | ( | ( | — | — | — | ||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income (loss) | — | — | — | — | — | ( | ( | ||||||||||||
Balance, March 31, 2023 | | | | | — | ( | ( | ||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income (loss) | — | — | — | — | — | ( | ( | ||||||||||||
Balance, June 30, 2023 |
| | $ | |
| | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements
3
CORNER GROWTH ACQUISITION CORP. 2
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
For the six | For the six | |||||
months ended | months ended | |||||
June 30, | June 30, | |||||
| 2024 |
| 2023 | |||
Cash Flows from Operating Activities |
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Net income (loss) | $ | ( | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Earnings and realized (gain) loss on marketable securities held in Trust Account |
| ( | ( | |||
Change in fair value of warrant liabilities |
| — | | |||
Changes in operating assets and liabilities: |
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Accounts payable and accrued expenses | | | ||||
Prepaid expenses |
| ( | ( | |||
Due to related party | | | ||||
Net cash used in operating activities |
| ( | ( | |||
Cash Flows from Investing Activities | ||||||
Investment of cash in Trust Account | ( | ( | ||||
Proceeds received from Trust Account | | | ||||
Net cash provided by investing activities | | | ||||
Cash Flows from Financing Activities |
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Proceeds received from Sponsor for Trust Account contributions | | | ||||
Payments to Class A ordinary shareholders for redemption of shares | ( | ( | ||||
Payment of offering costs |
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Net cash used in financing activities |
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Net change in cash |
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Cash at beginning of the period |
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Cash at end of the period | $ | | $ | | ||
Non-cash financing activities: |
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Remeasurement of Class A ordinary shares subject to possible redemption | $ | | $ | | ||
Conversion of Class B ordinary shares to Class A ordinary shares | $ | — | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements
4
CORNER GROWTH ACQUISITION CORP. 2
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2024
Note 1—Description of Organization, Business Operations and Basis of Presentation
Corner Growth Acquisition Corp. 2 (the “Company”), was incorporated as a Cayman Islands exempted company on
Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus on businesses in the technology industries primarily located in the United States.
As of June 30, 2024, the Company had not commenced any operations. All activity for the period through June 30, 2024 relates to the Company’s formation and the initial public offering described below (the “Initial Public Offering”), and to the Company’s search for a Business Combination target. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of earnings and realized gain (loss) on marketable securities held in the Trust Account from the proceeds derived from the Initial Public Offering and will recognize changes in the fair value of warrant liabilities as other income (loss). The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s Initial Public Offering was declared effective on June 16, 2021. On June 21, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
Following the closing of the Initial Public Offering on June 21, 2021, an amount of $
5
The Company will provide holders (the “Public Shareholders”) of its Class A ordinary shares, par value $
Notwithstanding the foregoing, the Amended and Restated Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined in Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Company’s Sponsor, officers and directors (the “initial shareholders”) have agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (A) that would modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial business combination or to redeem
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. On April 3, 2023, the Letter of Intent between the Company and the Target was terminated. The Company is continuing to pursue other opportunities.
6
On June 15, 2022, the Company held an extraordinary general meeting (the “June 2022 Extraordinary General Meeting”) which amended the Company’s 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 “June 2022 Extension Amendment Proposal”). As part of the June 2022 Extraordinary General Meeting, shareholders elected to redeem
On January 6, 2023, the 2022 Tender Offer expired (the “Expiration Time”). A total of
On March 10, 2023, pursuant to the terms of the amended and restated memorandum and articles of association of the Company, the Sponsor, the holder of an aggregate of
On March 15, 2023, the Company held an extraordinary general meeting of shareholders (the “March 2023 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association (the “Second Articles Amendment”) to extend the date by which the Company has to consummate a business combination from March 21, 2023 to March 21, 2024 (the “March 2023 Extension Amendment Proposal”). The shareholders of the Company approved the March 2023 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal at the March 2023 Extraordinary General Meeting and on March 15, 2023, the Company filed the Second Articles Amendment with the Cayman Islands Registrar of Companies.
As part of the March 2023 Extraordinary General Meeting, shareholders elected to redeem
The Company and the Sponsor have agreed that they will deposit into the Trust Account an amount equal to the lesser of (i) $
7
On March 8, 2024, the Company held an extraordinary general meeting of shareholders (the “March 2024 Extraordinary General Meeting,”), to amend the Company’s amended and restated memorandum and articles of association to extend the date by which the Company has to consummate a business combination from March 21, 2024 to December 31, 2024 (the “March 2024 Extension Amendment Proposal”) and eliminate the limitation that the Company shall not redeem Class A Ordinary Shares included as part of the units sold in the IPO to the extent that such redemption would cause the Company’s net tangible assets to be less than $
As part of the March 2024 Extraordinary General Meeting, shareholders elected to redeem
On February 22, 2024, the Company received a letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Company no longer meets the minimum
On May 10, 2024, the Company received a letter (the “Second Notice”) from the Listing Qualifications Department of Nasdaq notifying the Company that the Company no longer meets the minimum 500,000 publicly held shares requirement for The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(4) (the “Minimum Publicly Held Shares Requirement”). On June 24, 2024, the Company submitted a plan to regain compliance with the Minimum Publicly Held Shares Requirement. The Second Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on The Nasdaq Capital Market.
On June 17, 2024, the Company received a notice from the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”), the Company’s securities (shares, warrants, and rights) would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on June 26, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. On June 24, 2024, the Company submitted to Nasdaq a request for a hearing before the Panel to request additional time to complete a business combination, resulting in a stay of any suspension or delisting action pending the hearing. The Panel met to review the appeal on July 25, 2024 and is still considering the merits of the appeal, resulting in a stay of any suspension or delisting action while the appeal is still pending (see Note 9 to the notes to the unaudited condensed financial statements for more information).
If the Company is unable to complete a Business Combination by December 31, 2024 the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
8
The initial shareholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders or members of the Company’s management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amount will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $
Liquidity and Going Concern
As of June 30, 2024, the Company had $
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. Based on its current cash and working capital balances, management believes that the Company will not have sufficient working capital to meet its needs through the consummation of a Business Combination.
In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. The terms of such loans have not been determined and no written agreements exist with respect to such loans. However, as discussed in Note 4, as of June 30, 2024, the Company is indebted to the Sponsor and its affiliates for $
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 unaudited condensed financial statements. The Company also demonstrates other 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 unaudited condensed financial statements. These other 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 or classification of assets or liabilities should the Company be required to liquidate after December 31, 2024, our scheduled liquidation date if we do not elect to extend the Third Extended Date or complete the Business Combination prior to such date.
9
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 1, 2024. The accompanying condensed balance sheet as of December 31, 2023 has been derived from the audited financial statements. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. All of the Company’s cash and marketable securities held in Trust Account are considered cash equivalents as of June 30, 2024. The Company did
Marketable Securities Held in Trust Account
At December 31, 2023, substantially all of the assets held in the Trust Account were held in cash or in a money market mutual fund in U.S. based trust accounts at UBS Financial Services, Inc. with Continental Stock Transfer & Trust Company acting as trustee. On April 1, 2024, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash (i.e., in one or more bank accounts). As a result, the cash was transferred from UBS Financial Services, Inc. to Morgan Stanley. At June 30, 2024, substantially all of the assets held in the Trust Account were held in U.S. based trust accounts at Morgan Stanley with Continental Stock Transfer & Trust Company acting as trustee.
The Company accounts for its securities held in the Trust Account in accordance with the guidance in ASC Topic 320, “Investments – Debt Securities.” These securities are classified as trading securities with earnings and realized gain (loss) recognized through other income. The Company values its securities held in the Trust Account based on quoted prices in active markets (see Note 8 for more information).
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, Derivatives and Hedging (“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.
10
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 as liabilities 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 condensed statements of operations. There were no changes to the classification during the three and six months ended June 30, 2024.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480. Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including 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 the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to redemption amount. The change in the carrying value of Class A ordinary shares subject to possible redemption resulted in charges against additional paid-in capital and accumulated deficit.
At December 31, 2023 and June 30, 2024, the Class A ordinary shares subject to possible redemption reflected in the condensed balance sheets are reconciled in the following tables, respectively:
| Shares |
| Amounts | ||
Class A ordinary shares subject to possible redemption – December 31, 2023 | | $ | | ||
Less: |
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Redemption of Class A Ordinary shares | ( | ( | |||
Plus: |
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Remeasurement of Class A ordinary shares subject to redemption | — |
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Sponsor contribution | — | | |||
Class A ordinary shares subject to possible redemption – June 30, 2024 | | $ | |
As part of the March 2024 Extraordinary General Meeting, shareholders elected to redeem
As discussed further in Note 1, the Sponsor has made contributions to the Trust Account in connection with previous amendments to the Company’s Amended and Restated Articles of Association to extend the date by which the Company must consummate its initial business combination.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. As of June 30, 2024, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks.
11
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Fair value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman Islands income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
12
Net Income (Loss) Per Ordinary Share
The Company has two classes of shares: Class A ordinary shares (some of which are subject to possible redemption) and Class B ordinary shares. Income and losses are shared pro rata between the two classes. Net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of
The Company’s condensed statement of operations includes a presentation of income (loss) per share for ordinary shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income (loss) per share, basic and diluted, for stock subject to possible redemption is calculated by dividing the proportionate share of income (loss) by the weighted average number of ordinary shares subject to possible redemption outstanding since original issuance. As a result, diluted earnings (loss) per ordinary share is the same as basic earnings (loss) per ordinary share for the periods presented. Remeasurement associated with the Class A ordinary shares subject to possible redemption is excluded from earnings or loss per share as the redemption value approximates fair value. For basic earnings or loss per share, shares subject to forfeiture are not included in the weighted average shares outstanding until the restriction lapses.
The following table reflects the calculation of basic and diluted net income (loss) per share (in dollars, except per share amounts):
For the three months ended | For the six months ended | For the three months ended | For the six months ended | ||||||||||||||||||||||
June 30, 2024 | June 30, 2024 | June 30, 2023 | June 30, 2023 | ||||||||||||||||||||||
| Class A | Class A | Class A | Class A |
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Class A | Nonredeemable | Class A | Nonredeemable | Class A | Nonredeemable | Class A | Nonredeemable | ||||||||||||||||||
| Redeemable |
| and Class B |
| Redeemable |
| and Class B |
| Redeemable |
| and Class B |
| Redeemable |
| and Class B | ||||||||||
Basic and diluted net income (loss) per ordinary share: | |||||||||||||||||||||||||
Numerator: |
| ||||||||||||||||||||||||
Allocation of net income (loss) | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Denominator: | |||||||||||||||||||||||||
Basic and diluted weighted average ordinary shares outstanding | | | | | | | | | |||||||||||||||||
Basic and diluted net income (loss) per ordinary share | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
Recent Accounting Pronouncements
In June 2016, FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For emerging growth companies, the new guidance is effective for annual periods beginning after January 1, 2023. The Company adopted ASU 2016-13 as of January 1, 2023, with no material impact to its condensed financial statements.
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
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Risks and Uncertainties
The current conflicts in Russia and Ukraine, as well as Israel and Gaza, resulting sanctions and related countermeasures by the United States and other countries could to lead to market disruptions, including significant volatility in the credit and capital markets and the economy in general, which could have an adverse impact on the operations and financial performance of our potential Business Combination targets and our Company.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering, the Company sold
Note 4 — Related Party Transactions
Founder Shares
On February 18, 2021, the Sponsor paid $
On March 10, 2023, pursuant to the terms of the amended and restated memorandum and articles of association of the Company, the Sponsor, the holder of an aggregate of
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)
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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 Initial Public Offering, our Sponsor transferred
Promissory Note – Related Party
On February 22, 2021, the Sponsor agreed to loan the Company up to $
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors, may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans. In the event that a Business Combination does not close, the Company may use a portion of 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 $
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Administrative Services Agreement
Pursuant to an administrative services agreement (the “Administrative Services Agreement”) entered into on June 16, 2021, the Company has agreed to pay the Sponsor a total of (A) $
Operating and Formation Costs
Through June 30, 2024, the Sponsor and affiliates of the Sponsor also paid operating and formation costs of $
Note 5 — Commitments
Registration Rights
The holders of Founder Shares, Private Placement Warrants, Class A ordinary shares held by the initial shareholders as a result of the conversion of their Class B ordinary shares and securities that may be issued upon conversion of Working Capital Loans, if any, are entitled to registration rights pursuant to a registration rights agreement entered in connection with the Initial Public Offering. These holders are entitled to make up to
Underwriting Agreement
The underwriters are entitled to a deferred fee of $
Note 6 — Warrant Liabilities
The Company has accounted for the
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The Public Warrants will become exercisable at $
The warrants will expire
The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend or recapitalization, reorganization, merger or consolidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital-raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the ordinary shares issuable upon exercise of the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until
Once the warrants become exercisable, the Company may call the Public Warrants for redemption (except with respect to the Private Placement Warrants if they are held by the Sponsor or its permitted transferees):
● | in whole and not in part; |
● | at a price of $ |
● | upon a minimum of |
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● | if, and only if, the last reported sale price (the “closing price”) of the Class A ordinary shares equals or exceeds $ |
In addition, once the warrants become exercisable, the Company may call the warrants for redemption:
● | in whole and not in part; |
● | at $ |
● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
● | if the closing price of the Class A ordinary shares for any |
The “fair market value” of the Class A ordinary shares for the above purpose shall mean the volume-weighted average price of the Class A ordinary shares during the
If the Company calls the Public Warrants for redemption, management has the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. Additionally, in no event is the Company to be required to net cash settle any Warrants. If the Company is unable to complete the initial Business Combination by December 31, 2024 and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7 — Shareholders’ Deficit
Preference Shares — The Company is authorized to issue
Class A Ordinary Shares — The Company is authorized to issue
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Class B Ordinary Shares — The Company is authorized to issue
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a
Note 8 — Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Description |
| Level |
| June 30, 2024 |
| December 31, 2023 | ||
Assets: |
|
|
|
|
|
| ||
Cash and marketable securities held in Trust Account |
| 1 | $ | | $ | |
At June 30, 2024 and December 31, 2023, $
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The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at June 30, 2024 and at December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Description |
| Level |
| June 30, 2024 |
| Level |
| December 31, 2023 | ||
Liabilities: |
|
|
|
| ||||||
Warrant liability – Public Warrants |
| 1 | $ | | 1 | $ | | |||
Warrant liability – Private Placement Warrants |
| 2 | $ | | 2 | $ | | |||
Total liabilities | $ | | $ | |
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within the warrant liabilities on the condensed balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed statements of operations.
Initial Measurement and Subsequent Measurement
The Company established the initial fair value for the Public Warrants on June 21, 2021, the date of the consummation of the Company’s Initial Public Offering, using a Monte Carlo simulation model. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of
The Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of June 30, 2024 and December 31, 2023 are classified as Level 1 due to quoted prices in an active market. The Private Placement Warrants as of June 30, 2024 and December 31, 2023 are classified as Level 2 due to the use of quoted prices for similar assets that are not active.
The Monte Carlo model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. For periods subsequent to the detachment of the warrants from the Units, the close price of the public warrant price was used as the fair value as of each relevant date.
As of December 31, 2023, the fair value of the Public Warrants and Private Placement Warrants were determined to be $
As of June 30, 2024, the fair value of the Public Warrants and Private Placement Warrants were determined to be $
Level 3 financial liabilities consist of the Private Placement Warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. For the year ended December 31, 2023, the Private Placement Warrants were valued based on quoted prices for similar assets and have been transferred out of Level 3. The warrants remained in Level 2 for the three and six months ended June 30, 2024.
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The change in fair value of the Level 3 warrant liabilities for the year ended December 31, 2023 is summarized as follows:
Change in fair value of warrant liability |
| ||
Warrant liability at December 31, 2022 | $ | | |
| |||
Warrant liability at March 31, 2023 | $ | | |
( | |||
Warrant liability at December 31, 2023 | | ||
Transfer out of warrant liability at December 31, 2023 | ( | ||
Warrant liability at December 31, 2023 | $ | |
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred up to the date financial statements were issued. Based upon this review, the Company did not identify any other subsequent events, not previously disclosed, that would have required adjustment or disclosure in the financial statements, except described below.
On August 13, 2024, the Company received a determination letter (the ”Delisting Notification”) from Nasdaq stating that the Nasdaq Hearings Panel has determined to delist the Company’s securities from Nasdaq, due to the company’s non-compliance with the Minimum Publicly Held Shares Requirement and Nasdaq’s IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. Nasdaq determined to remove from listing our securities, effective at the opening of business on August 14, 2024, because the Company did not demonstrate compliance with such continued listing requirement. Nasdaq will complete the delisting by filing a Form 25 Notification of Delisting with the SEC, after applicable appeal periods have lapsed, which will remove the Company’s securities from listing and registration on Nasdaq. As of August 14, 2024, Nasdaq had not filed the Form 25.
Pursuant to the Delisting Notification, the Company has a period of 15 days from the date of the Delisting Notification to submit a written request for a review of the Nasdaq Hearings Panel’s delisting determination by the Nasdaq Listing and Hearing Review Council (the “Listing Council”). In addition, Nasdaq may, on its own motion, determine to review the Nasdaq Hearings Panel’s decision within 45 days after the Company was notified of the decision. Notwithstanding, the Company’s request for a review will not stay the decision of the Panel.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to Corner Growth Acquisition Corp. 2. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2023. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all forward-looking statements whenever they appear in this Quarterly Report. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on February 10, 2021 (inception) as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we focus on industries that complement our management team’s background, and in our search for targets for our Business Combination seek to capitalize on the ability of our management team to identify and acquire a business, focusing on the technology industry in the United States and other developed countries.
The registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on June 16, 2021. On June 21, 2021, we consummated our Initial Public Offering of 18,500,000 units, at $10.00 per unit, generating gross proceeds of $185,000,000, and incurring offering costs of approximately $698,351, inclusive of $6,475,000 in deferred underwriting commissions. Each unit consists of one Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”) and one-third of one redeemable warrant, each whole public warrant entitling the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 4,950,000 private placement warrants at a price of $1.50 per private placement warrant (the “Private Placement”) to our sponsor, generating gross proceeds of $7,425,000. Each private placement warrant is exercisable for one Class A ordinary share at a price of $11.50 per share.
Transaction costs amounted to $10,873,351, consisting of $3,700,000 of underwriting discount, $6,475,000 of deferred underwriting discount, and $698,351 of other offering costs.
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Upon the closing of the Initial Public Offering and private placement, $185,000,000 ($10.00 per unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the private placement were placed in the Trust Account, located in the United States at UBS Financial Services Inc., with Continental Stock Transfer & Trust Company acting as trustee, and are only invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the assets held in the Trust Account. Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the private placement, although substantially all of the net proceeds are intended to be applied toward consummating an initial Business Combination.
On January 6, 2023, the Company’s fixed price tender offer (the “2022 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 2022 Tender Offer expired (the “Expiration Time”). A total of 4,101,830 Class A ordinary shares were validly tendered and not withdrawn in the 2022 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 $41,879,684, which includes $319,942 of earnings in the Trust Account not previously withdrawn. After giving effect to the 2022 Tender Offer, there were 3,304,435 Class A Ordinary Shares issued and outstanding. In connection with the 2022 Tender Offer, the Sponsor deposited an additional $198,266 into the Trust Account (an aggregate of $0.06 per Class A ordinary share) on each of January, February and March 9, 2023.
On March 10, 2023, pursuant to the terms of the amended and restated memorandum and articles of association of the Company, the Sponsor, the holder of an aggregate of 4,475,000 shares of the Company’s Class B Ordinary Shares, par value $0.0001 per share, elected to convert 4,475,000 shares of the Class B Ordinary Shares held by it on a one-for-one basis into Class A Ordinary Shares of the Company, with immediate effect. Following such conversion, the Company had an aggregate of 7,779,435 shares of Class A Ordinary Shares issued and outstanding, of which 3,304,435 were subject to possible redemption, and 150,000 shares of Class B Ordinary Shares issued and outstanding. 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. Since the conversion occurred after the record date of the March 2023 Extraordinary General Meeting (as defined below), there was no impact to the votes required to approve the proposals or the counting of the votes at the March 2023 Extraordinary General Meeting as a result of the conversion.
On March 15, 2023, the Company held an extraordinary general meeting of shareholders (the “March 2023 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association (the “Second Articles Amendment”) to extend the date by which the Company has to consummate a business combination from March 21, 2023 to March 21, 2024 (the “March 2023 Extension Amendment Proposal”). The shareholders of the Company approved the March 2023 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal at the March 2023 Extraordinary General Meeting and on March 15, 2023, the Company filed the Second Articles Amendment with the Cayman Islands Registrar of Companies.
As part of the March 2023 Extraordinary General Meeting, shareholders elected to redeem 1,444,221 Class A ordinary shares, resulting in redemption payments out of the Trust Account totaling $15,297,014, or approximately $10.59 per share which includes $404,207 of earnings in the Trust Account not previously withdrawn. Subsequent to the redemptions and the Sponsor’s conversion, 6,335,214 Class A ordinary shares remained issued and outstanding, of which 1,860,214 were subject to possible redemption.
The Company and the Sponsor have agreed that they will deposit into the Trust Account an amount equal to the lesser of (i) $0.04 per share or (ii) $65,000.00 for each month (the “Second Monthly Contribution”) of the extension period up and until February 21, 2024, resulting in a maximum contribution of $0.48 per share of Class A Ordinary Shares that is not redeemed in connection with the March 2023 Extraordinary General Meeting (the “Second Maximum Contribution”, and the period from March 21, 2023 to March 21, 2024 the “Second Guaranteed Payment Period”), subject to the Company’s and the Sponsor’s right to stop making said Monthly Contributions This contribution was funded on or about the 21st of each month through February 21, 2024; provided that, no such deposits will be made following the completion of any business combination.
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On March 8, 2024, the Company held an extraordinary general meeting of shareholders (the “March 2024 Extraordinary General Meeting,”), to amend the Company’s amended and restated memorandum and articles of association to extend the date by which the Company has to consummate a business combination from March 21, 2024 to December 31, 2024 (the “March 2024 Extension Amendment Proposal”) and eliminate the limitation that the Company shall not redeem Class A Ordinary Shares included as part of the units sold in the IPO to the extent that such redemption would cause the Company’s net tangible assets to be less than $5,000,001. As part of the March 2024 Extraordinary General Meeting, the Company and/or the Sponsor is no longer required to deposit monthly contributions into the trust account. The shareholders approved the March 2024 Extension Amendment Proposal and the Company filed the amended and restated memorandum and articles of association with the Cayman Islands Registrar of Companies.
As part of the March 2024 Extraordinary General Meeting, shareholders elected to redeem 1,407,653 Class A ordinary shares, resulting in redemption payments out of the trust account totaling $16,309,778, or approximately $11.59 per share which includes $1,203,822 of earnings in the trust account not previously withdrawn. Subsequent to the redemptions, 4,927,561 Class A ordinary shares remained issued and outstanding.
On February 22, 2024, the Company received a letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Company no longer meets the minimum 300 public holders requirement for The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5500(a)(3) (the “Minimum Public Holders Requirement”). The Company timely submitted a plan to regain compliance with the Minimum Public Holders Requirement. On May 10, 2024, the Company received a letter from Nasdaq notifying the Company that the Company had, based on email correspondence with Nasdaq, demonstrated that it was in compliance with the Minimum Public Holders Requirement. As such, Nasdaq considers the matter closed.
On May 10, 2024, the Company received a letter (the “Second Notice”) from the Listing Qualifications Department of Nasdaq notifying the Company that the Company no longer meets the minimum 500,000 publicly held shares requirement for The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(4) (the “Minimum Publicly Held Shares Requirement”). In accordance with Nasdaq rules, the Company has 45 days, or until June 24, 2024, to submit a plan to regain compliance with the Minimum Publicly Held Shares Requirement. The Second Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on The Nasdaq Capital Market.
On April 1, 2024, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash (i.e., in one or more bank accounts).
On April 2, 2024, Jerome “Jerry” Letter provided written notice to the Company of his resignation as the Company’s Chief Financial Officer, effective immediately. Mr. Letter’s resignation was not as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Concurrently therewith, the Company’s current Co-Chairman and Chief Executive Officer, Marvin Tien, was appointed as acting Chief Financial Officer for the Company. Mr. Tien will retain his roles as Co-Chairman and Chief Executive Officer.
On June 17, 2024, the Company received a notice from the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”), the Company’s securities (shares, warrants, and rights) would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on June 26, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. On June 24, 2024, the Company submitted to Nasdaq a request for a hearing before the Panel to request additional time to complete a business combination, resulting in a stay of any suspension or delisting action pending the hearing. The Panel met to review the appeal on July 25, 2024 and is still considering the merits of the appeal, resulting in a stay of any suspension or delisting action while the appeal is still pending (see Note 9 to the notes to the unaudited condensed financial statements for more information).
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If we are unable to complete a Business Combination by December 31, 2024, 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 unaudited condensed financial statements, at June 30, 2024, we had $18,433 in our operating bank account, and working capital deficit of $4,603,960. We expect to continue to incur significant costs in pursuit of our initial Business Combination plans.
Our liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $25,000 from the sale of the founder shares, and loans from our sponsor of $100,000. The loan was repaid in full on August 9, 2021. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds received from the consummation of the Initial Public Offering and the Private Placement that were not placed in the Trust Account.
In order to finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan the Company funds as may be required. The terms of such loans have not been determined and no written agreements exist with respect to such loans. However, as discussed in Note 4 to the unaudited condensed financial statements herein, as of June 30, 2024, the Company is indebted to the Sponsor and its affiliates for $1,643,708, which represents operating and formation costs paid by these related parties on the Company’s behalf. The Sponsor is not under any obligation to make additional expenditures on the Company’s behalf.
Based on the foregoing, management believes that we may not have sufficient working capital to meet our 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 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 unaudited condensed financial statements. The Company also demonstrates other 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 unaudited condensed financial statements. These other 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 or classification of assets or liabilities should the Company be required to liquidate after December 31, 2024, our scheduled liquidation date if we do not complete the Business Combination prior to such date.
Material Changes in Financial Condition
As of June 30, 2024 and December 31, 2023, we had cash and marketable securities held in Trust Account of $5,316,054 and $21,200,364, respectively and had Class A ordinary shares subject to possible redemption of 452,561 and 1,860,214, respectively. The reduction of value in each of the account balances was primarily driven by redemption payments out of the Trust Account to shareholders as part of the March 2024 Extraordinary General Meeting disclosed above.
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Results of Operations
Our entire activity since inception through June 30, 2024 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 June 30, 2024, $18,433 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 three months ended June 30, 2024, we had net income of $69,448, which consisted of $56,730 of earnings and realized gain on marketable securities held in the Trust Account and a change in the fair value of warrant liabilities of $166,741, partially offset by and $154,023 in operating and formation costs.
For the three months ended June 30, 2023, we had net loss of $726,763, which consisted of $256,947 of earnings and realized gain on marketable securities held in the Trust Account, partially offset by a change in the fair value of warrant liabilities of $253,151 and $730,559 in operating and formation costs.
For the six months ended June 30, 2024 and 2023, we had net loss of $278,302 and $1,765,571, respectively, which consisted of $295,468 and $465,901 of earnings and realized gain on marketable securities held in the Trust Account, respectively, partially offset by a change in the fair value of warrant liabilities of $0 and $1,000,444, respectively, and $573,770 and $1,231,028 in operating and formation costs, respectively.
Related Party Transactions
Founder Shares
On February 18, 2021, our sponsor paid $25,000, or approximately $0.005 per share, to cover offering costs 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 Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of their founder shares or Class A ordinary shares received upon conversion thereof 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 June 30, 2024, 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 through June 30, 2024.
Working Capital 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 June 30, 2024, and through the filing date of this Form 10-Q, there were no outstanding Working Capital Loans under this arrangement.
Administrative Services Agreement
We agreed, commencing on the effective date of the Initial Public Offering, to pay our sponsor a total of (A) $40,000 per month and continuing monthly until December 31, 2024 and (B) on December 31, 2024, an amount equal to $480,000 less any amounts previously paid by the Company for office space, utilities and secretarial and administrative support services provided to the members of the Company’s management team. As of June 21, 2022, the total amount of $480,000 was incurred. There have been no expenses incurred since June 21, 2022. We recognized $0 in expenses incurred in connection with the aforementioned arrangements with the related parties on our condensed statements of operations for each of the three and six months ended June 30, 2024 and 2023, which is included in operating and formation costs on the condensed statements of operations. As of June 30, 2024 and December 31, 2023, there were no fees outstanding for these services.
Operating and Formation Costs
Through June 30, 2024, the Sponsor and affiliates of the Sponsor also paid operating and formation costs of $1,643,708 on behalf of the Company which are due on demand. Of such costs, $1,065,496 were paid as of December 31, 2023 and $578,212 were paid during the six months ended June 30, 2024. These amounts are included in due to related party on the condensed balance sheets as of June 30, 2024 and December 31, 2023.
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Contractual Obligations
Registration 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
The underwriters were entitled to underwriting discounts of $0.20 per Unit sold in the Initial Public Offering, or $3,700,000 in the aggregate, paid upon the closing of the Initial Public Offering. An additional fee of $0.35 per Unit sold in the Initial Public Offering, or $6,475,000 in the aggregate will be payable to the 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.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are fully described in Note 2 to our unaudited condensed financial statements appearing elsewhere in this Quarterly Report, and in Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024. We believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of these financial statements. There have been no changes to our critical accounting policies from our Form 10-K.
Recent Accounting Pronouncements
In June 2016, FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For emerging growth companies, the new guidance is effective for annual periods beginning after January 1, 2023. The Company adopted ASU 2016-13 as of January 1, 2023, with no material impact to its condensed financial statements.
Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements
For the three and six months ended June 30, 2024, 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.
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JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the principal executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4.Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our management evaluated, with the participation of our principal executive officer and principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2024, our disclosure controls and procedures were not effective, because of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that the controls around the interpretation and accounting for certain complex financial instruments were not effectively designed or maintained.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act) that occurred during the fiscal quarter of 2024 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1.Legal Proceedings
None.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider our risk factors from those disclosed under “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
As of the date of this report, there have been no material changes to the risk factors disclosed in the aforementioned Form 10-K, except as described below.
Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units are currently listed on the Nasdaq and our Class A ordinary shares and warrants may also be listed following their date of separation. Although after giving effect to our Initial Public Offering we meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will continue to be, listed on the Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on the Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in shareholders’ equity (generally $2,500,000), a minimum number of publicly traded securities (500,000) and a minimum number of holders of our securities (generally 300 public holders).
Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the Nasdaq initial listing requirements, which are more rigorous than the Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on the Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share, our shareholders’ equity would generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders of our securities. We cannot assure you that we will be able to meet those listing requirements at that time.
If the Nasdaq delists any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
● | a limited availability of market quotations for our securities; |
● | reduced liquidity for our securities; |
● | a determination that our Class A ordinary shares are a “penny stock,” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
● | a limited amount of news and analyst coverage; and |
● | a decreased ability to issue additional securities or obtain additional financing in the future. |
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units and our Class A ordinary shares and warrants are listed on the Nasdaq, our units, Class A ordinary shares and warrants qualify as covered securities under the statute. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
On December 18, 2023, we received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that our securities (units, shares and warrants) would be subject to suspension and delisting from the Nasdaq Capital Market at the opening of business on December 27, 2023, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement.
We timely requested a hearing before the Nasdaq Hearings Panel to appeal the notice. Nasdaq granted our hearing request, which hearing request stayed the suspension of trading of our securities on The Nasdaq Capital Market until the hearing process concluded and the Nasdaq Hearings Panel issued a written decision. A hearing on the matter was held on March 14, 2024.
On March 15, 2024, the Nasdaq Hearings Panel issued written notice of its decision to grant tour request for an exception to our listing deficiencies until June 17, 2024 in view of our substantial steps toward closing our previously announced business combination and our plan for achieving compliance with Nasdaq listing rules upon closing of the transaction for listing on The Nasdaq Capital Market.
On May 10, 2024, the Company received a letter (the “Second Notice”) from the Listing Qualifications Department of Nasdaq notifying the Company that the Company no longer meets the minimum 500,000 publicly held shares requirement for The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(4) (the “Minimum Publicly Held Shares Requirement”). In accordance with Nasdaq rules, the Company has 45 days, or until June 24, 2024, to submit a plan to regain to submit a plan of compliance with the Minimum Publicly Held Shares Requirement.
On June 17, 2024, the Company received a notice from the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”), the Company’s securities (shares, warrants, and rights) would be subject to suspension and delisting from The Nasdaq Capital Market at the opening of business on June 26, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. On June 24, 2024, the Company submitted to Nasdaq a request for a hearing before the Panel to request additional time to complete a business combination, resulting in a stay of any suspension or delisting action pending the hearing. The Panel met to review the appeal on July 25, 2024 and is still considering the merits of the appeal, resulting in a stay of any suspension or delisting action while the appeal is still pending.
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
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Item 5.Other Information
On August 13, 2024, the Company received a determination letter (the ”Delisting Notification”) from Nasdaq stating that the Nasdaq Hearings Panel has determined to delist the Company’s securities from Nasdaq, due to the company’s non-compliance with the Minimum Publicly Held Shares Requirement and Nasdaq’s IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. Nasdaq determined to remove from listing our securities, effective at the opening of business on August 14, 2024, because the Company did not demonstrate compliance with such continued listing requirement. Nasdaq will complete the delisting by filing a Form 25 Notification of Delisting with the SEC, after applicable appeal periods have lapsed, which will remove the Company’s securities from listing and registration on Nasdaq. As of August 14, 2024, Nasdaq had not filed the Form 25.
Pursuant to the Delisting Notification, the Company has a period of 15 days from the date of the Delisting Notification to submit a written request for a review of the Nasdaq Hearings Panel’s delisting determination by the Nasdaq Listing and Hearing Review Council (the “Listing Council”). In addition, Nasdaq may, on its own motion, determine to review the Nasdaq Hearings Panel’s decision within 45 days after the Company was notified of the decision. Notwithstanding, the Company’s request for a review will not stay the decision of the Panel.
During the three and six months ended June 30, 2024, no director or officer of the Company
Item 6.Exhibits
Exhibit |
| Description |
3.1 | ||
3.2 | ||
3.3 | ||
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 14th day of August, 2024.
| CORNER GROWTH ACQUISITION CORP.2 | ||
By: | /s/ Marvin Tien | ||
Name: | Marvin Tien | ||
Title: | Co-Chairman, Chief Executive Officer, Acting Chief |
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