COOL 10-Q
Corner Growth Acquisition Corp. (COOL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(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 ______
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State of organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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Registrant’s telephone number, including area code
Former name, former address and former fiscal year, if changed since last report
Securities registered under Section 12(b) of the Exchange Act:
Title of each class | Ticker symbol(s) | Name of each exchange on which registered |
N/A | ||
N/A | ||
N/A |
Indicate whether the registrant (1) 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 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 and 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 | ||
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| 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
There are
TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION | 30 | |
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UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES | 42 | |
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| Table of Contents |
PART I – FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
CORNER GROWTH ACQUISITION CORP.
Condensed Balance Sheets (Unaudited) as of
September 30, 2024 and December 31, 2023
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ASSETS |
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Current assets |
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Cash |
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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 |
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LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT |
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Current liabilities |
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Due to related party |
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Due to shareholders |
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Accrued expenses |
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Total current liabilities |
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Warrant liabilities |
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Deferred underwriting fee payable |
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Total Liabilities |
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COMMITMENTS AND CONTINGENCIES |
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Class A ordinary shares subject to possible redemption, |
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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 |
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Accumulated deficit |
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Total Shareholders’ Deficit |
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TOTAL LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT |
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See accompanying notes to condensed financial statements
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| Table of Contents |
CORNER GROWTH ACQUISITION CORP.
Condensed Statements of Operations (Unaudited)
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| For the three months ended September 30, 2024 |
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| For the nine months ended September 30, 2024 |
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| For the three months ended September 30, 2023 |
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| For the nine months ended September 30, 2023 Restated |
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Operating and formation costs |
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Loss from operations |
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Other income (loss) |
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Earnings and realized gain on marketable securities held in Trust Account |
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Transaction costs |
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Debt forgiveness |
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Change in fair value of warrant liabilities |
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Net income (loss) |
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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 |
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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 shares and Class B ordinary shares |
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See accompanying notes to condensed financial statements
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| Table of Contents |
CORNER GROWTH ACQUISITON CORP.
Condensed Statement of Changes in Stockholders’ Deficit
(Unaudited)
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| Ordinary Shares |
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Balance, January 1, 2024 |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Net loss |
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Balance, March 31, 2024 |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Net loss |
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Balance, June 30, 2024 |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Cancellation of Private Warrants |
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Forgivness of due to related party balance |
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Waiver of deferred underwriting commissions by underwriter |
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Net Profit |
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Balance, September 30, 2024 |
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Balance, January 1, 2023 |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Net loss |
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Balance, March 31, 2023 |
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Conversion of Class B ordinary shares to Class A nonredeemable ordinary shares |
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Accrual of deferred underwriting fee payable (restated) |
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Transaction cost allocation for change in deferred underwiting fee (restated) |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Net loss (restated) |
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Balance, June 30, 2023 (restated) |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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Net income |
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Balance, September 30, 2023 |
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See accompanying notes to condensed financial statements
| 5 |
| Table of Contents |
CORNER GROWTH ACQUISITON CORP.
Condensed Statements of Cash Flows (Unaudited)
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| For the nine months ended September 30, 2024 |
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| For the nine months ended September 30, 2023 Restated |
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Cash Flows from Operating Activities |
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Net income (loss) |
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Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Earnings and realized gain on marketable securities held in Trust Account |
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Debt Forgiveness |
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Change in fair value of warrant liabilities |
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Transaction costs attributable to warrant liabilities |
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Changes in operating assets and liabilities: |
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Accrued expenses |
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Due to related party |
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Prepaid expenses |
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Net cash used in operating activities |
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Cash Flows from Investing Activities |
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Proceeds received from Trust Account |
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Net cash provided by investing activities |
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Cash Flows from Financing Activities |
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Payments to Class A ordinary shareholders for redemption of shares |
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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 |
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Non-cash financing activities: |
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Remeasurement of Class A ordinary shares subject to possible redemption |
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(Waiver) / Accrual of deferred underwriting fee payable |
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Cancellation of private warrants |
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Conversion of Class B ordinary shares to Class A nonredeemable ordinary shares |
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Forgivness of due to related parties |
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Operting expense liability assumed by related party |
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See accompanying notes to condensed financial statements
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| Table of Contents |
CORNER GROWTH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(Unaudited)
Note 1—Description of Organization, Business Operations and Basis of Presentation
Corner Growth Acquisition Corp. (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. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2024, the Company had not commenced any operations. All activity through September 30, 2024 relates to the Company’s formation, its initial public offering described below (the “Initial Public Offering”) and, since the closing of the Initial Public Offering, the search for initial Business Combination candidates, and since the signing of the Business Combination Agreement described below, the completion of this proposed transaction. 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 interest income on cash and cash equivalents 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 Company’s original sponsor is CGA Sponsor LLC, a Delaware limited liability company (the “Original Sponsor”).
The registration statements for the Company’s Initial Public Offering were declared effective on December 16, 2020. On December 21, 2020, 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 $
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| Table of Contents |
Following the closing of the Initial Public Offering on December 21, 2020, an amount of $
As more fully described in Note 5, on June 23, 2023, the Company and the underwriter agreed to terminate the December 20,2022 fee reduction agreement solely upon execution of a side letter. On June 23, 2023, in accordance with the duly executed side letter, the Company and the underwriter agreed that the underwriter will irrevocably forfeit $
The Company will provide holders (the “Public Shareholders”) of its Class A ordinary shares, par value $
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| Table of Contents |
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
Extraordinary General Meetings
On December 20, 2022, the Company held an extraordinary general meeting (the “December 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 has to consummate a Business Combination from December 21, 2022 to June 21, 2023 (the “December 2022 Extension Amendment Proposal”). The shareholders approved the December 2022 Extension Amendment Proposal and on December 28, 2022 the Company filed the articles amendment with the Registrar of Companies of the Cayman Islands. The shareholders approved a proposal to amend the trust agreement to change the date on which Continental Stock Transfer & Trust Company must commence liquidation of the Trust Account from (A) the earlier of the Company’s completion of an initial business combination and December 21, 2022 to (B) the earlier of the Company’s completion of an initial business combination and June 21, 2023. In connection with the December 2022 Extraordinary General Meeting, shareholders elected to redeem
On June 15, 2023, the Company held an extraordinary general meeting of shareholders, which was adjourned and reconvened on June 20, 2023 (the “June 2023 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association to (i) extend the date by which the Company has to consummate a business combination from June 21, 2023 to March 20, 2024 or such earlier date as shall be determined by the Company’s board of directors in its sole discretion (such proposal, the “June 2023 Extension Amendment Proposal”), (ii) eliminate from the amended and restated memorandum and articles of association the limitation that the Company shall not redeem Class A ordinary shares included as part of the units sold in the Initial Public Offering to the extent that such redemption would cause the Company’s net tangible assets to be less than $
In connection with the vote to approve the June 2023 Extension Amendment Proposal, the Redemption Limitation Amendment Proposal and the Founder Conversion Amendment Proposal, shareholders elected to redeem 771,499 Class A ordinary shares, resulting in redemption payments out of the trust account totaling $8,085,078, or approximately $
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| Table of Contents |
On June 21, 2023, in connection with the approval of the Founder Conversion Amendment, our sponsor, the holder of an aggregate of
On February 29, 2024, the Company held an extraordinary general meeting of shareholders (the “February 2024 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association to (i) extend the date by which the Company has to consummate a business combination from March 20, 2024 to June 30, 2024 (the “Extended Date”) or such earlier date as shall be determined by the Company’s board of directors in its sole discretion (such proposal, the “February 2024 Extension Amendment Proposal” and, together with the December 2022 Extension Amendment Proposal and the June 2023 Extension Amendment Proposal, the “Extension Proposals”). The shareholders of the Company approved the February 2024 Extension Amendment Proposal and the Company filed the articles amendment with the Registrar of Companies of the Cayman Islands.
In connection with the vote to approve the February 2024 Extension Amendment Proposal, shareholders elected to redeem
On June 24, 2024, the Company held an Extraordinary General Meeting (the “ June 2024 Extraordinary General Meeting”), and in connection therewith the Company will file with the Registrar of Companies of the Cayman Islands a copy of the special resolution of the Company which resolved to approve an amendment to its Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities from June 30, 2024 to July 31, 2024 (the “New Extended Date”), and to allow the Company, without another shareholder vote, by resolution of the Company’s Board of Directors to determine in their sole discretion to extend the New Extended Date by one-month increments up to three consecutive times to a date that is ultimately no later than October 31, 2024 (each such additional date, as extended, an “Additional Extended Date”), unless the closing of a business combination shall have occurred prior thereto or such earlier date as determined by the Company’s Board of Directors to be in the best interests of the Company or such earlier date as shall be determined by the Company's Board of Directors in its sole discretion.
In connection with the vote to approve the extension, the holders of
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| Table of Contents |
On August 15, 2024, the Company, CGA Sponsor, LLC (the "Original Sponsor"), Ringwood Field, LLC (the "New Sponsor"), and Alexandre Balkanski, John Mulkey, and Jason Park entered into a share purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, among other things: (a) the Original Sponsor transferred to the New Sponsor an aggregate of
Nasdaq Notice and Hearing
On December 18, 2023, the Company received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that the Company’s 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. The Company timely requested a hearing before the Nasdaq Hearings Panel to appeal the notice.
Nasdaq granted the Company’s hearing request, which hearing request stayed the suspension of trading of the Company’s 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 the Company’s request for an exception to its listing deficiencies until June 17, 2024 in view of the Company’s substantial steps toward closing its previously announced initial business combination and its 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
On June 21, 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 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, which became effective at the opening of business on June 25, 2024, because the Company did not demonstrate compliance with such continued listing requirement by June 17, 2024. 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.
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On August 13, 2024, the Company received a final delisting notice from Nasdaq, notifying the Company of its decision to delist the Company’s shares from the Nasdaq Stock Market. The delisting was due to violations of Nasdaq Listing Rule IM-5101-2, which requires a special purpose acquisition company (SPAC) to complete one or more business combinations within 36 months of its initial public offering (IPO), as well as the failure to meet the minimum requirement of
As a result, the Company’s shares were suspended from trading at the open of business on August 14, 2024. The Company chose not to appeal the Nasdaq Panel's decision.
A Form 25-NSE was filed with the Securities and Exchange Commission, which will formally remove the Company’s securities from listing and registration on Nasdaq. The Company is currently evaluating alternative options, including over-the-counter (OTC) trading and potential future re-listings, in order to maximize shareholder value.
Business Combination Agreement
The Company has entered into a Business Combination Agreement, dated May 4, 2023 (the “Original BCA Date”), as amended and restated on December 29, 2023 (the “Business Combination Agreement”), by and among the Company, Noventiq Holdings PLC, an exempted company limited by shares registered by way of continuation under the laws of the Cayman Islands (“Noventiq”), Noventiq Holding Company, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“Parent”), Noventiq Merger 1 Limited, a Cayman Islands exempted company and wholly-owned subsidiary of Parent that has elected to be disregarded as an entity separate from Parent for U.S. federal income tax purposes (“Company Merger Sub”), and Corner Growth SPAC Merger Sub, Inc., an exempted company limited by shares incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Noventiq Merger Sub”), which provides, among other things, that (i) the Company will merge with and into Company Merger Sub (the “Company Merger”), with Company Merger Sub surviving the Company Merger and (ii) Noventiq
Merger Sub will merge with and into Noventiq (the “Noventiq Merger,” and together with the Company Merger, the “Mergers”), with Noventiq surviving the Noventiq Merger as a wholly-owned subsidiary of Parent (the transactions contemplated by the foregoing clauses (i) and (ii) the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
Immediately prior to the effective time of the Company Merger, each Company Class B ordinary share shall be converted into one Company Class A ordinary share. Pursuant to the Business Combination Agreement and at the effective time of the Company Merger, each Company Class A ordinary share shall automatically be cancelled and cease to exist in exchange for the right to receive one Parent ordinary share. At the effective time of the Company Merger, each Company warrant (the “Company Warrants”) issued and outstanding, entitling the holder thereof to purchase one share of Company Class A common stock at an exercise price of $
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On April 18, 2024, the Company announced an offer to exchange certain global depositary receipts (“GDRs”) representing Noventiq ordinary shares in consideration for newly issued ordinary shares (the “Exchange Offer”), which Exchange Offer expired on May 10, 2024. To provide for the terms of the Exchange Offer, on May 13, 2024, the Company and Noventiq entered into Amendment No. 1 to Amended and Restated Business Combination Agreement (“Amendment No. 1 to A&R BCA”), by and between the Company and Noventiq. Amendment No. 1 to A&R BCA provides, among other things, that (i) the outstanding shares underlying the GDRs are to be excluded for purposes of determining the Per Share Merger Equity Consideration Value (as defined in the BCA) and (ii) Noventiq shall use commercially reasonable efforts to accept the forfeit and/or surrender and cancellation, as soon as reasonable practicable, of Noventiq’s outstanding shares underlying the GDRs that it acquired pursuant to the Exchange Offer. Each reference to the A&R BCA shall be deemed a reference to the A&R BCA, as amended by Amendment No. 1 to A&R BCA. Please see Note 9 to the notes to the unaudited condensed financial statements for more information regarding the Business Combination Agreement.
On October 28, 2020, CGA Sponsor LLC (the “Original Sponsor”), paid $
Immediately prior to the effective time of the Company Merger,
Nasdaq determined to remove from listing our securities, which became effective at the opening of business on June 25, 2024. If the Company is unable to complete a Business Combination within the Combination Period, the Company 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 (which interest shall be net of taxes payable and up to $
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The Sponsor, officers and directors 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 during 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 the $
Liquidity and Going Concern
As of September 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 the intended Business Combination, the Sponsor, 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 required. As of August 15, 2024, in connection with the sale of the Original Sponsor’s stake to the New Sponsor, the Company’s outstanding liabilities amounting to $
As a result of the transaction, the Company had no outstanding liabilities to the former Sponsor as of September 30, 2024, with all debts effectively settled upon the transfer.
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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 reasonable period of time, which is considered one year from the issuance of these unaudited condensed financial statements. The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern for one year following the issuance of these unaudited condensed financial statements. These adverse conditions are negative financial trends, specifically a 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. There is no assurance that a Business Combination will be consummated by any such date of termination approved in accordance with the Amended and Restated Memorandum and Articles of Association.
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 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The interim results for the three and nine months ended September 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 condensed 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 condensed financial statements and the reported amounts of 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 September 30, 2024. The Company did not have any cash equivalents as of December 31, 2023.
Marketable Securities Held in Trust Account
At September 30, 2024 and December 31, 2023, substantially all of the assets held in the Trust Account were held in cash or in money market mutual funds in U.S. based trust accounts at Morgan Stanley with Continental Stock Transfer & Trust Company acting as trustee.
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The Company accounts for its securities held in the Trust Account in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 320 “Investments—Debt Securities.” These securities are classified as trading securities with unrealized gains or losses 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 480, Distinguishing Liabilities from Equity (“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.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed statements of operations.
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 condensed 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 September 30, 2024 and December 31, 2023, the Class A ordinary shares subject to possible redemption reflected in the condensed balance sheets are reconciled in the following table:
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Class A ordinary shares subject to possible redemption - December 31, 2023 |
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Less: |
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Payments to Class A ordinary shareholders for redemption of shares |
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| ( | ) |
Due to shareholders |
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| ( | ) |
Plus: |
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Remeasurement of carrying value to redemption value |
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| — |
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Class A ordinary shares subject to possible redemption - September 30, 2024 |
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In connection with the vote to approve the February 2024 Extension Amendment Proposal, shareholders elected to redeem
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 $
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 condensed 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.
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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 sheet, 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 condensed 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 no unrecognized tax benefits as of September 30, 2024 and December 31, 2023. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties for the three and nine months ended September 30, 2024 and 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
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 condensed 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.
Net Income (Loss) Per Ordinary Share
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 following table reflects the calculation of basic and diluted net income (loss) per share (in dollars, except share amounts):
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Basic and diluted net income (loss) per ordinary share: |
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Allocation of net income (loss) |
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Denominator: |
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Basic and diluted weighted average ordinary shares outstanding |
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Basic and diluted net income (loss) per ordinary share |
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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 impact to its condensed financial statements because the Company does not have financial assets within the scope of ASU 2016-13.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering, the Company sold
Note 4 — Related Party Transactions Founder Shares
On October 28, 2020, the Sponsor paid $
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The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares or Class A ordinary shares received upon conversion thereof until the earlier of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $
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, the Sponsor transferred
Compensation expense related to the Founder Shares is recognized only when the performance-based vesting condition (i.e. the consummation of a business combination) is probable of achievement under the applicable accounting literature. Stock-based compensation would be recognized at the consummation of a business combination, 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 September 30, 2024, 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 approval by the Company’s shareholders. As a result, the Company determined that, taking into account that there is a possibility that the Business Combination might not happen, no stock-based compensation expense should be recognized through September 30, 2024.
On August 15, 2024, the Company, the Original Sponsor, CGA Sponsor, LLC, and the New Sponsor, Ringwood Field, LLC, entered into a share purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, among other things: (a) the Original Sponsor transferred to the New Sponsor an aggregate of
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 had previously agreed, subject to limited exceptions, not to transfer, assign, or sell any of their Private Placement Warrants until
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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 $
Administrative Services Agreement
Pursuant to an administrative services agreement (the “Administrative Services Agreement”) entered into on December 17, 2020, the Company agreed to pay the Sponsor a total of $
Operating and Formation Costs
As of September 30, 2024, and December 31, 2023, the Sponsor and affiliates of the Sponsor had paid operating and formation costs of $
Note 5 — Commitments and Contingencies Registration Rights
The holders of Founder Shares, Private Placement Warrants, 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 three demands, excluding short form demands, that the Company register such securities. In addition, these holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
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Underwriting Agreement
After the Initial Public Offering, the underwriters were entitled to a deferred fee of $
On June 23, 2023, the Company and the underwriter agreed to terminate the December 20, 2022 fee reduction agreement solely upon execution of a side letter in accordance with the duly executed Mutual Termination of Initial Fee Reduction Agreement. On June 23, 2023, in accordance with the duly executed Side Letter to Underwriting Agreement, the Company and the underwriter agreed to the following:
| 1. | Cantor will irrevocably forfeit $ |
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| 2. | In addition, upon the consummation of the Business Combination, the Company shall pay to the Underwriter a non-refundable cash fee equal to |
| · | (x) the aggregate maximum gross proceeds received or receivable in connection with any Equity Financing, including, without limitation, aggregate amounts committed by investors to purchase securities, whether or not all securities are issued upon consummation of the Business Combination, plus |
| · | (y) the gross proceeds received by the Company upon exercise of any warrants or other securities issued in connection with such Financing that are convertible into common stock of the Company; |
| · | the aggregate maximum principal amount of debt committed or available to be committed or available in connection with the Debt Financing (including, without limitation, in the case of an offering of debt securities, the aggregate maximum principal amount of securities committed to be purchased by investors), whether or not drawn down (or, in the case of an offering of debt securities, whether or not purchased) upon consummation of the business Combination; and |
| · | any proceeds received from the Trust Account in connection with the Business Combination. |
However, on August 15, 2024, as part of the change in sponsor in connection with the share purchase agreement, the Company, the Original Sponsor, the New Sponsor, and Cantor Fitzgerald & Co., as the underwriter from the IPO, entered into an agreement under which Cantor agreed to accept a certain number of shares of the Company following the completion of a Business Combination, in lieu of the cash deferred commissions owed from the IPO.
The fees noted in items 1, 2 and additional note above are contingent upon the successful completion of a Business Combination. There is no assurance that a Business Combination will be consummated by any such date of termination approved in accordance with the Amended and Restated Memorandum and Articles of Association. In accordance with the guidance in ASC Topic 450, Contingencies, the Company is required to record its best estimate of the loss if the amount of loss can be reasonably estimated. The fee amount noted in item 2 cannot be reasonably estimated or determinable at this time and as a result, is not recorded in the financial statements.
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Finder’s Fee Arrangement
In connection with the Proposed Business Combination, a portion of the founder shares will be distributed under an agreement with a third party dated as of April 28, 2023 that constitutes a finder’s fee arrangement (the “Finder’s Fee Arrangement”). The Finder’s Fee Arrangement provides for our sponsor to make a $
If the Proposed Business Combination does not close for any reason, and a termination fee is actually paid by Noventiq to the Company, the Sponsor or their affiliates, then the third party will be entitled to receive a $
On March 14, 2024, the Finder’s fee Arrangement was amended and restated which no longer provides the third party an option to purchase an economic interest in
Note 6 — Warrant Liabilities
The Public Warrants will become exercisable at $
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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 30 days after the completion of the initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) are entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
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; |
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| · | at a price of $ |
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| · | 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 $ |
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In addition, once the warrants become exercisable, the Company may call the warrants for redemption:
| · | in whole and not in part; |
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| · | at $ |
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| · | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
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| · | 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 be required to net cash settle any Warrants. If the Company is unable to complete the initial Business Combination within the Combination Period 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 the respect to such warrants. Accordingly, the warrants may expire worthless.
Nasdaq removed our securities from listing, which became effective at the opening of business on August 14, 2024. The Company’s public warrants, issued under a Warrant Agreement dated December 16, 2020, between the Company and Continental Stock Transfer & Trust Company, remain outstanding and unaffected by the delisting
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Note 7 — Shareholders’ Deficit
Preference Shares — The Company is authorized to issue
Class A Ordinary Shares — The Company is authorized to issue
Class B Ordinary Shares — The Company is authorized to issue
Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares have the right to vote on the appointment of the Company’s directors prior to the initial Business Combination.
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The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a one-for-one basis (as adjusted). In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate,
On August 15, 2024, the Original Sponsor, CGA Sponsor, LLC, transferred an aggregate of
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 September 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
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Description |
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Assets: |
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Cash and Marketable securities held in Trust Account |
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At September 30, 2024 and December 31, 2023, $
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Liabilities: |
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Warrant Liability – Public Warrants |
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Warrant Liability – Private Placement Warrants |
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| 2 |
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| 2 |
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Total Warrant Liabilities |
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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 the 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 December 21, 2020, 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 one Class A ordinary share and one-third of one Public Warrant), (ii) the sale of Private Placement Warrants, and (iii) the issuance of shares of Class B ordinary shares, based on their fair values as determined at initial measurement, Class A ordinary shares and Class B ordinary shares based on their relative fair values at the initial measurement date. The Warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.
The Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 31, 2023, is classified as Level 1 due to quoted prices in an active market since February 8, 2021. The subsequent measurement of the Public Warrants as of September 30, 2024, is classified as Level 2. Following the delisting of the Public Warrants on August 14, 2024, the last quoted price on Nasdaq was at market close on August 13, 2024. The Public Warrants have not traded on any other market since the delisting. The Company used the last traded price on Nasdaq as an initial reference for valuation; however, the final valuation was determined using a Monte Carlo simulation to model the fair value of similar asset classes as of September 30, 2024.
The Private Placement Warrants, which were previously measured using Level 2 inputs due to the use of quoted prices for similar, non-active assets, were also valued using Monte Carlo simulation techniques. As part of the sponsor change on August 15, 2024, the Private Placement Warrants were canceled and removed from the balance sheet as of that date.
2023, the Public Warrants and Private Placement Warrants were each valued at $
The following table presents the changes in the fair value of warrant liabilities:
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Fair value as of December 31, 2022 |
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Fair value as of June 30, 2023 |
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Change in valuation inputs or other assumptions |
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Fair value as of September 30, 2023 |
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Fair value as of December 31, 2023 |
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Change in valuation inputs or other assumptions |
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Fair value as of March 31, 2024 |
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Change in valuation inputs or other assumptions |
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Fair value as of June 30, 2024 |
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Change in valuation inputs or other assumptions |
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Cancellation of Private Warrants |
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Fair value as of September 30, 2024 |
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Level 3 financial liabilities consist of the Private Placement Warrant liability 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. As of December 31, 2023, the Private Placement Warrants were valued based on quoted prices for similar assets and were transferred out of Level 3.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred up to the date condensed 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 condensed financial statements, except as described below.
Extraordinary General Meetings
On July 31, 2024, pursuant to Article 49.7 of the Amended Articles of Association, the Company’s board of directors approved an extension of the date by which the Company must consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities from July 31, 2024 to August 31, 2024.
Business Combination Agreement
On July 3, 2024, the parties to the Business Combination Agreement, the Sponsor, Noventiq Holding Company, an exempted company limited by shares incorporated under the laws of the Cayman Islands, and Noventiq Merger 1 Limited, a Cayman Islands exempted company and wholly-owned subsidiary of Noventiq Holding Company, entered into a settlement agreement (the “Settlement Agreement”), pursuant to which the parties agreed (i) to mutually terminate the Business Combination Agreement and all other Transaction Documents (as defined in the Business Combination Agreement) (collectively, the “Ancillary Agreements”) and (ii) to a mutual release of all claims related to the Business Combination Agreement and the transactions contemplated thereby. The mutual termination of the Business Combination Agreement and the Ancillary Agreements is effective as of July 3, 2024. The parties agreed to terminate the Business Combination Agreement as a result of the current unfavourable SPAC market conditions and other factors.
As a result of the termination of the Business Combination Agreement, the Business Combination Agreement is null and void, without any liability on the part of any party thereto or its respective affiliates, officers, directors or shareholders, except as provided in the Settlement Agreement. In accordance with the Settlement Agreement, Noventiq shall pay $
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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. 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 October 20, 2020 (inception) as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we focus on industries that complement our management team’s background, and in our search for targets for our Business Combination seek to capitalize on the ability of our management team to identify and acquire a business, focusing on the technology industry in the United States and other developed countries.
The registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on December 16, 2020. On December 21, 2020, we consummated our Initial Public Offering of 40,000,000 units, at $10.00 per unit, generating gross proceeds of $400,000,000, and incurring offering costs of approximately $22,766,000, inclusive of $14,000,000 in deferred underwriting commissions. Each unit consists of one Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”) and one-third of one redeemable warrant, each whole public warrant entitling the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 7,600,000 private placement warrants at a price of $1.50 per private placement warrant (the “Private Placement”) to our sponsor, CGA Sponsor LLC (the “Sponsor”), generating gross proceeds of $11,400,000. Each private placement warrant is exercisable for one Class A ordinary share at a price of $11.50 per share.
Upon the closing of the Initial Public Offering and private placement, $400,000,000 ($10.00 per unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the private placement were placed in the Trust Account, located in the United States at UBS Financial Services Inc. and Morgan Stanley, with Continental Stock Transfer & Trust Company acting as trustee, and are only invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the assets held in the Trust Account. Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the private placement, although substantially all of the net proceeds are intended to be applied toward consummating an initial Business Combination.
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Extraordinary General Meetings
On December 20, 2022, the Company held an extraordinary general meeting (the “December 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 has to consummate a Business Combination from December 21, 2022 to June 21, 2023. The shareholders approved a proposal to amend the trust agreement to change the date on which Continental Stock Transfer & Trust Company must commence liquidation of the Trust Account from (A) the earlier of the Company’s completion of an initial business combination and December 21, 2022 to (B) the earlier of the Company’s completion of an initial business combination and June 21, 2023. In connection with the December 2022 Extraordinary General Meeting, shareholders elected to redeem 38,808,563 Class A ordinary shares, resulting in redemption payments out of the Trust Account totaling $393,676,799, or approximately $10.14 per share which includes $5,591,169 of earnings in the Trust Account not previously withdrawn. In January 2023, the Company made redemption payments of $3,262,655 out of the Trust Account that were due to the redeeming shareholders who elected to redeem their shares as part of the December 2022 Extraordinary General Meeting. Subsequent to the redemptions, 1,191,437 Class A ordinary shares remained issued and outstanding until the June 2023 Extraordinary General Meeting described below.
On June 15, 2023, the Company held an extraordinary general meeting of shareholders, which was adjourned and reconvened on June 20, 2023 (the “June 2023 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association to (i) extend the date by which the Company has to consummate a business combination from June 21, 2023 to March 20, 2024 or such earlier date as shall be determined by the Company’s board of directors in its sole discretion (such proposal, the “June 2023 Extension Amendment Proposal”), (ii) eliminate from the amended and restated memorandum and articles of association the limitation that the Company shall not redeem Class A ordinary shares included as part of the units sold in the Initial Public Offering to the extent that such redemption would cause the Company’s net tangible assets to be less than $5,000,001 (the “Redemption Limitation Amendment Proposal”) and (iii) amend the Company’s amended and restated memorandum and articles of association to provide that Class B ordinary shares may be converted either at the time of the consummation of the Company’s initial business combination or at any earlier date at the option of the holders of Class B ordinary shares (the “Founder Conversion Amendment Proposal”). The shareholders of the Company approved the June 2023 Extension Amendment Proposal, the Redemption Limitation Amendment Proposal and the Founder Conversion Amendment Proposal at the June 2023 Extraordinary General Meeting and on June 21, 2023, the Company filed the articles amendment with the Registrar of Companies of the Cayman Islands.
In connection with the vote to approve the June 2023 Extension Amendment Proposal, the Redemption Limitation Amendment Proposal and the Founder Conversion Amendment Proposal, shareholders elected to redeem 771,499 Class A ordinary shares, resulting in redemption payments out of the trust account totaling
$8,085,078, or approximately $10.48 per share which includes $370,088 of earnings in the trust account not previously withdrawn. Subsequent to the redemptions, 419,938 Class A ordinary shares remained issued and outstanding until the February 2024 Extraordinary General Meeting further described below.
On June 21, 2023, in connection with the approval of the Founder Conversion Amendment, our sponsor, the holder of an aggregate of 9,825,001 shares of the Company’s Class B ordinary shares, par value $0.0001 per share, elected to convert 9,825,000 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 Sponsor holds 9,825,000 shares of Class A ordinary shares and 1 share of Class B ordinary shares and the Company will have an aggregate of 10,244,938 shares of Class A ordinary shares issued and outstanding (419,938 of which are subject to possible redemption) and 175,000 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.
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On February 29, 2024, the Company held an extraordinary general meeting of shareholders (the “February 2024 Extraordinary General Meeting”), to amend the Company’s amended and restated memorandum and articles of association to (i) extend the date by which the Company has to consummate a business combination from March 20, 2024 to June 30, 2024 (the “Extended Date”) or such earlier date as shall be determined by the Company’s board of directors in its sole discretion (such proposal, the “February 2024 Extension Amendment Proposal” and, together with the December 2022 Extension Amendment Proposal and the June 2023 Extension Amendment Proposal, the “Extension Proposals”). The shareholders of the Company approved the February 2024 Extension Amendment Proposal and the Company filed the articles amendment with the Registrar of Companies of the Cayman Islands.
In connection with the vote to approve the February 2024 Extension Amendment Proposal, shareholders elected to redeem 83,349 Class A ordinary shares, resulting in redemption payments out of the trust account totaling $911,508, or approximately $10.94 per share which includes $78,018 of earnings in the trust account not previously withdrawn. Subsequent to the redemptions, 10,161,589 Class A ordinary shares remained issued and outstanding.
On June 24, 2024, the Company held an Extraordinary General Meeting (the “ June 2024 Extraordinary General Meeting”), and in connection therewith the Company will file with the Registrar of Companies of the Cayman Islands a copy of the special resolution of the Company which resolved to approve an amendment to its Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities from June 30, 2024 to July 31, 2024 (the “New Extended Date”), and to allow the Company, without another shareholder vote, by resolution of the Company’s Board of Directors to determine in their sole discretion to extend the New Extended Date by one-month increments up to three consecutive times to a date that is ultimately no later than October 31, 2024 (each such additional date, as extended, an “Additional Extended Date”), unless the closing of a business combination shall have occurred prior thereto or such earlier date as determined by the Company's Board of Directors to be in the best interests of the Company or such earlier date as shall be determined by the Company's Board of Directors in its sole discretion.
In connection with the vote to approve the extension, the holders of 38,647 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.10 per share, for an aggregate redemption amount of approximately $428,962. After the satisfaction of such redemptions, the balance in the Company’s trust account will be approximately $3.3 million.
On August 15, 2024, the Company, CGA Sponsor, LLC (the "Original Sponsor"), Ringwood Field, LLC (the "New Sponsor"), and Alexandre Balkanski, John Mulkey, and Jason Park entered into a share purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, among other things: (a) the Original Sponsor transferred to the New Sponsor an aggregate of 5,895,000 Class A Ordinary Shares of the Company; (b) the New Sponsor executed a joinder agreement (the "Joinder") to become a party to that certain letter agreement, dated December 16, 2020 ("Letter Agreement"), and that certain Registration Rights Agreement, dated December 16, 2020 ("Registration Rights Agreement"), each originally entered into in connection with the Company’s initial public offering ("IPO"), among the Company, the Original Sponsor, and certain equity holders of the Company; (c) the Original Sponsor and holders of Class B Shares granted the New Sponsor the irrevocable right to vote the retained shares on their behalf and to take certain other actions on their behalf (the "POA Agreements"); (d) the Original Sponsor entered into surrender and cancellation agreements (the “Warrant Cancellation Agreements”) to cancel an aggregate of 7,600,000 private placement warrants purchased by the Original Sponsor at the time of the IPO; and (e) certain creditors agreed to cancel or reduce the amounts owed to them by the Company and assigned the liability for any remaining amounts to the Original Sponsor (the "Debt Cancellation Agreements"). Additionally, the Company, the Original Sponsor, the New Sponsor, and Cantor Fitzgerald & Co., as the underwriter of the IPO, entered into an agreement (the "Underwriter Agreements") whereby Cantor agreed to accept shares of the Company following any business combination in lieu of cash deferred commissions owed from the IPO.
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Nasdaq Notice and Hearing
On December 18, 2023, the Company received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that the Company’s 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. The Company timely requested a hearing before the Nasdaq Hearings Panel to appeal the notice.
Nasdaq granted the Company’s hearing request, which hearing request stayed the suspension of trading of the Company’s 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 the Company’s request for an exception to its listing deficiencies until June 17, 2024 in view of the Company’s substantial steps toward closing its previously announced initial business combination and its 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 compliance with the Minimum Publicly Held Shares Requirement.
On June 21, 2024, the Company received 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 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, which became effective at the opening of business on June 25, 2024, because the Company did not demonstrate compliance with such continued listing requirement by June 17, 2024. 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.
On August 13, 2024, the Company received a final delisting notice from Nasdaq, notifying the Company of its decision to delist the Company’s shares from the Nasdaq Stock Market. The delisting was due to violations of Nasdaq Listing Rule IM-5101-2, which requires a special purpose acquisition company (SPAC) to complete one or more business combinations within 36 months of its initial public offering (IPO), as well as the failure to meet the minimum requirement of 500,000 publicly held shares under Nasdaq Listing Rule 5550(a)(4).
As a result, the Company’s shares were suspended from trading at the open of business on August 14, 2024. The Company chose not to appeal the Nasdaq Panel's decision.
A Form 25-NSE was filed with the Securities and Exchange Commission, which will formally remove the Company’s securities from listing and registration on Nasdaq. The Company is currently evaluating alternative options, including over-the-counter (OTC) trading and potential future re-listings, in order to maximize shareholder value.
Business Combination Agreement
The Company has entered into a Business Combination Agreement, dated May 4, 2023 (the “Original BCA Date”), as amended and restated on December 29, 2023 (the “Business Combination Agreement”), by and among the Company, Noventiq Holdings PLC, an exempted company limited by shares registered by way of continuation under the laws of the Cayman Islands (“Noventiq”), Noventiq Holding Company, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“Parent”), Noventiq Merger 1 Limited, a Cayman Islands exempted company and wholly-owned subsidiary of Parent that has elected to be disregarded as an entity separate from Parent for U.S. federal income tax purposes (“Company Merger Sub”), and Corner Growth SPAC Merger Sub, Inc., an exempted company limited by shares incorporated under the laws of the Cayman Islands and a wholly-owned subsidiary of Parent (“Noventiq Merger Sub”), which provides, among other things, that (i) the Company will merge with and into Company Merger Sub (the “Company Merger”), with Company Merger Sub surviving the Company Merger and (ii) Noventiq Merger Sub will merge with and into Noventiq (the “Noventiq Merger,” and together with the Company Merger, the “Mergers”), with Noventiq surviving the Noventiq Merger as a wholly-owned subsidiary of Parent (the transactions contemplated by the foregoing clauses (i) and (ii) the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
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Immediately prior to the effective time of the Company Merger, each Company Class B ordinary share shall be converted into one Company Class A ordinary share. Pursuant to the Business Combination Agreement and at the effective time of the Company Merger, each Company Class A ordinary share shall automatically be cancelled and cease to exist in exchange for the right to receive one Parent ordinary share. At the effective time of the Company Merger, each Company warrant (the “Company Warrants”) issued and outstanding, entitling the holder thereof to purchase one share of Company Class A common stock at an exercise price of $11.50 per share (subject to adjustment), will be converted into the right to receive a warrant to purchase one Parent ordinary share at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. Pursuant to the Business Combination Agreement and at the effective time of the Noventiq Merger, each Noventiq ordinary share shall automatically be cancelled and cease to exist in exchange for the right to receive (i) such number or fraction of newly issued Parent ordinary shares that is equal to the Share Exchange Ratio (as defined in the Business Combination Agreement) and (ii) one Class A CSR (as defined below), one Class B CSR (as defined below) and one Class C CSR (as defined below) in each case, for each one whole Parent ordinary share issuable to such holder pursuant to the Business Combination Agreement at the effective time of the Noventiq Merger.
On April 18, 2024, the Company announced an offer to exchange certain global depositary receipts (“GDRs”) representing Noventiq ordinary shares in consideration for newly issued ordinary shares (the “Exchange Offer”), which Exchange Offer expired on May 10, 2024. To provide for the terms of the Exchange Offer, on May 13, 2024, the Company and Noventiq entered into Amendment No. 1 to Amended and Restated Business Combination Agreement (“Amendment No. 1 to A&R BCA”), by and between the Company and Noventiq. Amendment No. 1 to A&R BCA provides, among other things, that (i) the outstanding shares underlying the GDRs are to be excluded for purposes of determining the Per Share Merger Equity Consideration Value (as defined in the BCA) and (ii) Noventiq shall use commercially reasonable efforts to accept the forfeit and/or surrender and cancellation, as soon as reasonable practicable, of Noventiq’s outstanding shares underlying the GDRs that it acquired pursuant to the Exchange Offer. Each reference to the A&R BCA shall be deemed a reference to the A&R BCA, as amended by Amendment No. 1 to A&R BCA.
On July 3, 2024, the parties to the Business Combination Agreement, the Sponsor, Noventiq Holding Company, an exempted company limited by shares incorporated under the laws of the Cayman Islands, and Noventiq Merger 1 Limited, a Cayman Islands exempted company and wholly-owned subsidiary of Noventiq Holding Company, entered into a settlement agreement (the “Settlement Agreement”), pursuant to which the parties agreed (i) to mutually terminate the Business Combination Agreement and all other Transaction Documents (as defined in the Business Combination Agreement) (collectively, the “Ancillary Agreements”) and (ii) to a mutual release of all claims related to the Business Combination Agreement and the transactions contemplated thereby. The mutual termination of the Business Combination Agreement and the Ancillary Agreements is effective as of July 3, 2024. The parties agreed to terminate the Business Combination Agreement as a result of the current unfavourable SPAC market conditions and other factors.
As a result of the termination of the Business Combination Agreement, the Business Combination Agreement is null and void, without any liability on the part of any party thereto or its respective affiliates, officers, directors or shareholders, except as provided in the Settlement Agreement. In accordance with the Settlement Agreement, Noventiq shall pay $10,500,000 to or for the benefit of the Company. The Company will use the proceeds received pursuant to the Settlement Agreement to pay its expenses.
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On October 28, 2020, CGA Sponsor LLC, a Delaware limited liability company (the “Sponsor”), paid $25,000, or approximately $0.003 per share, to the Company and Noventiq to cover certain expenses in consideration for 8,625,000 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”), of the Company. In November 2020, the Sponsor transferred 50,000 such Class B ordinary shares of the Company to each of the Company’s three independent directors (Alexandre Balkanski, John Mulkey, and Jason Park) in recognition of, and as compensation for, their future services to the Company. On December 16, 2020, the Company effected a share capitalization, resulting in 10,062,500 Founder Shares issued and outstanding as of such date. As a result of the underwriters’ election to partially exercise their over-allotment option in connection with the Company’s initial public offering (the “Company Initial Public Offering”), 62,500 Founder Shares were forfeited for no consideration on December 23, 2020, resulting in 10,000,000 Founder Shares outstanding, of which, as of such date, 9,825,001 Founder Shares were held by the Sponsor and 58,333 Founder Shares were held by each of the Company’s three independent directors. As of the date of the amending and restating of the Business Combination Agreement, the Sponsor held 9,825,001 Founder Shares. Of these, 5,000,000 Company ordinary shares will be forfeited upon consummation of the Business Combination, and 1,500,000 Company ordinary shares (the “Alignment Shares”) are subject to forfeiture based on the gross proceeds raised from additional financings contemplated by the Business Combination Agreement, if any, by the Company and the cash balance of the Company’s trust account held for the benefit of its public shareholders as more fully described in the accompanying proxy statement/prospectus, but the consummation of the Business Combination is not subject to a minimum amount of additional financing having been raised. If (i) the cash balance of the Company’s trust account and the gross proceeds received from investors in additional financings (the “Additional Financing Investors”) is equal to or greater than $25 million upon consummation of the Business Combination, and (ii) the gross proceeds received from Additional Financing Investors is equal to or greater than $50 million prior to the date that is 180 days following the closing of the Business Combination, none of the Alignment Shares will be forfeited. An additional 2,000,000 Company ordinary shares (the “Sponsor Earnout Shares”) will be held in escrow and only released, in three equal instalments, upon the occurrence of certain milestone events as more fully described in the accompanying proxy statement/prospectus.
Immediately prior to the effective time of the Company Merger, 3,800,000 Company Warrants held by the Sponsor shall be forfeited and returned to the Company for cancellation.
If we are unable to complete a Business Combination by the New Extended Date or Additional Extended Date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay for our income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of our company, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law (see Note 9 to the notes to the unaudited condensed financial statements for more information).
In April 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.
Liquidity, Capital Resources and Going Concern
As indicated in the accompanying condensed financial statements, at September 30, 2024, we had $0 in our operating bank account, and a working capital deficit of
$2,813, and $364,651 of cumulative earnings and realized gains on the amounts remaining in the Trust Account after historical redemptions. 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 the Sponsor of approximately $120,000. The loan was repaid in full on December 22, 2020. Subsequent from the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds received from the consummation of the Initial Public Offering and the Private Placement.
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In order to finance transaction costs in connection with the intended Business Combination, the Sponsor, 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 required. As of August 15, 2024, in connection with the sale of the Original Sponsor’s stake to the New Sponsor, the Company’s outstanding liabilities amounting to $5,457,840 were transferred to the Original Sponsor. This included $5,177,840 of operating and formation costs and $280,000 of unpaid administrative fees.
As a result of the transaction, the Company had no outstanding liabilities to the former Sponsor as of September 30, 2024, with all debts effectively settled upon the transfer.
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 through a reasonable period of time, which is considered one year from the issuance of these condensed financial statements. The Company 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 condensed financial statements. These other adverse conditions are negative financial trends, specifically working capital deficiency and other adverse key financial ratios. Our scheduled liquidation date is July 31, 2024 (see Note 9 to the notes to the unaudited condensed financial statements for more information). No adjustments have been made to the carrying amounts or classification of assets or liabilities should the Company be required to liquidate. There is no assurance that a Business Combination will be consummated by any such date of termination approved in accordance with the Amended and Restated Memorandum and Articles of Association.
Results of Operations
Our entire activity since inception through September 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 (see Note 1 to the notes to the unaudited condensed financial statements). As of September 30, 2024, $0 was held outside the Trust Account and was being used to fund the Company’s operating expenses. We are not generating any operating revenues until the closing and completion of our initial Business Combination at the earliest.
For the three months ended September 30, 2024, we reported net income of $4,112,487, primarily due to a gain of $3,458,093 from changes in the fair value of warrant liabilities, debt forgiveness of $785,352, and $35,747 in earnings on marketable securities held in the Trust Account. Operating and formation costs totaled $166,705.
For the nine months ended September 30, 2024, we had a net loss of $477,816. This was driven by $1,961,391 in operating and formation costs partially offset by a $567,199 gain from changes in warrant liabilities, $785,352 in debt forgiveness and $131,024 in earnings on marketable securities.
In comparison, for the three months ended September 30, 2023, net income was $681,549, primarily due to a $1,046,667 gain in warrant liabilities and $57,747 in Trust Account earnings, offset by $422,865 in operating and formation costs.
For the nine months ended September 30, 2023 (restated), we recorded a net loss of $3,109,484, primarily due to $2,312,947 in operating and formation costs, $102,000 in transaction costs, and a $1,046,666 loss from changes in warrant liabilities, partially offset by $352,129 in Trust Account earnings.
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Related Party Transactions Founder Shares
On October 28, 2020, the Sponsor paid $25,000, or approximately $0.003 per share, to cover certain offering costs in consideration for 8,625,000 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”). In November 2020, the Sponsor transferred 50,000 Class B ordinary shares to each of the Company’s independent directors. On December 16, 2020, the Company effected a share capitalization of 1,437,500 Class B ordinary shares, resulting in an aggregate of 10,062,500 Class B Ordinary Shares issued and outstanding as of such date. As a result of the underwriters’ election to partially exercise their over-allotment option, 62,500 Founder Shares were forfeited for no consideration on December 23, 2020, resulting in 10,000,000 Class B ordinary shares outstanding.
On June 21, 2023, in connection with the approval of the Founder Conversion Amendment, our sponsor, the holder of an aggregate of 9,825,001 shares of the Company’s Class B ordinary shares, par value $0.0001 per share, elected to convert 9,825,000 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 Sponsor holds 9,825,000 shares of Class A ordinary shares and 1 share of Class B ordinary shares. The Company will have an aggregate of 10,122,942 and 10,244,938 shares of Class A ordinary shares issued and outstanding (297,942 and 419,938 of which are subject to possible redemption) and 175,000 and 175,000 shares of Class B ordinary shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. 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. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount contributed to the company by the number of founder shares issued. The founder shares will be worthless if we do not complete an initial business combination.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares or Class A ordinary shares received upon conversion thereof until the earlier of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
The Company’s Founder Shares are subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with the Company entered into by the initial stockholders, and officers and directors. The Sponsor has the right to transfer its ownership in the Founder Shares at any time, and to any transferee, to the extent that the Sponsor determines, in good faith, that such transfer is necessary to ensure that it and/or any of its parents, subsidiaries or affiliates are in compliance with the Investment Company Act of 1940. Any permitted transferees will be subject to the same restrictions and other agreements of the initial stockholders with respect to any Founder Shares. Prior to the closing of the Initial Public Offering, the 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-based vesting condition (i.e. the consummation of the business combination) is probable of achievement under the applicable accounting literature. Stock-based compensation would be recognized at the consummation of the business combination, 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 September 30, 2024, 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 approval by the Company’s shareholders. As a result, the Company determined that, taking into account that there is a possibility that the Business Combination might not happen, no stock-based compensation expense should be recognized through September 30, 2024.
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On August 15, 2024, the Company, the Original Sponsor, CGA Sponsor, LLC, and the New Sponsor, Ringwood Field, LLC, entered into a share purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, among other things: (a) the Original Sponsor transferred to the New Sponsor an aggregate of 5,895,000 Class A Ordinary Shares of the Company; (b) the New Sponsor executed a joinder agreement to become a party to that certain letter agreement, dated December 16, 2020 (“Letter Agreement”), and that certain Registration Rights Agreement, dated December 16, 2020 (“Registration Rights Agreement”), each originally entered into in connection with the Company’s initial public offering (“IPO”), among the Company, the Original Sponsor, and certain equity holders of the Company; and (c) the Original Sponsor and holders of the Class B Shares granted the New Sponsor the irrevocable right to vote the retained shares on their behalf and to take certain other actions on their behalf.
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). If we complete a Business Combination, we would repay the Working Capital Loans out of the proceeds of the Trust Account released to us. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the trust account. In the event that a Business Combination is not completed, we may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the private placement warrants. As of the date of this filing and September 30, 2024, 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 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $40,000 per month for office space, utilities and secretarial and administrative support services provided to members of the Company’s management team until the earlier of (A) the Company’s completion of the initial Business Combination or December 21, 2022 and (B) on December 21, 2022, an amount equal to $960,000, less the actual amount paid under the Administrative Services Agreement. On November 18, 2021, the Sponsor waived its right to receive any of the Company’s remaining, payment obligations under the Administrative Services Agreement.
For the three and nine months ended September 30, 2024, the Company incurred $0 in fees for these services. For the three and nine months ended September 30, 2023, the Company incurred $0 in fees for these services, respectively, which is included in operating and formation costs on the unaudited condensed statements of operations. As of September 30, 2024 and December 31, 2023, there were $0 and $280,000 in fees outstanding for these services that are included in due to related party on the condensed balance sheets. Notwithstanding the foregoing, on November 18, 2021, the Sponsor permanently waived its right to receive any of the Company’s outstanding, and all of the Company’s remaining, payment obligations under the Administrative Services Agreement.
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Operating and Formation Costs
As of September 30, 2024, and December 31, 2023, the Sponsor and affiliates of the Sponsor had paid operating and formation costs of $2,101,264 and $1,630,848, respectively, on behalf of the Company. These amounts were initially recorded as liabilities owed to the Sponsor and included in "Due to Related Party" on balance sheets. However, in connection with the transfer of the Original Sponsor’s stake to the New Sponsor on August 15, 2024, all outstanding liabilities were assumed by Original Sponsor and subsequently discharged. As a result, no further amounts remain payable to the Original Sponsor as of September 30, 2024. The New Sponsor is not under any obligation to make additional expenditures on the Company’s behalf.
Contractual Obligations Registration and Shareholder Rights
The holders of founder shares, private placement warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in the case of the founder shares, only after conversion of such shares into Class A ordinary shares) pursuant to a registration and shareholder rights agreement entered into during the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration and shareholder rights. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled to underwriting discounts of $0.20 per unit sold in the Initial Public Offering, or $8,000,000 in the aggregate, paid upon the closing of the Initial Public Offering. An additional fee of $0.35 per unit sold in the Initial Public Offering, or $14,000,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. Effective December 20, 2022, in accordance with a fee reduction agreement, the underwriter agreed to irrevocably forfeit
$10,000,000 of the aggregate $14,000,000 deferred fee that would otherwise be payable to it in cash pursuant the underwriting agreement, resulting in a reduced deferred fee of $4,000,000. 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. The Company accounted for this forfeiture during the fourth calendar quarter of the year ended December 31, 2022.
As more fully described in Note 5, on June 23, 2023, the Company and the underwriter agreed to terminate the December 20, 2022 fee reduction agreement solely upon execution of a side letter. On June 23, 2023, in accordance with the duly executed side letter, the Company and the underwriter agreed that the underwriter will irrevocably forfeit $7,000,000 (instead of $10,000,000) of the aggregate $14,000,000 Original Fee that would otherwise be payable to it in cash pursuant to the Underwriting Agreement, resulting in a reduced fee of $7,000,000, which shall be payable in cash by the Company to the underwriter upon consummation of a business combination, as originally set forth in the underwriting agreement.
However, on August 15, 2024, as part of the change in sponsor in connection with the share purchase agreement, the Company, the Original Sponsor, the New Sponsor, and Cantor Fitzgerald & Co., as the underwriter from the IPO, entered into an agreement under which Cantor agreed to accept a certain number of shares of the Company following the completion of a Business Combination, in lieu of the cash deferred commissions owed from the IPO.
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Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of income and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are fully described in Note 2 to our condensed financial statements appearing elsewhere in this Quarterly Report and are fully described in Note 2 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. We believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our condensed financial statements. There have been no changes to our significant accounting policies from our Form 10-K.
Recent Accounting Pronouncements
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 impact to its condensed financial statements because the Company does not have financial assets within the scope of ASU 2016-13.
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 condensed financial statements.
Off-Balance Sheet Arrangements
For the three and nine months ended September 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.
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 condensed 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 condensed financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the principal executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
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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 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 September 30, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 30, 2024, our disclosure controls and procedures were effective.
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 and the risk factors included in our definitive proxy statement filed with the SEC on October 11, 2024. 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.
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.
ITEM 5. OTHER INFORMATION
During the three and nine months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS
Exhibit No. |
| Description |
| ||
| ||
101.INS* |
| Inline XBRL Instance Document |
101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document |
101.SCH* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH* |
| Inline XBRL Taxonomy Extension definition Linkbase Document |
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
*Filed with this Report.
**Furnished with this Report, which shall not be deemed “filed” for purposes of Sec 18 of the Securities Act of 1934, or otherwise subject to the liability of that Section.
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SIGNATURES
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| CORNER GROWTH ACQUISITION CORP. |
| |
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Date: November 27, 2024 | By | /s/ Marvin Tien |
|
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| Marvin Tien, Co-Chairman, Chief Executive Officer, Director and Acting Chief Financial Officer |
|
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