ner Growth Acquisition 2(TRON) - 2024 Q4 - Annual Report

Part I Item 1. Business Corner Growth Acquisition Corp. 2, a Cayman Islands SPAC, has extended its business combination deadline to December 31, 2025, experienced significant redemptions, and delisted from Nasdaq - The company is a blank check company formed for a business combination and has not generated any operating revenues to date[17] - In August 2024, Connor Square, LLC became the new sponsor, acquiring a majority of founder shares, while 4,950,000 private placement warrants held by the old sponsor were cancelled[21] - The business combination deadline has been extended to December 31, 2025, following shareholder approval at the December 2024 Extraordinary General Meeting[36] - Share Redemption History | Meeting Date | Shares Redeemed (count) | Redemption Amount ($) | Remaining Public Shares (Post-Redemption) (count) | | :--- | :--- | :--- | :--- | | June 2022 | 11,093,735 | $111,062,537 | 7,406,265 | | Jan 2023 (Tender) | 4,101,830 | $41,879,684 | 3,304,435 | | March 2023 | 1,444,221 | $15,297,014 | 1,860,214 | | March 2024 | 1,407,653 | $16,309,778 | 4,927,561 (total outstanding) | | Dec 2024 | 437,513 | Not specified | 15,048 | - Following its Nasdaq delisting on August 14, 2024, the company is no longer required to comply with the rule that a business combination target must have a fair market value of at least 80% of net assets in the trust account[22] - Failure to complete a business combination by December 31, 2025, will result in the company ceasing operations and redeeming all public shares[39][74] Item 1A. Risk Factors The company faces significant risks, including the inability to complete a business combination by December 31, 2025, conflicts of interest with the new sponsor, limited trading liquidity post-Nasdaq delisting, and substantial doubt about its going concern ability - The primary risk is the potential inability to consummate an initial business combination by December 31, 2025, leading to liquidation and worthless warrants[99][126] - A conflict of interest exists as the new sponsor and affiliates will lose their entire investment if a business combination is not completed, potentially influencing target selection[105][181] - The company's delisted securities face limited trading, reduced liquidity, and potential "penny stock" classification, which could hinder business combination efforts[105][195] - The company's proximity to its liquidation date raises substantial doubt about its ability to continue as a going concern[106] - A potential business combination may be subject to Committee on Foreign Investment in the United States (CFIUS) review, which could impose conditions, delay, or prevent the transaction[122][124] - The company may be considered a Passive Foreign Investment Company (PFIC), potentially resulting in adverse U.S. federal income tax consequences for U.S. investors[228] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None Item 1C. Cybersecurity As a blank check company with no operations, the company does not face significant cybersecurity risk, lacks a formal program, and relies on third-party measures, with no material threats in fiscal year 2024 - The company, having no operations, lacks a formal cybersecurity risk management program and relies on third-party digital technologies[230] - In fiscal year 2024, no cybersecurity threats materially affected or are reasonably likely to materially affect the company's business, operations, or financial condition[230] Item 2. Properties The company's executive offices are located in Albany, NY, provided at no cost by the new sponsor and deemed adequate for current operations - The company's executive offices in Albany, NY, are provided by the new sponsor at no cost[232] Item 3. Legal Proceedings Management is unaware of any current or contemplated litigation against the company or its officers and directors - No litigation is currently pending or contemplated against the company[233] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's securities were delisted from Nasdaq on August 14, 2024, no cash dividends have been paid or are intended prior to a business combination, and initial private placement warrants were cancelled - The company's units, Class A ordinary shares, and warrants are no longer traded on a national securities exchange as of August 14, 2024, following delisting from Nasdaq[236] - The company has not paid and does not intend to pay any cash dividends prior to completing its initial business combination[238] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This MD&A covers the company's post-IPO activities, including extensions, redemptions, sponsor change, and Nasdaq delisting, highlighting a working capital deficit, going concern doubt, and financial results driven by non-operational items and related party transactions Overview The company, a SPAC, completed its IPO in June 2021, extended its business combination deadline to December 31, 2025, and experienced significant 2024 events including redemptions, a sponsor change, warrant cancellation, and Nasdaq delisting - The company is a blank check company formed in February 2021, focused on the technology industry for a potential business combination[245] - On August 15, 2024, Connor Square, LLC became the New Sponsor, resulting in the cancellation of 4,950,000 private placement warrants and the assignment of certain company debts to the Original Sponsor[263] - The company's securities were delisted from Nasdaq effective August 14, 2024, due to failing listing requirements, including the 36-month business combination timeframe[264] - The business combination deadline was extended to December 31, 2025, with shareholders redeeming 437,513 Class A shares, leaving 15,048 public shares outstanding[265][266] Liquidity, Capital Resources and Going Concern As of December 31, 2024, the company had no operating cash and a $32,524 working capital deficit, leading management to conclude substantial doubt about its going concern ability due to these factors and the mandatory liquidation date - As of December 31, 2024, the company had $0 in its operating bank account and a working capital deficit of $32,524[268] - Management has determined that the mandatory liquidation date and negative financial trends raise substantial doubt about the company's ability to continue as a going concern[272] - In connection with the August 2024 sponsor change, outstanding liabilities of $1,050,795 were transferred to the Original Sponsor, leaving the company with no outstanding liabilities to the former sponsor as of year-end[270] Results of Operations For the year ended December 31, 2024, the company reported a net income of $1.6 million, a significant shift from a $0.8 million net loss in 2023, primarily driven by $2.0 million in debt forgiveness and $0.4 million in trust account earnings - Results of Operations Comparison | Metric | Year Ended Dec 31, 2024 ($) | Year Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | | Operating and formation costs | $(747,441) | $(1,641,861) | | Earnings on Trust Account | $400,179 | $1,008,533 | | Debt forgiveness | $2,000,514 | $0 | | Change in fair value of warrant liabilities | $(54,450) | $(172,821) | | Net Income (Loss) | $1,598,802 | $(806,149) | Critical Accounting Policies Critical accounting policies include classifying redeemable Class A ordinary shares as temporary equity, accounting for warrants as fair-valued liabilities, and calculating net income per share using a two-class method, with 15,048 Class A shares subject to redemption as of December 31, 2024 - Class A ordinary shares subject to possible redemption are classified as temporary equity and measured at their redemption amount; as of December 31, 2024, 15,048 shares were subject to redemption[290] - Warrants are accounted for as liabilities and re-measured to fair value at each reporting period, with changes recognized in the statement of operations[292] - Net income per share is calculated using a two-class method, allocating earnings pro rata between redeemable Class A shares and non-redeemable Class A and Class B shares[294] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This section is not required as the company is a smaller reporting company - The company is a smaller reporting company and is not required to provide the information under this item[304] Item 8. Financial Statements and Supplementary Data This item refers to the full financial statements and notes, presented at the end of the report - The company's financial statements and supplementary data are included following Item 16 of the report[305] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting and financial disclosure - None Item 9A. Controls and Procedures Management concluded that as of December 31, 2024, disclosure controls and internal control over financial reporting were ineffective due to material weaknesses in accounting for complex instruments, recording liabilities, and internal communication of material agreements, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to a material weakness in internal control over financial reporting[309] - Material weaknesses were identified in controls for accounting for complex financial instruments, recording accrued and contingent liabilities, and communication of material agreements by executive management[312] - Remediation plans include improving processes for evaluating complex transactions and enhancing communication between executive management and accounting personnel[313] Item 9B. Other Information The company reports no other information required for Form 8-K disclosure during the fourth quarter of 2024 that was not already disclosed - No information was required to be disclosed on a Form 8-K during the quarter that was not so disclosed[315] Part III Item 10. Directors, Executive Officers and Corporate Governance As of the report date, Hao Tian is the sole executive officer and director, serving as CEO and CFO since August 2024, with board committees unpopulated due to Nasdaq delisting, and the company has adopted a Code of Ethics - Hao Tian has served as the company's Chief Executive Officer, Chief Financial Officer, and sole director since August 2024[318] - The board of directors' three standing committees (audit, nominating, compensation) are currently unpopulated following the delisting from Nasdaq[322] - The company has adopted a Code of Ethics applicable to its directors, officers, and employees[323] Item 11. Executive Compensation No cash compensation has been paid to executive officers or directors, who are eligible for out-of-pocket expense reimbursement, and no stock options or long-term incentive awards have been granted - None of the company's executive officers or directors has received any cash compensation for services rendered[333] - Officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with company activities, such as identifying potential target businesses[333] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details beneficial ownership as of July 1, 2025, with the new sponsor, Connor Square, LLC, holding 61.1% controlling voting power, and the old sponsor, CGA Sponsor 2, LLC, retaining a 38.6% voting interest - Beneficial Ownership as of July 1, 2025 | Name of Beneficial Owner | Approximate Percentage of Voting Control (%) | | :--- | :--- | | Connor Square, LLC ("new sponsor") | 61.1% | | CGA Sponsor 2, LLC ("old sponsor") | 38.6% | | All officers and directors as a group (1 individual) | < 1% | - As of December 31, 2024, the company had no equity compensation plans authorized for issuance[345] Item 13. Certain Relationships and Related Transactions, and Director Independence The company discloses related party transactions, primarily with its original and new sponsors, including founder share issuance, cancelled private placement warrants, no-cost office space, and potential working capital loans convertible into warrants - The original sponsor purchased founder shares and 4,950,000 private placement warrants, which were subsequently cancelled in 2024[347][348] - The company's executive offices are provided by the new sponsor at no cost[350] - The sponsor or its affiliates may loan the company up to $1,500,000 for transaction costs, convertible into warrants at $1.50 per warrant[352] - The board has determined that none of its members are currently "independent" under Nasdaq rules[358] Item 14. Principal Accountant Fees and Services This section summarizes fees paid to independent auditors, with total audit fees of approximately $80,350 in fiscal year 2024 and $113,000 in 2023, with no other fees paid - Accountant Fees | Fee Type | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $80,350 | $113,000 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | Part IV Item 15. Exhibits and Financial Statement Schedules This section lists documents filed as part of the Form 10-K, including governing documents, warrant agreements, the Share Purchase Agreement for the sponsor change, and various certifications - The report includes an exhibit index listing all filed documents, such as governing documents, material contracts, and certifications[366][367] Financial Statements and Notes Report of Independent Registered Public Accounting Firm The auditor's report states that financial statements are fairly presented in accordance with U.S. GAAP, but highlights substantial doubt about the company's ability to continue as a going concern due to net losses, negative cash flows, and financing dependence - The auditor's opinion states that the financial statements are presented fairly in all material respects[381] - The report explicitly raises substantial doubt about the company's ability to continue as a going concern due to its financial condition and dependence on financing[382][391] Financial Statements The financial statements detail the company's financial position and performance, showing a minimal trust account value of $182,240 and a shareholders' deficit as of December 31, 2024, with a $1.6 million net income in 2024 primarily from non-operational items - Balance Sheet Summary (As of December 31, 2024) | Account | Amount ($) | | :--- | :--- | | Cash and marketable securities held in trust account | $182,240 | | Total Liabilities | $217,506 | | Class A ordinary shares subject to possible redemption | $182,240 | | Total Shareholders' Deficit | $(217,506) | - Statement of Operations Summary (For the year ended December 31, 2024) | Account | Amount ($) | | :--- | :--- | | Operating and formation costs | $(747,441) | | Earnings on Trust Account | $400,179 | | Debt forgiveness | $2,000,514 | | Net income | $1,598,802 | Notes to Financial Statements The notes provide critical context to the financial statements, detailing business operations, deadline extensions, redemptions, sponsor change, going concern issues, significant accounting policies, related-party transactions, and warrant terms and valuation - Note 1 confirms management's determination of substantial doubt about the company's ability to continue as a going concern due to the mandatory liquidation date and working capital deficiency[440] - Note 2 details the accounting for Class A ordinary shares subject to possible redemption, showing a reduction from 1,860,214 shares at year-end 2023 to 15,048 shares at year-end 2024 due to redemptions[448][449] - Note 4 confirms that on August 15, 2024, the Original Sponsor transferred 2,685,000 shares to the New Sponsor and all 4,950,000 Private Placement Warrants were cancelled[477][481][497] - Note 5 confirms that the deferred underwriting fee of $6,475,000 was waived in an agreement where the underwriter will accept shares in lieu of cash upon a business combination[489][490] - Note 8 states that as of December 31, 2024, the Public Warrants were reclassified from Level 1 to Level 3 fair value measurement because they were delisted and are no longer actively traded[518]