The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
|
NOTE 1.
|
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
|
Tailwind Acquisition Corp. (the “Company”)
was incorporated in Delaware on May 29, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company has one subsidiary, Compass Merger
Sub Inc., a direct, wholly owned subsidiary of the Company incorporated in Delaware on February 17, 2021 (“Merger Sub”)
(see Note 6).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination. 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 March 31, 2021, the Company had not
commenced any operations. All activity for the period from May 29, 2020 (inception) through March 31, 2021 relates to the Company’s
formation, the initial public offering (“Initial Public Offering”), which is described below, identifying a target company
for a Business Combination, and activities in connection with the proposed acquisition of QOMPLX (see Note 6). The Company will not generate
any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income
in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the
Company’s Initial Public Offering was declared effective on September 3, 2020. On September 9, 2020 the Company
consummated the Initial Public Offering of 33,421,570 units (the “Units” and, with respect to the Class A common
stock included in the Units sold, the “Public Shares”), which includes the partial exercise by the underwriter of its
over-allotment option in the amount of 3,421,570 Units, at $10.00 per Unit, generating gross proceeds of $334,215,700, which is
described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 9,700,000 warrants (the “Private Placement Warrants”) at a price of $1.00
per Private Placement Warrant in a private placement to Tailwind Sponsor LLC (the “Sponsor”), generating gross proceeds of
$9,700,000, which is described in Note 4.
Transaction costs amounted to $18,847,894, consisting
of $6,684,314 in cash underwriting fees, $11,697,550 of deferred underwriting fees and $466,030 of other offering costs.
Following the closing of the Initial Public Offering
on September 9, 2020, an amount of $334,215,700 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the
United States and is invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act of 1940, as amended (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 the Company meeting certain conditions of Rule 2a-7 of
the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and
(ii) the distribution of the funds held in the Trust Account, as described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination
with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets
held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account)
at the time of the Company’s signing a definitive agreement in connection with its initial Business Combination. The Company will
only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires an interest in the target business or assets sufficient for it not to be required to register as an
investment company under the Investment Company Act
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination
or conduct a tender offer will be made by the Company. The public stockholders will be entitled to redeem their Public Shares for a pro rata
portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no
redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company will only proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote for business
or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated
Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange
Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to obtain stockholder approval
for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy
rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination,
the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), and any Public Shares purchased during or after the Initial
Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and
Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act),
will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior
consent of the Company.
The Sponsor has agreed (a) to waive its redemption
rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and
(b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem
100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with the
opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until September 9,
2022 to complete a Business Combination (the “Combination Period”). 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 earned on the funds held in the Trust Account and
not previously released to the Company to pay its tax obligations (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 stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve
and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed
to waive its rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete
a Business Combination within the Combination Period and, in such event, such amounts 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 assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or
products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in
each case net of the interest which may be withdrawn to pay franchise and income taxes. This liability will not apply with respect to
claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under
the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under
the Securities. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not
be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the
Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
|
NOTE 2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Presentation
The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q
and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC
for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete
presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair presentation of the financial position, operating results and cash flows for the period presented.
The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A as filed
with the SEC on May 14, 2021. The interim results for the three months ended March 31, 2021 are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or for any future periods.
Principles of Consolidation
The accompanying condensed consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions
have been eliminated in consolidation.
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 independent registered public
accounting firm 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 stockholder 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 a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of condensed consolidated financial
statements in conformity with 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 consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set
of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in
formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results
could differ significantly 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. The Company did not have any cash equivalents
as of March 31, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities
are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded
at amortized cost on the accompanying condensed consolidated balance sheets and adjusted for the amortization or accretion of premiums
or discounts.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common
stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights
that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the
Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity.
The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, the 33,421,570 and 28,283,580 shares of Class A common
stock subject to possible redemption at March 31, 2021 and December 31, 2020, respectively, are presented as temporary equity,
outside of the stockholders’ equity section of the Company’s condensed consolidated balance sheets.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of redeemable Class A common stock to equal the redemption value at
the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges
against additional paid in capital and accumulated deficit.
Offering Costs
Offering costs consist of legal, accounting and
other expenses that are directly related to the Initial Public Offering. Offering costs amounted to $18,847,894, of which $18,132,174
were charged to stockholders’ equity upon the completion of the Initial Public Offering and $715,720 was expensed to the condensed
consolidated statement of operations.
Warrant Liability
The Company accounts for the Warrants in accordance
with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must be recorded
as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust the Warrants to fair value
at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair
value is recognized in the statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded
price was available are valued using a binomial lattice model. For periods subsequent to the detachment of the Public Warrants from the
Units, the Public Warrant quoted market price was used as the fair value as of each reporting date.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of March 31, 2021 and December 31,
2020, the Company had a deferred tax asset of approximately $637,000 and $59,000, respectively, which had a full valuation allowance recorded
against it.
The Company’s currently taxable income primarily
consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up
costs and are not currently deductible. During the three months ended March 31, 2021, the Company did not record a provision for
income taxes. The Company’s effective tax rate for the three months ended March 31, 2021 was approximately 0%, which differs
from the expected income tax rate mainly due to the start-up costs (discussed above), which are not currently deductible, and permanent
differences attributable to the change in the fair value of warrant liabilities.
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.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of March 31, 2021 and December 31, 2020. 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.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Net Income (Loss) per Common Share
Net income (loss) per common share is computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The Company has not considered
the effect of warrants sold in the Initial Public Offering and private placement to purchase 26,410,785 shares of common stock in the
calculation of diluted income (loss) per share, since the inclusion of such warrants would be anti-dilutive under the treasury stock method.
As a result, diluted income (loss) per common share is the same as basic income (loss) per common share for the period presented.
The Company’s statement of operations includes
a presentation of income (loss) per share for common stock subject to possible redemption in a manner similar to the two-class method
of income (loss) per share. Net income per common share, basic and diluted, for Class A common stock is calculated by dividing the
interest income earned on the Trust Account, net of franchise and income taxes, by the weighted average number of Class A common
stock outstanding since original issuance. Net income (loss) per share, basic and diluted, for Class B common stock is calculated
by dividing the net income (loss), adjusted for income attributable to Class A common stock, net of applicable franchise and income
taxes, by the weighted average number of Class B common stock outstanding for the period. Class B common stock includes the
Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
The following table reflects the calculation of
basic and diluted net income (loss) per common share (in dollars, except per share amounts):
|
|
Three Months
Ended March
31,
|
|
|
|
2021
|
|
Class A Common Stock
|
|
|
|
|
Numerator: Earnings allocable to Class A Common Stock
|
|
|
|
|
Interest Income
|
|
$
|
50,175
|
|
Less: Income and Franchise Tax
|
|
|
(50,000
|
)
|
Net Earnings
|
|
$
|
175
|
|
Denominator: Weighted Average Class A Common Stock
|
|
|
|
|
Class A Common Stock, Basic and Diluted
|
|
|
33,421,570
|
|
Earnings/Basic and Diluted Class A Common Stock
|
|
$
|
0.00
|
|
|
|
|
|
|
Class B Common Stock
|
|
|
|
|
Numerator: Net Income minus Net Earnings
|
|
|
|
|
Net Income
|
|
$
|
7,282,560
|
|
Less: Net Earnings allocable to Class A Common Stock
|
|
|
(175
|
)
|
Net Income
|
|
$
|
7,282,385
|
|
Denominator: Weighted Average Class B Common Stock
|
|
|
|
|
Class B Common Stock, Basic and Diluted
|
|
|
8,355,392
|
|
Income/Basic and Diluted Class B Common Stock
|
|
$
|
0.87
|
|
As of March 31, 2021, basic and diluted shares
are the same as there are no securities that are dilutive to the stockholders.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts
represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Recent Accounting Standards
In August 2020, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU
2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation
of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures
for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends
the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not
have an impact on the Company’s financial statements.
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
consolidated financial statements.
|
NOTE 3.
|
INITIAL PUBLIC OFFERING
|
Pursuant to the Initial Public Offering, the Company
sold 33,421,570 Units, which includes a partial exercise by the underwriter of its over-allotment option in the amount of 3,421,570 Units,
at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant
(“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a
price of $11.50 per share, subject to adjustment (see Note 7).
|
NOTE 4.
|
PRIVATE PLACEMENT
|
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 9,700,000 Private Placement Warrants, at a price of $1.00 per private placement
warrant, or $9,700,000 in the aggregate. Each private placement warrant is exercisable to purchase one share of common stock at an exercise
price of $11.50 per share, subject to adjustment (see Note 7). A portion of the proceeds from the private placement warrants were added
to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within
the Combination Period, the proceeds from the sale of the private placement warrants held in the Trust Account will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law), and the private placement warrants will expire worthless.
|
NOTE 5.
|
RELATED PARTY TRANSACTIONS
|
Founder Shares
In June 2020, the Sponsor purchased 8,625,000
shares of the Company’s Class B common stock (the “Founder Shares”) for an aggregate purchase price of $25,000.
The Founder Shares included an aggregate of up to 269,607 shares that were subject to forfeiture by the Sponsor following the underwriter’s
election to partially exercise its over-allotment option so that the number of Founder Shares would collectively represent approximately
20% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter’s over-allotment option
expired unexercised on October 24, 2020, as such 269,607 Founder Shares were forfeited, resulting in there being an aggregate of
8,355,393 Founder Shares outstanding.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares 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 common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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, stock exchange, reorganization or other similar transaction that results in all
of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other
property.
Administrative Support Agreement
The Company entered into an agreement, commencing
on September 9, 2020, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial,
and administrative support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these
monthly fees. For the three months ended March 31, 2021, the Company incurred $30,000 in fees for these services. As if March 31,
2021 and December 31, 2020, there was $70,000 and $40,000, respectively, included in accounts payable and accrued expenses in the
accompanying condensed consolidated balance sheets.
Promissory Note — Related Party
In June 2020, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of December 31, 2020 or the consummation
of the Initial Public Offering. The outstanding balance under the Promissory Note of $52,250 was repaid on September 15, 2020.
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Related Party Loans
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors
or their affiliates 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 out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. 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. 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, at a price of $1.00 per warrant, of the post Business Combination
entity. The warrants would be identical to the Private Placement Warrants. As of March 31, 2021 and December 31, 2020, no Working
Capital Loans were outstanding.
|
NOTE 6.
|
COMMITMENTS AND CONTINGENCIES
|
Risks and Uncertainties
Management continues to evaluate the impact
of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the
Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Registration and Stockholder Rights
Pursuant to a registration and stockholder rights
agreement entered into on September 9, 2020, the holders of the Founder Shares, Private Placement Warrants, and warrants that may
be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private
Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares)
are entitled to registration rights, requiring the Company to register such securities for resale (in the case of the Founder Shares,
only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders will have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to
require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration
and stockholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to
become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option
from the date of the Initial Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the Initial
Public Offering price less the underwriting discounts and commissions. The underwriter’s elected to partially exercise the over-allotment
option to purchase an additional 3,421,570 Units. The remaining 1,078,430 Units expired unexercised on October 24, 2020.
The underwriter is entitled to a deferred fee
of $0.35 per Unit, or $11,697,550 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the
Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Business Combination Agreement
On March 1, 2021, the Company entered into
a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination
Agreement”), by and among the Company, Merger Sub, QOMPLX and Rationem, LLC, a Delaware limited liability company, in its capacity
as the representative of the stockholders of QOMPLX.
The Business Combination Agreement provides for,
among other things, the following transactions: (i) QOMPLX will change its name to “QOMPLX Operations, Inc.”; (ii) the
Company’s certificate of incorporation and bylaws will be amended and restated; and (iii) Merger Sub will merge with and into
QOMPLX, with QOMPLX as the surviving company in the merger, and after giving effect to such merger, continuing as the Company’s
wholly owned subsidiary. In addition, in connection with transactions contemplated by the Business Combination Agreement, the Company
is expected to change its name to “QOMPLX, Inc.” and QOMPLX is expected to consummate each of the acquisitions of Sentar, Inc.,
an Alabama corporation, and substantially all assets of RPC Tyche LLP, a limited liability partnership incorporated under the laws of
England and Wales (such acquisitions, together with the other transactions contemplated by the Business Combination Agreement, including
the PIPE Financing and the Bridge Financing (each as defined below), the “QOMPLX Business Combination”).
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Immediately prior to the effective time of the
QOMPLX Business Combination, in accordance with the terms and subject to the conditions of the Business Combination Agreement, outstanding
shares of QOMPLX (other than treasury shares and shares with respect to which appraisal rights under the Delaware General Corporation
Law are properly exercised and not withdrawn) will be exchanged for shares of Class A common stock, par value $0.0001 per share,
of New QOMPLX (the “New QOMPLX Common Stock”) and outstanding QOMPLX vested options to purchase shares of QOMPLX will be exchanged
for comparable options to purchase New QOMPLX Common Stock, in each case, based on an implied QOMPLX equity value of $850,000,000. This
implied equity value of $850,000,000 is increased by the aggregate exercise price of vested options used to purchase shares of QOMPLX
and is reduced by the accrued and unpaid interest under the Notes (as defined below) issued pursuant to the Bridge Financing Agreement.
Unvested and unexercised QOMPLX options will also be exchanged for comparable options to purchase New QOMPLX Common Stock based on the
same exchange ratio that is used for the exchange of the vested options to purchase shares of QOMPLX.
Concurrently with the execution of the Business
Combination Agreement, the Company entered into (i) the subscription agreements (the “Subscription Agreements”) with
certain investors, including, among others, Cannae Holdings, LLC (“Cannae”) and additional third party investors and (ii) a
bridge financing agreement (the “Bridge Financing Agreement”) with QOMPLX, Cannae and certain other stockholders of QOMPLX.
Pursuant to the Subscription Agreements, (A) each investor agreed to subscribe for and purchase, and the Company agreed to issue
and sell to such investors, on the closing date of the QOMPLX Business Combination substantially concurrently with the closing of the
QOMPLX Business Combination, an aggregate of 16,000,000 shares of New QOMPLX Common Stock for a purchase price of $10.00 per share, for
aggregate gross proceeds of $160,000,000 (the “PIPE Financing”) and (B) the Company agreed to issue an additional 835,539
shares of New QOMPLX Common Stock to Cannae in exchange for its agreement to act as the lead investor in the PIPE Financing with a $50,000,000
commitment. Pursuant to the Bridge Financing Agreement, QOMPLX has agreed to issue convertible notes (the “Notes”) to the
investors party thereto in an aggregate principal amount of $20,000,000 and the Company has agreed to, subject to, and conditioned upon
the occurrence of, and effective as of immediately prior to, the closing of the QOMPLX Business Combination, assume the Notes and satisfy
and discharge the principal amount and accrued and unpaid interest under each Note as of such time by way of issuance of one share of
New QOMPLX Common Stock for every $10.00 of principal amount and accrued and unpaid interest payable on a Note as of such time.
|
NOTE 7.
|
STOCKHOLDERS’ EQUITY
|
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per
share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.
At March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock — The Company is authorized to issue 500,000,000 shares of Class A common stock with a par
value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2021 and December 31,
2020, there were 0 and 5,137,990 shares of Class A common stock issued and outstanding, excluding 33,421,570 and 28,283,580 shares
of Class A common stock subject to possible redemption, respectively.
The Company determined the Class A common
stock subject to redemption to be equal to the redemption value of approximately $10.00 per share of Class A common stock while
also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Upon considering the impact
of the PIPE Financing and associated Subscription Agreements, it was concluded that the redemption value should include all shares of
Class A common stock resulting in the Class A common stock subject to possible redemption being equal to $334,215,700. This
resulted in a measurement adjustment to the initial carrying value of the Class A common stock subject to redemption with the offset
recorded to additional paid-in capital and accumulated deficit.
Class B
Common Stock — The Company is authorized to issue 50,000,000 shares of Class B common stock with a par
value of $0.0001 per share. At March 31, 2021 and December 31, 2020, there were 8,355,392 shares of Class B common stock
issued and outstanding.
Holders of Class A common stock and Class B
common stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment.
In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of
the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of
Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of
the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance)
so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal,
in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion
of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection
with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination).
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 8. WARRANTS
Public Warrants may only be exercised for a whole
number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants
will become exercisable on the later of (a) 12 months from the closing of the Initial Public Offering and (b) 30 days
after the completion of a Business Combination.
The Company will not be obligated to deliver
any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise
unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants
is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration,
or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated to issue any
shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants.
The Company has agreed that as soon as practicable,
but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts
to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock
issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective
within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement
and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified
in the warrant agreement; provided that if the Class A common stock is at the time of any exercise of a warrant not listed on a
national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company
will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonably efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering
the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of
a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when
the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonably
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemptions
of warrants when the price of Class A common stock equals or exceeds $18.00 — Once the Public Warrants become exercisable,
the Company may redeem the Public Warrants:
|
●
|
in whole and
not in part;
|
|
|
|
|
●
|
at
a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon not less than 30 days’
prior written notice of redemption to each warrant holder; and
|
|
|
|
|
●
|
if, and only if, the closing
price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period
ending three trading days before the Company sends the notice of redemption to the warrant holders.
|
If and when the Public Warrants become redeemable
by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for
sale under all applicable state securities laws.
Redemption
of warrants when the price per share of Class common stock equals or exceeds $10.00 — Once the Public Warrants
become exercisable, the Company may redeem the Public Warrants:
|
●
|
in whole and
not in part;
|
|
|
|
|
●
|
at $0.10 per warrant upon
a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants
on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value
of the Class A common stock;
|
|
|
|
|
●
|
if, and only if, the last
reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted per stock splits, stock dividends,
reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within the 30-trading day period ending
three trading days before the Company send the notice of redemption to the warrant holders; and
|
|
|
|
|
●
|
if the closing price of
the Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the
date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share, the Private Placement
Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business
Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price
or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A
common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business
Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted
(to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption
trigger price and the “Redemption of Warrants when the price per share of Class A common stock equals or exceeds $10.00”
described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price,
and the $10.00 per share redemption trigger price described above under “Redemption of Warrants when the price per share of Class A
common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and
the Newly Issued Price. As of March 31, 2021, and December 31, 2020, the Company had 16,710,785
and 9,700,000 Public Warrants and Private Placement Warrants, respectively, outstanding.
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 shares
of Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are
held by the initial purchasers or their permitted transferees (except for a number of shares of Class A common stock as described
above under Redemption of warrants for Class A common stock). If the Private Placement Warrants are held by someone other
than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption
scenarios and exercisable by such holders on the same basis as the Public Warrants.
NOTE 9. 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.
|
At March 31, 2021, assets held in the Trust
Account were comprised of $674 in cash and $334,370,632 in U.S. Treasury Bills. At December 31, 2020, assets held in the Trust Account
were comprised of $1,138 in cash and $334,319,993 in U.S. Treasury Bills. During the three months ended March 31, 2021, the Company
did not withdraw any interest income from the Trust Account.
The gross holding gains (losses) and fair value of held-to-maturity
securities at March 31, 2021 and December 31, 2020 are as follows:
|
|
|
Held-To-Maturity
|
|
Amortized
Cost
|
|
|
Gross
Holding
Gain (Loss)
|
|
|
Fair Value
|
|
March 31, 2021
|
|
|
U.S. Treasury Securities (Mature on 05/04/2021) (1)
|
|
$
|
334,370,632
|
|
|
$
|
5,024
|
|
|
$
|
334,375,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
U.S. Treasury Securities (Mature on 05/04/2021)
|
|
$
|
334,319,993
|
|
|
$
|
(1,804
|
)
|
|
$
|
334,318,189
|
|
|
(1)
|
Upon maturity, the proceeds in the
Trust Account were invested in a money market fund.
|
TAILWIND ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The following table presents information about the Company’s
assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020 indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Assets:
|
|
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
334,375,656
|
|
|
$
|
334,318,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
|
1
|
|
|
$
|
17,045,001
|
|
|
$
|
23,395,099
|
|
Warrant Liability – Private Placement Warrants
|
|
|
3
|
|
|
$
|
9,894,000
|
|
|
$
|
13,580,000
|
|
The Warrants were accounted for as
liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying condensed consolidated
balance sheets. The warrant liabilities are measured at fair value at issuance and on a recurring basis, with changes in fair value
presented within change in fair value of warrant liabilities in the condensed consolidated statement of operations.
The Private Placement Warrants were valued using
a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable
input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock. The expected
volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’
companies without an identified target. For periods subsequent to the detachment of the Public Warrants from the Units, the close price
of the Public Warrant price was used as the fair value as of each relevant date.
The following table presents the changes
in the fair value of Level 3 warrant liabilities:
|
|
Private
Placement
|
|
Fair value as of January 1, 2021
|
|
$
|
13,580,000
|
|
Change in fair value
|
|
|
(3,686,000
|
)
|
Fair value as of March 31, 2021
|
|
$
|
9,894,000
|
|
There were no transfers in or out of Level 3 from other levels in
the fair value hierarchy during the three months ended March 31, 2021.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred
after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review,
the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial
statements.