References in this report to "we," "us" or the "Company" refer to Tailwind
Acquisition Corp. References to our "management" or our "management team" refer
to our officers and directors, and references to the "Sponsor" refer to Tailwind
Sponsor LLC. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
financial statements and the notes thereto contained elsewhere in this Form
10-Q. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This 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 Exchange Act that are not historical facts, and involve risks
and uncertainties that could cause actual results to differ materially from
those expected and projected. All statements, other than statements of
historical fact included in this Form 10-Q including, without limitation,
statements regarding the Nuburu Proposed Business Combination and statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (the "SEC ") on March 31, 2022 and the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on May 16,
2022. The Company's securities filings can be accessed on the EDGAR section of
the SEC's website at www.sec.gov. Except as expressly required by applicable
securities law, the Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
May 29, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar Business
Combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Warrants, our capital stock, debt or a combination
of cash, stock and debt.
Recent Developments
On August 5, 2022, we entered into a Merger Agreement, by and among the company,
Merger Sub, and Nuburu. See Note 10 above for a description of the Merger
Agreement and the transactions contemplated thereby.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from May 29, 2020 (inception) through June 30, 2022 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and identifying a target company for a Business
Combination. We do not expect to generate any operating revenues until after the
completion of our Business Combination. We generate non-operating income in the
form of interest income on marketable securities held in the Trust Account. We
incur expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence
expenses.
For the three months ended June 30, 2022, we had a net income of $1,852,212 ,
which consists of the interest earned on marketable securities held in Trust
Account of $576,300 and the change in the fair value of warrant liability of
$1,848,754, offset by operational costs of $462,319 and a provision for income
taxes of $110,523.
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For the six months ended June 30, 2022, we had a net income of $11,013,680,
which consists of the interest earned on marketable securities held in Trust
Account of $750,404 and the change in the fair value of warrant liability of
$11,092,529, offset by operational costs of $712,237 and a provision for income
taxes of $117,016.
For the three months ended June 30, 2021, we had a net loss of $10,205,519,
which consists of operational costs of $1,503,643 and the change in the fair
value of warrant liability of $8,715,559, offset by the interest earned on
marketable securities held in Trust Account of $13,683.
For the six months ended June 30, 2021, we had a net loss of $2,922,959, which
consists of operational costs of $4,307,356, offset by the interest earned on
marketable securities held in Trust Account of $63,858 and the change in the
fair value of warrant liability of $1,320,539.
Liquidity and Capital Resources
On September 9, 2020, we consummated the Initial Public Offering of 33,421,570
Units at a price of $10.00 per Unit, which includes the partial exercise by the
underwriter of its over-allotment option in the amount of 3,421,570 Units,
generating gross proceeds of $334,215,700. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 9,700,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant in a
private placement to the Sponsor, generating gross proceeds of $9,700,000.
Following the Initial Public Offering, the partial exercise of the
over-allotment option by the underwriter's and the sale of the Private Placement
Warrants, a total of $334,215,700 was placed in the Trust Account. We incurred
$18,847,894 in transaction costs, including $6,684,314 of underwriting fees,
$11,697,550 of deferred underwriting fees and $466,030 of other offering costs.
For the six months ended June 30, 2022, cash used in operating activities was
$266,031. Net income of $11,013,680 was affected by interest earned on
marketable securities held in Trust Account of $750,404 and the change in the
fair value of warrant liability of $11,092,529. Changes in operating assets and
liabilities provided $563,222 of cash for operating activities.
For the six months ended June 30 2021, cash used in operating activities was
$760,883. Net loss of $2,922,959 was affected by interest earned on marketable
securities held in the Trust Account of $63,858 and the change in the fair value
of warrant liabilities of $1,320,539. Changes in operating assets and
liabilities provided $3,546,473 of cash for operating activities.
As of June 30, 2022, we had marketable securities and cash held in the Trust
Account of $335,191,598. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account to complete our Business Combination. To the extent that our
capital stock or debt is used, in whole or in part, as consideration to complete
our Business Combination, the remaining proceeds held in the Trust Account will
be used as working capital to finance the operations of the target business or
businesses, make other acquisitions and pursue our growth strategies.
As of June 30, 2022, we had $213,663 of cash held outside of the Trust Account.
We intend to use the funds held outside the trust account primarily to identify
and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, the sponsor, or certain of the Company's
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. 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
does not close, we 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. 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.
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If our estimate of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating a business combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our business combination. Moreover, we may need to
obtain additional financing either to complete our business combination or
because we become obligated to redeem a significant number of our public shares
upon consummation of our business combination, in which case we may issue
additional securities or incur debt in connection with such business
combination.
Going Concern and Liquidity
We have until September 9, 2022 to consummate an initial business combination.
It is uncertain that we will have sufficient liquidity to fund the working
capital needs of the Company until the liquidation date. Additionally, it is
uncertain that we will be able to consummate an initial business combination by
this time. The Company may not have sufficient liquidity to fund the working
capital needs of the Company until one year from the issuance of the financial
statements included in this Report. If an initial business combination is not
consummated by this date, there will be a mandatory liquidation and subsequent
dissolution. Management has determined that the mandatory liquidation, should an
initial business combination not occur, and potential subsequent dissolution
raises substantial doubt about our ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should we be required to liquidate after September 9, 2022.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities
and secretarial, and administrative support services to the Company. We began
incurring these fees on September 9, 2020 and will continue to incur these fees
monthly until the earlier of the completion of the Business Combination and the
Company's liquidation.
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.
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the period reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Warrant Liabilities
We account 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, we classify 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 our
condensed consolidated statements of operations.
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Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." 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 are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) is classified as temporary equity. At all other times, common stock
is classified as stockholders' equity. Our common stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, the common stock subject
to possible redemption is presented as temporary equity, outside of the
stockholders' deficit section of our condensed consolidated balance sheets.
Net Income Per Common Share
Net income per common stock is computed by dividing net income (loss) by the
weighted average number of common stock outstanding for the period. We have two
classes of shares, which are referred to as Class A common stock and Class B
common stock. Income and losses are shared pro rata between the two classes of
shares. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
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. We adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU
2020-06 did not have an impact on our condensed consolidated financial
statements.
In June 2016, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which
requires entities to measure all expected credit losses for financial assets
held at the reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts. ASU 2016-13 also requires additional
disclosures regarding significant estimates and judgments used in estimating
credit losses, as well as the credit quality and underwriting standards of an
entity's portfolio. The Company expects to adopt the provisions of this guidance
on January 1, 2023. The adoption is not expected to have a material impact on
the Company's condensed financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed consolidated financial statements.
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