10-K
1
tm2111126d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
̈TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Tailwind Acquisition
Corp.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (646) 432-0610
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class: Trading Symbol: Name of Each Exchange on Which Registered:
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ̈ No x
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ̈ No x
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx No ̈
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No ̈
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Smaller reporting company x
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ̈
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yesx No ̈
As of June 30, 2020, the last business day of the registrant’s
most recently completed second fiscal quarter, the registrant’s securities were not publicly traded. The registrant’s units
began trading on The New York Stock Exchange (“NYSE”) on September 4, 2020 and the registrant’s shares of Class A common
stock, par value $0.0001 (the “Class A common stock”) and public warrants began trading on the NYSE on October 23, 2020. The
aggregate market value of the Class A common stock outstanding, other than shares held by persons who may be deemed affiliates of the
registrant, computed by reference to the closing sales price for the shares of Class A common stock on December 31, 2020, as reported
on the NYSE, was $347,250,112.
As of March 31, 2021, 33,421,570 shares of Class A common stock,
par value $0.0001, and 8,355,393 shares of Class B common stock, par value $0.0001, were issued and outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS iii
PART I 3
Item 1. Business 3
Item 1A. Risk Factors 24
Item 1B. Unresolved Staff Comments 51
Item 2. Properties 51
Item 3. Legal Proceedings 51
Item 4. Mine Safety Disclosures 51
Item 6. Selected Financial Data 53
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56
Item 8. Financial Statements and Supplementary Data 56
Item 9A. Controls and Procedures 57
PART III 58
Item 10. Directors, Executive Officers and Corporate Governance 58
Item 11. Executive Compensation 66
Item 14. Principal Accountant Fees and Services 71
Item 15. Exhibits, Financial Statements Schedules 73
i
CERTAIN TERMS
Unless otherwise stated in this Annual Report
on Form 10-K (this “Report”), or the context otherwise requires, references to:
· “management” or our “management team” are to Chris Hollod and Matt Eby;
· “QOMPLX” are to QOMPLX, Inc.;
ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Report, including, without limitation, statements
under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”)
and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements
can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,”
“expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,”
“predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable
terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but
are not limited to, any statements relating to our ability to consummate any acquisition or other business combination (including our proposed business combination
with QOMPLX) and any other statements
that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual
results may differ materially due to various factors, including, but not limited to:
· our ability to select an appropriate target business or businesses;
· our pool of prospective target businesses;
· our public securities’ potential liquidity and trading;
· the lack of a market for our securities;
· the trust account not being subject to claims of third parties; or
· our financial performance following the offering.
The forward-looking statements contained in this
Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments
affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some
of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors
described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any
of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors”
may not be exhaustive.
By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.
We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations,
financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or
suggested by the forward-looking statements contained in this Report. In addition, even if our results or operations, financial
condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements
contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.
iii
SUMMARY OF RISK FACTORS
The following
is a summary of the principal risks described below in Part I, Item 1A “Risk Factors” in this Report. We believe that the
risks described in the “Risk Factors” section are material to investors, but other factors not presently known to
us or that we currently believe are immaterial may also adversely affect us. The following summary should not be considered an exhaustive
summary of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and the other
information contained in this Report.
1
2
PART I
Item 1. Business
Overview
We are a blank check company incorporated as a
Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses, which we refer to throughout this Report as our initial business combination.
We are an early stage and emerging growth company and, as such, we are subject to all of the risk associated with early stage and emerging
growth companies.
On September 9, 2020, we consummated an initial
public offering of 33,421,570 units, including the 3,421,570 units as a result of the underwriter’s partial exercise of its over-allotment
option, at an offering price of $10.00 per unit and a private placement with our Sponsor of 9,700,000 private placement warrants at a
price of $1.00 per warrant. The gross proceeds from our initial public offering, together with certain of the proceeds from the private
placement, totaled $343,915,700 in the aggregate.
We are seeking to capitalize on the multiple decades
of combined investment experience of our management team, board of directors and Advisors who are both technology entrepreneurs as well
as technology-oriented investors with a shared vision of identifying and investing in technology companies. We are also deeply experienced
in identifying omni-channel trends that we believe are even more important in a COVID and post-COVID world. We believe that our management
team’s, board of directors’ and Advisors’ relationships with leading technology company founders, executives of private
and public companies, venture capitalists and growth equity fund managers and their ability to identify and implement value creation initiatives,
in particular via marketing optimization, give us a competitive advantage. Our team has been immersed in the same ecosystem as the current
founders of private companies who are making decisions on how to build currency for future growth and monetization.
While we may pursue an initial business combination
target in any business, industry or geographical location, we intend to focus our search within the consumer internet, digital media and
marketing technology sectors. We intend to capitalize on the ability of our management team to identify, acquire and operate a business
or businesses that can benefit from our management team’s, board of directors’ and Advisors’ established relationships
and operating experience. Our management team has extensive experience in identifying and executing strategic investments and has done
so successfully in a number of sectors, particularly in digital consumer-facing businesses.
Accordingly, on March 1, 2021, we entered into
a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination
Agreement”), with Compass Merger Sub, Inc., a Delaware corporation (“Merger Sub”), QOMPLX and Rationem, LLC, a Delaware
limited liability company, in its capacity as the representative of the stockholders of QOMPLX (“QOMPLX Stockholder Representative”).
QOMPLX is a cloud-native leader in risk analytics
that provides technology solutions in the cybersecurity, risk transfer, and finance spaces. QOMPLX’s customers rapidly ingest, transform,
and contextualize large, complex, and disparate data sources using our platform and solutions in order to better quantify, model, and
predict risks and make critical operational decisions. QOMPLX’s technology platform delivers valuable operational services that
are enhanced by QOMPLX’s domain expertise to help organizations develop more informed risk strategies and make quality decisions
in demanding areas, such as cybersecurity, insurance, finance and government.
The Business Combination Agreement provides
for, among other things, the following transactions: (i) QOMPLX will change its name to “QOMPLX Operations, Inc.”; (ii)
our 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 our wholly owned subsidiary
(the “Merger”). In addition, in connection with the transactions contemplated by the Business Combination
Agreement, we are expected to change our name to “QOMPLX, Inc.” (“New QOMPLX”) and QOMPLX is expected to
consummate each of the acquisitions of Sentar, Inc., an Alabama corporation (“Sentar”),
and substantially all assets of RPC Tyche LLP, a limited liability partnership incorporated under the laws of England and Wales
(“Tyche”) (such acquisitions, collectively, the “Pipeline
Acquisitions” and, together with the other transactions contemplated by the Business Combination Agreement, including the PIPE
Financing and the Bridge Financing (each as defined below), the “Business Combination”).
3
Immediately prior to the effective time of the
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 (each as defined
below). 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, we entered into (i) 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”, and together with the Subscription Agreements, collectively, the “Financing
Agreements”) with QOMPLX, Cannae and certain other stockholders of QOMPLX. Pursuant to the Subscription Agreements, (A) each investor
agreed to subscribe for and purchase, and we agreed to issue and sell to such investors, on the closing date of the Business Combination
substantially concurrently with the closing of the 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) we 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 hawse have agreed to, subject
to, and conditioned upon the occurrence of, and effective as of immediately prior to, the closing of the 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.
Consummation of the transactions contemplated by
the Business Combination Agreement are subject to customary conditions of the respective parties, including receipt of approval from stockholders
of each of Tailwind and QOMPLX for consummation of the transactions and certain other actions related thereto by our stockholders.
Other than as specifically discussed, this Report
does not assume the closing of the transactions contemplated by the Business Combination Agreement.
Our Management Team, Board of Directors and Advisory Board
Philip Krim, our Chairman, has served as Casper
Sleep Inc.’s Chief Executive Officer and as a member of its board of directors since October 2013. Since founding the Company
in 2013, Mr. Krim has led Casper through tremendous growth, growing revenue from $15 million in 2014 to over $440 million
in 2019, and successfully took the company public in February 2020. Prior to that, Mr. Krim was the Chief Executive Officer
of Vocalize Mobile, a mobile search advertising platform for small businesses, from January 2010 until July 2013, and the Chief
Executive Officer of The Merrick Group from January 2003 until December 2009.
In addition to Mr. Krim, our board of
directors includes private equity and venture capital veterans Chris Hollod, our Chief Executive Officer (Founder and Managing
Partner of Hollod Holdings), Matt Eby, our Chief Financial Officer (Co-Founder and former Managing Partner of Tengram Capital
Partners), and Alan Sheriff (Co-Founder and former Chief Executive Officer of Solebury Capital). Additionally, our board of
directors also benefits from the rich expertise of Wisdom Lu (Founding Partner of Stibel & Co. and Bryant Stibel), Neha Parikh
(former President of Hotwire), and Will Quist (Partner at Slow Ventures).
4
In addition to our management team and board of
directors, we have assembled a highly differentiated Advisory Board of accomplished founders and operators that will help position us
as the value-add partner of choice for today’s leading entrepreneurs. The Advisory Board provides us significant advantages via
their operational expertise and deep networks. Additionally, they provides deep domain expertise across our target sub-verticals which
will be instrumental during our diligence processes. Our Advisory Board also provides us access to unique sourcing opportunities via their
direct networks. Given the extensive operational experiences across our Advisory Board, our Advisors are able to provide guidance to our
eventual target on how to best position the company for long term success.
Our Advisory Board is comprised of Jeff Stibel
(Founding Partner of Stibel & Co. and Bryant Stibel and former President & CEO of Web.com), Michael Kim (Founder and Managing
Partner of Cendana Capital), Dan Teran (Co-Founder and former CEO of Managed by Q), Eli Broverman (Co-Founder of Betterment), Carter Reum
(Co-Founder and General Partner at M13), Courtney Reum (Co-Founder and General Partner at M13), Jesse Pujji (Co-Founder and Executive
Chairman of Ampush), Colin Walsh (Ouai Haircare), and Jeff Hunter (Founder of Talentism LLC).
With respect to the above, past performance of
our management team or our Advisors is not a guarantee of either (i) success with respect to a business combination that may be consummated
or (ii) the ability to successfully identify and execute a transaction. You should not rely on the historical record of management
and its affiliates as indicative of future performance. Our management has no prior experience in operating blank check companies or special
purpose acquisition companies.
Our management team, sponsor, officers, directors
and Advisors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking
an initial business combination. Any such companies may present additional conflicts of interest in pursuing an acquisition target, particularly
in the event there is overlap among investment mandates. However, we do not currently expect that any such other blank check company would
materially affect our ability to complete our initial business combination. In addition, our officers, directors and Advisors are not
required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
Our Mission
Our mission is to provide growth capital, strategic
expertise and a preferred path to a public listing for disruptive high-growth technology and direct-to-consumer companies. We believe
companies, at a certain stage in their development, will see material benefits from being publicly traded, including increasing brand
and company awareness, developing a more liquid acquisition currency and diversifying funding sources and access to capital. An acquisition
by a blank check company with a team that is well-known to, and respected by, technology and vertically focused company founders, their
current third-party investors and their management teams, we believe, can provide a more transparent and efficient mechanism to bring
a private technology company to the public markets.
Our Strategy and Target Industries
We believe that we are well positioned to identify
attractive initial business combination opportunities across the technology and direct-to-consumer sectors. Our goal is to acquire a target
that we can help achieve significant organic growth and could serve as a platform for future add on acquisitions with the goal of becoming
an integrated provider offering a broad range of products or services across the technology ecosystem.
High-growth technology and direct-to-consumer
companies that are successful at creating data-driven direct to consumer business models and addressing the significant consumer
demand for more personalized experiences will reach significant financial scale and create shareholder value. With consumers
spending more time online, brands can more easily control the entire customer journey from discovery to payment, often driving
higher lifetime values. With transactions occurring online, there has been an explosion of data generated by consumers such as
frequency of webpage visits, transaction size, viewed and saved items, checkout cart items, etc. As all this new data provides an
opportunity for better targeting and marketing, many private companies have been raising significant private capital to deploy via
marketing with the hopes of supercharging growth. However, many companies lack the marketing sophistication required to build a
sustainable competitive moat with positive long-term unit economics. As our management team, board of directors and Advisors have
seen, the best companies in these categories are able to efficiently acquire new customers and deliver a personalized experience
which increases engagement and drives higher long-term retention.
5
Key sub-sectors within the technology ecosystem
that we believe are poised to experience rapid growth and could benefit from the experiences of our management team, board of directors
and Advisors include, but are not limited to, telehealth, eSports and digital gaming/betting, digital health and wellness, agriculture
and food technology, education technology, financial and insurance technology, real estate technology, space technology and enterprise
software companies, among others. The success or failure of companies that operate in these markets is largely driven by their ability
to harness the power of data-driven marketing in an efficient manner.
Tremendous market value has been created by these
types of businesses over the last decade as entrepreneurs and investors have raced to build the next-generation of technology and direct-to-consumer
internet brands.
Despite the significant growth of the sector, many
companies remain private with no clear timetable to become public. We believe there exists a set of companies that with the right guidance
and leadership could and should be public companies. Within our target universe there have been over 1,000 companies that raised $50 million
or more from 2015 to June 2020, representing approximately $200 billion plus of private capital raised in aggregate. In the
same time period only approximately 100 companies in our target universe went public raising approximately $45 billion in aggregate
capital (Source: Pitchbook, Thompson One and Capital IQ). This significant imbalance in the number of private companies and capital raised
vs public companies is emblematic of a broken IPO market. With so much capital tied up in illiquid private markets, we believe there will
be significant interest from founders and investors in these categories to engage with our team to achieve a public listing.
The coronavirus (“COVID-19”) outbreak
has proven to be a catalyst for growth for our potential target universe, pulling forward digital consumer trends and adoption across
several consumer categories. There are a number of businesses who have seen massive growth due in part to COVID-19 and they will need
capital to effectively address the increased demand for their products and services. We will likely represent an attractive option to
many of these companies as an efficient and strategic way to raise capital and reach the public markets quickly.
Our management team, board of directors and Advisors
have extensive experience building, advising and investing in companies operating in the same ecosystem as many of the companies in our
target categories. We will leverage our embedded relationships and network of peers in the space to quickly engage with founders in our
target universe. Our unique set of experiences building omni-channel business models and operations will be viewed as a strategic asset
to founders in our target categories. For example, in February 2020 our Chairman, Mr. Krim, successfully led the public debut
of an omni-channel digital first brand, (Casper Sleep (NYSE:CSPR)), putting him in a unique position to advise other founders in the category
looking to reach the public markets.
Additionally, our management team, board of directors
and Advisors have an extensive track record of building data-driven marketing organizations, which has resulted in significant growth
in both revenue and shareholder value. Our experience building sustaining consumer internet brands and leading marketing teams uniquely
positions us to help companies in the category achieve their long-term vision and outperform the competition.
We aim to leverage our extensive expertise driving
marketing innovation and revenue growth within leading public technology companies to help founders achieve long-term success and overcome
any deterrents to becoming a public company. By leveraging our extensive operational experience and network, we believe we can provide
significant benefits to potential targets and public market investors that can potentially lead to attractive long-term risk-adjusted
returns in the public markets.
We believe there are significant opportunities
in these industries to drive value creation, and the below themes will be general areas of focus:
6
· Rapidly growing companies with opportunity to change large categories.
Our Value Proposition
And Differentiation
Our management team, board of directors and Advisors
bring a unique set of operational skills and transaction experience that will be highly relevant for today’s entrepreneur. In addition,
the collective team’s capital markets, M&A and capital raising experience will be invaluable to a potential target as they look
to ready themselves for a public debut.
7
Business Combination Criteria and Sourcing Process
We intend to leverage what we believe is a competitive
advantage in sourcing potential targets that will materially benefit from our unique expertise and where we are best situated to augment
the value of the business following the completion of the initial business combination.
We believe our management team is well positioned
to identify unique opportunities across the technology private company landscape. Our selection process will leverage our relationships
with leading technology company founders, executives of private and public companies, venture capitalists and growth equity funds, in
addition to the extensive industry and geographical reach of the management team, board of directors and Advisors which we believe should
provide us with a key competitive advantage in sourcing potential business combination targets.
We also believe that our management team’s,
the board of directors’ and Advisors’ reputation, experience and track record of making investments in the technology industry
will make us a preferred partner for these potential targets. Given our profile and thematic approach, we anticipate that target business
candidates may be brought to our attention from various unaffiliated sources, in particular founders of, and investors in, other private
and public technology companies in our networks.
We intend to focus our target sourcing efforts
on assessing companies that we believe would benefit significantly from being publicly traded. Further, we believe that we are providing
an interesting alternative investment opportunity that capitalizes on key trends impacting the capital markets for technology companies.
Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We expect to
conduct a comprehensive due diligence review which will include, among other things, management and employee meetings, review of financial
information, facility inspection, and an extensive review of all other material target company information. We intend to use these criteria
as guidelines in evaluating potential acquisition opportunities, but an acquisition may be executed even if it does not meet our guidelines.
Acquisition Criteria
When candidate companies are being evaluated, we
expect to use the following, non-exclusive criteria for determining opportunities.
8
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management team
may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications
related to our initial business combination, which would be in the form of proxy solicitation materials or tender offer documents that
we would file with the U.S. Securities and Exchange Commission, or the SEC.
Our Acquisition Process
In evaluating a prospective target business, we
expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees,
document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us.
We will also utilize our operational and capital allocation experience.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm or an independent accounting firm that our initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Members of our management team indirectly own founder
shares and/or private placement warrants following our initial public offering and, accordingly, may have a conflict of interest in determining
whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our
initial business combination.
Each of our officers and directors presently has,
and any of them in the future may have, additional, fiduciary or contractual obligations to other entities pursuant to which such officer
or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes
aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual
obligations, he or she has honored his or her fiduciary or contractual obligations to present such opportunity to such entity. We do not
believe, however, that the fiduciary duties or contractual obligations of our officers or directors materially affect our ability to complete
our business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
9
Initial Business Combination
So long as our securities are then listed on the
NYSE, our initial business combination must occur with one or more target businesses that together have an aggregate fair market value
of at least 80% of the 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 agreement to enter into the initial business combination. If our board is not able to
independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment
banking firm or an independent accounting firm with respect to the satisfaction of such criteria.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests
or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction
company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders or for other reasons. However, we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended,
or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which
we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire
a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial
business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by
the post- transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes
of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be
based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business
combination for purposes of a tender offer or for seeking stockholder approval, as applicable. In addition, as long as our sponsor is
controlled by Philip Krim, we have agreed not to enter into a definitive agreement regarding an initial business combination without the
prior consent of our sponsor. If our securities are not then listed on the NYSE for whatever reason, we would no longer be required to
meet the foregoing 80% of net asset test.
Our Management Team
Members of our management team are not obligated
to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs
until we have completed our initial business combination. The amount of time that any member of our management team will devote in any
time period will vary based on whether a target business has been selected for our initial business combination and the current stage
of the business combination process.
We believe our management team’s operating
and transaction experience and network of relationships with investment banks, private equity firms, professional advisors and senior
industrial executives provide us with a substantial number of potential business combination targets. Over the course of their careers,
the members of our management team have developed a broad network of contacts and corporate relationships around the world. This network
has grown through the activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships
with sellers, financing sources and target management teams. Our management team is also highly experienced in executing transactions
under varying economic and financial market conditions.
Status as a Public Company
We believe our structure will make us an
attractive business combination partner to target businesses, including QOMPLX. As an existing public company, we offer a target business an
alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners
of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of
shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are
various costs and obligations associated with being a public company, we believe certain target businesses will find this method a
more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial
public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present
to the same extent in connection with a business combination with us.
10
Furthermore, once a proposed business combination
is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriter’s
ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or could
have negative valuation consequences. Once public, we believe the target business would then have greater access to capital and an additional
means of providing management incentives consistent with stockholders’ interests. It can offer further benefits by augmenting a
company’s profile among potential new customers and vendors and aid in attracting talented employees.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also
provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the
Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption
of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits
of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million
as of the end of the prior fiscal year’s second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Financial Position
As of December 31,
2020, we had approximately $334,321,131 held in the trust account, before payment of $11,697,550
in deferred underwriting fees. With the funds available, we offer a target business a variety of options
such as creating a liquidity event for its owners, providing access to the expertise of our management team, providing capital for the
potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we
are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the
flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to
fit its needs and desires.
Effecting our Initial Business Combination
We are not presently engaged in, and we will not
engage in, any operations for an indefinite period of time following our initial public offering. We will effectuate our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants, our
capital stock, debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete
our initial business combination with a company or business that may be financially unstable or in its early stages of development or
growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for
using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in
connection with our business combination or used for redemptions of purchases of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
11
We may seek to raise additional funds through a
private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject
to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our
business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender
offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through
loans in connection with our initial business combination.
Sources of Target Businesses
We anticipate that target business candidates will
be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment
banking firms, consultants, accounting firms and large business enterprises. Target businesses may be brought to our attention by such
unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses
in which they think we may be interested on an unsolicited basis, since many of these sources will have read this report and know what
types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target
business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities
that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting
fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage
a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be
available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our
best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee
will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors,
or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any
services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is). We have agreed to pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial
and administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing
an initial business combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction
company following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion
in our selection process of an acquisition candidate.
We are not prohibited from pursuing an initial
business combination with a business combination target that is affiliated with our sponsor, officers or directors or making the acquisition
through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we seek to complete our
initial business combination with a business combination target that is affiliated with our sponsor, officers or directors, we, or a committee
of independent directors, would obtain an opinion from an independent investment banking firm or an independent accounting firm that such
an initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in
any other context.
If any of our officers or directors becomes aware
of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary
or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting
such business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual
obligations that may take priority over their duties to us.
12
Selection of a Target Business and Structuring of Our Initial
Business Combination
Our initial business combination must occur with
one or more target businesses that together have an aggregate fair market value of at least 80% of our 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 agreement
to enter into the initial business combination. The fair market value of the target or targets will be determined by our board of directors
based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable
businesses. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm or from an independent accounting firm, with respect to the satisfaction of such
criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or
a similar company with nominal operations.
In any case, we will only complete an initial business
combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If
we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or
businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of the 80% of net assets test.
There is no basis for investors in our initial public offering to evaluate the possible merits or risks of any target business with which
we may ultimately complete our business combination.
To the extent we effect our business combination
with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we
expect to conduct a thorough due diligence review, which will encompass, among other things, meetings with incumbent management and employees,
document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information
that will be made available to us.
Lack of Business Diversification
For an indefinite period of time after the completion
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By completing our business combination with only a single business, our lack of diversification may:
Limited Ability to Evaluate the Target’s Management Team
Although we intend to closely scrutinize the management
of a prospective target business when evaluating the desirability of effecting our business combination with that business, our assessment
of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills,
qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the
target business cannot presently be stated with any certainty or may otherwise be subject to change. While it is possible that one or
more of our directors will remain associated in some capacity with us following our business combination, it is unlikely that any of
them will devote their full efforts to our affairs subsequent to our business combination. Moreover, we cannot assure you that members
of our management team will have significant experience or knowledge relating to the operations of the particular target business.
13
We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial business combination. With respect to the proposed Business
Combination with QOMPLX, such matters are specified in the Business Combination Agreement.
Following a business combination, we may seek to
recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that those additional managers will have the requisite skills, knowledge or experience necessary
to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial Business
Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC, subject to the provisions of our amended and restated certificate of incorporation
and bylaws. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to
seek stockholder approval for business or other legal reasons.
Presented in the table below is a graphic explanation
of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law
for each such transaction.
Type of Transaction Whether Stockholder Approval is Required
Purchase of assets No
Purchase of stock of target not involving a merger with the company No
Merger of target into a subsidiary of the company No
Merger of the company with a target Yes
Under the NYSE’s listing rules, stockholder
approval would be required for our initial business combination if, for example: