SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended December 31, 2008
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from __________________ to
______________________.
Commission
file number 001-33385
TAILWIND
FINANCIAL INC.
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
(State
or other jurisdiction of incorporation or organization)
|
13-4338095
(I.R.S.
Employer Identification No.)
|
Brookfield
Place, 181 Bay Street
Suite
2040
Toronto,
Ontario, Canada M5J 2T3
(Address
of principal executive offices)
(416)
601-2422
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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:
Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, " "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
o
|
Accelerated filer
x
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):
Yes
x
No
o
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 15,625,000 shares issued and
outstanding as of January 30, 2009.
TAILWIND
FINANCIAL INC.
INDEX
TO FORM 10-Q
|
|
|
Page
|
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
Item
1.
|
Financial
Statements
|
|
1
|
|
|
|
|
|
Balance
Sheets
As
of December 31, 2008 (unaudited) and June 30, 2008
|
|
2
|
|
|
|
|
|
Statements
of Operations (unaudited)
For
the three and six month periods ended December 31, 2008 and December 31,
2007 and the period from June 30, 2006 (inception) to December 31,
2008
|
|
3
|
|
|
|
|
|
Statements
of Stockholders’ Equity
For
the period from June 30, 2006 (inception) to December 31, 2008
(unaudited)
|
|
4
|
|
|
|
|
|
Statements
of Cash Flows (unaudited)
For
the six month periods ended December 31, 2008 and December 31,
2007 and the period from June 30, 2006 (inception) to December 31,
2008
|
|
5
|
|
|
|
|
|
Notes
to Unaudited Financial Statements
|
|
6
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
11
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
14
|
|
Item
4.
|
Controls
and Procedures
|
|
14
|
|
PART
II. OTHER INFORMATION
|
|
|
|
Item
1A.
|
Risk
Factors
|
|
14
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
14
|
|
Item
5.
|
Other
Information
|
|
14
|
|
Item
6.
|
Exhibits
|
|
14
|
PART
I.
FINANCIAL
STATEMENTS
Index
of Financial Statements
Unaudited
Financial Statements
|
|
|
Page
|
|
|
|
|
|
Balance
Sheets as of December 31, 2008 (unaudited) and June 30,
2008
|
|
2
|
|
|
|
|
|
Statements
of Operations (unaudited) for the three and six month periods ended
December 31, 2008 and December 31, 2007 and the period from June 30, 2006
(inception) to December 31, 2008
|
|
3
|
|
|
|
|
|
Statement
of Stockholders’ Equity (unaudited) for the period from June 30, 2006
(inception) to December 31, 2008
|
|
4
|
|
|
|
|
|
Statements
of Cash Flows (unaudited) for the six month periods ended December 31,
2008 and December 31, 2007 and the period from June 30, 2006 (inception)
to December 31, 2008
|
|
5
|
|
|
|
|
|
Notes
to Unaudited Financial Statements
|
|
6
|
Tailwind
Financial Inc.
(A
Development Stage Company)
BALANCE
SHEETS
|
|
|
December
31,
2008
|
|
|
June
30,
2008
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
30,889
|
|
|
$
|
33,383
|
|
|
Cash
and cash equivalents held in Trust Account (Note 1)
|
|
|
102,216,738
|
|
|
|
102,385,238
|
|
|
Prepaid
expenses
|
|
|
22,802
|
|
|
|
13,750
|
|
|
Income
taxes receivable
|
|
|
9,765
|
|
|
|
-
|
|
|
Total
current assets
|
|
$
|
102,280,194
|
|
|
$
|
102,432,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
acquisition costs (Note 7)
|
|
|
65,000
|
|
|
|
-
|
|
|
Fixed
assets, net of accumulated depreciation of $3,915 and
$2,565
|
|
|
3,416
|
|
|
|
4,766
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
102,348,610
|
|
|
$
|
102,437,137
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Deferred
underwriting fee (Note 4)
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
|
Accounts
payable and accrued expenses
|
|
|
711,158
|
|
|
|
780,161
|
|
|
Due
to shareholders (Note 6)
|
|
|
400,000
|
|
|
|
-
|
|
|
Income
taxes payable
|
|
|
-
|
|
|
|
402,000
|
|
|
Total
current liabilities
|
|
$
|
4,111,158
|
|
|
$
|
4,182,161
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to
possible conversion
(3,748,750 shares at conversion value)
(Note 1)
|
|
|
30,376,546
|
|
|
|
30,381,801
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
(Note
4)
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
(Notes 1 and 3):
|
|
|
|
|
|
|
|
|
|
Preferred
stock, par value $.01 per share, 5,000,000 shares authorized, 0 shares
issued
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, par value $.001 per share, 70,000,000 shares authorized, 11,876,250
shares issued and outstanding (excluding 3,748,750 shares subject to
possible conversion)
|
|
|
11,876
|
|
|
|
11,876
|
|
|
Additional
paid-in capital
|
|
|
66,560,117
|
|
|
|
66,554,862
|
|
|
Retained
earnings accumulated in the development stage
|
|
|
1,288,913
|
|
|
|
1,306,437
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
67,860,906
|
|
|
|
67,873,175
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
102,348,610
|
|
|
$
|
102,437,137
|
|
See notes
to unaudited financial statements.
Tailwind
Financial Inc.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
|
|
|
Three months
ended
December 31, 2008
|
|
|
Three months
ended
December 31, 2007
|
|
|
Six months
ended
December 31, 2008
|
|
|
Six months
ended
December 31, 2007
|
|
|
For the period from
June 30, 2006
(Inception) to
December 31, 2008
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Interest
income
|
|
$
|
100,883
|
|
|
$
|
946,049
|
|
|
$
|
427,500
|
|
|
$
|
2,061,385
|
|
|
$
|
4,512,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off
of deferred acquisition costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,337,802
|
|
|
Formation,
general and administrative expenses (Notes 4 and 5)
|
|
|
257,024
|
|
|
|
172,460
|
|
|
|
456,024
|
|
|
|
282,014
|
|
|
|
1,224,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
|
(156,141
|
)
|
|
|
773,589
|
|
|
|
(28,524
|
)
|
|
|
1,779,371
|
|
|
|
1,950,914
|
|
|
Income
taxes (Note 5)
|
|
|
(54,500
|
)
|
|
|
263,000
|
|
|
|
(11,000
|
)
|
|
|
609,000
|
|
|
|
662,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) for the period
|
|
$
|
(101,641
|
)
|
|
$
|
510,589
|
|
|
$
|
(17,524
|
)
|
|
$
|
1,170,371
|
|
|
$
|
1,288,914
|
|
|
Accretion
of Trust Account relating to common stock subject to possible
conversion
|
|
|
(30,482
|
)
|
|
|
153,127
|
|
|
|
(5,255
|
)
|
|
|
350,995
|
|
|
|
386,546
|
|
|
Net
income (loss) attributable to common stockholders
|
|
$
|
(71,159
|
)
|
|
$
|
357,462
|
|
|
$
|
(12,269
|
)
|
|
$
|
819,376
|
|
|
$
|
902,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of shares outstanding subject to possible conversion, basic and
diluted
|
|
|
3,748,750
|
|
|
|
3,748,750
|
|
|
|
3,748,750
|
|
|
|
3,748,750
|
|
|
|
|
|
|
Net
income (loss) per share subject to possible conversion, basic and
diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding, basic and diluted
|
|
|
11,876,250
|
|
|
|
11,876,250
|
|
|
|
11,876,250
|
|
|
|
11,876,250
|
|
|
|
|
|
|
Net
income (loss) per share, basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.07
|
|
|
|
|
|
See notes
to unaudited financial statements.
Tailwind
Financial Inc.
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY
For
the period from June 30, 2006 (Inception) to December 31, 2008
|
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
Retained
earnings
accumulated
in
the
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-In
Capital
|
|
|
Treasury
Stock
|
|
|
development
stage
|
|
|
Total
|
|
|
Balance
at June 30, 2006
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Issuance
of Common Stock to initial stockholder
|
|
|
3,593,750
|
|
|
|
3,594
|
|
|
|
27,656
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,250
|
|
|
Proceeds
from sale of underwriter’s purchase option
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
Proceeds
from issuance of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
4,700,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,700,000
|
|
|
Sale
of 12,500,000 units through public offering net of underwriter’s discount
and offering expenses and net of $29,990,000 of proceeds allocable to
3,748,750 shares of common stock subject to possible
conversion
|
|
|
8,751,250
|
|
|
|
8,751
|
|
|
|
62,315,040
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62,323,791
|
|
|
Forfeiture
of common stock issued to initial stockholder
|
|
|
-
|
|
|
|
-
|
|
|
|
3,520,312
|
|
|
|
(3,520,312
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Cancellation
of common stock received from initial stockholder (Note 1)
|
|
|
(468,750
|
)
|
|
|
(469
|
)
|
|
|
(3,519,843
|
)
|
|
|
3,520,312
|
|
|
|
-
|
|
|
|
-
|
|
|
Additional
cost of initial public offering
|
|
|
-
|
|
|
|
-
|
|
|
|
(96,602
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(96,602
|
)
|
|
Net
income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,306,437
|
|
|
|
1,306,437
|
|
|
Accretion
of Trust Account relating to common stock subject to possible
conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
(391,801
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(391,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2008
|
|
|
11,876,250
|
|
|
$
|
11,876
|
|
|
$
|
66,554,862
|
|
|
$
|
-
|
|
|
$
|
1,306,437
|
|
|
$
|
67,873,175
|
|
|
Net
income (loss) for the period (unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,524
|
)
|
|
|
(17,524
|
)
|
|
Accretion
of Trust Account relating to common stock subject to possible conversion
(unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,255
|
|
|
Balance
at December 31, 2008 (unaudited)
|
|
|
11,876,250
|
|
|
$
|
11,876
|
|
|
$
|
66,560,117
|
|
|
$
|
-
|
|
|
$
|
1,288,913
|
|
|
$
|
67,860,906
|
|
See notes
to unaudited financial statements.
Tailwind
Financial Inc.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
|
|
|
Six
months
ended
December
31, 2008
|
|
|
Six
months
ended
December
31
,
2007
|
|
|
For
the period from June
30,
2006 (Inception) to
December
31, 2008
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) for the period
|
|
$
|
(17,524
|
)
|
|
$
|
1,170,371
|
|
|
$
|
1,288,914
|
|
|
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
of fixed assets
|
|
|
1,350
|
|
|
|
1,215
|
|
|
|
3,915
|
|
|
Prepaid
expenses
|
|
|
(9,052
|
)
|
|
|
58,338
|
|
|
|
(22,802
|
)
|
|
Accounts
payable and accrued expenses
|
|
|
(134,003
|
)
|
|
|
(110,761
|
)
|
|
|
646,157
|
|
|
Income
taxes payable (receivable)
|
|
|
(411,765
|
)
|
|
|
338,000
|
|
|
|
(9,765
|
)
|
|
Net
cash provided by (used in) operating activities
|
|
$
|
(570,994
|
)
|
|
$
|
1,457,163
|
|
|
$
|
1,906,419
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
contributed to Trust Account
|
|
|
-
|
|
|
|
-
|
|
|
|
(100,000,000
|
)
|
|
Interest
reinvested in Trust Account
|
|
|
(427,500
|
)
|
|
|
(1,361,385
|
)
|
|
|
(4,512,738
|
)
|
|
Cash
transferred from Trust Account to operations
|
|
|
596,000
|
|
|
|
-
|
|
|
|
2,296,000
|
|
|
Purchase
of fixed assets
|
|
|
-
|
|
|
|
(5,399
|
)
|
|
|
(7,331
|
)
|
|
Net
cash provided by (used in) investing activities
|
|
$
|
168,500
|
|
|
$
|
(1,366,784
|
)
|
|
$
|
(102,224,069
|
)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock to initial stockholder
|
|
|
-
|
|
|
|
-
|
|
|
|
31,250
|
|
|
Proceeds
from notes payable to initial stockholder
|
|
|
-
|
|
|
|
-
|
|
|
|
368,750
|
|
|
Repayment
of notes payable to initial stockholder
|
|
|
-
|
|
|
|
-
|
|
|
|
(368,750
|
)
|
|
Deferred
acquisition costs
|
|
|
-
|
|
|
|
(9,707
|
)
|
|
|
-
|
|
|
Proceeds
from issuance of insider warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
4,700,000
|
|
|
Proceeds
from issuance of underwriter’s purchase option
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
Portion
of net proceeds from sale of units through public offering allocable to
shares of common stock subject to possible conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
29,990,000
|
|
|
Net
proceeds from sale of units through public offering allocable
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
-
|
|
|
|
-
|
|
|
|
62,323,791
|
|
|
Deferred
underwriting fees
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000,000
|
|
|
Loan
from shareholders
|
|
|
400,000
|
|
|
|
-
|
|
|
|
400,000
|
|
|
Additional
cost of initial public offering
|
|
|
-
|
|
|
|
(96,602
|
)
|
|
|
(96,602
|
)
|
|
Net
cash provided by (used in) financing activities
|
|
$
|
400,000
|
|
|
$
|
(106,309
|
)
|
|
$
|
100,348,539
|
|
|
Net
increase (decrease) in cash
|
|
|
(2,494
|
)
|
|
|
(15,930
|
)
|
|
|
30,889
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
33,383
|
|
|
|
129,799
|
|
|
|
-
|
|
|
End
of period
|
|
$
|
30,889
|
|
|
$
|
113,869
|
|
|
$
|
30,889
|
|
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of underwriter’s purchase option included in offering
costs
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,108,000
|
|
|
Accretion
of Trust Account relating to common stock subject to possible
conversion
|
|
$
|
(5,255
|
)
|
|
$
|
350,995
|
|
|
$
|
386,546
|
|
|
Accrued
acquisition costs
|
|
$
|
65,000
|
|
|
$
|
339,803
|
|
|
$
|
65,000
|
|
|
Cash
paid for income taxes
|
|
$
|
419,765
|
|
|
$
|
271,000
|
|
|
$
|
690,765
|
|
See notes
to unaudited financial statements.
TAILWIND
FINANCIAL INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
NOTE
1—ORGANIZATION AND BUSINESS OPERATIONS
Tailwind
Financial Inc. (the "Company"), was incorporated in Delaware on
June 30, 2006 as a blank check development stage company whose objective is
to acquire, through a purchase, asset acquisition, or other business combination
(each a "Business Combination") one or more operating businesses.
As of
December 31, 2008, the Company was a development stage company. All activity
through December 31, 2008 related to the Company's formation, public offering
described below (the "Offering"), and activities relating to identification
of and negotiations with a suitable business combination candidate (See Note 7 -
Activities in Pursuit of a Business Combination ).
The
Company consummated the Offering on April 17, 2007. The Company's management has
broad discretion with respect to the specific application of the net proceeds of
the Offering, although substantially all of the net proceeds of the Offering are
intended to be generally applied toward consummating a Business Combination.
Furthermore, there is no assurance that the Company will be able to successfully
consummate a Business Combination. Upon the closing of the Offering, 100% of the
proceeds were deposited in a trust account ("Trust Account") and invested only
in "government securities" or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act of 1940 until
the earlier of (i) the consummation of a first Business Combination or
(ii) dissolution and liquidation of the Company. The Company, after signing
a definitive agreement for the acquisition of a target business, will submit
such transaction for stockholder approval. In the event that stockholders owning
30% or more of the shares sold in the Offering vote against the Business
Combination and exercise their conversion rights described below, the Business
Combination will not be consummated. All of the Company's stockholders prior to
the Offering, including all of the officers and directors of the Company
("Initial Stockholders"), have agreed to vote their founding shares of common
stock in accordance with the vote of the majority in interest of all other
stockholders of the Company ("Public Stockholders") with respect to any Business
Combination. After consummation of a Business Combination, these voting
safeguards will no longer be applicable.
With
respect to a Business Combination which is approved and consummated, any Public
Stockholder who voted against the Business Combination may demand that the
Company convert his or her shares. The per share conversion price will equal the
amount in the Trust Account, calculated as of two business days prior to the
consummation of the proposed Business Combination, divided by the number of
shares of common stock held by Public Stockholders at the consummation of the
Offering. Accordingly, Public Stockholders holding 29.99% of the aggregate
number of shares owned by all Public Stockholders may seek conversion of their
shares in the event of a Business Combination. Such Public Stockholders are
entitled to receive their per share interest in the Trust Account computed
without regard to the shares held by the Initial Stockholders. An amount of
$29,990,000 (plus
accretion of $386,546 aggregating $30,376,546) has been classified as common
stock subject to possible conversion in the balance sheet as at December 31,
2008.
On
March 14, 2007, the Company's amended and restated certificate of
incorporation was filed which provides for the Company's common stock to have a
par value of $0.001 per share (as retroactively reflected in the financial
statements). On April 12, 2007, the Company amended and restated its
certificate of incorporation to provide for mandatory dissolution of the Company
and subsequent liquidation of the funds held in the Trust Account in the event
that the Company does not consummate a Business Combination or execute a letter
of intent, agreement in principle or definitive agreement for a Business
Combination within 18 months from the date of the consummation of the
Offering (October 17, 2008) unless certain extension criteria are met to extend
such date to April 17, 2009. On March 14, 2007, the Company's
Board of Directors declared a 1 for 1.15 stock split in the form of a
stock dividend (as retroactively reflected in the financial statements). In the
event of dissolution and liquidation, it is likely that the per share value of
the residual assets remaining available for distribution (including Trust
Account assets) will be less than the initial public offering price per share in
the Offering (assuming no value is attributed to the warrants contained in the
units offered in the Offering discussed in Note 3). The amended and
restated certificate of incorporation authorizes 5,000,000 shares of preferred
stock and 70,000,000 shares of common stock.
TAILWIND
FINANCIAL INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS (Continued)
The
Initial Stockholders, at the time of the public offering, held 3,593,750 shares
(after the 1 for 1.15 stock split referred to above). 468,750 of these shares
would be redeemed if the underwriters’ over allotment option was not exercised.
Since, on May 17, 2007, the overallotment option was not exercised, the Initial
Stockholders returned the 468,750 shares to the Company for cancellation. At the
date of the return and cancellation, management determined the fair value to be
$7.51 per share based on the common stock closing price on May 17, 2007.
Accordingly, on May 17, 2007, the Company recorded the $3,520,312 value of the
shares contributed to treasury stock and a $3,520,312 corresponding credit to
additional paid-in capital. Upon receipt, such shares were then immediately
cancelled by the Company which resulted in the retirement of the treasury stock
and a corresponding charge to additional paid-in capital and common
stock.
As
indicated in the accompanying financial statements, at December 31, 2008, the
Company has earned interest income on funds held in the Trust Account. Further,
the Company has incurred and expects to continue to incur significant costs in
pursuit of its financing and acquisition plans. There is no assurance that the
Company’s plans to consummate a Business Combination will be successful or
successful within the target business acquisition period (see Note 7 -
Activities in Pursuit of a Business Combination).
NOTE
2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements are unaudited and have been prepared in
accordance with principles generally accepted in the United States of America
("GAAP") for interim financial information and with the instructions to Form
10-Q. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been omitted pursuant to
such rules and regulations. These financial statements should be read in
conjunction with the Company’s audited financial and related disclosures for the
fiscal year ended June 30, 2008, included in the Company’s Form 10-K, filed on
September 15, 2008.
In the
opinion of management, all adjustments (consisting primarily of normal accruals)
have been made that are necessary to present fairly the financial position of
the Company. Operating results for the interim periods presented are not
necessarily indicative of the results to be expected for a full
year.
Use
of Estimates
The
preparation of financial statements 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 and disclosure of contingencies at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual amounts could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Deferred
Acquisition Costs
Costs related to proposed acquisitions
are capitalized and in the event an acquisition does not occur, the costs are
expensed.
Fixed
Assets
Fixed
assets consist of computer equipment at a cost of $7,331 and are depreciated on
a straight line basis over two years.
TAILWIND
FINANCIAL INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS (Continued)
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to credit risk consist of cash
and cash equivalents. The Company’s policy is to limit the amount of credit
exposure to any one financial institution and place investments with financial
institutions evaluated as being creditworthy, or in short-term money market
funds which are exposed to minimal interest rate and credit risk.
Income
Taxes
The
Company recognizes deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the Company’s financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement carrying amounts and the tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse.
Fair
Value Measurements
In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements ( "
SFAS No. 157 " ). SFAS No. 157 provides guidance for using fair value to measure
assets and liabilities. This statement clarifies the principle that fair value
should be based on the assumptions that market participants would use when
pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy,
giving the highest priority to quoted prices in active markets and the lowest
priority to unobservable data. SFAS No. 157 applies whenever other standards
require assets or liabilities to be measured at fair value.
Effective
July 1, 2008, the Company implemented SFAS Statement No. 157, which did not have
an impact on the Company’s financial results.
The
following table presents certain of the Company’s assets that are measured at
fair value as of December 31, 2008. In general, fair values determined by Level
1 inputs utilize quoted prices in active markets and the fair values described
below were determined through market, observable and corroborated
sources.
|
Description
|
|
December
31, 2008
|
|
|
Quoted
Prices in
Active
Markets
(Level
1)
|
|
|
Cash
|
|
$
|
30,889
|
|
|
$
|
30,889
|
|
|
Cash
and cash equivalents held in Trust Account (Note 1)
|
|
|
102,216,738
|
|
|
|
102,216,738
|
|
|
Total
|
|
$
|
102,247,627
|
|
|
$
|
102,247,627
|
|
In
accordance with the provisions of FSP No. FAS 157-2, Effective Date of FASB
Statement No. 157, the Company has elected to defer implementation of SFAS 157
as it relates to its non-financial assets and non-financial liabilities and is
evaluating the impact, if any, this standard will have on its financial
statements.
Earnings
(Loss) Per Common Share
Basic net
income (loss) per share is calculated by dividing net income (loss) attributable
to common stockholders by the weighted average number of common shares
outstanding during the period. Calculation of the weighted average common shares
outstanding during the period is based on 3,593,750 initial shares outstanding
throughout the period from June 30, 2006 (inception) to December 31, 2008,
468,750 initial shares cancelled by the Company on May 17, 2007 (retroactively
restated for this calculation to June 30, 2006) and 8,751,250 common shares
outstanding after the completion of the Offering on April 17, 2007. Basic net
income (loss) per share subject to possible conversion is calculated by dividing
accretion of the Trust Account relating to common stock subject to possible
conversion by 3,748,750 common shares subject to possible conversion. Diluted
earnings (loss) per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Since the effect of outstanding warrants to
purchase common stock and the outstanding unit purchase option issued to
Deutsche Bank Securities Inc. are antidilutive, they have been excluded from the
Company’s computation of net income (loss) per share (see Note 3).
TAILWIND
FINANCIAL INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS (Continued)
Recently
Issued Accounting Standards
In December 2007, the FASB issued SFAS
141 (revised 2007), Business Combinations, ( " SFAS 141(R) " ). SFAS 141(R)
retains the fundamental requirements of the original pronouncement requiring
that the purchase method be used for all business combinations, but also
provides revised guidance for recognizing and measuring identifiable assets and
goodwill acquired, liabilities assumed, and any noncontrolling interest in the
acquiree. It also requires the recognition of assets acquired and liabilities
assumed arising from contingencies, the capitalization of in-process research
and development at fair value, and the expensing of acquisition-related costs as
incurred. SFAS 141(R) is effective for fiscal years beginning after
December 15, 2008. In the event that the Company completes acquisitions
subsequent to its adoption of SFAS 141(R), the application of its provisions
will likely have a material impact on the Company’s results of operations,
although the Company is not currently able to estimate that impact.
In
December 2007, the FASB issued SFAS 160,
Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51
. SFAS
160 requires that ownership interests in subsidiaries held by parties other than
the parent, and the amount of consolidated net income, be clearly identified,
labeled and presented in the consolidated financial statements. It also requires
once a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary be initially measured at fair value.
Sufficient disclosures are required to clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling owners. It
is effective for fiscal years beginning after December 15, 2008, and
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements are applied
prospectively. The Company does not expect the adoption of SFAS 160 to have a
material impact on its financial condition or results of
operations.
The
Company does not believe that any other recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the
accompanying financial statements.
NOTE
3—PUBLIC OFFERING
In the
Offering, the Company sold to the public 12,500,000 units ( " Units " ) at a
price of $8.00 per Unit. Proceeds from the Offering totaled approximately
$95,300,000, which was net of approximately $4,700,000 in underwriting fees and
other expenses paid at closing or previously. The Company also sold in a private
placement immediately prior to the Offering 4,700,000 warrants for proceeds of
$4,700,000.
Each Unit
consists of one share of the Company's common stock, $0.001 par value, and one
Callable Common Stock Purchase Warrant ("Warrant"). Each Warrant entitles the
holder to purchase from the Company one share of common stock at an exercise
price of $6.00 commencing upon consummation of a Business Combination and
expiring April 11, 2011. The Warrants are callable at a price of $.01 per
Warrant upon 30 days' notice after the Warrants become exercisable, only in the
event that the last sale price of the common stock is at least $11.50 per share
for any 20 trading days within a 30 trading day period ending on the third day
prior to the date on which notice of the call is given. The Company may not call
the warrants unless the warrants and the shares of common stock underlying the
warrants are covered by an effective registration statement from the beginning
of the measurement period through the date fixed for the call.
The
Company's obligation is to use its best efforts in connection with the
registration rights agreement and upon exercise of the Warrants, it can satisfy
its obligation by delivering unregistered shares of common stock. If a
registration statement is not effective at the time a warrant is exercised, the
Company will not be obliged to deliver common stock, and there are no contracted
penalties for failure to do so.
The
Company sold the Units issued in the Offering to Deutsche Bank Securities Inc.
at a price per share equal to $7.44 (a discount of $0.56 per share), resulting
in an aggregate underwriting discount to Deutsche Bank Securities Inc. of
$7,000,000. The Company also sold to Deutsche Bank Securities Inc., for $100, an
option to purchase up to a total of 625,000 units. The Company accounted for the
fair value of the option as an expense of the Offering resulting in a charge to
stockholders equity with an equivalent increase in additional paid-in capital.
The Company has determined, based upon a Black-Scholes model, that the fair
value of the option on the date of sale was approximately $1.1 million using an
expected life of four years, volatility of 27.96% and a risk-free interest rate
of 4.65%.
TAILWIND
FINANCIAL INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS (Continued)
The units
issuable upon exercise of the above noted option are identical to those offered
in the Offering except that the warrants included in the option have an exercise
price of $7.20 per share (120% of the exercise price of the Warrants included in
the Units sold in the Offering). This option is exercisable at $9.60 per unit
commencing upon consummation of a Business Combination and expiring April 11,
2011. The option and the 625,000 units, the 625,000 shares of common stock and
the 625,000 warrants underlying such units, and the 625,000 shares of common
stock underlying such warrants, have been deemed compensation by the FINRA and
are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of the
FINRA Rules. Additionally, the option may not be sold, transferred, assigned,
pledged or hypothecated for a one-year period (including the foregoing 180-day
period) following the effective date of the registration statement except to any
underwriter and selected dealer participating in the offering and their bona
fide officers or partners. The option and its underlying securities have been
registered under the registration statement of which the Offering prospectus
forms a part. The exercise price and number of units issuable upon exercise of
the option may be adjusted in certain circumstances including in the event of a
stock dividend, extraordinary dividend, our recapitalization, reorganization,
merger or consolidation. However, the option will not be adjusted for issuances
of common stock at a price below the exercise price of the warrants included in
the option.
NOTE
4—COMMITMENTS
The Company utilizes certain
administrative, technology and secretarial services, as well as certain limited
office space provided by an affiliate of one of the Initial Stockholders. Such
affiliate has agreed that, until the consummation of a Business Combination, it
will make such services available to the Company, as may be required by the
Company from time to time. The Company has agreed to pay such affiliate $7,500
per month for such services commencing on the effective date of the Offering.
Included in formation, general and administrative expenses for the three and six
month periods ended December 31, 2008 is $22,500 and $45,000 of such costs
($157,500 for the period from June 30, 2006 to December 31, 2008).
In
connection with the Offering, the Company entered into an underwriting agreement
(the "Underwriting Agreement") with the underwriters in the Offering. Pursuant
to the Underwriting Agreement, the Company was obligated to pay the underwriter
for certain fees and expenses related to the Offering, including underwriters
discounts of $7,000,000. The Company paid $4,000,000 of the underwriting
discount upon closing of the Offering. The Company and the underwriters have
agreed that payment of the balance of the underwriting discount of $3,000,000
will be deferred until consummation of the Business Combination. Accordingly, a
deferred underwriting fee comprised of the deferred portion of the underwriting
discount is included in the accompanying balance sheet at December 31,
2008. This deferred underwriting discount may be reduced based
on the number of stockholders who do convert.
NOTE
5—TAXES
Provision (benefit) for income taxes
for the three and six month periods ended December 31, 2008 consists of current
federal tax of $(54,500) and $(11,000), respectively. Provision for
income taxes for the period from June 30, 2006 to December 31, 2008 was
$662,000.
The
Company’s effective tax rate approximates the federal statutory rate. No
provision for state and local income taxes has been made since the Company was
formed as a vehicle to effect a Business Combination and, as a result does not
conduct operations and is not engaged in a trade or business in any state. The
Company is incorporated in Delaware and accordingly is subject to franchise
taxes. Delaware franchise tax expense was $23,203 for the three month period
ended December 31, 2008 ($54,203 for the six month period ended December 31,
2008; $222,517 for the period from June 30, 2006 to December 31, 2008), are
included as part of general and administrative expenses in the accompanying
statements of operations.
NOTE
6—DUE TO SHAREHOLDERS
During the quarter ended December 31,
2008, the Company received two loans from the Initial Stockholders of $100,000
each, for a total of $400,000 for the six months ended December 31, 2008. The
loans are non-interest bearing and due on demand.
NOTE
7—ACTIVITIES IN PURSUIT OF A BUSINESS COMBINATION
On January 8, 2008, the Company
announced that it had entered into an agreement and plan of merger with Asset
Alliance Corporation ("Asset Alliance"), a multi-faceted investment management
firm specializing in alternative investments, whereby the Company would have
acquired all the outstanding common stock of Asset Alliance in exchange for
shares of the Company’s common stock, allowing Asset Alliance to access the
public markets through the proposed transaction with the Company. In connection
with the proposed transaction, the Company incurred approximately $1.3 million
of acquisition costs which costs were written off effective June 30, 2008. On
August 6, 2008 the Company formally provided notice to Asset Alliance of its
decision to terminate the agreement and plan of merger.
On August 27, 2008, the Company
announced that it had signed a letter of intent with GrandUnion Inc., a shipping
company headquartered in Piraeus, Greece, contemplating the acquisition by
Tailwind of 20 vessels operating the dry bulk industry, including nine new
buildings to be delivered in 2010 and 2011. On October 28, 2008, the Company
announced that it had terminated this letter of intent in accordance with its
terms effective October 25, 2008.
On January 26, 2009, the Company
announced that it had entered into an arrangement agreement pursuant to which
the Company will acquire all of the shares of Allen-Vanguard Corporation
(“Allen-Vanguard”) in exchange for shares of Tailwind. Allen-Vanguard
is a leading global provider of integrated solutions for protection and
counter-measures against hazardous devices and materials, including improvised
explosive devices (IEDs). In connection with the possible acquisition
the Company had incurred as at December 31, 2008 $65,000 of costs which have
been deferred. Reference is made to the Company’s Form 8-K filed
January 26, 2009, for further details.
Item 2.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
This
Quarterly Report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include statements regarding, among others, (a) our expectations
about possible business combinations, (b) our growth strategies,
(c) our future financing plans, and (d) our anticipated needs for
working capital. Forward-looking statements, which involve assumptions and
describe our future plans, strategies, and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "approximate," "estimate," "believe," "intend," "plan," or
"project," or the negative of these words or other variations on these words or
comparable terminology. This information may involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, performance,
or achievements to be materially different from the future results, performance,
or achievements expressed or implied by any forward-looking statements. These
statements may be found in this Form 10-Q. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks described in this Form
10-Q. In light of these risks and uncertainties, the events anticipated in the
forward-looking statements may or may not occur.
Forward-looking
statements are based on our current expectations and assumptions regarding our
business, the economy and other future conditions. Because forward-looking
statements relate to the future, by their nature, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict.
Our actual results may differ materially from those contemplated by the
forward-looking statements. We caution you therefore that you should not rely on
any of these forward-looking statements as statements of historical fact or as
guarantees or assurances of future performance. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements include regional, national or global political, economic, business,
competitive, market and regulatory conditions and the following:
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our status as a development stage
company;
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our dissolution or liquidation
prior to a business
combination;
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the reduction of the proceeds
held in the trust account due to third party
claims;
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our selection of a prospective
target business or asset;
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our issuance of our capital
shares or incurrence of debt to consummate a business
combination;
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our ability to consummate an
attractive business combination due to our limited resources and the
significant competition for business combination
opportunities;
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our dependence on our key
personnel;
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conflicts of interest of our
officers, directors and existing
investors;
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potential future affiliations of
our officers and directors with competing
businesses;
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our ability to obtain additional
financing if necessary;
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the control by our private
stockholders of a substantial interest in
us;
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our common stock becoming subject
to the penny stock rules of the Securities and Exchange Commission (the
"SEC");
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the adverse effect the
outstanding warrants and the unit purchase option may have on the market
price of our common shares;
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the existence of registration
rights with respect to the securities owned by our founding stockholders
and the securities underlying the unit purchase option granted to Deutsche
Bank Securities Inc.;
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our being deemed an investment
company;
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the lack of a market for our
securities;
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costs of complying with United
States securities laws and
regulations;
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risks of acquiring and operating
a business outside the United States;
and
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regulatory risks and operational
risks.
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Please
see Part II, Item 1A of this Form 10-Q and our previously filed Form 10-Q and
Form 10-K for additional risk factors.
Any
forward-looking statement made by us speak only as of the date on which we make
it, and is expressly qualified in its entirety by the foregoing cautionary
statements. Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict all of them.
We undertake no obligation to publicly update any forward-looking statement,
except as required by law, whether as a result of new information, future
developments or otherwise.
We were
formed on June 30, 2006 to consummate a merger, capital stock exchange, asset
acquisition, exchangeable share transaction or other similar business
combination with an operating business. Our initial business combination must be
with a business or businesses whose collective fair market value is at least
equal to 80% of our net assets (excluding the amount held in the Trust Account
representing a portion of the underwriters’ discount) at the time of the
acquisition.
On April
17, 2007, we completed the Offering of 12,500,000 Units. Each Unit consists of
one share of our common stock, par value $0.001 per share, (the " Common Stock "
) and one warrant entitling the holder to purchase one share of our Common Stock
at a price of $6.00. The public offering price of each Unit was $8.00, and we
generated gross proceeds of $100,000,000 in the Offering. Of the gross proceeds:
(i) we deposited $95,300,000 into a trust account at JP Morgan Chase Bank, NA,
maintained by American Stock Transfer & Trust Company, as trustee, which
included $3,000,000 of deferred underwriting discount; (ii) the underwriters
received $4,000,000 as underwriting discount (excluding the deferred
underwriting discount); and (iii) we retained $600,000 for offering expenses,
plus $100,000 for working capital. In addition, we deposited into the trust
account $4,700,000 that we received from the issuance and sale of 4,700,000
warrants to Parkwood Holdings Ltd., an entity owned 37.5% by our Chairman,
Gordon McMillan, 12.5% by our CEO, Andrew McKay and 50% by JovFunds Management
Inc.
We intend to use substantially all of
the funds held in the trust account, less the payment due the underwriter for
the deferred underwriting discount, in connection with a target business.
However, as long as we consummate a business combination with one or more target
acquisitions with a fair market value equal to at least 80% of our net assets
(excluding the amount held in the trust account representing the underwriters'
deferred discount), we may use the assets in the trust account for any purpose
we may choose. To the extent that our capital stock or debt is used in whole or
in part as consideration to consummate a business combination, the remaining
proceeds held in the trust account will be used as working capital, including
director and officer compensation, change-in-control payments or payments to
affiliates, or to finance the operations of the target business, make other
acquisitions and pursue our growth strategies.
The funds available to us outside of
the trust account ($100,000) and up to $1,600,000 of the interest earned on
the trust account will be used to identify and evaluate prospective acquisition
candidates, to perform business due diligence on prospective target businesses,
to travel to and from offices, plants or similar locations of prospective target
businesses, to select the target business to acquire and to structure,
negotiate, and consummate the business combination. Messrs. McMillan and
McKay and JovFunds each have jointly and severally agreed to pay, on our behalf
any expenses in excess of $1,700,000 that we may incur in connection with our
pursuit of a business combination. Such amounts will be reimbursed upon
consummation of our initial business combination. In this context, the Company
received a loan from Parkwood Holdings Ltd. due on demand for $200,000
during the quarter ended December 31, 2008, for a total of $400,000 for the six
months ended December 31, 2008.
As indicated in the accompanying
financial statements, at December 31, 2008, we had $30,889 in cash and
$102,216,738 in cash held in the trust account. Further, we have incurred and
expect to continue to incur significant costs in pursuit of our financing and
acquisition plans. We cannot assure you that our plan to consummate a business
combination will be successful. We must complete a business combination with a
fair market value of at least 80% of our net assets (excluding the amount held
in the trust account representing a portion of the underwriters’ discount) at
the time of acquisition by April 17, 2009. These factors, among others, raise
substantial doubt as to our ability to continue as a going concern.
For the
three month period ended December 31, 2008, we had a net loss of $101,641
($17,524 for the six month period ended December 31, 2008), consisting of
interest income of $100,883 ($427,500 for the six month period ended December
31, 2008) less costs attributable to organization, formation and general and
administrative expenses of $257,024 ($456,024 for the six month period ended
December 31, 2008) and net of a benefit from income taxes of $(54,500)
($(11,000) for the six month period ended December 31, 2008). Through December
31, 2008 we did not engage in any significant operations. Our entire activity
from inception through December 31, 2008 was to prepare for the Offering and
begin the identification of and negotiations with suitable business combination
candidates.
Our
financial statements as of and for the period ending June 30, 2008 were audited,
and we filed these audited financial statements in our annual report on Form
10-K filed on September 15, 2008.
On January 8, 2008, the Company
announced that it had entered into an agreement and plan of merger with Asset
Alliance Corporation ("Asset Alliance"), a multi-faceted investment management
firm specializing in alternative investments, whereby we would have acquired all
the outstanding common stock of Asset Alliance in exchange for shares of our
common stock, allowing Asset Alliance to access the public markets through the
proposed transaction with us. In connection with the proposed transaction, we
incurred approximately $1.3 million of acquisition costs which costs were
written off effective June 30, 2008. On August 6, 2008, we formally provided
notice to Asset Alliance of our decision to terminate the agreement and plan of
merger.
On August 27, 2008, the Company
announced that it had signed a letter of intent with GrandUnion Inc., a shipping
company headquartered in Piraeus, Greece, contemplating the acquisition by
Tailwind of 20 vessels operating the dry bulk industry, including nine new
buildings to be delivered in 2010 and 2011. On October 28, 2008, the Company
announced that it had terminated this letter of intent in accordance with its
terms effective October 25, 2008.
On January 26, 2009, the Company
announced that it had entered into an arrangement agreement pursuant to which
the Company will acquire all of the shares of Allen-Vanguard Corporation
(“Allen-Vanguard”) in exchange for shares of Tailwind. Allen-Vanguard
is a leading global provider of integrated solutions for protection and
counter-measures against hazardous devices and materials, including improvised
explosive devices (IEDs). Reference is made to the Company’s Form 8-K
filed January 26, 2009, for further details.
Item 3.
Quantitative and Qualitative
Disclosures About Market Risk
To date, our efforts have been limited
to organizational activities and activities relating to our initial public
offering and the identification of a target business. We have neither engaged in
any operations nor generated any revenues. As the proceeds from our initial
public offering held in the trust account have been invested in short term
investments, our only market risk exposure relates to fluctuations
in interest.
As of December 31, 2008, $102,216,738
of the net proceeds of our initial public offering (including accrued interest)
was held in the trust account for the purposes of consummating a business
combination. American Stock Transfer & Trust Company, the trustee, has
invested the money held in the trust account at JPMorgan Chase
Bank, NA.
We have not engaged in any hedging activities since our inception on
June 30, 2006. We do not expect to engage in any hedging activities with
respect to the market risk to which we are exposed.
Item 4.
Controls and
Procedures
We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in our
periodic filings with the SEC under the Exchange Act, including this report, is
recorded, processed, summarized and reported on a timely basis. These disclosure
controls and procedures include controls and procedures designed to ensure that
information required to be disclosed under the Exchange Act is accumulated and
communicated to our management on a timely basis to allow decisions regarding
required disclosure. Management, including our chief executive officer and chief
financial officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures (as defined under Rules 13a-15(e) and
15(d)-15(e) of the Exchange Act) as of December 31, 2008. Based upon that
evaluation, management has concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.
There has
not been any change in our internal control over financial reporting during the
three month period ended December 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II.
OTHER
INFORMATION
Item 1A.
Risk Factors
There
have been no material changes from the risk factors as previously disclosed in
our Annual Report on Form 10-K for the fiscal year ended June 30,
2008.
Item 2.
Unregistered Sales of Equity
Securities and Use of Proceeds.
Use
of Proceeds
On April
17, 2007, we consummated our initial public offering of 12,500,000 Units. Each
Unit consists of one share of our Common Stock and one warrant entitling the
holder to purchase from us one share of our Common Stock at an exercise price of
$6.00. The Units were sold at an offering price of $8.00 per unit, generating
total gross proceeds of $100,000,000. Deutsche Bank Securities Inc. acted as
representative of the underwriters. The securities sold in the offering were
registered under the Securities Act of 1933 on a registration statement on Form
S-1 (No. 333- 135790 ) that was declared effective on April 11,
2007.
Of the
gross proceeds from the Offering: (i) we deposited $95,300,000 into a trust
account at JP Morgan Chase Bank, NA, maintained by American Stock Transfer &
Trust Company, as trustee, which amount included $3,000,000 of deferred
underwriting discount; (ii) the underwriters received $4,000,000 as underwriting
discount (excluding the deferred underwriting discount); and (iii) we used
$782,811 for offering expenses.
Item
5.
Other
Information.
On
February 10, 2009, the Company received a notice from NYSE Alternext US LLC (the
“Exchange”) indicating that the Company was not in compliance with Section 704
of the NYSE Alternext US LLC Company Guide (the “Company Guide”), in that it did
not hold an annual meeting of its stockholders during 2008.
In order
to maintain its Exchange listing, the Company must submit a plan of compliance
by March 10, 2009 advising the Exchange of action it has taken, or will take,
that would bring it into compliance with Section 704 of the Company Guide by
August 11, 2009. The Corporate Compliance Department of the Exchange
will evaluate the plan and make a determination as to whether the Company has
made a reasonable demonstration in the plan of an ability to regain compliance
with the continued listing standards by August 11, 2009, in which case the plan
will be accepted. If the plan is accepted, the Company may be able to
continue its listing during the plan period up to August 11, 2009, during which
time it will be subject to periodic review to determine whether it is making
progress consistent with the plan. If the Company does not submit a
plan, if the Company submits a plan that is not accepted or if the plan is
accepted but the Company is not in compliance with the continued listing
standards at the conclusion of the plan period or does not make progress
consistent with the plan during the plan period, the Company may become subject
to delisting proceedings in accordance with Section 1010 and Part 12 of the
Company Guide.
The
Company intends to submit a plan to the Exchange and to hold an election of
directors in connection with its special meeting of stockholders relating to the
transaction with Allen-Vanguard to regain compliance with the Exchange’s listing
standards.
Item 6.
Exhibits.
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Exhibit
Number
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Exhibit
Description
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10.1
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Promissory
Note between Tailwind Financial Inc. and Parkwood Holdings Ltd., dated
November 4, 2008
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10.2
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Promissory
Note between Tailwind Financial Inc. and Parkwood Holdings Ltd., dated
November 26, 2008
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31.1
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Certification
by Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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31.2
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Certification
by Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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32.1
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Certification
by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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32.2
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Certification
by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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99
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Press
Release dated February 13,
2009.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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TAILWIND
FINANCIAL INC.
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Date:
February 13, 2009
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By:
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/s/
Andrew A. McKay
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Andrew
A. McKay
Chief
Executive
Officer
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