References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to
Tastemaker Acquisition Corp.References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to Tastemaker Sponsor, LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission(the "SEC"). The Company's securities filings can be accessed on the EDGAR section of the SEC'swebsite at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated on August 10, 2020as a Delawarecorporation and formed for the purpose of effectuating 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 Quarterly Report as our "initial business combination". We intend to effectuate our initial business combination using cash from the proceeds of the initial public offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of the initial public offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities nine months ended September 30, 2021and for the period from August 10, 2020(inception) through September 30, 2020, were operational activities and those related to identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held after the initial public offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. 23 -------------------------------------------------------------------------------- Table of Contents For three months ended September 30, 2021, we had a net income of $1,768,123, which resulted primarily from a gain on the change in fair value of warrant liabilities of $2,112,000and interest income of 7,190 partially offset by operating and formation costs of $285,056and franchise tax expense of $66,011. For nine months ended September 30, 2021, we had net income of $5,558,941, which resulted primarily from a gain on the change in fair value of warrant liabilities of $6,975,006, interest income of 32,368 and an unrealized gain on investments held in Trust Account of $20,871, offset by expensed offering costs of $736,627, operating and formation costs of $567,759and franchise tax expense of $164,918. For the period from August 10, 2020(inception) through September 30, 2020, we had no net income. Liquidity and Capital Resources On January 12, 2021, we consummated an initial public offering of 27,600,000 units generating gross proceeds to the Company of $276,000,000. Simultaneously with the consummation of the initial public offering, we completed the private sale of 8,700,000 warrants to Tastemaker Sponsor, LLCat a purchase price of $1.00per warrant (the "Private Placement Warrants"), generating gross proceeds of $8,700,000. For the nine months ended September 30, 2021, net cash used in operating activities was $901,635, which was primarily due to a change in fair value of warrant liabilities of $6,975,006, an unrealized gain on investments held in the Trust Account of $20,871, interest income on investments held in trust $32,343, of changes in working capital of $168,983, offset in part by our net income of $5,558,941and expensed offering costs related to the initial public offering of $736,627. For the period from August 10, 2020(inception) through September 30, 2020, no cash was used in operating activities. For the nine months ended September 30, 2021, net cash used in investing activities of $278,760,000was the result of the amount of net proceeds from the initial public offering being deposited to the Trust Account. Net cash provided by financing activities for the nine months ended September 30, 2021of $279,970,523was comprised of $270,480,000in proceeds from the issuance of units in the initial public offering net of underwriter's discount paid, $8,700,000in proceeds from the issuance of warrants in a private placement to our Sponsor, and reimbursed offering expenses of $1,352,400, offset in part by payment of $366,877for offering costs associated with the initial public offering and repayment of the outstanding balance on the promissory note to our Sponsor of $195,000. Net cash provided by financing activities for the period from August 10, 2020(inception) through September 30, 2020was $61,426was comprised of $195,000in proceeds on the promissory noted from our Sponsor and $25,000in proceeds from sale of Class B common stock to Sponsor, offset in part by in part by payment of $158,574for offering costs associated with the initial public offering. As of September 30, 2021, we had cash of $327,604held outside the trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required on a non-interest basis. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000of such loans may be convertible into warrants of the post business combination entity at a price of $1.00per warrant at the option of the lender. The warrants would be identical to the private placement warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. 24 -------------------------------------------------------------------------------- Table of Contents We anticipate that the cash held outside of the Trust Account as of September 30, 2021, will be not sufficient to allow us to operate for at least the next 12 months from the issuance of the financial statements, assuming that a Business Combination is not consummated during that time. We have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. These conditions raise substantial doubt about the our ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. Management plans to address this uncertainty through the Business Combination as discussed above. There is no assurance that the our plans to consummate the Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of September 30, 2021. Contractual Obligations Registration Rights The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants) will have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement The Company granted the underwriters a 45-day option to purchase up to 3,600,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On January 12, 2021the underwriters exercised the over-allotment option in full. The underwriters were paid a cash underwriting fee of $0.20per Unit, or $5,520,000in the aggregate. In addition, $0.375per Unit, or $10,350,000in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. 25 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: Warrant Liabilities We account for the warrants issued in connection with our initial public offering in accordance with Accounting Standards Codification ("ASC") 815-40, Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815"), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement , with changes in fair value recognized in the Statement of Operations in the period of change. Common stock subject to possible redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) is classified as temporary equity. At all other times, common stock is classified as stockholders' deficit. The Company's common stock features certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events. As of September 30, 2021and December 31, 2020, 27,600,000 and no shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders' deficit section of the Company's balance sheet, respectively. Net Income Per Common Share Net income per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 22,500,000 shares in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. 26 -------------------------------------------------------------------------------- Table of Contents Recent Accounting Standards In August 2020, the Financial Accounting Standards Board("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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