References to the "Company," "our," "us" or "we" refer to Pine Island
Acquisition Corp. 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 report. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements that involve risks
and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
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 (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in Delaware on August 21, 2020. We
were 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 (the "Business Combination"). We are an emerging growth
company and, as such, are subject to all of the risks associated with emerging
growth companies.
Our sponsor is Pine Island Sponsor LLC, a Delaware limited liability company
(the "Sponsor"). The registration statement for our initial public offering (the
"Initial Public Offering") was declared effective November 16, 2020. On November
19, 2020, we consummated the Initial Public Offering of 20,000,000 units (the
"Units" and, with respect to the Class A common stock included in the Units
offered, the "Public Shares"), at $10.00 per Unit, generating gross proceeds of
$200.0 million, and incurring offering costs of approximately $11.7 million,
inclusive of $7.0 million in deferred underwriting commissions. On November 20,
2020, the underwriters partially exercised the over-allotment option and on
November 24, 2020, purchased an additional 1,838,800 Units (the "Over-Allotment
Units"), generating gross proceeds of approximately $18.4 million, incurring
additional offering costs of approximately $1.0 million in underwriting fees
(inclusive of approximately $644,000 in deferred underwriting fees) (the
"Over-Allotment").
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 4,000,000 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant with our Sponsor, generating
gross proceeds of $6.0 million. Simultaneously with the closing of the
Over-Allotment on November 24, 2020, we consummated the second closing of the
Private Placement, resulting in the purchase of an aggregate of an additional
245,173 Private Placement Warrants by our Sponsor, generating gross proceeds of
approximately $368,000.
Upon the closing of the Initial Public Offering and the Private Placement on
November 19, 2020, $200.0 million ($10.00 per Unit) of the net proceeds of the
sale of the Units in the Initial Public Offering and the Private Placement were
placed in a trust account ("Trust Account") located in the United States with
Continental Stock Transfer & Trust Company acting as trustee, and invested only
in U.S. "government securities," within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act, which
invest only in direct U.S. government treasury obligations, as determined by us,
until the earlier of: (i) the completion of a Business Combination or (ii) the
distribution of the Trust Account as described below. Upon the closing of the
Over-Allotment on November 24, 2020, an additional amount of approximately $18.4
million was deposited to the Trust Account, for a total of approximately $218.4
million.
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We will only have 24 months from the closing of the Initial Public Offering, or
November 19, 2022, (the "Combination Period") and our stockholders have not
amended the Certificate of Incorporation to extend such Combination Period, we
will (1) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter
subject to lawfully available funds therefor, redeem the Public Shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account including interest earned on the funds held in the Trust
Account and not previously released to us to pay our franchise and income taxes
(less up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding Public Shares, which redemption will completely
extinguish Public Stockholders' rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of the remaining stockholders and the board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable
law.
Results of Operations
Our entire activity since inception through November 19, 2020, was in
preparation for an Initial Public Offering, and since our Initial Public
Offering, our activity has been limited to the search for a prospective initial
Business Combination. We will not generate any operating revenues until the
closing and completion of our initial Business Combination.
For the three months ended June 30, 2022, we had net income of approximately
$2.2 million, which consisted of approximately $2.1 million in change in the
fair value of derivative warrant liabilities and approximately $313,000 of
income on investments held in the Trust Account, offset by approximately
$151,000 of general and administrative expenses and approximately $50,000 of
franchise tax expense.
For the three months ended June 30, 2021, we had a net income of approximately
$2.1 million, which consisted of approximately $2.8 million in change in the
fair value of derivative warrant liabilities and approximately $5,000 of income
on investments held in the Trust Account offset by approximately $596,000 of
general and administrative expenses and approximately $50,000 of franchise tax
expense.
For the six months ended June 30, 2022, we had net income of approximately $6.5
million, which consisted of approximately $7.0 million in change in the fair
value of derivative warrant liabilities and approximately $207,000 of gain on
investments held in the Trust Account, offset by approximately $642,000 of
general and administrative expenses and approximately $99,000 of franchise tax
expense.
For the six months ended June 30, 2021, we had a net income of approximately
$6.3 million, which consisted of approximately $7.2 million in change in the
fair value of derivative warrant liabilities and approximately $37,000 of income
on investments held in the Trust Account, offset by approximately $866,000 of
general and administrative expenses and approximately $100,000 of franchise tax
expense.
Liquidity and Going Concern
As of June 30, 2022, we had approximately $129,000 in our operating bank account
and a working capital deficit of approximately $1.2 million.
Our liquidity needs to date have been satisfied through a capital contribution
of $25,000 from our Sponsor to purchase the Founder Shares, a loan under the
Note from our Sponsor, and the net proceeds from the consummation of the Private
Placement not held in the Trust Account. We had initially borrowed approximately
$105,000 under the Note and fully repaid the Note on November 19, 2020. In 2021,
we drew down $245,000 under the Note. Subsequently, in 2022, we drew down and
additional $342,000. In addition, in order to finance transaction costs in
connection with a Business Combination, our officers, directors and initial
stockholders may, but are not obligated to, provide us loans ("Working Capital
Loans'). As of June 30, 2022 and December 31, 2021, there were no amounts
outstanding under any Working Capital Loans.
Until the consummation of a Business Combination, we will be using the funds not
held in the Trust Account for identifying and evaluating prospective acquisition
candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to acquire, and
structuring, negotiating and consummating the Business Combination. We will need
to raise additional capital through loans or additional investments from our
Sponsor, stockholders, officers, directors, or third parties. Our officers,
directors and Sponsor may, but are not obligated to, loan us funds, from time to
time or at any time, in whatever amount they deem reasonable in their sole
discretion, to meet our working capital needs. Accordingly, we may not be able
to obtain additional financing. If we are unable to raise additional capital, it
may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, curtailing operations, suspending
the pursuit of a potential transaction, and reducing overhead expenses.
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We cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all. These conditions raise substantial
doubt about our ability to continue as a going concern through November 19,
2022. These unaudited condensed financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should we be unable to
continue as a going concern.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans, if any (and any shares of
common stock issuable upon the exercise of the Private Placement Warrants or
warrants issued upon conversion of the Working Capital Loans and upon conversion
of the Founder Shares), are entitled to registration rights pursuant to a
registration rights agreement. These holders will be entitled to certain demand
and "piggyback" registration rights. However, the registration rights agreement
will provide that we will not be required to effect or permit any registration
or cause any registration statement to become effective until termination of the
applicable lock-up period. We will bear the expenses incurred in connection with
the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$4.0 million in the aggregate, payable and paid upon the closing of the Initial
Public Offering. An additional fee of $0.35 per Unit, or $7.0 million in 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.
In connection with the consummation of the Over-Allotment on November 24, 2020,
the underwriters were entitled to an additional fee of approximately $368,000
payable and paid upon closing, and approximately $644,000 in deferred
underwriting commissions.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with GAAP. The preparation of these unaudited
condensed financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
the disclosure of contingent assets and liabilities in our unaudited condensed
financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 "Fair Value
Measurement of Equity Securities Subject to Contractual Sale Restrictions". The
ASU amends ASC 820 to clarify that a contractual sales restriction is not
considered in measuring an equity security at fair value and to introduce new
disclosure requirements for equity securities subject to contractual sale
restrictions that are measured at fair value. The ASU applies to both holders
and issuers of equity and equity-linked securities measured at fair value. The
amendments in this ASU are effective for the Company in fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have
not yet been issued or made available for issuance. The Company is still
evaluating the impact of this pronouncement on the condensed financial
statements.
Our management does not believe that any other recently issued, but not yet
effective, accounting standards updates, if currently adopted, would have a
material effect on the accompanying condensed financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
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JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, the unaudited condensed
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
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PINE ISLAND ACQUISITION CORP. 
