References to the "Company," "our," "us" or "we" refer to Pine Technology
Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
our audited financial statements and the notes related thereto which are
included in "Item 8. Financial Statements and Supplementary Data" of this Annual
Report on Form 10-K. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of many factors, including those set forth under "Special Note
Regarding Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in
this Annual Report on Form 10-K.
Forward Looking Statements
All statements other than statements of historical fact included in this Form
10-K including, without limitation, statements under "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. When used in
this Form 10-K, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or our management,
identify forward-looking statements. Such forward-looking statements are based
on the beliefs of management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Form 10-K. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company formed under the laws of the State of Delaware for
the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more
businesses. We intend to effectuate our initial business combination using cash
from the proceeds of our initial public offering and the sale of the private
placement warrants, our capital stock, debt or a combination of cash, stock and
debt.
Recent Developments
Terminated Business Combination Agreement
On December 7, 2021, we entered into the Merger Agreement with Merger Sub and
Tomorrow.io.
On March 6, 2022, the Parties to the Merger Agreement entered into the
Termination Agreement pursuant to which, due to market conditions, the parties
agreed to terminate the Merger Agreement effective as of such date, after taking
several factors into consideration. Pursuant to the Termination Agreement,
Tomorrow.io will pay us $1,500,000 upon the earliest to occur of (a) 120 days
from the date of the Termination Agreement, (b) two business days after the
initial closing of Tomorrow.io's Next Financing and (c) immediately prior to the
consummation of a Change of Control.
As a result of the Termination Agreement, the Merger Agreement is of no further
force and effect, and certain agreements entered into in connection with the
Merger Agreement, including, but not limited to, the Parent Support Agreement,
dated as of December 7, 2021, by and among PTAC, Tomorrow.io and Sponsor, the
Voting and Support Agreements, dated as of December 7, 2021, by and among PTAC,
Merger Sub, Tomorrow.io and certain Tomorrow.io stockholders, and the
Subscription Agreements, dated December 7, 2021, by and among PTAC with its
sponsor and certain other investors, will either be terminated or no longer be
effective, as applicable, in accordance with their respective terms.
We intend to continue to pursue the consummation of a business combination with
an appropriate target.
The foregoing description of the Termination Agreement does not purport to be
complete and is qualified in its entirety by the terms and conditions of the
Merger Agreement, which is filed herewith as Exhibit 2.1, and the Termination
Agreement, which is filed herewith as Exhibit 10.15, each of which is
incorporated by reference herein.
40
For more information about the Terminated Business Combination Agreement and
other recent developments, please see "Item 1. Business - Recent Developments."
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2021 were organizational activities,
those necessary to prepare for our IPO and identifying a target company for our
initial business combination, and activities in connection with the proposed
acquisition of Tomorrow.io, which has subsequently been terminated. We do not
expect to generate any operating revenues until after the completion of our
business combination. We generate non-operating income in the form of interest
income on cash and cash equivalents held in the trust account. We incur expenses
as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
For the year ended December 31, 2021, we had a net loss of $1,661,915, which
consists of interest income on amounts held in the Trust Account of $75,817 and
change in the fair value of the warrant liability of $1,771,678, offset by
formation and operating costs of $2,309,331, offering expenses related to
warrant issuance of $844,080 and excess of fair value over cash received for
Private Placement Warrants of $355,999.
For the quarter ended December 31, 2021, we had a net loss of $ $8,397,715,
which was largely attributable to a $6,908,333 increase in the fair value of the
warrant liability, as well as operating costs of $1,509,511 consisting primarily
of the costs related to the initial business combination. We had interest income
on amounts held in the Trust Account of $20,129.
For the period from December 30, 2020 (inception) through December 31, 2020, we
had net loss of $1,940, which consists of formation and operating costs of
$1,940.
Liquidity and Capital Resources
On March 15, 2021, we consummated the IPO of 34,500,000 units at a price of
$10.00 per Unit, which includes the full exercise by the underwriters of the
over-allotment option, at $10.00 per Unit, generating gross proceeds of
$345,000,000. Simultaneously with the closing of the IPO, we consummated the
sale of 5,933,333 Private Placement Warrants to the sponsor at a price of $1.50
per warrant, generating gross proceeds of approximately $8,900,000.
41
Following the IPO, the exercise of the over-allotment option and the sale of the
Private Placement Warrants, a total of $345,000,000 was placed in the trust
account. We incurred $19,478,776 in transaction costs, including $6,900,000 of
underwriting fees, $12,075,000 of deferred underwriting fees and $503,776 of
other costs.
As of December 31, 2021, we had cash and marketable securities held in the trust
account of $345,075,817 (including approximately $75,817 of interest income)
consisting of U.S. government securities with a maturity of 185 days or less or
in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act, which invest only in direct U.S. government treasury
obligations. Interest income on the balance in the trust account may be used by
us to pay taxes. Through December 31, 2021, we did not withdraw any interest
income from the trust account to pay our tax obligations.
For the year ended December 31, 2021, cash used in operating activities was
$1,486,542. Net loss of $1,661,915 was affected by interest earned on cash and
marketable securities held in the Trust Account of $75,817, a change in fair
value of warrant liabilities of $1,771,678, excess of fair value over cash
received for Private Placement Warrants of $355,999 and offering costs allocated
to warrants of $844,080. Changes in operating assets and liabilities provided
$822,789 of cash for operating activities.
For the period from December 30, 2020 (inception) through December 31, 2020,
cash used in operating activities was nil. Net loss of $1,940 was offset by
changes in current assets and liabilities of $1,940.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
deferred underwriting commissions and income taxes payable), to complete our
initial business combination. To the extent that our capital stock or debt is
used, in whole or in part, as consideration to complete our business
combination, the remaining proceeds held in the trust account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of December 31, 2021, we had cash of $313,382. 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 or similar locations of prospective target
businesses or their representatives or owners, review corporate documents and
material agreements of prospective target businesses, structure, negotiate and
complete a business combination.
We anticipate that the $313,382 outside of the Trust Account as of December 31,
2021 will not be sufficient to allow us to operate for at least the next 12
months, assuming that a business combination is not consummated during that
time. Until consummation of our business combination, we will be using the funds
not held in the Trust Account, and any additional Working Capital Loans (as
defined in Note 5 to our financial statements) from the Company's Sponsor, an
affiliate of the Company's Sponsor or certain of the Company's directors and
officers (which is described in Note 5 to our financial statements), for
identifying and evaluating target businesses, performing business due diligence
on prospective target businesses, traveling to and from the offices or similar
locations of prospective target businesses or their representatives or owners,
reviewing corporate documents and material agreements of prospective target
businesses, structuring, negotiating and completing a business combination. 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. We cannot provide any assurance
that new financing will be available to us on commercially acceptable terms, if
at all.
These conditions raise substantial doubt about our ability to continue as a
going concern until the earlier of the consummation of a business combination or
the date we are required to liquidate. Our 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.
42
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, the initial stockholder or their
affiliates may, but are not obligated to, loan us funds as may be required. If
we complete a business combination, we would repay such loaned amounts. In the
event that a 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
$1,500,000 of such loans may be convertible into warrants identical to the
Private Placement Warrants, at a price of $1.00 per warrant at the option of the
lender.
On December 6, 2021, we issued a promissory note in the principal amount of
$350,000 to our sponsor. Such promissory note bears interest at 0.33% per annum
and is repayable in full at the earlier of (i) March 15, 2023 or (ii) the date
on which we consummate an initial business combination as contemplated by our
amended and restated certificate of incorporation. If we do not consummate a
business combination, we may use a portion of any funds held outside the trust
account to repay the Note; however, no proceeds from the trust account may be
used for such repayment. As of December 31, 2021, the outstanding balance under
the Note amounted to an aggregate of $350,000.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2021.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space,
administrative and support services to the Company. We began incurring these
fees on March 11, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the business combination and our liquidation.
The underwriters of the PTAC IPO are entitled to a deferred fee of $12,075,000
in the aggregate. The deferred fee will be waived by the underwriters in the
event that we do not complete a business combination, subject to the terms of
the underwriting agreement.
On December 6, 2021, we issued a promissory note in the principal amount of
$350,000 (the "Note") to our sponsor. Such promissory note bears interest at
0.33% per annum and is repayable in full at the earlier of (i) March 15, 2023 or
(ii) the date on which we consummate an initial business combination as
contemplated by our amended and restated certificate of incorporation.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A Common Stock subject to possible redemption
in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities
from Equity." Shares of Class A Common Stock subject to mandatory redemption is
classified as a liability instrument and is measured at fair value.
Conditionally redeemable common stock (including common stock that features
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) is classified as temporary equity. At all other times, common stock is
classified as stockholders' equity. Our Class A Common Stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, the Class A Common Stock
subject to possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our audited balance sheet.
43
Net Income per Share of Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, Earnings Per Share. Net income per share is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period, excluding common stock subject to forfeiture. At December 31,
2021, the Company did not have any dilutive securities and other contracts that
could, potentially, be exercised or converted into shares of common stock and
then share in the earnings of the Company. As a result, diluted income per share
is the same as basic income per share for the period presented.
The Company's statement of operations applies the two-class method in
calculating net income per share. Basic and diluted net income per common share
for Class A common stock and Class B common stock is calculated by dividing net
income attributable to the Company by the weighted average number of shares of
Class A common stock and Class B common stock outstanding, allocated
proportionally to each class of common stock.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. The classification of derivative instruments, including whether
such instruments should be recorded as liabilities or as equity, is reassessed
at the end of each reporting period.
We account for our 17,433,333 warrants (comprising 11,500,000 public included as
part of our units sold in our initial public offering (the "public warrants")
and 5,933,333 private placement warrants sold to our sponsor in a private
placement which took place concurrently with our initial public offering (the
"Private Placement Warrants")) as derivative warrant liabilities in accordance
with ASC 815-40. Accordingly, we recognize the warrant instruments as
liabilities at fair value and adjusts the instruments to fair value at each
reporting period. The liabilities are subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in the
Company's statement of operations. The fair value of public warrants issued by
the Company in connection with its initial public offering was initially
measured using a Monte Carlo simulation model, and then subsequently measured at
the public trading price. The fair value of Private Placement Warrants has been
estimated using a Modified Black-Scholes model at each measurement date.
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, which simplifies accounting for
convertible instruments by removing major separation models required under
current GAAP. The ASU also removes certain settlement conditions that are
required for equity-linked contracts to qualify for the derivative scope
exception, and it simplifies the diluted earnings per share calculation in
certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of
the ASU did not impact the Company's financial position, results of operations
or cash flows.
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
financial statements.
© Edgar Online, source Glimpses