References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Pine Technology Acquisition Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Pine Technology Sponsor LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the 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 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 Quarterly
Report 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 Annual Report on Form 10-K filed with the SEC.
The Company's securities filings can be accessed on the EDGAR section of the
SEC's website 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 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 IPO 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. A receivable of $1,500,000 for the
reimbursement of business combination expenses has been recorded as of March 31,
2022.
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 the Company, Tomorrow.io and Sponsor,
the Voting and Support Agreements, dated as of December 7, 2021, by and among
the Company, Merger Sub, Tomorrow.io and certain Tomorrow.io stockholders, and
the Subscription Agreements, dated December 7, 2021, by and among Company 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
Termination Agreement, which is filed herewith as Exhibit 10.1, which is
incorporated by reference herein.
For more information about the Terminated Business Combination Agreement and
other recent developments, please see "Note 1. Organization and Business
Operation - Initial Business Combination."
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through March 31, 2022 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 three months ended March 31, 2022, we had net income of $20,222,363,
which consists of interest income on amounts held in the Trust Account of
$3,282, reimbursement of business combination expenses of $1,500,000, and change
in the fair value of the warrant liability of $19,062,658, offset by formation
and operating costs of $343,288 and interest expense of $289.
For the three months ended March 31, 2021, we had a net loss of $1,098,848,
which consists of interest income on amounts held in the Trust Account of $3,738
and change in the fair value of the warrant liability of $115,000, offset by
formation and operating costs of $17,507, offering expenses related to warrant
issuance of $844,080 and excess of fair value over cash received for Private
Placement Warrants of $355,999.
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.
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 March 31, 2022, we had cash and marketable securities held in the Trust
Account of $345,001,062 (including $1,062 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 March 31, 2022, we withdrew $78,037 of interest income from the Trust
Account to pay our tax obligations.
For the three months ended March 31, 2022, cash used in operating activities was
$297,437. Net income of $20,222,363 was affected by interest earned on cash and
marketable securities held in the Trust Account of $3,282, a change in fair
value of warrant liabilities of $19,062,658, reimbursement of business
combination expenses of $1,500,000, and interest expense of $289. Changes in
operating assets and liabilities used $45,851 of cash for operating activities.
For the three months ended March 31, 2021, cash provided by operating activities
was $59,099. Net loss of $1,098,848 was affected by interest earned on cash and
marketable securities held in the Trust Account of $3,738, a change in fair
value of warrant liabilities of $115,000, 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
$76,606 of cash for operating activities.
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.
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On March 6, 2022 we entered into a Termination Agreement and Plan of Merger with
Tomorrow.io and pursuant to the Termination Agreement, Tomorrow.io will pay us
$1,500,000 upon the earliest to occur of (a) 120 days from the Termination
Agreement, (b) two business days after the initial closing of Tomorrow,io's Next
Financing (as defined in the Termination Agreement) and (c) immediately prior to
the consummation of Change of Control (as defined in the Termination Agreement).
We anticipate that the Termination Payment from Tomorrow.io will provide
sufficient funds to alleviate any liquidity issues and allow the Company to
operate through the liquidation date of March 15, 2023. Until consummation of a
Business Combination, we will be using the funds not held in the Trust Account
and any additional Working Capital Loans from the Company's Sponsor, an
affiliate of the Company's Sponsor or certain of the Company's directors and
officers, 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.
As of March 31, 2022, we had cash of $93,982. 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 $93,982 outside of the Trust Account as of March 31, 2022
and the Termination Payment of $1,500,000 from Tomorrow.io will 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 6 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 6 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.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
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 March 31, 2022, the outstanding balance under the
Note amounted to an aggregate of $350,289, which includes $289 of accrued
interest.
In connection with the Company's assessment of going concern considerations in
accordance with the FASB ASU 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," management has determined that
if we are unable to complete a Business Combination by March 15, 2023, then the
Company will cease all operations except for the purpose of liquidating. The
date for mandatory liquidation and subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. We plan to
consummate a business combination prior to the mandatory liquidation date. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after March 15, 2023.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2022 and
December 31, 2021.
Contractual Obligations
We do not have any 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 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 the 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. As of March 31, 2022, the outstanding
balance under the Note amounted to an aggregate of $350,289, which includes $289
of accrued interest.
Critical Accounting Policies
The preparation of condensed 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 unaudited condensed balance sheet.
Net Income (Loss) per Share of Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, Earnings Per Share. Net income (loss) per share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period, excluding common stock subject to
forfeiture. At March 31, 2022 and 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 (loss) per share is the same as basic
income (loss) per share for the period presented.
The Company's condensed statement of operations applies the two-class method in
calculating net income (loss) per share. Basic and diluted net income (loss) per
common share for Class A common stock and Class B common stock is calculated by
dividing net income (loss) 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 IPO (the "Public Warrants") and 5,933,333 Private
Placement Warrants sold to our Sponsor in a private placement which took place
concurrently with our IPO 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 IPO 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.
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Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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PINE TECHNOLOGY ACQUISITION CORP. 
