SEC Form 10-Q filed by Pine Technology Acquisition Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended
OR
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Units, each consisting of one share of Class A common stock, $0.0001 par value, and one-third of one warrant | PTOCU | The | ||
| The Nasdaq Stock Market LLC | ||||
| Warrants included as part of the units | PTOCW | The Nasdaq Stock Market LLC |
Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.
Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 10, 2022, there were
PINE TECHNOLOGY ACQUISITION CORP.
Form 10-Q
For the Quarter Ended June 30, 2022
Table of Contents
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements. (Unaudited)
PINE TECHNOLOGY ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| June 30, 2022 (Unaudited) | December 31, 2021 | |||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other receivable | - | |||||||
| Total Current Assets | ||||||||
| Prepaid expenses - non-current | ||||||||
| Cash held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Redeemable Common Stock and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to Sponsor | ||||||||
| Income taxes payable | ||||||||
| Promissory note | ||||||||
| Total Current Liabilities | ||||||||
| Warrant liabilities | ||||||||
| Deferred underwriters’ discount | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Class A Common Stock subject to possible redemption; $ | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, $ | ||||||||
| Class A common stock, $ | ||||||||
| Class B common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Redeemable Common Stock and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
PINE TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Formation and operating costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | - | |||||||||||
| Termination fee | - | - | - | |||||||||||||
| Excess fair value over cash received for private placement warrants | - | - | ( | ) | ||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Offering expenses related to warrant issuance | ( | ) | ||||||||||||||
| Total other income, net | ||||||||||||||||
| Income before provision for income taxes | ||||||||||||||||
| Provision for income taxes | ( | ) | ( | ) | ||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding, Class A common stock | ||||||||||||||||
| Basic and diluted net income per share | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding, Class B common stock | ||||||||||||||||
| Basic and diluted net income per share | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
PINE TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022
| Common Stock | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance—December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion for Class A shares subject to redemption | — | — | ||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance—March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion for Class A shares subject to redemption | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||
| Balance—June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
| Common Stock | Additional | Total Stockholders’ | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance—December 31, 2020 | ( | ) | ||||||||||||||||||||||||||
| Sale of Units in Initial Public Offering, net of underwriting discount and initial fair value of public warrants | ||||||||||||||||||||||||||||
| Class A common stock subject to possible redemption | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion for Class A shares subject to redemption | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||
| Balance—June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
PINE TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six months Ended June 30, | For the Six months Ended June 30, | |||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on Trust Account | ( | ) | ( | ) | ||||
| Interest accrued on note payable | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
| Excess of fair value over cash received for private placement warrants | ||||||||
| Offering costs allocated to warrant issuance | ||||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid assets | ( | ) | ||||||
| Other receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Due to Sponsor | ||||||||
| Income taxes payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash withdrawn from Trust account to pay franchise taxes | ||||||||
| Investment of cash in Trust Account | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Initial Public Offering, net of underwriting discount | ||||||||
| Proceeds from issuance of Private Placement Warrants | ||||||||
| Cash received for share receivable | ||||||||
| Payment of offering costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net Change in Cash | ( | ) | ||||||
| Cash – Beginning | ||||||||
| Cash – Ending | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Initial value of Class A common stock subject to possible redemption | $ | $ | ||||||
| Initial value of warrant liabilities | $ | $ | ||||||
| Accretion for Class A common stock subject to possible redemption | $ | $ | ||||||
| Deferred underwriting discount payable charged to additional paid-in capital | $ | $ | ||||||
4
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Note 1 - Organization and Business Operations
Organization and General
Pine Technology Acquisition Corp. (the “Company”) was incorporated in Delaware on December 30, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of June 30, 2022, the Company had not yet commenced any operations. All activity through June 30, 2022, relates to the Company’s formation and the initial public offering (“IPO”) which is described below, and subsequent to the IPO, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on from the marketable securities held in the Trust Account (as defined below).
Financing
The registration statement for the Company’s
IPO was declared effective on March 10, 2021 (the “Effective Date”). On March 15, 2021, the Company consummated the IPO of
Simultaneously with the closing of the IPO, the
Company consummated the sale of
Transaction costs of the IPO amounted to $
Trust Account
Following the closing of the IPO on March 15,
2021, $
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially all the net proceeds are intended to be generally applied toward consummating a Business Combination.
5
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
The Company’s Business Combination must
be with one or more target businesses that together have a fair market value equal to at least
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to certain limitations.
The shares of common stock subject to redemption
is recorded at a redemption value and classified as temporary equity upon the completion of the IPO in accordance with Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed
with a Business Combination if the Company has net tangible assets of at least $
The Company will have 24 months from the closing
of the IPO (unless extended in accordance with the Company’s amended and restated certificate of incorporation) to consummate a
Business Combination. However, if the Company is unable to complete a Business Combination within the Completion Window, the Company will
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, 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 (net of permitted withdrawals and up to $
The Company’s Sponsor, officers and directors
have agreed to (i) waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion
of the initial Business Combination, (ii) waive their redemption rights with respect to their Founder Shares and public shares in connection
with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation to modify the
substance or timing of the Company’s obligation to provide for the redemption of the public shares in connection with an initial
Business Combination or to redeem
6
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered
public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company
has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount
of funds in the Trust Account to below the lesser of (i) $
On December 7, 2021, the Company entered into
an agreement and plan of merger (the “Merger Agreement”) with Pine Technology Merger Corp., a Delaware corporation (“Merger
Sub”), and The Tomorrow Companies Inc., a Delaware corporation (“Tomorrow.io”). On March 6, 2022, the above parties
entered into a Termination of Agreement and Plan of Merger (the “Termination Agreement”) pursuant to which, due to market
conditions, the parties thereto agreed to terminate the Merger Agreement effective as of such date, after taking several factors into
consideration.
As a result of the Termination Agreement, the Merger Agreement is of no further force and effect, and certain agreements entered into and 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 Pine Technology Sponsor LLC, the Voting and Support Agreements, dated as of December 7, 2021, by and among the Company, Merger Sub, Tomorrow.io and certain Tommorrow.io stockholders, and the Subscription Agreements, dated December 7, 2021, by and among the Company and certain investors, were either terminated or no longer effective, as applicable, in accordance with their respective terms.
The Company intends to continue to pursue the consummation of a business combination with an appropriate target.
Liquidity and Going Concern
As of June 30, 2022, the Company had cash outside
the Trust Account of $
Until the consummation of a Business Combination, the Company 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.
The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is 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. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date that these financial statements are issued.
7
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
In connection with the Company’s assessment of going concern considerations in accordance with the Financial Accounting Standards Board’s (“FASB’s”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by March 15, 2023, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and the date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. Management plans 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.
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
In February 2022, Russia launched a large-scale invasion of Ukraine. The extent and duration of the military action, resulting sanctions and resulting future market disruptions, are impossible to predict, but could be significant. Although the Company does not currently have operations, and does not anticipate having operations, in Russia or Ukraine, sanctions, an increase in cyberattacks and increases in energy costs, among other potential impacts on regional and global economic environment and currencies, may cause demand for products and services to be volatile, and cause abrupt changes in supply and demand of products and services which has had and may continue to have broader implications to the global economy. Such instability may affect the Company’s ability to consummate an initial Business Combination.
8
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Note 2 - Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 11, 2022, which contains the audited financial statements and notes thereto. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the balance sheet for December 31, 2021 to reclassify the accrued administrative fee from accounts payable and accrued expenses to due to Sponsor.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. One of the more significant accounting estimates included in these financial statements is the determination of the fair value f the warrant liabilities. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2022 and December 31, 2021.
9
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Marketable Securities Held in Trust Account
At June 30, 2022 and December 31, 2021, the Trust Account had $
Other Receivable
On March 6, 2022 the Company entered into a Termination
Agreement with Tomorrow.io and pursuant to the Termination Agreement, Tomorrow.io was obligated to pay the Company $
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $
Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally
redeemable common stock (including common stock that feature 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) are classified as temporary equity.
At all other times, common stock are classified as stockholders’ equity (deficit). The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. Accordingly, as of June 30, 2022 and December 31, 2021,
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.
As of June 30, 2022 and December 31, 2021, the Class A Common Stock reflected in the condensed balance sheets are reconciled in the following table:
| Gross proceeds | $ | |||
| Less: | ||||
| Proceeds allocated to public warrants | ( | ) | ||
| Issuance costs related to Class A common stock | ( | ) | ||
| Plus: | ||||
| Adjustment and accretion of carrying value to redemption value | ||||
| Contingently redeemable Class A common stock – December 31, 2021 | $ | |||
| Plus: | ||||
| Adjustment and accretion of carrying value to redemption value | ( | ) | ||
| Contingently redeemable Class A common stock – March 31, 2022 | $ | |||
| Plus: | ||||
| Adjustment and accretion of carrying value to redemption value | ||||
| Contingently redeemable Class A common stock – June 30, 2022 | $ |
10
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
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 of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding for each of the periods. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
Changes in fair value are not considered a dividend
of the purposes of the numerator in the earnings per share calculation. The calculation of diluted income per share does not consider
the effect of the warrants issued in connection with the IPO since the exercise of the warrants is contingent upon the occurrence of future
events and the inclusion of such warrants would be anti-dilutive. The Public Warrants and Private Placement Warrants are exercisable for
The following table reflects the calculation of basic and diluted net income per share of common stock (in dollars, except per share amounts):
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Common stock subject to possible redemption | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net income allocable to Class A common stock subject to possible redemption | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted Average Redeemable Class A common stock, Basic and Diluted | ||||||||||||||||
| Basic and Diluted net income per share, Redeemable Class A common stock | $ | $ | $ | $ | ||||||||||||
| Non-Redeemable Common shares | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net income allocable to Class B common stock not subject to redemption | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted Average Non-Redeemable Class B common stock, Basic and Diluted | ||||||||||||||||
| Basic and diluted net income per share, Class B common stock | $ | $ | $ | $ | ||||||||||||
Offering Costs
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs
consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO and that
were charged to stockholders’ equity upon the completion of the IPO. Accordingly, on March 15, 2021, offering costs totaling $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
11
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Derivative warrant liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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 re-assessed at the end of each reporting period.
The Company accounts for its
Income Taxes
The Company accounts for income taxes under ASC 740, “Income
Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences
between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to
be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it
is more likely than not that all or a portion of deferred tax assets will not be realized. As of June 30, 2022 and December 31, 2021,
the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3 - Initial Public Offering
Pursuant to the IPO, the Company initially sold
12
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Note 4 - Private Placement Warrants
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of
The Private Placement Warrants are non-redeemable in certain circumstances so long as they are held by the Sponsor or its permitted transferees and (including the shares of Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Company’s Sponsor until 30 days after the completion of the Company’s initial Business Combination. The Private Placement Warrants may also be exercised by the Sponsor and its permitted transferees for cash or on a “cashless basis” and the holders thereof (including with respect to the shares of Class A common stock issuable upon exercise thereof) are entitled to registration rights. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the warrants being sold as part of the Units in the IPO, including as to exercise price, exercisability and exercise period.
The Company’s initial stockholders, directors
and officers have entered into a letter agreement with the Company, pursuant to which they have agreed to: (1) to waive their redemption
rights with respect to any Founder Shares and public shares held by them, as applicable, in connection with the completion of the initial
Business Combination; (2) to waive their redemption rights with respect to any Founder Shares and public shares held by them in connection
with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation to modify the
substance or timing of the Company’s obligation to provide for the redemption of the public shares in connection with an initial
Business Combination or to redeem
Note 5 - Related Party Transactions
Founder Shares
On December 31, 2020, the Company’s Sponsor
subscribed an aggregate of
With certain limited exceptions, the Founder Shares
are not transferable, assignable or salable (except to the Company’s officers and directors and other persons or entities affiliated
with the Sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion
of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the
reported closing price of Class A common stock equals or exceeds $
Promissory Note - Related Party
The Company’s Sponsor has agreed to loan
the Company an aggregate of up to $
On December 6, 2021, the Company issued an unsecured
promissory note in the principal amount of $
13
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Administrative Services Agreement
Commencing on the date of the IPO, the Company
has agreed to pay an affiliate of its Sponsor a total of $
Working Capital Loans
In addition, in order to finance transaction costs
in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Company’s Sponsor or certain of
the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with
respect to such loans. Up to $
Expense Reimbursement
The Company’s Sponsor, directors and officers or any of their
respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on its behalf such as identifying
potential target businesses and performing due diligence on suitable Business Combinations. For the three and six months ended June 30,
2022 and June 30, 2021, the Company paid its Chief Executive Officer and his affiliates $
Note 6 - Commitments and Contingencies
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 or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement signed on March 10, 2021 requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of these securities are entitled to make up to three demands, excluding short form registration 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 consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
On March 15, 2021, the Company paid a fixed underwriting discount of $0.20 per Unit, or $6,900,000 in the aggregate. Additionally, a deferred underwriting discount of $0.35 per Unit, or $12,075,000 in the aggregate, will be payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.
14
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
Termination of Business Combination Agreement
On December 7, 2021, the Company entered into
the Merger Agreement by and among the Company, Merger Sub and Tomorrow.io. On March 6, 2022, the Parties 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 was obligated to pay
As a result of the Termination Agreement, the Merger Agreement is of no further force and effect, and certain agreements entered into and 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 Pine Technology Sponsor LLC, the Voting and Support Agreements, dated as of December 7, 2021, by and among the Company, Merger Sub, Tomorrow.io and certain Tommorrow.io stockholders, and the Subscription Agreements, dated December 7, 2021, by and among the Company and certain investors, will either be terminated or no longer effective, as applicable, in accordance with their respective terms.
In connection with the merger (the “Merger”) contemplated under the Merger Agreement, the Company had entered into engagement letters with Moelis & Company LLC and PJT Partners LP in respect of their roles as co-placement agents for the Subscription Agreements and with Moelis & Company LLC in respect of its role as the Company’s financial advisor. Under the terms of such engagement letters, Moelis & Company LLC and PJT Partners LP were entitled to receive advisory fees upon consummation of the Merger. Certain terms and conditions of such engagements survive the Termination Agreement. Additionally, certain fees payable to the Company’s legal advisor will be payable upon consummation of the Company’s initial business combination.
Note 7 - Stockholders’ Equity
Preferred Stock - The Company is
authorized to issue a total of
Class A Common Stock - The Company
is authorized to issue a total of
Class B Common Stock - The Company
is authorized to issue a total of
The Company’s Sponsor, directors and officers have agreed not to transfer, assign or sell their Founder Shares until the earlier to occur of (A) one year after the completion of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of its stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
15
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
The shares of Class B common stock will automatically
convert into shares of the Company’s Class A common stock at the time of its initial Business Combination on a one-for-one basis,
subject to adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued
in excess of the amounts sold in the IPO and related to the closing of the initial Business Combination, the ratio at which shares of
Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding
shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that
the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate,
on an as-converted basis,
Holders of the Class B common stock and holders of the Class A common stock will vote together as a single class, except as required by applicable law or stock exchange rules.
Note 8 - Warrants
Each whole warrant entitles the holder to purchase
one share of the Company’s Class A common stock at a price of $
The warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company’s satisfying the obligations described above with respect to registration. No warrant will be exercisable for cash or on a “cashless basis,” and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a Unit containing such warrant will have paid the full purchase price for the Unit solely for the share of Class A common stock underlying such Unit.
Redemption of Warrants for Cash.
If the warrants become redeemable, the Company may exercise the redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
16
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
The Company has established the last of the redemption
criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise
price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will
be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock
may fall below the $
If the Company calls the warrants for redemption as described above, the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” the management will consider, among other factors, the cash position, the number of warrants that are outstanding and the dilutive effect on the stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of the warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the fair market value of the Class A common stock, over the exercise price of the warrants by (y) the fair market value of the Class A common stock. The fair market value means the volume weighted average price of Class A common stock as reported during the ten-trading day period ending on the third trading day prior to the date on which the notice of redemption is sent to the holders.
Note 9 - Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| June 30, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| 2022 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Assets: | ||||||||||||||||
| U.S. Money Market Funds held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities - public warrants | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities - private warrants | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| 2021 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Assets: | ||||||||||||||||
| U.S. Money Market Funds held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities - public warrants | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities - private warrants | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Company utilized a Monte Carlo simulation model for the initial valuation of the Public Warrants. The subsequent measurement of the Public Warrants as of June 30, 2022 and December 31, 2021, is classified as Level 1 due to the use of an observable market quote in an active market.
17
PINE TECHNOLOGY ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
The Company utilizes a Modified Black-Scholes model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the Private Placement Warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. . The volatility is based on the implied volatility from the Company’s Public Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
There were no transfers between Levels 1, 2 or 3 during the quarter ended June 30, 2022 and December 31, 2021.
The following table provides quantitative information regarding Level 3 fair value measurements:
At March 15, 2021 (Initial Measurement) | At 2021 | At June 30, 2022 | ||||||||||
| Stock price | $ | $ | $ | |||||||||
| Strike price | $ | | $ | $ | ||||||||
| Term (in years) | ||||||||||||
| Volatility | % | % | % | |||||||||
| Risk-free rate | % | % | % | |||||||||
| Dividend yield | % | % | % | |||||||||
The following table provides a reconciliation of changes in fair value of the beginning and ending balances for the liabilities classified as Level 3:
Private Warrants | ||||
| Fair value of Level 3 warrants at January 1, 2022 | $ | |||
| Change in valuation inputs or other assumptions | ( | ) | ||
| Fair value of Level 3 warrants at March 31, 2022 | $ | |||
| Change in valuation inputs or other assumptions | ( | ) | ||
| Fair value of Level 3 warrants at June 30, 2022 | $ | |||
The following table presents the changes in the fair value of warrant liabilities:
Public Warrants | Private Placement Warrants | Total Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2022 | $ | $ | $ | |||||||||
| Change in valuation inputs or other assumptions | ( | ) | ( | ) | ( | ) | ||||||
| Fair value as of March 31, 2022 | $ | $ | $ | |||||||||
| Change in valuation inputs or other assumptions | ( | ) | ( | ) | ( | ) | ||||||
| Fair value as of June 30, 2022 | $ | $ | $ | |||||||||
Note 10 - Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the financial statements were issued. Based upon this review, other than described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
Other Receivable
As discussed in Notes 1, 2, and 6, on July 1,
2022 the Company received the termination payment from Tommorow.io pursuant to the Termination Agreement in the amount of $
Interest Withdrawal from the Trust Account
On July 14, 2022 the Company withdrew $
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 was obligated to 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. The Termination Payment of $1,500,000 for the reimbursement of business combination expenses was recorded as receivable as of March 31, 2022 and was received in full on July 1, 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, were either 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.”
19
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through June 30, 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 June 30, 2022, we had net income of $1,747,876, which consists of interest income on amounts held in the Trust Account of $257,084 and change in the fair value of the warrant liability of $1,743,332, offset by formation and operating costs of $244,724, interest expense of $366 and provision for income taxes of $7,450.
For the six months ended June 30, 2022, we had net income of $21,970,239, which consists of interest income on amounts held in the Trust Account of $260,366, reimbursement of business combination expenses of $1,500,000, and change in the fair value of the warrant liability of $20,805,990, offset by formation and operating costs of $588,012, interest expense of $655 and provision for income taxes of $7,450.
For the three months ended June 30, 2021, we had a net income of $6,423,127. We incurred $142,720 of formation and operating costs consisting mostly of general and administrative expenses. We had investment income of $26,166 on our amounts held in the Trust Account and change in the fair value of the warrant liability of $6,539,681.
For the six months ended June 30, 2021, we had a net income of $5,324,279. We incurred $160,227 of formation and operating costs consisting mostly of general and administrative expenses. We had investment income of $29,904 on our amounts held in the Trust Account and change in the fair value of the warrant liability of $6,654,681 offset by excess fair value over cash received for Private Placement Warrants of $355,999 and offering expenses related to warrant issuance of $844,080.
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 June 30, 2022, we had cash and marketable securities held in the Trust Account of $345,258,146 (including $258,146 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 June 30, 2022, we withdrew $78,037 of interest income from the Trust Account to pay our tax obligations.
For the six months ended June 30, 2022, cash used in operating activities was $302,851. Net income of $21,970,239 was affected by interest earned on cash and marketable securities held in the Trust Account of $260,366, a change in fair value of warrant liabilities of $20,805,990 and interest expense of $655. Changes in operating assets and liabilities used $1,207,389 of cash for operating activities.
For the six months ended June 30, 2021, cash provided by operating activities was $540,744. Net income of $5,324,279 was affected by interest earned on cash and marketable securities held in the Trust Account of $29,904, a change in fair value of warrant liabilities of $6,654,681, 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 used $380,517 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.
20
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 was obligated to 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). The Termination Payment was received on July 1, 2022. 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 June 30, 2022, we had cash of $88,568. 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.
Until the consummation of a Business Combination, the Company 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.
The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is 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. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date that these financial statements are issued.
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 June 30, 2022, the outstanding balance under the Note amounted to an aggregate of $350,655, which includes $655 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 liquidity condition and 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 June 30, 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 June 30, 2022, the outstanding balance under the Note amounted to an aggregate of $350,655, which includes $655 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 June 30, 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.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2022, we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts in the Trust Account, have been invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act, and that invest only in direct U.S. government obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2022, due to the material weaknesses in our internal control over financial reporting related to our accounting for complex financial instruments and significant and unusual transactions. In light of these material weaknesses, we performed additional analysis as deemed necessary to ensure that our condensed financial statements were prepared in accordance with GAAP. Accordingly, management believes that the condensed financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Changes in Internal Control over Financial Reporting
We have commenced our remediation efforts in connection with the identification of the material weaknesses discussed above. Specifically, we enhanced the supervisory review of accounting procedures in this financial reporting area and expanded and improved our review process for complex securities and related accounting standards. As of June 30, 2022, the material weaknesses discussed above had not been fully remediated. Accordingly, we continue to test our controls implemented to assess whether our controls are operating effectively. While there can be no assurance, we believe our material weaknesses will be remediated during the course of the fiscal year 2022.
Our certifying officers performed additional accounting and financial analyses and other post-closing procedures including consulting with subject matter experts related to the accounting for the Public Warrants, the Private Placement Warrants and Class A Common Stock. Our management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.
Other than the changes discussed above, there have been no changes to our internal control over financial reporting during the quarter ended June 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Except as set forth below, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 11, 2022 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2022 as filed with the SEC on May 16, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| * | Filed herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Pine Technology Acquisition Corp. | ||
| Date: August 10, 2022 | By: | /s/ Christopher Longo |
| Name: | Christopher Longo | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 10, 2022 | By: | /s/ Ciro M. DeFalco |
| Name: | Ciro M. DeFalco | |
| Title: | Chief Financial Officer | |
| (Principal Accounting Officer and Financial Officer) | ||
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