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    APXT   US03768F1021

APEX TECH

(APXT)
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2021APEX TECHNOLOGY ACQUISITION : AvePoint Closes Business Combination; to Begin Trading on Nasdaq as “AVPT”
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2021APEX TECHNOLOGY ACQUISITION : AvePoint Closes Business Combination; to Begin Trading on Nasdaq as "AVPT"
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2021APEX TECHNOLOGY ACQUISITION CORP : Submission of Matters to a Vote of Security Holders (form 8-K)
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APEX TECHNOLOGY ACQUISITION : 10-K/A - Management's Discussion and Analysis of Financial Condition and Results of Operations.

05/13/2021 | 03:25pm EDT

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes related thereto which are included in "Item 8. Consolidated Financial Statements and Supplementary Data" of this Amendment. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Special Note Regarding Forward-Looking Statements," "Item 1A. Risk Factors" and elsewhere in this Amendment.

Special Note Regarding Forward-Looking Statements

This Amendment 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. 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.



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Restatement


In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC's balance sheet as opposed to equity. Since issuance on November 17, 2020, our warrants were accounted for as equity within our balance sheet, and after discussion and evaluation, including with our independent auditors, we have concluded that our warrants should be presented as liabilities with subsequent fair value remeasurement.

Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued financial statements for the period ended December 31, 2020 should be restated because of a misapplication in the guidance around accounting for the warrants and should no longer be relied upon.

Historically, the warrants were reflected as a component of equity as opposed to liabilities on the balance sheets and the statements of operations did not include the subsequent non-cash changes in estimated fair value of the warrants, based on our application of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 815-40, Derivatives and Hedging, Contracts in Entity's Own Equity ("ASC 815-40). The views expressed in the SEC Staff Statement were not consistent with the Company's historical interpretation of the specific provisions within its warrant agreement and the Company's application of ASC 815-40 to the warrant agreement. We reassessed our accounting for warrants issued on September 19, 2019, in light of the SEC Staff's published views. Based on this reassessment, we determined that the warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in our statement of operations each reporting period. Accordingly, this Amendment restates our audited financial statements as of, and for the period ended December 31, 2020.

The restatement is more fully described in Note 2 of the notes to the financial statements included herein.



Overview


We are a blank check company formed under the laws of the State of Delaware on April 5, 2019 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses (an "initial business combination"). We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the sale of the placement units that occurred simultaneously with the completion of our initial public offering, our capital stock, debt or a combination of cash, stock and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.

Business Combination Agreement

On November 23, 2020, the Company entered into an Agreement and Plan of Merger (the "Business Combination Agreement") by and among the Company, Athena Technology Merger Sub, Inc., a Delaware corporation ("Merger Sub 1"), Athena Technology Merger Sub 2, LLC, a Delaware limited liability company ("Merger Sub 2"), and AvePoint, relating to a proposed business combination transaction between the Company and AvePoint. The Business Combination Agreement was amended on December 30, 2020.

Pursuant to the Business Combination Agreement, Merger Sub 1 will be merged with and into AvePoint (the "First Merger"), with AvePoint surviving the First Merger as a wholly owned subsidiary of the Company, and promptly following the First Merger, AvePoint will be merged with and into Merger Sub 2 (the "Second Merger"), with Merger Sub 2 surviving the Second Merger as a wholly owned subsidiary of the Company.

Pursuant to the terms of the Business Combination Agreement, at the effective time of the Merger:

(a) The aggregate consideration to be paid to AvePoint equity shareholders will

      be (i) an amount in cash of approximately $262 million (the "Aggregate Cash
      Consideration"), minus a deduction for the PIPE Fees and (ii) 143,261,093
      shares of common stock of Apex, par value $0.0001 ("Apex Common Stock"),
      which includes shares of Apex Common Stock that may be issuable pursuant to
      the exercise of exchanged AvePoint stock options (such aggregate amount, the
      "Aggregate Stock Consideration"). The Aggregate Stock Consideration will be
      increased by a number of shares of Apex Common Stock equal to the aggregate
      exercise price of the Exchanged Options divided by $10.00;



(b) AvePoint's stockholders who hold shares of Series C Preferred Stock, par

      value $0.001 ("AvePoint Preferred Stock") will receive an aggregate amount
      of $135 million (subject to deduction for Preferred PIPE Fees) from the
      Aggregate Cash Consideration and will receive the balance of their
      consideration in shares of Apex Common Stock from the Aggregate Stock
      Consideration;

(c) All holders of shares of common stock of AvePoint, par value $0.001 per

      share ("AvePoint Common Stock") other than the Named Executives will receive
      an aggregate amount of between $75 million and approximately $92 million in
      cash (subject to deduction for certain expenses) based on an election ("Cash
      Election") from the balance of the Aggregate Cash Consideration and will
      receive the remainder of their consideration in shares of Apex Common Stock
      from the Aggregate Stock Consideration;

(d) All shares of AvePoint Common Stock and AvePoint Preferred Stock held in the

      treasury of AvePoint or by Apex shall be canceled without any conversion
      thereof and no payment or distribution shall be made with respect thereto;




                                       44




(e) Each share of common stock of Merger Sub 1 issued and outstanding immediately

     prior to the Effective Time shall be converted into and exchanged for one
     validly issued, fully paid and non-assessable share of common stock, par
     value $0.001 per share, of the Surviving Corporation;



(f) Each Named Executive Cash-Settled Option that is outstanding immediately

     prior to the Effective Time, shall be converted into the right to receive (A)
     an amount of cash equal to: the product of (1) the number of Named Executive
     Cash-Settled Options multiplied by (2) the Per Share Amount, minus (y) the
     aggregate exercise price attributable to such Named Executive Cash-Settled
     Options; and (B) the contingent right to receive a number of shares
     Contingent Consideration following the Closing in accordance with the
     Business Combination Agreement;



(g) The Named Executives will receive an aggregate amount of $35 million in cash

     (subject to deduction for the Named Executive PIPE Fees (as defined in the
     Business Combination Agreement)) from the Aggregate Cash Consideration and
     will receive the balance of their transaction consideration in shares of Apex
     Common Stock from the Aggregate Stock Consideration;



(h) Each AvePoint Option that is outstanding immediately prior to the Effective

     Time, whether vested or unvested (other than the Named Executive Cash-Settled
     Options and AvePoint Options granted to Eligible individuals in the People's
     Republic of China ("PRC Options")), shall be converted into (1) an option to
     purchase a number of shares of Apex Common Stock (such option, an "Exchanged
     Option") equal to the product (rounded down to the nearest whole number) of
     (x) the number of shares of AvePoint Common Stock subject to such AvePoint
     Option immediately prior to the Effective Time and (y) the Exchange Ratio, at
     an exercise price per share (rounded up to the nearest whole cent) equal to
     (A) the exercise price per share of such AvePoint Option immediately prior to
     the Effective Time divided by (B) the Exchange Ratio; and



(i) The PRC Options will not be continued or assumed by AvePoint, Apex or the

     Merger Subs as part of the Mergers. The cancelled PRC Options will be
     replaced and substituted for as of the Effective Time with the award of a new
     stock option to purchase a number of shares of Apex Common Stock pursuant to
     the 2021 Plan equal to the product (rounded down to the nearest whole number)
     of (x) the number of shares of AvePoint Common Stock subject to such PRC
     Option immediately prior to the Effective Time and (y) the Exchange Ratio, at
     an exercise price (rounded up to the nearest whole cent) equal to (A) the
     exercise price per share of such PRC Option prior to the Effective Time
     divided by (B) the Exchange Ratio. The replacement stock options will be
     credited with vesting to the same extent as the existing PRC Options being
     replaced, and the new replacement awards will be subject to same vesting
     schedule and exercisability provisions



Additionally, On November 23, 2020, Apex entered into separate subscription agreements (collectively, the "Subscription Agreements") with a number of investors (collectively, the "PIPE Investors"), pursuant to which the PIPE Investors agreed to purchase an aggregate of 14,000,000 shares of Apex Common Stock (the "PIPE Shares"), at a purchase price of $10.00 per share for an aggregate purchase price of $140,000,000, in one or more private placement transactions (the "Private Placements"). The closing of the Private Placements pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the concurrent consummation of the Proposed Transactions. The purpose of the Private Placements is to raise additional capital for use by the combined company following the Closing.

Following the Closing, in addition to the Aggregate Cash Consideration and Aggregate Stock Consideration, the holders of AvePoint Preferred Stock, AvePoint Common Stock and AvePoint Options shall be issued additional shares of Apex Common Stock, as follows:

(a) 1,000,000 shares of Apex Common Stock, in the aggregate, if at any time from

     and after the Closing through the seventh anniversary thereof (x) the Closing
     Price is greater than or equal to $12.50 over any 20 Trading Days within any
     30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which
     results in the stockholders of Apex having the right to exchange their shares
     for cash, securities or other property having a value equaling or exceeding
     $12.50 per share (the "First Milestone") (such 1,000,000 shares of Apex
     Common Stock, the "First Milestone Contingent Consideration");



(b) 1,000,000 shares of Apex Common Stock, in the aggregate, if at any time from

     and after the Closing through the seventh anniversary thereof (x) the Closing
     Price is greater than or equal to $15.00 over any 20 Trading Days within any
     30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which
     results in the stockholders of Apex having the right to exchange their shares
     for cash, securities or other property having a value equaling or exceeding
     $15.00 per share (the "Second Milestone") (such 1,000,000 shares of Apex
     Common Stock, the "Second Milestone Contingent Consideration"); and



(c) 1,000,000 shares of Apex Common Stock, in the aggregate, if at any time from

     and after the Closing through the seventh anniversary thereof (x) the Closing
     Price is greater than or equal to $17.50 over any 20 Trading Days within any
     30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which
     results in the stockholders of Apex having the right to exchange their shares
     for cash, securities or other property having a value equaling or exceeding
     $17.50 per share (the "Third Milestone") (such 1,000,000 shares of Apex
     Common Stock, the "Third Milestone Contingent Consideration" and together
     with the First Milestone Contingent Consideration and the Second Milestone
     Contingent Consideration, the "Contingent Consideration"). For the avoidance
     of doubt, the maximum amount of the Contingent Consideration is 3,000,000
     shares of Apex Common Stock, in the aggregate.



The parties to the Business Combination Agreement have made customary representations, warranties and covenants, including, among others, with respect to the conduct of the businesses of AvePoint and Apex during the period between execution of the Business Combination Agreement and the consummation of the Business Combination



                                       45





Results of Operations



We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to December 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, following the Initial Public Offering, identifying a target company for a Business Combination and completing activities related to the Business Combination Agreement. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities 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 in connection with completing a Business Combination.

As a result of the restatement described in Note 2 of the notes to the financial statements included herein, we classify the warrants issued in connection with our Initial Public Offering as liabilities at their fair value and adjust the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.

For the year ended December 31, 2020, we had a net loss of $60,723,035, which consisted of operating costs of $5,309,612, franchise taxes of $201,196, a provision for income taxes of $411,315 and a change in the fair value of the warrant liability of $56,471,950, offset by interest earned on marketable securities held in the Trust Account of $1,671,038

For the period from April 5, 2019 (inception) through December 31, 2019, we had a net income of $2,965,368, which consisted of interest earned on marketable securities held in the Trust Account of $1,809,163, a change in the fair value of the warrant liability of ($3,052,800) and transaction costs of $988,242, offset by operating costs of $295,109, franchise taxes of $295,342 and a provision for income taxes of $317,902.

Liquidity and Capital Resources

On September 19, 2019, we consummated the Initial Public Offering of 35,000,000 Units, which included the partial exercise by the underwriters of the over-allotment option to purchase an additional 4,500,000 Units, at $10.00 per Unit, generating gross proceeds of $350,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 810,000 Placement Units to our Sponsor and Cantor at a price of $10.00 per Unit, generating gross proceeds of $8,100,000.

Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the Placement Units, a total of $350,000,000 was placed in the trust account. We incurred $19,806,442 in transaction costs, including $6,100,000 of underwriting fees, $13,150,000 of deferred underwriting fees and $556,442 of other offering costs.

For the year ended December 31, 2020, cash used in operating activities was $2,419,063. Net loss of $60,723,035 was affected by interest earned on marketable securities held in the trust account of $1,671,038, a non-cash charge for the change in the fair value of warrant liabilities of $56,471,950, and changes in operating assets and liabilities, which provided $3,503,060 of cash from operating activities.

For the period from April 5, 2019 (inception) through December 31, 2019, cash used in operating activities was $473,748. Net income of $2,965,368 was offset by interest earned on marketable securities held in the Trust Account of $1,809,163, a non-cash charge for the change in the fair value of warrant liabilities of ($3,052,800), and transaction costs of $988,242, and changes in operating assets and liabilities, which provided $434,605 of cash from operating activities.

As of December 31, 2020, we had cash and marketable securities of $351,858,320 held in the trust account. As of December 31, 2019, we had cash and marketable securities of $351,809,163 held in the trust account. Interest income on the balance in the trust account may be used by us to pay taxes. During the year ended December 31, 2020, we withdrew $1,621,881 of interest earned on the trust account to pay for our franchise tax obligations. During the year ended December 31, 2019, we did not withdraw any interest earned on the trust account. 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) 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 initial Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of December 31, 2020, we had cash of $197,628 held outside of the trust account. As of December 31, 2019, we had cash of $994,810 held outside of the trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. 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 units identical to the Placement Units, at a price of $10.00 per unit at the option of the lender.



                                       46




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 initial Business Combination. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such initial Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.



Going Concern


We have until September 19, 2021 to consummate a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after September 19, 2021.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.



Contractual Obligations


We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of our Sponsor a monthly fee of $15,000 for office space, utilities and secretarial and administrative support to us. We began incurring these fees on September 16, 2019 and will continue to incur these fees monthly until the earlier of the completion of the initial Business Combination and our liquidation.

The underwriters are entitled to a deferred fee of $13,150,000. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.



Principles of Consolidation


The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiary where the Company has the ability to exercise control. All significant intercompany balances and transactions have been eliminated in consolidation. Activities in relation to the noncontrolling interest are not considered to be significant and are, therefore, not presented in the accompanying consolidated statements.



Critical Accounting Policies


The preparation of consolidated 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 consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.



Warrant Liability


We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815-40-15-7D under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the warrants was estimated using a Monte Carlo simulation approach.



                                       47




Class A Common Stock Subject to Possible Redemption

We account for our common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is 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, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders' equity section of our balance sheets.

Net Income (Loss) per Common Share

We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, by the weighted average number of shares of Class A redeemable common stock outstanding for the periods presented. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing net income less income attributable to Class A redeemable common stock, by the weighted average number of shares of Class A and Class B non-redeemable common stock outstanding for the periods presented.



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 consolidated financial statements.

© Edgar Online, source Glimpses

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