References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Apex Technology Acquisition Corporation. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Apex Technology Sponsor LLC. The following
discussion and analysis of our financial condition and results of operations
should be read in conjunction with the financial statements and the notes
thereto contained elsewhere in this 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 of 1933 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/A filed with the
U.S. Securities and Exchange Commission (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 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. 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.
Recent Developments
On November 23, 2020, as amended on December 30, 2020, March 8, 2021 and May 18,
2021, we entered into the Business Combination Agreement with Merger Sub 1,
Merger Sub 2, and AvePoint, relating to a proposed business combination
transaction between us and AvePoint.
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.
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Additionally, On November 23, 2020, we entered the Subscription Agreements with
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. The Subscription Agreements were each subsequently
amended to extend the Outside Date (as defined therein) to July 21, 2021.
In May 2021, we entered into Amendment No. 1 to Warrant Agreement with
Continental Stock Transfer & Trust Company to correct a defective provision.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to March 31, 2021 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. 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.
For the three months ended March 31, 2021, we had net income of $28,311,612,
which consisted of a change in the fair value of the warrant liability of
$30,171,850 and interest earned on marketable securities held in the Trust
Account of $31,841, offset by operating costs of $1,842,079 and franchise taxes
of $50,000.
For the three months ended March 31, 2020, we had net income of $5,109,685,
which consisted of a change in the fair value of the warrant liability of
$4,294,000 and interest earned on marketable securities held in the Trust
Account of $1,452,414, offset by operating costs of $194,283, franchise taxes of
$50,000 and a provision for income taxes of $392,446.
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 three months ended March 31, 2021, cash used in operating activities was
$358,136. Net income of $28,311,612 was offset by a change in the fair value of
the warrant liability of $30,171,850, interest earned on marketable securities
held in the Trust Account of $31,841 and changes in operating assets and
liabilities, which provided $1,533,943 of cash from operating activities.
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For the three months ended March 31, 2020, cash used in operating activities was
$382,908. Net income of $5,109,685 was offset by a change in the fair value of
the warrant liability of $4,294,000, interest earned on marketable securities
held in the Trust Account of $1,452,414 and changes in operating assets and
liabilities, which provided $253,821 of cash from operating activities.
As of March 31, 2021, we had investments of $351,890,161 held in the Trust
Account. Interest income on the balance in the Trust Account may be used by us
to pay taxes. No amounts were withdrawn during the three months ended March 31,
2021. 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 March 31, 2021, we had cash of $139,492 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. There are no borrowings outstanding as of
March 31, 2021.
As of February 3, 2021, we issued a Convertible Promissory Note to the Sponsor.
The Convertible Promissory Note is non-interest bearing and payable on the
earlier of the date on which we consummate a Business Combination or the date
that our winding up is effective. If we do not consummate a Business
Combination, we may use a portion of any funds held outside the Trust Account to
repay the Convertible Promissory Note; however, no proceeds from the Trust
Account may be used for such repayment. Up to $300,000 of the Convertible
Promissory Note may be converted into units at a price of $10.00 per unit at the
option of the Sponsor. The units would be identical to the Placement Units. As
of March 31, 2021, the outstanding balance under the Convertible Promissory Note
amounted to an aggregate of $300,000.
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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 March 31, 2021. 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.
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Critical Accounting Policies
The preparation of condensed 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 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:
Warrant Liability
We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant's specific terms and
applicable authoritative guidance in ASC 480 and ASC 815. The assessment
considers whether the warrants are freestanding financial instruments pursuant
to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC
815, including whether the warrants are indexed to the Company's own common
shares and whether the warrant holders could potentially require "net cash
settlement" in a circumstance outside of the Company's control, among other
conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of warrant issuance and as of
each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations.
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 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 income 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.
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Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. We adopted ASU 2020-06 effective as of January 1,
2021. The adoption of ASU 2020-06 did not have an impact on our financial
statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
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