NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Apex Technology Acquisition Corporation (the “Company”)
was incorporated in Delaware on April 5, 2019. 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 (the “Business Combination”).
Although the Company is not limited to a particular
industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on companies in the software
and internet technology industries. 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.
The Company has two subsidiaries, Athena Technology
Merger Sub, Inc., a wholly-owned subsidiary of the Company incorporated in Delaware on October 13, 2020 (“Merger Sub 1”) and
Athena Technology Merger Sub 2, LLC, a wholly-owned subsidiary of the Company incorporated in Delaware on November 2, 2020 (“Merger
Sub 2”).
As of March 31, 2021, the Company had not commenced
any operations. All activity through March 31, 2021 relates to the Company’s formation, its initial public offering (the “Initial
Public Offering”), which is described below identifying a target company for a Business Combination and activities in connection
with the proposed acquisition of AvePoint, Inc., a Delaware corporation (“AvePoint”) (see Note 6). The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating
income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on September 16, 2019. On September 19, 2019, the Company consummated the Initial Public
Offering of 35,000,000 units (“Units” and, with respect to the Class A common stock included in the Units offered, the “Public
Shares”), 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, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 810,000 units (the “Placement Units”) at a price of $10.00 per Placement
Unit in a private placement to Apex Technology Sponsor LLC, a Delaware limited liability company (the “Sponsor”) and Cantor
Fitzgerald & Co. (“Cantor”), the representative of the underwriters, generating gross proceeds of $8,100,000, which is
described in Note 4.
Offering costs amounted to $19,806,442, consisting
of $6,100,000 of underwriting fees, $13,150,000 of deferred underwriting fees and $556,442 of other offering costs.
Following the closing of the Initial Public Offering
on September 19, 2019, an amount of $350,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Placement Units was placed in a trust account (“Trust Account”) and invested in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market
fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the
earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Placement Units, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance
that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business
Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into the initial Business
Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company will provide its holders of the outstanding
shares of Class A common stock (the “public stockholders”) included in the public units (“Public Shares”) with
the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the
Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust
Account ($10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released
to the Company to pay its tax obligations). The per-share amount to be distributed to public stockholders who redeem their Public Shares
will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There
will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Company will
proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon
such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in
favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder
vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended
and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and
Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however,
stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant
to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor
has agreed to vote its Founder Shares (as defined in Note 5), Placement Shares (as defined in Note 4) and any Public Shares purchased
during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect
to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a
Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares,
without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption
rights with respect to its Founder Shares (as defined below), Placement Shares (as defined below) and Public Shares held by it in connection
with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation
(i) that would affect the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination
or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision
relating to stockholders’ rights or pre-business combination activity, unless the Company provides the public stockholders with
the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company has until September 19, 2021 to consummate
a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the
Combination Period, 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 on the funds held in the Trust Account and not previously released
to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the
right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve
and liquidate, subject in the case of clauses (ii) and (iii) above to the Company’s obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with
respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the
Combination Period.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares and Placement Shares if the Company fails to complete a Business Combination within the Combination
Period. However, if the Sponsor acquires Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating
distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters
have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company
does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other
funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution,
it is possible that the per share value of the assets remaining available for distribution will be less than $10.00 per share.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or
products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public
Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions
in the value of the trust assets. This liability will not apply with respect to any claims by a third party who executed a waiver of any
right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a
third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to
reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all
vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses
or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim
of any kind in or to monies held in the Trust Account.
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
September 19, 2021 to consummate a Business Combination. It is uncertain that the Company 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
of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent
dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to
the carrying amounts of assets or liabilities should the Company be required to liquidate after September 19, 2021. Management plans to
continue efforts to close a business combination within the prescribed time frame.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated
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 consolidated
financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended December 31,
2020 as filed with the SEC on May 13, 2021, which contains the audited financial statements and notes thereto. The financial information
as of December 31, 2020 is derived from the audited financial statements presented in the Company’s Amended and Restated Annual
Report on Form 10-K/A for the year ended December 31, 2020. The interim results for the three months ended March 31, 2021 are not necessarily
indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Principles of Consolidation
The accompanying condensed consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.
Emerging Growth Company
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 independent registered public accounting
firm 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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 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 consolidated 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 condensed consolidated financial
statements in conformity with 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 condensed consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from the Company’s
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. Cash equivalents are stated at cost,
which approximates market value. Cash equivalents consist of money market accounts. As of March 31, 2021 and December 31, 2020,
cash equivalents amounted to $50,000.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” 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 the Company’s control) is classified
as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common
stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of
uncertain future events. Accordingly, at March 31, 2021 and December 31, 2020, Class A common stock subject to possible redemption is
presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated balance
sheets.
Offering Costs
Offering costs consist of legal, accounting, underwriting
fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Aggregate offering
costs amounted to $19,806,442, of which $18,818,200 were charged to stockholders’ equity upon the completion of the Initial Public
Offering and $988,242 were charged as an expense to the condensed consolidated statement of operations.
Warrant Liability
The Company accounts 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of March 31, 2021 and December
31, 2020, the Company had a deferred tax asset of approximately $2,099,000 and $137,000, respectively, which had a full valuation allowance
recorded against it of approximately $2,099,000 and $137,000, respectively.
The Company’s taxable income primarily consists
of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up costs
and are not currently deductible. The Company did not record an income tax provision during the three months ended March 31, 2021. During
the three months ended March 31, 2020, the Company recorded income tax expense of approximately $392,000, primarily related to interest
income earned on the Trust Account. The Company’s effective tax rate of 0% and 7% for the three months ended March 31, 2021 and
2020 respectively, differs from the expected income tax rate due to the start-up costs (discussed above) which are not currently deductible.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions 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.
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 March 31, 2021 and December 31, 2020. 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
is subject to income tax examinations by major taxing authorities since inception.
Net Income Per Common Share
Net income per common share is computed by dividing
net income by the weighted average number of common shares outstanding for the period.
The Company’s statements of operations includes
a presentation of income per share for common shares subject to redemption in a manner similar to the two-class method of income 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, by the weighted average number of Class A redeemable common stock for the periods of 35,000,000 shares.
Net income per common share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the
net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class A and Class B
non-redeemable common stock outstanding for the periods. Class A and Class B non-redeemable common stock includes the Founder Shares and
the Placement Units as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The following table reflects the calculation of
basic and diluted net income per share for common shares (in dollars, except per share amounts):
|
|
Three Months
Ended
March 31,
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Redeemable Class A Common Stock
|
|
|
|
|
|
|
Numerator: Earnings allocable to Redeemable Class A Common Stock
|
|
|
|
|
|
|
|
|
Interest Income
|
|
$
|
31,841
|
|
|
$
|
1,452,414
|
|
Income Tax and Franchise Tax
|
|
|
(31,841
|
)
|
|
|
(442,446
|
)
|
Net Earnings
|
|
$
|
—
|
|
|
$
|
1,009,968
|
|
Denominator: Weighted Average Redeemable Class A Common Stock
|
|
|
|
|
|
|
|
|
Redeemable Class A Common Stock, Basic and Diluted
|
|
|
35,000,000
|
|
|
|
35,000,000
|
|
Earnings/Basic and Diluted Redeemable Class A Common Stock
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Basic Earnings per Share
|
|
|
|
|
|
|
|
|
Numerator: Net Income minus Redeemable Net Earnings
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
28,311,612
|
|
|
$
|
5,109,685
|
|
Net Earnings allocable to Redeemable Class A Common Stock
|
|
|
—
|
|
|
|
(1,009,968
|
)
|
Non-Redeemable Net Income - Basic
|
|
$
|
28,311,612
|
|
|
$
|
4,099,717
|
|
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Class A and B Non-Redeemable Common Stock, Basic (1)
|
|
|
9,560,000
|
|
|
|
9,560,000
|
|
Income/Basic Non-Redeemable Class A and B Common Stock
|
|
$
|
2.96
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss per Share
|
|
|
|
|
|
|
|
|
Numerator: Non-Redeemable Net Income - Basic minus Change in fair value of warrant liabilities
|
|
|
|
|
|
|
|
|
Non-Redeemable Net Income - Basic
|
|
$
|
28,311,612
|
|
|
$
|
4,099,717
|
|
Less: Change in fair value of warrant liabilities
|
|
|
(30,171,850
|
)
|
|
|
(4,294,000
|
)
|
Non-Redeemable Net Loss – Diluted
|
|
$
|
(1,860,238
|
)
|
|
$
|
(194,283
|
)
|
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Class A and B Non-Redeemable Common Stock, Diluted (2)
|
|
|
12,757,321
|
|
|
|
9,560,000
|
|
Loss/Diluted Non-Redeemable Class A and B Common Stock
|
|
$
|
(0.15
|
)
|
|
$
|
(0.02
|
)
|
(1)
|
The weighted average non-redeemable common stock for the three months ended March 31, 2021 and 2020 includes the effect of 810,000 Private Units, which were issued in conjunction with the initial public offering on September 19, 2019.
|
(2)
|
As of March 31, 2021, diluted weighted average shares outstanding was calculated using the treasury stock method utilizing a weighted average share price of $14.00 and the effect of the warrants sold in the Initial Public Offering and the private placement to purchase an aggregate of 17,905,000 shares. As of March 31, 2020, basic and diluted shares are the same as there are no securities that are dilutive to the Company’s common stockholders.
|
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 Corporation coverage limit of $250,000. At March 31, 2021 and December 31, 2020, the Company has not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature.
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. The Company adopted ASU 2020-06 effective
as of January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s 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 the Company’s condensed
consolidated financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 35,000,000 Units, which includes the partial exercise by the underwriters of its option to purchase an additional 4,500,000 Units,
at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public
Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per
share, subject to adjustment (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor and Cantor purchased an aggregate of 810,000 Placement Units at a price of $10.00 per Placement Unit, for
an aggregate purchase price of $8,100,000, of which the Sponsor purchased 657,500 Placement Units and Cantor purchased 152,500 Placement
Units. Each Placement Unit consists of one share of Class A common stock (“Placement Share”) and one-half of one redeemable
warrant (each, a “Placement Warrant”). Each whole Placement Warrant is exercisable to purchase one share of Class A common
stock at a price of $11.50 per share. The proceeds from the Placement Units were added to the proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the
sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law),
and the Placement Units and all underlying securities will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
During the period ended December 31, 2019, the
Sponsor purchased 7,187,500 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate
price of $25,000. The Founder Shares will automatically convert into Class A common stock upon consummation of a Business Combination
on a one-for-one basis, subject to certain adjustments, as described in Note 7. On August 13, 2019 and September 16, 2019, the Company
effected a 1.1 for 1 stock dividend and a 1.109091 for 1 stock dividend, respectively, for each share of Class B common stock outstanding,
resulting in an aggregate of 8,768,750 Founder Shares issued and outstanding.
The Founder Shares included an aggregate of up
to 1,143,750 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or
in part, so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial
Public Offering (excluding Placement Shares underlying the Placement Units). In connection with the underwriters’ partial exercise
of the over-allotment option and the forfeiture of the remaining over-allotment option, 18,750 Founder Shares were forfeited and 1,125,000
Founder Shares are no longer subject to forfeiture, resulting in an aggregate of 8,750,000 Founder Shares issued and outstanding.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Sponsor has agreed, subject to limited exceptions,
not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business
Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the 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 a Business Combination, or (y) the date on which the Company completes a
liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
Related Party Loans
On June 25, 2019, the Sponsor loaned the Company
an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering (the “Promissory Note”). The Promissory
Note was non-interest bearing and payable on the earlier of December 31, 2019 or the completion of the Initial Public Offering. Outstanding
borrowings amounting to $275,000 under the Promissory Note were repaid upon the consummation of the Initial Public Offering.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors 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. The Working
Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion,
up to $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination at a price
of $10.00 per unit. The units would be identical to the Placement Units. There are no borrowings outstanding as of March 31, 2021 and
December 31, 2020.
As of February 3, 2021, the Company issued a convertible
promissory note to the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $300,000
(the “Convertible Promissory Note”). The Convertible Promissory Note is non-interest bearing and payable on the earlier of
the date on which the Company consummates a Business Combination or the date that the winding up of the Company is effective. If the Company
does not consummate a Business Combination, the Company 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.
Administrative Support Agreement
The Company entered into an agreement whereby,
commencing on September 16, 2019 through the earlier of the Company’s consummation of a Business Combination and its liquidation,
the Company will pay an affiliate of the Sponsor a total of $15,000 per month for office space, utilities and secretarial and administrative
support. For the three months ended March 31, 2021 and 2020, the Company incurred and paid $45,000 in each three month period in fees
for these services.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its search for a target company, and/or closing of the AvePoint Business Combination (as defined below),
the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered
into on September 16, 2019, the holders of the Founder Shares, Placement Units (including securities contained therein) and units (including
securities contained therein) that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable
upon the exercise of the Placement Warrants) and any shares of Class A common stock and warrants (and underlying Class A common stock)
that may be issued upon conversion of units issued upon conversion of the Working Capital Loans and Class A common stock issuable upon
conversion of the Founder Shares will be entitled to registration rights 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 the majority of these securities are
entitled to make up to three demands, excluding short form 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 the completion of
a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. Notwithstanding the foregoing, Cantor may not exercise its demand and “piggyback” registration rights after five (5)
and seven (7) years after the effective date of the registration statement and may not exercise its demand rights on more than one occasion.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option to purchase up to 4,575,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting
discounts and commissions. On September 19, 2019, the underwriters partially exercised their over-allotment option to purchase an additional
4,500,000 Units at $10.00 per Unit and forfeited the option to exercise the remaining 75,000 Units.
The underwriters were paid a cash underwriting
discount of $0.20 per Unit or $6,100,000 in the aggregate at the closing of the Initial Public Offering. In addition, 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 the Company completes a Business Combination, subject to the terms of the underwriting agreement.
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, March 8, 2021 and May 18, 2021.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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:
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(a)
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The aggregate consideration to be paid to AvePoint equity shareholders will be (i) an amount in cash of approximately $263 million (the “Aggregate Cash Consideration”), minus a deduction for the PIPE Fees and (ii) 143,210,835 shares of common stock of the Company (“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;
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(b)
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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;
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(c)
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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 $93 million in cash (subject to deduction for the Common Stockholder PIPE Fees) 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;
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(d)
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All shares of AvePoint Common Stock and AvePoint Preferred Stock held in the treasury of AvePoint or by the Company shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto;
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(e)
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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;
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(f)
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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;
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(g)
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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;
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(h)
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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
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(i)
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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
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APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Additionally, On November 23, 2020, the Company
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. The Subscription
Agreements were each subsequently amended to extend the Outside Date (as defined therein) to July 21, 2021.
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:
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(a)
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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”);
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(b)
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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
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(c)
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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.
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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.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021 and December
31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The
Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common
stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there were 7,723,921 and 10,555,082 shares of
Class A common stock issued or outstanding, excluding 28,086,079 and 25,254,918 shares of common stock subject to possible redemption,
respectively.
Class B Common Stock — The
Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common
stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there were 8,750,000 shares of Class B common
stock issued and outstanding.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Holders of Class A common stock and Class B common
stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of a 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
offered in the Initial Public Offering and related to the closing of a 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 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, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering
(not including the shares of Class A common stock underlying the Placement Units) plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued, or to be issued, to any seller
in a Business Combination, any private placement equivalent securities issued to the Sponsor or its affiliates upon conversion of loans
made to the Company).
NOTE 8. WARRANT LIABILITIES
Public Warrants may only be exercised for a whole
number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants
will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of
the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination 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 with respect to the shares of Class A common stock underlying the warrants is then effective
and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant
will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class
A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of
the state of residence of the registered holder of the warrants.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file
with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such
registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until
the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A
common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with
Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the foregoing, if a registration statement covering the Class
A common stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of a Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available,
holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
Once the warrants become exercisable, the Company
may redeem the Public Warrants:
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●
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in whole and not in part;
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●
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at a price of $0.01 per warrant;
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●
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upon not less than 30 days’ prior written notice of redemption given after the warrants become exercisable; and
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●
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if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders.
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If and when the warrants become redeemable by
the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of the warrants
is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration
or qualification.
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in
no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such
funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business
Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or
effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Placement Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering, except that the Placement Warrants and the Class A common stock issuable
upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business
Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be
non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Placement Warrants are held by
someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and
exercisable by such holders on the same basis as the Public Warrants.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for
its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
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Level 1:
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Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
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Level 2:
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Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
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Level 3:
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Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
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The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities
are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded
at amortized cost on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts.
At March 31, 2021, assets held in the Trust Account
were comprised of $680 in cash and $351,889,481 in money market funds, which are invested in U.S. Treasury Securities. At December 31,
2020, assets held in the Trust Account were comprised of $1,455 in cash and $175,325,383 in money market funds, which are invested in
U.S. Treasury Securities and $176,531,482 in U.S. Treasury Bills.
During the three months ended March 31, 2021,
the Company did not withdraw any interest income on the Trust Account. During the three months ended March 31, 2020, the Company withdrew
$148,743 of interest earned on the Trust Account to pay its franchise taxes.
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
Investments – U.S. Treasury Securities Money Market Fund
|
|
1
|
|
$
|
351,889,481
|
|
|
$
|
175,325,383
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
1
|
|
|
45,850,000
|
|
|
|
74,900,000
|
|
Warrant Liability – Private Placement Warrants
|
|
3
|
|
|
1,397,250
|
|
|
|
2,519,100
|
|
The Warrants were accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the accompanying condensed consolidated balance sheets.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
change in fair value of warrant liabilities in the consolidated statements of operations.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Warrants were valued using a Modified Black
Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary
unobservable input utilized in determining the fair value of the Warrants is the expected volatility of the common stock. The expected
volatility as of the date of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’
companies without an identified target. The expected volatility as of subsequent valuation dates was estimated through comparable guideline
companies.
The key inputs into the Modified Black-Scholes
Option Pricing Model for the Warrants were as follows:
Input:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Risk-free interest rate
|
|
|
0.95
|
%
|
|
|
0.42
|
%
|
Expected term (years)
|
|
|
5.1
|
|
|
|
5.4
|
|
Expected volatility
|
|
|
34.8
|
%
|
|
|
34.5
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Fair value of Units
|
|
$
|
11.08
|
|
|
$
|
15.01
|
|
The following table presents the changes in the fair value of warrant
liabilities:
|
|
Private Placement
|
|
|
Public
|
|
|
Warrant Liabilities
|
|
Fair value as of January 1, 2021
|
|
$
|
2,519,000
|
|
|
$
|
74,900,000
|
|
|
$
|
77,419,100
|
|
Change in valuation inputs or other assumptions(1)
|
|
|
(1,121,850
|
)
|
|
|
(29,050,000
|
)
|
|
|
(30,171,850
|
)
|
Fair value as of March 31, 2021
|
|
$
|
1,397,250
|
|
|
$
|
45,850,000
|
|
|
$
|
47,247,250
|
|
(1)
|
Changes in valuation inputs
or other assumptions are recognized in change in fair value of warrant liabilities in the consolidated statement of operations.
|
There were no transfers in or out of Level 3 from other levels in the
fair value hierarchy.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluates subsequent events and transactions that occur
after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review,
the Company did not identify subsequent events that would have required adjustment or disclosure in the condensed consolidated financial
statements.