NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(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 effecting 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.
As
of September 30, 2020, the Company had not commenced any operations. All activity through September 30, 2020 relates to the Company’s
formation, its initial public offering (the “Initial Public Offering”), which is described below, and identifying
a target company for a Business Combination. 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 includes 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. In addition,
at September 30, 2020, cash of $469,109 is held outside of the Trust Account and is available for working capital purposes.
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 FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The
Company will provide its holders (the “public stockholders”) of the outstanding shares of Class A common stock 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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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.
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 FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the
Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by September
19, 2021, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for
mandatory liquidation and subsequent dissolution raise 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.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions
to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for
interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 27, 2020, which contains the audited financial statements
and notes thereto. The financial information as of December 31, 2019 is derived from the audited financial statements presented
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The interim results for the three and
nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December
31, 2020 or for any future interim periods.
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 FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(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
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 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 financial
statements and the reported amounts of revenues and expenses during the reporting period.
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 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
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of September 30, 2020 and December 31, 2019.
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 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
September 30, 2020 and December 31, 2019, common stock subject to possible redemption is presented as temporary equity, outside
of the stockholders’ equity section of the Company’s condensed 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. Offering costs amounting to $19,806,442 were charged to stockholders’ equity upon
the completion of the Initial Public Offering.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(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 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 September 30, 2020 and December 31, 2019, the Company had a deferred tax
asset of approximately $246,000 and $62,000, respectively, which had a full valuation allowance recorded against it of approximately
$246,000 and $62,000, respectively.
The
Company’s currently 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. During the three and nine months
ended September 30, 2020, the Company recorded income tax expense of approximately $200 and $415,000, respectively, primarily
related to interest income earned on the Trust Account. During the three months ended September 30, 2019 and for the period from
April 5, 2019 (inception) through September 30, 2019, the Company recorded income tax expense of approximately $16,000, primarily
related to interest income earned on the Trust Account. The Company’s effective tax rate of 0% and 46% for the three and
nine months ended September 30, 2020 and 35% and 36% for the three and months ended September 30, 2019 and for the period from
April 5, 2019 (inception) through September 30, 2019, 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 September 30, 2020 and December 31, 2019. 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 (Loss) Per Common Share
Net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding
for the period. The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement
to purchase 17,905,000 shares of Class A common stock in the calculation of diluted income (loss) per share, since the exercise
of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The
Company’s statement of operations includes a presentation of income (loss) 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 of $50,790 and $177,344 for
the three months ended September 30, 2020 and 2019 and $1,634,570 and $177,344 for the nine months ended September 30, 2020 and
for the period from April 5, 2019 (inception) through September 30, 2019, respectively (net of applicable franchise and income
taxes of approximately $51,000 and $116,000 for the three months end September 30, 2020 and 2019 and $565,000 and $116,000 for
the nine months end September 30, 2020 and for the period from April 5, 2019 (inception) through September 30, 2019, respectively),
by the weighted average number of Class A redeemable common stock for the periods of 35,000,000 shares. Net loss per common
share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the net income (loss),
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 FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At September 30, 2020 and December 31, 2019,
the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks
on such account.
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 balance sheets, primarily
due to their short-term nature.
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 the Company’s condensed 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 as of December 31, 2019.
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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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 September 30, 2020 and
December 31, 2019.
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 and nine months ended September 30,
2020, the Company incurred and paid $45,000 and $135,000 in fees for these services, respectively. For the three months ended
September 30, 2019 and for the period from April 5, 2019 (inception) through September 30, 2019, the Company incurred $15,000
in fees for these services.
NOTE
6. COMMITMENTS AND CONTINGENCIES
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the industry 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 operations and/or search
for a target company, the specific impact is not readily determinable as of the date of these financial statements. The 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. At 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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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 September 30, 2020 and December 31, 2019, 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 September 30, 2020 and December
31, 2019, there were 2,339,652 and 2,388,064 shares of Class A common stock issued or outstanding, excluding 33,470,348 and 33,421,936
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 September 30, 2020 and December 31, 2019,
there were 8,750,000 shares of Class B common stock issued and outstanding.
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).
Warrants
— 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.
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.
APEX TECHNOLOGY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
|
●
|
in
whole and not in part;
|
|
|
|
|
●
|
at
a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption given after the warrants become exercisable; and
|
|
|
|
|
●
|
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.
|
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 FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE
8. 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:
|
Level 1:
|
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.
|
|
|
|
|
Level 2:
|
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.
|
|
|
|
|
Level 3:
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
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 sheet
and adjusted for the amortization or accretion of premiums or discounts.
At
September 30, 2020, assets held in the Trust Account were comprised of $2,423 in cash and $176,558,753 in money market funds,
which are invested in U.S. Treasury Securities and $176,558,734 in U.S. Treasury Bills. At December 31, 2019, assets held in the
Trust Account were comprised of $532 in cash, $94,650 in money market funds, which are invested in U.S. Treasury Securities, and
$351,713,981 in U.S. Treasury Bills.
During
the nine months ended September 30, 2020, the Company withdrew $1,561,593 of interest earned on the Trust Account to pay its franchise
and income taxes. During the period ended December 31, 2019, the Company did not withdraw any interest income from the Trust Account
to pay its taxes.
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
September 30, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation inputs the Company utilized to
determine such fair value:
Description
|
|
Level
|
|
|
September 30,
2020
|
|
|
December 31, 2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments – U.S. Treasury Securities Money Market Fund
|
|
|
1
|
|
|
$
|
175,320,964
|
|
|
$
|
94,650
|
|
The
gross holding losses and fair value of held-to-maturity securities at September 30, 2020 and December 31, 2019 are as follows:
|
|
Held-To-Maturity
|
|
Amortized Cost
|
|
|
Gross
Holding
(Loss)
Gains
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 10/29/2020)
|
|
$
|
176,561,177
|
|
|
$
|
(1,114
|
)
|
|
$
|
176,560,063
|
|
December 31, 2019
|
|
U.S. Treasury Securities (Mature on 3/19/2020)
|
|
$
|
351,713,981
|
|
|
$
|
281,644
|
|
|
$
|
351,995,625
|
|
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
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 financial statements.