Business Context and Reporting Period
This unaudited Form 10-Q was filed by Apex Technology Acquisition Corporation, not AvePoint, Inc., for the quarter ended June 30, 2020. Apex was a Delaware blank-check company formed to pursue a business combination, with a stated focus on software and internet technology companies. It had not commenced operating activities or generated operating revenue as of June 30, 2020.
The company completed its initial public offering in September 2019, placing substantially all offering proceeds into a trust account pending a business combination. The filing identifies Apex as a shell company and an emerging growth company.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 |
|---|---|---|
| Operating revenue | None | None |
| Interest income from trust account | $131,366 | $1,583,780 |
| General and administrative expense | $213,837 | $408,120 |
| Franchise tax expense | $50,000 | $100,000 |
| Income tax expense | $22,769 | $415,215 |
| Net income (loss) | $(155,240) | $660,445 |
| Basic and diluted income per redeemable Class A share | $0.00 | $0.03 |
| Basic and diluted loss per non-redeemable Class A and Class B share | $(0.02) | $(0.04) |
- Cash outside the trust account was $609,507 at June 30, 2020, compared with $994,810 at December 31, 2019.
- Trust-account assets were $353.2 million, primarily invested in U.S. Treasury money market funds.
- Total assets were $354.0 million; total liabilities were $14.1 million, including $13.15 million of deferred underwriting commissions.
- Temporary equity representing redeemable Class A shares was $334.9 million.
- Stockholders’ equity was approximately $5.0 million.
- Net cash used in operating activities for the six months was $593,443. Cash withdrawn from the trust account to pay franchise taxes was $208,140.
- The company had no long-term debt, borrowings, capital leases, operating leases, or off-balance-sheet financing arrangements as of June 30, 2020.
Material Changes Versus Comparable Period
- The comparable 2019 period covered only the period from April 5, 2019, the date of inception, through June 30, 2019, and therefore is not a meaningful operating comparison.
- For the six months ended June 30, 2020, the company reported net income of $660,445, compared with a net loss of $1,000 for the 2019 inception period. The change primarily reflected $1.58 million of trust-account interest income.
- Cash outside the trust account declined by $385,303 from year-end 2019, reflecting operating cash use partially offset by $208,140 withdrawn from the trust account for franchise taxes.
- Income tax expense increased substantially because taxable income primarily consisted of trust-account interest, while many startup costs were not currently deductible.
- Redeemable Class A shares increased modestly to 33,487,981 shares from 33,421,936 shares at December 31, 2019, as accrued trust-account earnings increased the redemption value.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management expects no operating revenue until after completion of an initial business combination and expects to continue incurring costs to identify, evaluate, and negotiate with potential targets.
- The company was required to complete a business combination by September 19, 2021. If it failed to do so, it would cease operations, redeem the public shares from the trust account, and liquidate. Public warrants could expire worthless.
- Public stockholders may redeem their shares for a pro rata portion of the trust account upon completion of a business combination or if the company liquidates. The filing states that the redemption amount could be below $10 per share, including because of negative interest rates or other reductions in trust assets.
- The company must generally acquire a target or targets with an aggregate fair market value of at least 80% of the trust-account assets, excluding specified amounts, and must acquire a controlling interest.
- The $13.15 million deferred underwriting commission is payable only if a business combination is completed and is expected to be paid from trust-account proceeds.
- The Sponsor may provide working-capital loans of up to $1.5 million that could be converted into units at $10 per unit, although no such borrowings were outstanding at quarter-end.
- COVID-19 could adversely affect the search for and completion of a business combination and the operations of any eventual target. Management stated that the specific financial impact was not determinable as of the reporting date.
- The company had no legal proceedings and reported no material changes to previously disclosed risk factors other than risks related to negative interest rates and COVID-19.
- Management concluded that disclosure controls and procedures were effective and reported no material change in internal control over financial reporting.
Important Facts for Investors to Verify
- Registrant identity: Confirm that this filing relates to Apex Technology Acquisition Corporation rather than AvePoint, Inc.; the source text identifies Apex as the registrant.
- Business-combination status: Verify whether Apex subsequently completed a business combination before the September 19, 2021 deadline and the resulting ownership, financing, and redemption terms.
- Trust-account protection: Review the amount ultimately available to public shareholders after taxes, deferred underwriting fees, redemptions, and any creditor claims.
- Dilution: Assess the impact of 8.75 million founder shares, placement securities, 17.905 million warrants, potential working-capital loan conversions, and any transaction-related equity issuance.
- Liquidity: Evaluate whether the $609,507 held outside the trust account was sufficient to fund operating and transaction expenses through the combination deadline.
- COVID-19 and target risks: Review subsequent filings for changes in the target search, transaction timing, market conditions, or trust-account value.