Apex Technology Acquisition Corporation — Form 10-K Summary
Filing and reporting period: The provided filing is for Apex Technology Acquisition Corporation, not AvePoint, Inc. It covers the period from April 5, 2019, inception, through December 31, 2019, and was filed March 27, 2020. Apex was an early-stage special purpose acquisition company formed to pursue a business combination, with an intended focus on software and internet technology companies. It had not commenced operating activities or generated operating revenue.
Financial position and results
| Metric | Period-end or period amount |
|---|---|
| Revenue | No operating revenue |
| Net income | $900,810 |
| Interest income from trust account | $1,809,163 |
| General and administrative expense | $295,109 |
| Franchise tax expense | $295,342 |
| Income tax provision | $317,902 |
| Net cash used in operating activities | $473,748 |
| Cash outside trust account | $994,810 |
| Trust account assets | $351,809,163 |
| Total assets | $352,987,612 |
| Total liabilities | $13,768,244 |
| Deferred underwriting commissions | $13,150,000 |
| Stockholders’ equity | $5,000,008 |
| Debt | No outstanding borrowings or long-term debt at December 31, 2019 |
The reported net income was principally generated by interest earned on trust-account investments; operating results do not reflect an operating business. The filing does not provide a meaningful operating margin because the company had no operating revenue. Trust-account investments consisted primarily of U.S. Treasury bills and money-market funds investing in U.S. Treasury securities.
Capitalization and liquidity
- The company completed an initial public offering of 35,000,000 units at $10.00 per unit, generating gross proceeds of $350.0 million.
- It simultaneously sold 810,000 placement units for $8.1 million to its sponsor and Cantor Fitzgerald.
- $350.0 million was placed in the trust account. The filing separately reports $351.8 million of cash and marketable securities in the trust account at December 31, 2019, including investment earnings.
- Public shareholders generally had redemption rights equal to their pro rata share of the trust account, approximately $10.04 per public share at December 31, 2019, subject to the stated conditions.
- The company had approximately $994,810 available outside the trust account for working capital and transaction expenses. Management believed this was sufficient to fund operations through September 19, 2021, but acknowledged that the estimate could be inaccurate.
- The company had no off-balance-sheet arrangements and no long-term lease, capital lease, or debt obligations other than a $15,000 monthly administrative-support fee payable to a sponsor affiliate.
Material changes versus the prior comparable period
No prior comparable operating period is presented because the company was incorporated on April 5, 2019. The reporting period primarily reflects formation, the September 2019 initial public offering, establishment of the trust account, and the search for a target business.
Outlook, contingencies, and key risks
- The company was required to complete an initial business combination by September 19, 2021. If unsuccessful, it was required to cease operations, redeem public shares, and liquidate; warrants would expire worthless.
- The proposed business combination generally had to have an aggregate fair market value of at least 80% of the trust-account assets, excluding specified amounts, and the post-transaction company had to acquire a controlling interest in the target.
- The company expected to target businesses with enterprise values between $650 million and $2 billion, potentially requiring additional equity or debt financing.
- Public-share redemptions could reduce available funds and prevent a transaction from meeting cash or net tangible asset conditions. The company was required to maintain at least $5,000,001 of net tangible assets, or any higher transaction-specific requirement.
- The sponsor, officers, and directors owned founder and placement securities at substantially below the public offering price and agreed to vote in favor of a proposed business combination in specified circumstances, creating potential conflicts of interest.
- Founder shares could convert into Class A common stock at a ratio greater than one-for-one in certain transactions, and additional equity or debt financing could significantly dilute public shareholders.
- The sponsor agreed to indemnify the trust account for certain third-party claims that reduce its value below the lesser of $10.00 per public share and the actual per-share amount at liquidation, but the filing states that the sponsor’s ability to satisfy this obligation had not been independently verified.
- The company identified COVID-19 as a subsequent-event risk that could negatively affect its financial position, results, and ability to identify or complete a business combination. The specific impact was not determinable as of the financial statement issuance date.
- Public warrants had an $11.50 exercise price and could be redeemed by the company for $0.01 per warrant if specified market-price conditions were met. Registration or exemption issues could limit warrant exercise.
- Management stated that disclosure controls and procedures were effective as of December 31, 2019. No internal-control attestation report was required because of the company’s status as a newly public emerging growth company.
Most important facts to verify
- Confirm the issuer identity: the supplied filing is for Apex Technology Acquisition Corporation, whereas the request identifies AvePoint, Inc.
- Verify whether the intended reporting period was fiscal year 2019 rather than “2019 Q4”; this is an annual Form 10-K covering inception through December 31, 2019.
- Confirm the trust-account balance, the $13.15 million deferred underwriting commission, and the amount of cash available outside the trust account.
- Review the proposed business-combination deadline, redemption mechanics, and liquidation provisions.
- Assess dilution from founder-share conversion, warrants, placement units, potential working-capital loans, and any future financing.
- Review sponsor indemnification terms and the risk that creditor claims could reduce amounts available to public shareholders.
- Evaluate the COVID-19 subsequent-event disclosure and any later filings describing changes to the business-combination search or trust account.