ALPHA PARTNERS TECHNOLOGY MERGER: DISCUSSION AND ANALYSIS BY MANAGEMENT OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Alpha Partners Technology Merger Corp. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Alpha Partners Technology Merger Sponsor
LLC The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the unaudited
condensed financial statements and the notes thereto contained elsewhere in this
Quarterly Report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and
uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" that are not
historical facts and involve risks and uncertainties that could cause actual
results to differ materially from those expected and projected. All statements,
other than statements of historical fact included in this Quarterly Report
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's final prospectus for its Initial Public
Offering (as defined below) filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company incorporated on February 5, 2021 as a Cayman Island
exempted company and formed for the purpose of effectuating a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses, which we refer to throughout
this Quarterly Report as our "initial business combination". We intend to
effectuate our initial business combination using cash from the proceeds of our
initial public offering (the "Initial Public Offering") and the private
placement of the Private Placement Units (as defined below), the proceeds of the
sale of our shares in connection with our initial business combination (pursuant
to forward purchase agreements or backstop agreements we may enter into
following the consummation of the Initial Public Offering or otherwise), shares
issued to the owners of the target, debt issued to bank or other lenders or the
owners of the target, or a combination of the foregoing.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities for the period from February 5, 2021 (inception)
through June 30, 2021 were organizational activities, those necessary to prepare
for the Initial Public Offering, described below. We do not expect to generate
any operating revenues until after the completion of our initial business
combination. We will generate
non-operating
income in the form of interest income on cash and cash equivalents held after
the Initial Public Offering. We incur expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses.
For the three months ended June 30, 2021, we had net income of $215,625, which
resulted entirely from the change in fair value of warrant liability.

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For the period from February 5, 2021 (inception) through June 30, 2021, we had a
net loss of $2,039,889, which resulted from a loss on sale of warrants of
$1,213,542, change in fair value of warrant liability of $814,583, and formation
costs of $11,764.
Liquidity and Capital Resources
For the period from February 5, 2021 (inception) through June 30, 2021, net cash
provided by operating activities was $0, which was due to our net loss of
$2,039,889, offset by the payment of formation costs by an affiliate of our
sponsor in exchange for the issuance of Class B ordinary shares of $11,764, the
change in fair value of the warrant liability of $814,583 and a
non-cash
loss on the sale of warrants of $1,213,542.
For the period from February 5, 2021 (inception) through June 30, 2021, net cash
provided by financing activities was $500,000, which was due to an advance from
an anchor investor of $500,681, offset in part by the repayment of a portion of
the advance from the anchor investor of $681.
As of June 30, 2021, we had $500,000 in our operating bank account.
On July 30, 2021, we consummated the Initial Public Offering of 25,000,000
units, at $10.00 per unit, generating gross proceeds of $250,000,000. Each unit
consisted of one Class A ordinary share (the "Public Shares"), $0.0001 par
value, and
one-third
of one redeemable warrant ("Public Warrant"). Each Public Warrant entitles the
holder to purchase one Class A ordinary share at an exercise price of $11.50 per
whole share
Simultaneously with the closing of the Initial Public Offering, the Sponsor and
Anchor Investors purchased an aggregate of 800,000 units at a price of $10.00
per unit (the "Private Placement Units") ($8,000,000 in the aggregate). Each
Private Placement Unit consists of one Class A ordinary share (the "Private
Placement Shares") and one-third of one redeemable warrant ("the Private
Placement Warrants") where each whole warrant is exercisable to purchase one
Class A ordinary share at an exercise price of $11.50 per share. A portion of
the proceeds from the sale of the Private Placement Units were added to the net
proceeds from the Initial Public Offering held in the Trust Account. If we do
not complete our initial business combination within 24 months from the closing
of the Initial Public Offering, the proceeds from the sale of the Private
Placement Warrants will be used to fund the redemption of the Public Shares
(subject to the requirements of applicable law) and the Private Placement Units
will expire worthless.
We had granted the underwriters in the Initial Public Offering a
45-day
option to purchase up to 3,750,000 additional units to cover over-allotments, if
any. On August 5, 2021, the underwriters partially exercised the over-allotment
option and purchased an additional 3,250,000 units, generating gross proceeds of
$32,500,000.
Simultaneously with the closing of the exercise of the over-allotment option, we
consummated the sale of 65,000 units at a purchase price of $10.00 per unit in a
private placement to our sponsor, generating gross proceeds of $650,000.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
taxes payable and deferred underwriting commissions), to complete our initial
business combination. We may withdraw interest income (if any) to pay income
taxes, if any. Our annual income tax obligations will depend on the amount of
interest and other income earned on the amounts held in the trust account. We
expect the interest income earned on the amount in the trust account (if any)
will be sufficient to pay our income taxes. To the extent that our equity or
debt is used, in whole or in part, as consideration to complete our initial
business combination, the remaining proceeds held in the trust account will be
used as working capital to finance the operations of the prospective partner,
make other acquisitions and pursue our growth strategies.

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Subsequent to our Initial Public Offering and prior to the completion of our
initial business combination, we will have available to us the $3.6 million of
proceeds less amounts spent on formation and offering expenses held outside the
trust account, as well as certain funds from loans from our sponsor, members of
our management team or any of their affiliates. We will use these funds to
primarily identify and evaluate prospective partner businesses, perform business
due diligence on prospective partner businesses, travel to and from the offices,
plants or similar locations of prospective partner businesses or their
representatives or owners, review corporate documents and material agreements of
prospective partner businesses, and structure, negotiate and complete a business
combination.
We do not believe we will need to raise additional funds following this offering
in order to meet the expenditures required for operating our business prior to
the completion of our initial business combination, other than funds available
from loans from our sponsor, members of our management team or any of their
affiliates. However, if our estimates of the costs of identifying a prospective
partner business, undertaking
in-depth
due diligence and negotiating an initial business combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to the completion of our initial business
combination. Moreover, we may need to obtain additional financing to complete
our initial business combination, either because the transaction requires more
cash than is available from the proceeds held in our trust account, or because
we become obligated to redeem a significant number of our public shares upon
completion of the business combination, in which case we may issue additional
securities or incur debt in connection with such business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. If we complete our initial
business combination, we may repay such loaned amounts. In the event that our
initial business combination does not close, we may use a portion of the working
capital held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment. Up to
$1,500,000 of such loans may be convertible into units of the post-business
combination company at a price of $10.00 per unit at the option of the lender.
The units would be identical to the private placement units. The terms of such
loans, if any, have not been determined and no written agreements exist with
respect to such loans. Prior to the completion of our initial business
combination, we do not expect to seek loans from parties other than our sponsor,
members of our management team or any of their affiliates as we do not believe
third parties will be willing to loan such funds and provide a waiver against
any and all rights to seek access to funds in our trust account.
We expect our primary liquidity requirements during that period to include
approximately $155,000 for legal, accounting, due diligence, travel and other
expenses in connection with any business combinations; $75,000 for legal and
accounting fees related to regulatory reporting obligations; $25,000 for
miscellaneous expenses incurred during the search for an initial business
combination prospective partner; $75,000 for continued listing fees; $700,000
for director & officer liability insurance premiums; and $100,000 will be used
as a reserve for our liquidation. We will also reimburse our sponsor for office
space, secretarial, research and administrative services provided to us, as well
as other obligations of our sponsor, in the amount of up to $55,000 per month
($1,320,000 in the aggregate).
These amounts are estimates and may differ materially from our actual expenses.
In addition, we could use a portion of the funds not being placed in trust to
pay commitment fees for financing, fees to consultants to assist us with our
search for a prospective partner business or as a down payment or to fund a
"no-shop"
provision (a provision designed to keep prospective partner businesses from
"shopping" around for transactions with other companies or investors on terms
more favorable to such prospective partner businesses) with respect to a
particular proposed business combination, although we do not have any current
intention to do so. If we entered into an agreement where we paid for the right
to receive exclusivity from a prospective partner business, the amount that
would be used as a down payment or to fund a
"no-shop"
provision would be determined based on the terms of the specific business
combination and the amount of our available funds at the time. Our forfeiture of
such funds (whether as a result of our breach or otherwise) could result in our
not having sufficient funds to continue searching for, or conducting due
diligence with respect to, prospective partner businesses.

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Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of June 30, 2021.
Contractual Obligations
Promissory Note-Related Party
On February 5, 2021, the Company issued an unsecured promissory note to an
affiliate of the Sponsor (the "Promissory Note"), pursuant to which the Company
could borrow up to an aggregate of $300,000 to cover expenses related to the
Initial Public Offering. The Promissory Note was
non-interest
bearing and was payable on the earlier of (i) December 31, 2021 or (ii) the
consummation of the Initial Public Offering. As of June 30, 2021, there was
$151,402 outstanding under the Promissory Note. On August 6, 2021, the Company
repaid the outstanding balance under the Promissory Note.
Underwriting Agreement
The Company granted the underwriters a
45-day
option to purchase up to 3,750,000 additional Units to cover over-allotments at
the Initial Public Offering price, less the underwriting discounts and
commissions. On August 5, 2021, the underwriters partially exercised the
over-allotment option to purchase an additional 3,250,000 Units at an offering
price of $10.00 per Unit for an aggregate purchase price of $32,500,000. On
September 11, 2021, the remaining option will expire.
The underwriters were paid a cash underwriting discount of $0.20 per Unit, or
$5,650,000 in the aggregate, upon the closing of the Initial Public Offering and
partial exercise of the over-allotment option. In addition, $0.35 per unit, or
$9,887,500 in the aggregate will be payable to the underwriters for deferred
underwriting commissions. 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.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies
:
Net Income (Loss) Per Ordinary Share
Net income (loss) per share is computed by dividing net loss by the weighted
average number of ordinary shares outstanding during the period. Weighted
average shares were reduced for the effect of an aggregate of 937,500 ordinary
shares that are subject to forfeiture if the over-allotment option is not
exercised by the underwriters. The Company has not considered the effect of the
warrants included in the Founder Units to purchase 2,395,833 Class A ordinary
shares in the calculation of diluted income (loss) per share, since the exercise
of the warrants into Class A ordinary shares is contingent upon the occurrence
of future events. As a result, diluted net Income (loss) per ordinary share is
the same as basic net income (loss) per ordinary share for the periods
presented.
Warrant Liabilities
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 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 ordinary shares, 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.

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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. The fair value of the Founder
Warrants included in the Founder Units was estimated using a Black-Scholes
Option Pricing Model.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2021, we were not subject to any market or interest rate risk.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under Securities Exchange Act of 1934, as amended (the
"Exchange Act") is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules
13a-15
and
15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of June 30, 2021. Based upon their
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures (as defined in Rules
13a-15
(e) and
15d-15
(e) under the Exchange Act) were not effective as of June 30, 2021, due solely
to the material weakness in our internal control over financial reporting that
resulted in the restatement of our financial statements as of February 5, 2021
included in our final prospectus for our initial public offering as filed with
the SEC on July 29, 2021. In light of this material weakness, we performed
additional analysis as deemed necessary to ensure that our unaudited interim
financial statements were prepared in accordance with U.S. generally accepted
accounting principles. Accordingly, management believes that the financial
statements included in this Quarterly Report on Form
10-Q
present fairly in all material respects our financial position, results of
operations and cash flows for the period presented.
A material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis. In connection
with the evaluation of the SEC's statement regarding SPAC accounting matters and
management's subsequent
re-evaluation
of its previously issued financial statements, the Company determined that there
were errors in its accounting for its warrants. Management concluded that a
deficiency in internal control over financial reporting existed relating to the
accounting treatment for complex financial instruments and that the failure to
properly account for such instruments constituted a material weakness as defined
in the SEC regulations. This material weakness resulted in the restatement of
the Company's audited financial statements as of and for the period ended
February 5, 2021.
Changes in Internal Control Over Financial Reporting
Other than the implementation of the material weakness remediation activities
described herein, during the most recently completed fiscal quarter, there has
been no change in our internal control over financial reporting (as defined in
Rules
13a-15(f)
and
15d-15(f)
under the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Management has
enhanced our processes to identify and appropriately apply applicable accounting
requirements to better evaluate and understand the nuances of the complex
accounting standards that apply to our financial statements to address the
material weakness. Our updated processes include providing enhanced access to
accounting literature, research materials and documents and increased
communication among our personnel and third-party professionals with whom we
consult regarding complex accounting applications. The elements of our
remediation plan can only be accomplished over time, and we can offer no
assurance that these initiatives will ultimately have the intended effects.

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