References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer toAlpha 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 theU.S. Securities and Exchange Commission (the "SEC"). The Company's securities filings can be accessed on the EDGAR section of theSEC'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 onFebruary 5, 2021 as aCayman 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 the 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 fromFebruary 5, 2021 (inception) throughSeptember 30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a business combination.. 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. 22 -------------------------------------------------------------------------------- Table of Contents For the three months endedSeptember 30, 2021 , we recorded net income of$3,013,329 , which resulted from a gain on fair value of warrant liability of$3,812,458 and interest and dividend income on investments held in the trust account in the amount of$2,353 , partially offset by expensed offering costs of$521,414 and formation and operating costs of$280,068 . For the period fromFebruary 5, 2021 (inception) throughSeptember 30, 2021 , we recorded net income of$973,440 , which resulted from a gain on fair value of warrant liability of$2,997,875 and interest and dividend income on investments held in the trust account in the amount of$2,353 , partially offset by a loss on sale of warrants of$1,213,542 , expensed offering costs of$521,414 , and formation costs of$291,832 . Liquidity and Capital Resources For the period fromFebruary 5, 2021 (inception) throughSeptember 30, 2021 , net cash used in operating activities was$847,941 , which was due to the change in fair value of the warrant liability of$2,997,875 , changes in working capital of$567,873 , and interest and dividend income on the investments held in the trust account of$2,353 , partially offset by a non-cash loss on the sale of warrants of$1,213,542 , net income of$973,440 , expensed offering costs added back to net income of$521,414 , and the payment of formation costs by an affiliate of our sponsor in exchange for the issuance of Class B ordinary shares of$11,764 . For the period fromFebruary 5, 2021 (inception) throughSeptember 30, 2021 , net cash used in investing activities of$282,500,000 was the result of the amount of net proceeds from the Initial Public Offering and the private placement sale of warrants being deposited to the trust account. For the period fromFebruary 5, 2021 (inception) throughSeptember 30, 2021 , net cash provided by financing activities was$285,715,719 , which was due to proceeds from the initial public offering, net of underwriter's discount paid less reimbursement of$278,019,000 , proceeds from sale of Private Placement Units of$8,650,000 and an advance from an anchor investor of$501,362 , offset in part by the payment of offering costs of$775,795 , the repayment of a portion of the advance from the anchor investor of$500,681 , and the repayment of the promissory note-related party of$178,167 . OnJuly 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 is exercisable to purchase one Class A ordinary share (the "Private Placement Shares") and one-third of one redeemable warrant (the "Private Placement Warrants") at a 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. 23 -------------------------------------------------------------------------------- Table of Contents 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. OnAugust 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 . As ofSeptember 30, 2021 , we had cash of$2,367,778 held outside the trust account. 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 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. 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 do not believe we will need to raise additional funds following the Initial Public Offering in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target 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 our initial business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our Initial Public Offering and the sale of the private placement warrants and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. 24 --------------------------------------------------------------------------------
Table of Contents Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as ofSeptember 30, 2021 . Contractual ObligationsPromissory Note-Related Party OnFebruary 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. OnAugust 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. OnAugust 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 . OnSeptember 11, 2021 , the remaining option expired. 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 inthe 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 Per Ordinary Share Net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 12,059,166 shares in the calculation of diluted income per share, since the exercise of the warrants is contingent upon the occurrence of future events. Class A Ordinary Shares Subject to Possible Redemption All of the 28,250,000 Class A ordinary shares sold as part of the units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company's liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company's amended and restated memorandum and articles of association. In accordance withSEC and its staff's guidance on redeemable equity instruments, which has been codified in Accounting Standards Codification ("ASC") 480-10-S99, redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. Therefore, all Public Shares have been classified outside of permanent equity. 25 -------------------------------------------------------------------------------- Table of Contents The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit. 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. 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 Public Warrants was estimated using a binomial/lattice model and the fair value of the Founder Warrants and Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model. Item 3. Quantitative and Qualitative Disclosures About Market Risk As ofSeptember 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 theSEC'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 We determined that we had initially recorded our warrants as equity instruments instead of as liabilities in our financial statements as of and for the period endedFebruary 5, 2021 . We subsequently restated the financial statements as of and for the period endedFebruary 5, 2021 within our final prospectus for our initial public offering as filed with theSEC onJuly 29, 2021 . Within this Quarterly Report on Form 10-Q, we are reporting the restated balance sheet as ofJuly 30, 2021 to correct for the classification of a portion of the Class A ordinary shares subject to possible redemption. We determined that the errors described above represented a material weakness in our internal control over financial reporting related to our accounting for complex financial instruments. 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 ofSeptember 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 ofSeptember 30, 2021 , due to the material weakness in our internal control over financial reporting related to the Company's accounting for complex financial instruments. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance withU.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented. 26
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Table of Contents Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2021 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management has identified a material weakness in internal controls related to the accounting for our complex financial instruments (including redeemable equity instruments as described above). In light of the material weakness identified, although we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance 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. Our plans at this time 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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