Filed Pursuant to Rule 424(b)(3)

Registration No. 333-258109

 

PROSPECTUS SUPPLEMENT NO. 6

(To the Prospectus dated August 9, 2021)

 

 

 

Up to 136,035,264 Shares of Common Stock

Up to 17,905,000 Shares of Common Stock Issuable Upon Exercise of Warrants

Up to 405,000 Warrants to Purchase Common Stock

 

 

This prospectus supplement supplements the prospectus, dated August 9, 2021 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-258109). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 15, 2021 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

 

The Prospectus and this prospectus supplement relate to the issuance by us of an aggregate of up to 17,905,000 shares of our common stock, $0.0001 par value per share (the “Common Stock”), which consists of (i) up to 405,000 shares of Common Stock that are issuable upon the exercise of 405,000 warrants (the “Private Warrants”) originally issued in a private placement to Apex Technology Sponsor LLC (the “Sponsor”) in connection with the initial public offering of Apex Technology Acquisition Corporation (“Apex”) and (ii) up to 17,500,000 shares of Common Stock that are issuable upon the exercise of 17,500,000 warrants (the “Public Warrants” and, together with the Private Warrants, the “Warrants”) originally issued in the initial public offering of Apex.

 

The Prospectus and this prospectus supplement also relate to the offer and sale from time to time by the selling securityholders named in the Prospectus or their permitted transferees (the “selling securityholders”) of (i) up to 136,035,264 shares of Common Stock consisting of (a) up to 14,000,000 shares of Common Stock issued in a private placement pursuant to subscription agreements (“Subscription Agreements”) entered into on November 23, 2020, as amended, (b) up to 8,750,000 shares of Common Stock (which includes 2,916,700 Sponsor Earn-Out Shares) issued in a private placement to the Sponsor and Cantor Fitzgerald & Co in connection with the initial public offering of Apex, (c) up to 810,000 shares of Common Stock that were issued in connection with the separation of the Private Units, (d) up to 405,000 shares of Common Stock issuable upon exercise of the Private Warrants and (e) up to 112,070,264 shares of Common Stock (including up to 13,329,190 shares of Common Stock issuable pursuant to outstanding options and up to 1,912,155 shares of Common Stock issuable as Earnout Shares) pursuant to that certain Amended and Restated Registration Rights Agreement, dated July 1, 2021, between us and the selling securityholders granting such holders registration rights with respect to such shares and (ii) up to 405,000 Private Warrants.

 

The Common Stock and Public Warrants are listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbols “AVPT” and “AVPTW,” respectively. On November 12, 2021, the last reported sales price of our Common Stock on Nasdaq was $9.21 per share and the last reported sales price of our Warrants was $2.32 per warrant.

 

 

This prospectus supplement should be read in conjunction with the Prospectus, including any amendments or supplements thereto, which is to be delivered with this prospectus supplement. This prospectus supplement is qualified by reference to the Prospectus, including any amendments or supplements thereto, except to the extent that the information in this prospectus supplement updates and supersedes the information contained therein.

 

This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the Prospectus, including any amendments or supplements thereto.

 

We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. The Prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

 

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described in the section titled “Risk Factors” beginning on page 10 of the Prospectus and under similar headings in any amendments or supplements to the Prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of this prospectus supplement or the Prospectus. Any representation to the contrary is a criminal offense.

 

 

Prospectus Supplement dated November 15, 2021

 

 

Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to ___________.

 

Commission file number: 001-39048

 

AvePoint, Inc.

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(Exact name of registrant as specified in its charter)

 

Delaware	83-4461709
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

525 Washington Blvd, Suite 1400

Jersey City, NJ 07310

(Address of principal executive offices) (Zip Code)

 

(201) 793-1111

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report).

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		AVPT		The Nasdaq Global Select Market
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share		AVPTW		The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

 

As of November 15, 2021, there were 181,420,149 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

 

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INDEX TO FINANCIAL STATEMENTS

 

 

	Page
FORWARD-LOOKING STATEMENTS	3
PART I. FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Operations	5
Condensed Consolidated Statements of Comprehensive Loss	6
Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Deficiency	7
Condensed Consolidated Statements of Cash Flows	9
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
PART II. —OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 6. Exhibits	72
Signatures	73

 

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Report”) contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events, or developments that we expect or anticipate will occur in the future — including statements relating to volume growth, sales, earnings, and statements expressing general views about future operating results — are forward-looking statements. These forward-looking statements are, by their nature, subject to significant risks and uncertainties, are based on the beliefs of, as well as assumptions made by and information currently available to, the Company’s management. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause the Company’s actual results to differ materially from historical experience and the Company’s present expectations or projections. These risks and uncertainties include, but are not limited to, those described in this Report, the Company’s prospectus dated August 9, 2021, filed with the SEC on August 10, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended (File No. 333-258109), relating to the Registration Statement on Form S-1 (File No. 333-258109), filed with the Securities and Exchange Commission (the “SEC”) on July 23, 2021 (as amended on August 5, 2021), the Company’s definitive proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (File No. 001-39048) on June 2, 2021 (including all exhibits), relating to the Registration Statement on Form S-4 (File No. 333-252712), filed with the SEC on February 4, 2021 (as amended on March 11, 2021, April 2, 2021, May 20, 2021, and May 28, 2021) and those described from time to time in the Company’s future reports filed with the SEC.

 

 

		September 30,				December 31,
		2021				2020
Assets
Current assets:
Cash and cash equivalents		$	260,704			$	69,112
Short-term investments			1,614				992
Accounts receivable, net of allowance of $878 and $1,767 at September 30, 2021 and December 31, 2020, respectively			54,226				48,250
Prepaid expenses and other current assets			13,086				2,343
Total current assets			329,630				120,697
Property and equipment, net			3,252				2,663
Deferred contract costs			35,267				31,943
Long-term unbilled receivables			6,104				5,499
Other assets			5,911				8,252
Total assets		$	380,164			$	169,054
Liabilities, mezzanine equity, and stockholders’ deficiency
Current liabilities:
Accounts payable		$	2,265			$	774
Accrued expenses and other liabilities			25,782				26,245
Current portion of deferred revenue			71,251				65,203
Total current liabilities			99,298				92,222
Long-term portion of deferred revenue			6,875				9,485
Share-based awards classified as liabilities			—				43,502
Earn-out liabilities			17,125				—
Warrant liabilities			795				—
Other non-current liabilities			3,947				3,658
Total liabilities			128,040				148,867
Commitments and contingencies (Note 10)
Mezzanine equity
Redeemable convertible preferred stock, $0.0001 par value; 94,695 shares authorized, 42,001 shares issued and outstanding with aggregate liquidation preference of $403,361 at December 31, 2020			—				183,390
Redemption value of common shares			—				25,074
Share-based awards classified as mezzanine equity			—				1,489
Redeemable noncontrolling interest			4,631				3,061
Total mezzanine equity			4,631				213,014
Stockholders’ deficiency
Common stock, $0.0001 par value; 1,000,000 and 243,360 shares authorized, 181,013 and 100,068 shares issued and outstanding, at September 30, 2021 and December 31, 2020, respectively			18				12
Additional paid-in capital			614,569				105,159
Treasury stock			(1,739	)			—
Accumulated other comprehensive income			1,892				1,791
Accumulated deficit			(367,247	)			(299,789	)
Total stockholders’ deficiency			247,493				(192,827	)
Total liabilities, mezzanine equity, and stockholders’ deficiency		$	380,164			$	169,054

 

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Revenue:
SaaS		$	22,410			$	14,092			$	61,255			$	36,034
Term license and support			17,477				8,171				37,292				23,272
Services			8,143				10,870				21,361				26,173
Maintenance and OEM			5,293				6,056				16,160				17,837
Perpetual license			604				605				2,003				2,095
Total revenue			53,927				39,794				138,071				105,411
Cost of revenue:
SaaS			4,866				2,799				13,870				7,856
Term license and support			211				437				714				1,257
Services			9,435				6,716				21,528				19,605
Maintenance and OEM			710				304				1,608				978
Total cost of revenue			15,222				10,256				37,720				29,696
Gross profit			38,705				29,538				100,351				75,715
Operating expenses:
Sales and marketing			25,186				21,830				73,488				49,881
General and administrative			22,230				10,469				44,186				20,918
Research and development			19,648				3,003				27,633				8,760
Depreciation and amortization			326				259				863				800
Total operating expenses			67,390				35,561				146,170				80,359
Loss from operations			(28,685	)			(6,023	)			(45,819	)			(4,644	)
Gain on earn-out and warrant liabilities			13,650				—				13,650				—
Interest income, net			56				17				80				26
Other income (expense), net			(299	)			65				(300	)			(324	)
Loss before income taxes			(15,278	)			(5,941	)			(32,389	)			(4,942	)
Income tax (benefit) expense			(5,521	)			6,244				(6,633	)			(72	)
Net loss		$	(9,757	)		$	(12,185	)		$	(25,756	)		$	(4,870	)
Net loss attributable to and accretion of redeemable noncontrolling interest			(517	)			—				(1,413	)			—
Net loss attributable to AvePoint, Inc.		$	(10,274	)		$	(12,185	)		$	(27,169	)		$	(4,870	)
Deemed dividends on preferred stock			608				(5,615	)			(32,928	)			(21,413	)
Net loss available to common shareholders		$	(9,666	)		$	(17,800	)		$	(60,097	)		$	(26,283	)
Loss per share:
Basic		$	(0.05	)		$	(0.20	)		$	(0.47	)		$	(0.30	)
Diluted		$	(0.05	)		$	(0.20	)		$	(0.47	)		$	(0.30	)
Shares used in computing loss per share:
Basic			176,621				90,805				126,738				86,784
Diluted			176,621				90,805				126,738				86,784

 

		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Net loss		$	(9,757	)		$	(12,185	)		$	(25,756	)		$	(4,870	)
Other comprehensive income (loss)
Foreign currency translation adjustments			15				(33	)			20				(274	)
Other comprehensive income (loss)			15				(33	)			20				(274	)
Total comprehensive loss		$	(9,742	)		$	(12,218	)		$	(25,736	)		$	(5,144	)
Comprehensive income attributable to redeemable noncontrolling interests			(488	)			—				(1,332	)			—
Total comprehensive loss attributable to AvePoint, Inc		$	(10,230	)		$	(12,218	)		$	(27,068	)		$	(5,144	)

 

										Redeemable				Share				Redeemable				Total																								Accumulated
		Convertible								Common				Based				noncontrolling				mezzanine												Additional												Other				Total
		Preferred Stock (1)								Shares				Awards				interest				equity				Common Stock (1)								Paid-In				Treasury				Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Amount				Amount				Amount				Amount				Shares				Amount				Capital				Stock				Deficit				Income				Deficiency
Balance, June 30, 2021			42,000,592			$	216,926			$	39,757			$	1,695			$	4,143			$	262,521				103,831,523			$	12			$	112,953			$	—			$	(358,030	)		$	1,848			$	(243,217	)
Reclassification of common shares to mezzanine equity			—				—				(1	)			—				—				(1	)			—				—				—				—				—				—				—
Remeasurement of redemption value of common shares			—				—				(449	)			—				—				(449	)			—				—				—				—				449				—				449
Proceeds from exercise of options			—				—				—				—				—				—				740,122				—				3,955				—				—				—				3,955
Stock-based compensation expense			—				—				—				—				—				—				—				—				33,233				—				—				—				33,233
Remeasurement of redemption value of convertible preferred stock			—				(608	)			—				—				—				(608	)			—				—				—				—				608				—				608
Conversion of convertible preferred stock			(42,000,592	)			(216,318	)			—				—				—				(216,318	)			28,500,592				3				85,390				—				—				—				85,393
Reclassification of redeemable common shares from mezzanine to permanent equity			—				—				(39,307	)			—				—				(39,307	)			—				—				39,307				—				—				—				39,307
Reclassification of share-based awards from liabilities and mezzanine equity to permanent equity			—				—				—				(1,695	)			—				(1,695	)			—				—				41,152				—				—				—				41,152
Merger and recapitalization, net of transaction costs			—				—				—				—				—				—				47,940,523				3				299,160				—				—				—				299,163
Reclassification of earn-out RSUs to earn-out shares			—				—				—				—				—				—				—				—				(581	)			—				—				—				(581	)
Reclassification of Apex shares purchased prior to the Business Combination			—				—				—				—				—				—				—				—				—				(1,739	)			—				—				(1,739	)
Comprehensive income (loss):
Net loss			—				—				—				—				—				—				—				—				—				—				(9,757	)			—				(9,757	)
Net loss attributable to and accretion of redeemable noncontrolling interest			—				—				—				—				517				517				—				—				—				—				(517	)			—				(517	)
Foreign currency translation adjustment			—				—				—				—				(29	)			(29	)			—				—				—				—				—				44				44
Balance, September 30, 2021			—			$	—			$	—			$	—			$	4,631			$	4,631				181,012,760			$	18			$	614,569			$	(1,739	)		$	(367,247	)		$	1,892			$	247,493

										Redeemable				Share				Redeemable				Total																								Accumulated
		Convertible								Common				Based				noncontrolling				mezzanine												Additional												Other				Total
		Preferred Stock (1)								Shares				Awards				interest				equity				Common Stock (1)								Paid-In				Treasury				Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Amount				Amount				Amount				Amount				Shares				Amount				Capital				Stock				Deficit				Income				Deficiency
Balance, June 30, 2020			51,091,344			$	198,454			$	10,699			$	1,287			$	—			$	210,440				90,643,593			$	11			$	58,429			$	—			$	(242,455	)		$	1,333			$	(182,682	)
Reclassification of share-based awards to mezzanine equity			—				—				—				101				—				101				—				—				(101	)			—				—				—				(101	)
Remeasurement of redemption value of common shares			—				—				6,229				—				—				6,229				—				—				—				—				(6,229	)			—				(6,229	)
Proceeds from exercise of options			—				—				—				—				—				—				91,260				—				39				—				—				—				39
Stock-based compensation expense			—				—				—				—				—				—				—				—				853				—				—				—				853
Proceeds from the issuance of common stock, net of issuance costs			—				—				—				—				—				—				5,488,862				—				31,209				—				—				—				31,209
Issuance of common shares in exchange for issuance cost			—				—				—				—				—				—				391,115				—				2,408				—				—				—				2,408
Remeasurement of redemption value of convertible preferred stock			—				4,145				—				—				—				4,145				—				—				—				—				(4,145	)			—				(4,145	)
Redemption of Series B convertible preferred stock			(9,090,752	)			(32,242	)			—				—				—				(32,242	)			—				—				—				—				(1,470	)			—				(1,470	)
Comprehensive income:
Net income			—				—				—				—				—				—				—				—				—				—				(12,185	)			—				(12,185	)
Foreign currency translation adjustment			—				—				—				—				—				—				—				—				—				—				—				(33	)			(33	)
Balance, September 30, 2020			42,000,592			$	170,357			$	16,928			$	1,388			$	—			$	188,673				96,614,829			$	11			$	92,837			$	—			$	(266,484	)		$	1,300			$	(172,336	)

										Redeemable				Share				Redeemable				Total																								Accumulated
		Convertible								Common				Based				noncontrolling				mezzanine												Additional												Other				Total
		Preferred Stock (1)								Shares				Awards				interest				equity				Common Stock (1)								Paid-In				Treasury				Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Amount				Amount				Amount				Amount				Shares				Amount				Capital				Stock				Deficit				Income				Deficiency
Balance, December 31, 2020			42,000,592			$	183,390			$	25,074			$	1,489			$	3,061			$	213,014				100,068,469			$	12			$	105,159			$	—			$	(299,789	)		$	1,791			$	(192,827	)
Reclassification of share-based awards to mezzanine equity			—				—				—				206				—				206				—				—				(206	)			—				—				—				(206	)
Reclassification of common shares to mezzanine equity			—				—				6,872				—				—				6,872				—				—				—				—				—				—				—
Remeasurement of redemption value of common shares			—				—				7,361				—				—				7,361				—				—				—				—				(7,361	)			—				(7,361	)
Proceeds from exercise of options			—				—				—				—				—				—				4,503,176				—				7,232				—				—				—				7,232
Stock-based compensation expense			—				—				—				—				—				—				—				—				37,441				—				—				—				37,441
Remeasurement of redemption value of convertible preferred stock			—				32,928				—				—				—				32,928				—				—				—				—				(32,928	)			—				(32,928	)
Issuance of redeemable noncontrolling interest in EduTech			—				—				—				—				238				238				—				—				515				—				—				—				515
Conversion of convertible preferred stock			(42,000,592	)			(216,318	)			—				—				—				(216,318	)			28,500,592				3				85,390				—				—				—				85,393
Reclassification of redeemable common shares from mezzanine to permanent equity			—				—				(39,307	)			—				—				(39,307	)			—				—				39,307				—				—				—				39,307
Reclassification of share-based awards from liabilities and mezzanine equity to permanent equity			—				—				—				(1,695	)			—				(1,695	)			—				—				41,152				—				—				—				41,152
Merger and recapitalization, net of transaction costs			—				—				—				—				—				—				47,940,523				3				299,160				—				—				—				299,163
Reclassification of earn-out RSUs to earn-out shares			—				—				—				—				—				—				—				—				(581	)			—				—				—				(581	)
Reclassification of Apex shares purchased prior to the Business Combination			—				—				—				—				—				—				—				—				—				(1,739	)			—				—				(1,739	)
Comprehensive income (loss):
Net loss			—				—				—				—				—				—				—				—				—				—				(25,756	)			—				(25,756	)
Net loss attributable to and accretion of redeemable noncontrolling interest			—				—				—				—				1,413				1,413				—				—				—				—				(1,413	)			—				(1,413	)
Foreign currency translation adjustment			—				—				—				—				(81	)			(81	)			—				—				—				—				—				101				101
Balance, September 30, 2021			—			$	—			$	—			$	—			$	4,631			$	4,631				181,012,760			$	18			$	614,569			$	(1,739	)		$	(367,247	)		$	1,892			$	247,493

										Redeemable				Share				Redeemable				Total																								Accumulated
		Convertible								Common				Based				noncontrolling				mezzanine												Additional												Other				Total
		Preferred Stock (1)								Shares				Awards				interest				equity				Common Stock (1)								Paid-In				Treasury				Accumulated				Comprehensive				Stockholders’
		Shares				Amount				Amount				Amount				Amount				Amount				Shares				Amount				Capital				Stock				Deficit				Income				Deficiency
Balance, December 31, 2019			51,091,344			$	182,656			$	10,684			$	1,291			$	—			$	194,631				84,331,573			$	10			$	33,691			$	—			$	(233,957	)		$	1,574			$	(198,682	)
Reclassification of share-based awards to mezzanine equity			—				—				—				97				—				97				—				—				(97	)			—				—				—				(97	)
Remeasurement of redemption value of common shares			—				—				6,244				—				—				6,244				—				—				—				—				(6,244	)			—				(6,244	)
Proceeds from exercise of options			—				—				—				—				—				—				121,680				—				54				—				—				—				54
Stock-based compensation expense			—				—				—				—				—				—				—				—				1,803				—				—				—				1,803
Proceeds from the issuance of common stock, net of issuance costs			—				—				—				—				—				—				11,770,461				1				54,978				—				—				—				54,979
Issuance of common shares in exchange for issuance cost			—				—				—				—				—				—				391,115				—				2,408				—				—				—				2,408
Remeasurement of redemption value of preferred stock			—				19,943				—				—				—				19,943				—				—								—				(19,943	)			—				(19,943	)
Redemption of Series B convertible preferred stock			(9,090,752	)			(32,242	)			—				—				—				(32,242	)			—				—				—				—				(1,470	)			—				(1,470	)
Comprehensive loss:
Net income			—				—				—				—				—				—				—				—				—				—				(4,870	)			—				(4,870	)
Foreign currency translation adjustment			—				—				—				—				—				—				—				—				—				—				—				(274	)			(274	)
Balance, September 30, 2020			42,000,592			$	170,357			$	16,928			$	1,388			$	—			$	188,673				96,614,829			$	11			$	92,837			$	—			$	(266,484	)		$	1,300			$	(172,336	)

 

		For the Nine Months Ended
		September 30,
		2021				2020
Operating activities
Net loss		$	(25,756	)		$	(4,870	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			863				800
Foreign currency remeasurement (gain) loss			(161	)			368
Provision for doubtful accounts			(880	)			175
Stock-based compensation			50,475				16,235
Gain on disposal of property and equipment			(15	)			—
Deferred income taxes			(1,008	)			(1,973	)
Change in value of earn-out and warrant liabilities			(13,650	)			—
Changes in operating assets and liabilities:
Accounts receivable and long-term unbilled receivables			(7,002	)			(2,416	)
Prepaid expenses and other current assets			(10,775	)			2,836
Deferred contract costs and other assets			(3,269	)			(3,040	)
Accounts payable, accrued expenses and other liabilities			1,836				(1,949	)
Deferred revenue			5,377				4,965
Net cash provided by (used in) operating activities			(3,965	)			11,131
Investing activities
Maturity (purchase) of short-term investments			(638	)			1,466
Purchase of property and equipment			(1,445	)			(314	)
Net cash provided by (used in) investing activities			(2,083	)			1,152
Financing activities
Proceeds from recapitalization of Apex shares			491,563				—
Payments of transaction fees			(49,990	)			—
Redemption of redeemable convertible preferred stock			(130,925	)			(33,712	)
Redemption of Legacy AvePoint common stock			(106,169	)			—
Payments of transaction fees by Legacy AvePoint			(2,998	)			—
Purchase of treasury stock			(1,631	)			—
Payment of net cash settlement for management options			(7,530	)			—
Proceeds from stock option exercises			4,555				54
Proceeds from sale of common shares of subsidiary			753				—
Repayments of capital leases			(20	)			(42	)
Payments of debt issuance costs			—				(300	)
Proceeds from issuance of Common stock, net of issuance costs			—				56,753
Net cash provided by financing activities			197,608				22,753
Effect of exchange rates on cash			32				(329	)
Net increase in cash and cash equivalents			191,592				34,707
Cash and cash equivalents at beginning of period			69,112				12,162
Cash and cash equivalents at end of period		$	260,704			$	46,869
Supplemental disclosures of cash flow information
Cash received (paid) for:
Interest		$	80			$	—
Income taxes		$	(2,823	)		$	80
Non-cash investing and financing activities
Issuance of common shares in exchange for issuance cost		$	—			$	2,408
Fixed assets acquired under capital leases		$	—			$	28

 

1. Nature of Business and Organization

 

Apex Technology Acquisition Corporation ("Apex") was a blank check company incorporated in Delaware on April 5, 2019. Apex was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. AvePoint, Inc. (“Legacy AvePoint”) was incorporated as a New Jersey corporation on July 24, 2001, was redomiciled as a Delaware corporation in 2006, and changed its name to "AvePoint Operations, Inc." in June 2021. On November 23, 2020, Apex, along with Athena Technology Merger Sub, Inc., a Delaware corporation, and Athena Technology Merger Sub 2, LLC, a Delaware limited liability company (collectively referred to herein as the “Apex Group”), and Legacy AvePoint entered into a Business Combination Agreement dated as of November 23, 2020 (as amended on December 30, 2020, March 8, 2021 and May 18, 2021, the “Business Combination Agreement”). On July 1, 2021, the parties to the Business Combination Agreement consummated the transactions contemplated thereby (the "Business Combination"), with Apex subsequently being renamed “AvePoint, Inc.” (hereinafter referred to as “AvePoint,” the “Company,” “we,” or “our”). On July 26, 2021, Legacy AvePoint merged with and into the Company with the Company surviving. The Business Combination is further described in "Note 3 — Business Combination".

 

AvePoint is a leading provider of enterprise collaboration and productivity software solutions. The Company develops, markets, and sells its suite of software solutions and services, primarily in North America, Europe, Australia, and Asia. The Company provides its customers with high-performance infrastructure management, compliance, data governance, mobility and productivity, online services and software solutions consulting. Many of the Company’s software solutions share an underlying architecture and include: DocAve Software Platform, DocAve Governance Automation, AvePoint Online Services, AvePoint Compliance Guardian, AvePoint Mobility and Productivity Software for SharePoint and Dynamics CRM, as well as customized business solutions, technical support, and services.

 

The Company’s headquarters are located in Jersey City, New Jersey, with additional offices in North America, Europe, Asia, Australia and the Middle East.

 

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated balance sheet as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial information and include the accounts of the Company. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted.

 

In the opinion of management, these financial statements contain all material adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2021.

 

These unaudited interim condensed consolidated financial statements should be read in conjunction with Legacy AvePoint's audited consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 and the related notes included within Amendment No. 4 to Apex's Form S-4, which was filed with the SEC on May 28, 2021.

 

Business Combination

 

The Business Combination was accounted for as a reverse recapitalization as Legacy AvePoint was determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations. This determination was primarily based on Legacy AvePoint comprising the ongoing operations of the combined entity, Legacy AvePoint’s senior management comprising the majority of the senior management of the combined company and the prior shareholders of Legacy AvePoint having a majority of the voting power of the combined entity. In connection with the Business Combination, the outstanding shares of Legacy AvePoint's preferred stock were redeemed for cash and shares of the Company’s common stock (the "Common Stock") and the outstanding shares of Legacy AvePoint's common stock were converted into the Company's Common Stock, representing a recapitalization, and the net assets of the Company were acquired at historical cost, with no goodwill or intangible assets recorded. Operations and assets and liabilities of the Company prior to the Business Combination in these financial statements are those of Legacy AvePoint. As a result, these financial statements represent the continuation of Legacy AvePoint and the historical shareholders’ deficiency. Common stock, preferred stock and loss per share of Legacy AvePoint prior to the Business Combination have been retrospectively adjusted for the Business Combination using an exchange ratio of 8.69144. Options to purchase common stock of Legacy AvePoint were converted into options to purchase common stock of AvePoint, Inc. using an exchange ratio of 8.6914. The options, as converted, continue to be governed by the Company's existing stock option plan. The accumulated deficit of Legacy AvePoint has been carried forward after the Business Combination. See "Note 3 — Business Combination" for additional information.

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s unaudited condensed consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s unaudited condensed consolidated balance sheets and the amounts of revenue and expenses reported for each of its periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, allowance for doubtful accounts, deferred contract costs, income taxes and related reserves, stock-based compensation and accounting for research and development costs. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the outbreak of a novel strain of the coronavirus (“COVID-19”).

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Foreign Currency

 

The Company has foreign operations where the functional currency has been determined to be the local currency, in accordance with FASB ASC 830, Foreign Currency Matters. Adjustments resulting from translating such foreign functional currency assets and liabilities into U.S. dollars, based on current exchange rates, are recorded as a separate component of stockholders’ deficiency under the caption, accumulated other comprehensive income. Revenue and expenses are translated using average rates prevailing during the period. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income (expense), net in the Company’s unaudited condensed consolidated statements of operations. Transaction gains (losses) totaled $(0.3) million and $(0.5) million for the three and nine months ended September 30, 2021 respectively, and $(0.5) million for the nine months ended September 30, 2020. There were no significant transaction gains or losses for the three months ended September 30, 2020.

 

Cash and Cash Equivalents

 

The Company maintains cash with several high credit-quality financial institutions. The Company considers all investments available with original maturities of three months or less to be cash equivalents. These investments are not subject to significant market risk. The Company maintains its cash and cash equivalents in bank accounts which, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts. The Company maintains cash balances used in operations at entities based in the People’s Republic of China, which imposes regulations that limit the ability to transfer cash out of the country. As of September 30, 2021 and December 31, 2020, the Company’s cash balances at these entities were $8.1 million and $6.8 million, respectively. For purposes of the unaudited condensed consolidated statements of cash flows, cash includes all amounts in the unaudited condensed consolidated balance sheets captioned cash and cash equivalents.

 

Deferred Sales Commissions

 

The Company defers sales commissions earned by its sales force that are considered to be incremental and recoverable costs of obtaining SaaS, term license and support, service, perpetual license and maintenance contracts. The Company has structured commissions plans such that the commission rate paid on renewal contracts are less than those paid on the initial contract; therefore, it is determined that the renewal commissions are not commensurate with the initial commission. The Company determines the estimated average customer relationship period and average renewal term utilizing a portfolio approach. Deferred costs are periodically reviewed for impairment.

 

Amortization of deferred sales commissions of $2.5 million and $7.1 million for the three and nine months ended September 30, 2021, respectively, and $3.0 million and $8.1 million for the three and nine months ended September 30, 2020, respectively, is included as a component of sales and marketing expenses in the Company’s unaudited condensed consolidated statements of operations. Deferred sales commissions recognized as a contract asset on the Company’s balance sheet was $35.3 million and $31.9 million at September 30, 2021 and December 31, 2020, respectively.

 

Revenue Recognition

 

The Company derives revenue from four primary sources: SaaS, term license and support, services, and maintenance. Services include installation services, training and other consulting services.

 

Term license and support revenue recognized at a point of time was $14.1 million and $27.6 million for the three and nine months ended September 30, 2021, respectively, and $5.9 million and $16.3 million for the three and nine months ended September 30, 2020, respectively.

 

Revenue deferred under contracts with customers as of September 30, 2021 and December 31, 2020 was $78.1 million and $74.7 million, respectively. Revenue recognized that was included in the opening deferred revenue balance was $56.2 million and $45.6 million for the nine months ended September 30, 2021 and 2020, respectively.

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The opening and closing balances of the Company’s accounts receivable, net, deferred revenue and deferred sales commissions are as follows:

 

 

(1) Accounts receivable, net is inclusive of accounts receivable, net of allowance for doubtful accounts, short-term unbilled receivables and long-term unbilled receivables.

 

There were no significant changes to the Company’s contract assets or liabilities during the year ended December 31, 2020 and the nine months ended September 30, 2021 outside of its sales activities.

 

As of September 30, 2021, transaction price allocated to remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, was $175.4 million, of which $134.5 million is related to SaaS and term license and support revenue. AvePoint expects to recognize approximately 65% of the total transaction price allocated to remaining performance obligations over the next twelve months and the remainder thereafter.

 

Legal Proceedings

 

In the normal course of its business, the Company may be involved in various claims, negotiations and legal actions. Except for such claims that arise in the normal course of business, as of December 31, 2020 and September 30, 2021, the Company was not a party to any other litigation for which a material claim is reasonably possible, probable or estimable.

 

Stock-Based Compensation

 

In preparing AvePoint’s full year 2020 financial statements, the Company determined that an error existed in the allocation methodology of its stock-based compensation expense in prior years. The Company evaluated the error and determined that it is not material to its financial statements. Although not material, certain amounts from prior periods related to stock-based compensation have been adjusted to conform with the appropriate allocation methodology which results in the presentation of the stock-based compensation expense in the same financial statement line items as cash compensation paid to the same employees. The reclassification of stock-based compensation resulted in the following changes:

 

 

Income Taxes

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to difference between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

AvePoint recognizes liabilities for uncertain tax positions taken or expected to be taken in income tax returns. Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes. Judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and unrecognize tax benefits. In determining the need for a valuation allowance, the historical and projected financial performance of the operation that is recording a net deferred tax asset is considered along with any other pertinent information. 

 

AvePoint files income tax returns in the U.S. federal, various states and foreign jurisdictions. The tax years 2016 through 2020 are open and subject to audit by US federal, state and local authorities. The tax years 2010 through 2020 are open and subject to audit by foreign tax jurisdictions.

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Redeemable Noncontrolling Interest

 

At September 30, 2021, the Company owned 76.09% and AEPL PTE. LTD. (“AEPL”) owned 23.91% of AvePoint EduTech PTE. LTD. (“EduTech”). As part of AEPL’s investment in EduTech, the Company granted AEPL a put option which allows AEPL to cause the Company to repurchase AEPL’s shares in EduTech at any time between December 24, 2022 and December 24, 2023 at a price equal to AEPL’s initial investment. Consequently, the Company records redeemable noncontrolling interest as mezzanine equity in its unaudited condensed consolidated balance sheets. At each reporting period, the Company increases the carrying amount of the redeemable noncontrolling interest by periodic accretions using the interest method so that the carrying amount will equal the redemption amount on the date that the put option becomes exercisable, and adjustments to the value are recorded as net income attributable to redeemable noncontrolling interest.

 

Emerging Growth Company

 

The Company is considered an emerging growth company. 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 an election to opt out is irrevocable. The Company elects 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.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, “Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815 — 40)” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The amendments in this ASU are effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2020-06 will have on its financial statements.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify various areas related to the accounting for income taxes and improve consistent application of ASC 740. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued and all other entities for periods for which financial statements have not yet been made available for issuance. The Company is currently evaluating the impact of its pending adoption of ASU 2019-12 on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) and also issued subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20, ASU 2019-01, ASU 2020-02, ASU 2020-05 and ASU 2021-05 (collectively, ASC 842). ASC 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. ASC 842 was effective for public business entities for fiscal years beginning after December 15, 2018. For all other for-profit entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. ASC 842 must be adopted using a modified retrospective method and its early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its consolidated financial statements. While the Company generally expects the financial records to be impacted by the requirements highlighted above, the Company cannot reasonably estimate the impact that adoption of the ASUs referenced in this announcement is expected to have on the financial statements at this time.

 

In January 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses on Financial Instruments,” which replaces incurred loss methodology to estimate credit losses on financial instruments with a methodology that reflects expected credit losses. This amendment affects entities holding financial assets that are not accounted for at fair value through net income including trade receivables. The amendments in this ASU were effective for public business entities, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2019. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2022. Early application of the amendments is permitted. The Company is currently evaluating the impact of adoption of this ASU on its consolidated financial statements. While the Company generally expects the financial records to be impacted by the requirements highlighted above, the Company cannot reasonably estimate the impact that adoption of the ASUs referenced in this announcement is expected to have on the financial statements at this time.

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

3. Business Combination

 

The Business Combination by and among Legacy AvePoint and the members of the Apex Group was effected on July 1, 2021 by the merger of Athena Technology Merger Sub, Inc. ("Merger Sub 1") with and into Legacy AvePoint (the “First Merger”), with Legacy AvePoint surviving the First Merger as a wholly-owned subsidiary of Apex, and promptly following the First Merger, Legacy AvePoint was merged with and into Athena Technology Merger Sub 2, LLC ("Merger Sub 2") (the “Second Merger”), with Merger Sub 2 surviving the Second Merger (the “Surviving Entity”) as a wholly-owned subsidiary of Apex (the Second Merger together with the First Merger, the “Mergers”). Following the consummation of the Mergers, the Surviving Entity changed its name to AvePoint US, LLC and Apex changed its name to AvePoint, Inc. (hereinafter referred to as “AvePoint,” the “Company,” “we,” or “our”). On July 26, 2021, AvePoint US, LLC was merged with and into the Company.

 

The following transactions occurred in connection with the Business Combination which impacted the Company's mezzanine equity and permanent equity accounts:

 

●	Shares of Legacy AvePoint common stock were cancelled and converted into 103,831,523 shares of the Company's Common Stock, par value $0.0001 per share.
●	$106.2 million was paid to holders of Legacy AvePoint common stock in exchange for 10,602,105 shares of Common Stock (as converted).
●	Shares of Apex Class A common stock were cancelled and converted into 34,982,628 shares of the Company's Common Stock.
●	Shares of Apex Class B common stock were cancelled and converted into 9,560,000 shares of the Company's Common Stock.
●	Apex entered into subscription agreements with certain investors, whereby 14,000,000 shares of the Company's Common Stock at $10.00 per share (“PIPE Shares”) for an aggregate purchase price of $140.0 million.
●	A portion of Legacy AvePoint preferred stock was cancelled and converted into 28,500,592 shares of the Company's Common Stock. The remaining preferred stock was redeemed for $130.9 million.
●	Options to purchase Legacy AvePoint common stock (other than certain options held by certain executives and options issued to employees in the People's Republic of China) were cancelled and converted into an option to purchase the Company's Common Stock with the same terms and conditions (including vesting and exercisability terms) applicable to the corresponding former Legacy AvePoint options.
●	Options to purchase Legacy AvePoint common stock issued to employees in the People's Republic of China were cancelled and converted into an option to purchase the Company's Common Stock with the same terms and conditions with the exception of fully vested options which will incur an additional month of vesting following the Business Combination to comply with local regulations.
●	Legacy AvePoint Officer Awards, as defined in "Note 13 — Stock-Based Compensation", were cancelled. Refer to "Note 13 — Stock-Based Compensation" for more information.
●	Put options on Legacy AvePoint Modified Options and Modified Common Stock, as defined in "Note 13 — Stock-Based Compensation", were cancelled. Refer to "Note 13 — Stock-Based Compensation" for more information.
●	The Company entered into earn-out agreements to issue additional shares if certain share price milestones are achieved. Refer to "Note 11 — Earn-Out and Warrant Liabilities" for more information.
●	The Company assumed public and private placement warrants from Apex. Refer to "Note 11 — Earn-Out and Warrant Liabilities" for more information.

 

As of the Closing Date and following the completion of the Business Combination, the Company is authorized to issue up to 1,000,000,000 shares of Common Stock at a par value of $0.0001 per share and up to 20,000,000 shares of preferred stock, the rights, preferences and privileges of which may be designated from time to time by the Company's Board.

 

As of the Closing Date and following the completion of the Business Combination, the Company had the following outstanding securities:

 

●	180,272,638 shares of Common Stock; and
●	17,905,000 warrants, each exercisable for one share of Common Stock at a price of $11.50 per share (the “Warrants”).

 

As a result of the Business Combination, the Company received net cash consideration of $204.5 million. AvePoint and Apex incurred costs that are considered direct and incremental costs associated with the transaction. These costs amounted to $56.2 million and were treated as a reduction of additional paid-in capital.

 

Cash flows provided to or paid by Legacy AvePoint or the Company in connection with the Business Combination are included in the Company's condensed consolidated statements of cash flows as financing activities. AvePoint's purchase of shares of Apex common stock prior to the Business Combination is included in the Company's condensed consolidated statements of cash flows as a financing cash outflow. The shares purchased are recorded as treasury stock.

 

 

4. Concentration of Credit Risk

 

The Company deposits its cash with financial institutions and, at times, such balances may exceed federally insured limits. No customer accounted for more than 10% of revenue for the three and nine months ended September 30, 2021 and 2020. At September 30, 2021, accounts receivable from one distributor exceeded 10% of the Company's total accounts receivable. Total receivables related to this distributor were $7.1 million as of September 30, 2021. No customer made up more than 10% of accounts receivable at December 31, 2020.

 

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

5. Accounts Receivable, Net

 

Accounts receivable, net, consists of the following components:

 

 

 

6. Property and Equipment, Net

 

Property and equipment, net, consists of the following:

 

 

Accumulated depreciation and amortization includes the amortization expense relating to assets acquired under capital leases. Depreciation and amortization expense was $0.3 million and $0.9 million for the three and nine months ended September 30, 2021, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2020, respectively. The Company evaluates the portion of depreciation and amortization expense attributable to cost of revenue based on organizational headcount directly attributable to the generation of revenue. Based on this evaluation, the Company has determined that depreciation and amortization attributable to cost of revenue is not material; therefore, the full expense has been recorded in operating expenses in the unaudited condensed consolidated statements of operations.

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

7. Accrued Expenses and Other Liabilities

 

Accrued expenses and other liabilities consists of the following components:

 

 

 

8. Line of Credit

 

On April 7, 2020, Legacy AvePoint entered into a loan and security agreement with HSBC Venture Bank USA Inc. (the "Bank") as lender for a revolving line of credit of up to $30.0 million (the "Loan Agreement"). The line bears interest at a rate equal to LIBOR plus 3.5%. The line carries an unused fee of 0.5%. The line will mature on April 7, 2023. On July 1, 2021, Legacy AvePoint effected an assignment of its existing rights and obligations under the Loan Agreement to AvePoint US, LLC (the “LLC”) through entry into a limited consent and first amendment to the Loan Agreement (the “Amended Loan Agreement”) and an assignment and assumption agreement (the “First Assignment and Assumption Agreement”). On July 23, 2021, in connection with the merger (the “Rollup Merger”) of the LLC with and into the Company, with the Company surviving, pursuant to an agreement dated as of July 23, 2021, by and between the Company and the LLC (“Rollup Merger Agreement”), the Company entered into that certain assignment and assumption agreement (the “Second Assignment and Assumption Agreement”) by and among the Company, the LLC, and the Bank, pursuant to which the Company would, at the effective time of the Rollup Merger, assume the LLC's obligations as borrower under the Amended Loan Agreement.

 

Under the Loan Agreement, the Company is required to maintain a specified adjusted quick ratio and a minimum annual recurring revenue tested by the Bank each quarter. The Company pledged, assigned and granted the Bank a security interest in all shares, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations. As of September 30, 2021, the Company is in compliance with all covenants under the line and had no borrowings outstanding under the line of credit.

 

 

9. Income Taxes

 

The Company had an effective tax rate of 36.3% and (105.1)% for the three months ended September 30, 2021 and 2020, respectively, and 20.5% and 1.5% for the nine months ended September 30, 2021 and 2020, respectively. 

 

The change in effective tax rates for the three-month period ended September 30, 2021 as compared to the three-month period ended September 30, 2020 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates or tax losses for which no benefit can be taken, changes in the valuation allowance, windfall tax benefits on equity exercises and deductible transaction related expenses.

 

The change in effective tax rates for the nine-month period ended September 30, 2021 as compared to the nine-month period ended September 30, 2020 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates or tax losses for which no benefit can be taken, changes in the valuation allowance, non-deductible equity compensation and deductible transaction related expenses.

 

The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances. In making such an assessment, management would consider all available positive and negative evidence, including the level of historical taxable income, future reversals of existing temporary differences, tax planning strategies, and projected future taxable income. 

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

10. Commitments and Contingencies

 

Operating Leases

 

The Company is obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030.

 

During the three and nine months ended September 30, 2021, total rent expense for facilities amounted to $1.9 million and $4.9 million, respectively. During the three and nine months ended September 30, 2020, total rent expense for facilities amounted to $1.4 million and $4.1 million, respectively. As of September 30, 2021 and December 31, 2020, letters of credit have been issued in the amount of $0.5 million, as security for operating leases. The letters of credit are secured by certificates of deposit.

 

The future minimum rental payments for all long-term non-cancelable property leases are as follows:

 

 

Purchase Commitments

 

The Company has outstanding unconditional purchase commitments to procure licenses to use IT software from suppliers. These agreements are negotiated in consideration of the volume of transactions with select suppliers and the associated required transaction volumes are expected to be met through the normal course of business.

 

In June 2017, the Company signed an unconditional purchase commitment in the amount of $8.0 million payable based upon consumption from June 2017 to June 2020. No payments were made for the fiscal year ended 2018. For the fiscal year ended December 31, 2019 the Company made payments in the amount of $5.5 million under this agreement. The remainder of the commitment was paid in the fiscal year ended December 31, 2020.

 

In April 2019, the Company signed an unconditional purchase commitment related to the use of Microsoft Office 365 in the amount of $2.1 million payable in three equal installments during 2019, 2020, and 2021. In May 2020, the Company signed an unconditional purchased commitment in the amount of $22.0 million to purchase IT solutions over a three-year term. Under this agreement, payments are made upon consumption of the IT solutions and any remaining obligations due at the end of the three-year term in May 2023. Given the Company’s history of procuring similar products, it is expected that cash payments to the supplier will occur in 2021 and 2022 with any remaining amounts coming due in 2023. During the year ended December 31, 2019, the Company paid $0.7 million under the 2019 agreement. During the year ended December 31, 2020, the Company paid $0.7 million related to the 2019 agreement and $3.1 million under the 2020 agreement for a total of $3.8 million. During the nine months ended September 30, 2021, the Company paid the remaining $0.7 million related to the 2019 agreement and $8.7 million related to the 2020 agreement.

 

The Company is obligated to make the following future minimum payments under the non-cancelable terms of these contracts as of September 30, 2021:

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

11. Earn-Out and Warrant Liabilities

 

Company Earn-Out Agreement

 

As a result of the Business Combination, the holders of Legacy AvePoint Preferred Stock, Legacy AvePoint common stock and Legacy AvePoint Options shall be issued additional shares of AvePoint's Common Stock, as follows:

 

●	1,000,000 shares of AvePoint's Common Stock, in the aggregate, if at any time from and after the Business Combination through the seventh anniversary thereof (a) AvePoint's stock price is greater than or equal to $12.50 over any 20 Trading Days within any 30 trading day period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $12.50 per share;
●	1,000,000 shares of AvePoint's Common Stock, in the aggregate, if at any time from and after the Business Combination through the seventh anniversary thereof (a) AvePoint's stock price is greater than or equal to $15.00 over any 20 Trading Days within any 30 trading day period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $15.00 per share;
●	1,000,000 shares of AvePoint's Common Stock, in the aggregate, if at any time from and after the Business Combination through the seventh anniversary thereof (a) AvePoint's stock price is greater than or equal to $17.50 over any 20 Trading Days within any 30 trading day period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $17.50 per share.

 

The rights described above are hereafter referred to as the "Company Earn-Out Shares". To the extent that any portion of the Company Earn-Out Shares that would otherwise be issued to a holder of options that remain unvested at the date of the milestones described above, then in lieu of issuing the applicable Company Earn-Out Shares, the Company shall instead issue an award of restricted stock units of the Company for a number of shares of AvePoint's Common Stock equal to such portion of the Company Earn-Out Shares issuable with respect to the unvested options (the “Company Earn-Out RSUs”). In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718. Refer to "Note 13 — Stock-Based Compensation" for more information regarding the Company Earn-Out RSUs.

 

In order to capture the market conditions associated with the Company Earn-Out Shares, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out Shares’ contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. Under this approach, the fair value of the Company Earn-Out Shares on July 1, 2021 was determined to be $29.6 million. The fair value was remeasured as of September 30, 2021 and was determined to be $17.1 million. As a result, approximately $12.5 million was recognized and included as gain on earn-out and warrant liabilities in the statements of operations.

 

Warrants to Acquire Common Stock

 

On July 1, 2021, as part of the Business Combination, the Company effectively granted 405,000 private placement warrants with a 5-year term and strike price of $11.50 per share. Management has determined that the private placements warrants are to be classified as liabilities to be marked to market at each reporting period.

 

The private placement warrants are held by only two parties and any transfer of the warrants to a party other than a current holder of the warrants would cause the warrants to be converted into public warrants. Consequently, the fair value of the private placement warrants is equivalent to the fair value of the public warrants described in "Note 12 — Mezzanine Equity and Stockholders’ Deficiency". Under this approach, the fair value of the private placement warrants on July 1, 2021 was determined to be $1.4 million. The fair value was remeasured as of September 30, 2021 and was determined to be $0.8 million. As a result, $0.6 million was recognized and included as gain on earn-out and warrant liabilities in the statements of operations.

 

 

 

AvePoint, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)