Filed Pursuant to Rule 424(b)(3)

Registration No. 333-258109

 

PROSPECTUS SUPPLEMENT NO. 1

(To the Prospectus dated August 9, 2021)

 

IMG01.JPG

 

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 Amendment to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 10, 2021 (the “Amended Current Report”). Accordingly, we have attached the Amended Current 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 August 9, 2021, the last reported sales price of our Common Stock on Nasdaq was $10.49 per share and the last reported sales price of our Warrants was $2.61 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 August 10, 2021

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

(Amendment No. 1)

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 10, 2021 (July 1, 2021)

 

AvePoint, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-39048

 

83-4461709

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

525 Washington Blvd, Suite 1400

Jersey City, NJ 

(Address of principal executive offices)

 

07310

(Zip Code)

 

Registrant’s telephone number, including area code: (201) 793-1111

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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. ☐

 

 

 

 

Introductory Note

 

This Amendment No. 1 on Form 8-K/A (“Amendment No. 1”) amends the Current Report on Form 8-K of AvePoint, Inc., a Delaware corporation (the “Company”), dated as of July 1, 2021 and filed on July 7, 2021 (the “Original Report”), in which the Company reported, among other events, the completion of the Business Combination (as defined in the Original Report) with Apex Technology Acquisition Corporation ("Apex").

 

This Amendment No. 1 is being filed to include (A) the unaudited condensed consolidated financial statements of AvePoint Operations, Inc. (f/k/a AvePoint, Inc.), a Delaware corporation (“Legacy AvePoint”), as of June 30, 2021 and December 31, 2020 and for the three months and six months ended June 30, 2021 and June 30, 2020 and (B) the Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy AvePoint as of June 30, 2021 and for the three months and six months ended June 30, 2021 and June 30, 2020.

 

This Amendment No. 1 does not amend any other item of the Original Report (except as otherwise expressly stated herein) or purport to provide an update or a discussion of any developments at the Company or its subsidiaries subsequent to the filing date of the Original Report, except as otherwise expressly stated herein.

 

The information previously reported in or filed with the Original Report is hereby incorporated by reference to this Amendment No. 1. Terms used but not defined herein shall have the meanings ascribed thereto in the Original Report. The information provided herein relates to Legacy AvePoint prior to the consummation of the Business Combination unless otherwise specifically indicated (e.g. with respect to subsequent events disclosures, forward-looking statements, or potential future risk factors) or the context otherwise requires.

 

Forward-Looking Statements

 

The Company makes certain statements in certain documents incorporated herein by reference that are forward-looking statements for purposes of the safe harbor provisions under the federal securities laws and United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact included in or incorporated by reference in this Amendment No. 1, regarding the Company’s future financial performance, as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Amendment No. 1, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions, and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. The Company cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company, incident to its business.

 

These forward-looking statements are based on information available as of the date of this Amendment No. 1, and current expectations, forecasts, and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this Amendment No. 1 and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

 

the Company’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably following the Closing;

 

2

 

 

the Company’s financial and business performance following the Business Combination, including financial projections and business metrics;

 

 

changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

 

 

the implementation, market acceptance and success of the Company’s business model and growth strategy;

 

 

the Company’s expectations and forecasts with respect to the size and growth of the cloud industry and digital transformation in general and Microsoft’s products and services in particular;

 

 

the ability of the Company’s products and services to meet customers’ compliance and regulatory needs;

 

 

the Company’s ability to compete with others in the digital transformation industry;

 

 

the Company’s ability to grow its market share;

 

 

the Company’s ability to attract and retain qualified employees and management;

 

 

the Company’s ability to adapt to changes in consumer preferences, perception and spending habits and develop and expand its product offerings and gain market acceptance of its products, including in new geographies;

 

 

the Company’s ability to develop and maintain its brand and reputation;

 

 

developments and projections relating to the Company’s competitors and industry;

 

 

the impact of health epidemics, including the COVID-19 pandemic, on the Company’s business and the actions the Company may take in response thereto;

 

 

the impact of the COVID-19 pandemic on customer demands for cloud services;

 

 

the Company’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

 

 

expectations regarding the time during which the Company will be an emerging growth company under the JOBS Act; and

 

 

the Company’s future capital requirements and sources and uses of cash.

 

Please see the other risks and uncertainties set forth in the Proxy Statement/Prospectus (as defined in the Original Report) in the section titled “Risk Factors” beginning on page 18 of the Proxy Statement/Prospectus, which is incorporated herein by reference.

 

In addition, statements such as “the Company believes,” “AvePoint believes," or "Apex believes" and similar statements, to the extent they or such similar statements are made herein or in any document incorporated by reference herein, reflect the Company’s, Legacy AvePoint’s, or Apex’s beliefs and opinions on the relevant subject. These statements are based upon information available to AvePoint or Apex, as the case may be, as of the date of the document in which such statements were made , and while AvePoint or Apex, as the case may be, believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 

Item 2.01         Completion of Acquisition or Disposition of Assets.

 

The disclosure set forth in the section titled “Introductory Note” above is incorporated by reference into this Item 2.01 of this Amendment No. 1. 

 

3

 

Item 9.01         Financial Statement and Exhibits.

 

(a) Financial Statements of Business Acquired.

 

The unaudited condensed consolidated financial statements of Legacy AvePoint as of June 30, 2021 and December 31, 2020 and for the three months and six months ended June 30, 2021 and 2020, and the related notes thereto, are attached as Exhibit 99.1 and are incorporated herein by reference.

 

The Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy AvePoint as of June 31, 2021 and for the three months and six months ended June 30, 2021 and 2020 is attached as Exhibit 99.2 and is incorporated herein by reference.

 

(d) Exhibits.

 

       

Incorporated by Reference

Exhibit
Number

 

Description

 

Schedule/

Form

 

File No.

 

Exhibit

 

Filing Date

99.1*

 

Unaudited condensed consolidated financial statements of Legacy AvePoint as of June 30, 2021 and December 31, 2020 and for the three months and six months ended June 30, 2021 and June 30, 2020

               

99.2*

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy AvePoint as of June 30, 2021 and for the three months and six months ended June 30, 2021 and June 30, 2020

               

 

*

Filed herewith.

 

4

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

AvePoint, Inc.

Dated: August 10, 2021

 
     
 

By:

/s/ Brian Michael Brown
   

Brian Michael Brown

   

Chief Operating Officer, General Counsel, and Secretary

 

 

Dated: August 10, 2021

AvePoint, Inc.

     
   
 

By:

/s/ Sophia Wu
   

Sophia Wu

   

Chief Financial Officer

 

 

5

 

Exhibit 99.1

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 

Assets

               

Current assets

               

Cash and cash equivalents

  $ 66,338     $ 69,112  

Short-term investments

    1,408       992  

Accounts receivable, net of allowance of $1,030 and $1,767 at June 30, 2021 and December 31, 2020, respectively

    44,753       48,250  

Prepaid expenses and other current assets

    4,319       2,343  

Total current assets

    116,818       120,697  

Property and equipment, net

    3,039       2,663  

Deferred contract costs

    33,781       31,943  

Long-term unbilled receivables

    6,440       5,499  

Other assets

    12,238       8,252  

Total assets

  $ 172,316     $ 169,054  

Liabilities, mezzanine equity, and stockholders’ deficiency

               

Current liabilities:

               

Accounts payable

  $ 520     $ 774  

Accrued expenses and other liabilities

    22,115       26,245  

Current portion of deferred revenue

    68,974       65,203  

Total current liabilities

    91,609       92,222  

Long-term portion of deferred revenue

    7,596       9,485  

Share-based awards classified as liabilities

    50,220       43,502  

Other non-current liabilities

    3,587       3,658  

Total liabilities

    153,012       148,867  

Commitments and contingencies (Note 10)

               

Mezzanine equity

               

Redeemable convertible preferred stock, $0.0001 par value; 10,895,226 shares authorized, 4,832,409 and 4,832,409 shares issued and outstanding with aggregate liquidation preferences of $508,273 and $403,361 at June 30, 2021 and December 31, 2020, respectively

    216,926       183,390  

Redemption value of common shares

    39,757       25,074  

Share-based awards

    1,695       1,489  

Redeemable noncontrolling interest

    4,143       3,061  

Total mezzanine equity

    262,521       213,014  

Stockholders’ deficiency:

               

Common stock, $0.0001 par value; 28,000,000 and 28,000,000 shares authorized, 11,946,412 and 11,513,451 shares issued and outstanding, at June 30, 2021 and December 31, 2020, respectively

    12       12  

Additional paid-in capital

    112,953       105,159  

Accumulated other comprehensive income

    1,848       1,791  

Accumulated deficit

    (358,030 )     (299,789 )

Total stockholders’ deficiency attributable to AvePoint Operations, Inc.

    (243,217 )     (192,827 )

Total liabilities, mezzanine equity, and stockholders’ deficiency

  $ 172,316     $ 169,054  

 

See accompanying notes.

 

1

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2021

   

2020

   

2021

   

2020

 

Revenue:

                               

SaaS

  $ 20,586     $ 11,699     $ 38,845     $ 21,942  

Term license and support

    11,088       7,357       19,815       15,101  

Services

    7,302       7,724       13,218       15,303  

Maintenance and OEM

    5,458       5,776       10,867       11,781  

Perpetual license

    910       400       1,399       1,490  

Total revenue

    45,344       32,956       84,144       65,617  

Cost of revenue:

                               

SaaS

    4,564       2,543       9,004       5,057  

Term license and support

    230       348       503       820  

Services

    6,508       5,877       12,093       12,889  

Maintenance and OEM

    418       305       898       674  

Total cost of revenue

    11,720       9,073       22,498       19,440  

Gross profit

    33,624       23,883       61,646       46,177  

Operating expenses:

                               

Sales and marketing

    29,001       14,010       48,302       28,051  

General and administrative

    11,664       5,291       21,956       10,449  

Research and development

    3,883       2,863       7,985       5,757  

Depreciation and amortization

    279       268       537       541  

Total operating expenses

    44,827       22,432       78,780       44,798  

Income (loss) from operations

    (11,203 )     1,451       (17,134 )     1,379  

Interest income, net

    11       5       24       9  

Other income (expense), net

    62       439       (1 )     (389 )

Income (loss) before income taxes

    (11,130 )     1,895       (17,111 )     999  

Income tax benefit

    (73 )     (6,149 )     (1,112 )     (6,316 )

Net income (loss)

  $ (11,057 )   $ 8,044     $ (15,999 )   $ 7,315  

Net income attributable to redeemable noncontrolling interest

    (499 )           (896 )      

Net income (loss) attributable to AvePoint Operations, Inc.

  $ (11,556 )   $ 8,044     $ (16,895 )   $ 7,315  

Deemed dividends on preferred stock

    (24,742 )     (8,063 )     (33,536 )     (15,798 )

Net loss available to common shareholders

  $ (36,298 )   $ (19 )   $ (50,431 )   $ (8,483 )

Net loss per share of common stock, basic and diluted

  $ (3.09 )   $ (0.00 )   $ (4.32 )   $ (0.87 )

Weighted average of shares used in computing net loss per share of common stock, basic and diluted

    11,732       9,793       11,663       9,750  

 

See accompanying notes.

 

2

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

 

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2021

   

2020

   

2021

   

2020

 

Net income (loss)

  $ (11,057 )   $ 8,044     $ (15,999 )   $ 7,315  

Other comprehensive income (loss)

                               

Foreign currency translation adjustments

    248       (318 )     5       (241 )

Other comprehensive income (loss)

    248       (318 )     5       (241 )

Total comprehensive income (loss)

  $ (10,809 )   $ 7,726     $ (15,994 )   $ 7,074  

Comprehensive income attributable to redeemable noncontrolling interests

    (447 )           (844 )      

Total comprehensive income (loss) attributable to AvePoint Operations, Inc.

  $ (11,256 )   $ 7,726     $ (16,838 )   $ 7,074  

 

See accompanying notes.

 

3

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Deficiency

For the Three Months Ended June 30, 2021 and 2020

(In thousands, except share amounts)

(Unaudited)

 

                   

Redeemable

   

Shared

   

Redeemable

   

Total

                                   

Accumulated

         
   

Convertible

   

Common

   

Based

   

noncontrolling

   

mezzanine

                   

Additional

           

Other

   

Total

 
   

Preferred Stock

   

Shares

   

Awards

   

interest

   

equity

   

Common Stock

   

Paid-In

   

Accumulated

   

Comprehensive

   

Stockholders’

 
   

Shares

   

Amount

   

Amount

   

Amount

   

Amount

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Income

   

Deficiency

 

Balance, March 31, 2021

    4,832,409     $ 192,184     $ 24,891     $ 1,591     $ 3,696     $ 222,362       11,640,181     $ 12     $ 108,972     $ (313,739 )   $ 1,548     $ (203,207 )

Reclassification of share-based awards to temporary equity

                      104             104                   (104 )                 (104 )

Reclassification of common shares from liabilities

                6,873                   6,873                                      

Remeasurement of redemption value of common shares

                7,993                   7,993                         (7,993 )           (7,993 )

Proceeds from exercise of options

                                        306,231             2,152                   2,152  

Stock-based compensation expense

                                                    1,933                   1,933  

Remeasurement of redemption value of Series C preferred stock

          24,742                         24,742                         (24,742 )           (24,742 )

Comprehensive income (loss):

                                                                                               

Net loss

                                                          (11,057 )           (11,057 )

Net income attributable to noncontrolling interest

                            499       499                         (499 )           (499 )

Foreign currency translation adjustment

                            (52 )     (52 )                             300       300  

Balance, June 30, 2021

    4,832,409     $ 216,926     $ 39,757     $ 1,695     $ 4,143     $ 262,521       11,946,412     $ 12     $ 112,953     $ (358,030 )   $ 1,848     $ (243,217 )

 

                   

Redeemable

   

Shared

   

Redeemable

   

Total

                                   

Accumulated

         
   

Convertible

   

Common

   

Based

   

noncontrolling

   

mezzanine

                   

Additional

           

Other

   

Total

 
   

Preferred Stock

   

Shares

   

Awards

   

interest

   

equity

   

Common Stock

   

Paid-In

   

Accumulated

   

Comprehensive

   

Stockholders’

 
   

Shares

   

Amount

   

Amount

   

Amount

   

Amount

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Income

   

Deficiency

 

Balance, March 31, 2020

    5,878,352     $ 190,391     $ 9,667     $ 1,189     $     $ 201,247       9,702,831     $ 10     $ 34,272     $ (241,404 )   $ 1,651     $ (205,471 )

Reclassification of share-based awards to temporary equity

                      98             98                   (98 )                 (98 )

Remeasurement of redemption value of common shares

                1,032                   1,032                         (1,032 )           (1,032 )

Proceeds from exercise of options

                                        3,500             15                   15  

Stock-based compensation expense

                                                    471                   471  

Proceeds from the issuance of common stock

                                        722,734       1       23,769                   23,770  

Remeasurement of redemption value of Series B preferred stock

          1,421                         1,421                         (1,421 )           (1,421 )

Remeasurement of redemption value of Series C preferred stock

          6,642                         6,642                         (6,642 )           (6,642 )

Comprehensive income:

                                                                                               

Net income

                                                          8,044             8,044  

Foreign currency translation adjustment

                                                                (318 )     (318 )

Balance, June 30, 2020

    5,878,352     $ 198,454     $ 10,699     $ 1,287     $     $ 210,440       10,429,065     $ 11     $ 58,429     $ (242,455 )   $ 1,333     $ (182,682 )

 

See accompanying notes.

 

4

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Deficiency

For the Six Months Ended June 30, 2021 and 2020

(In thousands, except share amounts)

(Unaudited)

 

                   

Redeemable

   

Shared

   

Redeemable

   

Total

                                   

Accumulated

         
   

Convertible

   

Common

   

Based

   

noncontrolling

   

mezzanine

                   

Additional

           

Other

   

Total

 
   

Preferred Stock

   

Shares

   

Awards

   

interest

   

equity

   

Common Stock

   

Paid-In

   

Accumulated

   

Comprehensive

   

Stockholders’

 
   

Shares

   

Amount

   

Amount

   

Amount

   

Amount

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Income

   

Deficiency

 

Balance, December 31, 2020

    4,832,409     $ 183,390     $ 25,074     $ 1,489     $ 3,061     $ 213,014       11,513,451     $ 12     $ 105,159     $ (299,789 )   $ 1,791     $ (192,827 )

Reclassification of share-based awards to temporary equity

                      206             206                   (206 )                 (206 )

Reclassification of common shares from liabilities

                6,873                   6,873                                      

Remeasurement of redemption value of common shares

                7,810                   7,810                         (7,810 )           (7,810 )

Proceeds from exercise of options

                                        432,961             3,277                   3,277  

Stock-based compensation expense

                                                    4,208                   4,208  

Remeasurement of redemption value of Series C preferred stock

          33,536                         33,536                         (33,536 )           (33,536 )

Issuance of redeemable noncontrolling interest in EduTech

                            238       238                   515                   515  

Comprehensive income (loss):

                                                                                               

Net loss

                                                          (15,999 )           (15,999 )

Net income attributable to noncontrolling interest

                            896       896                         (896 )           (896 )

Foreign currency translation adjustment

                            (52 )     (52 )                             57       57  

Balance, June 30, 2021

    4,832,409     $ 216,926     $ 39,757     $ 1,695     $ 4,143     $ 262,521       11,946,412     $ 12     $ 112,953     $ (358,030 )   $ 1,848     $ (243,217 )

 

                   

Redeemable

   

Shared

   

Redeemable

   

Total

                                   

Accumulated

         
   

Convertible

   

Common

   

Based

   

noncontrolling

   

mezzanine

                   

Additional

           

Other

   

Total

 
   

Preferred Stock

   

Shares

   

Awards

   

interest

   

equity

   

Common Stock

   

Paid-In

   

Accumulated

   

Comprehensive

   

Stockholders’

 
   

Shares

   

Amount

   

Amount

   

Amount

   

Amount

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Income

   

Deficiency

 

Balance, December 31, 2019

    5,878,352     $ 182,656     $ 10,684     $ 1,291     $     $ 194,631       9,702,831     $ 10     $ 33,691     $ (233,957 )   $ 1,574     $ (198,682 )

Reclassification of share-based awards to temporary equity

                      (4 )           (4 )                 4                   4  

Remeasurement of redemption value of common shares

                15                   15                         (15 )           (15 )

Proceeds from exercise of options

                                        3,500             15                   15  

Stock-based compensation expense

                                                    950                   950  

Proceeds from the issuance of common stock

                                        722,734       1       23,769                   23,770  

Remeasurement of redemption value of Series B preferred stock

          2,784                         2,784                         (2,784 )           (2,784 )

Remeasurement of redemption value of Series C preferred stock

          13,014                         13,014                         (13,014 )           (13,014 )

Comprehensive loss:

                                                                                               

Net income

                                                          7,315             7,315  

Foreign currency translation adjustment

                                                                (241 )     (241 )

Balance, June 30, 2020

    5,878,352     $ 198,454     $ 10,699     $ 1,287     $     $ 210,440       10,429,065     $ 11     $ 58,429     $ (242,455 )   $ 1,333     $ (182,682 )

 

See accompanying notes.

 

5

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

   

For the Six Months Ended

 
   

June 30,

 
   

2021

   

2020

 

Operating activities

               

Net income (loss)

  $ (15,999 )   $ 7,315  

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

               

Depreciation and amortization

    537       541  

Foreign currency remeasurement (gain) loss

    (134 )     220  

Provision for doubtful accounts

    (732 )     818  

Stock-based compensation

    17,799       2,854  

Gain on disposal of property and equipment

    (15 )      

Deferred income taxes

    (981 )     (5,788 )

Changes in operating assets and liabilities:

               

Accounts receivable

    2,399       4,822  

Prepaid expenses and other current assets

    (1,994 )     407  

Other assets

    (1,955 )     719  

Accounts payable, accrued expenses and other liabilities

    (4,057 )     (6,896 )

Deferred revenue

    3,298       964  

Accrued rent obligation

    (87 )     (206 )

Net cash provided by (used in) operating activities

    (1,921 )     5,770  

Investing activities

               

Maturity (purchase) of short-term investments, net

    (423 )     1,034  

Purchase of APXT shares

    (1,631 )      

Purchase of property and equipment

    (897 )     (169 )

Cash provided by (used in) investing activities

    (2,951 )     865  

Financing activities

               

Repayments of capital leases

    (14 )     (33 )

Payments of transaction fees

    (1,872 )      

Proceeds from stock option exercises

    3,277       15  

Proceeds from sale of common shares of subsidiary

    753        

Payments of debt issuance costs

          (120 )

Proceeds from issuance of Common stock

          7,000  

Net cash provided by financing activities

    2,144       6,862  

Effect of exchange rates on cash

    (46 )     (284 )

Net increase (decrease) in cash and cash equivalents

    (2,774 )     13,213  

Cash and cash equivalents at beginning of period

    69,112       12,162  

Cash and cash equivalents at end of period

  $ 66,338     $ 25,375  

Supplemental disclosures of cash flow information

               

Cash received (paid) for:

               

Interest

  $ 24     $ 8  

Income taxes

  $ (2,389 )   $ (529 )

Non-cash investing and financing activities

               

Fixed assets acquired under capital leases

  $     $ 28  

 

See accompanying notes.

 

6

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

 

1. Nature of Business and Organization

 

AvePoint Operations, Inc. (formerly known as AvePoint, Inc.) and its subsidiaries (“AvePoint” or the “Company”) are 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.

 

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

 

On November 23, 2020, Apex Technology Acquisition Corporation, a Delaware corporation ("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 the Company 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, with Apex subsequently being renamed “AvePoint, Inc.” The Business Combination is further described in Note 16 and Note 18.

 

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 six months ended June 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 the 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 incorporated by reference in the Company's Form 8-K, which was filed with the SEC on July 7, 2021.

 

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 could differ from those estimates. 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”).

 

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 $(0.1) million and $(0.2) million for the three and six months ended June 30, 2021, respectively, and $0.4 million and $(0.5) million for the three and six months ended June 30, 2020, respectively.

 

7

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

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 June 30, 2021 and December 31, 2020, the Company’s cash balances at these entities were $7.1 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 $2.4 million and $4.6 million for the three and six months ended June 30, 2021, respectively, and $2.6 million and $5.1 million for the three and six months ended June 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 $33.8 million and $31.9 million at June 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.

 

The following table presents AvePoint’s revenue by source:

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2021

   

2020

   

2021

   

2020

 

Revenue:

                               

SaaS

  $ 20,586     $ 11,699     $ 38,845     $ 21,942  

Term license and support

    11,088       7,357       19,815       15,101  

Services

    7,302       7,724       13,218       15,303  

Maintenance and OEM

    5,458       5,776       10,867       11,781  

Perpetual license

    910       400       1,399       1,490  

Total revenue

  $ 45,344     $ 32,956     $ 84,144     $ 65,617  

 

Term license and support revenue recognized at a point of time was $7.8 million and $13.5 million for the three and six months ended June 30, 2021, respectively, and $5.2 million and $10.4 million for the three and six months ended June 30, 2020, respectively.

 

Revenue deferred under contracts with customers as of June 30, 2021 and December 31, 2020 was $76.6 million and $74.7 million, respectively. Revenue recognized that was included in the opening deferred revenue balance was $43.3  and $35.1 million for the six months ended June 30, 2021 and 2020, respectively.

 

8

 

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

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:

 

   

Accounts

           

Deferred

 
   

receivable,

   

Deferred

   

sales

 
   

net

   

revenue

   

commissions

 
   

(in thousands)

 

Opening (January 1, 2020)

  $ 43,619     $ 60,600     $ 28,351  

Closing (December 31, 2020)

    53,749       74,688       31,943  

Increase/(decrease)

    10,130       14,088       3,592  
                         

Opening (January 1, 2021)

  $ 53,749     $ 74,688     $ 31,943  

Closing (June 30, 2021)

    51,193       76,570       33,781  

Increase/(decrease)

    (2,556 )     1,882       1,838  

 

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

 

As of June 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 $166.1 million, of which $126.6 million is related to SaaS and term license and support revenue. AvePoint expects to recognize approximately 63% 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 June 30, 2021, the Company is not a party to any other litigation for which a material claim is reasonably possible, probable or estimable.

 

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 jurisdiction, 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 major foreign tax jurisdictions.

 

Redeemable Noncontrolling Interest

 

At June 30, 2021, the Company owned 76.09% and AEPL PTE. LTD. (“AEPL”) owned 23.91% of a subsidiary of the Company, 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.

 

9

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Emerging Growth Company

 

Upon successful completion of the business combination discussed in the Subsequent Events section, AvePoint is expected to be 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 intends to elect 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, and ASU 2020-05 (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.

 

10

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

3. 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 six months ended June 30, 2021 and 2020 and no customer was more than 10% of accounts receivable at June 30, 2021 and December 31, 2020.

 

4. Accounts Receivable, Net

 

Accounts receivable, net, consists of the following components:

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 
   

(in thousands)

 

Trade receivables

  $ 28,373     $ 33,521  

Current portion of unbilled receivables

    17,410       16,496  

Allowance for doubtful accounts

    (1,030 )     (1,767 )
    $ 44,753     $ 48,250  

 

5. Property and Equipment, Net

 

Property and equipment, net, consists of the following:

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 
   

(in thousands)

 

Computer equipment

  $ 4,542     $ 4,030  

Leasehold improvements

    2,698       2,633  

Furniture and fixtures

    880       887  

Building

    774       766  

Office equipment

    386       384  

Software

    343       245  
      9,623       8,945  

Less accumulated depreciation and amortization

    (6,584 )     (6,282 )
    $ 3,039     $ 2,663  

 

Accumulated depreciation and amortization includes the amortization expense relating to assets acquired under capital leases. Depreciation and amortization expense was $0.3 million and $0.5 million for the three and six months ended June 30, 2021, respectively, and $0.3 million and $0.5 million for the three and six months ended June 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.

 

11

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

6. Other Assets

 

Other assets consists of the following components:

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 
   

(in thousands)

 

Deferred costs

  $ 4,055     $ 2,089  

Deferred tax asset

    3,851       2,963  

Long-term investments

    2,369       900  

Security deposit

    1,706       1,850  

Foreign income taxes receivable

    198       147  

Other

    59       303  
    $ 12,238     $ 8,252  

 

Deferred costs represent direct and incremental costs incurred as part of the Business Combination with Apex. The Business Combination is further described in Note 16 and Note 18.

 

7. Accrued Expenses and Other Liabilities

 

Accrued expenses and other liabilities consists of the following components:

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 
   

(in thousands)

 

Accrued compensation

  $ 13,469     $ 16,738  

Indirect taxes

    2,846       2,571  

Cloud service fees

    1,083       994  

Professional service fees

    785       500  

Accrued partner expenses

    603       1,253  

Income taxes payable

    447       1,713  

Current portion of capital lease and deferred rent

    166       203  

Other

    2,716       2,273  
    $ 22,115     $ 26,245  

 

12

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

8. Line of Credit

 

On April 7, 2020, the Company entered into a loan and security agreement with HSBC Venture Bank USA Inc. as lender for a revolving line of credit of up to $30.0 million. 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 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 June 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 computes its tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date ordinary quarterly earnings. The tax expense or benefit related to significant unusual or infrequently occurring items that will be separately reported or reported net of their related tax effect, and are individually computed, is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

 

During the three and six months ended June 30, 2021, the Company recorded income tax benefit of $0.1 million and $1.1 million, respectively. During the three and six months ended June 30, 2020, the Company recorded income tax benefit of $6.1 million and $6.3 million, respectively. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21% is primarily due to mix of pre-tax income (loss) results by jurisdictions taxed at different rates and changes in the valuation allowance for tax losses in certain foreign jurisdictions for which no benefit can be taken.

 

The Company’s effective tax rate may be subject to fluctuation during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of forecasted pre-tax earnings in the various jurisdictions in which the Company operates, valuation allowances against deferred tax assets, the recognition and de-recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.

 

The Company is subject to tax examinations in various jurisdictions. As of June 30, 2021 and December 31, 2020, the total amount of federal and foreign unrecognized tax benefits was $5.4 million at both dates, exclusive of interest and penalties. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. As of June 30, 2021 and December 31, 2020, the Company had $1.4 million and $1.2 million, respectively, of accrued interest and penalties associated with unrecognized tax benefits. These amounts were included in other non-current liabilities in their respective years. As of June 30, 2021 and December 31, 2020, the total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was not material.

 

Based on information available as of June 30, 2021, it is reasonably possible that the total amounts of unrecognized tax benefit could decrease by approximately $4 million over the next 12 months as a result of filing amended tax returns and potential lapses of the applicable statutes of limitations.

 

13

 

 

 

AvePoint Operations, Inc. and Subsidiaries

(formerly known as AvePoint, Inc.)

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 2027.

 

During the three and six months ended June 30, 2021, total rent expense for facilities amounted to $1.5 million and $3.0 million, respectively. During the three and six months ended June 30, 2020, total rent expense for facilities amounted to $1.3 million and $2.7 million, respectively. As of June 30, 2021, 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:

 

Year Ending December 31:

       
   

(in thousands)

 

2021 (six months)

  $ 3,034  

2022

    4,184  

2023

    2,635  

2024

    1,668  

2025

    938  

2026

    604  

Thereafter