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 |
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(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 |
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Common Stock, par value $0.0001 per share |
AVPT |
The Nasdaq Global Select Market |
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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; |
• |
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; |
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the Company’s ability to compete with others in the digital transformation industry; |
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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.
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 |
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Exhibit
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Description |
Schedule/ Form |
File No. |
Exhibit |
Filing Date |
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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 |
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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. |
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. |
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Dated: August 10, 2021 |
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By: |
/s/ Brian Michael Brown | |
Brian Michael Brown |
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Chief Operating Officer, General Counsel, and Secretary |
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Dated: August 10, 2021 |
AvePoint, Inc. |
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By: |
/s/ Sophia Wu | |
Sophia Wu |
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Chief Financial Officer |
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 |
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.
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 |
419 | |||
$ | 13,482 |
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, of which $3.6 million was paid in the six months ended June 30, 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 six months ended June 30, 2021, the Company paid $5.6 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 June 30, 2021:
Years ending December 31, |
||||
(in thousands) |
||||
2021 (six months) |
$ | 700 | ||
2022 |
— | |||
2023 |
13,373 | |||
2024 |
— | |||
2025 |
— | |||
2026 |
— | |||
Thereafter |
— | |||
$ | 14,073 |
AvePoint Operations, Inc. and Subsidiaries
(formerly known as AvePoint, Inc.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
11. Mezzanine Equity and Stockholders’ Deficiency
The Company has two classes of capital stock: common stock and preferred stock. The following summarizes the terms of the Company’s capital stock.
Common Stock
The Company is authorized to issue up to 28,000,000 shares of common stock at $0.001 par value, at June 30, 2021 and December 31, 2020.
There were 11,946,412 and 11,513,451 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.
Convertible Contingently Redeemable Preferred Stock
At June 30, 2021 and December 31, 2020, the Company was authorized to issue up to 4,832,409 shares of Series C convertible preferred stock (the “Series C Preferred Stock” or “Preferred Stock”) at $0.001 par value. The Company had 4,832,409 shares issued and outstanding as of June 30, 2021 and December 31, 2020. The Series C Preferred Stock liquidation preference was $508.3 million and $403.4 million as of June 30, 2021 and December 31, 2020, respectively. In addition to the Series C Preferred Stock, at June 30, 2021, the Company was authorized to issue up to 3,326,340 shares of Series B-1 convertible preferred stock and 2,736,477 shares of Series B-2 convertible preferred stock. Although authorized for issuance, no shares of Series B-1 convertible preferred stock nor Series B-2 convertible preferred stock were issued and outstanding at June 30, 2021 and December 31, 2020.
No dividends were declared related to the Preferred Stock in the six months ended June 30, 2021 and 2020.
On July 1, 2021, the outstanding preferred stock of the Company was redeemed for cash in part and converted into Combined Company Common Stock in part in connection with the the Business Combination with the Apex Group as described in Note 18.
Redeemable Noncontrolling Interest
On December 24, 2020, AEPL, an unaffiliated entity, acquired a redeemable noncontrolling interest in EduTech through the contribution of 10.0 million Singapore Dollars, which represents an investment of $7.5 million. As of December 31, 2020, AvePoint owned a 77.78% interest in EduTech and AEPL owned a 22.22% interest in EduTech. On February 11, 2021, AEPL contributed an additional 1.0 million Singapore Dollars, which represents an additional investment of $0.8 million. At the transaction closing date, AvePoint owned a 76.09% interest in EduTech and AEPL owned a 23.91% interest in EduTech. As part of AEPL’s initial and subsequent 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 and subsequent investment amounts. 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. These adjustments are recorded as net income attributable to redeemable noncontrolling interest. The rollforward of the balance of the redeemable noncontrolling interest is as follows:
Redeemable |
||||
noncontrolling |
||||
interest |
||||
(in thousands) |
||||
Beginning balance (December 31, 2020) |
$ | 3,061 | ||
Issuance of redeemable noncontrolling interest in EduTech |
238 | |||
Net income (loss) attributable to redeemable noncontrolling interest |
(531 | ) | ||
Other comprehensive income (loss) attributable to redeemable noncontrolling interest |
(52 | ) | ||
Adjustment to present redemption value as of June 30, 2021 |
1,427 | |||
Ending balance (June 30, 2021) |
$ | 4,143 |
AvePoint Operations, Inc. and Subsidiaries
(formerly known as AvePoint, Inc.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
12. Stock-Based Compensation
The Company maintains an equity incentive plan established in 2006, the 2006 Equity Incentive Plan (the “2006 Plan”). Under the 2006 Plan, the Company may grant incentive stock options, non-qualified stock options and restricted stock to eligible recipients under the Plan which include employees, directors and consultants. To date, the Company has issued only stock options and restricted stock. On January 1, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”), which replaces, on a go forward basis, the 2006 Plan. All ungranted equity reserved for issuance and not subject to outstanding awards under the 2006 Plan have been assumed by the 2016 Plan and no additional equity will be granted under the 2006 Plan. As of June 30, 2021, 2,298,673 shares remained for future awards under the 2016 Equity Incentive Plan. All outstanding stock awards granted under the 2006 Plan will remain subject to the 2006 Plan.
The Company records stock-based compensation in cost of revenue, sales and marketing, general and administrative and research and development. Stock-based compensation was included in the following line items:
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
(in thousands) |
|||||||||||||||
Cost of revenue |
$ | 272 | $ | 190 | $ | 362 | $ | 102 | ||||||||
Sales and marketing |
9,791 | 1,510 | 10,902 | 1,310 | ||||||||||||
General and administrative |
4,364 | 1,007 | 6,355 | 1,295 | ||||||||||||
Research and development |
83 | 72 | 180 | 147 | ||||||||||||
Total stock-based compensation |
$ | 14,510 | $ | 2,779 | $ | 17,799 | $ | 2,854 |
Stock Options
The compensation costs for stock option awards are accounted for in accordance with ASC 718, Compensation-Stock Compensation. Stock options vest over a four-year period and expire on the tenth anniversary of the date of award. Certain of the Company’s stock option awards (the “Officer Awards”) include a provision that may require the Company to redeem the vested portion of options at fair value in cash upon a separation of service initiated by the Company or upon death or disability of the holder. The Company has determined that the redemption feature requires the Officer Awards to be classified in temporary equity. For share-based payment arrangements with employees, the amount presented in temporary equity at each balance sheet date is based on the redemption provisions of the instrument and adjusted for the proportion of consideration received in the form of employee services. The shares underlying the Officer Awards are puttable to the Company upon certain conditions, such as death or disability of the Officer Awards recipients, which the Company has determined is not probable; therefore, the Company reclassifies the grant-date intrinsic value to mezzanine equity as the awards vest.
The Company’s stock option awards granted in the People’s Republic of China (the “PRC Options ”) contains a performance condition that states that the awards are only exercisable if the Company’s common shares are publicly traded and must be exercised by a cashless sell-all transaction. When the exercise contingency is resolved, the PRC Options will be classified as liabilities and recorded at fair value. In the period the exercise contingency is resolved US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date. As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods. As of June 30, 2021 and December 31, 2020, there was $1.4 million in unrecognized compensation costs related to currently unexercisable awards.
In 2020, the Company granted certain executives stock option awards that contain both service and performance vesting conditions (the “Time and Performance Based Option”). The Time and Performance Based Option granted awards in three tranches. The Time-Based Option vests 25 percent one year after the grant date and, thereafter, in 12 successive equal quarterly installments measured from the first anniversary, subject to the grantee’s continuous service with the Company. The Performance-Based I Option vests contingent upon the Company meeting certain performance goals. The Performance-Based II Option vests contingent upon the grantee achieving certain goals. Both the Performance-Based I Option and Performance-Based II Option are subject to the grantee’s continuous service to the company and approval by the board of directors.
For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense of $1.9 million and $4.2 million related to these options, respectively. For the three and six months ended June 30, 2020, the Company recorded stock-based compensation expense of $0.5 million and $1.0 million related to these options, respectively. These costs have been recorded in cost of revenue in the unaudited condensed consolidated statements of operations.
As of June 30, 2021 and December 31, 2020, there was $20.9 million and $18.4 million, respectively, in unrecognized compensation costs related to non-vested awards.
At June 30, 2021, AvePoint had 3,524,593 options outstanding and 1,332,459 options exercisable with intrinsic values of $303.2 million and $123.7 million, respectively. During the three and six months ended June 30, 2021, 306,231 and 432,961 options were exercised, respectively, with a total intrinsic value of $29.8 million and $39.2 million.
AvePoint Operations, Inc. and Subsidiaries
(formerly known as AvePoint, Inc.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Put and Call Options
On December 26, 2019, the Company granted put options, to certain of the Company’s management, to request a redemption of 358,188 shares of Common Stock (“Modified Common Stock”) or 592,399 shares underlying options to acquire Common Stock (Modified Options, collectively, “Eligible Shares”) during the period from March 25, 2025 to April, 2025 (the “Settlement Period”) or, if earlier, the 30 day period following a Qualifying Termination for a redemption price per share equal to the fair market value, as determined by the AvePoint’s Board of Directors; provided, that if a redemption request is delivered following a Qualifying Termination, the Company shall pay the redemption price during the Settlement Period unless the holders of Series C Preferred Stock consent to the payment of the redemption price by the Company within the 30 day period following the Qualifying Termination. In addition, the Company has a right to purchase all or any portion of the Eligible Shares at any time for a purchase price per share equal to the fair market value.
Temporary-equity classification is required if stock awards that would otherwise qualify for equity classification are subject to contingent redemption features that are not solely within the control of the issuer. The Company remeasures the Modified Common Stock at each balance sheet date based on the fair value of the Company’s shares and such remeasurements are reflected as an adjustment of the value in temporary equity. As of June 30, 2021 and December 31, 2020, the temporary equity balance related to the Modified Common Stock was $39.8 million and $25.1 million, respectively.
The fair values of Modified Options were estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions at June 30, 2021 and December 31, 2020:
June 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
Expected life (in years) |
4.10 | 4.48 | ||||||
Expected volatility |
34.44 | % | 42.97 | % | ||||
Risk-free rate |
0.79 | % | 0.37 | % | ||||
Dividend yield |
— | — |
At June 30, 2021 and December 31, 2020, the liability balance related to Modified Options was $33.7 million and $36.8 million, respectively. For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense of $2.8 million and $3.6 million related to these options, respectively. For the three and six months ended June 30, 2020, the Company recorded stock-based compensation expense of $1.9 million and $2.3 million related to these options, respectively. These costs have been recorded in costs of revenue and operating expenses in the unaudited condensed consolidated statements of operations.
During the three and six months ended June 30, 2021, 145,109 and 157,109 options included in Modified Options were exercised, respectively. As a result of exercises of the Modified Options, $15.4 million of the liability balance related to Modified Options was reclassified to liability-classified outstanding shares. During the same period, $6.9 million of the liability balance for these outstanding shares was reclassified to mezzanine equity as a result of the completion of six months from the time of the exercise of 79,443 options. At June 30, 2021, 157,109 outstanding shares are liability-classified and are remeasured at fair value each period. At June 30, 2021 and December 31, 2020, the liability balance related to this common stock was $16.5 million and $6.7 million, respectively. For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense of $1.2 million and $1.3 million related to this common stock, respectively.
AvePoint Operations, Inc. and Subsidiaries
(formerly known as AvePoint, Inc.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
13. Financial Instruments
Fair value is defined by ASC 820, Fair Value Measurement (ASC 820) as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
• |
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. |
• |
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
• |
Level 3 — Unobservable inputs for the asset or liability. |
The Company’s short-term investments consisted primarily of certificate of deposits held by financial institutions. The balance of certificate of deposits classified as short-term investments was $1.4 million and $1.0 million as of June 30, 2021 and December 31, 2020. In addition to certificates of deposits that are classified as short-term investments, the Company maintains certificates of deposits with maturities greater than twelve months and are classified as long-term investments included within other assets. The balance of certificates of deposits classified as long-term investments was $0.5 million and $0.8 million as of June 30, 2021 and December 31, 2020. Certificates of deposits are classified as Level 2 assets in accordance with ASC 820. The Company also holds an investment in shares of Apex Technology Acquisition Corporation. The balance of this investment was $1.8 million as of June 30, 2021. This investment is classified as a Level 1 asset in accordance with ASC 820.
14. Segment information
The Company operates in one segment. Its products and services are sold throughout the world, through direct and indirect sales channels. The Company’s chief operating decision maker (the “CODM”) is the Chief Executive Officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation, expense allocation or profitability by product or geography.
Revenue by geography are based upon the billing address of the customer. All transfers between geographic regions have been eliminated from consolidated revenue. No customers represented greater than 10% of revenue for the three and six months ended June 30, 2021 and 2020. The following table sets forth revenue by geographic area:
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
(in thousands) |
|||||||||||||||
Revenue: |
&nbs |