What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-03-09 · 582 added, 278 removed, 3 unchanged (100% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

units, Class A common stock and warrants are each traded on the Nasdaq Capital Market under the symbols “APXTU,”

“APXT”

and “APXTW,”

MARKET FOR REGISTRANT ’

S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Common Stock began trading on the Nasdaq Global Select Market (the “

Nasdaq ”) under the symbol “AVPT,”

and our Public Warrants began trading on the Nasdaq under the symbol “AVPTW”

on July 2, 2021.

Prior to the consummation of the Business Combination on July 1, 2021, Apex Units, Public Shares, and Public Warrants were each traded on the Nasdaq Capital Market under the symbols “APXTU,”

“APXT,”

and “APXTW,”

respectively.

Our units commenced public trading on September 17, 2019, and our Class A common stock

and warrants commenced separate public trading on November 5, 2019.

March 8, 2021, there were three (3) holders of record of our units, one (1) holder of record of our Class A common stock, one

(1) holder of our Class B common stock and one (1) holder of record of our warrants.

have not paid any cash dividends on our shares, and we have no present intention of doing so.

Any future payment of cash dividends

will be determined by our board of directors in light of our earnings, financial condition and other relevant considerations.

as noted in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Apex Units commenced public trading on September 17, 2019, and Apex’s Public Shares and Public Warrants commenced separate public trading on November 5, 2019.

In connection with the Closing of the Business Combination, each Apex Unit was separated into its components, which consisted of one share of Class A common stock and one-half of one Warrant, and such Units no longer exist.

As of December 31, 2021, there were 181,801,404 shares of our Common Stock issued and outstanding held of record by 111 holders, and 17,905,000 Warrants outstanding held of record by three holders.

Current Stockholder and Common Stock Information

On March 30, 2022, just prior to the date of this Annual Report, there were 182,602,086 shares of Common Stock issued and outstanding held of record by 113 holders, and 17,905,000 Warrants outstanding held of record by three holders.

This figure does not include a substantially greater number of beneficial holders of our Common Stock and Public Warrants whose shares (or Warrants to purchase shares) are held by banks, brokers, and other financial institutions.

Dividend Policy

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.

Any future determination to pay dividends is at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’

indebtedness, and will depend on our results of operations, financial condition, capital requirements, and other factors that our Board may deem relevant.

Except as noted in “

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ”

below, there are currently no contractual restrictions on our ability to pay dividends in cash or shares.

Authorized for Issuance under Equity Compensation Plans

Sales of Unregistered Securities

of Equity Securities by the Issuer and Affiliated Purchasers

Selected Financial Data.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction

with our audited consolidated financial statements and the notes related thereto which are included in “Item 8.

Financial Statements and Supplementary Data”

of this Annual Report on Form 10-K.

Certain information contained in the discussion

and analysis set forth below includes forward-looking statements.

Our actual results may differ materially from those anticipated

in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding

Forward-Looking Statements,”

“Item 1A.

Risk Factors”

and elsewhere in this Annual Report on Form 10-K.

Note Regarding Forward-Looking Statements

Report includes “forward-looking statements”

within the meaning of Section 27A of the Securities Act and Section 21E

of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ

materially from those expected and projected.

All statements, other than statements of historical fact included in this Quarterly

Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition

and Results of Operations”

regarding the Company’s financial position, business strategy and the plans and objectives

of management for future operations, are forward-looking statements.

Words such as “expect,”

“believe,”

“anticipate,”

“intend,”

“estimate,”

“seek”

and variations and similar words and

expressions are intended to identify such forward-looking statements.

Such forward-looking statements relate to future events

or future performance, but reflect management’s current beliefs, based on information currently available.

A number of factors

could cause actual events, performance or results to differ materially from the events, performance and results discussed in the

Securities Authorized for Issuance Under Equity Compensation Plans

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ”

(Part III, Item 12 of this Annual Report) and “

13  —

Stock-Based Compensation ”

(Part II, Item 8 of this Annual Report) for more information.

Items 5 and 6

Unregistered Sales of Equity Securities

The following list sets forth information regarding all unregistered securities sold by us since the Closing Date of the Business Combination:

On the Closing Date of the Business Combination, a number of qualified institutional buyers and accredited investors (each, a “

PIPE Investor ”) purchased from AvePoint an aggregate of 14,000,000 shares of Apex common stock (the " PIPE Shares "), for a purchase price of $10.00 per share and an aggregate purchase price of $140.0 million, pursuant to separate subscription agreements (each, a “

Subscription Agreement ”) entered into effective as of November 23, 2020 in one or more private placement transactions (the " Private Placements ").

The PIPE Shares issued in connection with the Subscription Agreements were not registered under the Securities Act and were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer under benefit plans and contracts relating to compensation as provided under Rule 701.

None of the Private Placements involved any underwriters, underwriting discounts or commissions, or any public offering.

The recipients of the securities in these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions.

All recipients had adequate access, through their relationships with us, to information about us.

The sales of these securities were made without any general solicitation or advertising.

Pursuant to the Subscription Agreements, we granted certain registration rights to the PIPE Investors with respect to the PIPE Shares. 

On the Closing Date of the Business Combination, certain persons and entities receiving shares of Common Stock pursuant to the Business Combination Agreement and certain persons and entities holding securities of Apex prior to the Closing entered into that certain Amended and Restated Registration Rights Agreement (the “

A&R Registration Rights Agreement ”). In the A&R Registration Right Agreement, we agreed that, within 15 business days after the Closing, we would file with the SEC a registration statement registering the resale of certain of our securities held by the Sponsor, the PIPE Investors, holders of the Warrants, and other selling securityholders, and that we would use commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof. 

On June 23, 2021, in fulfilment of our obligations under the A&R Registration Rights Agreement, we filed a Registration Statement on Form S-1 (File No.

333-258109) (the “

Preliminary S-1 ”) registering for sale or resale, as applicable, certain securities offered by us and by named selling securityholders (including the holders of PIPE Shares) therein.

The Preliminary S-1 became effective on August 9, 2021, and the prospectus relating thereto was filed on August 10, 2021.

On August 5, 2021, we filed an amendment to the Preliminary S-1 (the “

Amended S-1 ”).

In the Amended S-1, we registered for primary offering 17,905,000 shares of Common Stock, consisting of:

405,000 shares of Common Stock issuable upon exercise of the Private Warrants and

17,500,000 shares of Common Stock issuable upon exercise of the Public Warrants.

In the Amended S-1, certain selling securityholders registered for secondary offering an aggregate of 136,029,478 shares of Common Stock, consisting of:

Up to 14,000,000 PIPE Shares;

Up to 8,750,000 Common Stock shares held by the Sponsor and Cantor (the “

Sponsor Shares ”), which number includes 2,916,700 Sponsor Earn-Out Shares (as defined in the Amended S-1)

Up to 810,000 Placement Shares issued upon separation of the Placement Units;

Up to 405,000 shares of Common Stock issuable upon the exercise of the Private Warrants;

Up to 112,064,478 shares of Common Stock pursuant to the Registration Rights Agreement (including up to 13,329,196 shares of Common Stock issuable pursuant to outstanding options and up to 1,912,155 shares of Common Stock issuable as Earnout Shares (as such term is defined in the Amended S-1)).

Pursuant to the Amended S-1, certain selling securityholders also offered 405,000 Private Warrants.

Equity Incentive Plans - Conversion of Options

Legacy AvePoint granted to certain employees, directors and consultants of it and its subsidiaries, options to purchase an aggregate of 29,423,382

shares of common stock at exercise prices of $0.0334 to $3.905 per share under our 2016 Equity Incentive Plan and $0.0334 to $1.8915 per share under our 2006 Equity Incentive Plan.

Upon the closing of the Business Combination, such options were automatically and without any required action on the part of any holder or beneficiary thereof, were assumed by us and converted into options to purchase an aggregate of 255,731,562 shares of our Common Stock at exercise prices of $0.0038 to $0.4493 per share and $0.0038 to $0.2176 per share under our 2016 Equity Incentive Plan and our 2006 Equity Incentive Plan, respectively.

Capitalized terms used but not defined in this section under the heading " Unregistered Sales of Equity Securities " are defined in the section title " Business - 2021 Consummation of the Business Combination " (Part 1, Item 1 of this Annual Report).

Issuer Purchases of Equity Securities

In April of 2021, we purchased approximately $1.6 million of pre-Business Combination Apex common stock shares via a publicly announced share purchase program (the " Apex Share Purchase Program "), which shares are now recorded as treasury stock. In a press release issued on April 14, 2021, we announced that the board of directors of Legacy AvePoint authorized Legacy AvePoint to thereafter purchase up to an aggregate of $20.0 million of pre-Business Combination Apex common stock via the Apex Share Purchase Program until the date on which the SEC declared Apex's amended registration statement on Form S-4 effective (which date was June 2, 2021).

However, we elected to terminate the Apex Share Purchase Program on April 30, 2021.

See our consolidated financial statements (Part II, Item 8 of this Annual Report) for more information regarding this purchase and cash outflows related thereto.

Period

Total number of shares purchased (1)

Average price paid per share

Total number of shares purchased as part of publicly announced plans or programs

Maximum number (or approximate dollar value) of shares that may yet be purchased under the Apex Share Purchase Program (2)

April 14 - April 30, 2021 (3)

(1) All shares were purchased pursuant to the publicly announced Apex Share Purchase Program via open market purchases.

(2) The Apex Share Purchase Program authorized Legacy AvePoint to purchase up to an aggregate of $20.0 million of pre-Business Combination Apex common stock until the date on which the SEC declared Apex's amended registration statement on Form S-4 effective (which date was June 2, 2021).

The Apex Share Purchase Program was terminated on April 30, 2021, and no additional purchases were made thereunder.

(3) The Apex Share Purchase Program began on April 14, 2021 and ended on April 30, 2021.

Other than the period presented in this table, there are no other periods in which the Apex Share Purchase Program was active.

Use of Proceeds from the Business Combination

As a result of the Business Combination, we received net cash consideration of $204.5 million.

Legacy AvePoint and Apex incurred costs that are considered direct and incremental costs associated with the transactions contemplated by the Business Combination Agreement and those transactions ancillary thereto.

These costs amounted to $56.2 million and were treated as a reduction of additional paid-in capital.

In addition to the payment of the direct and incremental costs associated with consummation of the Business Combination, the remaining proceeds (including proceeds from the Private Placements) we received from the Business Combination are used (and will continue to be used) for our working capital and general corporate purposes, including potential merger and acquisition activity in accordance with our acquisition and growth strategies.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ( “

MD&A ”

) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below.

The MD&A should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report.

The MD&A  

should also be read together with (A)(i) our audited consolidated financial statements as of  

December 31, 2020 and for the year ended December 31, 2020 , (ii) the  

section  

titled “

Information About AvePoint ”

and (iii) the section titled  

Selected Historical Consolidated Financial Information of AvePoint, ”

in each case as set forth in Amendment No.

to our Form  

S-4, as filed with the SEC on May  

28, 2021, and (B) the section entitled “

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ”

as set forth in Amendment No.

to our Registration Statement on Form  

S-1, as filed with the SEC on August 5, 2021 (and declared effective on August 9, 2021).

The MD&A contains forward-looking statements that involve risks, uncertainties, and assumptions that are based on the beliefs of management, as well as assumptions made by, based on information currently available to, our management.

Actual results and timing of selected events may differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed below and those set forth under the section  

titled  “

Risk Factors ”

(Part I, Item  

1A of this Annual Report) . 

Please also see the section of this Annual Report titled  “

Forward-Looking Statements.

For information identifying important factors that could cause actual results to differ materially

from those anticipated in the forward-looking statements, please refer to the “Risk Factors”

Except as expressly

required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking

statements whether as a result of new information, future events or otherwise.

are a blank check company formed under the laws of the State of Delaware on April 5, 2019 for the purpose of effecting a merger,

capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target

businesses (an “initial business combination”).

We intend to effectuate our initial business combination using cash

from the proceeds of our initial public offering and the sale of the placement units that occurred simultaneously with the completion

of our initial public offering, our capital stock, debt or a combination of cash, stock and debt.

expect to continue to incur significant costs in the pursuit of our acquisition plans.

We cannot assure you that our plans to

complete a Business Combination will be successful.

Combination Agreement

November 23, 2020, the Company entered into an Agreement and Plan of Merger (the “Business Combination Agreement”)

by and among the Company, Athena Technology Merger Sub, Inc., a Delaware corporation (“Merger Sub 1”), Athena Technology

Merger Sub 2, LLC, a Delaware limited liability company (“Merger Sub 2”), and AvePoint, relating to a proposed business

combination transaction between the Company and AvePoint.

The Business Combination Agreement was amended on December 30, 2020.

to the Business Combination Agreement, Merger Sub 1 will be merged with and into AvePoint (the “First Merger”), with

AvePoint surviving the First Merger as a wholly owned subsidiary of the Company, and promptly following the First Merger, AvePoint

will be merged with and into Merger Sub 2 (the “Second Merger”), with Merger Sub 2 surviving the Second Merger as

a wholly owned subsidiary of the Company.

to the terms of the Business Combination Agreement, at the effective time of the Merger:

The aggregate consideration to be paid to AvePoint equity shareholders will be (i) an amount in cash of approximately $262 million (the “Aggregate Cash Consideration”), minus a deduction for the PIPE Fees and (ii) 143,261,093 shares of common stock of Apex, par value $0.0001 (“Apex Common Stock”), which includes shares of Apex Common Stock that may be issuable pursuant to the exercise of exchanged AvePoint stock options (such aggregate amount, the “Aggregate Stock Consideration”).

The Aggregate Stock Consideration will be increased by a number of shares of Apex Common Stock equal to the aggregate exercise price of the Exchanged Options divided by $10.00;

AvePoint’s stockholders who hold shares of Series C Preferred Stock, par value $0.001 (“AvePoint Preferred Stock”) will receive an aggregate amount of $135 million (subject to deduction for Preferred PIPE Fees) from the Aggregate Cash Consideration and will receive the balance of their consideration in shares of Apex Common Stock from the Aggregate Stock Consideration;

All holders of shares of common stock of AvePoint, par value $0.001 per share (“AvePoint Common Stock”) other than the Named Executives will receive an aggregate amount of between $75 million and approximately $92 million in cash (subject to deduction for certain expenses) based on an election (“Cash Election”) from the balance of the Aggregate Cash Consideration and will receive the remainder of their consideration in shares of Apex Common Stock from the Aggregate Stock Consideration;

All shares of AvePoint Common Stock and AvePoint Preferred Stock held in the treasury of AvePoint or by Apex shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto;

(e) Each share of common stock of Merger Sub 1 issued and outstanding immediately prior to the Effective

Time shall be converted into and exchanged for one validly issued, fully paid and non-assessable share of common stock, par value

$0.001 per share, of the Surviving Corporation;

(f) Each Named Executive Cash-Settled Option that is outstanding immediately prior to the Effective

Time, shall be converted into the right to receive (A) an amount of cash equal to:

the product of (1) the number of Named Executive

Cash-Settled Options multiplied by (2) the Per Share Amount, minus (y) the aggregate exercise price attributable to such Named

Executive Cash-Settled Options;

and (B) the contingent right to receive a number of shares Contingent Consideration following the

Closing in accordance with the Business Combination Agreement;

(g) The Named Executives will receive an aggregate amount of $35 million in cash (subject to deduction

for the Named Executive PIPE Fees (as defined in the Business Combination Agreement)) from the Aggregate Cash Consideration and

will receive the balance of their transaction consideration in shares of Apex Common Stock from the Aggregate Stock Consideration;

(h) Each AvePoint Option that is outstanding immediately prior to the Effective Time, whether vested

or unvested (other than the Named Executive Cash-Settled Options and AvePoint Options granted to Eligible individuals in the People’s

Republic of China (“PRC Options”)), shall be converted into (1) an option to purchase a number of shares of Apex Common

Stock (such option, an “Exchanged Option”) equal to the product (rounded down to the nearest whole number) of (x) the

number of shares of AvePoint Common Stock subject to such AvePoint Option immediately prior to the Effective Time and (y) the Exchange

Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such

AvePoint Option immediately prior to the Effective Time divided by (B) the Exchange Ratio;

(i) The PRC Options will not be continued or assumed by AvePoint, Apex or the Merger Subs as part of

The cancelled PRC Options will be replaced and substituted for as of the Effective Time with the award of a new stock

option to purchase a number of shares of Apex Common Stock pursuant to the 2021 Plan equal to the product (rounded down to the

nearest whole number) of (x) the number of shares of AvePoint Common Stock subject to such PRC Option immediately prior to the

Effective Time and (y) the Exchange Ratio, at an exercise price (rounded up to the nearest whole cent) equal to (A) the exercise

price per share of such PRC Option prior to the Effective Time divided by (B) the Exchange Ratio.

The replacement stock options

will be credited with vesting to the same extent as the existing PRC Options being replaced, and the new replacement awards will

be subject to same vesting schedule and exercisability provisions

Additionally,

On November 23, 2020, Apex entered into separate subscription agreements (collectively, the “Subscription Agreements”)

with a number of investors (collectively, the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase

an aggregate of 14,000,000 shares of Apex Common Stock (the “PIPE Shares”), at a purchase price of $10.00 per share

for an aggregate purchase price of $140,000,000, in one or more private placement transactions (the “Private Placements”).

The closing of the Private Placements pursuant to the Subscription Agreements is contingent upon, among other customary closing

conditions, the concurrent consummation of the Proposed Transactions.

The purpose of the Private Placements is to raise additional

capital for use by the combined company following the Closing.

the Closing, in addition to the Aggregate Cash Consideration and Aggregate Stock Consideration, the holders of AvePoint Preferred

Stock, AvePoint Common Stock and AvePoint Options shall be issued additional shares of Apex Common Stock, as follows:

(a) 1,000,000 shares of Apex Common Stock, in the aggregate, if at any time from and after the Closing

through the seventh anniversary thereof (x) the Closing Price is greater than or equal to $12.50 over any 20 Trading Days within

any 30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which results in the stockholders of Apex having the

right to exchange their shares for cash, securities or other property having a value equaling or exceeding $12.50 per share (the

“First Milestone”) (such 1,000,000 shares of Apex Common Stock, the “First Milestone Contingent Consideration”);

(b) 1,000,000 shares of Apex Common Stock, in the aggregate, if at any time from and after the Closing

through the seventh anniversary thereof (x) the Closing Price is greater than or equal to $15.00 over any 20 Trading Days within

any 30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which results in the stockholders of Apex having the

right to exchange their shares for cash, securities or other property having a value equaling or exceeding $15.00 per share (the

“Second Milestone”) (such 1,000,000 shares of Apex Common Stock, the “Second Milestone Contingent Consideration”);

through the seventh anniversary thereof (x) the Closing Price is greater than or equal to $17.50 over any 20 Trading Days within

any 30 Trading Day period or (y) Apex consummates a Subsequent Transaction, which results in the stockholders of Apex having the

right to exchange their shares for cash, securities or other property having a value equaling or exceeding $17.50 per share (the

“Third Milestone”) (such 1,000,000 shares of Apex Common Stock, the “Third Milestone Contingent Consideration”

and together with the First Milestone Contingent Consideration and the Second Milestone Contingent Consideration, the “Contingent

Consideration”).

For the avoidance of doubt, the maximum amount of the Contingent Consideration is 3,000,000 shares of Apex

Common Stock, in the aggregate.

parties to the Business Combination Agreement have made customary representations, warranties and covenants, including, among

others, with respect to the conduct of the businesses of AvePoint and Apex during the period between execution of the Business

Combination Agreement and the consummation of the Business Combination

of Operations

have neither engaged in any operations nor generated any revenues to date.

Our only activities from inception to December 31,

2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, following

the Initial Public Offering, identifying a target company for a Business Combination and completing activities related to the

Business Combination Agreement.

We do not expect to generate any operating revenues until after the completion of our initial

Business Combination.

We generate non-operating income in the form of interest income on marketable securities held in the trust

We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),

as well as for due diligence expenses in connection with completing a Business Combination.

the year ended December 31, 2020, we had a net loss of $4,251,085, which consisted of operating costs of $5,309,612, franchise

taxes of $201,196 and a provision for income taxes of $411,315 offset by interest earned on marketable securities held in the

Trust Account of $1,671,038

the period from April 5, 2019 (inception) through December 31, 2019, we had a net income of $900,810, which consisted of interest

earned on marketable securities held in the Trust Account of $1,809,163, offset by operating costs of $295,109, franchise taxes

of $295,342 and a provision for income taxes of $317,902.

and Capital Resources

September 19, 2019, we consummated the Initial Public Offering of 35,000,000 Units, which included the partial exercise by the

underwriters of the over-allotment option to purchase an additional 4,500,000 Units, at $10.00 per Unit, generating gross proceeds

of $350,000,000.

Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 810,000 Placement

Units to our Sponsor and Cantor at a price of $10.00 per Unit, generating gross proceeds of $8,100,000.

the Initial Public Offering, the exercise of the over-allotment option and the sale of the Placement Units, a total of $350,000,000

was placed in the trust account.

We incurred $19,806,442 in transaction costs, including $6,100,000 of underwriting fees, $13,150,000

of deferred underwriting fees and $556,442 of other offering costs.

the year ended December 31, 2020, cash used in operating activities was $2,419,063.

Net loss of $4,251,085 was affected by interest

earned on marketable securities held in the trust account of $1,671,038 and changes in operating assets and liabilities, which

provided $3,503,060 of cash from operating activities.

the period from April 5, 2019 (inception) through December 31, 2019, cash used in operating activities was $473,748.

of $900,810 was offset by interest earned on marketable securities held in the Trust Account of $1,809,163 and changes in operating

assets and liabilities, which provided $434,605 of cash from operating activities.

of December 31, 2020, we had cash and marketable securities of $351,858,320 held in the trust account.

Interest income on the

balance in the trust account may be used by us to pay taxes.

During the year ended December 31, 2020, we withdrew $1,621,881 of

interest earned on the trust account to pay for our franchise tax obligations.

We intend to use substantially all of the funds

held in the trust account, including any amounts representing interest earned on the trust account (less deferred underwriting

commissions) to complete our initial Business Combination.

To the extent that our capital stock or debt is used, in whole or in

part, as consideration to complete our initial Business Combination, the remaining proceeds held in the trust account will be

used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our

growth strategies.

of December 31, 2020, we had cash of $197,628 held outside of the trust account.

We intend to use the funds held outside the trust

account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses,

travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners,

review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business

order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor

or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be

If we complete a Business Combination, we would repay such loaned amounts.

In the event that a Business Combination

does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no

proceeds from our trust account would be used for such repayment.

Up to $1,500,000 of such loans may be convertible into units

identical to the Placement Units, at a price of $10.00 per unit at the option of the lender.

do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business.

if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination

are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to

our initial Business Combination.

Moreover, we may need to obtain additional financing either to complete our initial Business

Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial

Business Combination, in which case we may issue additional securities or incur debt in connection with such initial Business

Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with

the completion of our initial Business Combination.

If we are unable to complete our initial Business Combination because we do

not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.

following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order

to meet our obligations.

have until September 19, 2021 to consummate a Business Combination.

It is uncertain that we will be able to consummate a Business

Combination by this time.

If a Business Combination is not consummated by this date, there will be a mandatory liquidation and

subsequent dissolution.

Management has determined that the mandatory liquidation, should a Business Combination not occur, and

potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern.

No adjustments have

been made to the carrying amounts of assets or liabilities should we be required to liquidate after September 19, 2021.

Sheet Financing Arrangements

have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020.

We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often

referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet

arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities,

guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an

agreement to pay an affiliate of our Sponsor a monthly fee of $15,000 for office space, utilities and secretarial and administrative

support to us.

We began incurring these fees on September 16, 2019 and will continue to incur these fees monthly until the earlier

of the completion of the initial Business Combination and our liquidation.

underwriters are entitled to a deferred fee of $13,150,000.

The deferred fee will become payable to the underwriters from the

amounts held in the trust account solely in the event that we complete a Business Combination, subject to the terms of the underwriting

of Consolidation

accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiary where the

Company has the ability to exercise control.

All significant intercompany balances and transactions have been eliminated in consolidation.

Activities in relation to the noncontrolling interest are not considered to be significant and are, therefore, not presented in

the accompanying consolidated statements.

Accounting Policies

preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income

and expenses during the periods reported.

Actual results could materially differ from those estimates.

A Common Stock Subject to Possible Redemption

account for our common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standards

Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities

from Equity.”

Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and

are measured at fair value.

Conditionally redeemable common stock (including common stock that feature redemption rights that

is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within

our control) is classified as temporary equity.

At all other times, common stock is classified as stockholders’

Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence

of uncertain future events.

Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary

equity, outside of the stockholders’

equity section of our balance sheets.

Income (Loss) per Common Share

apply the two-class method in calculating earnings per share.

Net income per common share, basic and diluted for Class A

redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes,

by the weighted average number of shares of Class A redeemable common stock outstanding for the periods presented.

loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing net income

less income attributable to Class A redeemable common stock, by the weighted average number of shares of Class

A and Class B non-redeemable common stock outstanding for the periods presented.

Accounting Standards

does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material

effect on our consolidated financial statements.

2021 Business Highlights

Grew total ARR 34% year-over-year to $159.2 million;

Increased dollar-based net retention rate to 110%, up 3 percentage points year-over-year;

Eclipsed 2,800 total channel partners in 2021, of which, roughly three quarters are managed service providers (MSPs).

AvePoint’s channel presence has further expanded to include over 100 cloud marketplaces and distributors across 7 continents;

Expanded cloud user base to 9.4 million, up 34% from 7.0 million as of December 31, 2020;

Recognized as a Leader in The Forrester New Wave:

SaaS Application Data Protection, Q4 2021 Report.

According to the report, AvePoint offers strong capabilities in Microsoft 365, Google Workspace and Salesforce backup capabilities, and was the only vendor to receive a differentiated rating in all three criteria.

Our goal is to be the catalyst of business transformation by empowering organizations with relevant technologies that are efficient, secure, and well governed.

We help transform data and collaboration so users can be more productive with the latest cloud services (like Microsoft 365 (" M365 ")), and drive efficiency in delivery and management of those services for service providers.

Our strategy is focused on supporting cloud and hybrid cloud customers and partners as they transition to and mature their cloud deployments.

We do this through our Confidence Platform, a SaaS platform that assists organizations who use M365 and more than a half dozen cloud collaboration platforms.

The Confidence Platform (built on “

AvePoint Online Services ”

or " AOS ") supports the collaboration of 8 million users across 7 continents with a scalable, secure, and intelligent architecture.

The 2021 Business Combination

On November 23, 2020, Legacy AvePoint and the members of the Apex Group entered into the Business Combination Agreement.

The Business Combination by and among Legacy AvePoint and the members of the Apex Group was effected on July 1, 2021 by the merger of Athena Technology Merger Sub, Inc. (" Merger Sub 1 ") with and into Legacy AvePoint (the “

First Merger ”), with Legacy AvePoint surviving the First Merger as a wholly-owned subsidiary of Apex, and promptly following the First Merger, Legacy AvePoint was merged with and into Athena Technology Merger Sub 2, LLC (" Merger Sub 2 ") (the “

Second Merger ”), with Merger Sub 2 surviving the Second Merger (the “

Surviving Entity ”) as a wholly-owned subsidiary of Apex (the Second Merger together with the First Merger, the “

Mergers ”).

Following the consummation of the Mergers, the Surviving Entity changed its name to AvePoint US, LLC and Apex changed its name to AvePoint, Inc.

(hereinafter referred to as “

AvePoint ,”

" us ," or “

our ”).

On July 26, 2021, AvePoint US, LLC was merged with and into AvePoint, with AvePoint surviving.

The Business Combination is accounted for as a reverse recapitalization.

We are the accounting predecessor and we are the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in our future periodic reports filed with the SEC.

Under this method of accounting, Apex is treated as the acquired company for financial statement reporting purposes.

The most significant change in the successor’s subsequent reported financial position and results reflect the net increase in cash of approximately $204.5 million, including $140 million in gross proceeds from the PIPE by Apex.

Total transaction costs were approximately $56.2 million. See the section of this Annual Report titled “

Consolidated Financial Statements ”

for additional information.

As a result of the Business Combination, we are the successor to an SEC-registered and Nasdaq-listed company, which has required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We have incurred and expect to continue to incur additional annual expenses as a public company for, among other things, directors’

and officers’

liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees

Capitalized terms used but not defined in this section under the heading "The 2021 Business Combination" are defined in the section titled “

Business - 2021 Consummation of the Business Combination”

(Part I, Item 1 of this Annual Report).

Key Business Metrics

Our management reviews the following key business metrics to measure our performance, identify trends affecting our business, formulate business plans, make strategic decisions, and to make informed decisions regarding the allocation of our resources.

We disclose key business metrics within the MD&A and elsewhere in this Annual Report to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services.

Our key business metrics are fundamentally interconnected and indicative of how customers use our products and services.

However, increases or decreases in our key business metrics may not correspond with increases or decreases in our revenue.

The chart below illustrates certain of our key business metrics, each described in more detail below, as of the end of or for the periods presented.

Our key business metrics are further discussed in the section titled “

Notes to Consolidated Financial Statements ”

(Part II, Item 8 of this Annual Report).

Total ARR ($ in mil)

Core TTM dollar-based net retention rate

Annual Recurring Revenue

We calculate our annual recurring revenue (“

ARR ”) at the end of a particular period as the annualized sum of contractually obligated Annual Contract Value (“

ACV ”) from SaaS, term license and support, and maintenance revenue sources, with the exception of migration products, from all customers with a contract duration exceeding three months (such customers, our “

Core ”

customers, and such ARR, our “

Core ARR ”), and the product of the current month’s monthly recurring revenue (“

MRR ”) multiplied by twelve (to prospectively annualize SaaS and term license and support revenue).

ARR also includes some recurring professional services revenue, such as recurring TAM services.

MRR is attributable to our Channel business, and MRR-contributing customers are classified as customers with a contract duration of 3 months or less.

As of December 31, 2021 and December 31, 2020, our Channel business was transacting the equivalent of $9.4 million and $4.2 million in ARR, respectively, calculated as December’s MRR multiplied by twelve months.

Customer contracts used in calculating MRR may or may not be extended or renewed by our customers.

Growth in ARR is driven by both new business and the retention of existing business.

We believe ARR is indicative of growth in recurring revenue streams, leading to higher revenue growth in future periods.

ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items.

ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers (the same is true for those contracts used in calculating MRR, which may or may not be extended or renewed by the customer).

Core TTM Dollar-Based Net Retention Rate

We use a trailing twelve-month (" TTM ") dollar-based net retention rate to evaluate our ability to maintain and expand our revenue with our customer base over time. 

Core TTM Dollar-Based Net Retention Rate ”

as of a period end is calculated by starting with the ARR from the cohort of all Core customers as of 12 months prior to such period end (the “

Prior Period ARR ”).

We then calculate the ARR from these same Core customers as of the current period end (the “

Current Period ARR ”).

Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period.

We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the Core TTM Dollar-Based Net Retention Rate.

A Core TTM Dollar-Based Net Retention Rate greater than 100% implies positive net revenue retention.

We believe this Core TTM Dollar-Based Net Retention Rate metric is indicative of our ability to grow our relationships with existing customers, and further grow ARR and revenue.

Improvement in this metric is driven by improvement in both customer retention, as well as cross-sell and up-sell capabilities.

Components of Results of Operations

We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance across a variety of products.

SaaS revenue sources are generated from our cloud-based solutions.

Term license and support revenue sources are similar to SaaS revenue sources with the exception that term licenses and support are generated from the sales of on-premise or hybrid licenses which include a distinct support component.

Both SaaS and term license and support revenue sources are primarily billed annually, apart from our Channel business.

SaaS and term license and support are generally sold per user license or based upon the amount of data protected.

Services revenue includes revenue generated from implementation, training, consulting, migration, license customization and managed services.

Services revenue from implementation, training, consulting, migration, and license customization are recognized by applying a measure of progress, such as labor hours to determine the percentage of completion of each contract.

These offerings are not inherently recurring in nature and as such are subject to more period-to-period volatility than other elements of our business.

Services revenue from managed services are recognized ratably or on a straight-line basis over the contract term.

Maintenance revenue is a result of selling on-going support for perpetual licenses.

It also includes recurring professional services such as TAM.

Maintenance revenue is recognized ratably over the term of the maintenance agreement, which is typically one year.

Over time, we expect SaaS and term license and support revenue will increase as a percentage of total revenue and more closely reflect our bookings mix as it continues to focus on increasing SaaS and term license and support revenue as a key strategic priority.

Cost of Revenue

Cost of SaaS and cost of term license and support consists of all direct costs to deliver and support our SaaS and term license and support products, including salaries, benefits and related expenses, allocated overhead, and third-party hosting fees related to our cloud services.

We recognize these expenses as they are incurred.

We expect that these costs will increase in absolute dollars but may fluctuate as a percentage of SaaS and term license and support revenue from period to period.

Cost of maintenance consists of all direct costs to support our perpetual license products, including salaries, benefits, stock-based compensation and related expenses and allocated overhead.

We recognize these expenses as they are incurred.

We expect that cost of maintenance revenue will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue.

Cost of services consists of salaries, benefits, stock-based compensation and related expenses for our services organization, allocated overhead and IT necessary to provide services for our customers.

We recognize these expenses as they are incurred.

Gross Profit and Gross Margin

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue.

Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services for our cloud-based subscriptions, and the extent to which we expand our customer support and services organizations.

We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors but should increase in the long term as our product mix continues to shift in favor of SaaS and term license and support revenue.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related expenses for sales, marketing and customer success personnel, stock-based compensation expense, sales commissions, marketing programs, travel-related expenses, and allocated overhead costs.

We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand.

Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers.

We plan to continue our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT, stock-based compensation expense, external professional services, allocated overhead costs and other administrative functions.

Our general and administrative expenses have increased as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services.

Research and Development

Research and development expenses consist primarily of personnel-related expenses incurred for our engineering, product and design teams, stock-based compensation expense and allocated overhead costs.

We have a research and development presence in the United States, China, and Vietnam.

This provides a strategic advantage, allowing us to efficiently invest in both new product development and increasing our existing product capabilities.

We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions.

Other Income (Expense)

Other income (expense), net consists primarily of fair value adjustments on earn-out and warrant liabilities.

In addition to fair value adjustment, other income (expense), net also consists of foreign currency remeasurement gains/losses partially offset by interest income on corporate funds invested in money market instruments and highly liquid short-term investments.

We are subject to income taxes in the U.S.

(federal and state) and numerous foreign jurisdictions.

Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions.

The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States.

Accordingly, our effective tax rate could be affected by the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate.

Results of Operations

The following table summarizes our historical consolidated statement of operations data for the periods indicated.

The period-to-period comparison of operating results is not necessarily indicative of results for future periods.

Year Ended December 31,

(in thousands)

Total revenue

Total cost of revenue (1)

Operating expenses:

Sales and marketing (1)

General and administrative (1)

Research and development (1)

Depreciation and amortization

Total operating expenses

Loss from operations

Other income (expense), net

Loss before income taxes

Income tax expense

Stock-based compensation for the periods was included in the following line items:

Year Ended December 31,  

(in thousands)

Cost of revenue

Sales and marketing

General and administrative

Research and development

Total stock-based compensation

Comparison of the Years Ended December 31, 2021, and December 31, 2020 

The components of our revenue during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Term license and support

Perpetual license

Total revenue

Revenue increased $40.4 million, or 26.6%, from $151.5 million for the year ended December 31, 2020 to $191.9 million for the year ended December 31, 2021, primarily as a result of an increase in SaaS and term license and support revenue.

Revenue from our SaaS offerings increased $33.5 million, or 64.3%, from $52.1 million for the year ended December 31, 2020 to $85.6 million for the year ended December 31, 2021.

Revenue from our term license and support offerings increased $12.0 million, or 30.9%, from $38.9 million for the year ended December 31, 2020 to $51.0 million for the year ended December 31, 2021.

The growth in revenue is primarily attributable to AvePoint’s investment in our global sales teams and increases in our marketing efforts driving sales of new customers. 

Another meaningful factor was the increase in our net retention rate, indicating that existing customers continued to provide more revenue from us than in past periods. 

This increase is attributable in our customer success organizations as well as research and development efforts to produce new products and product features.

The increases attributable to SaaS and term license and support revenue were offset by a decrease in service, maintenance, and perpetual license revenue.

Our services offerings decreased $2.2 million, or 6.5%, from $34.1 million for the year ended December 31, 2020 to $31.9 million for the year ended December 31, 2021.

Our maintenance offerings decreased $2.4 million, or 10.4%, from $23.5 million for the year ended December 31, 2020 to $21.0 million for the year ended December 31, 2021. Our perpetual license offerings decreased $0.5 million, or 16.9%, from $2.9 million for the year ended December 31, 2020 to $2.4 million for the year ended December 31, 2021. Services revenue is derived from services offerings related to software implementation, training, migration, customized solutions and managed services.

Our revenue from maintenance and perpetual license revenue is expected to continue to trend downward period over period.

This is driven from multiple strategic decisions to shift away from the sale of perpetual licenses and towards SaaS and term licenses.

The fundamental shift by our customers to the cloud has accelerated the adoption of our SaaS offerings.

This increased adoption rate is evidenced by the shift in bookings towards SaaS offerings from perpetual license and term license and support bookings.

Beginning in 2016, we shifted our focus from a perpetual license model to a subscription pricing model.

Over the last several years, we have experienced a gradual decline in sales of perpetual licenses, followed by a corresponding decline in maintenance revenue.

In contrast, we have experienced a rapid increase in SaaS and term license and support sales and corresponding revenue.

Term license and support revenue for the years ended

December 31, 2021 and

2020 includes

$37.3 million and

$29.5 million of revenue recognized at a point of time, respectively.

Revenue by geographic region during the years ended December 31, 2021 and 2020 was as follows:

(dollars in thousands)

United States

From the year ended December 31, 2020 to the year ended December 31, 2021, United States experienced a $15.2 million increase in revenue driven by a $20.1 million increase in SaaS and term license and support revenue, partially offset by a $3.4 million decrease in services revenue, a $1.2 million decrease in maintenance revenue and a $0.3 million decrease in perpetual license revenue.

EMEA experienced a $15.8 million increase in revenue driven by an $18.3 million increase in SaaS and term license and support revenue and $0.2 million increase in perpetual license, partially offset by a $1.6 million decrease in services revenue and a $1.1 million decrease in maintenance revenue.

APAC experienced a $9.3 million increase in revenue driven by a $7.1 million increase in SaaS and term license and support revenue and a $2.8 million increase in services revenue, partially offset by a $0.5 million decrease in perpetual license revenue. The overall decrease in services and maintenance revenue in United States, German and other locations is due to our continued shift towards SaaS and term license and support offerings, while the increase in perpetual license revenue in German and Singapore is a result of an increase in one-time sales of perpetual licenses.

The increase in SaaS, term license and support and maintenance revenue offerings in Japan is a result of increased bookings in the location, while the decrease in perpetual license revenue is a result of the strategic shift away from perpetual license offerings.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Cost of revenue:

Term license and support

Total cost of revenue

GAAP cost of revenue

Stock-based compensation expense

Non-GAAP cost of revenue

Non-GAAP gross profit

Non-GAAP gross margin

Cost of revenue increased $12.4 million, or 30.7%, from $40.3 million for the year ended December 31, 2020 to $52.7 million for the year ended December 31, 2021.

Stock-based compensation contributed $2.9 million of the increase primarily as a result of a one-time compensation expense relating to stock-based compensation awards to a group of our longstanding employees as a result of becoming a public company.

The remaining $9.5 million increase was driven primarily by higher hosting costs resulting from increased SaaS revenue and higher service costs associated with a greater number of customization services which typically incur higher costs.

Operating Expenses

Sales and Marketing

Sales and marketing expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Sales and marketing

Percentage of revenue

GAAP sales and marketing

Stock-based compensation expense

Non-GAAP sales and marketing

Non-GAAP percentage of revenue

Sales and marketing expenses increased $24.0 million, or 31.3%, from $76.5 million for the year ended December 31, 2020 to $100.5 million for the year ended December 31, 2021.

Stock-based compensation decreased by $4.1 million primarily as a result of a reduction of mark-to-market fair value on liability classified awards in the first half of 2021 compared to mark-to-market fair value on liability classified awards in 2020.

The primary drivers of the remaining $28.0 million increase consisted of increases in personnel and marketing costs.

Personnel costs, which comprised approximately $21.0 million of the increase, were driven by compensation and benefits increases related to the increases in headcount across global sales and marketing teams.

Of the remaining $7.0 million of increases, the majority of the increase was driven by expanded marketing campaigns throughout 2021.

General and Administrative

General and administrative expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

General and administrative

Percentage of revenue

GAAP general and administrative

Stock-based compensation expense

Non-GAAP general and administrative

Non-GAAP percentage of revenue

General and administrative expenses increased $22.3 million, or 60.6%, from $36.9 million for the year ended December 31, 2020 to $59.2 million for the year ended December 31, 2021.

Stock-based compensation contributed $11.1 million of the increase as a result of a one-time compensation expense relating to existing stock-based compensation awards to a group of our international employees, unfavorable mark-to-market adjustments on liability classified awards in the first half of 2021 compared to mark-to-market adjustment on liability classified awards in 2020, and recognition of compensation expense for our Q3 2021 stock-based awards.

The primary drivers of the remaining $11.2 million increase consisted of increases in professional service, personnel, and insurance costs. Approximately 38% of the increase in general and administrative costs was due to increases in professional service costs, largely as a result of increased consumption of legal and consulting services due to the public listing of our securities in Q3 2021.

The increase in personnel costs, which made up approximately 29% of the increase, was driven by higher headcount required as we continue to expand and due to additional need for legal, finance and administrative personnel as we transitioned to become a publicly traded company.

Insurance increases, primarily related to increased coverage needed as a publicly traded company, made up approximately 14% of the increase. The remaining difference was driven by various general and administrative costs as we continue to expand our operations.

Research and Development

Research and development expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Research and development

Percentage of revenue

GAAP research and development

Stock-based compensation expense

Non-GAAP research and development

Non-GAAP percentage of revenue

Research and development expenses increased $19.6 million, or 160.3%, from $12.2 million for the year ended December 31, 2020 to $31.8 million for the year ended December 31, 2021.

Stock-based compensation represented the primary driver of the change, contributing approximately $15.8 million of the increase primarily as a result of a one-time compensation expense relating to existing stock-based compensation awards to a group of our international employees. 

The primary driver of the remaining $3.8 million increase resulted from higher compensation costs for research and development personnel as we seek to expand development of new offerings and improvements to existing offerings.

Income Tax Provision

Income tax provision during the years ended December 31, 2021 and 2020 was as follows:

(dollars in thousands)

Income tax expense

Our income tax expense for the year ended December 31, 2021 was $0.5 million as compared to the income tax expense of $1.1 million for the year ended 2020. The effective tax rate which equals the income tax provision divided by income from continuing operation was (1.42)% for the year ended December 31, 2021 compared to (6.7)% for the year ended December 31, 2020. The change in effective tax rates for the year ended December 31, 2021 as compared to the year ended December 31, 2020 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates or tax losses for which no benefit can be taken in 2020, changes in the valuation allowance, and non-deductible equity compensation, offset by deductible transaction related expenses and non-taxable gain from change in earn out liability fair value.

Certain Non-GAAP Financial Measures

We believe that, in addition to our financial results determined in accordance with GAAP, non-GAAP operating income and non-GAAP operating margin are useful in evaluating our business, results of operations, and financial condition.

Non-GAAP operating income and non-GAAP operating margin should not be considered as an alternative to operating income, operating margin or any other performance measures derived in accordance with GAAP as measures of performance.

Non-GAAP operating income and non-GAAP operating margin should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Non-GAAP Operating Income and Non-GAAP Operating Margin

Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance.

We define non-GAAP operating income as GAAP operating loss plus stock-based compensation.

We define non-GAAP operating margin as non-GAAP operating income divided by revenue.

We believe non-GAAP operating income and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics eliminate the effects of stock-based compensation which has had historical volatility from period to period due to marked-to-market securities. 

The elimination of the effect of variability of stock-based compensation expense, which is a non-cash expense, provides a better representation as to the overall operating performance of the company. 

We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to our peers, (b) to set and approve spending budgets, (c) to allocate resource, (d) to measure operational profitability and the accuracy of forecasting, (e) to assess financial discipline over operational expenditures.

GAAP operating margin for the years ended December 31, 2021 and 2020 was (27.9)% and (12.3)%, respectively.

Non-GAAP operating margin for the years ended December 31, 2021 and 2020 was 3.1% and 12.1%, respectively. 

The reduction in non-GAAP operating margin was primarily attributable to the significant investment in the business during late 2020 and through 2021 as well as a of increased expenses related to becoming a publicly traded company.

The following table presents a reconciliation of non-GAAP operating income from the most comparable GAAP measure, operating income, for the periods presented:

(dollars in thousands)

Loss from operations

Margin from operations

Stock-based compensation

Non-GAAP operating income

Non-GAAP operating margin

Liquidity and Capital Resources

As of December 31, 2021, we had an accumulated deficit of $375.3 million, $268.2 million in cash and cash equivalents and $2.4 million in short-term investments.

Historically, we have from time to time financed our operations with proceeds from the sale of preferred stock and other equity instruments.

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation.

Prior to 2020, we generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows.

We may continue to incur operating losses and negative cash flows from operations in the future and may require additional capital resources to execute strategic initiatives to grow our business.

Our long-term capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, and the timing of new product introductions.

Refer to " Note 10 - Commitments and Contingencies " for more information regarding the purchase commitments.

We believe that our existing cash and cash equivalents, our cash flows from operating activities, and our borrowing capacity under our credit facility with HSBC, described below, will be sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least the next twelve months.

In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing.

The sale of additional equity would be dilutive to our stockholders.

Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants. 

The following table sets forth a summary of our cash flows for the periods indicated.

(in thousands)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Operating Activities

provided by operating activities for the year ended

December 31, 2021 was

$5.0 million, reflecting our

net loss of

$33.2 million, adjusted for non-cash items of

$39.9 million and net cash

outflows of

$1.6 million from changes in our operating assets and liabilities.

The primary drivers for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, mark to market adjustments on earnout and warrant liabilities and changes in deferred tax assets as a result of timing differences in tax related to stock option awards.

The primary drivers of changes in operating assets and liabilities related to an increase in accounts receivable due primarily to timing of payments from customers and an increase in prepaid expenses and other current assets primarily related to prepaid insurance in Q3 2021 and an estimated tax payment in Q2 2021, partially offset by an increase in accounts payable and accrued expenses primarily due to billings related to professional services and an increase in deferred revenue due to continued increases in sales of our SaaS offerings which result in increased up-front payments.

Net cash 

provided by operating activities for the year ended

December 31, 2020 was 

$19.1 million, reflecting our

net loss of

$17.0 million, adjusted for non-cash items of

$34.8 million and net cash

inflows of

$1.3 million provided by changes in our operating assets and liabilities.

The primary drivers for non-cash items were stock-based compensation, which represented ongoing activity within the account, partially offset by deferred income taxes primarily due to the release of a valuation allowance in the first half of 2020.

The primary drivers of changes in operating assets and liabilities related to an increase in deferred revenue primarily due to continued increases in sales of our SaaS offerings which result in increased up-front payments and an increase in prepaid expenses and other current assets primarily due to timing of payments to suppliers, an increase in accounts receivable primarily due to timing of payments from customers.

Investing Activities

Net cash 

used in investing activities for the year ended

December 31, 2021 was

$3.4 million.

It consisted of $2.5 million of purchases of property and equipment and $1.4 million of purchases of short-term investments.

Net cash 

provided by investing activities for the year ended

December 31, 2020 was

$1.4 mill

It consisted of $2.4 million in maturities of short-term investments, partially offset by $1.0 million of purchases of property and equipment.

Financing Activities

provided by financing activities for the year ended

December 31, 2021 was

$198.6 million.

The primary driver of cash flows from financing activities was a result of the Business Combination, which resulted in a $441.6 million cash inflow, net of issuance costs paid immediately prior to the merger, partially offset by $130.9 million of cash outflows to Legacy AvePoint's preferred shareholders and $106.2 million of cash outflows to Legacy AvePoint's common shareholders.

Other cash flows from financing activities included $7.5 million of cash outflows to holders of Legacy AvePoint options, $3.0 million of cash outflows for Business Combination transaction costs paid directly by us, and $1.6 million of cash outflows related to Legacy AvePoint's purchase of pre-Business Combination Apex shares, which are now recorded as treasury stock.

These cash outflows were partially offset by $5.6 million of cash inflows from the proceeds collected upon exercise of stock options.

provided by financing activities for the year ended

December 31, 2020 was 

$35.6 million

It consisted primarily of proceeds from the issuance of Common Stock

, partially offset by payments made for the redemption of our Series B preferred stock.

Credit Facility

On April 7 2020, Legacy AvePoint entered into a loan and security agreement (the “

Loan Agreement ”) with HSBC Ventures Bank USA Inc.

HSBC ”), a commercial bank.

On July 1, 2021, Legacy AvePoint effected an assignment of its existing rights and obligations under the Loan Agreement to AvePoint US, LLC (which, at the time of the assignment, was a wholly-owned subsidiary of ours) through entry into a limited consent and first amendment to the Loan Agreement (the “

First Amendment ,”

and the Loan Agreement as amended thereby, the “

First Amended Loan Agreement ”) and an assignment and assumption agreement (the “

First Assignment and Assumption Agreement ”).

In addition, our Board approved the entry into a pledge agreement (the “

Pledge Agreement ”) and limited guaranty (the “

Limited Guaranty ”) in favor of HSBC, pursuant to which we pledged 100% of the AvePoint US, LLC equity held by us (the “

Pledged Equity ”) as collateral in support of the borrower’s obligations under the Amended Loan Agreement and further provided a payment guarantee to HSBC on behalf of AvePoint US, LLC equal to the value of the Pledged Equity and capped at the amount actually borrowed under the First Amended Loan Agreement.

On July 26, 2021, we effected a merger with AvePoint US, LLC, following the consummation of which we were the surviving entity (the “

Rollup Merger ”).

In connection therewith, on July 23, 2021, we entered into that certain second assignment and assumption agreement (the “

Second Assignment and Assumption Agreement ”) by and among us, AvePoint US, LLC, and HSBC, pursuant to which we would assume AvePoint US, LLC’s obligations as borrower under the First Amended Loan Agreement as of the effective time of the Rollup Merger (the “

Assumption ”).

We, the guarantors party to the Loan Agreement (the “

Guarantors ”), and HSBC also entered into that certain limited consent, dated as of July 23, 2021 (the “

Limited Consent ”), whereby HSBC consented to the Rollup Merger, the entry into the Second Assignment and Assumption Agreement, and the Assumption, and all other actions taken by or necessary or permissible to be taken by us, AvePoint US, LLC, or the Guarantors related thereto, whether occurring prior to, on, or after the effective time of the Rollup Merger.

On October 31, 2021, we entered into that certain Second Amendment (the " Second Amendment ") to the First Amended Loan Agreement.

The First Amended Loan Agreement as amended by the Second Amendment (the " Second Amended Loan Agreement ") provides for, among other things, completion of the Post-Closing Amendments (as defined in the Limited Consent) and the removal of "Holdings" (as defined in the First Amended Loan Agreement) as a limited guarantor of the Borrower's (as defined in the First Amended Loan Agreement) obligations under the First Amended Loan Agreement and the de facto termination of the Pledge Agreement and Limited Guaranty.

The Second Amended Loan Agreement’s substantive economic terms were not amended from the original Loan Agreement, the substantive economic terms of which are described as follows:

a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw at our request.

Borrowings under the line bear interest at a rate equal to LIBOR plus 3.5%.

The line carries an unused fee of 0.5% per year.

The proceeds of borrowings under the Second Amended Loan Agreement will be used for general corporate purposes.

We, on a consolidated basis with our subsidiaries, are required to maintain a specified adjusted quick ratio, tested by HSBC each quarter.

Pursuant to the Second Amended Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Second Amended Loan Agreement.

Our line of credit under the Second Amended Loan Agreement will mature on April 7, 2023.

To date, we are in compliance with all covenants under the Second Amended Loan Agreement.

We have not at any time, including as of and for the fiscal year ending as of December 31, 2021, borrowed under the Second Amended Loan Agreement.

The descriptions of the Loan Agreement, the First Amendment, the Second Amendment, the First Amended Loan Agreement, the Second Amended Loan Agreement, the First Assignment and Assumption Agreement, the Second Assignment and Assumption Agreement, the Limited Consent, the Pledge Agreement, and the Limited Guaranty, are qualified in their entirety by the full text of the forms of such agreements, copies of which are attached hereto as Exhibits and are incorporated herein by reference.

Leasing Obligations

We are obligated under various non-cancelable operating leases for office space.

The initial terms of the leases expire on various dates through 2030.

During the years ended December 31, 2021 and 2020, total rent expense for facilities amounted to $6.4 million and $5.6 million, respectively.

As of December 31, 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.

Operating Segment Information

We operate in one segment.

Our products and services are sold throughout the world, through direct and indirect sales channels.

Our chief operating decision maker (the “

CODM ”) is our 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.

Note 15 –

Segment Information ”

(Part II, Item 8 of this Annual Report) for more information.

Critical Accounting Policies and Estimates

Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities.

We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that our management believes are reasonable under the circumstances.

The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.

While our significant accounting policies are described in more detail in the section titled “

Notes to Consolidated Financial Statements ”

(Part II, Item 8 of this Annual Report), we believe the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Revenue Recognition

We derive revenue from four primary sources:

SaaS, term license and support, services, and maintenance.

Many of our contracts with customers include multiple performance obligations.

Judgment is required in determining whether each performance obligation is distinct.

Our products and services generally do not require a significant amount of integration or interdependency;

therefore, our products and services are generally not combined.

We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price (“

SSP ”) for each performance obligation within each contract.

We use judgment in determining the SSP for products and services.

For substantially all performance obligations except term licenses, we are able to establish the SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers.

We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change.

Term license are sold only as a bundled arrangement that includes the rights to a term license and support.

In determining the SSP of license and support in a term license arrangement we applied observable inputs using the value relationship between support and term license, the value relationship between support and perpetual licenses, the average economic life of our products, software renewals rates and the price of the bundled arrangement in relation to the perpetual licensing approach.

Using a combination of the relative fair value method or the residual value method the SSP of the performance obligations in an arrangement was allocated to each performance obligation within a sales arrangement.

Company Earn-Out Shares

In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718.

"Note 13 —

Stock-Based Compensation" for more information regarding the Company Earn-Out RSUs.

In order to capture the market conditions associated with the Company Earn-Out Shares, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out Shares’

contractual life based on the appropriate probability distributions.

The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial.

The Monte Carlo model requires highly subjective assumptions including the expected volatility of the price of our common stock, and the expected term of the earn-out shares.

Impact of COVID-19 on Our Business

In the fiscal year ended December 31, 2021, the COVID-19 pandemic and related voluntary and government-imposed social and business restrictions have had, and will likely continue to have, a significant impact on global economic conditions, the environment in which we operate our business, and on our financial results.

We have seen a strong demand for our existing products, as well as products released during the pandemic as a result of our customers' need for security, governance, and collaboration in both remote and hybrid work settings.

During the fiscal year ended December 31, 2021, we experienced a 26.6% increase in revenue compared to the fiscal year ended December 31, 2020.

We believe that market volatility during the pandemic has caused organizations to accelerate their digital transformation priorities, as evidenced by increased cloud usage and demand for remote technology solutions among our customers.

This transformation requires advanced technology solutions and ample automation to support new organizational realities, all of which we are in a prime position to provide.

We remain focused on improving and investing in the products and services we offer to support our long-term growth while continuing to innovate and develop new products and services in response to customer needs, whether directly as a result of the COVID-19 pandemic or otherwise.

Although our business has not been adversely affected by the COVID-19 pandemic, and in fact has been positively affected by, among other things, our customers’

increased focus on our ability to provide multiple core services and products as solutions to pandemic-driven obstacles, the extent of the continuing impact of COVID-19 is uncertain and will depend on numerous factors outside of our control.

Refer to the section titled “

Risk Factors ”

(Part I, Item 1A of this Annual Report) for our consideration of risks related to COVID-19.

Economic Conditions, Challenges, and Risks

The markets for software and cloud-based services are dynamic and highly competitive.

Our competitors are developing new software while also deploying competing cloud-based services for consumers and businesses.

Customer preferences evolve rapidly, and choices in hardware, products, and devices can and do influence how users access services in the cloud, and in some cases, the user’s choice of which suite of cloud-based services to use.

We must continue to evolve and adapt over an extended time in pace with this changing environment.

The investments we are making in infrastructure, research and development, marketing, and geographic expansion will continue to increase our operating costs and may decrease our operating margins.

Our success is highly dependent on our ability to attract and retain qualified employees.

We hire a mix of university and industry talent worldwide.

We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.

Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic.

Recently, Russia initiated significant military action against Ukraine.

In response, the U.S.

and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S.

and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen.

It is not possible to predict the broader consequences of the conflict, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S.

and other countries in respect thereof as well as any counter measures or retaliatory actions by Russia or Belarus in response, including, for example, potential cyberattacks or the disruption of energy exports, is likely to cause regional instability, geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy.

The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.

Our international operations provide a significant portion of our total revenue and expenses.

Many of these revenue and expenses are denominated in currencies other than the U.S.

As a result, changes in foreign exchange rates may significantly affect revenue and expenses.

Refer to the section titled “

Risk Factors ”

(Part I, Item 1A of this Annual Report) for a discussion of these factors and other risks.

Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue against another (e.g.

comparing the fourth fiscal quarter of fiscal year 2020 against the first fiscal quarter of fiscal year 2021). Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’

fiscal year ends. The ongoing COVID-19 pandemic may have an impact on consumer behaviors and customer activities that may result in temporary changes to and increased fluctuations in the quarterly revenue of our business.

Additionally, new product and service introductions (including the timing of those introductions) can significantly impact revenue.

Revenue can also be affected when consumers and customers anticipate a product introduction.

Our operating expenses have generally increased sequentially due to increases in personnel in connection with the expansion of our business.

Emerging Growth Company Accounting Election

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 are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

We will be an emerging growth company at least until December 31, 2021.

As a result, we have elected to avail ourselves of the extended transition period and will take advantage of the benefits of the extended transition period emerging growth company status permits.

During the extended transition period, it may be difficult or impossible to compare our financial results with the financial results of another public company that complies with public company effective dates for accounting standard updates because of the potential differences in accounting standards used.

We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2024, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.07 billion, (c) the date on which we are deemed to be a “large accelerated filer”

under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

The next determination date as to whether we have satisfied the criteria set forth in the foregoing (b), (c), and (d) is the last day of our second fiscal quarter in 2022.

Recently Issued and Adopted Accounting Pronouncements

For information about recent accounting pronouncements, see Note 2 to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity