AvePoint, Inc. 10-K

Item 8. Financial Statements AND SUPPLEMENTARY DATA Index to Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 58 Consolidated Balance Sheets 59 Consolidated Statements of Operations 60 Consolidated Statements of Comprehensive Loss 61 Consolidated Statements of Mezzanine Equity and Stockholders’ Equity 62 Consolidated Statements of Cash Flows 65 Notes to Consolidated Financial Statements 66 57 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of AvePoint, Inc and its subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of AvePoint, Inc. and subsidiaries (the “ Company ” ) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, mezzanine equity and stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “ financial statements ” ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024, expressed an adverse opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition – Determination of Standalone Selling Prices — Refer to Note 2 to the financial statements Critical Audit Matter Description The Company’s revenue is derived from four primary sources: SaaS, term license and support, services, and maintenance. Many of the Company’s contractual arrangements with customers include multiple performance obligations. For such arrangements with multiple performance obligations, the Company allocates the aggregate transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. The Company applies judgment in determining SSP for each performance obligation. Term licenses 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, management utilizes observable inputs and considers the value relationship between support and term license when compared to the value relationship between support and perpetual licenses, the average economic life of their products, and software renewal rates. For substantially all of the Company’s other contractual arrangements with multiple performance obligations, the Company determines SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers. The Company typically establishes an SSP range for its products and services which is reassessed on a periodic basis or when facts and circumstances change. We identified the determination of SSP for products and services as a critical audit matter due to the judgement by management involved in the determination of SSP, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence related to management’s determination of SSP. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s SSP determinations included the following, among others: · We tested the effectiveness of controls over revenue recognition, which included controls associated with the Company’s methodology to determine SSP and the underlying data utilized in the application of the methodology. · We evaluated the appropriateness of the Company’s methodology to determine SSP in accordance with ASC 606, Revenue from Contracts with Customers . · We tested the accuracy of inputs utilized by the Company to determine SSP, which included selecting a sample of the Company’s transactional data used to determine SSP and agreeing relevant information to source documents. · We tested the completeness of the Company’s transactional data used to determine SSP by selecting a sample of previously recorded sales and agreeing relevant information into such transactional data. · We tested the mathematical accuracy of management’s calculations to determine SSP. /s/ Deloitte & Touche LLP New York, New York February 29, 2024 We have served as the Company’s auditor since 2021. 58 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except par value) December 31, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 223,162 $ 227,188 Short-term investments 3,721 2,620 Accounts receivable, net of allowance of $ 926 and $ 725 , respectively 85,877 66,474 Prepaid expenses and other current assets 12,824 10,013 Total current assets 325,584 306,295 Property and equipment, net 5,118 5,537 Goodwill 19,156 18,904 Intangible assets, net 10,546 11,079 Operating lease right-of-use assets 13,908 15,855 Deferred contract costs 54,675 48,553 Other assets 13,595 9,310 Total assets $ 442,582 $ 415,533 Liabilities, mezzanine equity, and stockholders’ equity Current liabilities: Accounts payable $ 1,384 $ 1,519 Accrued expenses and other current liabilities 53,766 47,784 Current portion of deferred revenue 121,515 93,405 Total current liabilities 176,665 142,708 Long-term operating lease liabilities 9,383 11,348 Long-term portion of deferred revenue 7,741 8,085 Earn-out shares liabilities 18,346 6,631 Other liabilities 5,603 3,607 Total liabilities 217,738 172,379 Commitments and contingencies (Note 12) Mezzanine equity Redeemable noncontrolling interest 6,038 14,007 Total mezzanine equity 6,038 14,007 Stockholders’ equity Common stock, $ 0.0001 par value; 1,000,000 shares authorized, 184,652 and 185,278 shares issued and outstanding as of December 31, 2023 and 2022, respectively 18 19 Additional paid-in capital 667,881 665,715 Treasury stock — ( 21,666 ) Accumulated other comprehensive income 3,196 2,006 Accumulated deficit ( 460,496 ) ( 416,927 ) Noncontrolling interest 8,207 — Total stockholders’ equity 218,806 229,147 Total liabilities, mezzanine equity, and stockholders’ equity $ 442,582 $ 415,533 See accompanying notes. 59 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share amounts) For the Year Ended December 31, 2023 2022 2021 Revenue: SaaS $ 160,961 $ 117,180 $ 85,580 Term license and support 52,744 57,214 50,970 Services 44,795 41,283 31,919 Maintenance 13,325 16,662 23,440 Total revenue 271,825 232,339 191,909 Cost of revenue: SaaS 35,924 27,313 19,118 Term license and support 1,946 2,006 963 Services 38,807 36,037 30,950 Maintenance 783 920 1,970 Total cost of revenue 77,460 66,276 53,001 Gross profit 194,365 166,063 138,908 Operating expenses: Sales and marketing 112,105 110,638 100,868 General and administrative 61,271 65,132 59,390 Research and development 36,340 31,359 32,141 Total operating expenses 209,716 207,129 192,399 Loss from operations ( 15,351 ) ( 41,066 ) ( 53,491 ) Other (expense) income, net ( 3,263 ) 7,416 20,703 Loss before income taxes ( 18,614 ) ( 33,650 ) ( 32,788 ) Income tax expense 2,887 5,038 457 Net loss $ ( 21,501 ) $ ( 38,688 ) $ ( 33,245 ) Net income attributable to noncontrolling interest ( 224 ) ( 2,942 ) ( 1,974 ) Net loss attributable to AvePoint, Inc. $ ( 21,725 ) $ ( 41,630 ) $ ( 35,219 ) Deemed dividends on preferred stock — — ( 32,928 ) Net loss available to common stockholders $ ( 21,725 ) $ ( 41,630 ) $ ( 68,147 ) Basic and diluted loss per share $ ( 0.12 ) $ ( 0.23 ) $ ( 0.48 ) Basic and diluted shares used in computing loss per share 182,257 181,957 141,596 See accompanying notes. 60 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Comprehensive Loss (In thousands) For the Year Ended December 31, 2023 2022 2021 Net loss $ ( 21,501 ) $ ( 38,688 ) $ ( 33,245 ) Other comprehensive income (loss) net of taxes Unrealized gain on available-for-sale securities 100 — — Foreign currency translation adjustments 1,104 ( 250 ) 463 Total other comprehensive income (loss) 1,204 ( 250 ) 463 Total comprehensive loss $ ( 20,297 ) $ ( 38,938 ) $ ( 32,782 ) Comprehensive income attributable to noncontrolling interest ( 238 ) ( 3,003 ) ( 1,911 ) Total comprehensive loss attributable to AvePoint, Inc. $ ( 20,535 ) $ ( 41,941 ) $ ( 34,693 ) See accompanying notes. 61 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Mezzanine Equity and Stockholders’ Equity For the Year Ended December 31, 2023, 2022 and 2021 (In thousands, except share amounts) Redeemable Total Accumulated Noncontrolling Mezzanine Additional Other Total Interest Equity Common Stock Paid-In Treasury Stock Accumulated Comprehensive Noncontrolling Stockholders’ Amount Amount Shares Amount Capital Shares Amount Deficit Income Interest Equity Balance, December 31, 2022 $ 14,007 $ 14,007 185,277,588 $ 19 $ 665,715 4,189,750 $ ( 21,666 ) $ ( 416,927 ) $ 2,006 $ — $ 229,147 Proceeds from exercise of options — — 2,840,716 — 5,569 — — — — — 5,569 Common stock issued upon vesting of restricted stock units — — 3,253,130 — — — — — — — — Stock-based compensation expense — — — — 36,048 — — — — — 36,048 Accretion of redeemable noncontrolling interest 212 212 — — — — — ( 212 ) — — ( 212 ) Reclassification of redeemable noncontrolling interest in MaivenPoint Pte. Ltd. (1) ( 8,148 ) ( 8,148 ) — — — — — — — 8,148 8,148 Reclassification of earn-out RSUs to earn-out shares — — — — ( 567 ) — — — — — ( 567 ) Repurchase of common stock — — ( 6,719,032 ) — — 6,719,032 ( 39,063 ) — — — ( 39,063 ) Retirement of common stock — — — ( 1 ) ( 38,884 ) ( 10,908,782 ) 60,729 ( 21,844 ) — — — Comprehensive income (loss): Net income (loss) (38 ) (38 ) — — — — — ( 21,513 ) — 50 ( 21,463 ) Unrealized gain on available-for-sale securities — — — — — — — — 100 — 100 Foreign currency translation adjustments 5 5 — — — — — — 1,090 9 1,099 Balance, December 31, 2023 $ 6,038 $ 6,038 184,652,402 $ 18 $ 667,881 — $ — $ ( 460,496 ) $ 3,196 $ 8,207 $ 218,806 62 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Mezzanine Equity and Stockholders’ Equity For the Year Ended December 31, 2023, 2022 and 2021 (In thousands, except share amounts) Redeemable Total Accumulated Noncontrolling Mezzanine Additional Other Total Interest Equity Common Stock Paid-In Treasury Stock Accumulated Comprehensive Stockholders’ Amount Amount Shares Amount Capital Shares Amount Deficit Income Equity Balance, December 31, 2021 $ 5,210 $ 5,210 181,821,767 $ 18 $ 625,056 143,564 $ (1,739 ) $ (375,297 ) $ 2,317 $ 250,355 Proceeds from exercise of options — — 1,799,665 — 2,818 — — — — 2,818 Common stock issued upon vesting of restricted stock units — — 1,784,993 — — — — — — — Common stock issued upon acquisition — — 324,845 — 1,517 — — — — 1,517 Common stock issued for canceled officer awards — — 3,592,504 1 (1 ) — — — — — Stock-based compensation expense — — — — 37,210 — — — — 37,210 Issuance of redeemable noncontrolling interest in MaivenPoint Pte. Ltd. (1) 5,794 5,794 — — — — — — — — Reclassification of earn-out RSUs to earn-out shares — — — — ( 885 ) — — — — ( 885 ) Repurchase of common stock — — ( 4,046,186 ) — — 4,046,186 ( 19,927 ) — — ( 19,927 ) Comprehensive income (loss): Net loss — — — — — — — ( 38,688 ) — ( 38,688 ) Net income attributable to and accretion of redeemable noncontrolling interest 2,942 2,942 — — — — — ( 2,942 ) — ( 2,942 ) Foreign currency translation adjustments 61 61 — — — — — — ( 311 ) ( 311 ) Balance, December 31, 2022 $ 14,007 $ 14,007 185,277,588 $ 19 $ 665,715 4,189,750 $ ( 21,666 ) $ ( 416,927 ) $ 2,006 $ 229,147 63 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Mezzanine Equity and Stockholders’ Equity For the Year Ended December 31, 2023, 2022 and 2021 (In thousands, except share amounts) Redeemable Share Redeemable Total Accumulated Convertible Common Based Noncontrolling Mezzanine Additional Other Total Preferred Stock Shares Awards Interest Equity Common Stock Paid-In Treasury Accumulated Comprehensive Stockholders’ Shares Amount Amount Amount Amount Amount Shares Amount Capital Stock Deficit Income Equity Balance, December 31, 2020 42,000,592 $ 183,390 $ 25,074 $ 1,489 $ 3,061 $ 213,014 100,068,469 $ 12 $ 105,159 $ — $ ( 299,789 ) $ 1,791 $ ( 192,827 ) Reclassification of share-based awards to mezzanine equity — — — 206 — 206 — — ( 206 ) — — — ( 206 ) Reclassification of common shares to mezzanine equity — — 6,872 — — 6,872 — — — — — — — Remeasurement of redemption value of common shares — — 7,361 — — 7,361 — — — — ( 7,361 ) — ( 7,361 ) Proceeds from exercise of options — — — — — — 5,141,331 — 8,242 — — — 8,242 Common stock issued upon vesting of restricted stock units — — — — — — 170,852 — — — — — — Stock-based compensation expense — — — — — — — — 46,475 — — — 46,475 Remeasurement of redemption value of convertible preferred stock — 32,928 — — — 32,928 — — — — ( 32,928 ) — ( 32,928 ) Issuance of redeemable noncontrolling interest in MaivenPoint Pte. Ltd. (1) — — — — 238 238 — — 515 — — — 515 Conversion of convertible preferred stock ( 42,000,592 ) ( 216,318 ) — — — ( 216,318 ) 28,500,592 3 85,390 — — — 85,393 Reclassification of redeemable common shares from mezzanine to permanent equity — — ( 39,307 ) — — ( 39,307 ) — — 39,307 — — — 39,307 Reclassification of share-based awards from liabilities and mezzanine equity to permanent equity — — — ( 1,695 ) — ( 1,695 ) — — 41,152 — — — 41,152 Merger and recapitalization, net of transaction costs — — — — — — 47,940,523 3 299,736 — — — 299,739 Reclassification of earn-out RSUs to earn-out shares — — — — — — — — ( 714 ) — — — ( 714 ) Reclassification of Apex shares purchased prior to the Business Combination — — — — — — — — — ( 1,739 ) — — ( 1,739 ) Comprehensive income (loss): Net loss — — — — — — — — — — ( 33,245 ) — ( 33,245 ) Net income attributable to and accretion of redeemable noncontrolling interest — — — — 1,974 1,974 — — — — ( 1,974 ) — ( 1,974 ) Foreign currency translation adjustments — — — — ( 63 ) ( 63 ) — — — — — 526 526 Balance, December 31, 2021 — $ — $ — $ — $ 5,210 $ 5,210 181,821,767 $ 18 $ 625,056 $ ( 1,739 ) $ ( 375,297 ) $ 2,317 $ 250,355 (1) Formerly AvePoint EduTech Pte. Ltd. See accompanying notes. 64 Table of Contents AvePoint, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) For the Year Ended December 31, 2023 2022 2021 Operating activities Net loss $ ( 21,501 ) $ ( 38,688 ) $ ( 33,245 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 4,687 3,494 1,238 Operating lease right-of-use assets expense 6,234 5,945 — Foreign currency remeasurement loss — 835 1,308 Stock-based compensation 36,048 37,218 59,508 Deferred income taxes ( 864 ) 3,701 ( 175 ) Other 1,068 ( 607 ) ( 755 ) Change in value of earn-out and warrant liabilities 11,454 ( 4,402 ) ( 21,233 ) Changes in operating assets and liabilities: Accounts receivable ( 19,448 ) ( 14,388 ) ( 8,243 ) Prepaid expenses and other current assets ( 2,773 ) ( 2,108 ) ( 5,914 ) Deferred contract costs and other assets ( 7,687 ) ( 9,596 ) ( 8,890 ) Accounts payable, accrued expenses, operating lease liabilities and other liabilities 609 ( 2,553 ) 10,626 Deferred revenue 26,867 20,375 10,805 Net cash provided by (used in) operating activities 34,694 ( 774 ) 5,030 Investing activities Maturities of investments 2,620 183,554 — Purchases of investments ( 3,497 ) ( 180,969 ) ( 916 ) Cash paid in business combinations and asset acquisitions, net of cash acquired — ( 18,572 ) — Capitalization of internal-use software ( 1,434 ) ( 1,612 ) — Purchase of property and equipment ( 2,087 ) ( 3,853 ) ( 2,461 ) Investment in notes ( 1,250 ) — — Net cash used in investing activities ( 5,648 ) ( 21,452 ) ( 3,377 ) Financing activities Proceeds from recapitalization of Apex shares, net of transaction fees of $ 49,990 — — 441,573 Redemption of redeemable convertible preferred stock — — ( 130,925 ) Redemption of Legacy AvePoint common stock — — ( 106,169 ) Purchase of common stock ( 39,036 ) ( 19,927 ) ( 1,628 ) Payment of net cash settlement for management options — — ( 7,530 ) Proceeds from stock option exercises 5,569 2,818 5,566 Proceeds from sale of common shares of subsidiary — — 753 Repayments of finance leases ( 64 ) ( 39 ) ( 25 ) Payments of debt issuance costs ( 136 ) — — Payments of transaction fees by Legacy AvePoint — — ( 2,998 ) Net cash (used in) provided by financing activities ( 33,667 ) ( 17,148 ) 198,617 Effect of exchange rates on cash 595 ( 1,655 ) ( 1,165 ) Net (decrease) increase in cash and cash equivalents ( 4,026 ) ( 41,029 ) 199,105 Cash and cash equivalents at beginning of period 227,188 268,217 69,112 Cash and cash equivalents at end of period $ 223,162 $ 227,188 $ 268,217 Supplemental disclosures of cash flow information Income taxes paid $ 6,112 $ 3,320 $ 4,037 Contingent considerations in business combination $ — $ 5,635 $ — Common stock issued in business combination $ — $ 1,517 $ — Loan to certain acquiree shareholders $ — $ 235 $ — See accompanying notes. 65 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Nature of Business and Organization AvePoint, Inc., incorporated as a New Jersey corporation on July 24, 2001 (“ Legacy AvePoint ”), was redomiciled as a Delaware corporation in 2006, and changed its name to “AvePoint Operations, Inc.” in June 2021. On July 1, 2021, Legacy AvePoint and certain members of Apex Technology Acquisition Corporation (“ Apex ”) consummated the transactions contemplated by a business combination agreement (the “ Apex Business Combination ”) and a number of qualified institutional buyers and accredited investors consummated their respective purchases of shares as contemplated by related subscription agreements, with Apex being renamed “AvePoint, Inc.” On July 2, 2021, shares of common stock were officially listed under the ticker “AVPT” on the Nasdaq Global Select Market. Subsequent to the consummation of the Apex Business Combination, on July 26, 2021, Legacy AvePoint’s successor by merger AvePoint US LLC merged with and into AvePoint, Inc. with AvePoint, Inc. (hereinafter referred to as “ AvePoint ”, the “ Company ”, “ we ”, “ us ”, or “ our ”) surviving. Our principal corporate headquarters are located in Jersey City, New Jersey, and our principal operating headquarters are located in Richmond, Virginia. We have additional offices across North America, Europe, Asia, Australia and the Middle East. AvePoint generates revenue by providing a cloud-native data management software platform that organizations rely on to manage and protect critical data, optimize IT operations, achieve meaningful cost savings, and efficiently secure the digital workplace; as well as providing customized business solutions, technical support, and services. 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the consolidated accounts of AvePoint, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 66 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Recently Adopted Accounting Guidance In January 2016, the Financial Accounting Standards Board ( “ FASB ” ) issued Accounting Standard Update ( “ ASU ” ) 2016 - 13, Financial Instruments — Credit Losses on Financial Instruments which replaces incurred loss methodology to estimate credit losses on financial instruments with a methodology that reflects expected credit losses. This amendment affects entities holding financial assets that are not accounted for at fair value through net income including trade receivables. Subsequently FASB issued ASU 2020 - 02 which deferred the adoption date. The amendments in this ASU are effective for Emerging Growth Company entities, which elected to take advantage of the extended transition period, for fiscal years beginning after December 15, 2022. Early application of the amendments is permitted. The Company adopted the standard on January 1, 2023. The adoption of the standard did not have a material impact on its consolidated financial statements. In August 2020, the FASB issued ASU 2020 - 06, “ Debt — Debt with Conversion and Other Options (Subtopic 470 - 20 ) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815 — 40 ) ” ( “ ASU 2020 - 06 ”). ASU 2020 - 06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. The Company adopted the standard on January 1, 2023. The adoption of the standard did not have a material impact on its consolidated financial statements. Comparative Data  Certain amounts from prior periods that were presented separately have now been grouped to conform to the current period presentation, including: ■ The reclassification of perpetual license revenue to be included in maintenance revenue on the consolidated statements of operations for the years ended December 31, 2022 and 2021. ■ The reclassification of gain (loss) on earn-out and warrant liabilities to be included in other (expense) income, net on the consolidated statements of operations for the years ended December 31, 2022 and 2021. ■ The reclassification of interest income (expense), net to be included in other (expense) income, net on the consolidated statements of operations for the years ended December 31, 2022 and 2021. ■ The reclassification of depreciation and amortization to be included in cost of revenue, sales and marketing, general and administrative and research and development on the consolidated statements of operations for the years ended December 31, 2022 and 2021. 67 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Business Combination When we consummate a business combination, the assets acquired, and the liabilities assumed are recognized separately from goodwill at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of the fair value of consideration transferred over the acquisition date fair value of the net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill as we obtain new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Upon the earlier of the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded in the consolidated statements of operations. Acquisition-related costs were immaterial and were expensed as incurred. Pro forma historical results of operations related to the business combinations closed in 2022 have not been presented because they are not material to our consolidated financial statements, either individually or in aggregate. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The amounts of assets and liabilities reported in our consolidated balance sheets and the amounts of revenue and expenses reported for each of its periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for determination of standalone selling price for revenue recognition, allowance for doubtful accounts, deferred contract costs, valuation of goodwill and other intangible assets, income taxes and related reserves, stock-based compensation, purchase price in a business combination, and earn-out liabilities. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties. Foreign Currency The Company has foreign operations where the functional currency has been determined to be the local currency, in accordance with FASB ASC 830, Foreign Currency Matters . Adjustments resulting from translating such foreign functional currency assets and liabilities into U.S. dollars, based on current exchange rates, are recorded as a component of accumulated other comprehensive income in the Company ’s consolidated balance sheets. Revenue and expenses are translated using average rates prevailing during the period. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other (expense) income, net in the Company’s consolidated statements of operations. Cash and Cash Equivalents The Company maintains cash with several high credit-quality financial institutions. The Company considers all investments available with original maturities of three months or less to be cash equivalents. These investments are not subject to significant market risk. The Company maintains its cash and cash equivalents in bank accounts which, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts. The Company maintains cash balances used in operations at entities based in countries which impose regulations that limit the ability to transfer cash out of the country. As of December 31, 2023 and 2022 , the Company’s cash balances at these entities were $ 13.1 million and $ 10.8 million, respectively. Based on our intentions regarding our investments in U.S. treasury bills, we classify these investments as available-for-sale. We carry these securities at fair value, and report the unrealized gains and losses, net of taxes, as a component of stockholders’ equity, except for any unrealized losses determined to be related to credit losses, which we record within non-operating income, net in the accompanying consolidated statements of operations. 68 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Short-Term Investments Short-term investments consist mainly of certificates of deposit held by financial institutions which have an initial maturity of greater than three months but less than or equal to one year at period end. Prepaid Expenses and Other Current Assets The prepaid expenses balances as of December 31, 2023 and 2022 were $ 7.6 million and $ 7.1 million, respectively. Property and Equipment Property and equipment are stated at cost and depreciated on a straight-line basis over the shorter of their estimated useful lives or related contract terms beginning in the year the asset was placed into service. We depreciate computer equipment and software generally over a period of three years. We amortize leasehold improvements over the shorter of the remaining lease term or the estimated useful lives of the assets. We depreciate furniture and fixture generally over a period of seven years. We depreciate buildings over a period of forty years. We depreciate office equipment generally over a period of five years. Depreciation and amortization for buildings, information technology assets, leasehold improvements, and furniture and fixtures commences once they are ready for our intended use. Normal repair and maintenance costs are expensed as incurred. We write off depreciated assets that are no longer in service. We evaluate long-lived assets, which include leasehold improvements and equipment subject to depreciation and amortization, for impairment whenever events or changes in business circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss will be recognized when the aggregate of estimated undiscounted future cash flows expected to result from the use and the eventual disposition of the long-lived assets less than its carrying amount. Impairment, if any, is determined based on the fair value of the long-lived asset. There were no impairment charges recognized during the years ended December 31, 2023 , 2022 and 2021, respectively. Goodwill Goodwill represents the excess of the fair value of consideration transferred over the fair value of net identifiable assets acquired. We review goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the quantitative goodwill impairment test will be performed. The quantitative goodwill impairment test identifies goodwill impairment and measures the amount of goodwill impairment loss to be recognized by comparing the fair value of our single reporting unit with its carrying amount. If the fair value exceeds its carrying amount, no further analysis is required; otherwise, any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. 69 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Intangible Assets, net Intangible assets primarily consist of customer related assets and acquired software and technology. Typical customer related assets include order backlogs and customer relationships. Intangible assets that have finite useful lives are amortized over their useful lives on a straight-line basis, which range from one year to ten years. We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. Leases The Company adopted ASC 842, Leases , on January 1, 2022, using the modified retrospective approach and has elected not to restate comparative periods and record a cumulative-effect adjustment as of the effective date. ASC 842 requires companies to generally recognize on the balance sheet operating and finance lease liabilities and corresponding right-of-use (“ ROU ”) assets. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward its historical assessments of whether a contract contains a lease, lease classification and initial direct costs. The Company elected not to use hindsight in determining the lease term. The Company made the following other transition considerations and elections under ASC 842 : (i) not to separate non-lease components for all classes of underlying assets, including under Leases (“ ASC 840 ”) for the purpose of transition measurement; (ii) apply accounting similar to ASC 840 for operating lease with term of 12 months or less at the commencement date; (iii) consider remaining lease term as of the date of initial application in determining the incremental borrowing rate to be used to discount minimum rental payments for operating leases in transition. Leases are classified as either operating or finance leases based on certain criteria. This classification determines the timing and presentation of expenses on the income statement, as well as the presentation of the related cash flows and balance sheet. Operating leases are recorded on the balance sheet beginning January 1, 2022, as operating lease right-of-use assets, accrued expenses and other liabilities, and long-term operating lease liabilities. The Company currently has no material finance leases. ROU assets and related liabilities are recorded at lease commencement based on the present value of the lease payments over the expected lease term. Lease payments include future increases unless the increases are based on changes in an index or rate. If the rate implicit in the leases was not readily determinable, the Company’s incremental borrowing rate is used to calculate ROU assets and related liabilities. The incremental borrowing rate is determined based on the Company’s estimated credit rating, the term of the lease, the economic environment where the asset resides and full collateralization. Lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancelable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term and is allocated within operating expenses in the consolidated statements of operations. 70 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Deferred Contract Costs We defer sales commissions that are considered to be incremental and recoverable costs of obtaining or renewing SaaS, term license and support, service, perpetual license and maintenance contracts. The initial commissions are amortized over the anticipated period of asset benefit. We have structured commissions plans such that the commission rate paid on renewal contracts are less than those paid on the initial contract; therefore, it is determined that the renewal commissions are not commensurate with the initial commission, which are related to future contracts with a customer. The renewal commissions are amortized over the average renewal term. We determine the anticipated period of asset benefit and the average renewal term utilizing a portfolio approach, considering our customer contracts, the duration of our relationships with our customers, and the useful life of our technology. Changes in the anticipated period of asset benefit or the average renewal term are recognized on a prospective basis upon occurrence. No impairment was recorded for the years ended December 31, 2023 , 2022 and 2021. Amortization of deferred contract costs of $ 19.0 million, $ 13.4 million and $ 9.5 million for the years ended December 31, 2023 , 2022 and 2021, respectively, is included as a component of sales and marketing expenses in our consolidated statements of operations. Deferred contract costs recognized as a contract asset on our balance sheet was $ 54.7 million and $ 48.6 million as of December 31, 2023 and 2022 , respectively. Software Development Costs Costs incurred in the development of new software products and enhancements to existing software products to be accounted for under software revenue recognition guidance are accounted for in accordance with ASC 985 - 20, Costs of Software to be Sold, Leased, or Marketed, or ASC 985 - 20. These costs, consisting primarily of salaries and related payroll costs, are expensed as incurred until technological feasibility has been established. After technological feasibility is established, costs are capitalized in accordance with ASC 985 - 20. The Company’s primary on-premises product is DocAve, which is within the scope of subtopic 985 - 20. DocAve has been available for sale since 2002. Typically, the economic life of software produced is less than five years. As such, any costs subject to capitalization under ASC 985 - 20 would be fully amortized at this time. As a result, no internally generated software development costs have been capitalized as of December 31, 2023 and 2022 . We account for costs to develop or obtain internal-use software and implementation costs incurred in hosting arrangements in accordance with ASC 350 - 40, Internal-Use Software, or ASC 350 - 40. We also account for costs of significant upgrades and enhancements resulting in additional functionality under ASC 350 - 40. These costs are primarily software purchased for internal use, purchased software licenses, implementation costs, and development costs related to our hosted product, which is accessed by customers on a subscription basis. Costs incurred for maintenance, training, and minor modifications or enhancements are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Internally developed software costs required to be capitalized as defined by the accounting guidance are not material to our consolidated financial statements. 71 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Revenue Recognition We derive revenue from four primary sources: SaaS, term license and support, services, and maintenance. Our sources of revenue mainly include: ■ SaaS and term license and support revenue includes revenue from the sale of SaaS and term license and support, versions of our software and related customer support. SaaS revenue is recognized ratably over the term of the contract. Term license revenue includes distinct on-premises license and support performance obligations. The license is generally recognized upfront at the point in time when the software is made available to the customer to download and use, and the support is recognized ratably over the term of the contract. ■ Services revenue includes revenue derived primarily from the implementation of software, training, consulting, and migrations. We also offer license customization and managed services. Services revenue from implementation, training, consulting, migration, and license customization is recognized by applying a measure of progress, such as labor hours to determine the percentage of completion of each contract. Services revenue from managed services is recognized ratably on a straight-line basis over the contract term. ■ Maintenance revenue includes revenue from sales of perpetual license and related post-contract support. Perpetual license revenue is recognized upfront upon delivery of the licensed product and/or the utility that enables the customer to access authorization keys, provided that an enforceable contract has been received. While perpetual license revenues today are immaterial, our perpetual licenses are typically sold with post-contract support (“ PCS ”), which includes unspecified technical enhancements and customer support. Revenue from PCS is classified as maintenance revenue and is recognized ratably over the term of the contract, which is typically one year, as we satisfy the PCS performance obligation. In rare cases when the software and the related when-and-if available updates are critical to the combined utility of the software, the Company has determined this to be one performance obligation and revenue is recognized ratably over the license term. Term license and perpetual license revenue recognized at point in time was $ 31.4 million, $ 40.0 million and $ 39.7 million for the years ended December 31, 2023 , 2022 and 2021, respectively. The remaining revenue amount is recognized over time. 72 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) ASC 606, Revenue from Contracts with Customers, is a single standard for revenue recognition that applies to all of our SaaS, term license and support, services, perpetual license and maintenance arrangements and generally requires revenue to be recognized upon the transfer of control of promised goods or services provided to its customers, reflecting the amount of consideration it expects to receive for those goods or services. Pursuant to ASC 606, revenue is recognized upon the application of the following steps: ■ identification of the contract, or contracts, with a customer; ■ identification of the performance obligations in the contract; ■ determination of the transaction price; ■ allocation of the transaction price to the performance obligations in the contract; and ■ recognition of revenue when, or as, the contractual performance obligations are satisfied. Our revenue arrangements generally include standard warranty or service level provisions that its arrangements will perform and operate in all material respects as defined in the respective agreements, the financial impacts of which have historically been and are expected to continue to be insignificant. Our arrangements generally do not include a general right of return relative to the delivered products or services. We recognize revenue net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Many of our contracts include multiple performance obligations. Our products and services generally do not require a significant amount of integration or interdependency; therefore, the Company’s 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 licenses 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 utilize observable inputs and consider the value relationship between support and term license when compared to the value relationship between support and perpetual licenses, the average economic life of our products and software renewal rates. Using a combination of the relative fair value method or the residual value method, the SSP of the performance obligations in an arrangement is allocated to each performance obligation within a sales arrangement. 73 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) We utilize indirect sales channels which leverage Channel Partners. These deals are executed in one of two ways: 1. Channel Partner as Customer In the first form of these arrangements, the Channel Partner purchases the products from us at a discounted price and resells the products to end users at a price determined by the Channel Partner. In this scenario, the Channel Partner is the entity that has contracted with us and therefore is determined to be our customer. We recognize revenue when control of the goods and/or services are transferred to the customer. In this first form of the sales transaction, revenue recognition occurs upon transfer to the Channel Partner (acting as reseller) or as directed by the Channel Partner (acting as reseller) to its customer. 2. End User as Customer In the second form, we bill the end user, and the Channel Partner receives a commission. Upon analysis of deals executed through the second form of these channels, we determined that the end user represents our customer due to the fact that the end user purchased goods and/or services that are outputs of our ordinary activities. Consequently, Channel Partners utilized in deals executed through this second model are deemed to be agents of the transaction. In this second form of these arrangements, we recognize revenue upon transfer of the goods and/or services to the end user, and amortize the commission over the anticipated period of asset benefit. The timing of revenue recognition may differ from the timing of invoicing to our customers. We record an unbilled receivable when revenue is recognized prior to invoicing. Current unbilled receivables are included in accounts receivable, net in the consolidated balance sheets. Long-term unbilled receivables that are expected to be billed more than twelve months after the period end are included within other assets in the consolidated balance sheets. We record deferred revenue in the consolidated balance sheets when cash is collected or invoiced before revenue is earned. Our standard payment terms are generally net 30 days. Invoices for SaaS, term license and support and maintenance are generally issued annually in advance or when the license is made available for customer use. Invoices for license contracts are generally issued when the license is available for the customer for download. Services are generally invoiced in advance or as the services are performed. Total deferred revenue as of December 31, 2022 was $ 101.5 million, of which $ 87.0 million was recognized as revenues for the year ended December 31, 2023 . The opening and closing balances of the Company’s accounts receivable, net, deferred revenue and deferred contract costs are as follows: Deferred Accounts Deferred contract receivable (1) revenue costs (in thousands) Balance, December 31, 2022 73,348 101,490 48,553 Balance, December 31, 2023 94,067 129,256 54,675 ( 1 ) Accounts receivable is inclusive of accounts receivable, net of allowance for doubtful accounts, current unbilled receivables and long-term unbilled receivables. Long-term unbilled receivables are included in other assets on the consolidated balance sheets. As of December 31, 2023 and 2022, the allowance for doubtful accounts was not material. 74 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) No customer accounted for more than 10% of revenue for the years ended December 31, 2023, 2022 and 2021, and no customer accounted for more than 10% of accounts receivable as of December 31, 2023 and 2022. As of December 31, 2023 , transaction price allocated to remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, was $ 307.4 million, of which $ 254.2 million is related to SaaS and term license and support revenue. We expect to recognize approximately 63 % of the total transaction price allocated to remaining performance obligations over the next twelve months and the remainder thereafter. Stock-Based Compensation Stock-based compensation represents the cost related to stock-based awards granted to employees. To date, we have issued both stock options and restricted stock units (“ RSUs ”). With respect to equity-classified awards, the Company measured stock-based compensation cost at the grant date based on the estimated fair value of the award and recognizes the cost as expense ratably over the requisite service period. With respect to liability-classified awards, the Company measures stock-based compensation cost at the grant date and at each reporting period based on the estimated fair value of the award. Stock-based compensation cost is recognized ratably over the requisite service period, net of actual forfeitures in the period. We estimate the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes model requires highly subjective assumptions in order to derive the inputs necessary to calculate the fair value of stock options. To estimate the expected term of stock options, the Company considered contractual terms of the options, including the vesting and expiration periods, as well as historical option exercise data and current market conditions to determine an estimated expected term. The Company’s historical experience is too limited to be able to reasonably estimate expected term. Expected volatility is based on historical volatility of a group of peer entities. Dividend yields are based upon historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected term. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the difference between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize liabilities for uncertain tax positions taken or expected to be taken in income tax returns. Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes. Judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and unrecognize tax benefits. In determining the need for a valuation allowance, the historical and projected financial performance of the operation that is recording a net deferred tax asset is considered along with any other pertinent information. The Financial Accounting Standards Board Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income (“ GILTI ”), states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. Our valuation allowances are primarily the result of uncertainties regarding the future realization of tax attributes recorded in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies. In assessing our valuation allowance as of December 31, 2023, we considered all available evidence, including the magnitude of recent and current operating results, the duration of statutory carryforward periods, our historical experience utilizing tax attributes prior to their expiration dates, the historical volatility of operating results of these jurisdictions and our assessment regarding the sustainability of their profitability. The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. Valuation allowances recorded against deferred tax assets increased by a net $ 1.8 million. For additional information regarding our income taxes, refer to “ Note 10 - Income Taxes ”. 75 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Noncontrolling Interest Noncontrolling Interest is recognized as equity in the Company's consolidated balance sheets, is reflected in net income attributable to noncontrolling interest in the consolidated statements of operations and comprehensive loss and is captured within the net income (loss) in the consolidated statements of mezzanine equity and stockholders’ equity. Noncontrolling interests represent ownership interests in the Company's subsidiaries held by third parties. Redeemable noncontrolling interest is measured at the higher of its redeemable value and net income (loss) allocated to the redeemable noncontrolling interest, and is included in mezzanine equity on the consolidated balance sheets. At each reporting period, we increase the carrying amount of the redeemable noncontrolling interest by periodic accretions using the interest method so that the carrying amount will equal the redemption amount on the date that the put option becomes exercisable. These adjustments are recorded as net income attributable to noncontrolling interest on the consolidated statements of operations. Upon expiration of the underlying put option, the redeemable noncontrolling interest is reclassified to equity on the consolidated balance sheets. As of December 31, 2023 and 2022, the Company controlled and owned 73.82 % of MaivenPoint Pte. Ltd. (“ MaivenPoint ”). AEPL PTE. LTD. (“ AEPL ”), an unaffiliated investor As part of AEPL’s investment in MaivenPoint, the Company granted AEPL a put option which allows AEPL to cause the Company to repurchase AEPL’s shares in MaivenPoint at any time between December 24, 2022, and December 24, 2023, at a price equal to AEPL’s initial investment of approximately $ 8.3 million. Consequently, the Company records redeemable noncontrolling interest as mezzanine equity in its consolidated balance sheets. On December 24, 2023, the put option expired. As of December 31, 2023 and 2022, AEPL owned 23.20 % of MaivenPoint. I-Access Solutions Pte. Ltd. (“ I- A ccess ”) On February 18, 2022, ( the “ I-Access Closing Date ”), MaivenPoint consummated its acquisition of all of the ordinary shares of I-Access, a Singapore limited company. As a result, I-Access became a wholly owned subsidiary of MaivenPoint. The acquisition was made pursuant to a share purchase agreement, dated as of January 31, 2022, ( the “ Share Purchase Agreemen t”), by and among MaivenPoint and the former I-Access shareholders. As part of the transaction price, MaivenPoint granted I-Access a put option which allows I-Access to cause MaivenPoint to repurchase its shares on February 18, 2024, at a price equal to approximately $ 5.9 million. Consequently, the Company records redeemable noncontrolling interest as mezzanine equity in its consolidated balance sheets. As of December 31, 2023 and 2022, former I-Access shareholders owned 2.98 % of MaivenPoint and such shares were included in redeemable noncontrolling interest on the Company’s consolidated balance sheets. Treasury Stock Retirement We account for treasury stock transactions under the cost method. For each reacquisition of common stock, the number of shares and the acquisition price for those shares is added to the existing treasury stock count and total value, respectively. We periodically retire treasury shares that we acquire through share repurchases and return those shares to the status of authorized but unissued. When treasury shares are retired, we allocate the excess of the repurchase price over the par value of shares acquired between additional paid-in capital and accumulated deficit. The portion allocated to additional paid-in capital is limited to the pro rata portion of additional paid-in capital for the retired treasury shares. Any further excess of the repurchase price is allocated to accumulated deficit. 76 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Recent Accounting Pronouncements Recently issued accounting pronouncements not yet effective In November 2023, the FASB issued ASU 2023 - 07, “Improvements to Reportable Segment Disclosures (Topic 280 )” (“ ASU 2023 - 07 ”). ASU 2023 - 07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendment in this ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the impact ASU 2023 - 08 will have on our consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No. 2023 - 09, “Improvements to Income Tax Disclosures (Topic 740 )” (“ ASU 2023 - 09 ”). ASU 2023 - 09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The amendment in this ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted. We are currently evaluating the impact ASU 2023 - 09 will have on our consolidated financial statements and related disclosures. 3. Business Combination Apex Technology Acquisition Corporation The Apex Business Combination was accounted for as a reverse recapitalization as Legacy AvePoint was determined to be the accounting acquirer under ASC 805, Business Combination . This determination was primarily based on Legacy AvePoint comprising the ongoing operations of the combined entity, Legacy AvePoint’s senior management comprising the majority of the senior management of the combined company and the prior stockholders of Legacy AvePoint having a majority of the voting power of the combined entity. In connection with the Apex Business Combination, the outstanding shares of Legacy AvePoint’s preferred stock were redeemed for cash and shares of AvePoint’s common stock and the outstanding shares of Legacy AvePoint’s common stock were converted into AvePoint’s common stock, representing a recapitalization, and the net assets of the Company were acquired at historical cost, with no goodwill or intangible assets recorded. Operations and assets and liabilities of the Company prior to the Apex Business Combination in these financial statements are those of Legacy AvePoint. As a result, these financial statements represent the continuation of Legacy AvePoint and the historical stockholders’ deficiency. The accumulated deficit of Legacy AvePoint has been carried forward after the Apex Business Combination. 77 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The following transactions occurred in connection with the Apex Business Combination which impacted our mezzanine equity and permanent equity accounts: ■ Shares of Legacy AvePoint common stock were cancelled and converted into 103,831,523 shares of our common stock, par value $ 0.0001 per share. ■ $ 106.2 million was paid to holders of Legacy AvePoint common stock in exchange for 10,602,105 shares of common stock (as converted). ■ Shares of Apex Class A common stock were cancelled and converted into 34,982,628 shares of our common stock. ■ Shares of Apex Class B common stock were cancelled and converted into 9,560,000 shares of our common stock. ■ Apex entered into subscription agreements with certain investors, whereby 14,000,000 shares of our common stock were sold at $ 10.00 per share for an aggregate purchase price of $ 140.0 million. ■ A portion of Legacy AvePoint preferred stock was cancelled and converted into 28,500,592 shares of our common stock. The remaining preferred stock was redeemed for $ 130.9 million. ■ Options to purchase Legacy AvePoint common stock (other than certain options held by certain executives and options issued to certain international employees) were cancelled and converted into an option to purchase our common stock with the same terms and conditions (including vesting and exercisability terms) applicable to the corresponding former Legacy AvePoint options. ■ Options to purchase Legacy AvePoint common stock issued to certain international employees were cancelled and converted into an option to purchase our common stock with the same terms and conditions with the exception of fully vested options which incurred an additional month of vesting following the Apex Business Combination to comply with local regulations. ■ Legacy AvePoint Officer Awards, as defined in “Note 15 — Stock-Based Compensation,” were cancelled. Refer to “Note 15 — Stock-Based Compensation” for more information. ■ Put options on Legacy AvePoint Modified Options and Modified Common Stock, as defined in “Note 15 — Stock-Based Compensation”, were cancelled. Refer to “Note 15 — Stock-Based Compensation” for more information. ■ We entered into earn-out agreements to issue additional shares if certain share price milestones are achieved. Refer to “Note 13 — Company Earn-Out and Warrant Liabilities” for more information. ■ We assumed public and private placement warrants from Apex. Refer to “Note 13 — Company Earn-Out and Warrant Liabilities” for more information. As a result of the Apex 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 transaction. These costs amounted to $ 56.2 million and were treated as a reduction of additional paid-in capital. Cash flows provided to or paid by Legacy AvePoint or Apex in connection with the Apex Business Combination are included in our consolidated statements of cash flows as financing activities. Our purchase of shares of Apex common stock prior to the Apex Business Combination is included in our consolidated statements of cash flows as a financing cash outflow. The shares purchased are recorded as treasury stock. 78 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) I-Access Acquisition On the I-Access Closing Date, MaivenPoint consummated its acquisition of all of the ordinary shares of I-Access. As a result, I-Access became a wholly-owned subsidiary of MaivenPoint. The acquisition was made pursuant to the Share Purchase Agreement, by and among MaivenPoint and the former I-Access shareholders. The Company, through its subsidiary MaivenPoint, completed the acquisition of I-Access to further expand its SaaS solutions for corporate learning and development. The fair value of the transaction consideration totaled approximately $ 7.1 million, consisting of: $ 1.5 million in cash, and contingent consideration measured at a fair value of $ 5.6 million on the I-Access Closing date. The above-mentioned contingent consideration consists of: (i) 2.98 % of MaivenPoint common shares (of those, 292,440 shares were issued on the I-Access Closing Date and 30,252 shares were held in escrow pending distribution pursuant to the Adjustment for Guaranteed Minimum Revenue (as defined below)); (ii) a put option which allows sellers to cause MaivenPoint to repurchase the shares of MaivenPoint for approximately $ 5.9 million, upon 24 months from Acquisition Close Date or the occurrence of certain triggering events which are in the control of the Company; and (iii) earnout in MaivenPoint shares held in escrow at a fair value equal to revenue surplus above the agreed guaranteed minimum revenue amount, of up to approximately $ 0.7 million, or the return of MaivenPoint shares at a fair value equal to the revenue shortfall below the agreed guaranteed minimum revenue amount, of up to approximately $ 0.7 million (together, the “ Adjustment for Guaranteed Minimum Revenue ”). In the event of a revenue shortfall, all shares held in escrow would have been returned to MaivenPoint. On April 15, 2022 , the Company implemented a management changeover. As a result, pursuant to the terms of the Share Purchase Agreement, the Adjustment for Guaranteed Minimum Revenue was cancelled and the 292,440 MaivenPoint shares issued as consideration on the I-Access Closing Date, the 30,252 MaivenPoint shares held in escrow, the put option on MaivenPoint shares and the earnout in MaivenPoint shares were no longer contingent and were reclassified to mezzanine equity and included in redeemable noncontrolling interest. The acquisition-related costs totaled $ 0.3 million and are recognized as an expense within general and administrative in the consolidated statements of operations. Prior to being reclassified to mezzanine equity, the contingent consideration was liability classified and was measured at fair value on the I-Access Closing Date and remeasured on the date the Adjustment for Guaranteed Minimum Revenue was cancelled. The fair value of the contingent consideration was estimated using a combination of multiple valuation methods, including discounted cash flows method, guideline public company method, and the Black-Scholes option-pricing model with the following weighted-average assumptions as of February 18, 2022, and April 15, 2022: February 18, 2022 April 15, 2022 Expected life (in years) 2.08 1.93 Expected volatility 50 % 50 % Risk-free rate 1.23 % 1.83 % Dividend 0 % 0 % The contingent consideration fair value estimated on the I-Access Closing Date and the date the Adjustment for Guaranteed Minimum Revenue was cancelled was $ 5.6 million and $ 5.8 million, respectively. During the year ended December 31, 2022, the change in the fair value of $ 0.2 million is included within general and administrative on the consolidated statements of operations. The financial results of I-Access have been included in our consolidated financial statements since the date of the acquisition. The I-Access business is reported within our reportable segment. In accordance with ASC 805 - 740, the Company established a deferred tax liability with an offset to goodwill in connection with the accounting for the opening balance sheet of the I-Access acquisition as a result of book-to-tax differences primarily related to the technology and software intangibles and customer related assets. 79 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The following table summarizes the final fair value of assets acquired and liabilities assumed as of the acquisition date: Purchase Consideration Allocation (in thousands) Accounts receivable, net $ 429 Prepaid expenses and other current assets 72 Property and equipment 22 Goodwill 3,950 Technology and software 2,750 Customer related assets 909 Other assets 997 Accrued expenses and other liabilities ( 718 ) Current portion of deferred revenue ( 230 ) Other non-current liabilities ( 1,072 ) Total purchase consideration $ 7,109 The goodwill, which is generally not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled workforce of the acquired business and the synergies expected to arise as a result of the acquisitions. Intangible assets primarily relate to acquired technology and software and customer related assets. The acquired definite-lived intangible assets are being amortized over an estimated useful life of: (i) 10 years for technology and software on a straight-line basis; and (ii) 1 to 10 years for customer related assets on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the relief from royalty method which is based on the premise that the only value that a purchaser of the assets receives is the exemption from paying a royalty for its use over its remaining useful life. Some of the significant assumptions inherent in the development of such asset valuations include revenues, royalty rate, contributory asset charges, discount rate, useful life, as well as other factors. Essential Acquisition On August 25, 2022 , the Company acquired all of the issued and outstanding equity interest in Essential Co. Ltd., a South Korea-based software solutions provider that will advance the Company’s ability to enable organizations to accelerate data-driven digital transformation, for a total valuation of $ 3.0 million with most of the value allocated to goodwill. The resulting goodwill is not deductible for income tax purposes. tyGraph Companies Acquisition On September 12, 2022 , the Company consummated its acquisition of all of the outstanding shares of tyGraph Incorporated (“ tyGraph US ”), and AvePoint Ontario Ltd. (“ AvePoint Ontario ”, a wholly-owned subsidiary of AvePoint) consummated its acquisition of all of the outstanding shares of tyGraph Ltd. (“ tyGraph Canada ” and, collectively with tyGraph US, the “ tyGraph Companies ”). On September 12, 2022 , tyGraph Canada was merged with and into AvePoint Ontario, with AvePoint Ontario surviving. As a result, the tyGraph Companies became wholly-owned subsidiaries of AvePoint. The acquisition was made pursuant to a share purchase agreement, by and among AvePoint, AvePoint Ontario and the former tyGraph Companies shareholders. The Company completed the acquisition of the tyGraph Companies to further expand its SaaS solutions for providing robust analytics capabilities that enable organizations to uncover workplace engagement. The fair value of the transaction consideration totaled approximately $ 15.3 million, consisting of: $ 13.8 million in cash, and 324,845 of shares in the Company measured at a fair value of $ 1.5 million on the closing date. The above-mentioned cash consideration consisted of: (i) the cash purchase price of $ 13.5 million; (ii) the entire outstanding principal and interest of the loans made to certain tyGraph Companies shareholders which was approximately $ 0.2 million; and (iii) unpaid transaction costs incurred by the tyGraph Companies as of the open of business on the closing date which was approximately $ 0.1 million. 80 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The acquisition-related costs incurred by the Company totaled $ 0.4 million and are recognized as an expense within general and administrative in the consolidated statements of operations. The financial results of the tyGraph Companies have been included in our consolidated financial statements since the date of the acquisition. The tyGraph Companies businesses are reported within our reportable segment. In accordance with ASC 805 - 740 , the Company established a deferred tax liability with an offset to goodwill in connection with the accounting for the opening balance sheet of the tyGraph Companies acquisition as a result of book-to-tax differences primarily related to the technology and software intangibles and customer related assets. The following table summarizes the final fair value of assets acquired and liabilities assumed as of the acquisition date: Purchase Consideration Allocation (in thousands) Accounts receivable, net $ 449 Prepaid expenses and other current assets 262 Property and equipment 30 Goodwill 12,193 Customer related assets 3,868 Technology and software 2,552 Other assets 219 Accounts payable ( 93 ) Accrued expenses and other liabilities ( 342 ) Current portion of deferred revenue ( 2,079 ) Other non-current liabilities ( 1,724 ) Total purchase consideration $ 15,335 The goodwill, which is generally not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled workforce of the acquired business and the synergies expected to arise as a result of the acquisition. Intangible assets primarily relate to acquired technology and software and customer related assets. The acquired definite-lived intangible assets are being amortized over an estimated useful life of: (i) 6 years for technology and software on a straight-line basis; and (ii) 10 years for customer related assets on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the relief from royalty method which is based on the premise that the only value that a purchaser of the assets receives is the exemption from paying a royalty for its use over its remaining useful life. Some of the significant assumptions inherent in the development of such asset valuations include revenues, royalty rate, contributory asset charges, discount rate, useful life, as well as other factors. 81 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 4. Goodwill The changes in the carrying amounts of goodwill were as follows: Goodwill (in thousands) Balance as of December 31, 2022 $ 18,904 Acquisitions — Effect of foreign currency translation 252 Balance as of December 31, 2023 $ 19,156 During the years ended December 31, 2023 and 2022, goodwill was not impaired. 5. Intangible Assets, net Intangible assets consist of acquired intangible assets and internally-developed software. Amortization expense for intangible assets was $ 2.1 million and $ 1.4 million for the years ended December 31, 2023 and 2022 , respectively. There was no amortization expense for intangible assets for the year ended December 31, 2021. A summary of the balances of the Company’s intangible assets as of December 31, 2023 and 2022 is presented below: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Useful Life December 31, December 31, 2023 2022 (in thousands) (in years) Technology and software, net 7,976 ( 1,758 ) 6,218 6,842 ( 777 ) 6,065 3.0 - 10.0 Customer related assets, net 4,546 ( 640 ) 3,906 4,799 ( 477 ) 4,322 10.0 Content, net 843 ( 421 ) 422 830 ( 138 ) 692 3.0 Total $ 13,365 $ ( 2,819 ) $ 10,546 $ 12,471 $ ( 1,392 ) $ 11,079 82 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) As of December 31, 2023 , estimated future amortization expense for the intangible assets reflected above was as follows: Year Ending December 31: (in thousands) 2024 $ 2,328 2025 1,946 2026 1,451 2027 1,161 2028 1,016 Thereafter 2,644 Total intangible assets subject to amortization $ 10,546 6. Accounts Receivable, Net Accounts receivable, net, consists of the following components: December 31, December 31, 2023 2022 (in thousands) Trade receivables $ 60,508 $ 47,046 Current unbilled receivables 26,295 20,153 Allowance for doubtful accounts ( 926 ) ( 725 ) $ 85,877 $ 66,474 Long-term unbilled receivables were $ 8.2 million and $ 6.9 million as of December 31, 2023 and 2022 , respectively, and were included in other assets on the consolidated balance sheets. 83 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 7. Property and Equipment, Net Property and equipment, net, consists of the following: December 31, December 31, 2023 2022 (in thousands) Computer equipment $ 6,633 $ 6,079 Leasehold improvements 4,206 3,823 Furniture and fixtures 1,320 1,316 Building 707 725 Office equipment 390 493 Software 294 347 13,550 12,783 Less accumulated depreciation and amortization ( 8,432 ) ( 7,246 ) $ 5,118 $ 5,537 Depreciation and amortization expense was $ 2.6 million, $ 2.1 million and $ 1.2 million for the years ended December 31, 2023 , 2022 and 2021, respectively. 8. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consists of the following components: December 31, December 31, 2023 2022 (in thousands) Accrued compensation $ 27,820 $ 26,585 Current operating lease liabilities 5,337 5,392 Indirect taxes 4,540 3,638 Cloud service fees 3,827 2,285 Professional service fees 2,469 1,464 Accrued partner expenses 1,681 1,445 Income taxes payable 2,053 1,055 Other 6,039 5,920 $ 53,766 $ 47,784 84 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 9. Line of Credit The Company maintains a loan and security agreement (the “ Loan Agreement ”) with HSBC Bank USA, National Association (“ HSBC ”), as lender, for a revolving line of credit of up to $ 30.0 million, with an accordion feature that provides up to $ 20.0 million of additional borrowing capacity the Company may draw upon at its request. The line bears interest at a rate equal to term SOFR plus 3.00 % to 3.25 % depending on the Consolidated Total Leverage Ratio (as defined in the Loan Agreement). The line carries an unused fee ranging from 0.50 % to 0.55 % depending on the Consolidated Total Leverage Ratio. The line will mature on November 3, 2026. We are required to maintain a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Loan Agreement) as well as a maximum Consolidated Total Leverage Ratio, tested by the bank each quarter. The Company pledged, assigned and granted the bank a security interest in all shares of its subsidiaries, future proceeds and assets (except for excluded assets, including material intellectual property) as security for the performance of the loan and security agreement obligations. As of December 31, 2023, the Company is compliant with all covenants under the line and had no borrowings outstanding under the line of credit. The Company has not at any time, including as of December 31, 2023 , and for the fiscal year ended December 31, 2023 , borrowed under the Loan Agreement. 10. Income Taxes Pretax loss resulting from domestic and foreign operations is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Domestic $ ( 31,398 ) $ ( 17,081 ) $ ( 23,583 ) Foreign 12,784 ( 16,569 ) ( 9,205 ) Pretax loss from continuing operations $ ( 18,614 ) $ ( 33,650 ) $ ( 32,788 ) The components of the provision (benefit) for income taxes consists of the following: Year Ended December 31, 2023 2022 2021 (in thousands) Current income tax expense: Federal $ 3,188 $ 1,937 $ 467 State and local ( 1,121 ) 668 ( 881 ) Foreign 1,691 ( 1,478 ) 1,117 Total current income tax expense 3,758 1,127 703 Deferred income tax expense (benefit): Federal — 2,370 89 State and local — ( 820 ) ( 12 ) Foreign ( 871 ) 2,361 ( 323 ) Total deferred income tax expense (benefit) ( 871 ) 3,911 ( 246 ) Total income tax expense $ 2,887 $ 5,038 $ 457 85 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The reconciliation of the amounts at the U.S. federal statutory income tax rate to the company’s effective income tax rate is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) U.S. federal statutory tax rate $ ( 3,909 ) $ ( 7,067 ) $ ( 6,886 ) State and local income taxes, net ( 2,077 ) ( 292 ) ( 962 ) Stock-based compensation 3,117 ( 51 ) 10,865 Executive compensation limitation 449 3,566 — Fair value of earnout liability 2,165 ( 828 ) ( 3,946 ) GILTI inclusion, net 1,940 — — Foreign-derived intangible income deduction ( 1,534 ) — — Transaction costs — 125 ( 2,209 ) Change in valuation allowance 1,794 12,844 3,085 Deferred rate change 2,076 — — Foreign rate differential ( 1,107 ) ( 2,066 ) 440 Return-to-provision adjustments 274 ( 1,029 ) ( 196 ) Permanent differences ( 343 ) 29 334 Other, net 42 ( 193 ) ( 68 ) Total $ 2,887 $ 5,038 $ 457 The Company’s effective tax rate differed from the U.S. federal statutory rate primarily due to mix of pre-tax income (loss) results by jurisdictions taxed at different rates than 21 %, a permanent item recorded for the executive compensation limitation, and changes in valuation allowance in certain foreign jurisdictions. Deferred income taxes are provided for the tax effect of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. Significant components of the Company’s deferred tax assets and (liabilities) are as follows: December 31, December 31, 2023 2022 (in thousands) Deferred Tax Assets: Net operating loss carryforwards $ 9,634 $ 13,775 Deferred revenue 8,653 4,301 Compensation and benefits 6,996 6,567 Research and development expenses 11,086 6,169 Lease liability 2,518 3,622 Foreign tax credits — 270 Fair value of earnout liability 305 93 Other 26 457 Total Deferred Tax Assets 39,218 35,254 Less: Valuation allowance ( 22,469 ) ( 20,808 ) Deferred Tax Assets, net 16,749 14,446 Deferred Tax Liabilities: Property and equipment ( 178 ) ( 197 ) Amortization ( 2,395 ) ( 2,595 ) Commissions ( 11,543 ) ( 8,384 ) Prepaid subscription ( 1,569 ) ( 836 ) Unbilled receivable ( 435 ) ( 1,489 ) Right-of-use assets ( 2,290 ) ( 3,402 ) Total Deferred Tax Liability ( 18,410 ) ( 16,903 ) Net Deferred Tax Liabilities $ ( 1,661 ) $ ( 2,457 ) 86 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Deferred tax assets are included within the consolidated balance sheets as follows: December 31, December 31, 2023 2022 (in thousands) Deferred Tax Assets, net $ 1,738 $ 488 Deferred Tax Liabilities ( 3,399 ) ( 2,945 ) Net Deferred Tax Liabilities $ ( 1,661 ) $ ( 2,457 ) As of December 31, 2023 , the Company had net operating loss (“ NOL ”) carryforwards for state and local income tax of $ 14.5 million, which may offset future taxable income. The state NOL carryforwards begin to expire in 2026 . The Company also has foreign NOL carryforwards of approximately $ 41.2 million, which will expire beginning 2024 and NOL carryforward periods vary from 6 years to indefinite period. Under the provisions of the Internal Revenue Code, the U.S. NOL carryforwards are subjected to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of a 50% cumulative change in the ownership interest of significant stockholders over a three -year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. The Company may have experienced an ownership change prior to December 31, 2023, however, the Company does not believe its NOL carryforwards would be limited under IRC Section 382. The Company could experience an ownership change in the future which could limit the utilization of certain NOL carryforwards. ASC 740 - 10 - 30 - 5 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making this assessment, management considered all available positive and negative evidence, including the level of historical taxable income, future reversals of existing temporary differences, tax planning strategies, and projected future taxable income. On the basis of this evaluation, a valuation allowance of $ 22.5 million and $ 20.8 million was recorded as of December 31, 2023 and 2022 , respectively, against certain jurisdictions’ net deferred tax assets for which it is more likely than not that the tax benefit will not be realized. As of December 31, 2023, the Company did not provide any foreign withholding taxes related to its foreign subsidiaries’ undistributed earnings, as such earnings have been retained and are intended to be indefinitely reinvested to fund ongoing operations of the foreign subsidiaries. It is not practicable to estimate the amount of taxes that would be payable upon remittance of these earnings, because such tax, if any, is dependent upon circumstances existing if and when remittance occurs. 87 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties is as follows: December 31, December 31, December 31, 2023 2022 2021 (in thousands) Beginning balance $ 141 $ 1,088 $ 5,369 Additions based on tax positions related to the current year — — — Reduction for tax positions of prior years — ( 12 ) ( 4,281 ) Reduction for settlements — ( 935 ) — Expiration of applicable statute of limitations ( 7 ) — — Ending balance $ 134 $ 141 $ 1,088 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. As of December 31, 2023 and 2022 , the Company had $ 0.2 million and $ 0.2 million, respectively, of accrued interest and penalties associated with unrecognized tax benefits. These amounts were included in other non-current liabilities in their respective years. As of December 31, 2023, and December 31, 2022, the total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was not material. The Company files income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. The tax years 2019 through 2022 generally remain open for examination for federal, state and local tax purposes. The tax years 2013 through 2022 are open and subject to audit by foreign jurisdictions. 11. Leases The Company is obligated under various non-cancelable operating leases primarily for office space. The initial terms of the leases expire on various dates through 2030. We determine if an arrangement is a lease at inception. The components of the Company’s operating lease expense are reflected in the consolidated statements of operations as follows: Year Ended December 31, 2023 2022 (in thousands) Lease liability cost $ 6,978 $ 5,945 Short-term lease expenses (1) 777 1,760 Variable lease cost not included in the lease liability (2) 477 261 Total lease cost $ 8,232 $ 7,966 ( 1 ) Short-term lease expenses include rent expenses from leases of 12 months or less on the transition date or lease commencement. ( 2 ) Variable lease cost includes common area maintenance, property taxes, and fluctuations in rent due to a change in an index or rate. Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected to combine fixed payments for non-lease components, for all classes of underlying assets, with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. During the year ended December 31, 2023 , ROU assets obtained in exchange for new operating lease liabilities amounted to $ 4.3 million. 88 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Other information related to operating leases is as follows: Year Ended December 31, 2023 2022 (in thousands) Cash paid for amounts included in the measurement of the lease liability: Operating cash flows from operating leases $ 7,190 $ 5,626 As of December 31, 2023 and 2022, our operating leases had weighted average remaining lease terms of 3.8 years and 4.4 years, respectively, and weighted average discount rates of 5.6 % and 5.1 %, respectively. The maturity schedule of the operating lease liabilities as of December 31, 2023 , is as follows: Year Ending December 31: (in thousands) 2024 $ 5,998 2025 4,073 2026 2,513 2027 1,721 2028 789 Thereafter 1,212 Total future lease payments 16,306 Less: Present value adjustment ( 1,586 ) Present value of future lease payments (1) $ 14,720 ( 1 ) Includes the current portion of operating lease liabilities of $ 5.3 million, which is reflected in accrued expenses and other liabilities in the consolidated balance sheets. As of December 31, 2023, letters of credit have been issued in the amount of $ 1.0 million as security for operating leases. The letters of credit are secured by certificates of deposit. During the year ended December 31, 2021, total rent expenses amounted to $ 6.4 million. The future minimum rental payments under ASC 840 for all long-term non-cancelable property leases as of December 31, 2021, were as follows: Year Ending December 31: (in thousands) 2022 $ 5,680 2023 3,808 2024 2,428 2025 1,840 2026 1,438 Thereafter 2,960 $ 18,154 89 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 12. Commitments and Contingencies Purchase Commitments The Company has outstanding unconditional purchase commitments to procure licenses to use IT software from suppliers. These agreements are negotiated in consideration of the volume of transactions with select suppliers and the associated required transaction volumes are expected to be met through the normal course of business. In July 2022, the Company signed an unconditional purchase commitment related to the use of Microsoft Office 365 in the amount of $ 6.1 million payable in three installments during 2022, 2023, and 2024. During the year ended December 31, 2022, the Company paid $ 1.9 million related to the July 2022 agreement. During the year ended December 31, 2023 , the Company paid $ 2.0 million related to the July 2022 agreement. In December 2022, the Company signed an unconditional purchase commitment in the amount of $ 96.0 million to purchase IT solutions over a three -year term. Under this agreement, payments are made upon access to the service and any remaining obligations due at the end of the three -year term in December 2025. Given the Company’s history of procuring similar products, it is expected that cash payments to the supplier will occur in 2023 through 2025 with any remaining amounts coming due in 2025. During the year ended December 31, 2023 , the Company paid $ 21.7 million related to the December 2022 agreement. The Company is obligated to make the following future minimum payments under the non-cancelable terms of these contracts as of December 31, 2023 : Years ending December 31, (in thousands) 2024 $ 2,213 2025 74,263 2026 — 2027 — 2028 — Thereafter — $ 76,476 Legal Proceedings In the normal course of its business, the Company may be involved in various claims, negotiations and legal actions. Except for such claims that arise in the normal course of business, as of December 31, 2023 , the Company was not a party to any other litigation for which a material claim is reasonably possible, probable or estimable. 90 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Guarantees In the normal course of business, customers in certain geographies or in highly regulated sectors occasionally require contingency agreements, which are secured by certificates of deposit. As of December 31, 2023 , letters of credit have been issued in the amount of $ 3.4 million, as security for the agreements. These agreements have not had a material effect on our results of operations, financial position or cash flow. 13. Company Earn-Out and Warrant Liabilities Company Earn-Out Certain holders of common stock and certain holders of options shall be issued additional shares of AvePoint’s common stock, as follows: ■ 1,000,000 shares of AvePoint’s common stock, in the aggregate, if at any time from July 1, 2021 through July 1, 2028 ( a) AvePoint’s stock price is greater than or equal to $12.50 over any 20 Trading Days within any 30 -day trading period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $12.50 per share; ■ 1,000,000 shares of AvePoint’s common stock, in the aggregate, if at any time from July 1, 2021 through July 1, 2028 ( a) AvePoint’s stock price is greater than or equal to $15.00 over any 20 Trading Days within any 30 -day trading period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $15.00 per share; ■ 1,000,000 shares of AvePoint’s common stock, in the aggregate, if at any time from July 1, 2021 through July 1, 2028 ( a) AvePoint’s stock price is greater than or equal to $17.50 over any 20 Trading Days within any 30 -day trading period or (b) the Company consummates a subsequent transaction, which results in the stockholders of the Company having the right to exchange their shares for cash, securities or other property having a value equaling or exceeding $17.50 per share. The rights described above are hereafter referred to as the “ Company Earn-Out Shares ”. To the extent that any portion of the Company Earn-Out Shares that would otherwise be issued to a holder of options that remain unvested at the date of the milestones described above, then in lieu of issuing the applicable Company Earn-Out Shares, the Company shall instead issue an award of RSUs of the Company for a number of shares of AvePoint’s common stock equal to such portion of the Company Earn-Out Shares issuable with respect to the unvested options (the “ Company Earn-Out RSUs ”). In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718. Refer to “ Note 15 — Stock-Based Compensation ” for more information regarding the Company Earn-Out RSUs. 91 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 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. Significant increases or decreases to these inputs in isolation could result in a significantly higher or lower liability. Under this approach, the fair value of the Company Earn-Out Shares on July 1, 2021, was determined to be $ 29.6 million. The fair value was remeasured as of December 31, 2023 and 2022 , and was determined to be $ 18.3 million and $ 6.6 million, respectively, and included in the earn-out shares’ liabilities in the consolidated balance sheets. As a result, $ 11.1 million loss, $ 4.3 million gain and $ 20.3 million gain was recognized during the years ended December 31, 2023 , 2022 and 2021, respectively, and included as other (expense) income, net in the consolidated statements of operations. We estimated the earn-out shares fair value using a Monte Carlo model with the following significant unobservable assumptions: December 31, December 31, July 1, 2023 2022 2021 Term (in years) 4.50 5.50 7.00 Volatility 55.00 % 55.00 % 40.00 % Private Warrants to Acquire Common Stock On July 1, 2021, the Company granted 405,000 private placement warrants with a 5 -year term and strike price of $ 11.50 per share. Management has determined that the private placements warrants are to be classified as liabilities to be marked to market at each reporting period. The private placement warrants are non-transferable and any transfer to an unrelated party would cause the warrants to be converted into public warrants. Consequently, the fair value of the private placement warrants is equivalent to the quoted price of the publicly traded warrants . Under this approach, the fair value of the private placement warrants on July 1, 2021, was determined to be $ 1.4 million. The fair value was remeasured as of December 31, 2023 and 2022 , and was determined to be $ 0.5 million and $ 0.2 million, respectively, and included in the other non-current liabilities in the consolidated balance sheets. As a result, $ 0.3 million loss, $ 0.2 million gain, and $ 0.9 million gain was recognized during the years ended December 31, 2023 , 2022 and 2021, respectively, and included as other (expense) income, net in the consolidated statements of operations. 14. Mezzanine Equity and Stockholders ’ Equity The Company has one class of capital stock: common stock. The following summarizes the terms of the Company’s capital stock. Common Stock Pursuant to the Company’s restated Articles of Incorporation, the Company is authorized to issue up to 1,000,000,000 shares of common stock at $ 0.0001 par value. There were 184,652,402 and 185,277,588 shares issued and outstanding, including treasury shares, if any, as of December 31, 2023 and 2022 , respectively. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s Board of Directors. The Company’s Board of Directors has not declared common stock dividends since inception. During the year ended December 31, 2023, the Company repurchased 6,719,032 shares and retired 10,908,782 shares. The shares were returned to the status of authorized but unissued shares. As a result, common stock amount, additional paid-in capital, and accumulated deficit in the consolidated balance sheet were reduced by $ 0.0 million, $ 38.9 million, and $ 21.8 million, respectively. 92 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Share Repurchase Program On March 17, 2022, the Company announced that its Board of Directors authorized a new share repurchase program (the “ Share Repurchase Program ”) for the Company to buy back shares of its common stock. Under the Share Repurchase Program, the Company has the authority to buy up to $ 150 million of common stock via acquisitions in the open market or privately negotiated transactions. The Share Repurchase Program will remain open for a period of three years from the date of authorization and may be suspended or discontinued at any time. The Company is not obligated to make purchases of, nor is it obligated to acquire any particular amount of, common stock under the Share Repurchase Program. During the years ended December 31, 2023 and 2022, the Company purchased 6,719,032 and 4,046,186 shares, respectively, at an average price of $ 5.81 and $ 4.92 per share, respectively. Sponsor Earn-Out Shares On July 1, 2021 the Company modified the terms of 2,916,700 shares of common stock (“ Sponsor Earn-Out Shares ”) then held by Apex’s sponsor, such that such shares will be subject to the following vesting provisions: ■ 100% of the Sponsor Earn-Out Shares shall vest and be released if at any time through July 1, 2028, AvePoint’s stock price is greater than or equal to $15.00 (as adjusted for share splits, share capitalization, reorganizations, recapitalizations and the like) over any 20 trading days within any 30 -day trading period; and ■ 100% of the remaining Sponsor Earn-Out Shares that have not previously vested shall vest and be released if at any time through July 1, 2028, the Company consummates a subsequent transaction. The Sponsor Earn-Out Shares are currently outstanding and receive all benefits of regular shares with the exception of the fact that the shares are held in escrow and restricted from transfer until the vesting conditions described above are met. Consequently, the shares are classified as equity. No Sponsor Earn-Out Shares have vested as of December 31, 2023 . Public Warrants to Acquire Common Stock On July 1, 2021, the Company issued 17,500,000 public warrants with an exercise price of $ 11.50 . Each warrant entitles the registered holder to purchase one share of AvePoint’s common stock and the warrants are exercisable from the date of issuance through July 1, 2026. The public warrants are equity classified and its fair value, based on the publicly traded warrants, was $ 59.3 million on July 1, 2021, and included in the additional paid-in capital on the consolidated balance sheets. As of December 31, 2023 and 2022, all 17,500,000 warrants remain outstanding. 93 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Redeemable Noncontrolling Interest On December 24, 2020, AEPL, an unaffiliated entity, acquired a redeemable noncontrolling interest in MaivenPoint through the contribution of $ 7.5 million. As of December 31, 2020, AvePoint owned a 77.78 % interest in MaivenPoint and AEPL owned a 22.22 % interest in MaivenPoint. On February 11, 2021, AEPL acquired additional redeemable noncontrolling interest in MaivenPoint through the contribution of $ 0.8 million. At the transaction closing date, AvePoint owned a 76.09 % interest in MaivenPoint and AEPL owned a 23.91 % interest in MaivenPoint. As part of AEPL’s initial and subsequent investment in MaivenPoint, the Company granted AEPL a put option which allows AEPL to cause the Company to repurchase AEPL’s shares in MaivenPoint at any time between December 24, 2022, and December 24, 2023, at a price equal to AEPL’s initial and subsequent investment amounts. On February 18, 2022, MaivenPoint consummated the acquisition of 100 % of the equity in I-Access for an aggregate purchase price of approximately $ 7.1 million. The negotiated transaction consideration includes MaivenPoint issuing shares and rights for shares which both also subject to a guaranteed minimum revenue provision (the “ GMR ”), and granting the former I-Access shareholders a put option which allows sellers to cause MaivenPoint to repurchase the shares of MaivenPoint for approximately $ 5.9 million, upon 24 months from Acquisition Close Date or the occurrence of certain triggering events which are in the control of the Company. Under the GMR the former I-Access shareholders may have earned additional shares or return shares base on a revenue surplus and shortfall outcome. On April 15, 2022, the Company implemented a management changeover. As a result, pursuant to the terms of the Share Purchase Agreement, the GMR was cancelled and the 292,440 MaivenPoint shares issued as consideration on the I-Access Closing Date, the 30,252 MaivenPoint shares held in escrow, and the put option on MaivenPoint shares were no longer contingent, reclassified to mezzanine equity and included in redeemable noncontrolling interest. From the date the GMR was cancelled to December 31, 2023, AvePoint owned a 73.82 % interest in MaivenPoint, AEPL owned a 23.20 % interest in MaivenPoint and the former I-Access shareholders owned a 2.98 % interest in MaivenPoint. On December 24, 2023, the put option granted to AEPL expired. The redeemable noncontrolling interest owned by AEPL was reclassified to equity and is presented in the Stockholders’ equity section of the consolidated balance sheets for the year ended December 31, 2023. During February 2024, certain of the former I-Access shareholders submitted notices of exercise of the put option of approximately $ 5.5 million. The roll forward of the balance of the redeemable noncontrolling interest is as follows: Redeemable Noncontrolling Interest Year Ended December 31, 2023 2022 2021 (in thousands) Beginning balance $ 14,007 $ 5,210 $ 3,061 Issuance of redeemable noncontrolling interest — 5,794 238 Reclassification of redeemable noncontrolling interest ( 8,148 ) — — Net loss attributable to redeemable noncontrolling interest ( 38 ) ( 401 ) ( 847 ) Other comprehensive income (loss) attributable to redeemable noncontrolling interest 5 61 ( 63 ) Adjustment to present redemption value 212 3,343 2,821 Ending balance $ 6,038 $ 14,007 $ 5,210 94 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 15. Stock-Based Compensation The Company maintains the 2021 Equity Incentive Plan (the “ 2021 Plan ”). As of December 31, 2023, 23,202,700 shares remained for future issuance under the 2021 Plan. To date, the Company has issued only stock options, restricted stock and restricted stock units to employees, directors and consultants. Stock-based compensation was included in the following line items in the consolidated statements of operations: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 3,161 $ 2,640 $ 3,477 Sales and marketing 9,518 11,393 15,906 General and administrative 19,338 19,398 24,063 Research and development 4,031 3,787 16,062 Total stock-based compensation $ 36,048 $ 37,218 $ 59,508 Total tax benefit related to vested or exercised awards during the years ended December 31, 2023 , 2022 and 2021 was $ 2.5 million, $ 2.2 million and $ 0.03 million, respectively. Stock Options The compensation costs for stock option awards are accounted for in accordance with ASC 718, Compensation-Stock Compensation . Stock options vest over a four -year service period and expire on the tenth anniversary of the date of award. Certain of the Company’s stock option awards (the “ Officer Awards ”) included a provision that required the Company to redeem the vested portion of options at fair value in cash upon a separation of service initiated by the Company or upon death or disability of the holder. The Company determined that the redemption feature required the Officer Awards to be classified in mezzanine equity prior to the Apex Business Combination. For share-based payment arrangements with employees, the amount presented in mezzanine equity at each balance sheet date was based on the redemption provisions of the instrument and adjusted for the proportion of consideration received in the form of employee services. The shares underlying the Officer Awards were puttable to the Company upon certain conditions, such as death or disability of the Officer Awards recipients, which the Company determined was not probable; therefore, the Company reclassified the grant-date intrinsic value to mezzanine equity as the awards vested. The Officer Awards were cancelled in 2021, concurrent with the Apex Business Combination. In exchange for the cancellation of the Officer Awards, the Company agreed to deliver to the holders of the Officer Awards a fixed amount of shares equal to the amount of shares the holders would have received if the Officer Awards were exercised on the date of the Apex Business Combination in a net share settlement scenario. The cancelled Officer Awards were treated as modification of the original awards under ASC 718; however, no incremental value exists as a result of the modification. As a result of the cancellation of the original Officer Awards, the $ 1.7 million mezzanine balance was reclassified to permanent equity on July 1, 2021, and the Company recognized $ 3.5 million in previously unrecognized compensation costs. As a result, the Company issued 3,592,504 shares in July 2022. 95 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The Company’s stock option awards granted to certain international employees (the “ Legacy International Options ”) contained a performance condition that stated that the awards are only exercisable if the Company’s common shares are publicly traded. When the exercise contingency was resolved upon completion of the Apex Business Combination, the Legacy International Options were cancelled and replaced with new awards with substantially the same terms and conditions (the “ International Options ”). Prior to the Apex Business Combination, no compensation expense related to the Legacy International Options was recognized, as the exercise contingency was not deemed probable until the occurrence of the Apex Business Combination. Had the exercise contingency been deemed probable, the Legacy International Options would have been classified as liabilities. After the Apex Business Combination vested International Options can be exercised utilizing broker-assisted settlements; therefore, the International Options are classified as equity. As a result of this change in classification, the Company calculated the fair value of the awards on July 1, 2021, for purposes of compensation expense. In accordance with ASC 718, all previously unrecognized compensation since the grant date was immediately recognized upon resolution of the exercise contingency. As a result, in 2021 the Company recognized a one -time charge of $ 24.3 million in previously unrecognized compensation costs. In 2020, the Company granted certain executives stock option awards that contain both service and performance vesting conditions (the “ Time and Performance Based Options ”). The Time and Performance Based Options were granted in three tranches (the “ Time-Based Options ,” the “ Performance-Based 1 Options ,” and the “ Performance-Based II Options ”). The Time-Based Option vests over a four -year period, subject to the grantee’s continuous service with the Company. The Performance-Based I Option vests contingent upon the Company meeting certain performance goals. These goals were considered met in 2021. The Performance-Based II Option vests contingent upon the grantee achieving certain goals. These goals were considered met on January 1, 2021. Both the Performance-Based I Option and Performance-Based II Option are subject to the grantee’s continuous service to the company. The weighted-average grant date fair value of options granted in the years ended December 31, 2023 , 2022 and 2021 was $ 2.49 , $ 2.71 and $ 4.09 , respectively. The Company calculates the expected term using the “simplified” method, which is the simple average of the vesting period and the contractual term. The simplified method is applied as the Company does not have sufficient historical data to provide a reasonable basis for an estimate of the expected term. Expected volatility is based on historical and implied volatility of a group of peer entities over a similar expected term. Dividend yields are based upon historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected term. The Company estimated the grant date fair value of these stock options using the Black-Scholes option-pricing model with the following weighted-average assumptions: 2023 2022 2021 Expected term (in years) 6.11 6.11 6.11 Expected volatility 59.19 % 45.18 % 43.31 % Risk-free rate 3.63 % 2.16 % 0.94 % Dividend yield — — — 96 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) A summary of the Company’s stock option activity during the year ended December 31, 2023 is as follows: Stock Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Balance, January 1, 2023 29,167,803 $ 4.05 6.53 Granted 1,125,374 4.22 — Exercised ( 2,840,716 ) 1.96 — Forfeited or expired ( 260,276 ) 7.03 — Balance, December 31, 2023 27,192,185 $ 4.25 5.91 As of December 31, 2023 , the following table summarizes information about outstanding and exercisable stock options: Outstanding Exercisable Exercise Price Stock Options Weighted-Average Contractual Life Weighted-Average Exercise Price Stock Options Weighted-Average Contractual Life Weighted-Average Exercise Price $ 0.16 - $ 1.34 5,401,719 2.68 $ 1.28 5,401,719 2.68 $ 1.28 $ 1.52 - $ 1.89 4,051,290 4.74 1.61 4,051,290 4.74 1.61 $ 3.90 - $ 9.64 17,739,176 7.16 5.75 11,785,430 6.93 5.44 27,192,185 5.91 $ 4.25 21,238,439 5.43 $ 3.65 As of December 31, 2023 , there was $ 15.7 million in unrecognized compensation costs related to all non-vested options. This unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of approximately 1.7 years. As of December 31, 2023 , the Company had 27,192,185 options outstanding and 21,238,439 options exercisable with intrinsic values of $ 115.5 million and $ 101.2 million, respectively. During the year ended December 31, 2023 , 2,840,716 options were exercised, with a total intrinsic value of $ 11.8 million. During the year ended December 31, 2022, 1,799,665 options were exercised, with a total intrinsic value of $ 6.6 million. During the year ended December 31, 2021, 5,141,331 options were exercised, with a total intrinsic value of $ 40.0 million. Total cash received from exercise of options during the years ended December 31, 2023, 2022 and 2021 was $ 5.6 million, $ 2.8 million and $ 5.6 million, respectively. Restricted Stock Units In addition to Stock Options granted under the 2021 Plan, 6,752,588 RSUs were granted under the 2021 Plan in 2023. The compensation costs for stock option awards are accounted for in accordance with ASC 718, Compensation-Stock Compensation. RSUs vest over a four -year service period from the grant date and are measured at the fair market value of the underlying stock at the grant date. 97 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) A summary of the Company’s RSU activity during the year ended December 31, 2023 is as follows: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2022 8,392,543 $ 7.10 Granted 6,752,588 4.38 Vested ( 3,253,130 ) 7.02 Forfeited ( 1,189,412 ) 5.94 Unvested as of December 31, 2023 10,702,589 $ 5.54 The per share weighted-average grant date fair value of RSUs granted during the years ended December 31, 2023 , 2022 and 2021 was $ 4.38 , $ 5.55 and $ 9.64 , respectively. The total fair value of shares vested during the years ended December 31, 2023 , 2022 and 2021 was $ 18.9 million, $ 8.2 million and $ 9.5 million, respectively. As of December 31, 2023 , there was $ 52.4 million in unrecognized compensation costs specific to the non-vested RSUs under the 2021 Plan. This unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of approximately 2.5 years. Company Earn-Out RSUs The compensation costs for Company Earn-Out RSUs are accounted for in accordance with ASC 718, Compensation-Stock Compensation . In order to capture the market conditions associated with the Company Earn-Out RSUs, 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 RSUs’ contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. Under this approach, the grant-date fair value of the Company Earn-Out RSUs on July 1, 2021, was determined to be $ 2.5 million. The stock options underlying the Earn-Out RSUs vest over a four -year period and expire on the tenth anniversary of the date of award. If the contingent milestones of the Earn-Out RSUs are not met by the seventh anniversary of the Apex Business Combination, the holders of the underlying stock options will not receive the Earn-Out RSUs. For the years ended December 31, 2023 , 2022 and 2021, the Company recorded stock-based compensation expense of $ 0.9 million, $ 0.9 million and $ 0.4 million, respectively, related to these Earn-Out RSUs. 98 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Put and Call Options On December 26, 2019, the Company granted put options to certain of the Company’s management, to request a redemption of 3,113,170 shares of common stock (“ Modified Common Stock ”) or 5,148,777 shares underlying options to acquire common stock (“ Modified Options ”, collectively, “ Eligible Shares ”) during the period from March 25, 2025, to April 26, 2025 ( the “ Settlement Period ”) or, if earlier, the 30 day period following a Qualifying Termination for a redemption price per share equal to the fair market value, as determined by AvePoint’s Board of Directors; provided, that if a redemption request is delivered following a Qualifying Termination, the Company shall pay the redemption price during the Settlement Period unless the holders of Series C Preferred Stock consent to the payment of the redemption price by the Company within the 30 day period following the Qualifying Termination. In addition, the Company has a right to purchase all or any portion of the Eligible Shares at any time for a purchase price per share equal to the fair market value. Mezzanine equity classification is required if stock awards that would otherwise qualify for equity classification are subject to contingent redemption features that are not solely within the control of the issuer. The Company remeasured the Modified Common Stock at each balance sheet date based on the fair value of the Company’s shares and such remeasurements are reflected as an adjustment of the value in mezzanine equity. In 2019, the Company recorded a one -time stock-based compensation expense of $ 0.5 million, related to Modified Common Stock. These costs have been recorded in operating expenses in the consolidated statements of operations. In connection with the Apex Business Combination, the agreements creating the Modified Common Stock and Modified Options were terminated. As a result, the $ 39.3 million mezzanine balance and the $ 49.7 million liability balance were reclassified to permanent equity on July 1, 2021. The fair values of Modified Options were estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions on July 1, 2021: July 1, 2021 Expected term (in years) 4.10 Expected volatility 34.44 % Risk-free rate 0.79 % Dividend yield — For the year ended December 31, 2021, the Company recorded stock-based compensation expenses of $ 11.8 million, related to these options. These costs have been recorded in costs of revenue and operating expenses in the consolidated statements of operations. During 2021, 1,365,503 options included in Modified Options were exercised. As a result of exercises of the Modified Options during 2021, $ 15.4 million of the liability balance related to Modified Options was reclassified to liability-classified outstanding shares within the six months from the time of exercise. During 2021, $ 6.9 million of the liability balance for these outstanding shares was reclassified to mezzanine equity as a result of the completion of six months from the time of the exercise of 690,474 options. As of July 1, 2021, the Apex Business Combination date, the liability balance related to this Modified Common Stock was $ 49.7 million. For the year ended December 31, 2022 , the Company recorded stock-based compensation expense of $ 1.2 million, related to this Modified Common Stock. 99 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 16. Fair Value Measurements Fair value is defined by ASC 820, Fair Value Measurement (ASC 820 ) as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three -level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ■ Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. ■ Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. ■ Level 3 — Unobservable inputs for the asset or liability. Year Ended December 31, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash Equivalents: Certificates of deposit (1) $ — $ 1,533 $ — $ 1,533 Money market funds — 4,423 — 4,423 U.S. treasury bills — 171,841 — 171,841 Short term investments: Certificates of deposit (1) — 3,721 — 3,721 Other assets: Notes receivables (3) — — 1,840 1,840 Total $ — $ 181,518 $ 1,840 $ 183,358 Liabilities: Earn-out shares liabilities: Earn-out shares (2) $ — $ — $ 18,346 $ 18,346 Other non-current liabilities: Warrant liabilities (2) — 533 — 533 Total $ — $ 533 $ 18,346 $ 18,879 100 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) Year Ended December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash Equivalents: Certificates of deposit (1) $ — $ 1,693 $ — $ 1,693 Money market funds — 188,769 — 188,769 Short term investments: Certificates of deposit (1) — 2,620 — 2,620 Other assets: Certificates of deposit (1) — 162 — 162 Total $ — $ 193,244 $ — $ 193,244 Liabilities: Earn-out shares liabilities: Earn-out shares (2) $ — $ — $ 6,631 $ 6,631 Other non-current liabilities: Warrant liabilities (2) — 227 — 227 Total $ — $ 227 $ 6,631 $ 6,858 ( 1 ) The majority of certificates of deposit are foreign deposits. ( 2 ) Refer to “ Note 13 - Company Earn-Out and Warrant Liabilities ” for further details. ( 3 ) Other assets include yielding loan notes to Lumens Capital Partners, Ltd. (“ LCP ”) with a total commitment of up to $ 5.0 million and maturities of greater than twelve months. See “ Note 21 - Subsequent Events ” for more information. The notes bear interest at an annual rate equal to 8 %. During the years ended December 31, 2023 and 2022, new notes receivables issued were $ 1.3 million and $ 0.5 million, respectively. Fair values are based on discounted future cash flows using current interest rates offered for similar notes to third parties with similar credit ratings for the same remaining maturities. 101 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) The following table summarizes the Company’s available-for-sale securities measured at fair value as of December 31, 2023. Year Ended December 31, 2023 (in thousands) Amortized Cost Fair Value Gross unrealized gains Gross unrealized losses U.S. treasury bills $ 171,815 $ 171,841 $ 26 $ — Total $ 171,815 $ 171,841 $ 26 $ — The contractual maturity of the available-for-sale securities held as of December 31, 2023 was within one year. The following table presents the reconciliation in Level 3 instruments which consisted of earn-out shares liabilities which were measured on a recurring basis for the year ended December 31, 2023. Year Ended December 31, 2023 (in thousands) Opening balance $ 6,631 Total gains or losses from the period Included in other (expense) income, net 11,148 Reclass from Earnout-RSU 567 Closing balance $ 18,346 102 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 17. Segment information The Company operates in one segment. Its products and services are sold throughout the world, through direct and indirect sales channels. The Company’s chief operating decision maker (the “ CODM ”) is the Chief Executive Officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation, expense allocation or profitability by product or geography. Revenue by geography is based upon the billing address of the customer. All transfers between geographic regions have been eliminated from consolidated revenue. The following table sets forth revenue by geographic area: Year Ended December 31, 2023 2022 2021 (in thousands) Revenue: North America $ 118,490 $ 102,025 $ 83,034 EMEA 81,753 71,635 58,285 APAC 71,582 58,679 50,590 Total revenue $ 271,825 $ 232,339 $ 191,909 The following table sets forth revenue generated by countries which represent more than 10% of total consolidated revenue: Year Ended December 31, 2023 2022 2021 (in thousands) Revenue: United States $ 115,799 $ 100,870 $ 83,034 Germany 35,775 30,625 23,574 Singapore 30,974 21,915 16,580 Japan 22,547 21,348 23,360 The following table sets forth property and equipment, net held within the United States, China and foreign countries: December 31, December 31, 2023 2022 (in thousands) Property and equipment, net: United States $ 1,137 $ 1,279 China 1,915 2,982 Other 2,066 1,276 Total property and equipment, net $ 5,118 $ 5,537 103 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 18. Other (expense) income, net Other (expense) income, net is disaggregated as follows: Year Ended December 31, 2023 2022 2021 (in thousands) (Loss) gain on earn-out and warrant liabilities $ ( 11,454 ) $ 4,497 $ 21,233 Interest income (expense), net 26 ( 40 ) 102 Profits on securities 8,895 2,811 16 Foreign currency exchange (loss) gain, net ( 778 ) 112 ( 877 ) Other, net 48 36 229 Other (expense) income, net $ ( 3,263 ) $ 7,416 $ 20,703 19. Loss Per Share Basic loss per share available to the Company’s common shareholders (“ EPS ”) is computed by dividing net loss by the weighted average number of common shares outstanding for the period. In computing diluted EPS, the Company adjusts the denominator, subject to anti-dilution requirements, to include the dilution from potential shares of common stock resulting from outstanding share-based payment awards, warrants, earn-outs and the conversion of convertible preferred shares. The Company applies the two -class method in calculating loss per share. The Company’s Sponsor Earn-Out Shares described in “ Note 14 — Mezzanine Equity and Stockholders’ Equity ” are considered participating securities and have no contractual obligation to shares in the loss of the Company. As such, the weighted-average impact of these shares is excluded from the calculation of loss per share below. As losses were incurred during all periods presented, no earnings per share exists for the Sponsor Earn-Out Shares. Year Ended December 31, 2023 2022 2021 (in thousands, except per share amounts) Loss per share available to common stockholders, excluding sponsor earn-out stockholders Numerator: Net loss $ ( 21,501 ) $ ( 38,688 ) $ ( 33,245 ) Net income attributable to noncontrolling interest ( 224 ) ( 2,942 ) ( 1,974 ) Net loss attributable to AvePoint, Inc. $ ( 21,725 ) $ ( 41,630 ) $ ( 35,219 ) Deemed dividends on preferred stock — — ( 32,928 ) Total net loss available to common stockholders $ ( 21,725 ) $ ( 41,630 ) $ ( 68,147 ) Denominator: Weighted average common shares outstanding 182,257 181,957 141,596 Effect of dilutive securities — — — Weighted average diluted shares 182,257 181,957 141,596 Basic and diluted loss per share available to common stockholders, excluding sponsor earn-out stockholders $ ( 0.12 ) $ ( 0.23 ) $ ( 0.48 ) 104 Table of Contents AvePoint, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) To arrive at net loss available to common stockholders, the Company deducted net income attributable to the noncontrolling interest in MaivenPoint and deemed dividends, which related to the redemption, extinguishment, and remeasurement of preferred stock. For the years ended December 31, 2023 , 2022 and 2021, the Company’s potentially dilutive securities were deemed to be anti-dilutive given the Company’s net loss position. As such, basic loss per share is equal to diluted loss per share for the periods presented. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported: Year Ended December 31, 2023 2022 2021 (in thousands) Stock options 27,192 29,168 30,480 Restricted stock units 10,703 8,493 5,167 Warrants 17,905 17,905 17,905 Company Earn-Outs 3,000 3,000 3,000 Total potentially dilutive securities 58,800 58,566 56,552 20. Related Party Transactions The Company has entered into indemnification agreements with its Executive Officers and directors. These agreements, among other things, require AvePoint to indemnify its directors and Executive Officers to the fullest extent permitted by Delaware law, specifically the Delaware General Corporation Law (as the same exists or may hereafter be amended) for certain expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by a director or officer in any action or proceeding arising out of their services as one of the Company’s directors or officers or any other company or enterprise to which the person provides services at the Company’s request. 21. Subsequent Events The following material subsequent events occurred since the date of the most recent balance sheet period reported. Growth Equity Fund On February 28, 2024 the Company entered into an agreement with LCP to form the A3 Ventures Fund 1, L.P. (the “ A3V Fund ”). The A3V Fund will focus its investments in companies in the growth equity phase, as well as mature cashflow generating businesses with strong growth potential; and located in established enterprise software markets that map to LCP’s and the Company’s professional expertise and geographical footprint. The Company has committed $50.0 million to the A3V Fund, which will be called as needed for portfolio investments and to pay fees and expenses of the A3V Fund. Other institutional investors and/or high net worth individuals will also be allowed to commit capital to the A3V Fund. 105 Table of Contents PART II Items 9 and 9A ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.