GTY Technology Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 gtyh-20200331x10q.htm 10-Q gtyh_Current_Folio_10Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended March 31, 2020

☐

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

For the transition period from to

GTY TECHNOLOGY HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Massachusetts	001‑37931	83‑2860149
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (702) 945‑2898

Not Applicable

(Former name or former address, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, par value $0.0001 per share	GTYH	Nasdaq Stock Market LLC

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

None.

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

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

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

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

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

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

As of May 8, 2020, 54,209,197 and 53,592,831 shares of common stock, par value $0.0001 per share were issued and outstanding, respectively.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

Form 10-Q

For the Quarter Ended March 31, 2020

Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	4

	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II. OTHER INFORMATION		41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 6.	Exhibits	42

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands)


	March 31,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	8,116	$	8,374
Accounts receivable, net		8,299		9,184
Prepaid expenses and other current assets		4,037		3,047
Total current assets		20,452		20,605

Property and equipment, net		4,617		3,185
Right of use assets		5,154		5,876
Intangible assets, net		112,115		115,788
Goodwill		286,635		286,635
Other assets		2,393		2,304
Total assets	$	431,366	$	434,393

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	8,213	$	8,443
Contract liabilities - current portion		15,836		17,346
Financing lease obligations - current portion		565		555
Operating lease liability - current portion		1,780		1,851
Contingent consideration - current portion		12,685		12,680
Term loan, net		11,542		—
Total current liabilities		50,621		40,875

Contract and other long-term liabilities		1,708		1,264
Deferred tax liability		16,274		20,276
Financing lease obligations - less current portion		615		811
Operating lease liability - less current portion		3,683		4,311
Contingent consideration - less current portion		41,230		41,233
Total liabilities		114,131		108,770

Commitments and contingencies

Shareholders’ equity:
Common stock		5		5
Exchangeable shares		43,220		45,681
Additional paid in capital		377,572		369,756
Accumulated other comprehensive income		2,419		370
Treasury stock		(5,174)		(5,174)
Accumulated deficit		(100,807)		(85,015)
Total shareholders' equity		317,235		325,623
Total liabilities and shareholders’ equity	$	431,366	$	434,393

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands, except per share amounts)


	Successor				Predecessor
			February 19, 2019		January 1, 2019
	Three Months Ended		through		through
	March 31, 2020		March 31, 2019		February 18, 2019
Revenues	$	11,276	$	3,034	$	4,928
Cost of revenues		4,527		1,576		1,614
Gross Profit		6,749		1,458		3,314

Operating expenses
Sales and marketing		4,854		1,378		1,394
General and administrative		7,449		2,319		1,749
Research and development		3,798		1,472		1,580
Amortization of intangible assets		3,673		1,693		32
Acquisition costs		—		35,029		151
Restructuring charges		3,466		—		—
Change in fair value of contingent consideration		29		35		(37)
Total operating expenses		23,269		41,926		4,869
Loss from operations		(16,520)		(40,468)		(1,555)

Other income (expense)
Interest income (expense), net		(236)		421		(170)
Loss from issuance of shares		(2,056)		—		—
Other income (loss), net		499		(5)		12
Total other income (expense), net		(1,793)		416		(158)

Loss before income taxes		(18,313)		(40,052)		(1,713)
Benefit from income taxes		2,521		—		—
Net loss	$	(15,792)	$	(40,052)	$	(1,713)

Net loss per share, basic and diluted	$	(0.30)	$	(0.83)
Weighted average shares of common stock outstanding, basic and diluted		52,575		48,462

Net loss	$	(15,792)	$	(40,052)	$	(1,713)
Other comprehensive income:
Foreign currency translation gain		2,049		—		—
Total other comprehensive income		2,049		—		—
Comprehensive loss	$	(13,743)	$	(40,052)	$	(1,713)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands, except share amounts)

Three Months Ended March 31, 2020


													Accumulated
							Additional						Other		Total
	Common Stock			Exchangeable Shares			Paid in		Treasury		Accumulated		Comprehensive		Shareholders’
Successor	Shares	Amount		Shares	Amount		Capital		Stock		Deficit		Income		Equity
Balance - December 31, 2019	52,303,862	$	5	5,568,096	$	45,681	$	369,756	$	(5,174)	$	(85,015)	$	370	$	325,623
Net loss	—		—	—		—		—		—		(15,792)		—		(15,792)
Foreign currency translation gain	—		—	—		—		—		—		—		2,049		2,049
Share-based compensation	—		—	—		—		3,295		—		—		—		3,295
Share Redemption (Incremental Shares Issued)	334,254		—	—		—		2,056		—		—		—		2,056
Vested and settled restricted shares	31,250		—	—		—		—		—		—		—		—
Stock option exercises	3,699		—	—		—		4		—		—		—		4
Exchangeable shares converted to Common Stock	246,097		—	(246,097)		(2,461)		2,461		—		—		—		—
Balance - March 31, 2020	52,919,162	$	5	5,321,999	$	43,220	$	377,572	$	(5,174)	$	(100,807)	$	2,419	$	317,235

Successor from February 19, 2019 to March 31, 2019


																	Total
													Additional				Shareholders’
	Common Stock			Class A			Class B			Exchangeable Shares			Paid in		Accumulated		Equity
Successor	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		(Deficit)
Balance - February 19, 2019	—	$	—	898,984	$	—	13,568,821	$	1	—	$	—	$	—	$	4,999	$	5,000
Net loss	—		—	—		—	—		—	—		—		—		(40,052)		(40,052)
Ordinary shares no longer subject to possible redemption	—		—	9,216,438		1	—		—	—		—		88,912		—		88,913
Private placement of Class A shares, net of costs	—		—	12,863,098		2	—		—	—		—		125,256		—		125,258
Exchange of shares in GTY Merger	36,547,341		4	(22,978,520)		(3)	(13,568,821)		(1)	—		—		—		—		—
Class A shares issued for acquisitions	11,973,154		1	—		—	—		—	—		—		119,730		—		119,731
Shares convertible into Class A shares issued for acquisitions	—		—	—		—	—		—	5,761,741		47,617		—		—		47,617
Share-based compensation	—		—	—		—	—		—	—		—		551		—		551
Common stock redeemed	(100,000)		—	—		—	—		—	—		—		(1,000)		—		(1,000)
Balance - March 31, 2019	48,420,495	$	5	—	$	—	—	$	—	5,761,741	$	47,617	$	333,449	$	(35,053)	$	346,018

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands, except share and per share amounts)

Predecessor from December 31, 2018 to February 18, 2019


	Predecessor
Balance as of December 31, 2018	$	(37,142)
Net loss		(1,713)
Stock compensation		61
Exercise of stock options		13
Shareholders'/Members' equity activity		5,629
Balance as of February 18, 2019	$	(33,152)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)


	Successor				Predecessor
			February 19, 2019		January 01, 2019
	Three Months Ended		through		through
	March 31, 2020		March 31, 2019		February 18, 2019
Cash flows from operating activities:
Net loss	$	(15,792)	$	(40,052)	$	(1,713)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment		54		79		177
Amortization of intangible assets		3,673		1,693		32
Amortization of right of use assets		431		262		165
Share-based compensation		3,295		551		61
Deferred income tax benefit		(2,521)		—		—
Loss on issuance of shares		2,056		—		—
Amortization of deferred debt issuance costs		66		—		—
Bad debt expense		69		9		6
Foreign exchange loss on payment of vested options		—		17		—
Change in fair value of contingent consideration		29		35		(37)
Change in fair value of warrant liability		—		—		(18)
Changes in operating assets and liabilities:
Accounts receivable		522		(1,164)		2,190
Prepaid expenses and other assets		(1,122)		(617)		202
Accounts payable and accrued liabilities		(546)		13,916		(781)
Contract and other long-term liabilities		(42)		—		—
Operating lease liabilities		(441)		—		—
Net cash (used in) provided by operating activities		(10,269)		(25,271)		284

Cash flows from investing activities:
Proceeds from cash held in trust		—		217,642		—
Proceeds from the sales of marketable securities		—		—		1,531
Acquisitions, net of cash acquired		—		(179,008)		—
Capital expenditures		(1,111)		(6)		(15)
Net cash (used in) provided by investing activities		(1,111)		38,628		1,516

Cash flows from financing activities:
Proceeds from borrowings, net of issuance costs		11,476		—		35
Repayments of borrowings		—		(640)		(69)
Contingent consideration payments		(27)		—		—
Stock options exercises		4		—		13
Member distribution		—		—		(500)
Redemption of Class A Ordinary Shares		—		(113,982)		—
Common stock redeemed		—		(1,000)		—
Proceeds received from private placement of Class A shares, net of costs		—		125,258		—
Proceeds from disposal of fixed assets		—		—		1
Repayments of finance lease obligations		(136)		(20)		(19)

Price	6.16	EPS	-1
Shares	52	P/E	-5
MCap	322	P/FCF	-4
Net Debt	-17	EBIT	-60
TEV	305	TEV/EBIT	-5
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-03-13
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-13
10-K	2018-12-31	Filed 2019-03-18
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-03-16
10-Q	2017-09-30	Filed 2017-11-13
10-Q	2017-06-30	Filed 2017-08-11
10-Q	2017-03-31	Filed 2017-05-12
10-K	2016-12-31	Filed 2017-03-24
10-Q	2016-09-30	Filed 2016-12-12

8-K	2020-06-23	Shareholder Vote
8-K	2020-05-08
8-K	2020-04-02
8-K	2020-03-24
8-K	2020-03-12
8-K	2020-02-19
8-K	2020-02-14
8-K	2020-02-14
8-K	2020-01-14
8-K	2019-12-12
8-K	2019-11-07
8-K	2019-10-14
8-K	2019-09-16
8-K	2019-08-09
8-K	2019-08-08
8-K	2019-07-02
8-K	2019-06-24
8-K	2019-06-04
8-K	2019-05-20
8-K	2019-05-13
8-K	2019-05-07
8-K	2019-02-19
8-K	2019-02-19
8-K	2019-02-14
8-K	2019-02-08
8-K	2019-02-07
8-K	2019-02-07
8-K	2019-02-04
8-K	2019-02-01
8-K	2019-01-22
8-K	2019-01-14
8-K	2019-01-14
8-K	2018-12-28
8-K	2018-11-23
8-K	2018-11-13
8-K	2018-10-30
8-K	2018-10-22
8-K	2018-10-10
8-K	2018-09-12
8-K	2018-08-28
8-K	2018-06-27
8-K	2018-01-03

EX-31.1	gtyh-20200331ex311421cec.htm
EX-31.2	gtyh-20200331ex312f18d12.htm
EX-32.1	gtyh-20200331ex321fab961.htm
EX-32.2	gtyh-20200331ex3220428ca.htm

GTYH 10Q Quarterly Report

GTY Technology Earnings 2020-03-31