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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from                               to                             
Commission File Number: 001-37397
Rimini Street, Inc.
(Exact name of registrant as specified in its charter)

Delaware36-4880301
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
3993 Howard Hughes Parkway, Suite 500,
Las Vegas, NV
89169
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(702) 839-9671
Not Applicable
(Former name, former address and former fiscal year, 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 shareRMNIThe Nasdaq Global Market
  
Public Units, each consisting of one share of Common
Stock, $0.0001 par value, and one-half of one Warrant
RMNIU
 OTC Pink Current Information Marketplace
  
Warrants, exercisable for one share of Common Stock, $0.0001 par valueRMNIWOTC Pink Current Information Marketplace

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 þ 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 þ No ¨





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 þ
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 þ
The registrant had approximately 87,040,000 shares of its $0.0001 par value common stock outstanding as of May 2, 2022. 






RIMINI STREET, INC.
TABLE OF CONTENTS
Page
Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
Unaudited Condensed Consolidated Statements of Stockholders' Deficit
Unaudited Condensed Consolidated Statements of Cash Flows

1



PART I - FINANCIAL INFORMATION
 
ITEM 1. Financial Statements. 
RIMINI STREET, INC. 
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
March 31,December 31,
 20222021
ASSETS
Current assets:
Cash and cash equivalents$158,046 $119,571 
Restricted cash419 419 
Accounts receivable, net of allowance of $792 and $576, respectively
91,288 135,447 
Deferred contract costs, current15,714 14,985 
Prepaid expenses and other17,087 16,340 
Total current assets282,554 286,762 
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $13,869 and $13,278, respectively
4,519 4,435 
Operating lease right-of-use assets12,498 12,722 
Deferred contract costs, noncurrent23,107 21,524 
Deposits and other1,760 1,786 
Deferred income taxes, net63,358 64,033 
Total assets$387,796 $391,262 
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt$3,664 $3,664 
Accounts payable3,620 5,708 
Accrued compensation, benefits and commissions37,327 36,558 
Other accrued liabilities22,451 26,124 
Operating lease liabilities, current4,482 4,227 
Deferred revenue, current248,503 253,221 
Total current liabilities320,047 329,502 
Long-term liabilities:
Long-term debt, net of current maturities78,770 79,655 
Deferred revenue, noncurrent51,526 47,047 
Operating lease liabilities, noncurrent11,900 12,511 
Other long-term liabilities2,852 2,933 
Total liabilities465,095 471,648 
Commitments and contingencies (Note 9)
Stockholders’ deficit:
Preferred stock; $0.0001 par value. Authorized 99,820 shares (excluding 180 shares of Series A Preferred Stock); no other series has been designated
  
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 87,011 and 87,107 shares, respectively
9 9 
Additional paid-in capital149,420 149,234 
Accumulated other comprehensive loss(2,910)(2,724)
Accumulated deficit(222,702)(225,789)
Treasury stock, at cost(1,116)(1,116)
Total stockholders' deficit(77,299)(80,386)
Total liabilities and stockholders' deficit$387,796 $391,262 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2



RIMINI STREET, INC. 
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
Three Months Ended
March 31,
 20222021
Revenue$97,910 $87,895 
Cost of revenue37,207 33,836 
Gross profit60,703 54,059 
Operating expenses:
Sales and marketing31,700 30,383 
General and administrative19,951 16,603 
Impairment charges related to operating right of use assets 393 
Litigation costs and related recoveries:
Professional fees and other costs of litigation3,499 4,763 
Insurance costs and recoveries, net(389) 
 Litigation costs and related recoveries, net
3,110 4,763 
Total operating expenses54,761 52,142 
Operating income5,942 1,917 
Non-operating income and (expenses):
Interest expense(808)(47)
Loss on change in fair value of redeemable warrants (4,668)
Other income, net209 772 
Income (loss) before income taxes5,343 (2,026)
Income tax expense(2,256)(1,550)
Net income (loss)3,087 (3,576)
Other comprehensive income:
Foreign currency translation loss(186)(2,364)
Comprehensive income (loss)$2,901 $(5,940)
Net income (loss) attributable to common stockholders$3,087 $(9,845)
Net income (loss) per share attributable to common stockholders:
Basic$0.04 $(0.13)
           Diluted$0.03 $(0.13)
Weighted average number of shares of Common Stock outstanding:
Basic and diluted87,124 78,733 
Diluted88,485 78,733 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3



RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Stockholders' Deficit
(In thousands) 
Three Months Ended March 31,
20222021
Common Stock, Shares
  Beginning of period87,107 76,406 
    Exercise of stock options for cash287 716 
    Restricted stock units vested184 268 
    Issuance of Common Stock in March 2021 and August 2020 Offerings— 7,750 
    Retired shares of Common Stock(567)— 
  End of period87,011 85,140 
Total Stockholders' Deficit, beginning of period$(80,386)$(203,060)
Common Stock, Amount
  Beginning of period9 8 
    Exercise of stock options for cash— — 
    Restricted stock units vested— — 
    Issuance of Common Stock in March 2021 and August 2020 Offerings, net— 1 
  End of period9 9 
Additional Paid-in Capital
  Beginning of period149,234 98,258 
    Stock based compensation expense3,051 2,233 
    Exercise of stock options for cash375 2,912 
    Restricted stock units vested— — 
    Issuance of Common Stock in March 2021 Offering, net— 55,628 
    Retired shares of Common Stock(3,240)— 
   Return on repurchase of Series A Preferred Stock shares in January 2021— (38)
    Accretion of discount on Series A Preferred Stock— (1,473)
    Accrued dividends on Series A Preferred Stock:
      Payable in cash— (3,660)
      Payable in kind— (1,098)
  End of period149,420 152,762 
Accumulated Other Comprehensive Loss
  Beginning of period(2,724)(318)
    Foreign currency translation loss(186)(2,364)
  End of period(2,910)(2,682)
Accumulated Deficit
  Beginning of period(225,789)(301,008)
    Net income (loss)3,087 (3,576)
  End of period(222,702)(304,584)
  Treasury Stock(1,116)— 
Total Stockholders' Deficit, end of period$(77,299)$(154,495)


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



4





RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended March 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$3,087 $(3,576)
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on change in fair value of redeemable warrants 4,668 
Stock-based compensation expense3,051 2,233 
Depreciation and amortization577 583 
Accretion and amortization of debt discount and issuance costs240  
Deferred income taxes671 180 
Impairment charges related to operating right of use assets 393 
Amortization and accretion related to operating right of use assets1,403 1,554 
Changes in operating assets and liabilities:
Accounts receivable44,980 33,176 
Prepaid expenses, deposits and other(490)(2,510)
Deferred contract costs(2,312)444 
Accounts payable(2,277)(1,017)
Accrued compensation, benefits, commissions and other liabilities(2,815)(7,063)
Deferred revenue(266)(4,571)
Net cash provided by operating activities45,849 24,494 
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures(485)(374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds related to Common Stock issuances in March 2021 Offering 56,965 
Payments of professional fees related to Common Stock issuances in March 2021 Offering(27)(900)
Principal payments on the Credit Facility(1,125) 
Payments to repurchase shares of Series A Preferred Stock (8,951)
Payments of cash dividends on Series A Preferred Stock (4,009)
Payments to repurchase and retire Common Stock(3,240) 
Principal payments on capital leases(81)(109)
Proceeds from exercise of employee stock options375 2,912 
Net cash (used in) provided by financing activities(4,098)45,908 
Effect of foreign currency translation changes(2,791)(4,440)
Net change in cash, cash equivalents and restricted cash38,475 65,588 
Cash, cash equivalents and restricted cash at beginning of period119,990 87,909 
Cash, cash equivalents and restricted cash at end of period$158,465 $153,497 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

5



RIMINI STREET, INC. 
Unaudited Condensed Consolidated Statements of Cash Flows, Continued
(In thousands)

Three Months Ended March 31,
20222021
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest$568 $46 
Cash paid for income taxes544 812 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Discount on shares of Common Stock issued in March 2021 Public Offering:
  Underwriter discounts and commissions$ $2,948 
  Underwriter expenses  1,050 
  Accrued professional fees related to the issuance of Common Stock 436 
Redeemable Series A Preferred Stock Dividends and Accretion:
  Accrued cash dividends$ $3,540 
  Accrued PIK dividends 1,051 
  Accretion of discount on Series A Preferred Stock 1,473 
  Issuance of Series A Preferred Stock for PIK dividends 1,193 
Increase in payables for capital expenditures$168 $175 


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


6


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION
 
Nature of Business
 
Rimini Street, Inc. (the “Company”) is a global provider of enterprise software support services. The Company’s subscription-based software support products and services offer enterprise software licensees a choice of solutions that replace or supplement the support products and services offered by enterprise software vendors. 

Basis of Presentation and Consolidation
 
The unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, included in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC on March 2, 2022 (the “2021 Form 10-K”).
 
The accompanying condensed consolidated balance sheet and related disclosures as of December 31, 2021 have been derived from the Company’s audited financial statements. The Company’s financial condition as of March 31, 2022, and operating results for the three months ended March 31, 2022, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2022.
 
NOTE 2 — LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES
 
Liquidity
 
As of March 31, 2022, the Company’s current liabilities exceeded its current assets by $37.5 million, and the Company recorded net income of $3.1 million for the three months ended March 31, 2022. As of March 31, 2022, the Company had available cash, cash equivalents and restricted cash of $158.5 million. As of March 31, 2022, the Company’s current liabilities included $248.5 million of deferred revenue whereby the historical costs of fulfilling the Company's commitments to provide services to its clients was approximately 38% of the related deferred revenue for the three months ended March 31, 2022.

On July 20, 2021, the Company redeemed the remaining 87,802 shares of its 13.00% Series A Preferred Stock at an aggregate total redemption price of $88.4 million. The total redemption price consisted of $87.8 million related to the outstanding shares of Series A Preferred Stock with a face value of $1,000 per share and $0.6 million or $6.86 per share of Series A Preferred Stock related to the dividends earned for the period from July 1, 2021 through July 19, 2021. The redeemed shares of the Series A Preferred Stock, along with the dividends, were recorded on the redemption date of July 20, 2021.

The Company funded the July 20, 2021 redemption with borrowings from a five year term loan of $90 million, which was entered into on July 20, 2021 (the “Credit Facility”). Annual minimum principal payments over the five year term for the Credit Facility will be 5%, 5%, 7.5%, 7.5% and 10%, respectively, with the remaining balance due at the end of the term. See Note 5 for further information regarding the Company's Credit Facility.

7


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


As discussed in Note 7, the Company completed a firm commitment underwritten public offering on March 11, 2021 (the “March 2021 Offering”) of 7.8 million shares of its common stock, par value $0.0001 per share (“Common Stock”), at a price of $7.75 per share for total gross proceeds of $57.0 million. Underwriter discounts and commissions were $2.9 million and the underwriter expenses were $0.2 million. The Company also incurred additional professional fees and expenses of $1.3 million as part of the transaction, resulting in net proceeds from the March 2021 Offering of approximately $55.6 million. The Company had previously completed a firm commitment underwritten public offering on August 18, 2020 (the “August 2020 Offering”) of 6.1 million shares of its Common Stock at a price of $4.50 per share for total gross proceeds of $27.5 million. Underwriter discounts and commissions were $1.7 million and the underwriter expenses were $0.1 million. The Company also incurred additional professional fees of $0.6 million as part of the transaction, resulting in net proceeds from the August 2020 Offering of approximately $25.1 million.

Additionally, the Company is obligated to make operating and financing lease payments that are due within the next 12 months in the aggregate amount of $6.7 million. In March 2020, the World Health Organization declared the outbreak of a novel strain of the coronavirus (“COVID-19”) to be a pandemic. As of the issuance date of these financial statements, the Company’s ability to operate continues not to be significantly adversely impacted by the COVID-19 pandemic and the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including Credit Facility repayments, working capital needs, capital expenditures and other contractual obligations for at least 12 months from the issuance date of these financial statements.
 
Use of Estimates
 
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, accounts receivable, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operation may be affected.
 
Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards were adopted during the fiscal year 2022:

In August 2020, the FASB issued ASU 2020-6, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). The guidance eliminates the beneficial conversion and cash conversion accounting for convertible instruments. The new guidance also modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The new guidance was effective for us as of January 1, 2022. The impact of the adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

NOTE 3 - DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

Activity for deferred contract costs consisted of the following (in thousands):
Three Months Ended
March 31,
20222021
Deferred contract costs, current and noncurrent, as of the beginning of period$36,509 $34,945 
Capitalized commissions during the period6,525 3,274 
Amortized deferred contract costs during the period(4,213)(3,719)
Deferred contract costs, current and noncurrent, as of the end of period$38,821 $34,500 

Deferred revenue activity consisted of the following (in thousands):
8


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Three Months Ended
March 31,
20222021
Deferred revenue, current and noncurrent, as of the beginning of period$300,268 $256,933 
Billings, net97,671 80,959 
Revenue recognized(97,910)(87,895)
Deferred revenue, current and noncurrent, as of the end of period$300,029 $249,997 

The transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized. As of March 31, 2022, the remaining transaction price included in deferred revenue was $248.5 million in current and $51.5 million in noncurrent.

NOTE 4 — OTHER FINANCIAL INFORMATION
  
Other Accrued Liabilities
 
Other accrued liabilities consisted of the following (in thousands): 
March 31,December 31,
 20222021
Accrued sales and other taxes$5,730 $8,805 
Accrued professional fees4,850 4,502 
Current maturities of capital lease obligations313 315 
Income taxes payable1,153 1,546 
Accrued litigation settlement costs7,127 7,530 
Other accrued expenses3,278 3,426 
Total other accrued liabilities$22,451 $26,124 


NOTE 5 — DEBT

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

March 31,December 31,
20222021
Credit Facility$82,434 $83,319 
Less current maturities 3,664 3,664 
Long-term debt, net of current maturities$78,770 $79,655 

Effective July 20, 2021, the Company received $89.3 million of net proceeds related to the Credit Facility. The borrowings under the Credit Facility were incurred with an original discount of 0.375%. As part of the transaction, the Company incurred issuance costs of $4.2 million, which were capitalized and will be amortized over the term of the Credit Facility.

The Credit Facility bears interest at the London Interbank Offered Rate (“LIBOR”), plus a margin ranging from 1.75% to 2.50%. For the three months ended March 31, 2022, the interest rate on the Credit Facility was 2.5%, which was comprised of LIBOR at 0.22% and a margin of 2.25%. As of March 31, 2022, LIBOR was 1.01% and the margin was 1.75%. The fair value of the Credit Facility was $86.8 million (Level 2 inputs) as of March 31, 2022 compared to the carrying value of $86.0 million as of March 31, 2022. The LIBOR rate as of December 31, 2021 was not materially different from the interest rate for the year ended December 31, 2021. Hence the fair value of the Credit Facility approximated the carrying value as of December 31, 2021.
9


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20 million in U.S. cash. Annual minimum principal payments over the five year term for the Credit Facility will be 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term. On March 31, 2022, the Company made a principal payment of $1.1 million.

Pursuant to a Guaranty and Security Agreement, dated July 2, 2021 (the “Guaranty and Security Agreement”), among the Credit Parties and Capital One, National Association, as agent, the obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries (the Company and the guarantors, collectively, the “Credit Parties”) and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The components of interest expense are presented below (in thousands):
Three Months Ended
March 31,
20222021
Credit Facility:
  Interest expense$543 $ 
  Accretion expense related to discount and issuance costs240  
Interest on finance leases25 47 
$808 $47 

NOTE 6 — REDEEMABLE SERIES A PREFERRED STOCK

On July 20, 2021, the Company redeemed the remaining 87,802 shares of its 13.00% Series A Preferred Stock at an aggregate total redemption price of $88.4 million. The total price consisted of $87.8 million related to the outstanding shares of Series A Preferred Stock with a face value of $1,000 per share and $0.6 million, or $6.86 per share related to the dividends earned for the period from July 1, 2021 to but not including the redemption date, July 19, 2021. The redeemed shares of the Series A Preferred Stock, along with the dividends, were recorded on the redemption date of July 20, 2021.

The Company funded the July 20, 2021 redemption with borrowings under the Credit Facility. See Note 5 for further information regarding the Company's Credit Facility.

On April 16, 2021, the Company redeemed 60,000 shares of its 13.00% Series A Preferred Stock at an aggregate total redemption price of $62.3 million. The total price consisted of $60.0 million related to the face value of $1,000 per share of Series A Preferred Stock and $2.3 million, or $39.05 per share, related to the dividends to be earned for the period from April 1, 2021 through July 18, 2021. The redeemed shares of Series A Preferred Stock, along with the dividends were recorded when the Series A Preferred Stock became mandatorily redeemable on April 16, 2021.

The Company funded the April 16, 2021 redemption with a portion of the proceeds from the March 2021 Offering and the August 2020 Offering, which raised aggregate net proceeds of approximately $80.7 million.

On January 5, 2021, the Company entered into an agreement with certain of the holders of its Series A Preferred Stock (the “January 2021 Stock Repurchase Agreement”) to repurchase 10,000 shares of Series A Preferred Stock and the associated obligations pursuant to the Company’s Convertible Secured Promissory Notes outstanding in respect thereof (the “Note Obligations”) for an aggregate purchase price of approximately $8.95 million representing a discount to the face value of such shares of Series A Preferred Stock and no make-whole payments were required. The January 2021 Stock Repurchase Agreement contains customary representations, warranties and covenants of the parties and waivers relating to the purchased shares of Series A Preferred Stock.

Upon the closing of the transactions described above, the shares of Series A Preferred Stock purchased by the Company were retired (and the underlying Note Obligations cancelled) and are not eligible for re-issuance by the Company in accordance with the terms of the CoD.

10


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The changes in the net carrying value of Series A Preferred Stock from December 31, 2020 to September 30, 2021 (the quarter in which the Series A Preferred Stock was redeemed in full) are set forth below (dollars in thousands):
Series A Preferred Stock
SharesAmount
Net carrying value as of December 31, 2020154,911 $137,854 
Issuance of shares to settle PIK Dividends on January 4, 20211,193 1,193 
Repurchase of 10,000 shares on January 5, 2021
(10,000)(8,913)
Accretion of discount for the three months ended March 31, 2021 1,473 
Net carrying value as of March 31, 2021146,104 131,607 
Issuance of shares to settle PIK Dividends on April 1, 20211,051 1,051 
Redemption of 60,000 shares on April 16, 2021
(60,000)(54,327)
Accretion of discount for the three months ended June 30, 2021 804 
Net carrying value as of June 30, 202187,155 79,135 
Issuance of shares to settle PIK Dividends on July 1, 2021647 647 
Redemption of 87,802 shares on July 20, 2021
(87,802)(79,782)
Net carrying value as of September 30, 2021 $ 

Presented below is a summary of total and per share dividends declared during the fiscal year 2021 (dollars in thousands, except per share amounts):
Dividends Payable in:TotalDividends
CashPIKDividendsPer Share
Dividends payable as of December 31, 2020$3,842 $1,193 $5,035 $32.50 
  Cash Dividends @ 10% per annum
3,660 — 3,660 23.40 
  PIK Dividends @ 3% per annum
— 1,098 1,098 7.02 
Fractional PIK shares settled for cash47 (47)  
Less dividends settled January 4, 2021(4,009)(1,193)(5,202)(33.26)
Dividends payable as of March 31, 20213,540 1,051 4,591 32.14 
  Cash Dividends @ 10% per annum
2,179 — 2,179 25.00 
  PIK Dividends @ 3% per annum
— 654 654 7.50 
Fractional PIK shares settled for cash7 (7)  
Less dividends settled April 1, 2021(3,540)(1,051)(4,591)(52.68)
Dividends payable as of June 30, 20212,186 647 2,833 32.51 
Less dividends settled on July 1, 2021(2,186)(647)(2,833)(32.27)
Dividends payable as of September 30, 2021$ $ $ $ 

NOTE 7 — COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS 

Common Stock Retired

On February 27, 2022, the Board approved adoption of a stock repurchase program to repurchase up to $15.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, through March 4, 2024, subject to compliance with the Company's Credit Facility dated July 2, 2021, and amended January 14, 2022 to increase the amount of securities that could be purchased by the Company to approximately $15.0 million during the term of the facility, and other applicable legal requirements.

During the three months ended March 31, 2022, the Company acquired 0.6 million shares of Common Stock on the open market at a cost of $3.2 million. Upon completion of this repurchase, these shares of Common Stock were retired.

11


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Common Stock Offerings

On March 11, 2021, the Company completed the March 2021 Offering of 7.8 million shares of its Common Stock at a price of $7.75 per share for total gross proceeds of $57.0 million. Underwriter discounts and commissions were $2.9 million and the underwriter expenses were $0.2 million. The Company also incurred additional professional fees and expenses of $1.3 million as part of the transaction, resulting in net proceeds from the March 2021 Offering of approximately $55.6 million. The Company used the net proceeds from the March 2021 Offering, together with proceeds from the offering described below, to redeem 60,000 shares of Series A Preferred Stock in April 2021.

On August 18, 2020, the Company completed the August 2020 Offering of 6.1 million shares of its Common Stock at a price of $4.50 per share for total gross proceeds of $27.5 million. Underwriter discounts and commissions were $1.7 million and the underwriter expenses were $0.1 million. The Company also incurred additional professional fees of $0.6 million as part of the transaction, resulting in net proceeds from the August 2020 Offering of approximately $25.1 million. The Company used the net proceeds from the August 2020 Offering, together with proceeds from the offering described above, to redeem 60,000 shares of Series A Preferred Stock and for working capital and other general corporate purposes.

Treasury Stock

On August 6, 2021, the Company reacquired 0.1 million shares of common stock for $1.1 million related to restricted stock units (“RSUs”) that vested on that date. These shares are included as Treasury Stock as of March 31, 2022.

Stock Plans

The Company’s stock plans consist of the 2007 Stock Plan (the “2007 Plan”) and the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). The 2007 Plan and the 2013 Plan are collectively referred to as the “Stock Plans”. On February 22, 2022, the Board of Directors authorized an increase of approximately 3.5 million shares available for grant under the 2013 Plan. For additional information about the Stock Plans, please refer to Note 8 to the Company’s consolidated financial statements for the year ended December 31, 2021, included in Part II, Item 8 of the 2021 Form 10-K. The information presented below provides an update for activity under the Stock Plans for the three months ended March 31, 2022.
 
Restricted Stock Units
 
For the three months ended March 31, 2022, the Board of Directors granted RSUs under the 2013 Plan for an aggregate of approximately 0.6 million shares of Common Stock to employees and to non-employee directors of the Company. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $4.85 per share, the aggregate fair value for the shares underlying the RSUs amounted to $2.8 million as of the grant date that will be recognized as compensation cost over the vesting period. Accordingly, compensation expense related to RSUs of approximately $2.6 million and $1.9 million was recognized for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the unrecognized expense of $13.4 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.8 years.
 
Stock Options
 
For the three months ended March 31, 2022, the Board of Directors granted stock options for the purchase of an aggregate of approximately 0.4 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. These stock options generally vest annually for one-third of the awards and expire ten years after the grant date.
 
The following table sets forth a summary of stock option activity under the Stock Plans for the three months ended March 31, 2022 (shares in
12


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


thousands): 
 Shares
Price (1)
Term (2)
Outstanding, December 31, 20216,824 $5.92 5.6
Granted396 5.10 
Forfeited(129)5.99 
Expired(48)7.16 
Exercised(287)1.31 
Outstanding, March 31, 2022 (3)(4)6,756 6.06 5.8
Vested, March 31, 2022 (3)4,587 5.95 4.1
 
(1)Represents the weighted average exercise price.
(2)Represents the weighted average remaining contractual term until the stock options expire.
(3)As of March 31, 2022, the aggregate intrinsic value of all stock options outstanding was $4.1 million. As of March 31, 2022, the aggregate intrinsic value of vested stock options was $3.3 million.
(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.3 million shares as of March 31, 2022.

The following table presents activity affecting the total number of shares available for grant under the Stock Plans for the three months ended March 31, 2022 (in thousands):
 
Available, December 31, 20214,324 
Newly authorized by Board of Directors3,484 
Stock options granted(396)
Restricted stock units granted(580)
Expired options under Stock Plans48 
Forfeited options under Stock Plans129 
Forfeited restricted stock units under Stock Plans70 
     Shares repurchased567 
Available, March 31, 20227,646 
 
The aggregate fair value of approximately 0.4 million stock options granted for the three months ended March 31, 2022 amounted to $0.9 million, or $2.30 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the three months ended March 31, 2022, the fair value of each stock option grant under the Stock Plans was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:
 
Expected life (in years)6.0
Volatility45%
Dividend yield0%
Risk-free interest rate1.83%
Fair value per common share on date of grant$5.10
 
As of March 31, 2022 and December 31, 2021, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $4.0 million and $3.9 million, respectively. As of March 31, 2022, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 2.2 years.
 
Stock-Based Compensation Expense
 
13


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Stock-based compensation expense attributable to RSUs and stock options is classified as follows (in thousands):
Three Months Ended
March 31,
 20222021
Cost of revenues$508 $316 
Sales and marketing827 727 
General and administrative1,716 1,190 
Total$3,051 $2,233 

Warrants
 
On April 12, 2021, the SEC issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “SEC Staff Statement”). Upon review of the SEC Staff Statement which addressed certain accounting and reporting considerations related to warrants similar to the Company’s GP Sponsor Private Placement Warrants and upon review of ASC 815-40, Contracts in Entity’s Own Equity, the Company determined that its GP Sponsor Private Placement Warrants should have been classified as a liability instead of equity. On October 29, 2021, the GP Sponsor sold the warrants for $1.04 per warrant to outside holders. As a result of the sale, the new holders of the Private Placement Warrants had the same rights as that of the Public Warrant holders. Therefore as of October 29, 2021, the Company reclassified the liability for redeemable warrants to additional paid-in capital for $6.3 million. See Note 12 for information regarding the fair value of the GP Sponsor Private Placement Warrants.

As of March 31, 2022, warrants were outstanding for an aggregate of 18.1 million shares of Common Stock, including 3.4 million shares of Common Stock exercisable at $5.64 per share, and an aggregate of 14.7 million shares of Common Stock exercisable at $11.50 per share. For additional information about these warrants, please refer to Note 8 to the Company’s consolidated financial statements for the year ended December 31, 2021, included in the 2021 Form 10-K.
 
NOTE 8 — INCOME TAXES
 
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed into law, amending portions of relevant U.S. tax laws. The CARES Act contains changes to corporate taxation, including among other things, adjusting net operating loss (NOL) limitations and carryback rules, refundable AMT credits, bonus depreciation and interest expense limitations. The CARES Act also provides for an Employee Retention Credit, a fully refundable payroll tax credit for certain eligible employers and the ability for all eligible employers to defer payment of the employer share of payroll taxes owed on wages paid for the period ending December 31, 2020 (such deferred payroll taxes are due in two installments: 50% by December 31, 2021 and 50% by December 31, 2022). The Company has elected to defer payroll tax payments which totaled $1.6 million as of March 31, 2021. The Company paid $1.6 million in December 2021 as required under the CARES Act. The remaining amount of $1.6 million is required to be paid in December 2022.

For the three months ended March 31, 2022 and 2021, the Company’s effective tax rate was 42.2% and (76.5)%, respectively. The Company’s income tax expense was primarily attributable to earnings in the United States and foreign jurisdictions subject to income taxes and foreign withholding taxes. The Company did not have any material changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three months ended March 31, 2022 and 2021.

For additional information about income taxes, please refer to Note 9 to the Company’s consolidated financial statements for the year ended December 31, 2021, included in Part II, Item 8 of the 2021 Form 10-K.

NOTE 9 — COMMITMENTS AND CONTINGENCIES
  
Retirement Plan

The Company has defined contribution plans for both its U.S. and foreign employees. For certain of these plans, employees may contribute up to the statutory maximum, which is set by law each year. The plans also provide for employer contributions. The Company’s matching contributions to these plans totaled $0.8 million for both the three months ended March 31, 2022 and 2021, respectively.

14


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Rimini I Litigation

In January 2010, certain subsidiaries of Oracle Corporation (together with its subsidiaries individually and collectively, “Oracle”) filed a lawsuit, Oracle USA, Inc. et al. v. Rimini Street, Inc. et al. (United States District Court for the District of Nevada) (the “District Court”) (“Rimini I”), against the Company and its Chief Executive Officer, Seth Ravin, alleging that certain of the Company’s processes (Process 1.0) violated Oracle’s license agreements with its customers and that the Company committed acts of copyright infringement and violated other federal and state laws. The litigation involved the Company’s business processes and the manner in which the Company provided services to its clients.

After completion of a jury trial in 2015 and subsequent appeals, the final outcome of Rimini I was that Mr. Ravin was found not liable for any claims and the Company was found liable for only one claim: “innocent infringement,” a jury finding that the Company did not know and had no reason to know that its former support processes were infringing. The jury also found that the infringement did not cause Oracle to suffer lost profits. The Company was ordered to pay a judgment of $124.4 million in 2016, which the Company promptly paid and then pursued appeals. With interest, attorneys’ fees and costs, the total judgment paid by the Company to Oracle after the completion of all appeals was approximately $89.9 million. A portion of such judgment was paid by the Company’s insurance carriers.

Injunction Proceedings

Since November 2018, the Company has been subject to a permanent injunction prohibiting it from using certain support processes that had been found in Rimini I to “innocently” infringe certain Oracle copyrights. The injunction does not prohibit the Company’s provision of support services for any Oracle product lines, but rather defines the manner in which the Company can provide support services for certain Oracle product lines.

On July 10, 2020, Oracle filed a motion to show cause contending that the Company is in violation of the injunction, and the Company opposed this motion, disputing Oracle’s claims. On January 12, 2022, the District Court issued its findings and order following an evidentiary hearing held in September 2021 regarding whether the Company (i) violated the injunction for certain accused conduct and (ii) should be held in contempt in those instances where the District Court found a violation of the injunction, and what sanctions, if any, are appropriate.

In the order, the District Court ruled in favor of the Company with respect to five of the items. With respect to the other five items, the District Court found the Company violated the permanent injunction, awarded sanctions to Oracle of $0.6 million and ordered that certain computer files be quarantined from use and notice and proof of such quarantining be provided to Oracle. The District Court also ruled that Oracle may recover its reasonable attorneys’ fees and costs. The Company reserves all rights, including appellate rights, with respect to the District Court rulings and findings.

On February 7, 2022, Rimini filed a Notice of Appeal in the District Court, commencing an appeal of the District Court’s January 12, 2022 decision to the Ninth Circuit Court of Appeals (“Court of Appeals”). Rimini’s opening brief is due on May 18, 2022. Oracle’s answering brief is currently due on June 17, 2022. At this time, the Company believes that it is in substantial compliance with the injunction and has complied with the order regarding the quarantining of certain computer files. On February 8, 2022, the District Court stayed the briefing on Oracle’s bill of attorneys’ fees and costs until Rimini’s appeal is resolved. As of March 31, 2022 and December 31, 2021, the Company had accrued $6.9 million, as an estimate related to reasonable attorneys’ fees and costs. During the three months ended March 31, 2022, the Company paid $0.6 million to Oracle for the award sanctions. Regarding the Company's estimate for reasonable attorneys' fees and costs, significant judgment is required to determine the amount of loss related to this matter as the outcome is inherently unpredictable and subject to uncertainties.
Rimini II Litigation

In October 2014, the Company filed a separate lawsuit, Rimini Street Inc. v. Oracle Int’l Corp., in the District Court against Oracle seeking a declaratory judgment that the Company’s revised “Process 2.0” support practices, in use since at least July 2014, do not infringe certain Oracle copyrights (“Rimini II”). The Company’s operative complaint asserts declaratory judgment, tort, and statutory claims. Oracle’s operative counterclaim asserts declaratory judgment and copyright infringement claims and Lanham Act, breach of contract, and business tort violations.

On September 15, 2020, the District Court issued an order resolving the parties’ motions for summary judgment. It found infringement of 17 Oracle PeopleSoft copyrights for work the Company performed for a set of “gap customers” that were supported by processes litigated in Rimini I, and that became the Company’s customers after Rimini I was filed. The District
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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Court also found infringement of four Oracle PeopleSoft copyrights involving support of two specific Company clients, described by the District Court as “limited cases” and involving “limited circumstance[s].” There was no finding of infringement on any other Oracle copyrights at issue.

The order also resolved several of the non-copyright claims asserted by the parties: (i) allowing the Company’s claim for injunctive relief against Oracle for unfair competition in violation of the California Business & Professions Code §17200 et seq. to proceed to trial; (ii) granting summary judgment for Oracle on the Company’s affirmative claims for damages under the Nevada and California unfair and deceptive trade practices statutes; and (iii) holding that Oracle had the right to revoke the Company’s access to its websites. The Court also reiterated that the Company has the legal right to provide aftermarket support for Oracle’s enterprise software.

The parties filed their joint pretrial order in Rimini II in December 2020. On September 3, 2021, the District Court granted Oracle’s motion to realign the parties with Oracle now designated as plaintiff and the Company and Mr. Ravin now designated as the defendants in the case caption and at trial. The District Court also granted Oracle’s motion to bifurcate the trial – the jury trial will proceed first and will be followed by a separate bench trial on the parties’ equitable claims for unfair competition and Oracle’s claim for an accounting.

On September 30, 2021, the District Court approved the Pretrial Order and indicated that it had “ordered counsel to meet and confer on possible trial dates in mid-2022 and the potential trial length for a trial.” On February 3, 2022, the parties filed a Joint Report Regarding Trial Date, Duration, and Location. On April 14, 2022, District Court judge, who had been presiding over the case, entered an order referring the case for reassignment. The case has been reassigned to another District Court judge. Presently, there is no specific trial date approved or ordered by the District Court.

As of this date, no damages of any kind have been awarded by the District Court in Rimini II. Damages, if any, will be a decision for the Rimini II jury. The Company reserves all rights, including appellate rights, with respect to the District Court and jury rulings and findings in Rimini II.

At this time, the Company does not have sufficient information regarding possible damages exposure for the counterclaims asserted by Oracle. The Company maintains that zero damages should be awarded in Rimini II. A jury will ultimately determine what amount, if any, of damages to award. Both parties have sought injunctive relief in addition to monetary damages in this matter, and the Company has reserved its rights to appeal regarding the possible recovery of damages by the Company in connection with the Company’s claims against Oracle. As a result, an estimate of the range of loss, if any, cannot be reasonably determined. The Company also believes that an award for damages payable to Oracle is not probable, so no accrual has been made as of March 31, 2022. However, as with any jury trial, the ultimate outcome may be different from the Company’s best estimates and could have a material adverse impact on Company’s financial results and business.

Other Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Liquidated Damages
 
The Company enters into agreements with clients that contain provisions related to liquidated damages that would be triggered in the event that the Company is no longer able to provide services to these clients. The maximum cash payments related to these liquidated damages is approximately $7.7 million and $8.3 million as of March 31, 2022 and December 31, 2021, respectively. To date, the Company has not incurred any costs as a result of such provisions and has not accrued any liabilities related to such provisions in these unaudited condensed consolidated financial statements.
 
NOTE 10 — RELATED PARTY TRANSACTIONS

16


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Rimini Street, Inc. (“RSI”) was incorporated in the state of Nevada in September 2005. RSI provides enterprise software support services. In May 2017, RSI entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GP Investments Acquisition Corp. (“GPIA”), a publicly-held special purpose acquisition company (“SPAC”) incorporated in the Cayman Islands and formed for the purpose of effecting a business combination with one or more businesses. The Merger Agreement was approved by the respective shareholders of RSI and GPIA in October 2017, and closing occurred on October 10, 2017, resulting in (i) the merger of a wholly-owned subsidiary of GPIA with and into RSI, with RSI as the surviving corporation, after which (ii) RSI merged with and into GPIA, with GPIA as the surviving corporation and renamed “Rimini Street, Inc.” (referred to herein as “RMNI”, as distinguished from RSI, which is defined as the predecessor entity with the same legal name) immediately after consummation of the second merger. Prior to the consummation of the mergers, the ultimate parent entity of GPIA was GP Investments, Ltd. (“GP Investments”), a global private equity firm and a former affiliate of the Company. An affiliate of GP Investments (Mr. Antonio Bonchristiano) was a member of the Company’s Board of Directors until May 5, 2021.

In addition, an affiliate of Adams Street Partners and its affiliates (collectively referred to as “ASP”) is also a member of the Company’s Board of Directors. As of March 31, 2022, ASP owned approximately 27.1% of the Company’s issued and outstanding shares of Common Stock. In July 2018, ASP acquired 19,209 shares of Series A Preferred Stock and approximately 0.4 million shares of Common Stock issued in the Initial Private Placement for total consideration of approximately $19.2 million, which shares of Series A Preferred Stock were all redeemed by the Company in 2021 on the same terms and conditions as for all other holders of Series A Preferred Stock.

NOTE 11 —EARNINGS (LOSS) PER SHARE

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share for each class of stock to be calculated using the two-class method. The holders of Series A Preferred Stock were entitled to participate in Common Stock dividends, if and when declared, on a one-to-one per-share basis. Accordingly, in periods in which the Company has net income, earnings per share will be computed using the two-class method whereby the pro rata dividends on Common Stock that are also distributable to the holders of Series A Preferred Stock would have been deducted from earnings applicable to common stockholders, regardless of whether a dividend is declared for such undistributed earnings. Under the two-class method, earnings for the reporting period were allocated between the holders of the Company’s Common Stock and the Series A Preferred Stock based on their respective participation rights in undistributed earnings.

Basic earnings per share of Common Stock is computed by dividing net income attributable to common stockholders by the weighted average number of shares of basic Common Stock outstanding. Net income allocated to the holders of the Company’s Series A Preferred Stock is calculated based on the shareholders’ proportionate share of the weighted average shares of Common Stock outstanding on an if-converted basis. Diluted earnings per share of Common Stock is calculated by adjusting the basic earnings per share of Common Stock for the effects of potential dilutive Common Stock shares outstanding such as stock options, restricted stock units and warrants.
For the three months ended March 31, 2022 and 2021, basic and diluted net earnings per share of Common Stock were computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective periods. The following tables set forth the computation of basic and diluted net loss attributable to common stockholders (in thousands, except per share amounts):

17


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Three Months Ended
March 31,
20222021
Income attributable to common stockholders:
  Net income (loss)$3,087 $(3,576)
  Return on repurchase of Series A Preferred Stock shares (38)
  Dividends and accretion related to Series A Preferred Stock:
    Cash dividends declared (3,660)
    PIK dividends declared (1,098)
    Accretion of discount (1,473)
     3,087 (9,845)
    Undistributed earnings allocated using the two-class method  
      Net loss attributable to common stockholders$3,087 $(9,845)
Three Months Ended
March 31,
20222021
Weighted average number of shares of Common Stock outstanding87,124 78,733 
Additional shares outstanding if Series A Preferred Stock is converted to Common Stock 14,651 
Total shares outstanding if Series A Preferred Stock is converted to Common Stock87,124 93,384 
      Percentage of shares allocable to Series A Preferred Stock %15.7 %
Three Months Ended
March 31,
20222021
Weighted average number of shares of Common Stock outstanding:  
  Basic 87,124 78,733 
  Stock options512  
  Restricted stock units849  
  Diluted88,485 78,733 
Net income (loss) per share attributable to common stockholders:
  Basic $0.04 $(0.13)
  Diluted$0.03 $(0.13)

The following potential Common Stock equivalents were excluded from the computation of diluted net loss per share for the respective periods ending on these dates since the impact of inclusion was anti-dilutive (in thousands): 
March 31,December 31,
 20222021
Restricted stock units1,197 248 
Stock options4,329 2,458 
Warrants18,128 14,688 
Total23,654 17,394 
 

NOTE 12 — FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS
 
Fair Value Measurements
18


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


 
Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts, and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 13 to the Company’s consolidated financial statements for the year ended December 31, 2021, included in Part II, Item 8 of the 2021 Form 10-K. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

During the year ended December 31, 2021, the Company determined that its GP Sponsor Private Placement Warrants are subject to treatment as a liability. The GP Sponsor Private Placement Warrants could not be redeemed by the Company so long as these warrants were held by the initial purchasers or such purchasers’ permitted transferees. If these warrants were held by someone other than the initial purchasers or such purchasers’ permitted transferees, these warrants are redeemable by the Company and exercisable on the same basis as certain warrants to purchase approximately 8.6 million shares of the Company’s Common Stock, at $11.50 per share (the “Public Warrants”). As a result, the GP Sponsor Private Placement Warrants were reclassified as a liability. On October 29, 2021, the GP Sponsor sold the warrants for $1.04 per warrant to outside holders. As a result of the sale, the new holders of the Private Placement Warrants had the same rights as that of the Public Warrant holders. Therefore as of October 29, 2021, the Company reclassified the liability for redeemable warrants to additional paid-in capital for $6.3 million. During the quarter ended March 31, 2021, the key assumptions used to determine the fair value was the term period of the warrants, the risk free rate and volatility.

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate fair values due to their short-term maturities. Based on borrowing rates currently available to the Company for debt with similar terms, the carrying value of capital lease obligations approximate fair value as of the respective balance sheet dates.
 
Significant Concentrations
 
The Company attributes revenues to geographic regions based on the location of its clients’ contracting entity. The following table shows revenues by geographic region (in thousands):
 
Three Months Ended
March 31,
 20222021
United States of America$52,284 $47,559 
International45,626 40,336 
Total$97,910 $87,895 
 
No clients represented more than 10% of revenue for both the three months ended March 31, 2022 or 2021. As of March 31, 2022, no clients accounted for more than 10% of total net accounts receivable. As of December 31, 2021, the Company had one customer greater than 10% of total net accounts receivable. The Company tracks its assets by physical location. As of March 31, 2022 and December 31, 2021, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $1.6 million and $1.5 million, respectively. As of March 31, 2022, the Company had operating lease right-of-use assets of $7.2 million, $4.4 million and $1.0 million in the United States, India and the rest of the world, respectively. As of December 31, 2021, the Company had operating lease right-of-use assets of $7.7 million, $4.7 million and $0.4 million in the United States, India and the rest of the world, respectively.
 
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions, primarily in the United States. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of March 31, 2022 and December 31, 2021, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $99.7 million and $70.6 million, respectively. As of March 31, 2022 and December 31, 2021, the Company had restricted cash of $0.4 million and $0.4 million, respectively. The Company has never experienced any losses related to these balances.
 
19


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses are generally not significant.
 
NOTE 13 - LEASES

Effective at the start of fiscal 2020, the Company adopted the provisions and expanded disclosure requirements described in Accounting Standards Codification (ASC) Topic 842, Leases. The Company adopted the standard using the prospective method. The Company has operating leases for real estate and equipment with an option to renew the leases for up to one month to five years. Some of the leases include the option to terminate the leases upon 30-days notice with a penalty. The Company’s leases have various remaining lease terms ranging from April 2022 to January 2027. The Company’s lease agreements may include renewal or termination options for varying periods that are generally at the Company's discretion. The Company’s lease terms only include those periods related to renewal options the Company believes are reasonably certain to exercise. The Company generally does not include these renewal options as it is not reasonably certain to renew at the lease commencement date. This determination is based on consideration of certain economic, strategic and other factors that the Company evaluates at lease commencement date and reevaluates throughout the lease term. Some leases also include options to terminate the leases and the Company only includes those periods beyond the termination date if it is reasonably certain not to exercise the termination option.

The Company uses a discount rate to calculate the right of use (“ROU”) asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments. The variable portion of lease payments is not included in the Company’s ROU assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

The Company has lease agreements with both lease and non-lease components that are treated as a single lease component for all underlying asset classes. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.

The Company has elected to apply the short-term lease exception for all underlying asset classes. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. The Company’s leases do not include significant restrictions or covenants, and residual value guarantees are generally not included within its operating leases. As of March 31, 2022, the Company did not have any material additional operating leases that have not yet commenced.

The components of lease expense and supplemental balance sheet information were as follows (in thousands):
Three Months Ended March 31,
20222021
Operating lease expense related to ROU assets and liabilities$1,403 $1,554 
Other lease expense193 160 
Total lease expense$1,596 $1,714 

Other information related to leases was as follows (in thousands):
20


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Supplemental Balance Sheet InformationMarch 31, 2022December 31, 2021
Operating lease right-of-use assets, noncurrent$12,498 $12,722 
March 31, 2022December 31, 2021
Operating lease liabilities, current$4,482 $4,227 
Operating lease liabilities, noncurrent11,900 12,511 
  Total operating lease liabilities$16,382 $16,738 
Weighted Average Remaining Lease TermYears
Operating leases3.8
Weighted Average Discount Rate
Operating leases10.5 %

Maturities of operating lease liabilities as of March 31, 2022 were as follows (in thousands):
Year ending March 31:
2023$5,928 
20244,850 
20254,437 
20262,646 
20272,046 
Thereafter 
  Total future undiscounted lease payments19,907 
Less imputed interest(3,525)
Total$16,382 

For the three months ended March 31, 2022 and 2021, the Company paid $1.4 million and $1.6 million, respectively, for operating lease liabilities.



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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
 
    This Quarterly Report on Form 10-Q (this “Report”) includes forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, but are not limited to, information concerning:

the duration of and economic, operational and financial impacts on our business of the COVID-19 pandemic, as well as the actions taken by governmental authorities, clients or others in response to the continuance of the pandemic;
the evolution of the enterprise software management and support landscape facing our clients and prospects;
our ability to educate the market regarding the advantages of our enterprise software management and support services and products;
estimates of our total addressable market;
expectations of client savings;
the occurrence of catastrophic events, including terrorism and geopolitical actions specific to an international region, that may disrupt our business or that of our current and prospective clients;
our ability to maintain an adequate rate of revenue growth;
our ability to maintain sufficient cash flow and capital;
our ability to service the indebtedness under our Credit Facility;
our business plan and our ability to effectively manage our growth and associated investments;
beliefs and objectives for future operations;
our ability to expand our leadership position in independent enterprise software support and sell our new application managed services;
our ability to attract and retain clients and our ability to further penetrate our existing client base;
our ability to maintain our competitive technological advantages against new entrants in our industry;
our ability to timely and effectively scale and adapt our existing technology;
our ability to innovate new products and bring them to market in a timely manner, including our recently announced application management services “AMS” offerings;
our ability to maintain, protect, and enhance our brand and intellectual property;
our ability to capitalize on changing market conditions including a market shift to hybrid and cloud/SaaS offerings for information technology environments and retirement of certain software releases by software vendors;
our ability to develop strategic partnerships;
benefits associated with the use of our services;
our ability to expand internationally;
our ability to raise equity or debt financing and engage in other transactions to simplify our capital structure in the future;
the effects of increased competition in our market and our ability to compete effectively;
our intentions with respect to our pricing model;
cost of revenues, including changes in costs associated with production, manufacturing, and client support;
changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;
our ability to maintain our good standing with the United States and international governments and capture new contracts;
costs associated with defending intellectual property infringement and other claims, such as those claims discussed under “Legal Proceedings” in Part II, Item 1 of this Report and our expectations with respect to such litigation;
our expectations concerning relationships with third parties, including channel partners and logistics providers;
economic and industry trends or trend analysis;
our ability to prevent unauthorized access to our information technology systems, protect the confidential information of our employees and clients and comply with privacy and data protection regulations;
our ability to enhance stockholder value through our stock repurchase program;
the attraction and retention of qualified employees and key personnel;
22


future acquisitions of or investments in complementary companies, products, subscriptions or technologies;
uncertainty from the discontinuance of LIBOR and transition to other interest rate benchmarks;
the impact of the reclassification of certain of our warrants as liabilities;
the effects of seasonal trends on our results of operations, including the contract renewal cycles for vendor-supplied software services; and
other risks and uncertainties, including those discussed under “Risk Factors” in Part II, Item 1A of this Report.

    We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referred to under “Risk Factors” in Part II, Item 1A of this Report. Moreover, we operate in very competitive and rapidly changing markets. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
 
    You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements in this Report are made as of the date of the filing, and except as required by law, we disclaim and do not undertake any obligation to update or revise publicly any forward-looking statements in this Report. You should read this Report and the documents that we reference in this Report and have filed with the SEC as exhibits with the understanding that our actual future results, levels of activity and performance, as well as other events and circumstances, may be materially different from what we expect.
 
Overview
 
    The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this Report, and our audited consolidated financial statements for the year ended December 31, 2021, included in Part II, Item 8 of our 2021 Form 10-K.
 
    Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated based on such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

We were incorporated as Rimini Street, Inc. (“RSI”) in the state of Nevada in September 2005. In May 2017, RSI entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GP Investments Acquisition Corp. (“GPIA”), a publicly-held special purpose acquisition company incorporated in the Cayman Islands and formed for the purpose of effecting a business combination with one or more businesses. Substantially all of GPIA’s assets consisted of cash and cash equivalents. The Merger Agreement was approved by the respective shareholders of RSI and GPIA in October 2017, and closing occurred on October 10, 2017, resulting in (i) the merger of a wholly-owned subsidiary of GPIA with and into RSI, with RSI as the surviving corporation, after which (ii) RSI merged with and into GPIA, with GPIA as the surviving corporation. Prior to consummation of the mergers, GPIA domesticated as a Delaware corporation (the “Delaware Domestication”). Immediately after the Delaware Domestication and the consummation of the second merger, GPIA was renamed “Rimini Street, Inc.” (referred to herein as the Company, as distinguished from RSI with the same legal name).

    We are a global provider of enterprise software management and support products and services, and the leading independent software support provider for Oracle and SAP products, based on both the number of active clients supported and recognition by industry analyst firms. We founded our company to disrupt and redefine the enterprise software support market by developing and delivering innovative new products and services that fill a then unmet need in the market. We believe we have achieved and sustained our leadership position in independent enterprise software support by delivering on our mission to provide extraordinary technology solutions that achieve each client’s strategic, operational, and financial goals.

23


In September 2020, we announced the global availability of our award-winning, mission-critical, 24x7x365 support, application management, security and migration services beyond proprietary databases to leading open source database platforms, including MySQL, MariaDB, PostgreSQL and MongoDB.

In November 2019, we announced the global availability of our Application Management Services (“AMS”) for Oracle, which includes coverage for Oracle Database, Middleware and a wide range of Oracle applications including E-Business Suite, JD Edwards, PeopleSoft and Siebel. In addition to leveraging our support services for Oracle that replaces expensive and less robust software vendor annual support with a more responsive and comprehensive support offering, our clients can now have us manage their Oracle systems day-to-day with an integrated application management and support service provided by a single trusted vendor. As an integrated service, we believe we can provide clients a better model, better people, and better outcomes with higher satisfaction and significant savings of time, labor and money. The AMS for Oracle includes system administration, operational support, health monitoring and enhancement support.

In August 2019, we announced plans to globally offer AMS for SAP enterprise software, expanding the scope of support services we offer clients globally. This AMS service is in addition to our traditional enterprise Support Services. We are already providing this new SAP AMS service to clients in North and South America. The service includes system administration and SAP Basis support, system health monitoring with proactive analysis, preventative system recommendations and event detection; and enhancement support for complex SAP software landscapes.

In 2018 we announced support for Software as a Service (“SaaS”) solutions beginning with Salesforce products. As a partner of Salesforce, we provide our award-winning service and support for custom code, release updates and application integrations in addition to ongoing administrative, configuration and enhancement of Salesforce’s industry leading cloud solutions. We also provide support to clients for additional SaaS solutions that we will formally announce in the future. By providing support for SaaS as well as traditionally licensed enterprise software, Rimini Street unifies support for its clients across applications and software delivery models from one trusted provider, creating efficiencies and savings, simplifying support processes and enabling improved support outcomes.
 
    Enterprise software support products and services is one of the largest categories of overall global information technology (“IT”) spending. We believe core enterprise resource planning (ERP), client relationship management (CRM), product lifecycle management (PLM) and technology software platforms have become increasingly important in the operation of mission-critical business processes over the last 30 years, and also that the costs associated with failure, downtime, security exposure and maintaining the tax, legal and regulatory compliance of these core software systems have also increased. As a result, we believe that licensees often view software support as a mandatory cost of doing business, resulting in recurring and highly profitable revenue streams for enterprise software vendors. For example, for fiscal year 2021, SAP reported that support revenue represented approximately 41% of its total revenue. For fiscal year 2021, Oracle reported a margin of 85% for cloud services and license support.

We believe that software vendor support is an increasingly costly model that has not evolved to offer licensees the responsiveness, quality, breadth of capabilities or value needed to meet the needs of licensees. Organizations are under increasing pressure to reduce their IT costs while also delivering improved business performance through the adoption and integration of emerging technologies, such as mobile, virtualization, internet of things (“IoT”) and cloud computing. Today, however, the majority of IT budgets are spent operating and maintaining existing infrastructure and systems, in part as a result of software vendor policies and support models that are designed to benefit the vendor and force organizations to follow a vendor-dictated roadmap. As a result, we believe organizations are increasingly seeking ways to create competitive advantage and growth by redirecting budgets from expensive maintenance programs and costs to new technology investments that provide greater strategic value. We believe our software products and services help clients achieve these objectives by reducing the total cost of support.

We believe that AMS for enterprise software is a large market with significant unmet needs in client satisfaction and value. Traditional AMS providers compete on price, but the traditional AMS model is broken with a focus on a “land and expand” model based on initial cheaper, less-skilled workers but higher costs over time and frequently poor client satisfaction or degradation in service over time. Providers usually contract for lower-cost services with a goal to grow revenue through scope creep by adding hours to open tickets or selling new project work. These lower-cost AMS support models sound cost-effective, but their contractual structures can both enable and incent traditional AMS providers to maximize their own revenue at the expense of their clients by “addressing” issues (sometimes neither quickly nor efficiently), but not necessarily resolving them or their root causes. In addition, traditional AMS offerings are disparate and separate from software vendor support, with inherent inefficiencies and gaps that further limit responsiveness, root cause analysis and business value.

24


We believe organizations are realizing the value of an integrated, expert-led Support and AMS offering that eliminates inefficiencies, realizes joint value from the resolution of root causes that reduce issue volumes over time, and improves client satisfaction. Through our solution offerings, Rimini Street provides expert, ultra-responsive support and AMS, functioning as an extension of IT teams, with engineers available 24x7x365 around the globe for all AMS and enterprise software projects, and to fill skill gaps or help with rightsizing enterprise teams. Rimini Street teams deliver a wide variety of desired outcomes for a broad range of use cases such as supporting entire enterprise software systems, reducing costs, clearing backlogs, or facilitating the redeployment of IT teams for more strategic initiatives.

    As of March 31, 2022, we employed over 1,680 professionals and supported over 2,880 active clients globally, including 70 Fortune 500 companies and 17 Fortune Global 100 companies across a broad range of industries. We define an active client as a distinct entity, such as a company, an educational or government institution, or a business unit of a company that purchases our services to support a specific product. For example, we count as two separate active client instances in circumstances where we provide support for two different products to the same entity.
 
    Our subscription-based revenue provides a strong foundation for, and visibility into, future period results. For the three months ended March 31, 2022 and 2021, we generated revenue of $97.9 million and $87.9 million, respectively, representing an increase of 11%. During the three months ended March 31, 2022, we had net income of $3.1 million, and as of March 31, 2022, we had an accumulated deficit of $222.7 million. Approximately 53% and 54% of our revenue was generated in the United States for the three months ended March 31, 2022 and 2021, respectively. Approximately 47% and 46% of our revenue was generated in foreign jurisdictions for the three months ended March 31, 2022 and 2021, respectively.
 
    Since our inception, we have financed our operations through cash collected from clients and net proceeds from equity financings and borrowings.
 
Impact of COVID-19

Near the end of the first quarter of 2020, the emergence of the COVID-19 pandemic created, rapidly evolving and unpredictable impacts on global society, economies, financial markets and business practices. These rapidly evolving and unpredictable impacts continue as virus variants have resulted in additional outbreaks during fiscal year 2021 and 2022 to date. In response to the COVID-19 pandemic, federal and state governments have implemented multiple measures aiming to contain the spread of the virus, including social distancing, travel restrictions, border closures, quarantine guidance following travel to certain jurisdictions, limitations on public gatherings and continued closures of certain non-essential businesses, vaccination mandates or requirements for businesses to confirm employees’ vaccination status, and other restrictions. As a result, to protect the health and well-being of our employees, clients and the communities in which we operate, we transitioned as many of our employees as possible to a work-at-home model, temporarily closed our offices worldwide, placed restrictions on non-essential business travel, transitioned to a no in-person event marketing strategy and implemented a fully remote sales model. We believe these measures have been successful and have not significantly affected our financial results for the three months ended March 31, 2022. We have implemented business continuity measures and will continue to respond to the COVID-19 pandemic as circumstances dictate.

As a result of the measures that we have taken in response to the COVID-19 pandemic described above, we have realized reduced costs of travel, reductions in costs resulting from cancelling certain in-person marketing events, reductions in office operating costs and potential rent abatement related to office closures around the world. While some of our offices have partially re-opened with limited staffing, our offices will not fully re-open until local authorities permit us to, and our own criteria and conditions to ensure employee health and safety are satisfied. We continue to expect to offset some of these reduced costs with accelerated investments including implementing virtual sales and other marketing programs, special compensation bonuses for lower-paid employees and special compensation bonuses for employees who have tested positive for COVID-19. For example, during the COVID-19 pandemic, we paid COVID-19 special bonuses to certain of our employees to help with pandemic-related special costs and for employees who have tested positive for COVID-19. We have authorized COVID-19 special bonuses during pandemic that have been paid from 2020 through the three months ended March 31, 2022. The cost of these special bonuses were more than offset by the cost reductions relating to travel and in-person marketing event fees and expenses described above.

The COVID-19 pandemic had no significant net impact on our revenue or results of operations during the three months ended March 31, 2022, and we continued to deliver uninterrupted and critical support services to our clients during this period. Our ability to utilize our secure remote-connectivity global infrastructure promotes the safety of our employees while abiding by the restrictions currently in place where they are located throughout the world. While we did implement discounted or extended payment terms for certain of our clients in 2020, in most cases it was in exchange for contractual concessions
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favorable to us, for example, extended contract terms or marketing support for references, and the collective impact of such changes was not material to our results. However, the COVID-19 pandemic has impacted business markets worldwide, primarily due to the uncertainty relating to the continued effects of the pandemic. As a result, we have experienced some clients not renewing our services as their businesses have been adversely impacted during the pandemic. Despite this, we expect to continue to be able to market, sell and provide our current and future products and services to clients globally. We also expect to continue investing in the development and improvement of new and existing products and services to address client needs.

The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental and business actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability. These factors may adversely impact consumer, business, and government spending on technology as well as our clients’ ability to pay for our services on an ongoing basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including receivables and forward-looking guidance. As such, the effects of the COVID-19 pandemic may not be fully reflected in our financial results until future periods. Refer to “Risk Factors” (Part II, Item 1A of this Report) for a discussion of these factors and other risks.

On March 27, 2020, CARES Act was signed into law in the United States to address the economic impact of the COVID-19 pandemic. We have elected to defer payroll tax payments which totaled $3.2 million as permitted by the CARES Act (such deferred payroll taxes are due in two installments: 50% by December 31, 2021 and 50% by December 31, 2022). We paid $1.6 million in December 2021 as required under the CARES Act. We continue to monitor any effects that may result from the CARES Act and other similar legislation or actions in geographies in which our business operates.

Recent Developments

On February 27, 2022, the Board approved adoption of a stock repurchase program to repurchase up to $15.0 million of our common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, through March 4, 2024, subject to compliance with our Credit Facility dated July 2, 2021, and amended January 14, 2022 to increase the amount of securities that could be purchased by us to approximately $15.0 million during the term of the facility, and other applicable legal requirements.

During the three months ended March 31, 2022, we acquired 0.6 million shares of Common Stock on the open market at a cost of $3.2 million. Upon completion of these repurchases, such shares of Common Stock were retired.

On July 20, 2021, we redeemed the remaining 87,802 shares of our 13.00% Series A Preferred Stock at an aggregate total redemption price of $88.4 million. The total redemption price consisted of $87.8 million related to the outstanding shares of Series A Preferred Stock with a face value of $1,000 per share and $0.6 million or $6.86 per share of Series A Preferred Stock related to the dividends earned for the period from July 1, 2021 through July 19, 2021. The redeemed shares of the Series A Preferred Stock, along with the dividends, were recorded on the redemption date of July 20, 2021.

We funded the July 20, 2021 redemption with borrowings from a five year secured term loan of $90 million, which was entered into on July 20, 2021 (the “Credit Facility”). Annual minimum principal payments over the five year term for the Credit Facility will be 5%, 5%, 7.5%, 7.5% and 10%, respectively, with the remaining balance due at the end of the term. See Note 5 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report for further information regarding our Credit Facility.

On April 16, 2021, we redeemed 60,000 shares of our 13.00% Series A Preferred Stock at an aggregate total redemption price of $62.3 million. The total price consists of $60.0 million related to the face value of $1,000 per share of Series A Preferred Stock and $2.3 million or $39.05 per share of Series A Preferred Stock related to the dividends to be earned for the period from April 1, 2021 through July 18, 2021. The redeemed shares of Series A Preferred Stock, along with the dividends to be earned, were recorded when the Series A Preferred Stock became mandatorily redeemable on April 16, 2021.
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