Delaware
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7371
|
83-3780685
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||
(State or other jurisdiction of incorporation or organization)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer Identification Number)
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Nicole Brookshire
Matthew Browne
Reid Hooper
Cooley LLP
500 Boylston Street
Boston, MA 02116
Tel: (617) 937-2300
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Byron B. Rooney
Roshni Banker Cariello
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Tel: (212) 450-4000
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Large accelerated filer
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☐
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Accelerated filer
|
☐
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Non-accelerated filer
|
☒
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Smaller reporting company
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☒
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Emerging growth company
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☒
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Title of Each Class of Securities to be Registered
|
Amount
to be
Registered
|
Proposed
Maximum
Offering
Price
Per Share
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount of
Registration
Fee
|
||||||||||||
Class 1 Common Stock, $0.0001 par value per share
|
$
|
3,749,307
|
(1)
|
N/A
|
$
|
24,870,407.08 |
(2)
|
$
|
2,305.49 |
(3)
|
||||||
Warrants, each whole warrant exercisable for one share of Class 1 Common Stock, $0.0001 par value per share, at an exercise price of $11.50 per share
|
12,497,692
|
(4)
|
N/A
|
N/A
|
N/A
|
(5)
|
(1) |
Represents the maximum number of shares of Class 1 Common Stock, $0.0001 par value per share (the “Common Stock”), of BTRS Holdings Inc. (the “Company”) that may be issued directly to (i) holders of warrants, each whole warrant
exercisable for one share of Common Stock at an exercise price of $11.50 per share (the “Warrants”), who tender their Warrants pursuant to the Offer (as defined below) and (ii) holders of Warrants who do not tender their Warrants pursuant
to the Offer and, pursuant to the Warrant Amendment (as defined below), if approved, may receive shares of Common Stock in the event the Company exercises its right to convert the Warrants into shares of Common Stock. Pursuant to Rule 416
under the Securities Act of 1933, as amended (the “Securities Act”), the Company is also registering an indeterminate number of additional shares of Common Stock issuable by reason of any stock dividend, stock split, recapitalization or
other similar transaction.
|
(2) |
This maximum aggregate offering price assumes the acquisition of 12,497,692 Warrants in exchange for shares of Common Stock. This maximum aggregate offering price, estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(f) and Rule 457(c) under the Securities Act, is based on the product of (i) $1.99, the average of the high and low prices of the Warrants on November 17, 2021, as reported on the
Nasdaq Capital Market, and (ii) 12,497,692, the maximum number of Warrants to be acquired in the Offer based on the exchange ratio of 0.30 in effect following the close of trading on trading on the Nasdaq Global Select Market on
November 17, 2021, the last trading day prior to commencement of the Offer.
|
(3) |
Calculated in accordance with Rule 457(f) under the Securities Act and the Fee Rate Advisory #1 for Fiscal Year 2022, issued August 23, 2021, by multiplying the maximum aggregate offering price by 0.0000927.
|
(4) |
Represents the maximum number of Warrants that may be amended pursuant to the Warrant Amendment.
|
(5) |
No additional registration fee is payable pursuant to Rule 457(g) under the Securities Act.
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Page
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iii
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v
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1
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7
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36
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44
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54
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84
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92
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106
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116
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124
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128
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130
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130
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130
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F-1
|
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A-1
|
• |
our financial and business performance, including the financial projections, forecasts and business metrics and any underlying assumptions thereunder;
|
• |
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
|
• |
the capabilities and benefits to our customers of our technology platform;
|
• |
the advantages and expected growth of the Business Payments Network;
|
• |
our ability to digitally transform the accounts receivable industry;
|
• |
our ability to scale in a cost-effective manner;
|
• |
developments and projections relating to our competitors and industry;
|
• |
the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto;
|
• |
creating additional infrastructure to support our operations as a public company, losing emerging growth company status, and becoming a large accelerated filer effective as of December 31, 2021;
|
• |
our future capital requirements and sources and uses of cash;
|
• |
our ability to obtain funding for our operations;
|
• |
our business, expansion plans, and opportunities;
|
• |
our growth strategy for expanding our operations outside the United States;
|
• |
our ability to acquire or invest in businesses, products, or technologies that may complement or expand our products or platforms, enhance our technical capabilities, or otherwise offer growth opportunities; and
|
• |
the outcome of any known and unknown litigation and regulatory proceedings.
|
• |
the ability to maintain the listing of the Common Stock on the Nasdaq Global;
|
• |
changes in applicable laws or regulations;
|
• |
the effect of the COVID-19 pandemic on our business;
|
• |
our ability to execute our business model;
|
• |
our ability to attract and retain customers and expand customers’ use of our products and services;
|
• |
risks relating to the uncertainty of our projected financial and operating information;
|
• |
our ability to raise capital;
|
• |
the approval of the Warrant Amendment and our ability to require that all Warrants be exchanged for shares of Common Stock;
|
• |
the exchange of Warrants for shares of Common Stock pursuant to the Offer, which will increase the number of shares eligible for future resale in the public market and result in dilution to our
stockholders;
|
• |
the lack of a third-party determination that the Offer or the Consent Solicitation is fair to Warrant Holders;
|
• |
the possibility that we may be adversely affected by other economic, business and/or competitive factors; and
|
• |
other risks and uncertainties discussed in the section titled “Risk Factors” in this Prospectus/Offer to Exchange.
|
The Company
|
We are a leading provider of cloud-based software and integrated payment processing solutions that simplify and automate B2B commerce. Accounts receivable (“AR”) is broken and
relies on conventional processes that are outdated, inefficient, manual and largely paper-based. We are at the forefront of the digital transformation of AR, providing mission-critical solutions that span credit decisioning and
monitoring, online ordering, invoicing, cash application and collections. Our solutions integrate with a number of ecosystem players, including financial institutions, enterprise resource planning (“ERP”) systems, and accounts payable
(“AP”) software platforms, to help customers accelerate cash flow and generate sales more quickly and efficiently. Customers use our platform to transition from expensive paper invoicing and check acceptance to efficient electronic
billing and payments, which accelerates revenue capture, generates cost savings, and provides a better user experience.
|
|
Corporate Contact
Information
|
Our principal executive offices are located at 1009 Lenox Drive, Suite 101, Lawrenceville, New Jersey 08648. Our telephone number is (609) 235-1010. Our website address is www.billtrust.com where general information about us is available. The information contained on, or that may be accessed through, our
website is not part of, and is not incorporated into, this Prospectus/Offer to Exchange or the registration statement on Form S-4 of which the Prospectus/Offer to Exchange forms a part.
|
|
Warrants that qualify for the
Offer
|
As of November 17, 2021, we had outstanding 12,497,692 Warrants, each exercisable for one share of our Common Stock at a price of $11.50 per share, subject to
adjustments pursuant to the Warrant Agreement. Pursuant to the Offer, we are offering up to an aggregate of 3,749,307 shares of our Common Stock in exchange for all of the Warrants.
Under the Warrant Agreement, we may call the Warrants for redemption at our option:
• in whole and not in part;
• at a price of $0.01 per Warrant;
• upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each Warrant Holder; and
• if, and only if, the reported closing price of our Common Stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which we send the notice of redemption to the Warrant Holders, provided that
there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day redemption period or the Company has
elected to require the exercise of Warrants on a “cashless basis.”
|
The Warrants expire on January 12, 2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
|
||
Market Price of Our
Common Stock
|
Our Common Stock is currently listed on the Nasdaq Global under the symbol “BTRS” and our Warrants are currently listed on the Nasdaq Capital under the symbol “BTRSW.” See “Market Information,
Dividends and Related Stockholder Matters.”
|
|
The Offer
|
Each Warrant Holder who tenders Warrants for exchange pursuant to the Offer will receive 0.30 shares of our Common Stock for each Warrant so exchanged. No fractional shares of Common Stock will be issued pursuant to the Offer. In
lieu of issuing fractional shares, any Warrant Holder who would otherwise have been entitled to receive fractional shares pursuant to the Offer will, after aggregating all such fractional shares of such holder, be paid cash (without
interest) in an amount equal to such fractional part of a share multiplied by the last sale price of our Common Stock on the Nasdaq Global on the last trading day of the Offer Period. Our obligation to complete the Offer is not
conditioned on the receipt of a minimum number of tendered Warrants.
Holders of the Warrants tendered for exchange will not have to pay any of the exercise price for the tendered Warrants in order to receive shares of Common Stock in the exchange.
The shares of Common Stock issued in exchange for the tendered Warrants will be unrestricted and freely transferable, as long as the Warrant Holder is not an affiliate of ours and was not an affiliate of ours within the three months
prior to the proposed transfer of such shares.
We are not aware of any U.S. state where the making of the Offer and the Consent Solicitation is not in compliance with applicable law. If we become aware of any U.S. state where the making of the Offer and the Consent Solicitation
or the acceptance of the Warrants pursuant to the Offer is not in compliance with applicable law, we will make a good faith effort to comply with the applicable law. If, after such good faith effort, we cannot comply with the applicable
law, the Offer and the Consent Solicitation will not be made to (nor will tenders be accepted from or on behalf of) the Warrant Holders.
|
|
The Consent Solicitation
|
In order to tender Warrants in the Offer and Consent Solicitation, holders are required to consent (by executing the Letters of Transmittal and Consent or requesting that their broker or nominee consent on their behalf) to an
amendment to the Warrant Agreement governing the Warrants as set forth in the Warrant Amendment attached as Annex A. If approved, the Warrant Amendment would permit the Company to require that all Warrants that are outstanding upon the
closing of the Offer be converted into shares of Common Stock at a ratio of 0.27 shares of Common Stock per Warrant (a ratio which is 10% less than the exchange ratio applicable to the Offer). Upon such conversion, no Warrants will
remain outstanding.
|
|
Purpose of the Offer and
Consent Solicitation
|
The purpose of the Offer and Consent Solicitation is to attempt to simplify our capital structure and reduce the potential dilutive impact of the Warrants, thereby providing us with more flexibility for financing our operations in
the future. See “The Offer and Consent Solicitation —
Background and Purpose of the Offer and Consent Solicitation.”
|
Offer Period
|
The Offer and Consent Solicitation will expire on the Expiration Date, which is one minute after 11:59 p.m., Eastern Standard Time, on December 16, 2021, or
such later time and date to which we may extend. All Warrants tendered for exchange pursuant to the Offer and Consent Solicitation, and all required related paperwork, must be received by the exchange agent by the Expiration Date, as
described in this Prospectus/Offer to Exchange.
If the Offer Period is extended, we will make a public announcement of such extension by no later than 9:00 a.m., Eastern Standard Time, on the next business
day following the Expiration Date as in effect immediately prior to such extension.
We may withdraw the Offer and Consent Solicitation only if the conditions of the Offer and Consent Solicitation are not satisfied or waived prior to the Expiration Date. Promptly upon any such withdrawal, we will return the tendered
Warrants (and, with respect to the Consent Warrants, the related consent to the Warrant Amendment will be revoked). We will announce our decision to withdraw the Offer and Consent Solicitation by disseminating notice by public
announcement or otherwise as permitted by applicable law. See “The Offer and Consent Solicitation — General Terms — Offer Period.”
|
|
Amendments to the Offer
and Consent Solicitation
|
We reserve the right at any time or from time to time to amend the Offer and Consent Solicitation, including by increasing or (if the conditions to the Offer are not satisfied) decreasing the exchange ratio of Common Stock issued for
every Warrant exchanged or by changing the terms of the Warrant Amendment. If we make a material change in the terms of the Offer and Consent Solicitation or the information concerning the Offer and Consent Solicitation, or if we waive
a material condition of the Offer and Consent Solicitation, we will extend the Offer and Consent Solicitation to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. See “The
Offer and Consent Solicitation — General Terms — Amendments to the Offer and Consent Solicitation.”
|
|
Conditions to the Offer and
Consent Solicitation
|
The Offer is subject to customary conditions, including the effectiveness of the registration statement on Form S-4, of which this Prospectus/Offer to Exchange forms a part, and the absence of any action or proceeding, statute, rule,
regulation or order that would challenge or restrict the making or completion of the Offer. The Offer is not conditioned upon the receipt of a minimum number of tendered Warrants. However, the Consent Solicitation is conditioned upon
receiving the consent of holders of at least 50% of the Warrants (which is the minimum number required to amend the Warrant Agreement). We may waive some of the conditions to the Offer. See “The Offer
and Consent Solicitation — General Terms — Conditions to the Offer and Consent Solicitation.”
We will not complete the Offer and Consent Solicitation unless and until the registration statement described above is effective. If the registration statement is not effective at the Expiration Date, we may, in our discretion,
extend, suspend or cancel the Offer and Consent Solicitation, and will inform Warrant Holders of such event.
|
|
Withdrawal Rights
|
If you tender your Warrants for exchange and change your mind, you may withdraw your tendered Warrants (and, with respect to the Consent Warrants, thereby automatically revoke the related consent to the Warrant Amendment) at any time
prior to the Expiration Date, as described in greater detail in the section titled “The Offer and Consent Solicitation — Withdrawal Rights.” If the Offer Period is extended, you may withdraw your
tendered Warrants (and, with respect to the Consent Warrants, thereby automatically revoke the related consent to the Warrant Amendment) at any time until the extended Expiration Date. In addition, tendered Warrants that are not
accepted by us for exchange by January 18, 2022 may thereafter be withdrawn by you until such time as the Warrants are accepted by us for exchange.
|
Federal and State Regulatory
Approvals
|
Other than compliance with the applicable federal and state securities laws, no federal or state regulatory requirements must be complied with and no federal or state regulatory approvals must be obtained in connection with the Offer
and Consent Solicitation.
|
|
Absence of Appraisal or
Dissenters’ Rights
|
Holders of Warrants do not have any appraisal or dissenters’ rights under applicable law in connection with the Offer and Consent Solicitation.
|
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U.S. Federal Income Tax
Consequences of the Offer
|
For those holders of Warrants participating in the Offer and for any holders of Warrants subsequently exchanged for shares of Common Stock pursuant to the terms of the Warrant Amendment, if approved, we intend to treat the exchange
of your Warrants for shares of Common Stock as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code pursuant to which (i) you should not recognize any gain or loss on the exchange of your Warrants for shares of
Common Stock (other than with respect to any cash received in lieu of a fractional share of our Common Stock), (ii) your aggregate tax basis in shares of Common Stock received in the exchange should equal your aggregate tax basis in
your Warrants surrendered in the exchange (except to the extent of any tax basis allocated to a fractional share for which a cash payment is received in connection with the exchange), and (iii) your holding period for shares of Common
Stock received in the exchange should include your holding period for the surrendered Warrants. However, because there is a lack of direct legal authority regarding the U.S. federal income tax consequences of an exchange of your
Warrants for shares of Common Stock, there can be no assurance in this regard and alternative characterizations are possible by the IRS or a court, including ones that would require U.S. holders to recognize taxable income on the
exchange of your Warrants for shares of Common Stock.
Although the issue is not free from doubt, we intend to treat all Warrants not exchanged for shares of Common Stock in the Offer as having been exchanged for “new” warrants pursuant to the Warrant Amendment and to treat such deemed
exchange as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code, pursuant to which (i) you should not recognize any gain or loss on the deemed exchange of Warrants for “new” warrants, (ii) your aggregate tax
basis in the “new” warrants deemed to be received in the exchange should equal your aggregate tax basis in your existing Warrants surrendered in the exchange, and (iii) your holding period for the “new” warrants deemed to be received in
the exchange should include your holding period for the surrendered Warrants. Because there is a lack of direct legal authority regarding the U.S. federal income tax consequences of a deemed exchange of warrants for “new” warrants such
as that contemplated by the Warrant Amendment there can be no assurance in this regard and alternative characterizations by the IRS or a court are possible, including ones that would require U.S. holders to recognize taxable income on
the deemed exchange. See “The Offer and Consent Solicitation — Material U.S. Federal Income Tax Consequences.”
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No Recommendation
|
None of our Board, our management, the dealer manager, the exchange agent, the information agent, or any other person makes any recommendation on whether you should tender or refrain from tendering all or any portion of your Warrants
or consent to the Warrant Amendment, and no one has been authorized by any of them to make such a recommendation.
|
|
Risk Factors
|
For risks related to the Offer and Consent Solicitation, please read the section titled “Risk Factors” beginning on page 7 of this Prospectus/Offer to Exchange.
|
|
Exchange Agent
|
The depositary and exchange agent for the Offer and Consent Solicitation is:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
|
Dealer Manager
|
The dealer manager for the Offer and Consent Solicitation is:
BofA Securities, Inc.
Bank of America Tower at One Bryant Park
New York, New York 10036
Toll-Free: (888) 803-9655
We have other business relationships with the dealer manager, as described in “The Offer and Consent Solicitation — Dealer Manager.”
|
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Additional Information
|
We recommend that our Warrant Holders review the registration statement on Form S-4, of which this Prospectus/Offer to Exchange forms a part, including the exhibits that we have filed with the SEC in connection with the Offer and
Consent Solicitation and our other materials that we have filed with the SEC, before making a decision on whether to tender for exchange in the Offer and consent to the Warrant Amendment. All reports and other documents we have filed
with the SEC can be accessed electronically on the SEC’s website at www.sec.gov.
|
• |
We have a history of operating losses and may not achieve or sustain profitability in the future.
|
• |
The COVID-19 pandemic has materially impacted the United States and global economies, and could have a material adverse impact on our employees, customers, and partners, which could adversely and materially impact our business,
financial condition and results of operations.
|
• |
If our security measures or those of our third-party vendors are breached or unauthorized access to customer data is otherwise obtained, our platform or products may be perceived as not being secure, customers may reduce the use of
or stop using our products and platform and we may incur significant liabilities.
|
• |
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
|
• |
If we fail to manage our technical operations infrastructure, our existing customers may experience service outages.
|
• |
Our risk management efforts may not be effective to prevent fraudulent activities by our customers, employees or other third parties, which could expose us to material financial losses and liability and otherwise harm our business.
|
• |
We facilitate the transfer of customer funds daily, and such transfers are subject to the risk of errors, which could result in financial losses, damage to our reputation or loss of trust in our brand, which would harm our business
and financial results.
|
• |
If we are unable to attract new customers, the growth of our revenues will be adversely affected.
|
• |
Our business depends substantially on our customers renewing their contracts and subscriptions and purchasing additional subscriptions from us. Any decline in our customer renewals would harm our future operating results.
|
• |
Because we recognize subscription revenues over the term of the contract, fluctuations in new sales and customer cancellations may not be immediately reflected in our operating results and may be difficult to discern.
|
• |
Our business depends, in part, on our partnerships with financial institutions, third-party service providers, processing providers and other financial services suppliers. If any of our agreements with such financial institutions,
third-party service providers, processing providers, or financial services providers are terminated, we could experience service interruptions.
|
• |
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations and payment methods, demand for product enhancements, new product features, and changing business needs,
requirements or preferences, our products may become less competitive.
|
• |
The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed.
|
• |
Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our
business.
|
• |
The exchange of Warrants for shares of Common Stock will increase the number of shares eligible for future resale and result in dilution to our stockholders.
|
• |
attract new customers and increase sales to our existing customers;
|
• |
increase adoption and usage of our products and services, including the BPN;
|
• |
manage the effects of the COVID-19 pandemic on our business and operations;
|
• |
expand the functionality and scope of the products we offer;
|
• |
increase the rates at which customers subscribe to and continue to use our products;
|
• |
increase the volume of payments processed;
|
• |
increase awareness of our brand and successfully compete with other companies;
|
• |
expand into markets outside the United States;
|
• |
provide our customers with high-quality customer support that meets their needs; and
|
• |
successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our products and services.
|
• |
sales, marketing and customer support services, which we refer to as customer success, including an expansion of our sales organization and new customer success initiatives;
|
• |
our technology infrastructure, including systems architecture, scalability, availability, performance, and security;
|
• |
product development, including investments in our product development team and the development of new products and new functionality;
|
• |
expanding into markets outside the United States;
|
• |
acquisitions or strategic investments;
|
• |
regulatory compliance and risk management; and
|
• |
general administration, including increased legal and accounting expenses associated with being a public company.
|
• |
our ability to attract new customers;
|
• |
the addition or loss of one or more of our larger customers, including as the result of acquisitions or consolidations;
|
• |
the timing of recognition of revenues, including a significant portion of our revenues that are transaction-based and highly recurring in nature and vary based on the number of invoices processed, payments made and payment volume;
|
• |
the amount and timing of operating expenses;
|
• |
general economic, industry and market conditions, both domestically and internationally, including any economic downturns and adverse impacts resulting from the COVID-19 pandemic;
|
• |
the timing of our billing and collections;
|
• |
customer renewal, expansion, and adoption rates;
|
• |
security breaches of, technical difficulties with, or interruptions to the delivery and use of our products and services on our platform;
|
• |
the amount and timing of completion of professional services engagements;
|
• |
increases or decreases in the number of users for our products, services and platform, or pricing changes upon any renewals of customer agreements;
|
• |
changes in our pricing policies or those of our competitors;
|
• |
the timing and success of new product introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners;
|
• |
extraordinary expenses such as litigation or other dispute-related expenses or settlement payments;
|
• |
sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
|
• |
the impact of new accounting pronouncements and the adoption thereof;
|
• |
fluctuations in stock-based compensation expense;
|
• |
expenses in connection with mergers, acquisitions or other strategic transactions;
|
• |
the amount and timing of expenses related to our expansion to markets outside the United States; and
|
• |
the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangibles from acquired companies.
|
• |
loss of customers;
|
• |
lost or delayed market acceptance and sales of our products and services and decreased use of our platform;
|
• |
legal claims against us including warranty and service level agreement claims;
|
• |
regulatory enforcement action;
|
• |
diversion of our resources; or
|
• |
increased insurance costs.
|
• |
product features, quality, and functionality;
|
• |
data asset size and ability to leverage artificial intelligence to scale with our customers’ business needs;
|
• |
ease of deployment;
|
• |
ease of integration with customers’ and partners’ APIs (as defined below) for their billing and payment systems as well as third-party technologies;
|
• |
ability to automate processes;
|
• |
cloud-based delivery architecture;
|
• |
advanced security and control features;
|
• |
brand recognition; and
|
• |
pricing and total cost of ownership.
|
• |
customers’ budgetary constraints and priorities;
|
• |
the timing of customers’ budget cycles;
|
• |
the need by some customers for lengthy evaluations; and
|
• |
the length and timing of customers’ approval processes.
|
• |
improving our key business applications, processes and information technology (“IT”) infrastructure to support our business needs;
|
• |
enhancing information and communication systems to ensure that our employees and offices are well-coordinated and can effectively communicate with each other and our growing base of customers and partners;
|
• |
enhancing our internal controls to ensure timely and accurate reporting of all of our operations and financial results; and
|
• |
appropriately documenting our IT systems and our business processes.
|
• |
prohibit, restrict, and/or impose taxes or fees on transactions in, to or from certain countries or with certain governments, individuals, and entities;
|
• |
impose additional customer identification and customer due diligence requirements;
|
• |
impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring;
|
• |
limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements;
|
• |
impose minimum capital or other financial requirements;
|
• |
limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange;
|
• |
require enhanced disclosures to our money transmission customers;
|
• |
require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid;
|
• |
limit the number or principal amount of transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; and
|
• |
restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.
|
• |
the need to localize and adapt our platform for specific countries, including translation into foreign languages and associated expenses;
|
• |
data privacy laws that require customer data to be stored and processed in a designated territory;
|
• |
difficulties in staffing and managing foreign operations and working with foreign partners;
|
• |
different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;
|
• |
new and different sources of competition;
|
• |
weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;
|
• |
laws and business practices favoring local competitors;
|
• |
compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;
|
• |
increased financial accounting and reporting burdens and complexities;
|
• |
restrictions on the transfer of funds;
|
• |
fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk;
|
• |
adverse tax consequences;
|
• |
unstable regional and economic political conditions; and
|
• |
the fragmentation of longstanding regulatory frameworks caused by Brexit.
|
• |
subject us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations, and enforcement actions in one or more
jurisdictions levied by federal, state, local or foreign regulators, state attorneys general and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state, and local laws;
|
• |
result in licensure and additional compliance requirements;
|
• |
increase regulatory scrutiny of our business; and
|
• |
restrict our operations and force us to change our business practices or compliance program, make product or operational changes, or delay planned product launches or improvements.
|
• |
changes in the relative amounts of income before taxes in the various jurisdictions in which we operate due to differing statutory tax rates in various jurisdictions;
|
• |
changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Act as modified by the CARES Act;
|
• |
changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political
environments in which we do business;
|
• |
the outcome of current and future tax audits, examinations, or administrative appeals; and
|
• |
limitations or adverse findings regarding our ability to do business in some jurisdictions.
|
• |
fluctuations in demand for or pricing of our products and platform;
|
• |
our ability to attract new customers;
|
• |
our ability to retain and grow engagement with our existing customers;
|
• |
the impact of the COVID-19 pandemic on our employees, customers and partners, and our results of operations, liquidity and financial condition;
|
• |
our ability to expand our relationships with our financial institution partners or BPN partners, or to identify and attract new partners;
|
• |
customer expansion rates;
|
• |
changes in customer preference for cloud-based products and services as a result of security breaches in the industry or privacy concerns, or other security or reliability concerns regarding our products or services;
|
• |
fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;
|
• |
changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;
|
• |
potential and existing customers choosing our competitors’ products or developing their own solutions in-house;
|
• |
the development or introduction of new platforms, products or services that are easier to use or more advanced than our current suite of products and services, especially related to the application of artificial intelligence-based
services;
|
• |
our failure to adapt to new technology that is widely accepted;
|
• |
our ability to control costs, including our operating expenses;
|
• |
the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions;
|
• |
the amount and timing of non-cash expenses, including stock based compensation, goodwill impairments, if any, and other non-cash charges;
|
• |
the amount and timing of costs involved with our expansion into markets outside the United States;
|
• |
the amount and timing of costs associated with recruiting, training, and integrating new employees, and retaining and motivating existing employees;
|
• |
the effects of acquisitions and their integration;
|
• |
general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;
|
• |
the impact of new accounting pronouncements;
|
• |
changes in the competitive dynamics of our market;
|
• |
security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; and
|
• |
awareness of our brand and our reputation in our target markets.
|
• |
may significantly dilute the equity interests of our stockholders;
|
• |
may subordinate the rights of holders of Common Stock if preferred stock is issued with rights senior to those afforded our Common Stock;
|
• |
could cause a change in control if a substantial number of shares of our Common Stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors; and
|
• |
may adversely affect prevailing market prices for our Common Stock.
|
• |
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
• |
the exclusive right of the Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death, or removal of a director with or without cause by stockholders, which prevents stockholders from
being able to fill vacancies on the Board;
|
• |
the ability of the Board to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used
to significantly dilute the ownership of a hostile acquirer;
|
• |
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
• |
the requirement that a special meeting of stockholders may be called only by the chairperson of the Board, the chief executive officer or the Board, which may delay the ability of our stockholders to force consideration of a proposal
or to take action, including the removal of directors;
|
• |
limiting the liability of, and providing indemnification to, our directors and officers;
|
• |
controlling the procedures for the conduct and scheduling of stockholder meetings;
|
• |
providing for a staggered board, in which the members of the Board are divided into three classes to serve for a period of three years from the date of their respective appointment or election;
|
• |
granting the ability to remove directors with cause by the affirmative vote of 66 2⁄3% in voting power of the outstanding shares of Common Stock entitled to vote thereon;
|
• |
requiring the affirmative vote of at least 66 2⁄3% of the voting power of the outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class, to amend the Bylaws or
Articles V, VI, VII, VIII and IX of the Charter; and
|
• |
advance notice procedures that stockholders must comply with in order to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from
conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
|
• |
the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002:
|
• |
compliance with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;
|
• |
the requirement that we provide full and more detailed disclosures regarding executive compensation; and
|
• |
the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approve.
|
• |
actual or anticipated fluctuations in our financial condition or results of operations;
|
• |
variance in our financial performance from expectations of securities analysts;
|
• |
changes in our projected operating and financial results;
|
• |
announcements by us or our competitors of significant business developments, acquisitions or new offerings;
|
• |
announcements or concerns regarding real or perceived quality or issues with our products or similar products of our competitors;
|
• |
adoption of new regulations applicable to the payment and processing industries or the expectations concerning future regulatory developments;
|
• |
our involvement in litigation;
|
• |
future sales of our Common Stock by us or our stockholders;
|
• |
changes in senior management or key personnel;
|
• |
the trading volume of our Common Stock; and
|
• |
changes in the anticipated future size and growth rate of our market.
|
• |
the registration statement on Form S-4, of which this Prospectus/Offer to Exchange forms a part, shall have become effective under the Securities Act, and shall not be the subject of any stop order or proceeding seeking a stop order;
|
• |
no action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, shall have been threatened, instituted or pending before any court,
authority, agency or tribunal that directly or indirectly challenges the making of the Offer, the tender of some or all of the Warrants pursuant to the Offer or otherwise relates in any manner to the Offer;
|
• |
there shall not have been any action threatened, instituted, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to the Offer or Consent Solicitation or us, by any court or any authority, agency or tribunal that, in our reasonable judgment, is reasonably likely to directly or indirectly, (i) make the acceptance
for exchange of, or exchange for, some or all of the Warrants illegal or otherwise restrict or prohibit completion of the Offer or Consent Solicitation, or (ii) materially delay or materially restrict our ability, or render us unable, to
accept for exchange or exchange some or all of the Warrants; and
|
• |
there shall not have occurred (i) any general suspension of trading in securities on any national securities exchange or in the over-the-counter market; (ii) a declaration of a banking moratorium or any suspension of payments in
respect to banks in the U.S.; (iii) any limitation (whether or not mandatory) by any government or governmental, regulatory or administrative authority, agency or instrumentality, domestic or foreign, or other event that, in our
reasonable judgment is reasonably likely to affect the extension of credit by banks or other lending institutions; or (iv) a natural disaster, the commencement or escalation of any war, armed hostilities or other national or international
calamity, including, but not limited to, a catastrophic terrorist attack against the U.S. or its citizens, an outbreak of a pandemic or contagious disease other than COVID-19, or an escalation of the impacts or worsening threat of the
COVID-19 pandemic as a result of significant new precautionary or emergency measures, recommendations or orders taken, issued or reinstated by any governmental or regulatory authority in response to the COVID-19 pandemic, directly or
indirectly involving the United States, on or after November 18, 2021, which in our reasonable judgment is or may be materially adverse to us or otherwise makes it inadvisable for us to proceed with the Offer and Consent Solicitation.
|
• |
the tender is made by or through an Eligible Institution;
|
• |
the exchange agent receives by hand, mail, overnight courier, facsimile or electronic mail transmission, prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery in the form we have provided
with this Prospectus/Offer to Exchange, with signatures guaranteed by an Eligible Institution; and
|
• |
a confirmation of a book-entry transfer into the exchange agent’s account at DTC of all Warrants delivered electronically, together with a properly completed and duly executed Letter of Transmittal and Consent with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message in accordance with ATOP), and any other documents required by the Letter of Transmittal and Consent, must be received by the exchange agent within two days
that the Nasdaq Capital is open for trading after the date the exchange agent receives such Notice of Guaranteed Delivery.
|
• |
Huge Market. According to Visa, B2B commerce drives approximately 2/3 of global payments. The transactions between businesses annually generate 280 billion global invoices and
associated $120+ trillion of global commercial payments. Conventional AR processes for B2B invoicing and payment are highly dated and ripe for disruption. To illustrate, in the United States alone, more than 50% of payments are still
being made by paper check, presenting a huge market opportunity for digital transformation. We believe our global total addressable market for digital transformation of accounts receivables with integrated payments is extremely large, and
estimate that in North America alone that total addressable market is approximately $10.9 billion, based on an estimated 43,500 businesses with annual revenues of $50 million or more in the United States and Canada that are in industries
that use our products and services and with a potential estimated annual revenue of approximately $250,000 for each such business, which is our estimated representative annual spend for customers that fully utilize our platform.
|
• |
Favorable Trends. The need for modern, digital invoice presentment and payment acceptance is fueled by B2B buyers and governments. B2B commerce is increasingly digital, with
the global B2B e-commerce market size estimated to reach $20.9 trillion by 2027. Rapid adoption of SaaS platform AP solutions like AvidXchange, Coupa, and SAP Ariba by B2B buyers creates complexity for supplier AR departments, requiring
manual activity for invoice presentment, remittance capture and electronic payment processing. In addition, governments are requiring B2B sellers to interact with electronic tax validation systems in order to present invoices. The 2020
global pandemic has accelerated the demand for faster and more efficient digital B2B interactions. Companies need solutions that enable AR professionals to work outside of the office, generate cost savings from operational efficiency,
address increased pressure on working capital, and provide a superior customer experience. Our platform addresses such challenges and is poised to benefit from these favorable industry conditions.
|
• |
Key Market Challenges. Finance leaders globally are tasked with digitally transforming their AR processes. Major AR-related challenges listed by finance leaders are high
operating expenses, insufficient speed of receiving and applying cash, working capital tied up by high days sales outstanding (“DSO”) and costly manual labor with high risk of errors. In addition, for their businesses to remain
competitive, finance leaders also increasingly seek to provide a differentiated experience to their business customers, including self-service capabilities, integrated payments, automated interaction with AP portals and real time customer
credit insight to enable more accelerated transactions.
|
• |
Billtrust deploys great software. Our cloud-based AR platform was purpose-built for enterprise and mid-market customers spanning more than 40 industry verticals. Our powerful
and proprietary technology platform combines cloud-based software and integrated payments capabilities to create end-to-end B2B commerce solutions for our customers. Our solutions are mission-critical and trusted by tens of thousands of
users. Our software is highly configurable based on business needs, with capabilities covering credit, ordering, invoicing, payments, cash application and collections. We provide customers with a unified and mobile platform that
seamlessly integrates with their ERP systems for real-time pricing, availability, processing and tracking.
|
• |
Extensive ecosystem integrations. The digital transformation of AR requires integration with various participants, including AP portals, banks, ERP systems and other
independent software vendors. Our platform seamlessly connects with these participants. Many of these participants have different standards and protocols, and it is a challenge for suppliers to satisfy and maintain their interoperability
as standards and protocols change over time. Our robust integrations and partner ecosystem enable businesses to send and receive invoices and payments the way they want. For example, we partner with over 160 leading AP portals to
automatically deliver invoices, enabling AR professionals to avoid the labor and expense of manually keying invoice data.
|
• |
Integrated payments with frictionless money movement capabilities. The ultimate objective of AR is to receive and apply payments. Our platform enables payment acceptance and
remittance capture to be achieved across various touchpoints. We support multiple payment modalities as well as a wide variety of currencies. Additionally, we help our customers comply with various regulations including those related to
privacy, anti-money laundering (“AML”) and Payment Card Industry Data Security Standard.
|
• |
Generate high customer return on investment with short payback period. We are focused on driving business outcomes. Our solutions automate AR departments, accelerate cash
flow, minimize man-hours, reduce processing and compliance costs and help our customers scale more efficiently. We achieve these results for our customers by optimizing across credit, order, invoicing, payments, cash application and
collections functions. We have a dedicated customer success team that helps our customers deploy best practices and uses a data-driven campaign-based approach to rapidly drive our customers’ customers to adopt electronic solutions. Our
eSolutions programs drive significantly more usage of electronic invoice delivery and payments and provide greater cost savings for our customers than organizations trying to do it on their own.
|
• |
Business Payments Network (BPN). The BPN is a unique, digital payments highway that brings together suppliers and buyers in a highly efficient manner. According to a 2018
Mastercard report, more than 50% of B2B payments are still done by paper check and via manual processes. Our proprietary “Digital Lockbox” combines payments and remittance data from multiple sources, enabling dramatically decreased manual
cash application processes. As an open network, the BPN provides broad support for the payments industry and currently integrates with 160 AP providers and banks with its open network approach.
|
• |
Acquire new customers. We have an opportunity to further scale sales and marketing activities to acquire new logos in both the mid-market and enterprise space. By investing in
demand generation and broadening our sales coverage teams, we can increase the quantity of new sales opportunities and resultant conversions to customers. We also have growing volume of referrals from existing partners and customers who
provide us with an additional pipeline of prospects.
|
• |
Cross and up-sell to existing customers. The breadth of our platform enables a land and expand approach to increasing customer value. Customers generally contract for a subset
of available modules and then expand as they progress on their digital transformation journey. In addition, newly acquired customers may begin with one operating division or subsidiary company creating a meaningful opportunity to increase
the value delivered and resultant revenue to us by cross-selling to other business units within a corporate entity. Our annual customer revenue churn rate of less than 3% over the last three years demonstrates the sticky nature of our
customer relationships and our net dollar retention rate of greater than 100% evidences the opportunity for expanded growth within the existing customer base.
|
• |
Monetize payments. The B2B payments space is ripe for digital transformation, and we have a compelling opportunity to increase our volume of payments processed and further
monetize a larger proportion of transactions as they shift to digital methods from paper check. For the 12 months ended August 31, 2020, the monetary volume associated with invoice data processed across our various modules was
approximately $1.0 trillion. We directly processed approximately $55 billion in electronic payments on behalf of our customers over the same time period. As more customers shift to accepting digital payments, we will monetize this
increased activity through higher subscription and merchant processing revenue. This accelerating shift to digital payments across B2B fuels revenue growth opportunities with existing customers, new logos and within the BPN for us.
|
• |
Scale the BPN. We believe the BPN is well-positioned to be the leading and de-facto payments network in the B2B space. Our relationship with Visa provides distribution into
multiple bank channels, and when combined with the growing count of participating AP entities, the BPN is well-positioned to serve as “the rails” for B2B payments. As our customers and their end customers connect through the BPN, our
member network organically expands and we are able to monetize different parts of the network and increase revenue from the BPN. We charge fees when AP providers send payments, when suppliers receive payments and when we process payments
through our payment facilitator merchant processing solution. We expect the favorable market conditions for the BPN and its approach to expanding the BPN’s use to provide significant revenue growth opportunities.
|
• |
Expand into new geographies. Our platform is currently equipped with international capabilities, with overseas invoice delivery to recipients in a majority of countries
outside of the U.S., acceptance of multiple currencies and compatibility with multiple languages. The market for global invoicing services is large, with over 280 billion annual invoices delivered globally. Looking ahead, we will seek to
further extend and build upon our platform to engage with and target customers in other developed markets.
|
• |
Strategic M&A. In addition to growing our business organically, we will continue to opportunistically pursue strategic acquisitions to increase market share, enhance
solutions and capabilities, and expand internationally. We have a proven track record of successfully sourcing, acquiring and integrating acquisitions, which has enhanced our growth and has helped build out our end-to-end platform. Our
dedicated team of corporate development professionals and deep experience in M&A favorably position us for success in this area.
|
• |
Credit Application. Our B2B credit application module provides a modern digital process that delivers credit-related information in real-time to streamline prospect evaluation
and new customer onboarding during initial sales activity. The solution provides for complete digitization and eliminates frictional challenges resulting from manual application processing, slow data validation and inconsistent review
criteria, resulting in accelerated credit decisions and approvals aligning to corporate risk tolerance. The solution provides a highly configurable workflow and branding capabilities.
|
• |
Credit Management. Our credit management module provides ongoing risk assessment for our customers’ customers. Our proprietary software aggregates industry trade-network
inputs, bureau reports and other third-party data to create accurate and up-to-date credit profiles. Our software also performs granular data analysis, delivering smart recommendations while our artificial intelligence (“AI”)-assisted
data weighting and scoring increases accuracy. Profiles, data, and insights are made available to align day-to-day operations with corporate risk strategy.
|
• |
Order/E-commerce. Our order/e-commerce module provides B2B wholesale distributors with robust e-commerce capabilities. Our offering delivers an optimized and personalized
configuration, ordering and payment experience. Configurable and seamlessly integrated with existing ERP systems and third-party product content providers, our solution enables our customers to serve their customers 24/7 with deep B2B
functionality. The web experience is augmented by an AI-powered recommendation engine and a robust native mobile application.
|
• |
Invoicing. Our invoicing module enables our customers to optimize invoice delivery across all distribution channels. Our module ingests invoice data from myriad ERP systems
and presents invoices in ways that reflect customer needs and preferences. The solution includes customer-branded e-presentment portals, e-bills, email billing, automated entry into AP portals via direct integration and leveraging robotic
process automation, and highly efficient print and physical delivery ensuring rapid and cost-efficient presentment and delivery. The solution also includes support from our customer success team that leverages data from our BPN supplier
business directory to help our customers migrate their customers to highly efficient electronic delivery methods.
|
• |
Integrated B2B Payments. Our deeply integrated payment capabilities enable our customers to facilitate payments at every possible touchpoint across our solution set. Various
payment types, including ACH, credit card, wire, check and cash can be accepted and automatically captured across the platform. Our configuration capabilities allow customers to drive payment acceptance on their terms with flexible
criteria per individual buyer to manage costs. Examples include delinquency state, payment amount, surcharge/convenience fee inclusion, remittance quality, AP provider and more. Our secure and compliant payment infrastructure shifts risk
and compliance responsibilities away from our customers and enables them to leverage our ongoing security investment and expertise.
|
• |
Cash Application. Our cash application module enables revenue reconciliation via line item reconciliation within accounting and ERP systems. Our automated offering consumes
payment and remittance data across inbound channels including lockboxes, mail, email, portal posting, hosted payment page intake and via direct and manual feeds. The solution leverages machine learning to constantly increase automation
and minimize costly and manual exception handling. Our integrations with banks, AP portals and ERPs enable rapid deployment and deliver industry-leading match rates and straight through processing. Exception handling is simplified via our
intuitive user interface that is augmented by smart suggestions and an active learning process that actively eliminates exception types once handled.
|
• |
Collections. Our collections module enables customers to shift from a reactive recovery-centric model to a strategic customer touchpoint-centric operation, preventing payment
delays and driving positive customer experiences. The solution delivers process efficiency and increases financial recoveries by automating workflows and providing clear visibility across relevant data points and actions taken. Policies
are deployed and monitored across a collections team driving consistent focus and behaviors. Our embedded in-line payment acceptance and dispute-handling capabilities at each interaction point are often critical to recoveries.
|
• |
Business Payments Network (BPN). The BPN makes accepting electronic payments easy. The network connects suppliers and their underlying systems, AP portals, payment card
issuers, banks, and payment processors in a comprehensive, supplier-driven way. Remittance and payments are automatically delivered to a supplier’s “Digital Lockbox” for processing and distribution to their accounting and ERP systems.
Participating buyers and financial institutions can also facilitate payment automation with access to BPN’s supplier business directory, a transparent listing of supplier payment preferences. The BPN allows complex financial and payment
data to come together in a single platform and at scale, while providing seamless payment processing, reconciliation and remittance management.
|
• |
Global storage and information management solutions provider: When we began working with this customer, the customer had an internal goal to convert 24,000 customers from
print to digital in one year. The customer exceeded that goal in approximately one year, with 33,000 customers converted, and the customer currently sends out more than 800,000 documents per month across North America utilizing our
solutions, reaching a rate for digital distribution of documents of 71% and continuing to grow.
|
• |
Global leader in performance-driven golf products: Our cash application module helped this customer achieve ACH payment match rates averaging 99.5% and enabled the company to
reduce the amount of time used to perform cash application processing by an estimated 20 hours per day. These improvements helped facilitate a 20% annual increase in electronic payments.
|
• |
New Customer Acquisition. Our direct sales team consists of sales representatives that have designated portfolios of accounts. We use account-based selling and marketing. This
includes persona identification such as individual influencers, gatekeepers and decision makers. We also take a classic funnel approach to marketing against a large number of targets that drives activity to the top of our sales funnel.
Our account development team quickly manages this activity to qualify leads and transition opportunities to our sales executives.
|
• |
Existing Customer Expansion. We follow a land and expand strategy and regularly seek to grow our business by expanding within our existing customer base. This is achieved by
selling new modules into that base, penetrating additional divisions or related parties, and activating incremental electronic payment processing activity. Our teams identify the expansion opportunity within each account based on modules
purchased and proclivity to purchase additional solutions based on industry and company dynamics. This enables disciplined account planning, targeting, execution and success measurement.
|
• |
High customer satisfaction and return on investment;
|
• |
Ability to automate and digitally transform AR processes;
|
• |
Product quality, configurability, and functionality;
|
• |
Scalability of cloud-based software solutions with common UX;
|
• |
Ease of deployment and integration into both modern and legacy ERP systems;
|
• |
Extensiveness of ecosystem integrations;
|
• |
Advanced security and control;
|
• |
Brand recognition and market share;
|
• |
Regulatory compliance leadership and know-how in movement of money; and
|
• |
Flexibility to accept transactions across multiple modalities and currencies.
|
• |
Print – The Print segment is primarily responsible for printing customer invoices and optimizing the amount of time and costs associated with billing customers via mail.
|
• |
Software and Payments – The Software and Payments segment primarily operates using software and cloud based services, optimizes electronic invoice presentment, electronic payments, credit
decisioning, collections automation, cash application and deduction management, and e-commerce of B2B customers.
|
• |
subscription fees that are recognized ratably as our obligations are delivered over the subscription term;
|
• |
transaction fees that are recognized when transactions are processed, and in some cases ratably as our obligations are delivered, at contracted rates, for:
|
o |
processing of electronic invoices delivered, stored, or printed through its software platform and print operations; and
|
o |
payments based on a percentage of payment volume processed or per item processing fees; and
|
• |
services revenue from contracted fees associated with implementation of new customers or products on its platform, generally recognized over five years, as well as consulting services provided to customers on a time and materials basis
recognized as services are provided.
|
▪ |
TPV - ACH/Wire - payments made via our software, portals, gateways, and our Business Payments Network that are processed via ACH or wire transfers.
|
▪ |
TPV - Card - payments through our software, portals, gateways, and third-party processors, and includes our payment facilitator (“PayFac”) customers.
|
Year Ended December 31, |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||
2020 | 2019 | 2018 |
2021
|
2020
|
2021
|
2020
|
||||||||||||||||||||||
(in billions)
|
||||||||||||||||||||||||||||
Total Payment Volume
|
$ | 54.7 | $ | 43.9 | $ | 31.4 |
$
|
21.0
|
$
|
14.9
|
$
|
54.9
|
$
|
39.0
|
||||||||||||||
TPV - ACH/Wire
|
37.0 | 30.9 | 22.0 |
13.5
|
10.1
|
35.4
|
26.8
|
|||||||||||||||||||||
TPV - Card
|
$ | 17.7 | $ | 13.0 | $ | 9.4 |
$
|
7.5
|
$
|
4.8
|
$
|
19.5
|
$
|
12.2
|
Years Ended December 31, |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||
2020
|
2019
|
2018
|
2021
|
2020
|
2021
|
2020
|
||||||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||||||
Number of electronic invoices presented
|
273
|
243
|
215
|
79
|
74
|
227
|
201
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Subscription, transaction, and services
|
$
|
32,732
|
79
|
%
|
$
|
28,808
|
75
|
%
|
$
|
97,440
|
79
|
%
|
$
|
78,978
|
74
|
%
|
||||||||||||||||
Reimbursable costs
|
8,625
|
21
|
9,486
|
25
|
26,085
|
21
|
28,052
|
26
|
||||||||||||||||||||||||
Total revenues
|
41,357
|
100
|
38,294
|
100
|
123,525
|
100
|
107,030
|
100
|
||||||||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||||||||||
Cost of subscription, transaction, and services
|
9,368
|
23
|
8,577
|
22
|
27,981
|
23
|
24,100
|
23
|
||||||||||||||||||||||||
Cost of reimbursable costs
|
8,625
|
21
|
9,486
|
25
|
26,085
|
21
|
28,052
|
26
|
||||||||||||||||||||||||
Total cost of revenues
|
17,993
|
44
|
18,063
|
47
|
54,066
|
44
|
52,152
|
49
|
||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||
Research and development
|
13,453
|
33
|
9,098
|
24
|
35,716
|
29
|
27,260
|
25
|
||||||||||||||||||||||||
Sales and marketing
|
10,310
|
25
|
5,745
|
15
|
29,226
|
24
|
17,296
|
16
|
||||||||||||||||||||||||
General and administrative
|
9,838
|
24
|
5,106
|
13
|
32,766
|
27
|
15,225
|
14
|
||||||||||||||||||||||||
Depreciation and amortization
|
1,205
|
3
|
1,402
|
4
|
3,924
|
3
|
4,223
|
4
|
||||||||||||||||||||||||
Total operating expenses
|
34,806
|
84
|
21,351
|
56
|
101,632
|
82
|
64,004
|
60
|
||||||||||||||||||||||||
Loss from operations
|
(11,442
|
)
|
(28
|
)
|
(1,120
|
)
|
(3
|
)
|
(32,173
|
)
|
(26
|
)
|
(9,126
|
)
|
(9
|
)
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||
Interest income
|
115
|
—
|
1
|
—
|
349
|
—
|
18
|
—
|
||||||||||||||||||||||||
Interest expense and loss on extinguishment of debt
|
(2
|
)
|
—
|
(1,120
|
)
|
(3
|
)
|
(2,947
|
)
|
(2
|
)
|
(3,405
|
)
|
(3
|
)
|
|||||||||||||||||
Change in fair value of financial instruments and other income (expense)
|
162
|
—
|
(443
|
)
|
(1
|
)
|
(9,823
|
)
|
(8
|
)
|
(51
|
)
|
—
|
|||||||||||||||||||
Total other income (expense)
|
275
|
1
|
(1,562
|
)
|
(4
|
)
|
(12,421
|
)
|
(10
|
)
|
(3,438
|
)
|
(3
|
)
|
||||||||||||||||||
Loss before income taxes
|
(11,167
|
)
|
(27
|
)
|
(2,682
|
)
|
(7
|
)
|
(44,594
|
)
|
(36
|
)
|
(12,564
|
)
|
(12
|
)
|
||||||||||||||||
Provision for income taxes
|
(27
|
)
|
—
|
(33
|
)
|
—
|
(130
|
)
|
—
|
(150
|
)
|
—
|
||||||||||||||||||||
Net loss and comprehensive loss
|
$
|
(11,194
|
)
|
(27
|
)%
|
$
|
(2,715
|
)
|
(7
|
)%
|
$
|
(44,724
|
)
|
(36
|
)%
|
$
|
(12,714
|
)
|
(12
|
)%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Subscription and transaction fees
|
$
|
30,376
|
$
|
26,130
|
$
|
4,246
|
16
|
%
|
||||||||
Services and other
|
2,356
|
2,678
|
(322
|
)
|
(12
|
)
|
||||||||||
Subscription, transaction, and services
|
32,732
|
28,808
|
3,924
|
14
|
||||||||||||
Reimbursable costs
|
8,625
|
9,486
|
(861
|
)
|
(9
|
)
|
||||||||||
Total revenues
|
$
|
41,357
|
$
|
38,294
|
$
|
3,063
|
8
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of subscription, transaction, and services
|
$
|
9,368
|
$
|
8,577
|
$
|
791
|
9
|
%
|
||||||||
Cost of reimbursable costs
|
8,625
|
9,486
|
(861
|
)
|
(9
|
)
|
||||||||||
Total cost of revenues
|
$
|
17,993
|
$
|
18,063
|
$
|
(70
|
)
|
—
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
13,453
|
$
|
9,098
|
$
|
4,355
|
48
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
10,310
|
$
|
5,745
|
$
|
4,565
|
79
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
9,838
|
$
|
5,106
|
$
|
4,732
|
93
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$
|
1,205
|
$
|
1,402
|
$
|
(197
|
)
|
(14
|
)%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Total other income (expense)
|
$
|
275
|
$
|
(1,562
|
)
|
$
|
1,837
|
118
|
%
|
Three Months Ended September
30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Provision for income taxes
|
$
|
(27
|
)
|
$
|
(33
|
)
|
$
|
6
|
18
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Subscription and transaction fees
|
$
|
89,631
|
$
|
73,065
|
$
|
16,566
|
23
|
%
|
||||||||
Services and other
|
7,809
|
5,913
|
1,896
|
32
|
|
|||||||||||
Subscription, transaction, and services
|
97,440
|
78,978
|
18,462
|
23
|
|
|||||||||||
Reimbursable costs
|
26,085
|
28,052
|
(1,967
|
)
|
(7
|
)
|
||||||||||
Total revenues
|
$
|
123,525
|
$
|
107,030
|
$
|
16,495
|
15
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of subscription, transaction, and services
|
$
|
27,981
|
$
|
24,100
|
$
|
3,881
|
16
|
%
|
||||||||
Cost of reimbursable costs
|
26,085
|
28,052
|
(1,967
|
)
|
(7
|
)
|
||||||||||
Total cost of revenues
|
$
|
54,066
|
$
|
52,152
|
$
|
1,914
|
4
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
35,716
|
$
|
27,260
|
$
|
8,456
|
31
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
29,226
|
$
|
17,296
|
$
|
11,930
|
69
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
32,766
|
$
|
15,225
|
$
|
17,541
|
115
|
%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$
|
3,924
|
$
|
4,223
|
$
|
(299
|
)
|
(7
|
)%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Total other income (expense)
|
$
|
(12,421
|
)
|
$
|
(3,438
|
)
|
$
|
(8,983
|
)
|
(261
|
)%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Provision for income taxes
|
$
|
(130
|
)
|
$
|
(150
|
)
|
$
|
20
|
13
|
%
|
Years Ended December 31,
|
% change
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Subscription, transaction and services
|
$
|
108,569
|
$
|
96,460
|
13
|
%
|
21
|
%
|
||||||||
Reimbursable costs
|
37,116
|
40,008
|
(7
|
)
|
(2
|
)
|
||||||||||
Total revenues
|
145,685
|
136,468
|
7
|
|
13
|
|
||||||||||
Cost of revenues:
|
|
|||||||||||||||
Cost of subscription, transaction and services
|
32,531
|
32,015
|
2
|
|
21
|
|
||||||||||
Cost of reimbursable costs
|
37,116
|
40,008
|
(7
|
)
|
(2
|
)
|
||||||||||
Total cost of revenues, excluding depreciation and amortization
|
69,647
|
72,023
|
(3
|
)
|
7
|
|
||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
36,468
|
34,285
|
6
|
|
45
|
|
||||||||||
Sales and marketing
|
23,420
|
22,098
|
6
|
|
2
|
|
||||||||||
General and administrative
|
22,188
|
23,297
|
(5
|
)
|
24
|
|
||||||||||
Depreciation and amortization
|
5,624
|
5,881
|
(4
|
)
|
(3
|
)
|
||||||||||
Total operating expenses
|
87,700
|
85,561
|
2
|
|
22
|
|
||||||||||
Loss from operations
|
(11,662
|
)
|
(21,116
|
)
|
(45
|
)
|
24
|
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
18
|
1
|
1700
|
|
(99
|
)
|
||||||||||
Interest expense
|
(4,661
|
)
|
(1,507
|
)
|
209
|
|
85
|
|
||||||||
Other income (expense), net
|
(518
|
)
|
(21
|
)
|
2367
|
|
(95
|
)
|
||||||||
Total other income (expense)
|
(5,161
|
)
|
(1,527
|
)
|
238
|
|
39
|
|
||||||||
Loss before income taxes
|
(16,823
|
)
|
(22,643
|
)
|
(26
|
)
|
25
|
|
||||||||
Provision for income taxes
|
(204
|
)
|
(160
|
)
|
28
|
|
132
|
|
||||||||
Net loss and comprehensive loss
|
$
|
(17,027
|
)
|
$
|
(22,803
|
)
|
(25
|
)%
|
25
|
%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Subscription and transaction fees
|
$
|
99,609
|
$
|
89,476
|
$
|
10,133
|
11
|
%
|
||||||||
Services and other
|
8,960
|
6,984
|
1,976
|
28
|
|
|||||||||||
Subscription, transaction and services
|
$
|
108,569
|
$
|
96,460
|
$
|
12,109
|
13
|
|
||||||||
Reimbursable costs
|
37,116
|
40,008
|
(2,892
|
)
|
(7
|
)
|
||||||||||
Total revenues
|
$
|
145,685
|
$
|
136,468
|
$
|
9,217
|
7
|
%
|
• |
Subscription, transaction and services revenue was $108.6 million for the year ended December 31, 2020, compared to $96.5 million for the year ended December 31, 2019, an increase of $12.1 million or 13%.
|
• |
Reimbursable costs revenue was $37.1 million for the year ended December 31, 2020, compared to $40.0 million for the year ended December 31, 2019, a decrease of $2.9 million or 7%.
|
• |
Subscription and transaction fees related to the Software and Payments segment increased $12.3 million or 18% from contracting with new customers and existing customers purchasing additional products and increasing transaction volume
primarily from payments. Software and Payments segment revenue was $81.2 million, or 81% of subscription and transaction fees, for the year ended December 31, 2020, compared to $68.9 million, or 77% of subscription and transaction fees
for the year ended December 31, 2019.
|
• |
Print segment revenue was $55.6 million for the year ended December 31, 2020, compared to $60.6 million for the year ended December 31, 2019, a decrease of $5.1 million or 8%. Subscription and transaction fees related to the Print
segment decreased $2.2 million or 11% due primarily to the impact of COVID-19 on customer transaction volumes. Subscription and transaction fees related to the Print segment were $18.4 million, or 19% of subscription and transaction fees,
for the year ended December 31, 2020, compared to $20.6 million, or 23% of subscription and transaction fees, for the year ended December 31, 2019. Reimbursable costs decreased $2.9 million or 7%, due to the impact of COVID-19 on customer
transaction volumes. For more information on how we were affected by and responded to COVID-19, see the section entitled “— Impact of COVID-19 on our Business.”
|
• |
Services and other revenue increased $2.0 million or 28% due primarily to an increase in existing customer professional services consulting engagements, as well as a shift to pricing more services on an hourly rate basis as compared to
the prior period, which is not expected to be sustainable at this growth rate in future periods. In 2019 Services and other included revenue related to a one-time legacy software platform perpetual license fee. Services and other revenue
was $9.0 million for the year ended December 31, 2020, compared to $7.0 million for the year ended December 31, 2019.
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of subscription, transaction and services
|
$
|
32,531
|
$
|
32,015
|
$
|
516
|
2
|
%
|
||||||||
Cost of reimbursable costs
|
37,116
|
40,008
|
(2,892
|
)
|
(7
|
)
|
||||||||||
Total cost of revenues, excluding depreciation and amortization
|
$
|
69,647
|
$
|
72,023
|
$
|
(2,376
|
)
|
(3
|
)%
|
• |
Cost of subscription, transaction and services was $32.5 million or 22% of total revenues for the year ended December 31, 2020, compared to $32.0 million or 23% of total revenues for the year ended December 31, 2019, an increase of
$0.5 million or 2%.
|
• |
Cost of reimbursable costs was $37.1 million or 25% of total revenues for the year ended December 31, 2020, compared to $40.0 million or 29% of total revenues for the year ended December 31, 2019, a decrease of $2.9 million or 7% due
primarily to the impact of COVID-19 on customer transaction volumes. For more information on how we were affected by and responded to COVID-19, see the section entitled “— Impact of COVID-19 on Our
Business.”
|
• |
Cost of subscription, transaction and services related to the Software and Payments segment increased $0.7 million or 6% due primarily to a $0.5 million increase in personnel-related costs, including non-cash stock-based compensation
expense, and a $0.2 million increase in Software and Payments direct costs due to new customers and existing customers purchasing additional products and increasing transactions. Cost of subscription, transaction and services related to
the Software and Payments segment were $12.6 million resulting in a segment gross margin of $68.6 million or 85% for the year ended December 31, 2020, compared to $11.9 million resulting in a segment gross margin of $57.0 million or 83%
for the year ended December 31, 2019. We expect that cost of subscription, transaction, and services will increase in absolute dollars, but may fluctuate as a percentage of total revenues from period to period, as we continue to sell a
mix of solutions and services to new and existing customers.
|
• |
Cost of revenues related to the Print segment was $45.6 million for the year ended December 31, 2020, compared to $49.7 million for the year ended December 31, 2019, a decrease of $4.0 million or 8%. Cost of subscription, transaction
and services related to Print decreased $1.2 million or 11.9% due primarily to a $1.2 million decrease in Print direct costs resulting from impact of COVID-19 on customer transaction volumes. Cost of subscription, transaction and services
related to the Print segment were $8.5 million resulting in a segment gross margin of $10.0 million or 54% for the year ended December 31, 2020, compared to $9.6 million resulting in a segment gross margin of $11.0 million or 53% for the
year ended December 31, 2019. Cost of reimbursable costs decreased $2.9 million or 7% due to the impact of COVID-19 on customer transaction volumes. For more information on how we were affected by and responded to COVID-19, see the
section entitled “— Impact of COVID-19 on Our Business.”
|
• |
Cost of services and other was $11.5 million for the year ended December 31, 2020, compared to $10.5 million for the year ended December 31, 2019, an increase of $1.0 million or 10%. The increase was due to a $1.0 million increase in
personnel-related costs, including non-cash stock-based compensation expense and amortization of deferred service costs for personnel who were directly engaged in providing implementation and consulting services to our customers.
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
36,468
|
$
|
34,285
|
$
|
2,183
|
6
|
%
|
||||||||
Percentage of total revenues
|
25
|
%
|
25
|
%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
23,420
|
$
|
22,098
|
$
|
1,322
|
6
|
%
|
||||||||
Percentage of total revenues
|
16
|
%
|
16
|
%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
22,188
|
$
|
23,297
|
$
|
(1,109
|
)
|
(5
|
)%
|
|||||||
Percentage of total revenues
|
15
|
%
|
17
|
%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$
|
5,624
|
$
|
5,881
|
$
|
(257
|
)
|
(4
|
)%
|
|||||||
Percentage of total revenues
|
4
|
%
|
4
|
%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Total other income (expense)
|
$
|
(5,161
|
)
|
$
|
(1,527
|
)
|
$
|
(3,634
|
)
|
238
|
%
|
|||||
Percentage of total revenues
|
(4
|
)%
|
(1
|
)%
|
Years Ended December
31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Provision for income taxes
|
$
|
(204
|
)
|
$
|
(160
|
)
|
$
|
(44
|
)
|
28
|
%
|
|||||
Percentage of total revenues
|
(0.1
|
)%
|
(0.1
|
)%
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
Net cash used in operating activities
|
$
|
(9,809
|
)
|
$
|
(4,041
|
)
|
$
|
(5,768
|
)
|
(143
|
)%
|
|||||
Net cash used in investing activities
|
(46,647
|
)
|
(1,506
|
)
|
(45,141
|
)
|
(2,997
|
)
|
||||||||
Net cash provided by financing activities
|
282,945
|
15,834
|
267,111
|
1,687
|
|
|||||||||||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
226,489
|
$
|
10,287
|
$
|
216,202
|
2,102
|
%
|
Years Ended December 31,
|
Change | |||||||||||||||
2020
|
2019
|
Amount | % | |||||||||||||
Net cash used in operating activities
|
$
|
(217
|
)
|
$
|
(7,275
|
)
|
$
|
7,058
|
97
|
%
|
||||||
Net cash used in investing activities
|
(1,756
|
)
|
(10,652
|
)
|
8,896
|
84
|
||||||||||
Net cash provided by (used in) financing activities
|
14,954
|
22,773
|
(7,819
|
)
|
(34
|
)
|
||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
$
|
12,981
|
$
|
4,846
|
$
|
8,135
|
168
|
%
|
Contractual Obligations (1)
|
Total
|
< 1 Year
|
1-3 Years
|
3-5 Years
|
> 5 Years
|
|||||||||||||||
Capital leases
|
$
|
103
|
$
|
84
|
$
|
19
|
$
|
—
|
$
|
—
|
||||||||||
Operating leases
|
46,664
|
4,669
|
8,640
|
8,228
|
25,127
|
|||||||||||||||
Purchase commitments (2)
|
378
|
378
|
—
|
—
|
—
|
|||||||||||||||
Contingent consideration (3)
|
370
|
370
|
—
|
—
|
—
|
|||||||||||||||
Total contractual cash obligations
|
$
|
47,515
|
$
|
5,501
|
$
|
8,659
|
$
|
8,228
|
$
|
25,127
|
(1) |
In connection with the Business Combination on January 12, 2021, we repaid all amounts outstanding on our long-term debt. Accordingly, long term debt is no longer shown as a contractual obligation.
|
(2) |
Purchase commitments principally consist of contractual commitments for supplies used in our print operations.
|
(3) |
The acquisition of Second Phase, LLC in April 2019 included a contingent consideration arrangement that required additional consideration to be paid to the sellers annually based meeting certain recurring revenue growth and
profitability targets (together, "the Financial Targets") during the three-year period beginning May 1, 2019. In May 2021, we determined the second year Financial Targets were not met and accordingly reduced the amount of remaining
contingent consideration payable.
|
Years Ended December 31,
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||
2020
|
2019
|
2018
|
2021
|
2020
|
2021
|
2020
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Total revenues
|
$
|
145,685
|
$
|
136,468
|
$
|
120,515
|
$
|
41,357
|
$
|
38,294
|
$
|
123,525
|
$
|
107,030
|
||||||||||||||
Less: Reimbursable costs revenue
|
37,116
|
40,008
|
40,944
|
8,625
|
9,486
|
26,085
|
28,052
|
|||||||||||||||||||||
Net Revenue (non-GAAP)
|
$
|
108,569
|
$
|
96,460
|
$
|
79,571
|
$
|
32,732
|
$
|
28,808
|
$
|
97,440
|
$
|
78,978
|
||||||||||||||
Total revenues
|
$
|
145,685
|
$
|
136,468
|
$
|
120,515
|
$
|
41,357
|
$
|
38,294
|
$
|
123,525
|
$
|
107,030
|
||||||||||||||
Less: Cost of revenue, excluding depreciation and amortization
|
69,647
|
72,023
|
67,511
|
17,993
|
18,063
|
54,066
|
52,152
|
|||||||||||||||||||||
Gross profit, excluding depreciation and amortization
|
76,038
|
64,445
|
53,004
|
23,364
|
20,231
|
69,459
|
54,878
|
|||||||||||||||||||||
Add: Stock-based compensation expense
|
263
|
133
|
114
|
436
|
77
|
1,284
|
166
|
|||||||||||||||||||||
Adjusted Gross Profit (non-GAAP)
|
$
|
76,301
|
$
|
64,578
|
$
|
53,118
|
$
|
23,800
|
$
|
20,308
|
$
|
70,743
|
$
|
55,044
|
||||||||||||||
Gross margin, excluding depreciation and amortization
|
52.2
|
%
|
47.2
|
%
|
44.0
|
%
|
56.5
|
%
|
52.8
|
%
|
56.2
|
%
|
51.3
|
%
|
||||||||||||||
Adjusted Gross Margin (non-GAAP)
|
70.3
|
%
|
66.9
|
%
|
66.8
|
%
|
72.7
|
%
|
70.5
|
%
|
72.6
|
%
|
69.7
|
%
|
Years Ended December 31,
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||
2020
|
2019
|
2018
|
2021
|
2020
|
2021
|
2020
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Net loss and comprehensive loss
|
$
|
(17,027
|
)
|
$
|
(22,803
|
)
|
$
|
(18,231
|
)
|
$
|
(11,194
|
)
|
$
|
(2,715
|
)
|
$
|
(44,724
|
)
|
$
|
(12,714
|
)
|
|||||||
Provision for income taxes
|
204
|
160
|
69
|
27
|
33
|
130
|
150
|
|||||||||||||||||||||
Other expense
|
500
|
20
|
286
|
—
|
|
—
|
—
|
—
|
||||||||||||||||||||
Change in fair value of financial instruments and other income
|
—
|
—
|
—
|
(162
|
) |
443 |
9,823
|
51 |
||||||||||||||||||||
Interest expense and loss on extinguishment of debt
|
4,661
|
1,507
|
814
|
2 |
|
1,120
|
|
2,947 |
|
3,405
|
|
|||||||||||||||||
Interest income
|
—
|
—
|
—
|
(115
|
) |
(1
|
) |
(349
|
) |
(18
|
) |
|||||||||||||||||
Depreciation and amortization
|
5,624
|
5,881
|
6,040
|
1,205
|
1,402
|
3,924
|
4,223
|
|||||||||||||||||||||
Stock-based compensation expense
|
3,063
|
2,114
|
1,796
|
5,914
|
826 |
20,446 |
1,987 |
|||||||||||||||||||||
Restructuring and severance
|
628
|
1,215
|
508
|
35
|
77
|
358
|
359 |
|||||||||||||||||||||
Acquisition and integration expenses
|
162
|
895
|
415
|
257
|
26
|
257
|
162
|
|||||||||||||||||||||
Other capital structure transaction costs
|
— | — | — | — | — | 498 |
— | |||||||||||||||||||||
Adjusted EBITDA (non-GAAP)
|
$
|
(2,185
|
)
|
$
|
(11,011
|
)
|
$
|
(8,303
|
)
|
$
|
(4,031
|
)
|
$
|
1,211
|
$
|
(6,690
|
)
|
$
|
(2,395
|
)
|
Years Ended December 31,
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||||
2020
|
2019
|
2018
|
2021
|
2020
|
2021
|
2020
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Net cash used in operating activities
|
$
|
(217
|
)
|
$
|
(7,275
|
)
|
$
|
(6,289
|
)
|
$
|
1,012
|
$
|
3,397
|
$
|
(9,809
|
)
|
$
|
(4,041
|
)
|
|||||||||
Purchases of property and equipment
|
(1,756
|
)
|
(4,317
|
)
|
(7,936
|
)
|
(450
|
)
|
(196
|
)
|
(1,570
|
)
|
(1,506
|
)
|
||||||||||||||
Free cash flow (non-GAAP)
|
$
|
(1,973
|
)
|
$
|
(11,592
|
)
|
$
|
(14,225
|
)
|
$
|
562
|
$
|
3,201
|
$
|
(11,379
|
)
|
$
|
(5,547
|
)
|
1. |
Identify the contract, or contracts, with a customer;
|
2. |
Identify the performance obligations in the contract;
|
3. |
Determine the transaction price;
|
4. |
Allocate the transaction price to the performance obligations in the contract; and
|
5. |
Recognize revenue when, or as, we satisfy a performance obligation.
|
a. |
Expected term - we estimate the expected life of stock options granted based on its historical experience, which we believe is representative of the actual characteristics of the awards.
|
b. |
Expected volatility - we estimate the volatility of the Common Stock on the date of grant based on the historic volatility of comparable companies in its industry.
|
c. |
Risk-free interest rate - we selected the risk-free interest rate based on yields from United States Treasury zero-coupon issues with a term consistent with the expected life of the awards in effect at the time of grant.
|
d. |
Expected dividend yield - we have never declared nor paid any cash dividends on Common Stock and we have no plans to do so. Consequently, we used an expected dividend yield of zero.
|
Name
|
Age
|
Position
|
Executive Officers
|
||
Flint A. Lane
|
55
|
Chief Executive Officer and Chairman of the Board
|
Steven Pinado
|
54
|
President
|
Mark Shifke
|
62
|
Chief Financial Officer
|
Joseph Eng
|
54
|
Chief Information Officer
|
Jeanne O’Connor
|
52
|
Chief Talent Officer
|
Non-Employee Directors
|
||
Charles Bernicker(1)(2)(3)
|
56
|
Director
|
Clare Hart(2)(4)
|
61
|
Director
|
Robert Farrell(2)(3)
|
57
|
Director
|
Lawrence Irving(1)(4)
|
65
|
Director
|
Matt Harris(3)
|
48
|
Director
|
Juli Spottiswood(1)(4)
|
55
|
Director
|
(1) |
Member of the audit committee
|
(2) |
Member of the compensation committee
|
(3) |
Member of the nominating and corporate governance committee
|
(4) |
Member of the risk management committee
|
• |
Class I, which consists of Flint A. Lane and Lawrence Irving, whose terms will expire in 2022;
|
• |
Class II, which consists of Charles B. Bernicker, Matt Harris and Clare Hart, whose terms will expire in 2023; and
|
• |
Class III, which consists of Robert Farrell and Juli Spottiswood, whose terms will expire in 2024.
|
• |
evaluating the performance, independence and qualifications of our independent auditors and determining whether to retain our existing independent auditors or engage new independent auditors;
|
• |
helping ensure the independence and performance of our independent auditors;
|
• |
helping to maintain and foster an open avenue of communication between management and our independent auditors;
|
• |
discussing the scope and results of the audit with our independent auditors, and reviewing, with management, our interim and year-end operating results;
|
• |
developing procedures for employees to submit concerns anonymously about questionable account or audit matters;
|
• |
reviewing our policies on risk assessment and risk management;
|
• |
reviewing related party transactions;
|
• |
obtaining and reviewing a report by our independent auditors at least annually, that describes our internal quality control procedures, any material issues with such procedures, and any steps taken to deal with such issues when
required by applicable law; and
|
• |
approving (or, as permitted, pre-approving) all audit and all permissible non-audit services to be performed by our independent auditors.
|
• |
approving the retention of compensation consultants and outside service providers and advisors;
|
• |
reviewing and approving, or recommending that the Board approve, the compensation, individual and corporate performance goals and objectives and other terms of employments of our executive officers, including evaluating the performance
of our chief executive officer, and, with his assistance, that of our other executive officers;
|
• |
reviewing and recommending to the Board the compensation of our directors;
|
• |
administering our equity and non-equity incentive plans;
|
• |
reviewing our practices and policies of employee compensation as they relate to risk management and risk-taking incentives;
|
• |
reviewing and evaluating succession plans for the executive officers;
|
• |
reviewing and approving, or recommending that the Board approve, incentive compensation and equity plans;
|
• |
helping the Board oversee our human capital management policies, plans and strategies; and
|
• |
reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy.
|
• |
identifying, evaluating, and selecting, or recommending that the Board approve, nominees for election to the Board and its committees;
|
• |
approving the retention of director search firms;
|
• |
evaluating the performance of the Board and of individual directors;
|
• |
considering and making recommendations to the Board regarding the composition of the Board and its committees;
|
• |
evaluating the adequacy of our corporate governance practices and reporting; and
|
• |
overseeing an annual evaluation of the Board’s performance.
|
• |
encouraging integration of risk management into the organization’s goals and in general work to create a corporate culture to manage risks appropriately;
|
• |
communicating with management and the board regarding our risk exposures and risk tolerance;
|
• |
monitoring our risk profile and the potential exposure to risks;
|
• |
reviewing risk management policy, plans, infrastructure, objectives, strategies and process;
|
• |
reviewing with management our performance against its risk management plans;
|
• |
reviewing enterprise and emerging risks and escalating risks for improvements and crisis preparedness and recovery plans;
|
• |
reviewing management’s corrective actions for deficiencies that arise with respect to the effectiveness of our enterprise-wide risk assessment processes;
|
• |
monitoring governance rating agencies and their assessments of our risk-related policies, and make recommendations to the Board; and
|
• |
reviewing the effectiveness of our information security policies and practices and internal controls over financial reporting with the audit committee.
|
• |
for any transaction from which the director derives an improper personal benefit;
|
• |
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
• |
for any unlawful payment of dividends or redemption of shares; or
|
• |
for any breach of a director’s duty of loyalty to the corporation or its stockholders.
|
• |
Flint A. Lane, our Chief Executive Officer;
|
• |
Steven Pinado, our President; and
|
• |
Mark Shifke, our Chief Financial Officer.
|
Name and Principal Position
|
Year
|
Salary
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)(1)
|
Compensation
Bonus
($)(2)
|
All Other
Compensation
($)(3)
|
Total
($)
|
|||||||||||||||||||
Flint A. Lane
|
2020
|
400,000
|
-
|
212,500
|
37,500(2
|
)
|
8,250(3
|
)
|
658,250
|
|||||||||||||||||
Chief Executive Officer
|
2019
|
397,917
|
-
|
225,000
|
-
|
8,297(3
|
)
|
631,214
|
||||||||||||||||||
Steven Pinado
|
2020
|
350,000
|
18,332
|
148,750
|
26,250(2
|
)
|
-
|
543,332
|
||||||||||||||||||
President
|
2019
|
334,167
|
-
|
150,000
|
-
|
6,337(3
|
)
|
490,504
|
||||||||||||||||||
Mark Shifke
|
2020
|
234,981
|
2,279,989
|
114,198
|
20,152
|
-
|
2,649,320
|
|||||||||||||||||||
Chief Financial Officer
|
2019(4)
|
-
|
-
|
-
|
(1) |
The amount reported represents the portion of the named executive officer’s 2020 annual performance bonus that was attributable to achievement of our pre-established performance goals, as described under “Non-Equity Incentive Plan
Compensation” below.”.
|
(2) |
The amount reported represents the portion of the named executive officer’s 2020 annual performance bonus that was not attributable to achievement of our pre-established performance goals, as described under “Non-Equity Incentive Plan
Compensation” below.
|
(3) |
The amount reported consists of 401(k) matching contributions.
|
(4) |
Mr. Shifke commenced employment as of February 2020 and did not receive compensation in 2019.
|
Option Awards(1)
|
||||||||||||||||
Name
|
Date of
Grant
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|||||||||||
Flint A. Lane
|
5/1/2013
|
180,706
|
-
|
0.49
|
4/30/2023
|
|||||||||||
Chief Executive Officer
|
2/1/2015
|
62,647
|
-
|
1.27
|
1/31/2025
|
|||||||||||
1/31/2017
|
89,146
|
-
|
1.88
|
1/30/2027
|
||||||||||||
5/15/2017
|
316,236(2
|
)
|
45,177(2
|
)
|
1.93
|
5/14/2027
|
||||||||||
Steven Pinado
|
3/28/2018
|
104,806
|
65,055(2
|
)
|
2.15
|
3/27/2028
|
||||||||||
President
|
3/28/2018
|
998,405(2
|
)
|
599,041(2
|
)
|
2.15
|
3/27/2028
|
|||||||||
5/12/2020
|
4,936
|
14,833(3
|
)
|
2.19
|
5/11/2030
|
|||||||||||
Mark Shifke
|
2/5/2020
|
150,556
|
1,118,202(2
|
)
|
3.42
|
2/4/2030
|
||||||||||
Chief Financial Officer
|
2/5/2020
|
23,361
|
99,321(2
|
)
|
3.42
|
2/4/2030
|
||||||||||
6/19/2020
|
27,105
|
189,742(2
|
)
|
2.19
|
6/18/2030
|
|||||||||||
|
5/12/2020
|
9,179
|
27,540(3
|
)
|
2.19
|
5/11/2030
|
(1) |
All of the option awards granted in 2013 were granted under the 2003 Plan, the terms of which are described below under “-Employee Benefit and Stock Plans-2003 Stock Incentive Plan.” All of the option awards granted after 2013 were
granted under the 2014 Plan, the terms of which are described below under “-Employee Benefit and Stock Plans-2014 Incentive Compensation Plan.”
|
(2) |
The options are subject to a four-year vesting schedule, with 12.5% of the shares subject to each stock option vesting every six months following the date of grant, subject to continued employment through each vesting date.
|
(3) |
The options are subject to a two-year vesting schedule, with 25.0% of the shares subject to each stock option vesting every six months following the date of grant, subject to continued employment through each vesting date.
|
Name
|
Fees
earned or
paid in
cash
($)
|
Stock
awards
($)
|
Option
awards
($)(1)
|
All other
compensation
($)
|
Total
($)
|
|||||||||||||||
Kanwarpal Bindra(2)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Robert Farrell
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Kelly Ford-Buckley(3)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Clare Hart
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Lawrence Irving
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Stephen Waldis(4)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Matt Harris
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Juli Spottiswood
|
-
|
-
|
-
|
-
|
-
|
(1) |
As of December 31, 2020, the aggregate number of shares underlying outstanding options to purchase Common Stock held by its non-employee directors were: Kanwarpal Bindra 71,277 shares of Common Stock, Robert Farrell 279,089 shares of
Common Stock, Kelly Ford-Buckley 71,277 shares of Common Stock, Clare Hart 71,277 shares of Common Stock, Lawrence Irving 279,089 shares of Common Stock, Stephen Waldis zero shares of Common Stock and Matt Harris zero shares of Common
Stock. As of December 31, 2019, none of Legacy Billtrust’s non-employee directors held other unvested stock awards. As of December 31, 2020, Stephen Waldis also held 279,091 shares of Common Stock.
|
(2) |
Kanwarpal Bindra resigned from the board of directors of Legacy Billtrust on July 13, 2020.
|
(3) |
Kelly Ford-Buckley resigned from the board of directors of Legacy Billtrust on November 19, 2020.
|
(4) |
Stephen Waldis resigned from the board of directors of Legacy Billtrust on November 19, 2020.
|
• |
financial institutions or financial services entities;
|
• |
broker-dealers or traders in securities;
|
• |
taxpayers that are subject to the mark-to-market tax accounting rules;
|
• |
tax-exempt entities;
|
• |
governments or agencies or instrumentalities thereof;
|
• |
partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
|
• |
insurance companies;
|
• |
regulated investment companies;
|
• |
real estate investment trusts;
|
• |
expatriates or former long-term residents of the United States;
|
• |
persons that actually or constructively own 10 percent or more of our shares of Common Stock;
|
• |
persons deemed to sell our shares of Common Stock under the constructive sale provisions of the Code;
|
• |
persons that acquired our securities as compensation;
|
• |
persons that hold our securities as part of a straddle, constructive sale, hedge, conversion or other integrated or similar transaction;
|
• |
“qualified foreign pension funds” (within the meaning of Section 897(1)(2) of the Code) and entities, all of the interests of which are held by qualified foreign pension funds;
|
• |
tax-qualified retirement plans;
|
• |
persons subject to special tax accounting rules as a result of any item of gross income with respect to Warrants or shares of Common Stock being taken into account in an “applicable financial statement,” or
|
• |
U.S. Holders (as defined below) whose functional currency is not the U.S. dollar.
|
• |
the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the U.S. (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the U.S. to
which such gain is attributable);
|
• |
the Non-U.S. Holder is a nonresident alien individual present in the U.S. for 183 days or more during the taxable year of the sale or other taxable disposition and certain other requirements are met; or
|
• |
shares of Common Stock constitute a U.S. real property interests (“USRPIs”), by reason of our status as a U.S. real property holding corporation (“USRPHC”), for U.S. federal income tax purposes.
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per Warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and
|
• |
if, and only if, the closing price of Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the Warrant Holders.
|
• |
a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
|
• |
an affiliate of an interested stockholder; or
|
• |
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
|
• |
our Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
|
• |
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than
statutorily excluded shares of common stock; or
|
• |
on or subsequent to the date of the transaction, such transaction is approved by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
• |
1% of the total number of shares of our common stock then outstanding; or
|
• |
the average weekly reported trading volume of our Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
• |
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
• |
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
• |
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file
such reports and materials), other than Form 8-K reports; and
|
• |
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
|
• |
each person or group known to us who beneficially owns more than 5% of our outstanding shares of Common Stock;
|
• |
each of our named executive officers and directors; and
|
• |
all of our executive officers and directors as a group.
|
Name and Address of Beneficial Owner
|
Number of
Shares of
Common Stock
Beneficially
Owned
|
Percentage of
Outstanding
Common Stock
|
||||||
Directors and Executive Officers:
|
||||||||
Flint A. Lane(1)
|
26,272,619
|
17.0
|
%
|
|||||
Steven Pinado(2)
|
1,697,702
|
1.1
|
%
|
|||||
Mark Shifke(3)
|
795,213
|
*
|
||||||
Joe Eng(4)
|
800,363
|
*
|
||||||
Jeanne O’Connor(5)
|
240,924
|
*
|
||||||
Charles Bernicker(6)
|
374,522
|
*
|
||||||
Clare Hart(7)
|
96,683
|
*
|
||||||
Robert Farrell(8)
|
317,177
|
*
|
||||||
Lawrence Irving(9)
|
317,177
|
*
|
||||||
Matt Harris
|
—
|
—
|
||||||
Juli Spottiswood(10)
|
23,660
|
*
|
||||||
Directors and Executive Officers as a Group (11 Individuals)
|
30,936,040
|
19.5
|
%
|
|||||
Five Percent Holders:
|
||||||||
Entities affiliated with Bain Capital Venture Investors, LLC(11)
|
28,367,064
|
18.5
|
%
|
|||||
Riverwood Capital(12)
|
14,245,740
|
9.3
|
%
|
* |
Less than 1%
|
(1) |
Consists of (i) 17,614,241 shares of Common Stock, (ii) 7,839,466 shares of Common Stock held by Flint Lane 2009 Grantor Retained Annuity Trust and (iii)
818,912 shares of Common Stock issuable pursuant to options that are exercisable as of or within 60 days of November 12, 2021.
|
(2) |
Consists of (i) 90,671 shares of Common Stock and (ii) 1,607,031 shares of Common Stock issuable pursuant to RSUs that will vest within 60 days of November 12,
2021 and options that are exercisable as of or within 60 days of November 12, 2021.
|
(3) |
Consists of (i) 69,847 shares of Common Stock and (ii) 725,366 shares of Common Stock issuable pursuant to vested RSUs, RSUs that will vest within 60 days of
November 12, 2021 and options that are exercisable as of or within 60 days of November 12, 2021.
|
(4) |
Consists of (i) 187,918 shares of Common Stock and (ii) 564,507 shares of Common Stock issuable pursuant to RSUs that will vest within 60 days of November 12,
2021 and options that are exercisable as of or within 60 days of November 12, 2021, and (iii) 47,938 shares of Common Stock held by the Pamela L Eng Trust. Mr. Eng disclaims beneficial ownership of the shares of Common Stock held by the
Pamela L Eng Trust except to the extent of his pecuniary interest therein.
|
(5) |
Consists of (i) 18,071 shares of Common Stock and (ii) 222,853 shares of Common Stock issuable pursuant to vested RSUs, RSUs that will vest within 60 days of
November 12, 2021 and options that are exercisable as of or within 60 days of November 12, 2021.
|
(6) |
Gives effect to pro rata distribution from a limited liability company of which Mr. Bernicker is a member.
|
(7) |
Consists of (i) 25,406 shares of Common Stock and (ii) 71,277 shares of Common Stock issuable pursuant to options that are exercisable as of or within 60 days
of November 12, 2021.
|
(8) |
Consists of (i) 38,088 shares of Common Stock and (ii) 279,089 shares of Common Stock issuable pursuant to options that are exercisable as of or within 60 days
of November 12, 2021.
|
(9) |
Consists of (i) 38,088 shares of Common Stock and (ii) 279,089 shares of Common Stock issuable pursuant to options that are exercisable as of or within 60 days
of November 12, 2021.
|
(10) |
Consists of (i) 9,204 shares of Common Stock and (ii) 14,456 shares of Common Stock issuable pursuant to options that are exercisable as of or within 60 days of
November 12, 2021.
|
(11) |
Based solely on a Schedule 13D/A filed on July 8, 2021, consists of (i) 25,706,922 shares of Common Stock held by Bain Capital Venture Fund 2012, L.P. (“Venture Fund 2012”), (ii) 2,510,636 shares of
Common Stock held by BCIP Venture Associates (“BCIP VA”) and (iii) 149,506 shares of Common Stock held by BCIP Venture Associates-B (“BCIP VA-B” and, together with Venture Fund 2012 and BCIPVA, the “Bain Capital Venture Entities”). Bain
Capital Venture Investors, LLC (“BCVI”), the Executive Committee of which consists of Enrique Salem and Ajay Agarwal, is the ultimate general partner of Venture Fund 2012 and governs the investment strategy and decision-making processes
with respect to investments held by BCIP VA and BCIP VA-B. By virtue of the relationships described in this footnote, each of BCVI, Mr. Salem and Mr. Agarwal may be deemed to share voting and dispositive power over the shares held by
the Bain Capital Venture Entities. The business address of the Bain Capital Venture Entities is 200 Clarendon Street, Boston MA 02116.
|
(12) |
Based solely on a Form 4 filed on July 8, 2021, consists of (i) 2,954,508 shares of Common Stock held by Riverwood Capital Partners II (Parallel-B) L.P. and (ii) 11,291,232 shares of Common Stock held by
Riverwood Capital Partners II L.P. (together with Riverwood Capital Partners II (Parallel-B) L.P., “Riverwood Capital.” Riverwood Capital II L.P. is the general partner of Riverwood Capital. The general partner of Riverwood Capital II
L.P. is Riverwood Capital GP II Ltd. Riverwood Capital II L.P. and Riverwood Capital GP II Ltd. may be deemed to have shared voting and dispositive power over, and be deemed to be indirect beneficial owners of, shares directly held by
Riverwood Capital. All investment decisions with respect to the shares held by Riverwood Capital are made by a majority vote of a four-member investment committee, comprised of Francisco Alvarez-Demalde, Jeffrey Parks, Thomas Smach, and
Christopher Varelas. All voting decisions over the shares held by Riverwood Capital are made by a majority vote of Riverwood Capital GP II Ltd.’s eleven shareholders. No single natural person controls investment or voting decisions with
respect to the shares held by Riverwood Capital. The business address of Riverwood Capital is 70 Willow Road, Suite 100 Menlo Park CA 94025-3652.
|
INDEX TO FINANCIAL STATEMENTS
|
Page
|
FINANCIAL STATEMENTS
|
|
Audited Financial Statements of BTRS Holdings Inc. (f/k/a Factor Systems, Inc. (dba Billtrust)):
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-8
|
|
Unaudited Financial Statements of BTRS Holdings Inc:
|
|
F-42
|
|
F-43
|
|
F-44
|
|
F-46
|
|
F-47
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Customer funds
|
|
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Deferred implementation, commission and other costs, current
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Deferred implementation and commission costs, non-current
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Customer funds payable
|
$
|
|
$
|
|
||||
Current portion of debt and capital lease obligations, net of deferred financing costs
|
|
|
||||||
Accounts payable
|
|
|
||||||
Accrued expenses and other
|
|
|
||||||
Deferred revenue
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term debt and capital lease obligations, net of current portion and deferred financing costs
|
|
|
||||||
Customer postage deposits
|
|
|
||||||
Deferred revenue, net of current portion
|
|
|
||||||
Deferred taxes
|
|
|
||||||
Other long-term liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 11)
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred Stock, $
|
|
|
||||||
Class 1 Common stock, $
|
|
|
||||||
Class 2 Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
For the Years Ended December 31,
|
2020
|
2019
|
2018
|
|||||||||
Revenues:
|
||||||||||||
Subscription, transaction and services
|
$
|
|
$
|
|
$
|
|
||||||
Reimbursable costs
|
|
|
|
|||||||||
Total revenues
|
|
|
|
|||||||||
|
||||||||||||
Cost of revenues:
|
||||||||||||
Cost of subscription, transaction and services
|
|
|
|
|||||||||
Cost of reimbursable costs
|
|
|
|
|||||||||
Total cost of revenues, excluding depreciation and amortization
|
|
|
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
|
|
|
|||||||||
Sales and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Total operating expenses
|
|
|
|
|||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other income (expense):
|
||||||||||||
Interest income
|
|
|
|
|||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Total other expense
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Provision for income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net loss and comprehensive loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
||||||||||||
Net loss per share attributable to common stockholders
|
||||||||||||
Basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
||||||||||||
Weighted average number of shares used to compute net loss per share attributable to common
stockholders
|
||||||||||||
Basic and diluted
|
|
|
|
|
Redeemable
Convertible Preferred Stock
|
Class 1
Common Stock
|
Class 2
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
(Deficit)
|
||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||||||||
Balance, December 31, 2017
|
|
$
|
|
|
$ |
|
|
$ |
|
$ |
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||||||||||
Retroactive application of reverse recapitalization (Note 1)
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Adjusted balance, December 31, 2017
|
|
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||||||
Stock-based compensation from option and restricted stock unit grants
|
—
|
—
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||||||||
Exercise of stock options
|
—
|
—
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Vesting of restricted stock units
|
—
|
—
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
Adjustment from adoption of ASC 606 (see Note 2)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Balance January 1, 2019
|
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
Stock-based compensation from option of grants
|
—
|
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||||||||
Exercise of stock options
|
—
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net Loss
|
—
|
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance, December 31, 2019
|
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
Stock-based compensation from option grants
|
—
|
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||||||||
Exercise of stock options
|
—
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance, December 31, 2020
|
$ | $ | $ | $ | $ | ( |
) | $ |
For the Years Ended December 31,
|
2020
|
2019
|
2018
|
|||||||||
Operating activities:
|
||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Provision for bad debts
|
|
|
|
|||||||||
Amortization of debt discount
|
|
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|||||||||
Change in fair value of contingent consideration liability
|
(
|
)
|
|
|
||||||||
Change in fair value of warrants liability
|
|
|
|
|||||||||
Deferred income taxes
|
|
|
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Prepaid expenses
|
|
(
|
)
|
(
|
)
|
|||||||
Other assets (current and non-current)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Accounts payable
|
(
|
)
|
|
|
||||||||
Accrued expenses
|
|
|
|
|||||||||
Deferred revenue
|
|
|
|
|||||||||
Deferred implementation, commissions and other costs
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other liabilities (current and non-current)
|
(
|
)
|
|
|
||||||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investing activities:
|
||||||||||||
Purchase of businesses
|
|
(
|
)
|
(
|
)
|
|||||||
Capitalized Software Development
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Financing activities:
|
||||||||||||
Issuance of long-term debt
|
|
|
(
|
)
|
||||||||
Financing costs paid upon issuance of long-term debt
|
(
|
)
|
|
|
||||||||
Proceeds from line of credit
|
|
|
|
|||||||||
Repayments of line of credit
|
(
|
)
|
(
|
)
|
|
|||||||
Payments on long-term debt
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Payments on capital lease obligations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from exercise of stock options
|
|
|
|
|||||||||
Payments of deferred purchase consideration
|
(
|
)
|
|
(
|
)
|
|||||||
Change in customer funds payable
|
( |
) | ||||||||||
Settlement of contingent consideration liabilities
|
|
|
(
|
)
|
||||||||
Net cash provided by financing activities
|
|
|||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
(
|
)
|
||||||||||
Cash, cash equivalents, and restricted cash, beginning of year
|
|
|||||||||||
Cash, cash equivalents and restricted cash, end of year
|
$
|
|
$ | $ | ||||||||
|
||||||||||||
Reconciliation of cash, cash equivalents, and restricted cash to the balance sheets
|
||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Customer funds |
||||||||||||
Restricted cash
|
|
|
|
|||||||||
Total cash, cash equivalents, and restricted cash
|
$ | $ | $ |
For the Years Ended December 31,
|
2020
|
2019
|
2018
|
|||||||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||||||
Cash paid for interest
|
$
|
|
$
|
|
$
|
|
||||||
Cash paid for income taxes
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||
Noncash Investing & Financing Activities:
|
||||||||||||
Fixed assets purchased under capital lease obligation
|
$
|
|
$
|
|
$
|
|
||||||
Leasehold improvement incentive recorded as property and equipment and other long-term liability
|
$
|
|
$
|
|
$
|
|
||||||
Contingent consideration for purchase of business
|
$
|
|
$
|
|
$
|
|
||||||
Deferred purchase consideration
|
$
|
|
$
|
|
$
|
|
1.
|
Organization and Nature of Business
|
(i) |
Credit Management modules include credit scoring and management as well as automated credit applications.
|
(ii) |
Order/E-commerce module provides B2B wholesale distributors with robust e-commerce capabilities. Billtrust’s offering delivers an optimized and personalized
configuration, ordering and payment experience.
|
(iii) |
Invoicing presentment module enables its customers to optimize invoice delivery across all distribution channels. Billtrust’s module ingests invoice data from
myriad ERP systems and presents invoices in ways that reflect customer needs and preferences. The solution includes customer-branded electronic invoice presentment portals, electronic invoices, email billing, automated entry into AP
portals via direct integration and leveraging robotic process automation (“RPA”), and highly efficient print and physical delivery ensuring rapid and cost efficient presentment and delivery.
|
(iv) |
Payments capabilities enable customers to facilitate payments at every possible touchpoint across its solution set. Various payment types, including ACH,
credit, wire, check and cash can be accepted and automatically captured and enriched with relevant remittance data across the platform and via our BPN.
|
(v) |
Cash Application - enables application of cash from invoices via line item reconciliation within accounting and ERP systems. Billtrust’s automated offering
consumes payment and remittance data across inbound channels including lockboxes, mail, email, portal posting, hosted payment page intake and via direct and manual feeds.
|
(vi) |
Collections - integrated accounts receivable collections workflow management system for customers and employees that enables customers to shift to a strategic
customer touchpoint-centric operation, preventing payment delays and driving positive customer experiences. It supports management of disputes and deductions when discrepancies in services invoiced and services delivered occur between
businesses. The solution delivers process efficiency and increases financial recoveries by automating workflows and providing clear visibility across relevant data points and actions taken.
|
• |
Within the Balance Sheets, redeemable convertible preferred stock in mezzanine equity was converted into Class 1 and 2 common stock and classified in permanent
equity.
|
• |
The Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit were renamed the Statements of Stockholders' Equity.
|
• |
Within the Statements of Stockholders' Equity:
|
• |
Redeemable convertible preferred stock, common stock, share activity, and per share amounts were converted to Class 1 and 2 common stock using the Exchange
Ratio.
|
• |
Preferred stock dividends and accretion of preferred stock to redemption value for the years ended December 31, 2020, 2019, and 2018 in the amounts of $
|
• |
Within the Statements of Operations and Comprehensive Loss, net loss per share and the weighted average number of shares used to compute net loss per share were
adjusted based on the converted number of Class 1 and 2 common shares.
|
• |
Within the Notes to Financial Statements:
|
• |
The exercise price within the Warrants paragraph of Note 2. Significant Accounting Policies and the stock prices in Note 5. Fair Value Measurements have been adjusted using the Exchange Ratio.
|
• |
Note 9. Redeemable Preferred Stock and Stockholders’ Equity that was included in the previously issued financial
statements has been removed in its entirety, with the subsequent notes re-numbered accordingly.
|
• |
All stock options and related per share amounts in Note 9. Incentive Compensation Plans have been adjusted using the
Exchange Ratio.
|
• |
All per share and share amounts in Note 8. Current and Long-Term Debt and Capital Lease Obligations and Note 14. Loss per Share were adjusted based on (1) the converted number of Class 1 and 2 common shares, and (2) the removal of the preferred stock dividends and accretion to redemption value.
|
• |
Note 15. Subsequent Events was updated to reflect activity through June 21 2021, including updating information with
regard to the closing of the BCA.
|
Year Ended December 31, 2020
|
Year Ended December 31, 2019
|
Year Ended December 31, 2018
|
||||||||||||||||||||||||||||||||||
As Previously
|
As Previously
|
As Previously
|
||||||||||||||||||||||||||||||||||
|
Reported
|
Adjustment
|
Revised |
Reported
|
Adjustment
|
Revised
|
Reported
|
Adjustment
|
Revised
|
|||||||||||||||||||||||||||
Cash flows from financing activities:
|
||||||||||||||||||||||||||||||||||||
Change in customer funds payable
|
$
|
|
$ | ( |
) | $ | ( |
) |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Net cash provided by financing activities
|
|
( |
) |
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||||
Net increase in cash, cash equivalents, and restricted cash
|
|
( |
) |
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
2.
|
Significant Accounting Policies
|
1. |
Identification of the contract, or contracts, with a customer;
|
2. |
Identification of the performance obligations in the contract;
|
3. |
Determination of the transaction price;
|
4. |
Allocation of the transaction price to the performance obligations in the contract; and
|
5. |
Recognition of revenue when, or as, the Company satisfies a performance obligation
|
|
2020
|
2019
|
2018
|
|||||||||
Subscription and transaction fees
|
$
|
|
$
|
|
$
|
|
||||||
Services and other
|
||||||||||||
Subscription, transaction and services
|
$
|
|
$
|
|
$
|
|
Ending balance December 31, 2019
|
$
|
|
||
Amounts invoiced but not recognized
|
||||
Revenue recognized
|
(
|
)
|
||
Ending balance December 31, 2020
|
$
|
|
Assets held under capital leases – computer, print and mail equipment
|
|
Computer, print and mail equipment
|
|
Furniture and fixtures
|
|
Software
|
|
Vehicles
|
|
Leasehold improvements
|
|
3.
|
Acquisitions
|
(i) |
cash paid at closing in April 2019, net of amounts acquired, of $
|
(ii) |
$
|
(iii) |
earnouts in each of the first three full years commencing May 1, 2019, based on meeting certain recurring revenue growth and profitability targets. These annual
earnouts are subject to a minimum profitability threshold, as defined in the Second Phase APA, and pay out a percentage of the growth in recurring subscription revenue from the prior annual period, less the defined minimum profitability
threshold. Additionally, the sellers were entitled to a new customer earnout for 2019 based on the cumulative monthly subscription value for new customer contracts signed during 2019. The earnouts were recorded at their fair value of $
|
Other current assets
|
$
|
|
||
Property and equipment
|
|
|||
Customer relationships
|
|
|||
Technology
|
|
|||
Non-compete agreements
|
|
|||
Tradename
|
|
|||
Goodwill
|
|
|||
Other current liabilities
|
(
|
)
|
Deferred revenue liability
|
(
|
)
|
||
Total purchase price
|
$
|
|
Other current assets
|
$
|
|
||
Property and equipment
|
|
|||
Customer relationships
|
|
|||
Technology
|
|
|||
Non-compete agreements
|
|
|||
Tradename
|
|
|||
Goodwill
|
|
|||
Other current liabilities
|
(
|
)
|
||
Deferred revenue liability
|
(
|
)
|
||
Total purchase price
|
$
|
|
Ending balance, December 31, 2018 (current and long-term liabilities)
|
$
|
|
||
Contingent Consideration attributable to the Second Phase acquisition
|
|
|||
Ending balance, December 31, 2019 (current and long-term liabilities)
|
$
|
|
||
Fair value adjustments to contingent consideration
|
(
|
)
|
||
Ending balance, December 31, 2020 (current and long-term liabilities)
|
$
|
|
4.
|
Revenue from Contracts with Customers
|
5.
|
Fair Value Measurements
|
• |
Level 1: Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
|
• |
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
• |
Level 3: Unobservable inputs for which there is little or no market data requiring the Company to develop its own assumptions.
|
December 31, 2020
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents(1)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Short-term investments
|
|
|
|
|
||||||||||||
Restricted Cash
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration(2)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Warrants to purchase Series C Preferred stock(3)
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2019
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents(1)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration(2)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Warrants to purchase Series C Preferred stock(4)
|
|
|
|
|
||||||||||||
$
|
|
$
|
|
$
|
|
$
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
Ending balance, December 31, 2018
|
$
|
|
||
Change in fair value(1)
|
||||
Ending balance, December 31, 2019
|
$
|
|
||
Change in fair value(1)
|
||||
Ending balance, December 31, 2020
|
$
|
|
Ending balance, December 31, 2018 (current and long-term liabilities)
|
$
|
|
||
Contingent Consideration attributable to the Second Phase acquisition
|
||||
Ending balance, December 31, 2019 (current and long-term liabilities)
|
$
|
|
||
Fair value adjustments to contingent consideration
|
(
|
)
|
||
Ending balance, December 31, 2020 (current and long-term liabilities)
|
$
|
|
(1) |
|
6. |
Goodwill and Intangible Assets, net
|
Ending balance, December 31, 2018
|
$
|
|
||
Additions from acquisition
|
|
|||
Ending balance, December 31, 2019
|
$
|
|
|
December 31, 2020
|
||||||||||||
|
Weighted
Average
Useful Life
|
Gross
Carrying
Value
|
Accumulated
amortization
|
Net
|
|||||||||
Customer relationships
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Non-compete agreements
|
|
|
(
|
)
|
|
||||||||
Trademarks and trade names
|
|
|
(
|
)
|
|
||||||||
Technology
|
|
|
(
|
)
|
|
||||||||
Total
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
December 31, 2019
|
||||||||||||
|
Weighted
Average
Useful Life
|
Gross
Carrying
Value
|
Accumulated
amortization
|
Net
|
|||||||||
Customer relationships
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Non-compete agreements
|
|
|
(
|
)
|
|
||||||||
Trademarks and trade names
|
|
|
(
|
)
|
|
||||||||
Technology
|
|
|
(
|
)
|
|
||||||||
Total
|
|
$
|
|
$
|
(
|
)
|
$
|
|
2021
|
$
|
|
||
2022
|
|
|||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
Thereafter
|
|
|||
Total
|
$
|
|
7. |
Property and Equipment, net
|
2020
|
2019
|
|||||||
Assets held under capital leases – computer, print and mail equipment and software
|
$
|
|
$
|
|
||||
Computer, print and mail equipment
|
|
|
||||||
Furniture and fixtures
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Software
|
|
|
||||||
Vehicles
|
|
|
||||||
Internal software development
|
|
|
||||||
Construction in progress
|
|
|
||||||
Total property and equipment
|
|
|
||||||
Less: accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
Total
|
$
|
|
$
|
|
8. |
Current and Long-Term Debt and Capital Lease Obligations
|
December 31,
|
2020
|
2019
|
||||||
Term Loan
|
$
|
|
$
|
|
||||
Unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Revolving Facility Line of Credit
|
|
|
||||||
Capital lease obligations
|
|
|
||||||
Subtotal
|
|
|
||||||
Less: current portion, net of unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Long-term debt and capital lease obligations |
$
|
|
$
|
|
(i) |
an Initial Term Loan of $
|
(ii) |
a Delayed Draw Term Loan (“DDTL”) of up to $
|
(iii) |
a Revolving Commitment facility (“Revolver”) of $
|
(i) |
LIBOR (or equivalent) rate, for a
|
(ii) |
Base Rate - defined as the greater of (a) the Prime rate, (b) the Federal Funds Effective Rate plus
of 1%, (c) the Adjusted LIBOR Rate, or (d) |
2021
|
$
|
|
||
2022
|
|
|||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
Thereafter
|
|
|||
Total
|
$
|
|
9. |
Incentive Compensation Plans
|
Shares
|
Weighted-
Average
Exercise Price
|
Remaining
Contractual
Life (Years)
|
||||||||||
Options outstanding, December 31, 2018
|
|
$
|
|
|
||||||||
Retroactive application of reverse recapitalization (Note 1)
|
|
(
|
)
|
|||||||||
Adjusted options outstanding, December 31, 2018
|
|
$
|
|
|
||||||||
Granted
|
|
|
||||||||||
Exercised
|
(
|
)
|
|
|||||||||
Forfeited
|
(
|
)
|
|
|||||||||
Options, outstanding, December 31, 2019
|
|
$ |
|
|||||||||
Granted
|
|
|
||||||||||
Exercised
|
(
|
)
|
|
|||||||||
Forfeited
|
(
|
)
|
|
|||||||||
Options outstanding, December 31, 2020
|
|
$ |
|
|||||||||
Options vested and expected to vest, December 31, 2020
|
|
$
|
|
|
||||||||
Options exercisable, December 31, 2020
|
|
$
|
|
|
2020
|
2019
|
2018
|
||||||||||
Risk-free interest rate
|
|
%
|
|
%
|
|
%
|
||||||
Dividend yield
|
|
%
|
|
%
|
|
%
|
||||||
Volatility factor of the expected market price of the Company’s common stock
|
|
%
|
|
%
|
|
%
|
||||||
Expected life of option
|
|
|
|
2020
|
2019
|
2018
|
||||||||||
Cost of subscription, transaction and other revenue
|
$
|
|
$
|
|
$
|
|
||||||
Research and development
|
|
|
|
|||||||||
Sales and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
10. |
Income Taxes
|
2020
|
2019
|
2018
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
|
$
|
|
$
|
|
||||||
State
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
(
|
)
|
|
(
|
)
|
||||||||
Deferred:
|
||||||||||||
Federal
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
State
|
(
|
)
|
(
|
)
|
|
|||||||
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Provision for income taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
2020
|
2019
|
2018
|
||||||||||
Statutory rate applied to pre-tax loss
|
$ |
|
$ |
|
$ |
|
||||||
Permanent items
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Stock compensation related expenses
|
|
(
|
)
|
(
|
)
|
|||||||
State taxes
|
|
|
|
|||||||||
Valuation allowance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
2020
|
2019
|
|||||||
Deferred tax assets:
|
||||||||
Compensation and bonuses
|
$
|
|
$
|
|
||||
Intangible assets
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Accrued expenses and other
|
|
|
||||||
Net operating loss carryforwards
|
|
|
||||||
Unearned revenue
|
|
|
||||||
Other carryforwards
|
|
|
||||||
Interest expense limitation
|
|
|
||||||
Deferred rent
|
|
|
||||||
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
Deferred tax assets, net of valuation allowance
|
$
|
|
$
|
|
||||
Deferred tax liabilities:
|
||||||||
Deferred implementation costs
|
(
|
)
|
(
|
)
|
||||
Fixed assets
|
(
|
)
|
(
|
)
|
||||
Goodwill
|
(
|
)
|
(
|
)
|
||||
Deferred tax liabilities
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Total deferred taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
11. |
Commitments and Contingencies
|
Year ending December 31,
|
Operating
Leases
|
Capital
Leases
|
||||||
2021
|
$
|
|
$
|
|
||||
2022
|
|
|
||||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
Thereafter
|
|
|
||||||
Total minimum lease payments
|
$
|
|
$
|
|
||||
Less amounts representing interest
|
(
|
)
|
||||||
Present value of lease payments
|
|
|||||||
Less current portion
|
(
|
)
|
||||||
Long-term portion of minimum lease payments
|
$
|
|
12. |
Segment Information
|
|
December 31, 2020
|
|||||||||||||||
|
Print
|
Software and
Payments
|
All other
|
Total
|
||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Services and other
|
|
|
|
|
||||||||||||
Subscription, transaction and services
|
|
|
|
|
||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues, excluding depreciation and amortization
|
|
|
|
|
||||||||||||
Segment gross profit - subscription, transaction and services | ( |
) | ||||||||||||||
Segment gross profit - reimbursable costs | ||||||||||||||||
Total segment gross profit, excluding depreciation and amortization
|
$ | $ | $ | ( |
) | $ | ||||||||||
Total segment gross margin, excluding depreciation and amortization | % | % | ( |
)% | % | |||||||||||
Segment gross margin - subscription, transaction and services | % | % | ( |
)% | % | |||||||||||
Unallocated amounts: | ||||||||||||||||
Sales and marketing | $ |
|||||||||||||||
Research and development | ||||||||||||||||
General and administrative | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Interest income | ( |
) | ||||||||||||||
Interest expense | ||||||||||||||||
Other (income)/expense, net | ||||||||||||||||
Loss before income taxes | $ |
( |
) |
|
December 31, 2019
|
|||||||||||||||
|
Print
|
Software and
Payments
|
All other
|
Total
|
||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Services and other
|
|
|
|
|
||||||||||||
Subscription, transaction and services
|
|
|
|
|
||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues, excluding depreciation and amortization
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Segment gross profit - subscription, transaction and services
|
|
|
(
|
)
|
|
|||||||||||
Segment gross profit - reimbursable costs
|
|
|
|
|
||||||||||||
Total segment gross profit, excluding depreciation and amortization
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
||||||||||||||||
Total segment gross margin, excluding depreciation and amortization
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Segment gross margin - subscription, transaction and services
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Unallocated amounts: | ||||||||||||||||
Sales and marketing | $ |
|||||||||||||||
Research and development | ||||||||||||||||
General and administrative | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Interest income | ( |
) | ||||||||||||||
Interest expense | ||||||||||||||||
Other (income)/expense, net | ||||||||||||||||
Loss before income taxes | $ |
( |
) |
|
December 31, 2018
|
|||||||||||||||
|
Print
|
Software and
Payments
|
All other
|
Total
|
||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Services and other
|
|
|
|
|
||||||||||||
Subscription, transaction and services
|
|
|
|
|
||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues, excluding depreciation and amortization
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Segment gross profit - subscription, transaction and services
|
|
|
(
|
)
|
|
|||||||||||
Segment gross profit - reimbursable costs
|
|
|
|
|
||||||||||||
Total segment gross profit, excluding depreciation and amortization
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
||||||||||||||||
Total segment gross margin, excluding depreciation and amortization
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Segment gross margin - subscription, transaction and services
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales and marketing
|
$
|
|
||||||||||||||
Research and development
|
|
|||||||||||||||
General and administrative
|
|
|||||||||||||||
Depreciation and amortization
|
|
|||||||||||||||
Interest income
|
(
|
)
|
||||||||||||||
Interest expense
|
|
|||||||||||||||
Other (income)/expense, net
|
|
|||||||||||||||
Loss before income taxes
|
$
|
(
|
)
|
13. |
Related Party Transactions
|
14. |
Loss per Share
|
|
December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
Numerator:
|
||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Denominator:
|
||||||||||||
Weighted-average common shares outstanding
|
|
|
|
|||||||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Options to purchase common stock
|
|
|
|
|||||||||
Series C Warrants
|
|
|
|
|||||||||
|
|
|
15. |
Subsequent Events
|
i. |
Approximately $
|
ii. |
Approximately $
|
i. |
Approximately
|
ii. |
Approximately
|
iii. |
|
iv. |
In connection the Merger, each issued and outstanding South Mountain Class A and Class B share was converted into
|
v. |
In connection with the Merger, all
|
September 30, 2021
|
December 31, 2020
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Marketable securities
|
|
|
||||||
Customer funds
|
|
|
||||||
Accounts receivable, net
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Deferred implementation and commission costs, current portion
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Deferred implementation and commission costs, net of current portion
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Customer funds payable
|
$
|
|
$
|
|
||||
Current portion of debt and capital lease obligations, net of deferred financing costs
|
|
|
||||||
Accounts payable
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
|
||||||
Deferred revenue, current portion
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Debt and capital lease obligations, net of deferred financing costs and current portion
|
|
|
||||||
Customer postage deposits
|
|
|
||||||
Deferred revenue, net of current portion
|
|
|
||||||
Deferred taxes
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 10)
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $
|
|
|
||||||
Class 1 common stock, $
|
|
|
||||||
Class 2 common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription, transaction, and services
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues, excluding depreciation and amortization
|
|
|
|
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
|
|
|
|
||||||||||||
Sales and marketing
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
|
|
|
|
||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
|
|
|
|
||||||||||||
Interest expense and loss on extinguishment of debt
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Change in fair value of financial instruments and other income (expense)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Total other income (expense)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Provision for income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net loss and comprehensive loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Net loss per common share, basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Weighted average common shares outstanding, basic and diluted
|
|
|
|
|
Three Months Ended September 30, 2021
|
||||||||||||||||||||||||||||
Class 1 Common Stock
|
Class 2 Common Stock
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Total Stockholders’ Equity
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance, June 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of common stock under stock plans
|
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||
Shares exchanged in connection with Secondary Offering (Note 17)
|
|
—
|
(
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance, September 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended September 30, 2020
|
||||||||||||||||||||||||||||
Class 1 Common Stock
|
Class 2 Common Stock
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Total Stockholders’ Equity
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance, June 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of common stock under stock plans
|
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance, September 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Nine Months Ended September 30, 2021
|
||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock
|
Class 1
Common Stock
|
Class 2
Common Stock
|
Additional Paid-in Capital
|
Accumulated Deficit
|
Total Stockholders’ Equity (Deficit)
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Beginning balance, December 31, 2020
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||||||||||
Retroactive application of reverse recapitalization (Note 3)
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Adjusted balance, December 31, 2020
|
|
|
|
|
8,197
|
|
|
(
|
)
|
|
||||||||||||||||||||||||||
Reverse recapitalization and PIPE Financing (Note 3)
|
—
|
—
|
|
|
(
|
)
|
—
|
|
—
|
|
||||||||||||||||||||||||||
Fair value of Earnout Shares (Note 3)
|
—
|
—
|
—
|
—
|
—
|
—
|
(
|
)
|
—
|
(
|
)
|
|||||||||||||||||||||||||
Issuance and vesting of Earnout Shares (Note 3)
|
—
|
—
|
|
|
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Issuance of common stock under stock plans
|
—
|
—
|
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Shares issued for exercise of warrants
|
—
|
—
|
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Shares exchanged in connection with Secondary Offering (Note 17)
|
—
|
—
|
|
—
|
(
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance, September 30, 2021
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Nine Months Ended September 30, 2020
|
||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock
|
Class 1
Common Stock
|
Class 2
Common Stock
|
Additional Paid-in Capital
|
Accumulated
Deficit
|
Total Stockholders’ Equity (Deficit)
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2019
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||||||||||
Retroactive application of reverse recapitalization (Note 3)
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Adjusted balance, December 31, 2019
|
|
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||||||
Issuance of common stock under stock plans
|
—
|
—
|
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance, September 30, 2020
|
—
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Provision for bad debts
|
|
|
||||||
Loss on extinguishment of debt and amortization of debt discount
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Change in fair value of financial instruments and other income
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses
|
(
|
)
|
(
|
)
|
||||
Deferred implementation, commissions, and other costs
|
|
(
|
)
|
|||||
Other assets (current and non-current)
|
|
(
|
)
|
|||||
Accounts payable
|
|
(
|
)
|
|||||
Accrued expenses and other
|
|
|
||||||
Deferred revenue
|
(
|
)
|
(
|
)
|
||||
Other liabilities (current and non-current)
|
(
|
)
|
(
|
)
|
||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of marketable securities
|
(
|
)
|
|
|||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from borrowings, net of costs
|
|
|
||||||
Payments on borrowings
|
(
|
)
|
(
|
)
|
||||
Business Combination and PIPE financing
|
|
|
||||||
Payments of equity issuance costs
|
(
|
)
|
|
|||||
Debt extinguishment costs
|
(
|
)
|
|
|||||
Payments of deferred purchase consideration
|
|
(
|
)
|
|||||
Change in customer funds payable
|
(
|
)
|
|
|||||
Payments on capital lease obligations
|
(
|
)
|
(
|
)
|
||||
Proceeds from common stock issued
|
|
|
||||||
Taxes paid on net share issuance of stock-based compensation
|
(
|
)
|
|
|||||
Net cash provided by financing activities
|
|
|
||||||
Net increase in cash, cash equivalents, and restricted cash
|
|
|
||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
|
||||||
Cash, cash equivalents, and restricted cash, end of period (Note 2)
|
$
|
|
$
|
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Cash paid for income taxes
|
$
|
|
$
|
|
||||
Non-cash investing & financing activities:
|
||||||||
Reclassification of Series C preferred stock warrant liability to equity (Note 3)
|
$
|
|
$
|
|
||||
Net assets acquired in Business Combination and other
|
$
|
|
$
|
|
||||
Deferred offering costs included in accrued expenses
|
$
|
|
$
|
|
||||
Equity issuance costs in other assets and accrued expenses charged to additional paid-in-capital
|
$
|
|
$
|
|
||||
Issuance and vesting of Earnout Shares (Note 3)
|
$
|
|
$
|
|
Nine Months Ended September 30, 2020
|
||||||||||||
As
Previously Reported
|
Adjustment
|
Revised
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Change in customer funds payable
|
$
|
|
$
|
|
$
|
|
||||||
Net cash provided by financing activities
|
|
|
|
|||||||||
Net increase in cash, cash equivalents, and restricted cash
|
|
|
|
|||||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
|
|
|||||||||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
|
$
|
|
$
|
|
• |
Within the Condensed Consolidated Balance Sheets, redeemable convertible preferred stock in mezzanine equity was converted into Class 1 and 2 common stock and classified in permanent equity.
|
• |
The Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit were renamed the Condensed Consolidated Statements of Stockholders’ Equity.
|
• |
Within the Condensed Consolidated Statements of Stockholders’ Equity:
|
• |
Redeemable convertible preferred stock, common stock, share activity, and per share amounts were converted to Class 1 and 2 common stock at an exchange ratio of
|
• |
Preferred stock dividends and accretion of preferred stock to redemption value for the nine months ended September 30, 2020 in the amount $
|
• |
Within the Condensed Consolidated Statements of Operations and Comprehensive Loss, net loss per share and the weighted average number of shares used to compute net loss per share were adjusted based on the converted number of Class 1
and 2 common shares.
|
• |
Within the Notes to Condensed Consolidated Financial Statements:
|
• |
In Note 6 - Loss Per Share, all per share and share amounts for the 2020 periods presented were adjusted based on (1) the converted number of Class 1 and 2 common shares, and (2) the removal of
the preferred stock dividends and accretion to redemption value.
|
• |
In Note 7 - Stockholders' Equity and Stock-Based Compensation, stock options outstanding at December 31, 2020 and the weighted average fair value of stock options granted during the nine months
ended September 30, 2020 before the Business Combination have been adjusted using the Conversion Rate.
|
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Customer funds
|
|
|
||||||
Restricted cash (1)
|
|
|
||||||
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
(1)
|
Restricted cash consists of collateral for letters of credit required for leased office space. At September 30, 2021 restricted cash is included in other assets in the Condensed Consolidated Balance Sheets.
At December 31, 2020 restricted cash is included in other current assets in the Condensed Consolidated Balance Sheets. The short-term or long-term classification is determined in accordance with the expiration of the underlying letters
of credit.
|
i. |
Approximately $
|
ii. |
Approximately $
|
i. |
|
ii. |
|
iii. |
|
i. |
Each issued and outstanding South Mountain Class A and Class B share was converted into
|
ii. |
All
|
Reverse Recapitalization
|
||||
Cash - South Mountain (net of redemptions and non-contingent expenses)
|
$
|
|
||
Cash - PIPE investors
|
|
|||
Cash electing shares of Legacy Billtrust shareholders
|
(
|
)
|
||
Fees to underwriters and other transaction costs
|
(
|
)
|
||
Net cash received from reverse recapitalization
|
|
|||
Net assets acquired and other adjustments
|
|
|||
Net contributions from reverse recapitalization
|
$
|
|
Number of Shares
|
||||
Common Stock outstanding prior to Business Combination
|
|
|||
South Mountain founder shares
|
|
|||
Redemption of South Mountain shares
|
(
|
)
|
||
Common stock of South Mountain
|
|
|||
Shares issued from PIPE
|
|
|||
Legacy Billtrust shareholders' shares purchased for cash
|
(
|
)
|
||
Recapitalization shares
|
|
|||
Legacy Billtrust stockholders' shares
|
|
|||
Total Shares
|
|
Earnout Shares
|
Sponsor Vesting
Shares
|
Total
|
||||||||||
Fair value on Closing Date
|
$
|
|
$
|
|
$
|
|
||||||
Fair value adjustment (1)
|
|
|
|
|||||||||
Amount paid for tax withholding
|
(
|
)
|
|
(
|
)
|
|||||||
Amount reclassified to equity
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Ending balance, September 30, 2021
|
$
|
|
$
|
|
$
|
|
(1)
|
Included in change in fair value of financial instruments and other income in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
|
September 30, 2021
|
||||||||||||
Gross Carrying
Value
|
Accumulated Amortization
|
Net Carrying Value
|
||||||||||
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Non-compete agreements
|
|
(
|
)
|
|
||||||||
Trademarks and trade names
|
|
(
|
)
|
|
||||||||
Technology
|
|
(
|
)
|
|
||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
December 31, 2020
|
||||||||||||
Gross Carrying
Value
|
Accumulated Amortization
|
Net Carrying Value
|
||||||||||
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Non-compete agreements
|
|
(
|
)
|
|
||||||||
Trademarks and trade names
|
|
(
|
)
|
|
||||||||
Technology
|
|
(
|
)
|
|
||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
2021 (remainder)
|
$
|
|
||
2022
|
|
|||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
Thereafter
|
|
|||
Total
|
$
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
Revenues:
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Subscription and transaction fees
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Services and other
|
|
|
|
|
||||||||||||
Subscription, transaction, and services
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average common shares outstanding
|
|
|
|
|
||||||||||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Stock options
|
|
|
|
|
||||||||||||
Restricted stock units
|
|
|
|
|
||||||||||||
Warrants
|
|
|
|
|
||||||||||||
|
|
|
|
i. |
In whole and not in part;
|
ii. |
At a price of $
|
iii. |
Upon a minimum of
|
iv. |
If, and only if, the reported last sale price of the Company’s Class 1 common stock equals or exceeds $
|
Number of Shares
|
Weighted-Average Exercise Price
|
Weighted-Average Remaining Contractual Life (in Years)
|
Aggregate Intrinsic Value
|
|||||||||||||
Outstanding at December 31, 2020
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Exercised
|
(
|
)
|
|
|||||||||||||
Forfeited
|
(
|
)
|
|
|||||||||||||
Outstanding at September 30, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Vested and expected to vest at September 30, 2021
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable at September 30, 2021
|
|
$
|
|
|
$
|
|
Number of
Shares
|
Weighted-
Average Grant
Date Fair Value
|
|||||||
Unvested at December 31, 2020
|
|
$
|
|
|||||
Granted (1)
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Forfeited (2)
|
(
|
)
|
|
|||||
Unvested at September 30, 2021
|
|
$
|
|
(1)
|
No RSUs were granted prior to the Business Combination.
|
(2)
|
Includes
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Cost of subscription, transaction, and services
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Research and development
|
|
|
|
|
||||||||||||
Sales and marketing
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Risk-free interest rate
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Expected dividend yield
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Expected volatility
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Expected life (in years)
|
|
|
|
|
||||||||||||
Weighted average grant date fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30,
2021 |
December 31,
2020 |
|||||||
Term Loan
|
$
|
|
$
|
|
||||
Unamortized debt issuance costs
|
|
(
|
)
|
|||||
Capital lease obligations (Note 10)
|
|
|
||||||
Net carrying amounts
|
$
|
|
$
|
|
i. |
An Initial Term Loan of $
|
ii. |
A Delayed Draw Term Loan of up to $
|
iii. |
A Revolving Commitment facility of $
|
Operating
Leases
|
Capital Leases
|
|||||||
2021 (remainder)
|
$
|
|
$
|
|
||||
2022
|
|
|
||||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
Thereafter
|
|
|
||||||
Total minimum lease payments
|
$
|
|
$
|
|
||||
Less: Amounts representing interest
|
(
|
)
|
||||||
Present value of lease payments
|
|
|||||||
Less: Current portion
|
(
|
)
|
||||||
Long-term portion of minimum lease payments
|
$
|
|
• |
Level 1: Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities.
|
• |
Level 2: Inputs, other than Level 1 inputs, that are observable either directly or indirectly, such as quoted prices for similar assets or liabilities, quotes prices in markets that are not active, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
• |
Level 3: Unobservable inputs for which there is little or no market data, requiring the Company to develop its own estimates and assumptions
|
September 30, 2021
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market funds (1)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Marketable securities:
|
||||||||||||||||
Certificates of deposit (2)
|
|
|
|
|
||||||||||||
Total Assets
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration (3)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total Liabilities
|
$
|
$
|
|
$
|
|
$
|
|
December 31, 2020
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration (3)
|
$
|
|
$
|
$
|
$
|
|
||||||||||
Warrants to purchase Series C Preferred Stock (4)
|
|
|
||||||||||||||
Total Liabilities
|
$
|
|
$
|
$
|
|
$
|
|
(1) |
Included in cash and cash equivalents in the Condensed Consolidated Balance Sheets.
|
(2) |
Certificates of deposit are valued at amortized cost, which approximates fair value.
|
(3) |
The acquisition of Second Phase, LLC in April 2019 included a contingent consideration arrangement that required additional consideration to be paid to the sellers annually based meeting certain recurring revenue growth and
profitability targets (together, "the Financial Targets") during the
|
(4) |
The Company had outstanding warrants to purchase Series C stock, (refer to Note 3 - Business Combination). The amount was included in other long term liabilities in the Condensed Consolidated
Balance Sheets.
|
Contingent
Consideration
|
||||
Ending balance, December 31, 2020
|
$ | |||
Fair value adjustment to contingent consideration (1)
|
( |
) | ||
Ending balance, September 30, 2021
|
$ |
Warrants
|
||||
Ending balance, December 31, 2020
|
$ | |||
Change in fair value (2)
|
||||
Exercise of Series C warrants (3)
|
( |
) | ||
Ending balance, September 30, 2021
|
$ |
(1) |
Subsequent to the acquisition of Second Phase, LLC, the changes in the fair value of the contingent consideration were primarily due to management's estimates and the achievements of the Financial Targets during each period. Increases
or decreases in the inputs would have resulted in higher or lower fair value adjustments. This amount was recognized in change in fair value of financial instruments and other income in the Condensed Consolidated Statements of Operations
and Comprehensive Loss.
|
(2) |
Included in change in fair value of financial instruments and other expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
|
(3) |
As part of the Business Combination on January 12, 2021 (refer to Note 3 - Business Combination), the warrants were exercised and subsequently converted to common stock.
|
September 30,
2021 |
December 31,
2020 |
|||||||
Assets held under capital leases
|
$ | $ | ||||||
Computer, print and mail equipment
|
||||||||
Furniture and fixtures
|
||||||||
Leasehold improvements
|
||||||||
Software
|
||||||||
Vehicles
|
||||||||
Internal software development
|
||||||||
Construction in progress
|
||||||||
Total property and equipment
|
||||||||
Less: accumulated depreciation and amortization
|
( |
) | ( |
) | ||||
Total property and equipment, net
|
$ | $ |
September 30,
2021 |
December 31,
2020 |
|||||||
Accrued expenses
|
$
|
|
$
|
|
||||
Accrued compensation
|
|
|
||||||
Accrued professional services, taxes, and other expenses
|
|
|
||||||
Total accrued expenses and other current liabilities
|
$
|
|
$
|
|
• |
Print – The Print segment is primarily responsible for printing customer invoices and optimizing the amount of time and costs associated with billing customers via mail.
|
• |
Software and Payments – The Software and Payments segment primarily operates using software and cloud based services, optimizes electronic invoice presentment, electronic payments, credit
decisioning, collections automation, cash application and deduction management, and e-commerce of B2B customers.
|
Three Months Ended September 30, 2021
|
||||||||||||||||
Print
|
Software and Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$ | $ | $ | $ | ||||||||||||
Services and other
|
||||||||||||||||
Subscription, transaction, and services
|
|
|
|
|||||||||||||
Reimbursable costs
|
|
|
|
|||||||||||||
Total revenues
|
|
|
|
|||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues
|
|
|
|
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Total segment gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(
|
)
|
||||||||||||||
Depreciation and amortization
|
(
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other income (expenses)
|
|
|||||||||||||||
Loss before income taxes
|
$
|
(
|
)
|
Three Months Ended September 30, 2020
|
||||||||||||||||
Print
|
Software and Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
|
$ | $ |
$
|
|
||||||||||
Services and other
|
||||||||||||||||
Subscription, transaction, and services
|
|
|
|
|||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues
|
|
|
|
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$ | $ |
$
|
(
|
)
|
$
|
|
|||||||||
Total segment gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
|
%
|
% |
(
|
)%
|
|
%
|
|||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(
|
)
|
||||||||||||||
Depreciation and amortization
|
(
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(
|
)
|
Nine Months Ended September 30, 2021
|
||||||||||||||||
Print
|
Software and Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
|
$
|
|
$
|
$
|
|
|||||||||
Services and other
|
||||||||||||||||
Subscription, transaction, and services
|
|
|
|
|
||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues
|
|
|
|
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Total segment gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(
|
)
|
||||||||||||||
Depreciation and amortization
|
(
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(
|
)
|
Nine Months Ended September 30, 2020
|
||||||||||||||||
Print
|
Software and Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$ | $ |
$
|
|
$
|
|
||||||||||
Services and other
|
||||||||||||||||
Subscription, transaction, and services
|
|
|
|
|
||||||||||||
Reimbursable costs
|
|
|
|
|
||||||||||||
Total revenues
|
|
|
|
|
||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
|
|
|
|
||||||||||||
Cost of reimbursable costs
|
|
|
|
|
||||||||||||
Total cost of revenues
|
|
|
|
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Total segment gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
|
%
|
|
%
|
(
|
)%
|
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(
|
)
|
||||||||||||||
Depreciation and amortization
|
(
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(
|
)
|
(a) |
the new Section 6A thereto:
|
1
|
This will be the last sale price of our Common Stock on Nasdaq on the last trading day of the Offer Period (as defined in the Registration Statement on Form S-4 filed with the SEC on November 18, 2021).
|
2. |
Miscellaneous Provisions.
|
BTRS HOLDINGS INC.
|
|||
By:
|
|||
Name: Mark Shifke
|
|||
Title: Chief Financial Officer
|
|||
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as Warrant Agent
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Item 20.
|
Indemnification of Directors and Officers.
|
Item 21.
|
Exhibits and Financial Statement Schedules.
|
Exhibit
No.
|
Description
|
|
Business Combination Agreement, dated as of October 18, 2020, by and among South Mountain Merger Corp., BT Merger Sub I, Inc., BT Merger Sub II, LLC and Factor Systems, Inc. (d/b/a Billtrust) (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Amendment to Business Combination Agreement, dated as of December 13, 2020, by and among South Mountain Merger Corp., BT Merger Sub I, Inc., BT Merger Sub II, LLC and Factor Systems, Inc. (d/b/a Billtrust) (incorporated by reference to
Exhibit 2.2 to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Second Amended and Restated Certificate of Incorporation of the Company, dated January 12, 2021 (incorporated by reference to Exhibit 3.1 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by the Company on October 22, 2020).
|
||
Form of Common Stock Certificate of the Company (incorporated by reference to Exhibit 4.1 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Form of Warrant Certificate of the Company (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
Warrant Agreement, dated June 19, 2019, by and between South Mountain Merger Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.4 filed to the Current Report on Form 8-K
filed by the Company on June 25, 2019).
|
||
Amended and Restated Registration Rights Agreement, dated October 18, 2020, by and among the Company and certain stockholders of the Company (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed by the
Company on January 14, 2021).
|
||
Opinion of Cooley LLP
|
||
Tax Opinion of Cooley LLP
|
||
BTRS Holdings Inc. 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
BTRS Holdings Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.4 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Lease Agreement, dated August 28, 2017, by and between Factor Systems, Inc. (d/b/a Billtrust) and Lenox Drive Office Park LLC (incorporated by reference to Exhibit 10.5 filed to the Current Report on Form 8-K filed by the Company on
January 14, 2021).
|
||
First Amendment to Lease Agreement, dated August 28, 2017, by and between Factor Systems, Inc. (d/b/a Billtrust) and Lenox Drive Office Park LLC (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed by the
Company on January 14, 2021).
|
||
Employment Agreement between Factor Systems, Inc. (d/b/a Billtrust) and Flint A. Lane dated August 1, 2014, as amended by First Amendment to Employment Agreement dated May 18, 2017 and Second Amendment to Employment Agreement dated
October 14, 2020 (incorporated by reference to Exhibit 10.7 filed on BTRS Holdings Inc.’s Current Report on Form 8-K, filed by the Registrant on January 14, 2021).
|
||
Employment Agreement between Factor Systems, Inc. (d/b/a Billtrust) and Steven Pinado dated March 28, 2018, as amended by First Amendment to Employment Agreement dated October 14, 2020 (incorporated by reference to Exhibit 10.8 filed
to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Employment Agreement between Factor Systems, Inc. (d/b/a Billtrust) and Mark Shifke dated March 10, 2020 (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Employment Agreement between Factor Systems, Inc. (d/b/a Billtrust) and Joe Eng dated February 24, 2020 (incorporated by reference to Exhibit 10.10 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Form of Indemnification Agreement by and between the Company and its directors and officers (incorporated by reference to Exhibit 10.2 filed to the Current Report on Form 8-K filed by the Company on January 14, 2021).
|
||
Form of Subscription Agreement, dated as of October 18, 2020, by and between the Company and the investors party thereto (incorporated by reference to Exhibit 10.1 filed to the Current Report on Form 8-K filed by the Company on January
14, 2021).
|
||
Form of Dealer Manager Agreement
|
||
Form of Tender and Support Agreement, dated November 17, 2021, by and between the Company and Supporting Stockholders.
|
||
Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registration Statement on Form S-1 (File No. 333-257488) filed by the Company on June 28, 2021).
|
||
Consent of Independent Registered Public Accounting Firm – BDO USA, LLP, independent registered public accounting firm of the Company (f/k/a Factor Systems, Inc. (dba Billtrust)).
|
||
Consent of Cooley LLP (included in Exhibit 5.1)
|
||
Consent of Cooley LLP (included in Exhibit 8.1)
|
||
Power of Attorney (included on signature page)
|
||
Form of Letter of Transmittal and Consent
|
||
Form of Notice of Guaranteed Delivery
|
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
|
||
Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
|
+ |
The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
|
# |
Indicates management contract or compensatory plan or arrangement.
|
* |
Filed herewith.
|
Item 22.
|
Undertakings.
|
(a)
|
The undersigned registrant hereby undertakes:
|
(1) |
To file, during any period during which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i) |
to include any Prospectus/Offer to Exchange required by section 10(a)(3) of the Securities Act of 1933;
|
(ii) |
to reflect in the Prospectus/Offer to Exchange any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus/Offer to Exchange filed with the SEC pursuant to Rule 424(b) under the Securities Act
if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
(iii) |
to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2) |
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
|
(3) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
(4) |
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
(5) |
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
(b) |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
|
(c) |
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
|
(d) |
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
|
BTRS HOLDINGS INC.
|
||
By:
|
/s/ Flint A. Lane
|
|
Name:
|
Flint A. Lane
|
|
Title:
|
Chief Executive Officer and Chairman of the Board of Directors
|
Signature
|
Title
|
Date
|
||
/s/ Flint A. Lane
|
Chief Executive Officer and Chairman of the Board of Directors
|
November 18, 2021
|
||
Flint A. Lane
|
(Principal Executive Officer)
|
|||
/s/ Mark Shifke
|
Chief Financial Officer
|
November 18, 2021
|
||
Mark Shifke
|
(Principal Financial Officer)
|
|||
/s/ Andrew Herning
|
Chief Accounting Officer
|
November 18, 2021
|
||
Andrew Herning
|
(Principal Accounting Officer)
|
|||
/s/ Charles Bernicker
|
Director
|
November 18, 2021
|
||
Charles Bernicker
|
||||
/s/ Clare Hart
|
Director
|
November 18, 2021
|
||
Clare Hart
|
||||
/s/ Robert Farrell
|
Director
|
November 18, 2021
|
||
Robert Farrell
|
||||
/s/ Lawrence Irving
|
Director
|
November 18, 2021
|
||
Lawrence Irving
|
||||
/s/ Matt Harris
|
Director
|
November 18, 2021
|
||
Matt Harris
|
||||
/s/ Juli Spottiswood
|
Director
|
November 18, 2021
|
||
Juli Spottiswood
|