UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, ~~2021~~2022


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

For the transition period from to

GTY TECHNOLOGY HOLDINGS INC.

(Exact name of registrant as specified in its charter)


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

~~1180 North Town Center Drive~~800 Boylston Street, 16^th FloorBoston, ~~Suite 100~~, ~~Las Vegas~~, ~~Nevada~~MA ~~89144~~02199

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (~~702~~877) ~~945-2898~~465-3200

Not Applicable

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

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

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

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

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

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

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

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

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

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

As of May 13, ~~2021, 57,495,291~~2022, 59,409,278 shares of common stock, par value $0.0001 per share, were outstanding.

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

Form 10-Q

For the Quarter Ended March 31, ~~2021~~2022

Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	~~Unaudited~~ Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	4

	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	67

	Notes to Unaudited Condensed Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3435

Item 4.	Controls and Procedures	3435

PART II. OTHER INFORMATION		35

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	3536

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3536

Item 6.	Exhibits	36

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS ~~(UNAUDITED)~~

(Amounts in thousands)


					March 31,		December 31,
	March 31,		December 31,		2022		2021
	2021		2020		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	17,936	$	22,800	$	11,274	$	13,329
Accounts receivable, net		10,752		9,994		13,510		12,604
Prepaid expenses and other current assets		3,855		2,583		5,766		4,191
Total current assets		32,543		35,377		30,550		30,124

Property and equipment, net		3,651		3,891		3,120		3,208
Finance lease right of use assets		1,330		1,355		643		722
Operating lease right of use assets		2,539		2,610		3,281		1,876
Intangible assets, net		97,508		101,107		82,935		86,528
Goodwill		284,635		284,635		268,808		268,808
Other assets		3,736		3,472		3,860		3,678
Total assets	$	425,942	$	432,447	$	393,197	$	394,944

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	5,556	$	6,366	$	7,430	$	5,483
Deferred revenue - current portion		23,345		22,304		28,688		26,816
Finance lease liability - current portion		580		581		41		140
Operating lease liability - current portion		1,133		1,316		827		581
Contingent consideration - current portion		729		743		547		13
Total current liabilities		31,343		31,310		37,533		33,033

Deferred revenue - less current portion		2,236		1,602		1,687		1,979
Warrant liability		7,078		3,040		1,912		4,868
Deferred tax liability		17,144		17,494		17,137		17,738
Contingent consideration - less current portion		43,630		42,530		40,807		43,032
Term loans, net		26,694		26,632		24,940		24,641
Finance lease liability - less current portion		5		147
Operating lease liability - less current portion		2,916		2,927		3,859		2,716
Total liabilities		131,046		125,682		127,875		128,007

Commitments and contingencies

Shareholders’ equity:
Common stock		6		6		6		6
Exchangeable shares		50,637		54,224		47,447		50,358
Additional paid in capital		393,082		380,881		407,851		401,507
Accumulated other comprehensive income		261		6
Accumulated other comprehensive loss						(437)		(44)
Treasury stock		(8,343)		(5,633)		(8,343)		(8,343)
Accumulated deficit		(140,747)		(122,719)		(181,202)		(176,547)
Total shareholders' equity		294,896		306,765		265,322		266,937
Total liabilities and shareholders’ equity	$	425,942	$	432,447	$	393,197	$	394,944

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

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GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

(Amounts in thousands, except per share amounts)



	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		March 31,		March 31,		March 31,
	2021		2020		2022		2021
Revenues	$	13,259	$	11,276	$	15,900	$	13,259
Cost of revenues		4,742		4,527		6,037		4,742
Gross Profit		8,517		6,749		9,863		8,517

Operating expenses
Sales and marketing		3,762		4,854		5,245		3,762
General and administrative		5,193		7,449		6,295		5,193
Research and development		2,985		3,798		4,033		2,985
Amortization of intangible assets		3,599		3,673		3,593		3,599
Restructuring charges		—		3,466
Change in fair value of contingent consideration		1,114		29		(1,677)		1,114
Total operating expenses		16,653		23,269		17,489		16,653
Loss from operations		(8,136)		(16,520)		(7,626)		(8,136)

Other income (expense)
Interest expense, net		(859)		(236)		(687)		(859)
Loss from repurchase/issuance of shares		(5,333)		(2,056)		—		(5,333)
Change in fair value of warrant liability		(4,038)		(1,563)		2,956		(4,038)
Other income, net		168		499
Gain on extinguishment of debt						—		239
Other income (loss), net						(41)		(71)
Total other income (expense), net		(10,062)		(3,356)		2,228		(10,062)

Loss before income taxes		(18,198)		(19,876)		(5,398)		(18,198)	��
Benefit from income taxes		170		2,521		743		170
Net loss		(18,028)		(17,355)		(4,655)		(18,028)

Net loss per share, basic and diluted	$	(0.32)	$	(0.33)	$	(0.08)	$	(0.32)
Weighted average common shares outstanding, basic and diluted		55,828		52,575		58,033		55,828

Net loss	$	(18,028)	$	(17,355)	$	(4,655)	$	(18,028)
Other comprehensive gain:
Foreign currency translation gain		255		2,049
Total other comprehensive gain		255		2,049
Other comprehensive gain (loss):
Foreign currency translation gain (loss)						(393)		255
Total other comprehensive gain (loss)						(393)		255
Comprehensive loss	$	(17,773)	$	(15,306)	$	(5,048)	$	(17,773)

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

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands, except share amounts)

Three Months Ended March 31, 2022


													Accumulated
							Additional						Other		Total
	Common Stock			Exchangeable Shares			Paid in		Treasury		Accumulated		Comprehensive		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Stock		Deficit		Loss		Equity
Balance - December 31, 2021	57,604,854	$	6	5,586,251	$	50,358	$	401,507	$	(8,343)	$	(176,547)	$	(44)	$	266,937
Net loss	—		—	—		—		—		—		(4,655)		—		(4,655)
Foreign currency translation loss	—		—	—		—		—		—		—		(393)		(393)
Share-based compensation	—		—	—		—		3,432		—		—		—		3,432
Vested and issued restricted stock units	1,399,254		—	—		—		—		—		—		—		—
Stock option exercises	1,155		—	—		—		1		—		—		—		1
Common stock issued for exchangeable shares	291,167		—	(291,167)		(2,911)		2,911		—		—		—		—
Balance - March 31, 2022	59,296,430	$	6	5,295,084	$	47,447	$	407,851	$	(8,343)	$	(181,202)	$	(437)	$	265,322

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

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands, except share amounts)

Three Months Ended March 31, 2021


													Accumulated																Accumulated
							Additional						Other		Total								Additional						Other		Total
	Common Stock			Exchangeable Shares			Paid in		Treasury		Accumulated		Comprehensive		Shareholders’		Common Stock			Exchangeable Shares			Paid in		Treasury		Accumulated		Comprehensive		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Stock		Deficit		Income		Equity		Shares	Amount		Shares	Amount		Capital		Stock		Deficit		Income		Equity
Balance - December 31, 2020	55,570,282	$	6	5,972,779	$	54,224	$	390,232	$	(5,633)	$	(129,030)	$	6	$	309,805	55,570,282	$	6	5,972,779	$	54,224	$	390,232	$	(5,633)	$	(129,030)	$	6	$	309,805
Adjustment for correction of an error - warrant liability	—		—	—		—		(9,351)		—		6,311		—		(3,040)	—		—	—		—		(9,351)		—		6,311		—		(3,040)
Balance - December 31, 2020, as adjusted	55,570,282		6	5,972,779		54,224		380,881		(5,633)		(122,719)		6		306,765	55,570,282		6	5,972,779		54,224		380,881		(5,633)		(122,719)		6		306,765
Net loss	—		—	—		—		—		—		(18,028)		—		(18,028)	—		—	—		—		—		—		(18,028)		—		(18,028)
Foreign currency translation gain	—		—	—		—		—		—		—		255		255	—		—	—		—		—		—		—		255		255
Share-based compensation	—		—	—		—		1,823		—		—		—		1,823	—		—	—		—		1,823		—		—		—		1,823
Issuance of common stock	935,633		—	—		—		6,790		—		—		—		6,790	935,633		—	—		—		6,790		—		—		—		6,790
Common stock repurchases	(525,060)		—	—		—		—		(2,710)		—		—		(2,710)	(525,060)		—	—		—		—		(2,710)		—		—		(2,710)
Common stock issued for exchangeable shares	358,658		—	(358,658)		(3,587)		3,587		—		—		—		—
Vested and issued restricted stock units	1,095,689		—	—		—		—		—		—		—		—	1,095,689		—	—		—		—		—		—		—		—
Stock option exercises	792		—	—		—		1		—		—		—		1	792		—	—		—		1		—		—		—		1
Common stock issued for exchangeable shares																	358,658		—	(358,658)		(3,587)		3,587		—		—		—		—
Balance - March 31, 2021	57,435,994	$	6	5,614,121	$	50,637	$	393,082	$	(8,343)	$	(140,747)	$	261	$	294,896	57,435,994	$	6	5,614,121	$	50,637	$	393,082	$	(8,343)	$	(140,747)	$	261	$	294,896

~~Three Months Ended March 31, 2020~~

Accumulated

Additional

Other

Total

Common Stock

Exchangeable Shares

Paid in

Treasury

Accumulated

Comprehensive

Shareholders’


Shares

Amount

Shares

Amount

Capital

Stock

Deficit

Income

Equity
Balance - December 31, 2019

52,303,862

$
5

5,568,096

$
45,681

$
340,625

$
(5,174)

(71,460)

$
370

$
310,047
Adjustment for correction of an error - warrant liability

—

—

—

—

(9,351)

—

4,180

—

(5,171)
Balance - December 31, 2019, as adjusted

52,303,862

5

5,568,096

45,681

331,274

(5,174)

(67,280)

370

304,876
Net loss

—

—

—

—

—

—

(17,355)

—

(17,355)
Foreign currency translation gain

—

—

—

—

—

—

—

2,049

2,049
Share-based compensation

—

—

—

—

3,295

—

—

—

3,295
Share redemption (incremental shares issued)

334,254

—

—

—

2,056

—

—

—

2,056
Shares issued for contingent consideration

—

—

550,388

10,000

—

—

—

—

10,000
Vested and issued restricted stock units

31,250

—

—

—

—

—

—

—

—
Stock option exercises

3,699

—

—

—

4

—

—

—

4
Exchangeable shares converted to common stock

246,097

—

(246,097)

(2,461)

2,461

—

—

—

—
Balance - March 31, 2020

52,919,162

$
5

5,872,387

$
53,220

$
339,090

$
(5,174)

$
(84,635)

$
2,419

$
304,925

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

Table of Contents

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)


	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		March 31,		March 31,		March 31,
	2021		2020		2022		2021
Cash flows from operating activities:
Net loss	$	(18,028)	$	(17,355)	$	(4,655)	$	(18,028)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment		253		54		257		253
Amortization of intangible assets		3,599		3,673		3,593		3,599
Amortization of right of use assets		279		431		269		279
Share-based compensation		1,823		3,295		3,432		1,823
Deferred income tax benefit		(170)		(2,521)		(601)		(170)
Loss on issuance/repurchase of shares		5,333		2,056		—		5,333
Change in fair value of warrant liability		4,038		1,563		(2,956)		4,038
Change in fair value of contingent consideration						(1,677)		1,114
Amortization of deferred debt issuance costs		172		66		166		172
Accrual of paid in kind interest		130		—		132		130
Gain on extinguishment of debt		(239)		—		—		(239)
Bad debt expense		5		69		—		5
Loss on disposal of fixed assets		24		—		—		24
Change in fair value of contingent consideration		1,114		29
Changes in operating assets and liabilities:
Accounts receivable		(789)		522		(866)		(789)
Prepaid expenses and other assets		(1,536)		(1,122)		(1,749)		(1,536)
Accounts payable and accrued liabilities		(813)		(546)		1,799		(813)
Deferred revenue and other liabilities		1,747		(42)		1,394		1,747
Operating lease liabilities		(348)		(441)		(229)		(348)
Net cash used in operating activities		(3,406)		(10,269)		(1,691)		(3,406)

Cash flows from investing activities:
Capital expenditures		(31)		(1,111)		(170)		(31)
Proceeds from disposal of fixed assets						—		6
Net cash used in investing activities		(31)		(1,111)		(170)		(25)

Cash flows from financing activities:
Proceeds from borrowings, net of issuance costs		—		11,476
Contingent consideration payments		(28)		(27)		(14)		(28)
Stock options exercises		1		4		1		1
Common stock repurchases		(8,043)		—		—		(8,043)
Proceeds from issuance of common stock, net of costs		6,790		—		—		6,790
Proceeds from disposal of fixed assets		6		—
Repayments of finance lease liabilities		(144)		(136)		(99)		(144)
Net cash provided by (used in) financing activities		(1,418)		11,317
Net cash used in financing activities						(112)		(1,424)

Effect of foreign currency on cash		(9)		(195)
Effect of foreign currency on cash and cash equivalents						(82)		(9)

Net change in cash and cash equivalents		(4,864)		(258)		(2,055)		(4,864)
Cash and cash equivalents, beginning of period		22,800		8,374		13,329		22,800
Cash and cash equivalents, end of period	$	17,936	$	8,116	$	11,274	$	17,936

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

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GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SUPPLEMENTAL CASH FLOWS DISCLOSURE

(Amounts in thousands)


	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		March 31,		March 31,		March 31,
	2021		2020		2022		2021
Supplemental disclosure of cash flow information:
Cash paid for interest	$	510	$	—	$	518	$	510
Cash paid for income taxes	$	—	$	—

Noncash Investing and Financing Activities:
Exchangeable shares issued for contingent consideration	$	—	$	10,000
Share redemption (incremental shares issued)	$	—	$	2,056
Purchases of property and equipment included in accounts payable	$	—	$	382
Exchangeable shares converted to common stock	$	3,587	$	2,461	$	2,911	$	3,587

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

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Note 1. Organization and Business Operations

GTY Technology Holdings Inc. and its subsidiaries (“GTY” or the “Company”) offers a cloud-based suite of solutions primarily for North American state and local governments. GTY’s cloud-based suite of solutions for state and local governments addresses functions in procurement, payments, grant management, budgeting and permitting.

The Company is headquartered in ~~Las Vegas, Nevada~~Boston, Massachusetts and has other offices in the United States and Canada. The following is a brief description of the Company’s primary subsidiaries and their businesses.

Bonfire, a Procurement Business

Bonfire Interactive Ltd. (“Bonfire” or “Procurement”) was incorporated on March 5, 2012 under the laws of the Province of ~~Ontario and its wholly owned subsidiary, Bonfire Interactive US Ltd., was incorporated in the United States on January 8, 2018 (collectively, “Bonfire” or “Procurement”).~~Ontario. Bonfire is a provider of strategic sourcing and procurement software, serving customers in government, the broader public sector, and various highly regulated commercial vertical markets. Bonfire offers customers and their sourcing professionals a modern software-as-a-service (“SaaS”) application that helps find, engage, evaluate, negotiate and award vendor and supplier contracts. Bonfire delivers workflow automation, data collection and analysis, and collaboration to drive cost savings, compliance, and strategic outcomes. All of Bonfire’s applications are delivered as a SaaS offering, and Bonfire offers implementation and premium support services.

CityBase, a Payments Business

CityBase, Inc. (“CityBase” or “Payments”), a Delaware corporation headquartered in Chicago, provides dynamic content, digital services, and integrated payments via a SaaS platform that includes technological functionality accessible via web and mobile, kiosk, point-of-sale, and other channels. CityBase software integrates its platform to underlying systems of record, billing, and other source systems, and configures payments and digital services to meet the requirements of its customers, which include government agencies and utility companies.

eCivis, a Grants Management Business

eCivis, Inc. (“eCivis” or “Grants Management”), a Delaware corporation headquartered in Los Angeles, California, is a leading SaaS provider of grants management and indirect cost reimbursement solutions that enable its customers to standardize and streamline complex grant processes in a fully integrated platform. The eCivis platform consists of four core cloud-based products, including grants research, grants management, sub-recipient management, and cost allocation and recovery. To assist its customers in the implementation of its cloud-based products, eCivis offers one-time implementation services, including data integration, grants migration and change management. Additionally, eCivis provides ongoing grants management training, cost allocation plan consulting and cost recovery services.

Open Counter, a Permitting Business

Open Counter Enterprises Inc. (“Open Counter” or “Permitting”), a Delaware corporation headquartered in Boston, Massachusetts, is a developer and provider of software tools for cities to streamline permitting and licensing services for municipal governments. Open Counter provides customers with software through a hosted platform and provides professional services related to software implementation.

Questica, a Budget Business

Questica Software Inc., (“Questica” and, collectively with Sherpa, “Budget”) is a British Columbia corporation organized in 1998 and headquartered in Burlington, Ontario, Canada. Questica ~~USCDN Inc.~~designs and ~~its wholly-owned subsidiary Questica Ltd. (collectively, “Questica”) design and develop~~develops budgeting software that

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

supports the unique requirements of the public sector. The Questica suite of products are part of a comprehensive web-based budgeting preparation, performance, management, ~~and~~ data visualization and visual publication solution that enables public sector and non-profit organizations to improve and shorten their budgeting cycles.

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Questica Software Inc. was organized in 1998 as an Ontario corporation, maintains two offices located in Burlington, Ontario, Canada and serves the healthcare, K-12, higher education and local government verticals primarily in North America. Questica USCDN was organized in 2017 as an Ontario corporation and Questica Ltd. was incorporated in 2017 in the United States as a Delaware corporation. Questica Ltd. is located in Huntington Beach, California, primarily serving the non-profit market and services a limited number of customers in the public and private sector. The majority of Questica Ltd.’s customers are located in the United States and Canada, with some customers located in the United Kingdom and Africa, among other countries.

Sherpa, a Budget Business

Sherpa Government Solutions LLC (“Sherpa” and, collectively with Questica, “Budget”) is a Colorado limited liability company headquartered in Denver, Colorado, established in 2004. Sherpa is a leading provider of public sector budgeting software and consulting services that help state and local governments create and manage budgets and performance. Customers purchase Sherpa’s software and then engage its consulting services to configure the software and receive training on how to manage the software going forward. Following implementation, customers continue to use the software in exchange for maintenance or subscription fees.

Note 2. ~~Restatement~~Going Concern and Liquidity

The Company’s condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of ~~Previously Issued Financial Statements~~operations, realization of assets, and liquidation of liabilities in the normal course of business.

On ~~April~~

As reflected in the condensed consolidated financial statements, the Company had an accumulated deficit of approximately $181.2 million at March 31, 2022, a net loss of approximately $4.7 million, approximately $1.7 million net cash used in operating activities for the three months ended March 31, 2022, and $30.0 million of term loans due within 12 ~~2021, the Acting Director~~months of the ~~Division~~date of ~~Corporation Finance and Acting Chief Accountant of~~these condensed consolidated financial statements. These factors raise substantial doubt about the Securities and Exchange Commission together issued a “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”), concluding that SPAC warrants may require classificationCompany’s ability to continue as a ~~liability rather than equity.~~ going concern.

The ~~SEC Statement discussed “certain features~~Company is attempting to further expand its customer base; scale up its production of ~~warrants issued in SPAC transactions” that “may be common across all entities”. It focused in part on provisions in warrant agreements for potential changes~~various products; increase revenue; and replace the term loans with financing with terms similar to the ~~settlement amounts dependent upon~~current agreement in place; however, the ~~characteristics~~Company’s cash position may not be sufficient to support its daily operations through the next twelve months from the date of filing this 10-Q. While the ~~warrant holder,~~Company believes in the viability of its platform and ~~specifically whether the warrant holder is an input into the pricing~~in its ability to raise additional funds by way of a ~~fixed-for-fixed option on equity shares. According~~public or private offering, there can be no assurances to that effect.

The condensed consolidated financial statements do not include any adjustments related to the ~~SEC Staff Statement, if~~recoverability and classification of recorded asset amounts or the ~~warrant holder is not an input into such pricing, these provisions would preclude~~amounts and classification of liabilities that might be necessary should the ~~warrant from being classified in equity and thus require classification~~Company be unable to continue as a liability. As a result of the SEC Statement, the Company reevaluated the accounting treatment of the public warrants and private warrants issued in connection with its initial public offering and previously recorded as equity on the Company’s consolidated balance sheet. The Company’s public warrants were correctly classified as equity. Because the Company’s private warrants do not contain a provision whereby the Company can call the warrants, however, the private warrants should have been recorded at fair value as a liability in the Company’s consolidated balance sheet. The Company assessed this error and determined it was not material to previously issued financial statements. Accordingly, the Company will revise, rather than restate, its previously issued 2020 quarterly and annual financial statements in the Company’s filings for 2021 on Forms 10-Q and 10-K filings. Additionally, the historical quarterly and annual financial statements prior to the business combination were not restated due to the change in accounting as we believe the information is no longer relevant to investors.

~~The following tables present the effect of the revision for the financial statement line items adjusted in the affected periods:~~

~~Condensed Consolidated Statements of Operations and Comprehensive Loss~~going concern.

Quarter Ended March 31, 2020

As Previously Reported

Adjustments

As Revised
Change in fair value of warrant liability

$
—

$
1,563

$
1,563
Net loss

$
15,792

$
1,563

$
17,355
Comprehensive loss

$
13,743

$
1,563

$
15,306
Net loss per share, basic and diluted

$
(0.30)

$
(0.03)

$
(0.33)

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Condensed Consolidated Statements of Cash Flows

Quarter Ended March 31, 2020

As Previously Reported

Adjustments

As Revised
Net loss

$
15,792

$
1,563

$
17,355
Change in fair value of warrant liability

$
—

$
1,563

$
1,563

Condensed Consolidated Balance Sheet

As of December 31, 2020

As Previously Reported

Adjustments

As Revised
Warrant liability

$
—

$
3,040

$
3,040
Additional paid in capital

$
390,232

$
(9,351)

$
380,881
Accumulated deficit

$
(129,030)

$
6,311

$
(122,719)

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (“SEC”) on February ~~19, 2021.~~ 18, 2022.

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2022.

Certain reclassifications have been made to conform to current period presentation. These reclassifications include the presentation of the gain on extinguishment of debt and the proceeds from the disposal of fixed assets. There was no impact to net loss or net change in cash and cash equivalents, respectively.

Principles of Consolidation

The ~~three months ended March 31, 2021 and 2020~~ condensed consolidated financial statements include all accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheets and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include revenue recognition, the carrying value of goodwill, the fair value of acquired intangibles, the capitalization of software development costs, the useful lives of intangible assets, share-based compensation, right of use assets, warrant liability, financing and operating lease liabilities, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses.

~~Covid-19~~COVID-19 Update

~~In December 2019,~~The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause customer slowdowns or shutdowns, depress demand, and adversely impact results of operations. During the ~~emergence of a novel coronavirus, or COVID-19, was reported~~quarter ended March 31, 2022, the Company faced significant uncertainties and ~~in March 2020, the World Health Organization, or WHO, characterized COVID-19 as a pandemic.~~ ~~The broader implications of the global emergence of COVID-19~~continues to expect uncertainties around its key accounting estimates to continue to evolve depending on ~~the Company’s business, operating results, and overall financial performance remain uncertain and they~~ ~~depend on certain developments, including~~ the duration and ~~spread~~degree of impact associated with the ~~outbreak, impact on the Company’s~~

COVID-19 pandemic~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

~~(Amounts in tables in thousands, except share~~. Estimates may change as new events occur and ~~per share amounts)~~

~~customers~~additional information emerges, and ~~its sales cycles, impact on its partners~~such changes are recognized or ~~employees, and impact on the economic environment and financial markets, all of which are uncertain and cannot be predicted.~~ Since March 2020, the Company has seen certain new and existing customers halt or decrease investment in infrastructure, and the Company expects that certain of its current and potential customers will take actions to reduce operating expenses and moderate cash flows, including by delaying sales and requesting extended billing and payment terms. The Company will continue to actively monitor the situation and may take further actions that alter its business operations, as may be required by federal, state, or local authorities, or that the Company determines aredisclosed in the ~~best interests of its employees, customers, partners, suppliers, and stockholders.~~consolidated financial statements.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 as filed with the SEC on February ~~19, 2021 aside from those described in Note 2.~~18, 2022.

Fair Value

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value.

●

Level 1 — uses quoted prices in active markets for identical assets or liabilities.

●

Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

The Company’s only material financial instruments carried at fair value as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, with changes in fair value flowing through current earnings, consist of contingent consideration liabilities recorded in conjunction with business combinations and the fair value of its warrant liabilities are as follows:

Fair Value Measurement at

Reporting Date Using




Quoted Prices in

Significant


Active Markets

Other

Significant

Balance as of

for Identical

Observable

Unobservable

March 31,

Assets

Inputs

Inputs

2021

(Level 1)

(Level 2)

(Level 3)
Contingent consideration – current

$
729

$
—

$
—

$
729
Contingent consideration – long term

43,630

—

—

43,630
Warrant liability

7,078

—

—

7,078
Total liabilities measured at fair value

$
51,437

$
—

$
—

$
51,437

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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


			Fair Value Measurement at								Fair Value Measurement at
			Reporting Date Using								Reporting Date Using
			Quoted Prices in		Significant						Quoted Prices in		Significant
			Active Markets		Other		Significant				Active Markets		Other		Significant
	Balance as of		for Identical		Observable		Unobservable		Balance as of		for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs		March 31,		Assets		Inputs		Inputs
	2020		(Level 1)		(Level 2)		(Level 3)		2022		(Level 1)		(Level 2)		(Level 3)
Contingent consideration – current	$	743	$	—	$	—	$	743	$	547	$	—	$	—	$	547
Contingent consideration – long term		42,530		—		—		42,530		40,807		—		—		40,807
Warrant liability		3,040		—		—		3,040		1,912		—		—		1,912
Total liabilities measured at fair value	$	46,313	$	—	$	—	$	46,313	$	43,266	$	—	$	—	$	43,266


											Fair Value Measurement at
											Reporting Date Using
											Quoted Prices in		Significant
											Active Markets		Other		Significant
									Balance as of		for Identical		Observable		Unobservable
									December 31,		Assets		Inputs		Inputs
									2021		(Level 1)		(Level 2)		(Level 3)
Contingent consideration – current									$	13	$	—	$	—	$	13
Contingent consideration – long term										43,032		—		—		43,032
Warrant liability										4,868		—		—		4,868
Total liabilities measured at fair value									$	47,913	$	—	$	—	$	47,913

There were no transfers made among the three levels in the fair value hierarchy during the three months ended March 31, ~~2021.~~2022.

The following tables present additional information about Level 3 liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for liabilities within the Level 3 category may include changes in

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

Changes in contingent consideration liabilities measured at fair value from December 31, ~~2020~~2021 to March 31, ~~2021~~2022 were as follows:


Contingent consideration – December 31, 2020	$	43,273
Contingent consideration – December 31, 2021			$	43,045
Change in fair value of contingent consideration		1,114		(1,677)
Payments of contingent consideration		(28)		(14)
Contingent consideration – March 31, 2021	$	44,359
Contingent consideration – March 31, 2022			$	41,354

On February 19, 2019, the Company consummated several acquisitions (collectively, the “Acquisition”), pursuant to which it acquired each of Bonfire, CityBase, eCivis , Open Counter, Questica and Sherpa (together with Bonfire, CityBase, eCivis, Open Counter and Questica, the “Acquired Companies”).

The fair value of the Company’s contingent consideration liabilities recorded as part of the Acquisition has been classified within Level 3 in the fair value hierarchy. The contingent consideration represents the estimated fair value of future payments due to the sellers based on each company’s achievement of annual earnings targets in certain years and other events considered in certain transaction documents. The ~~initial~~ fair values of the contingent consideration were calculated through the use of either Monte Carlo simulation or modified Black-Scholes analyses based on earnings projections for the respective earn-out periods, corresponding earnings thresholds, and approximate timing of payments as outlined in the purchase agreements for each of the Acquired Companies. The analyses utilized the following assumptions: (i) expected term; (ii) risk-adjusted net sales or earnings; (iii) risk-free interest rate; and (iv) expected volatility of earnings. Estimated payments, as determined through the respective models, were further discounted by a credit spread assumption to account for credit risk. The contingent consideration is revalued to fair value each period, and any increase or decrease is recorded in operating income (loss). The fair value of the contingent consideration may be impacted by certain unobservable inputs, most significantly with regard to discount rates, expected volatility and historical and projected performance. Significant changes to these inputs in isolation could result in a significantly different fair value measurement.

~~Changes~~As of March 31, 2022, the contingent consideration liability consists of consideration due to former shareholders of CityBase and shareholders associated with an asset purchase by eCivis prior to the Acquisition.

Shareholders associated with CityBase may receive, upon CityBase’s trailing twelve-month net revenue exceeding $37.0 million, or the CityBase threshold, on or prior to December 31, 2048, an earnout payment equal to a number of shares (or, in the ~~warrant liability measured at~~case of certain individuals associated with CityBase who are not accredited investors, the cash value thereof) of our common stock calculated by dividing $54.5 million by the greater of (x) $10.00 or (y) the volume-weighted average closing price for the shares of our common stock for the 30 trading days immediately preceding the payment date. The fair value ~~from December 31, 2020 to~~of contingent consideration as of March 31, ~~2021 were~~2022 is $40.8 million. The valuation of contingent consideration as ~~follows:~~of March 31, 2022 was derived from a Monte Carlo simulation of payout patterns from revenue estimates provided by the Company.

Pursuant to the terms of a 2018 asset purchase agreement by eCivis, shareholders associated with the purchase may receive cash consideration equal to 7.5% of new revenue between $500,000 and 999,999.99, 10% of new revenue above $1,000,000, 2% of renewal revenue up to 249,999.99 3% of renewal revenue between $250,000.00 to $749,999.99 and 5% above $750,000.00 in each earn-out year beginning in 2018 and ending in 2022. Only revenue derived from the acquired assets is eligible. The potential undiscounted amount of all future payments that the Company could be required to make

1213

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Warrant liability – December 31, 2020

$
3,040
Change in fair value of warrant liability

4,038
Warrant liability – March 31, 2021

$
7,078

is unlimited. The total fair value of the associated contingent liability as of March 31, 2022 is approximately $0.5 million. The valuation of contingent consideration as of March 31, 2022 was derived from a discounted cash flow model based on expected payment amounts estimated by the Company.

Changes in the warrant liability measured at fair value from December 31, 2021 to March 31, 2022 were as follows:


Warrant liability – December 31, 2021	$	4,868
Change in fair value of warrant liability		(2,956)
Warrant liability – March 31, 2022	$	1,912

The warrant liability was estimated using a Black-Scholes model derived from a Monte Carlo simulation of the Company’s outstanding public warrants. These inputs were primarily derived from the implied volatility of the traded public warrant price. The warrant liability is revalued to fair value each period, and any increase or decrease is recorded in other income (expense).

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and term loans approximates fair value because of the short-term nature of these instruments.

The Company measures certain assets at fair value on a non-recurring basis, generally annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include goodwill and other intangible assets.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Disaggregation of Revenues


	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		March 31,		March 31,		March 31,
	2021		2020		2022		2021
Subscriptions, support and maintenance	$	10,165	$	7,724	$	12,545	$	10,165
Professional services		2,941		3,169		3,012		2,941
License		63		383		39		63
Asset sales		90		—		304		90
Total revenues	$	13,259	$	11,276	$	15,900	$	13,259

Revenues

Subscription, support and maintenance. The Company ~~provides SaaS~~delivers its solutions primarily as a subscription service that ~~provide~~provides customers with access to SaaS related support and updates during the term of the arrangement. Revenues are recognized ratably over the contract term as the customer simultaneously receives and consumes the benefits of the subscription, ~~service,~~ as the service is made available by the Company. The first year of subscription fees are typically payable within 30 days after the execution of a contract, and thereafter upon renewal. The Company initially records subscription fees as contract liabilities and recognizes revenues on a straight-line basis over the term of the agreement.

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

The Company’s contracts may include variable consideration in the form of usage fees, which are constrained and recognized once the uncertainties associated with the constraint are resolved, which is when usage occurs and the fee is known.

Subscription, support and maintenance revenues also includes ~~on-premise~~kiosk rentals and support or maintenance pertaining to license sales. Revenues from ~~on-premise~~kiosk rentals and support are recognized on a straight-line basis over the support period.

Revenues from subscription, support and maintenance comprised approximately ~~77%~~79% and ~~68%~~77% of total revenues for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Professional services. The Company’s professional services contracts generate revenues on a time and materials or fixed fee basis. Revenues are recognized as the services are rendered for time and materials contracts. Revenues are recognized when the milestones are achieved and accepted by the customer or on a proportional performance basis for fixed fee contracts. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately ~~22%~~19% and ~~28%~~22% of total revenues for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

License. Revenues from distinct licensed software are recognized upfront when the software is made available to the customer, which normally coincides with contract execution, as this is when the customer has the risks and rewards of the right to use the software. Revenues from licenses comprised ~~approximately~~ less than 1% ~~and 3%~~ of total revenues for the three months ended March 31, ~~2021~~2022 and ~~2020, respectively.~~2021.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the customer and is fully operational and ready to accept transactions, which is when the customer obtains control and has the risks and rewards of the asset. Asset sales ~~were~~comprised approximately 1%2% and ~~less than~~ 1% of total revenues for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

~~Restructuring Charges~~

On March 30, 2020, the Company implemented a global restructuring plan which resulted in an approximate 10% reduction of the Company’s workforce. This action was intended to streamline the Company’s operational reporting and reduce operating cash outflows. The Company recorded pre-tax restructuring charges of approximately $3.5 million which is comprised of one-time employee termination benefits paid over a weighted-average period of approximately 10 months. All termination benefits associated with the restructuring plan have been paid as of March 31, 2021.

Net Loss per Share

Net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share of common stock is computed similarly to basic net income per share of common stock except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Due to the net loss for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, diluted and basic loss per share are the same.

Securities that could potentially dilute net loss per share in the future that were not included in the computation of diluted loss per share at March 31, ~~2021~~2022 and ~~2020~~2021 are as follows:


	2021	2020	2022	2021
Warrants to purchase common stock	27,093,334	27,093,334	27,093,316	27,093,334
Unvested restricted stock units	3,173,584	4,022,110	2,900,250	3,173,584
Options to purchase common stock	245,112	261,027	239,088	245,112
Total	30,512,030	31,376,471	30,232,654	30,512,030

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Income Taxes

In determining the quarterly benefit from income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss, adjusted for discrete items arising in that quarter. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% as a result of state taxes, foreign taxes and changes in the

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Company’s valuation allowance for domestic income taxes. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded a ~~$0.2~~$0.7 million and ~~$2.5~~$0.2 million benefit from income taxes, respectively.

Recently Adopted Accounting Pronouncements

~~On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2018-13,~~ ~~Changes to Disclosure Requirements for Fair Value Measurements (Topic 820),~~ which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The adoption of this new standard did not have a material impact on the Company’s condensed consolidated financial statements.

~~On January 1, 2020, the Company adopted ASU No. 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under Accounting Standards Codification (“ASC”) 350-40 – Internal Use Software, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. The adoption of this new standard did not have a material impact on the Company’s condensed consolidated financial statements.

On January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies various aspects related to accounting for income taxes, removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The adoption of this new standard did not have a material impact on the Company’s condensed consolidated financial statements.

~~Recently Issued~~ Accounting Pronouncements Not Yet Adopted

In ~~August 2020,~~November 2021, the Financial Accounting Standards Board ~~(FASB)~~ issued ~~Accounting Standards Update~~ASU No. ~~2020-06,~~2021-10, ~~Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)~~Government Assistance (Topic 832): ~~Accounting for Convertible Instruments and Contracts in an Entity's Own Equity~~Disclosure by Business Entities about Government Assistance (ASU ~~2020-06)~~2021-10), which ~~simplifies~~requires the disclosure of government assistance received by most business entities relating to: (1) the types of government assistance received; (2) the accounting for ~~convertible instruments by reducing~~such assistance; and (3) the ~~number of accounting models available for~~ ~~convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use~~effect of the ~~if-converted method.~~assistance on a business entity's financial statements. This guidance will be effective for our annual financial statements for the ~~Company in~~year ended December 31, 2022. We are currently evaluating the ~~first quarter~~impact of ~~2022~~the new guidance on ~~a full or modified retrospective basis, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its~~our consolidated financial statements.

1516

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Note 4. Intangible Assets

The Company recognized goodwill and certain identifiable intangible assets in connection with business combinations. Identifiable intangible assets consist of the following as of March 31, ~~2021~~2022 and ~~March~~December 31, ~~2020:~~2021:


	March 31, 2021						March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents / Developed Technology	$	60,084	$	(15,878)	$	44,206	$	60,084	$	(23,350)	$	36,734
Trade Names / Trademarks		16,348		(3,623)		12,725		16,348		(5,235)		11,113
Customer Relationships		51,003		(10,770)		40,233		51,003		(15,915)		35,088
Non-Compete Agreements		1,162		(818)		344		1,162		(1,162)		-
Total Intangibles	$	128,597	$	(31,089)	$	97,508	$	128,597	$	(45,662)	$	82,935


	December 31, 2020						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents / Developed Technology	$	60,084	$	(14,026)	$	46,058	$	60,084	$	(21,494)	$	38,590
Trade Names / Trademarks		16,348		(3,227)		13,121		16,348		(4,836)		11,512
Customer Relationships		51,003		(9,514)		41,489		51,003		(14,630)		36,373
Non-Compete Agreements		1,162		(723)		439		1,162		(1,109)		53
Total Intangibles	$	128,597	$	(27,490)	$	101,107	$	128,597	$	(42,069)	$	86,528

Amortization expense recognized by the Company related to intangible assets was $3.6 million for each of the three months ended March 31, ~~2021~~2022 and ~~March 31, 2020 was $3.6 million and $3.7 million, respectively.~~2021.

The estimated aggregate future amortization expense for intangible assets is as follows:

Nine months ended December 31, 2021

11,012
Year ended December 31, 2022

14,276
Year ended December 31, 2023

14,224
Year ended December 31, 2024

14,263
Year ended December 31, 2025

14,224
Thereafter

29,509

$
97,508


Nine months ending December 31, 2022		10,683
Year ending December 31, 2023		14,224
Year ending December 31, 2024		14,263
Year ending December 31, 2025		14,224
Year ending December 31, 2026		14,224
Thereafter		15,317
	$	82,935

Note 5. Leases

The Company leases office space under agreements classified as operating leases that expire on various dates through 2030. Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses.

At March 31, ~~2021,~~2022, the Company had operating right of use assets of approximately ~~$2.5~~$3.3 million and operating lease liabilities of approximately ~~$4.0~~$4.7 million, which are included in the condensed consolidated balance sheet.

The ~~Company purchases kiosks that are funded by finance leases that expire on various dates through 2023 and are included in fixed assets. At March 31, 2021, the Company had finance lease~~ right of use ~~assets of $1.3 million and finance lease liabilities of approximately $0.6 million.~~

1617

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

assets obtained in exchange for new operating lease liabilities was approximately $1.6 million for the three months ended March 31, 2022.

The Company purchases kiosks that are funded by finance leases that expire on various dates through 2023 and are included in fixed assets. At March 31, 2022, the Company had finance lease right of use assets of $0.6 million and finance lease liabilities of less than $0.1 million.

The following summarizes quantitative information about the Company’s leases:

Three Months Ended March 31, ~~2021:~~2022:


					Grants										Grants
	Procurement		Payments		Management		Budget		Total		Procurement		Payments		Management		Budget		Total
Finance lease cost
Amortization of right-of-use assets	$	—	$	15	$	—	$	—	$	15	$	—	$	79	$	—	$	—	$	79
Interest		—		26		—		—		26		—		3		—		—		3
Operating lease cost		114		115		20		109		358		112		33		30		110		285
Total lease cost	$	114	$	156	$	20	$	109	$	399	$	112	$	115	$	30	$	110	$	367

Grants

Procurement

Payments

Management

Budget

Total

Weighted-average remaining lease term – finance leases

N/A

1.0

N/A

N/A

1.0

Weighted-average remaining lease term – operating leases

1.2

0.7

1.8

9.5

7.2

Weighted-average discount rate – finance leases

N/A

13.0
%

N/A

N/A

13.0
%
Weighted-average discount rate – operating leases

9.9
%

10.0
%

8.0
%

4.8
%

6.2
%


							Grants
	Procurement			Payments			Management			Budget			Total
Weighted-average remaining lease term – finance leases		N/A			0.2			N/A			N/A			0.2
Weighted-average remaining lease term – operating leases		0.3			4.9			0.8			8.6			6.2
Weighted-average discount rate – finance leases		N/A			13.0	%		N/A			N/A			13.0	%
Weighted-average discount rate – operating leases		10.0	%		10.0	%		8.0	%		4.8	%		6.6	%

As of March 31, ~~2021,~~2022, future minimum lease payments under non-cancellable leases are as follows:


					Grants				Operating		Finance						Grants				Operating		Finance
	Procurement		Payments		Management		Budget		Leases		Leases		Procurement		Payments		Management		Budget		Leases		Leases
Nine months ended December 31, 2021	$	365	$	343	$	90	$	318	$	1,026	$	439
Year Ended December 31, 2022		247		—		123		430		677		197
Year Ended December 31, 2023		—		—		10		383		383		—
Year Ended December 31, 2024		—		—		—		368		368		—
Year Ended December 31, 2025		—		—		—		417		417		—
Year Ending December 31, 2022													$	125	$	291	$	103	$	326	$	845	$	45
Year Ending December 31, 2023														—		394		—		386		780		—
Year Ending December 31, 2024														—		400		—		371		771		—
Year Ending December 31, 2025														—		407		—		421		828		—
Year Ending December 31, 2026														—		413		—		421		834		—
Thereafter		—		—		—		2,109		2,109		—		—		69		—		1,704		1,773		—
Total	$	612	$	343	$	223	$	4,025	$	4,980	$	636	$	125	$	1,974	$	103	$	3,629	$	5,831	$	45
Less present value discount		(27)		(21)		(16)		(883)		(931)		(51)		(2)		(424)		(4)		(715)		(1,145)		(4)
Present value of lease liabilities	$	585	$	322	$	207	$	3,142	$	4,049	$	585	$	123	$	1,550	$	99	$	2,914	$	4,686	$	41

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Note 6. Term Loans

Credit Facility

On February 14, 2020, the Company entered into an unsecured term loan credit facility (“February 2020 Credit Facility”) that provided for borrowing of term loans in an aggregate principal amount of $12.0 million. The credit facility had a maturity date of twelve months from the borrowing date of the term loans. On the closing date, the Company fully drew on the credit facility net of deferred issuance costs of $0.7 million. The $0.7 million of deferred issuance costs included $0.4 million of fees to be applied against interest and $0.3 million of other issuance costs. Amounts outstanding under the credit facility bore interest from the date the term loans were first made until the last day of the fiscal month immediately following the six-month anniversary of such initial borrowing date at a rate per annum equal to 12 percent. Commencing on the first day of each fiscal month thereafter, the interest rate increased by 1 percent per annum until the termination date. The February 2020 Credit Facility was terminated on November 13, 2020 and $0.2 million of unamortized deferred issuance costs were expensed and included in other income, net.

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

On November 13, 2020, the Company entered into a senior secured term loan facility (“November 2020 Credit Facility”) that provides for borrowing of term loans in an aggregate principal amount of $25,000,000. The November 2020 Credit Facility has a maturity date of 30 months from the borrowing of the term loans. ~~On the closing date, the Company fully drew on the November 2020 Credit Facility and replaced the February 2020 Credit Facility.~~ Amounts outstanding under the November 2020 Credit Facility accrue interest at a rate of 8 percent plus LIBOR ~~or 8.15% at March 31, 2021~~ and 2 percent payment-in-kind (“PIK”) interest. The November 2020 Credit Facility is supported by a security interest in the assets of the Company and includes certain financial covenants pertaining to annual recurring revenue, revenue, and cash. As of March 31, ~~2021,~~2022, the Company was compliant with all financial covenants.

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized $0.7 million and ~~$0.2~~$0.8 million of interest expense, including amortization of deferred issuance costs, respectively, under the ~~February 2020 and~~ November 2020 Credit ~~Facilities~~Facility. At March 31, 2022 and ~~approximately $0.2 million and $0.1 million of debt issuance costs, respectively. At March~~December 31, 2021, the Company had accrued approximately $0.2 million and $0.3 million of accrued ~~interest.~~

~~Paycheck Protection Plan Loans (PPP Loans)~~

~~In April~~cash interest and ~~May 2020, the Company’s subsidiaries CityBase, eCivis, and Sherpa received $2.0 million, $0.9~~$0.7 million and ~~$0.2~~$0.6 million ~~respectively, in loan proceeds from the Paycheck Protection Program (the “PPP”) administered by the Small Business Administration~~ of the United States government. This program was established under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was created to provide fast and direct economic assistance for American workers, families, small businesses, and preserves jobs for American industries. The Company used the funds to support the compensation expenses related to its U.S. employees. These loans mature two years from the date of issuance and accruePIK interest, at a rate of one percent per annum. As of March 31, 2021 and December 31, 2020, the Company accounted for these loans in accordance with ASC 470. The Company obtained forgiveness for the $0.2 million in loan proceeds pertaining to the loan received by Sherpa and expects to seek forgiveness for the remaining loans during the year ended December 31, 2021.respectively.

The Company’s term ~~loans are~~loan as of March 31, 2022 is summarized as follows:

November 2020
Credit Facility

PPP Loans

Total
Principal
$ 25,000

$ 2,971

$ 27,971
Payment-in-kind ("PIK") accrued interest
199

—

199
Unamortized deferred issuance costs
(1,476)

—

(1,476)
Term loans, net
$ 23,723

$ 2,971

$ 26,694

Maturity Date
May 2023

April and May 2022

Interest Rate
8% + LIBOR

1%

PIK Interest Rate
2%

0%


	November 2020 Credit Facility
Principal	$ 25,000
Payment-in-kind ("PIK") accrued interest	732
Unamortized deferred issuance costs	(792)
Term loans, net	$ 24,940

Maturity date	May 2023
Interest rate	8% + LIBOR
PIK interest rate	2%

Note 7. Commitments and Contingencies

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of its business. The Company is not currently a party to any legal proceedings that, if determined adversely to the Company, would have a material adverse effect on the Company.

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Indemnification

Additionally, in the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

agreement and the maximum potential amount of future payments that the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has it been sued in connection with these indemnification arrangements.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company has not accrued a liability for any legal proceedings, claims or indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with them is not probable or reasonably estimable.

Note 8. Shareholders’ Equity

Common Stock – GTY is authorized to issue 400,000,000 shares of common stock with a par value of $0.0001 per share. The Company had 60,917,843 shares issued and 59,296,430 shares outstanding as of March 31, 2022 and 59,226,267 shares issued and 57,604,854 shares outstanding as of December 31, 2021, net of treasury stock.

On ~~November 25, 2020,~~February 4, 2022, the Company entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc. (“B. ~~Riley”~~Riley Securities”) and Needham & Company, LLC (“~~Needham”~~Needham & Company” and together with B. Riley Securities, the “Sales Agents”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $10.0 million through B. Riley Securities and Needham & Company as its sales agents. The issuance and sale, if any, of shares of common stock by the Company under the At Market Sales Agreement will be made pursuant to the Company’s effective registration statement on Form ~~S-3.~~ S-3 (File No. 333-262289). The parties agreed that the At Market Issuance Sales Agreement dated November 25, 2020 between the Company and the Sales Agents (the “Prior ATM Agreement”) has terminated. During the three months ended March 31, 2021, the Company sold 935,633 of common shares for $6.8 million in ~~proceeds.~~proceeds under the Prior ATM Agreement.

During the three months ended March 31, 2022 and 2021, the Company issued 291,167 and 358,658 shares of common ~~shares~~stock, respectively, for the same number of exchangeable shares to the former shareholders of Questica and Bonfire.

Share Redemptions

Under the agreements with eCivis, the Company acquired eCivis for aggregate consideration of approximately $14.0 million in cash and 2,883,433 shares of Company common stock, including 703,631 shares of the Company’s common stock which are redeemable for cash at any time in the sole discretion of the Company for a price of $10.00 per share (the “Redeemable Shares”). Upon redemption of the Redeemable Shares, the Company must simultaneously redeem additional shares from the holder equal to 40% of the number of Redeemable Shares being redeemed (the “Additional Shares”) at $10 per share. If the Redeemable Shares were not redeemed by February 12, 2020 and February 12, 2021, the Company was required to issue additional shares, as calculated based on the number of outstanding Redeemable Shares. In June 2019, 178,571 Redeemable Shares and 71,428 Additional Shares were redeemed and the Company recorded a $0.8 million loss. During February 2020, the Company issued 334,254 Additional Shares and recorded a $2.1 million loss. The remaining 525,060 shares of common stock were redeemed for a total of $8.0 million and the Company recorded a $5.3 million loss during the three months ended March 31, 2021.

Preferred Shares – GTY is authorized to issue 25,000,000 preferred shares with a par value of $0.0001 per share. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, there were 0 preferred shares issued or outstanding.

1920

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GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Warrants

At March 31, ~~2021 and December 31, 2020,~~2022, there were a total of ~~27,093,334~~27,093,316 warrants outstanding including 18,400,000 public warrants and ~~8,693,334~~8,693,316 private warrants. The warrants were originally sold as part of the units offered in the Company’s initial public offering and expire five years from the date of the ~~acquisition~~Acquisition or February 2024. Each warrant entitles the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustments. The warrants may be exercised only for a whole number of shares of common stock. NaN fractional shares will be issued upon exercise of the warrants.

The Company may call the public warrants for redemption, 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 to each warrant holder, if, and only if, the reported last sale price of common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders. The private warrants are not callable for redemption and are marked to market and included in warrant liabilities with non-cash fair value adjustments recorded into earnings during each reporting period.

Note 9. Share-Based Compensation

Stock Options

In connection with the Acquisition, the Company adopted a stock option plan and issued 408,667 stock options to employees. The total fair value of the stock options at the grant date was $3.6 million.

A summary of stock option activity is as follows:


				Weighted						Weighted
				Average						Average
		Weighted		Remaining				Weighted		Remaining
		Average		Contractual	Total			Average		Contractual	Total
	Number of	Exercise		Life (in	Intrinsic		Number of	Exercise		Life (in	Intrinsic
	Shares	Price		years)	Value		Shares	Price		years)	Value
Outstanding as of December 31, 2020	245,904	$	2.26	7.0	$	1,130
Outstanding as of December 31, 2021							240,421	$	2.28	6.0	$	1,130
Granted	—		—	—		—	—		—	—		—
Exercised	(792)		1.16				(1,155)		1.16
Forfeited/expired	—		—				(178)		1.16
Outstanding as of March 31, 2021	245,112	$	2.26	6.7	$	1,126
Outstanding as of March 31, 2022							239,088	$	2.29	5.7	$	1,091
Options vested and exercisable	191,248	$	2.25	6.6	$	880	232,401	$	2.28	5.7	$	1,062

For each of the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~approximately~~less than $0.1 million of share-based compensation expense related to the options. As of March 31, ~~2021,~~2022, the Company has ~~$0.4~~less than $0.1 million of unrecognized share-based compensation cost to be recognized over ~~0.5~~0.2 years.

Restricted Stock Units

Subsequent to the Acquisition, the Company adopted a plan to issue restricted stock units (“RSUs”) to employees as annual performance awards. RSUs may vest in ratable annual installments over either two or four years, as applicable, from the date, or RSUs may vest subject to the achievement of certain performance conditions over a three-year performance period, in each case, assuming continuous service by the employees through the applicable vesting dates.

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

A summary of the Company's RSU’s and related information is as follows:

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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


		Weighted Average			Weighted Average
	Number of Units	Grant Price		Number of Units	Grant Price
Unvested as of December 31, 2020	3,280,290	$	4.94
Unvested as of December 31, 2021				3,751,306	$	5.73
Granted	816,162		6.92	1,375,826		4.20
Vested	(882,990)		4.70	(2,022,842)		5.40
Forfeited/expired	(39,878)		4.45	(204,040)		5.59
Unvested as of March 31, 2021	3,173,584	$	5.52
Unvested as of March 31, 2022				2,900,250	$	5.25

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded approximately ~~$1.7~~$3.4 million and ~~$3.2~~$1.8 million, respectively, of share-based compensation expense related to the RSUs. As of March 31, ~~2021,~~2022, the Company had unrecognized share-based compensation expense related to all unvested RSUs of ~~$14.5~~approximately $13.7 million. The weighted average remaining contractual term of unvested RSUs is approximately ~~1.3~~1.2 years at March 31, ~~2021. 825,590~~2022. 177,246 of the unvested RSUs contain performance conditions subject to achieving segment specific revenue and profitability metrics.

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Note 10. Segment Reporting

The Company conducts its business through the following 5 operating segments: Procurement, Payments, Grants Management, Permitting, and Budget.

The accounting policies of the operating segments are the same as those described in Note 3. The following provides operating information about the Company’s reportable segments for the periods presented:


	Corporate		Procurement		Payments		Grants Management		Permitting		Budget		Total		Corporate		Procurement		Payments		Grants Management		Permitting		Budget		Total
Three Months Ended March 31, 2021

Three Months Ended March 31, 2022
Total revenue	$	—		2,437		2,229		1,750		695		6,148	$	13,259	$	—		2,939		3,046		2,153		729		7,033	$	15,900
Cost of revenues		—		470		1,566		650		154		1,902		4,742		—		676		1,974		1,007		207		2,173		6,037
Income (loss) from operations		(1,756)		(805)		(4,846)		(969)		(387)		627		(8,136)		(2,627)		(909)		(1,797)		(1,551)		(409)		(333)		(7,626)
Amortization of intangible assets		—		651		1,355		323		297		973		3,599		—		642		1,339		326		302		984		3,593
Depreciation expense		—		47		94		9		2		101		253		—		43		93		9		1		111		257
Interest income (expense), net		(844)		—		(12)		(3)		—		—		(859)		(687)		—		—		—		—		—		(687)
Benefit from (provision for) income taxes		—		—		—		—		—		170		170		—		859		—		—		—		(116)		743

Three Months Ended March 31, 2020
Three Months Ended March 31, 2021
Total revenue	$	—		1,656		1,899		1,465		613		5,643	$	11,276	$	—		2,437		2,229		1,750		695		6,148	$	13,259
Cost of revenues		—		392		1,470		722		139		1,804		4,527		—		470		1,566		650		154		1,902		4,742
Income (loss) from operations		(5,520)		(2,114)		(6,352)		(1,449)		(886)		(199)		(16,520)
Loss from operations																(1,756)		(805)		(4,846)		(969)		(387)		627		(8,136)
Amortization of intangible assets		—		667		1,365		323		300		1,018		3,673		—		651		1,355		323		297		973		3,599
Depreciation expense		—		16		18		8		1		11		54		—		47		94		9		2		101		253
Interest income (expense), net		(205)		(1)		(30)		—		—		—		(236)		(844)		—		(12)		(3)		—		—		(859)
Benefit from (provision for) income taxes		113		—		1,785		428		247		(52)		2,521		—		—		—		—		—		170	��	170

As of March 31, 2021
As of March 31, 2022
Goodwill	$	—		68,744		88,327		45,140		21,956		60,468	$	284,635	$	—		68,744		77,622		45,140		16,834		60,468	$	268,808
Assets		26,630		92,306		109,142		54,976		27,526		115,362		425,942		9,566		92,919		82,205		52,470		21,600		134,437		393,197

As of December 31, 2020
As of December 31, 2021
Goodwill	$	—		68,744		88,327		45,140		21,956		60,468	$	284,635	$	—		68,744		77,622		45,140		16,834		60,468	$	268,808
Assets		31,407		92,841		110,339		55,676		28,474		113,710		432,447		15,063		92,352		84,940		53,168		22,186		127,235		394,944

Revenues from North America customers accounted for greater than 90% of the Company’s revenues for the periods presented.

~~Table of Contents~~

~~NOTES TO CONDENSED CONSOLIDATED STATEMENTS~~

~~(UNAUDITED)~~

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

Note 11. Subsequent Events

Second Amendment to November 2020 Credit Facility

On April 1, 2022, the Company entered into a Second Amendment to the November 2020 Credit Facility (the “Second Amendment”). Under the Second Amendment, a term loan in the aggregate principal amount of $5,000,000 was made (the “Second Amendment Term Loan”), in addition to the term loan in the aggregate principal amount of $25,000,000 previously made under the November 2020 Credit Facility (the “Initial Term Loan”). The terms and conditions of the Second Amendment Term Loan are substantially the same as the terms and conditions of the Initial Term Loan, except that (i) the closing fee for the Second Amendment Term Loan is 2.0% rather than 2.5% and (ii) 0 prepayment fee is payable with respect to the Second Amendment Term Loan.

Table of Contents

GTY TECHNOLOGY HOLDINGS, INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2022

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

Agreement and Plan of Merger

On April 28, 2022, the Company ~~has evaluated events from March 31, 2021~~entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GI Georgia Midco Inc., a Delaware corporation (“Parent”), and GI Georgia Merger Sub Inc., a Massachusetts corporation and a wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Parent at a price of $6.30 per share of common stock, par value $0.0001, of the Company (each, a “Share”), in cash, without interest and subject to deduction for any required withholding tax (the “Merger Consideration”), through the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub are owned by funds affiliated with GI Partners (collectively, “GI Partners”). The Company’s shareholders will be asked to vote on the approval of the merger agreement at a special meeting of shareholders that will be held on a date to be announced. The merger agreement is subject to approval by holders of 66⅔% of the ~~financial statements were issued. There were no subsequent events that need disclosure.~~outstanding shares of the Company’s capital stock entitled to vote on such matter at the special meeting of shareholders as well as receipt of regulatory approvals and satisfaction of other customary conditions.

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

You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February ~~19, 2021.~~18, 2022. Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve a number of risks, uncertainties and other factors that could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could materially affect such forward-looking statements can be found in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and elsewhere in this Form 10-Q. Investors are urged to consider these factors carefully in evaluating any forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date hereof, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Certain statements in the following discussions are based on non-GAAP financial measures. A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of comprehensive income, balance sheets or statements of cash flows of the issuer; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. The Company includes non-GAAP financial measures in this Management’s Discussion and Analysis, as the Company’s management believes that these measures and the information they provide are useful to investors because they permit investors to view the Company’s performance using the same tools that management uses and to better evaluate the Company’s ongoing business performance. In order to better align the Company’s reported results with the internal metrics used by the Company’s management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures exclude the impact of purchase accounting related to the Acquisition. See “Reconciliation of Non-GAAP Revenues” below for more information and reconciliations of such measures to the nearest comparable GAAP measures.

Overview

We are a public sector company that offers a cloud-based suite of solutions primarily for North American state and local governments. Our six wholly-owned subsidiaries are Bonfire, CityBase, eCivis, Open Counter, Questica and Sherpa. Through our operating subsidiaries, we serve some of the fastest growing segments in the government technology sector, specifically procurement, payments, grants management, permitting, and budgeting.

We were formed on August 11, 2016 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “business combination”). Until the business combination, we did not engage in any operations nor generate any revenues. We recognized an opportunity to replace costly legacy on-premises software systems with scalable and efficient SaaS products. Our search led to the acquisition (the “Acquisition”) of Bonfire, CityBase, eCivis, Open Counter, Questica, and Sherpa on February 19, 2019.

Our customers are primarily located in the United States and Canada, including counties, municipalities, special districts, law enforcement agencies and public school districts. We plan to continue to increase our customer base by leveraging our comprehensive product portfolio with our existing customer base, investing in direct sales to new customers, and using relationships with other companies that offer complementary products and services.

We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the second and third quarters of each year and usually during the last month of the quarter. This can be attributed to buying patterns typical in the public sector. As the terms of most of our customer agreements are measured in full year increments, agreements initially entered into in any given month of any quarter will generally come up for

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renewal at that same time in subsequent years. This seasonality is reflected in our invoicing and cash flows with our highest collections occurring in the second ~~and third quarters and lower collections in the first and fourth quarters.~~half of each calendar year.

Our variable consideration or usage fee revenue is also dependent on the payment patterns of our customers’ constituents. Historically, a high percentage of these usage fees have been earned in the second and fourth quarters of each year. This seasonality is also reflected in our revenues and cash flows during the respective periods.

Expansion and Further Penetration of Our Customer Base. We employ a strategy that focuses on acquiring new customers and growing our relationships with existing customers over time. We believe that significant opportunity exists for us to acquire new customers as well as expand the use of our platforms by selling additional products and increasing the number of users within our current customers’ organizations.

Investment in Growth. We plan to continue to invest in our business so that we can capitalize on our market opportunity. We intend to continue to grow our sales and marketing team to acquire new customers and to increase sales to existing customers. We intend to continue to grow our research and development team to extend the functionality and range of our applications. We also intend to invest in new and improved information technology solutions to support our business. However, we expect our sales and marketing expenses and research and development expenses as a percentage of revenues to decrease over time as we grow our revenues and gain economies of scale by increasing our customer base and increase sales to our existing customer base. We believe that these investments will contribute to our long-term growth, although they may adversely affect our profitability in the near term.

Leveraging Relationships. We plan to continue to strengthen and expand our relationships with technology vendors, professional services firms, and resellers. These relationships enable us to increase the speed of deployment and offer a wider range of integrated services to our customers. We intend to support these existing relationships, seek additional relationships and further expand our channel of resellers to help us increase our presence in existing markets and to expand into new markets. Our business and results of operations will be significantly affected by whether we succeed in leveraging and expanding these relationships.

Market Adoption of Our Platforms. A key focus of our sales and marketing efforts is creating market awareness about the benefits of our cloud-based SaaS platforms. The market for SaaS solutions is less mature than the market for on-premise software applications, and potential customers may be slow or unwilling to migrate from their legacy solutions. Our business and operating results will be significantly affected by the degree to and speed with which organizations adopt our solutions.

Key Components of our Results of Operations

Revenues

Subscription, support and maintenance. We deliver ~~SaaS~~our solutions primarily as a subscription service and provide customers with access to SaaS-related support and updates during the term of the arrangement. Revenues are recognized ratably over the contract term as the customer simultaneously receives and consumes the benefits of the subscription service. Subscription fees are typically payable within 30 days after the execution of a contract, and thereafter upon renewal. We initially record subscription fees as contract liabilities and recognize revenues on a straight-line basis over the term of the agreement.

Our contracts may include variable consideration in the form of usage fees, which are included in the transaction price in the period in which the usage occurs and the fee is known.

Subscription, support and maintenance revenues also includes kiosk rentals and ~~on-premise~~ support or maintenance pertaining to license sales. Revenues from kiosk rentals and ~~on-premise~~ support are recognized on a straight-line basis over the support period.

Revenues from subscription, support and maintenance comprised approximately ~~77%~~79% and ~~68%~~77% of total revenues for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

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Professional services. Our professional services contracts generate revenues on a time and materials, fixed fee or subscription basis. Revenues are recognized as the services are rendered for time and materials contracts. Revenues are recognized when the milestones are achieved and accepted by the customer or on a proportional performance basis for fixed fee contracts. Revenues are recognized ratably over the contract term for subscription contracts. The milestone method for revenue recognition is used when there is substantive uncertainty at the date the contract is entered into regarding whether the milestone will be achieved. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately ~~22%~~19% and ~~28%~~22% of total revenues for the three months ended March 31, 2022 and 2021, ~~and 2020.~~respectively.

License. Revenues from distinct licensed software are recognized upfront when that software is made available to the customer, which normally coincides with contract execution, as this is when the customer has the risks and rewards of the right to use the software. Revenues from licenses comprised ~~approximately~~ less than 1% ~~and 3% of total revenues~~ for the three months ended March 31, ~~2021~~2022 and ~~2020, respectively.~~2021.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the customer and is fully operational and ready to accept transactions, which is when the customer obtains control and has the risks and rewards of the asset. Asset sales ~~were~~comprised approximately 1%2% and ~~less than~~ 1% of total revenues for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

Cost of Revenues

Cost of revenues primarily consists of salaries and benefits of personnel relating to our hosting operations and support, implementation, and grants research. Cost of revenues includes data center costs including depreciation of the Company’s data center assets, third-party licensing costs, consulting fees, and the amortization of acquired technology from recent acquisitions.

Operating Expenses

Sales and marketing

Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including salaries, sales commissions and incentives and benefits, travel and related costs, outside consulting fees, marketing programs, including lead generation, and costs of advertising and trade shows. We defer sales commissions and amortize them ratably over the expected customer life. We expect that sales and marketing expenses will increase as we expand our direct sales teams and increase sales through our strategic relationships and resellers.

Research and development

Research and development expenses consist primarily of salaries and benefits associated with our engineering, product and quality assurance personnel. Research and development expenses also include the cost of third-party contractors. Other than internal-use software development costs that qualify for capitalization, research and development costs are expensed as incurred. We expect research and development costs to increase as we develop new solutions and make improvements to our existing platforms.

General and administrative

General and administrative expenses consist primarily of salaries and benefits with our executive, finance, legal, human resources, compliance and other administrative personnel, accounting, auditing and legal professional services fees, recruitment costs, and other corporate-related expenses. We expect that general and administrative expenses will increase as we scale our business, but at a lower rate over time.

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Results of Operations

Three Months Ended March 31, ~~2021~~2022 Compared to the Three Months Ended March 31, ~~2020~~2021

Total revenues

Our total revenues were ~~$13.3~~$15.9 million for the three months ended March 31, ~~2021.~~2022. Excluding the $0.1 million impact of purchase accounting, our total non-GAAP revenues for the three months ended March 31, ~~2021~~2022 was ~~$13.4~~$16.0 million compared to ~~$11.6~~$13.4 million for the three months ended March 31, ~~2020,~~2021, representing a ~~15%~~20% increase. This increase was driven by an increase in the number of customers, an increase in the number of users added by existing customers and an increase in the number of products purchased by existing customers. The change in revenues for each operating segment is provided in the following table (in thousands, except percentages):


	Generally Accepted Accounting Principles (“GAAP”)								Non-GAAP

																	Generally Accepted Accounting Principles (“GAAP”)								Non-GAAP
	Total		Total		Increase /		Increase /		Total		Total		Increase /		Increase /		Total		Total		Increase /		Increase /		Total		Total		Increase /		Increase /
	Revenues		Revenues		(Decrease)		(Decrease)		Revenues		Revenues		(Decrease)		(Decrease)		Revenues		Revenues		(Decrease)		(Decrease)		Revenues		Revenues		(Decrease)		(Decrease)
	2021		2020		in Dollars		in %		2021		2020		in Dollars		in %		2022		2021		in Dollars		in %		2022		2021		in Dollars		in %
Procurement	$	2,437	$	1,656	$	781	47	%	$	2,437		1,665	$	772	46	%	$	2,939	$	2,437	$	502	21	%	$	2,939	$	2,437	$	502	21	%
Payments		2,229		1,899		330	17	%		2,351		2,032		319	16	%		3,046		2,229		817	37	%		3,175		2,351		824	35	%
Grants Management		1,750		1,465		285	19	%		1,750		1,480		270	18	%		2,153		1,750		403	23	%		2,153		1,750		403	23	%
Permitting		695		613		82	13	%		695		613		82	13	%		729		695		34	5	%		729		695		34	5	%
Budget		6,148		5,643		505	9	%		6,148		5,801		347	6	%		7,033		6,148		885	14	%		7,033		6,148		885	14	%
Total	$	13,259	$	11,276	$	1,983	18	%	$	13,381	$	11,591	$	1,790	15	%	$	15,900	$	13,259	$	2,641	20	%	$	16,029	$	13,381	$	2,648	20	%

A reconciliation of non-GAAP revenues and other non-GAAP financial measures is included in the section titled “Reconciliation of Non-GAAP Financial Measures” in this Quarterly Report on Form 10-Q.

Total cost of revenues

Our total cost of revenues for the three months ended March 31, ~~2021~~2022 increased primarily as a result of costs associated with our headcount additions to support our revenue ~~growth and share-based compensation resulting from the grant of restricted stock units.~~growth. The change in cost of revenues for each operating segment is due to the following (in thousands, except percentages):


`
	Total Cost		Total Cost
	of		of		Increase /		Increase /		Total Cost of		Total Cost of		Increase /		Increase /
	Revenues		Revenues		(Decrease)		(Decrease)		Revenues		Revenues		(Decrease)		(Decrease)
	2021		2020		in Dollars		in %		2022		2021		in Dollars		in %
Procurement	$	470	$	392	$	78	20	%	$	676	$	470	$	206	44	%
Payments		1,566		1,470		96	7	%		1,974		1,566		408	26	%
Grants Management		650		722		(72)	(10)	%		1,007		650		357	55	%
Permitting		154		139		15	11	%		207		154		53	34	%
Budget		1,902		1,804		98	5	%		2,173		1,902		271	14	%
Total	$	4,742	$	4,527	$	215	5	%	$	6,037	$	4,742	$	1,295	27	%

Procurement

Procurement’s total cost of revenues increased by ~~$0.1~~$0.2 million or ~~20%~~44% primarily due to a $0.1 million or ~~15%~~30% increase in salaries and wages driven by ~~an 8%~~a 33% increase in average headcount from March 31, ~~2020~~2021 to March 31, ~~2021.~~

~~Payments~~

~~Payments’ total cost of revenues increased by $0.1 million or 7% primarily due to~~2022 and a $0.1 million increase in ~~hardware costs resulting from an increase in asset sales.~~ stock-based compensation related to the issuance of restricted stock units.

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Payments

Payments’ total cost of revenues increased by $0.4 million or 26% primarily due to a $0.2 million increase in kiosk operations, a $0.1 million increase in costs associated with the sale of kiosks, and a $0.1 million increase in implementation costs.

Grants Management

Grants Management’s total cost of revenues ~~decreased~~increased by ~~$0.1~~$0.4 million or ~~10% primarily~~55% primary due to a $0.1 million ~~decrease~~increase in hosting costs, a $0.1 million increase in the cost of third-party ~~contractors.~~contractors to support implementations, a $0.1 million increase in royalty expense, and a $0.1 million or 21% increase in salaries and wages.

Permitting

Permitting’s total cost of revenues ~~was materially consistent year-over-year.~~increased by $0.1 million or 55% due to a $0.1 million increase in salaries and wages.

Budget

Budget’s total cost of revenues increased by ~~$0.1~~$0.3 million or 5%14% primarily due to a ~~$0.1~~$0.3 million or 26% increase in ~~share-based compensation related~~salaries and wages driven by a 17% increase in average headcount from March 31, 2021 to ~~the issuance of restricted stock units.~~March 31, 2022.

Operating expenses (sales and marketing, general and administrative, and research and development)

Our operating expenses (including sales and marketing, general and administrative and research and development expenses) for the three months ended March 31, ~~2021~~2022 have ~~decreased~~increased due primarily to ~~the restructuring plan implemented~~an increase in ~~March 2020.~~salaries and wages from an increase in headcount, reestablishment of business travel, and expansion of third-party costs to support operations. The change in operating expenses for each operating segment is due to the following (in thousands, except percentages):



									Total		Total
	Operating		Operating		Increase /		Increase /		Operating		Operating		Increase /		Increase /
	Expenses		Expenses		(Decrease)		(Decrease)		Expenses		Expenses		(Decrease)		(Decrease)
	2021		2020		in Dollars		in %		2022		2021		in Dollars		in %
Procurement	$	2,121	$	2,556	$	(435)	(17)	%	$	2,531	$	2,121	$	410	19	%
Payments		3,054		5,019		(1,965)	(39)	%		3,208		3,054		154	5	%
Grants Management		1,732		1,869		(137)	(7)	%		2,370		1,732		638	37	%
Permitting		631		937		(306)	(33)	%		629		631		(2)	(0)	%
Budget		2,646		2,991		(345)	(12)	%		4,207		2,646		1,561	59	%
Corporate		1,756		2,729		(973)	(36)	%		2,628		1,756		872	50	%
Total	$	11,940	$	16,101	$	(4,161)	(26)	%	$	15,573	$	11,940	$	3,633	30	%

Procurement

Procurement’s total operating expense ~~decreased~~increased by $0.4 million or ~~17%~~19% primarily due to a $0.3 million or 52% increase in research and development expense, a $0.2 million or 18% increase in sales and marketing expense, and partially offset by a $0.1 million or 8% decrease in general and administrative expense. The increase in research and development expense was primarily due to a $0.3 million or ~~23% decrease~~53% increase in salaries and wages due to a 58% increase in average headcount from March 31, 2021 to March 31, 2022. The increase in sales and marketing ~~expenses and~~expense was primarily due to a ~~$0.1~~$0.2 million or ~~13% decrease~~28% increase in ~~research~~salaries and ~~development.~~wages due to a 21% increase in average headcount from March 31, 2021 to March 31, 2022. The decrease in ~~sales~~general and ~~marketing expenses~~administrative expense was primarily due ~~primarily~~ to ~~a $0.1 million or 15% decrease in salaries and wages,~~ a $0.1 million decrease in share-based compensation and a $0.1 million decrease in travel and trade shows resulting from the COVID-19 pandemic. The decrease in salaries and wages was due primarily to a 26% decrease in average headcount from March 31, 2020 to March 31, 2021 driven mainly by our March 2020 restructuring. The decrease in research and development was primarily due to a $0.1 million or 12% decrease in salaries and wages due to a 29% decrease in average headcount from March 31, 2020 to March 31, 2021.expense.

~~Payments~~

Payments’ total operating expense decreased by $2.0 million or 39% primarily due to a $0.7 million or 40% decrease in research and development, a $0.6 million or 48% decrease in sales and marketing expense, and a $0.6 million or 32% decrease in general and administrative expenses. The decrease in sales and marketing expenses was due primarily to a $0.3 million decrease in share-based compensation and a $0.2 million or 25% decrease in salaries and wages. The decrease in salaries and wages related to sales and marketing was due primarily to a 23% decrease in average headcount from March 31, 2020 to March 31, 2021 driven mainly by our March 2020 restructuring. The $0.6 million decrease in general and administrative expenses was due primarily to a $0.4 million decrease in share-based compensation and a $0.2 million or 26% decrease in salaries and wages resulting from a 28% decrease in average headcount from March 31, 2020 to March 31, 2021. The $0.7 million decrease in research and development was due primarily to a $0.6 million or 39% decrease in

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Payments

Payments’ total operating expense increased by $0.2 million or 5% primarily due to a $0.2 million or 18% increase in research and development expense. The increase in research and development expense was primarily due to a $0.2 million or 15% increase in salaries and wages ~~related~~due to a ~~30% decrease~~21% increase in average headcount from March 31, ~~2020~~2021 to March 31, ~~2021 and a $0.1 million decrease in share-based compensation.~~2022.

Grants Management

Grants Management’s total operating expense ~~decreased~~increased by ~~$0.1~~$0.6 million or 7%37% primarily due to a $0.4 million or 78% increase in research and development expense and a $0.2 million or 31% increase in sales and marketing expense. The increase in research and development expense was due to a $0.3 million increase in the cost of third-party contractors. The increase in sales and marketing expense was due to a $0.2 million or ~~34% decrease~~47% increase in ~~general~~salaries and ~~administrative costs offset~~wages due to a 68% increase in average headcount from March 31, 2021 to March 31, 2022.

Permitting

Permitting’s total operating expense was materially consistent year-over-year.

Budget

Budget’s total operating expense increased by ~~a $0.1~~$1.6 million or ~~16%~~59% primarily due to a $0.8 million or 75% increase in sales and marketing ~~expenses. The decrease~~expense and a $0.7 million or 69% increase in general and administrative ~~costs was primarily due to a $0.1 million decrease in human resources and recruiting spend and a $0.1 million decrease in consulting and professional services costs.~~expense. The increase in sales and marketing ~~costs~~expense was ~~primarily driven by a $0.1 increase in third-party commissions.~~

~~Permitting~~

Permitting’s total operating expenses decreased by $0.3 million or 33% primarily due a $0.2 million or 37% decrease in sales and marketing expenses and a $0.1 million or 50% decrease in general and administrative expenses. The decrease in sales and marketing is primarily due to a ~~$0.2~~$0.4 million or ~~42% decrease~~53% increase in salaries and wages ~~related to~~and a 24% decrease in headcount resulting from the March restructuring. The $0.1 million decrease in general and administrative costs was related to a $0.1 million decrease in travel spend due to the Covid-19 pandemic.

~~Budget~~

~~Budget’s total operating expenses decreased by~~ $0.3 million ~~or 12% primarily due to a $0.2 million or 14% decrease~~increase in ~~sales and marketing expenses and a $0.1 million or 16% decrease in general and administrative expenses.~~share-based compensation expense. The ~~decrease in sales and marketing expenses is primarily related to a $0.2 million or 18% decrease~~increase in salaries and wages ~~related~~was due primarily to a ~~4% decrease~~39% increase in average headcount from March 31, ~~2020~~2021 to March 31, ~~2021.~~2022. The ~~$0.1 million decrease~~increase in general and administrative ~~expenses is~~expense was primarily ~~related~~due to a ~~$0.1 decrease~~$0.8 million increase in share-based compensation ~~related to issuance of restricted stock units.~~expense.

Corporate

Corporate expenses are primarily comprised of outside services including legal, accounting and consulting fees, payroll and related expenses, corporate insurance, and share-based compensation. Corporate expenses ~~decreased~~increased by ~~$1.0~~$0.9 million or ~~36%~~50% due ~~primarily~~ to a ~~$0.5 million decrease in share-based compensation from the cancellation of restricted stock units and a $0.5~~$0.4 million or ~~62% decrease in salaries and wages. The decrease~~29% increase in salaries and wages, ~~is due primarily to~~ a ~~41% decrease~~$0.2 million increase in ~~average headcount from March 31, 2020 to March 31, 2021 driven mainly by our March 2020 restructuring.~~ share-based compensation expense, a $0.1 million increase in insurance costs, and a $0.1 million increase in outside services.

Other operating expenses

Amortization of intangible assets

Amortization of intangible assets consists of the amortization of finite lived intangibles resulting from the Acquisition as described in Note 4 of the notes to our condensed consolidated financial statements.

~~Acquisition costs~~

~~Acquisition costs consists primarily of Acquisition transaction costs, capital market advisory fees, and bonuses incurred as a result of the transaction or a change in control.~~

~~Restructuring costs~~

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~~was comprised of one-time employee termination benefits paid over a weighted average period of approximately 10 months.~~

Change in fair value of contingent consideration

The change in fair value of contingent consideration consists of any adjustments to the contingent consideration liability since the Acquisition.

Other income (expense)

Interest income (expense)

Interest income (expense) is primarily comprised of the investments held by GTY Corporate, offset by interest under the November 2020 Credit Facility.

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Loss on repurchase/issuance of shares

Loss on repurchase/issuance of shares is comprised of the difference in fair value between the price in which shares are issued and the market value on the date of grant.

Change in fair value of warrant liability

Change in fair value between the current price of the Company’s warrants and the previously reported price.

Gain on extinguishment of debt

Gain on extinguishment of debt is comprised of debt forgiveness associated with loans under the Paycheck Protection Program.

Other income (loss)

Other income (loss) is comprised primarily of unrealized gains and losses associated with transactions in currencies that are not denominated in U.S. Dollars.

Reconciliation of Non-GAAP Revenues

To supplement our condensed consolidated financial statements, which are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, we have provided certain financial measures that have not been prepared in accordance with GAAP (“non-GAAP financial measures”), which include (i) non-GAAP revenues, (ii) non-GAAP gross profit and non-GAAP gross margin and (iii) non-GAAP loss from operations.

We use these non-GAAP financial measures internally in analyzing our financial results and believe that these metrics are useful to investors, as a supplement to the corresponding GAAP measure, in evaluating our ongoing operational performance and trends. However, it is important to note that particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Non-GAAP Revenues. Non-GAAP revenues are defined as GAAP revenues adjusted for the impact of purchase accounting resulting from a company’s business combination which reduced its acquired contract liabilities to fair value. The Company believes that presenting non-GAAP revenues is useful to investors as it eliminates the impact of the purchase accounting adjustments to revenues to allow for a direct comparison between current and future periods.

Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP gross profit adjusted for the impact of purchase accounting resulting from a company’s business combination and share-based compensation included in cost of revenues. Non-GAAP gross margin is defined as non-GAAP gross profit divided by non-GAAP revenues. The Company believes that presenting non-GAAP gross profit and margin is useful to investors as it eliminates the impact of the purchase accounting adjustments to allow for a direct comparison between periods.

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Non-GAAP Loss from Operations. Non-GAAP loss from operations is defined as GAAP loss from operations adjusted for the impact of purchase accounting to revenues resulting from a company’s business combination, the amortization of acquired intangible assets, share-based compensation, acquisition related costs, goodwill impairment expense, restructuring charges and the change in fair value of contingent consideration. The Company believes that presenting non-GAAP loss from operations is useful to investors as it eliminates the impact of certain non-cash and acquisition related expenses to allow a direct comparison of loss from operations between all periods presented.

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Below is a reconciliation of non-GAAP revenues, non-GAAP gross profit and non-GAAP gross margin and non-GAAP loss from operations to their most directly comparable GAAP financial measures (in thousands, except percentages):


	Three Months Ended									Three Months Ended
	March 31,			December 31,			March 31,			March 31,			December 31,			March 31,
	2021			2020			2020			2022			2021			2021
Revenues	$	13,259		$	13,101		$	11,276		$	15,900		$	16,620		$	13,259
Purchase accounting adjustment to revenue		122			126			315			129			104			122
Non-GAAP Revenues	$	13,381		$	13,227		$	11,591		$	16,029		$	16,724		$	13,381

Gross Profit	$	8,517		$	8,174		$	6,749		$	9,863		$	10,120		$	8,517
Purchase accounting adjustment to revenue		122			126			315			129			104			122
Share-based compensation		292			236			218			447			357			292
Non-GAAP Gross Profit	$	8,931		$	8,536		$	7,282		$	10,439		$	10,581		$	8,931

Gross Margin		64	%		62	%		60	%		62	%		61	%		64	%
Non-GAAP Gross Margin		67	%		65	%		63	%		65	%		63	%		67	%

Loss from operations	$	(8,136)		$	(11,125)		$	(16,520)		$	(7,626)		$	(20,976)		$	(8,136)
Purchase accounting adjustment to revenue		122			126			315			129			104			122
Amortization of intangibles		3,599			3,683			3,673			3,593			3,668			3,599
Share-based compensation		1,823			2,283			3,295			3,432			2,942			1,823
Goodwill impairment expense		—			2,000			—			—			15,827			—
Restructuring charges		—			—			3,466
Change in fair value of contingent consideration		1,114			1,951			29			(1,677)			(3,002)			1,114
Non-GAAP Loss from operations	$	(1,478)		$	(1,082)		$	(5,742)		$	(2,149)		$	(1,437)		$	(1,478)

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Three Months Ended March 31,


2021

2020

Revenues

13,259

11,276

Purchase accounting adjustment to revenue

122

315

Non-GAAP Revenues

$
13,381

$
11,591

Gross Profit

8,517

6,749

Purchase accounting adjustment to revenue

122

315

Share-based compensation

292

218

Non-GAAP Pro forma as Adjusted Gross Profit

$
8,931

$
7,282

Gross Margin

64
%

60
%
Non-GAAP Gross Margin

67
%

63
%

Loss from operations

$
(8,136)

$
(16,520)

Purchase accounting adjustment to revenue

122

315

Amortization of intangibles

3,599

3,673

Share-based compensation

1,823

3,295

Restructuring charges

—

3,466

Change in fair value of contingent consideration

1,114

29

Non-GAAP Loss from operations

$
(1,478)

$
(5,742)

Below is a reconciliation of non-GAAP revenues to revenues by operating segment:


	Three Months Ended March 31,																		Three Months Ended March 31,
							Grants									Total									Grants									Total
	Procurement			Payments			Management			Permitting			Budget			Revenues			Procurement			Payments			Management			Permitting			Budget			Revenues
Revenues 2021	$	2,437		$	2,229		$	1,750		$	695		$	6,148		$	13,259
Revenues 2022																			$	2,939		$	3,046		$	2,153		$	729		$	7,033		$	15,900
Purchase accounting adjustment to revenues		—			122			—			—			—			122			—			129			—			—			—			129
Non-GAAP Revenues 2021	$	2,437		$	2,351		$	1,750		$	695		$	6,148		$	13,381		$	2,939		$	3,175		$	2,153		$	729		$	7,033		$	16,029

Revenues 2020	$	1,656		$	1,899		$	1,465		$	613		$	5,643		$	11,276
Revenues 2021																			$	2,437		$	2,229		$	1,750		$	695		$	6,148		$	13,259
Purchase accounting adjustment to revenues		9			133			15			—			158			315			—			122			—			—			—			122
Non-GAAP Revenues 2020	$	1,665		$	2,032		$	1,480		$	613		$	5,801		$	11,591		$	2,437		$	2,351		$	1,750		$	695		$	6,148		$	13,381

% change		46	%		16	%		18	%		13	%		6	%		15	%		21	%		35	%		23	%		5	%		14	%		20	%

Liquidity and Capital Resources

As of March 31, ~~2021,~~2022, we had a cash balance of approximately ~~$17.9~~$11.3 million. From the date of the Acquisition through March 31, ~~2021,~~2022, our liquidity needs have been satisfied through proceeds from the January–February 2020 private investment in public equity, or PIPE, transactions, proceeds from our initial public offering that were released in February 2019 from the trust account established in connection with such offering for the benefit of our shareholders, proceeds from our June 2019 registered direct offering, proceeds from our February 2020 and November 2020 credit facilities, proceeds

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from ~~issuance~~issuances of stock under our ~~ATM agreement,~~at-the-market offering program, and loan proceeds in April–May 2020 from the Paycheck Protection Program.

~~Our unaudited~~As reflected in the condensed consolidated financial statements, ~~have been prepared assuming that we will~~the Company had an accumulated deficit of approximately $181.2 million at March 31, 2022, a net loss of approximately $4.7 million, approximately $1.7 million net cash used in operating activities for the three months ended March 31, 2022, and $30.0 million of term loans due within 12 months of the date of these condensed consolidated financial statements. These factors raise substantial doubt about the Company’s ability to continue as a going ~~concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.~~concern.

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~~We are~~The Company is attempting to further expand ~~our~~its customer ~~base,~~base; scale up its production of various products; increase revenue; and ~~increase revenues;~~replace the term loans with financing with terms similar to the current agreement in place; however, ~~our~~the Company’s cash position may not be sufficient to support ~~our~~its daily operations through the next twelve months from the date of filing this 10-Q. ~~Our ability to continue as a going concern is dependent upon our ability to raise additional funds by way of a public or private offering and our ability to further generate sufficient revenues.~~ While ~~we believe~~the Company believes in the viability of ~~our platforms,~~its platform and in ~~our~~its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect.

~~COVID-19 Update~~

~~In December 2019,~~The condensed consolidated financial statements do not include any adjustments related to the ~~emergence~~recoverability and classification of ~~a novel coronavirus,~~recorded asset amounts or ~~COVID-19, was reported~~the amounts and ~~in March 2020,~~classification of liabilities that might be necessary should the ~~World Health Organization, or WHO, characterized COVID-19~~Company be unable to continue as a pandemic. We responded by immediately restricting non-essential travel and enabled work-from-home protocols. Shortly thereafter, and in line with guidance provided by government agencies and international organizations, we restricted all travel, mandated a work-from-home policy across our global workforce, and moved all in-person customer-facing events to virtual ones. We expect these restrictions to stay in effect during the second quarter of 2021. We also responded by launching the GTY COVID Emergency Response Program, where a number of GTY products were offered free for a few months to allow our customers to move quickly to solve their infrastructure problems and prevent interruption to government services.going concern.

COVID-19 Update

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which ~~As a result~~may cause customer slowdowns or shutdowns, depress demand, and adversely impact results of operations. During the ~~pandemic, we have seen purchasing decisions being deferred or delayed, delays in services revenue due~~quarter ended March 31, 2022, the Company faced significant uncertainties and continues to ~~the delayed implementation of projects, and an impact~~expect uncertainties around its key accounting estimates to continue to evolve depending on ~~new business pipeline and large deals. We have also seen a decrease in travel-related expenses and advertising and trade show expenses. We expect to see similar impacts in 2021.~~

~~The broader implications of the global emergence of COVID-19 on our business, operating results, and overall financial performance remain uncertain and they~~ ~~depend on certain developments, including~~ the duration and ~~spread~~degree of impact associated with the ~~outbreak, impact on our customers~~COVID-19 pandemic. Estimates may change as new events occur and ~~our sales cycles, impact on our partners~~additional information emerges, and such changes are recognized or ~~employees, and impact on the economic environment and financial markets, all of which are uncertain and cannot be predicted.~~ We are conducting business as usual with certain limitations to employee travel, employee work locations, and marketing events, among other modifications. We have observed other companies taking precautionary and preemptive actions to address COVID-19, and the effects it has had and is expected to have on business and the economy. Since March 2020, we have seen certain new and existing customers halt or decrease investment in infrastructure, and we expect that certain of our current and potential customers will take actions to reduce operating expenses and moderate cash flows, including by delaying sales and requesting extended billing and payment terms. We will continue to actively monitor the situation and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine aredisclosed in the ~~best interests of our employees, customers, partners, suppliers, and stockholders.~~consolidated financial statements.

Historical Cash Flows

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



	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	March 31,		March 31,		March 31,		March 31,
	2021		2020		2022		2021
Net cash used in operating activities	$	(3,406)	$	(10,269)	$	(1,691)	$	(3,406)
Net cash used in investing activities	$	(31)	$	(1,111)	$	(170)	$	(25)
Net cash provided by (used in) financing activities	$	(1,418)	$	11,317
Net cash used in financing activities					$	(112)	$	(1,424)

Net Cash Used In Operating Activities

Our net loss and cash flows from operating activities are significantly influenced by ~~the Acquisition and~~ our investments in headcount and infrastructure to support anticipated growth.

For the three months ended March 31, 2022, net cash used in operations was $1.7 million resulting from our net loss of $4.7 million and partially offset by changes in operating assets and liabilities of $0.4 million and net non-cash expenses of $2.6 million. The $2.6 million of non-cash expenses was comprised of $3.6 million of amortization of intangible assets acquired as a result of the Acquisition, $3.4 million from share-based compensation resulting from our issuance of stock options and restricted stock units, and partially offset by a $3.0 million change in fair value of warrant liability and a $1.7 million change in contingent consideration. The changes in operating assets and liabilities of $0.4 million was comprised primarily of a $1.8 million increase in accounts payable and accrued liabilities and a $1.4 million increase in deferred revenue and other liabilities and partially offset by a $1.7 million increase in prepaid expenses and other assets, a $0.9 million increase in accounts receivable, and a $0.2 million decrease in operating lease liabilities.

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For the three months ended March 31, 2021, net cash used in operations was ~~$(3.4)~~$3.4 million resulting from our net loss of $18.0 million and changes in operating assets and liabilities of $1.7 million, offset by net non-cash expenses of $16.4 million. The $16.4 million of non-cash expenses was comprised of a $5.3 million loss associated with the redemption of

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common stock, a $4.0 million change in fair value of warrant liability, $3.6 million of amortization of intangible assets acquired as a result of the Acquisition, $1.8 million from share-based compensation resulting from our issuance of stock options and restricted stock units and a $1.1 million change in contingent consideration, offset by $0.2 million of deferred tax benefits related to the tax and book basis difference on the amortization of intangible assets and $0.2 million gain on extinguishment of debt. The changes in operating assets and liabilities of $(1.7) million was comprised primarily of a $1.5 million increase in prepaid expenses and other assets, a $0.8 million decrease in accounts payable and accrued liabilities, and a $0.8 million increase in accounts receivable, offset by a $1.7 million increase in deferred revenue and other long-term liabilities.

For the three months ended March 31, 2020, net cash used in operations was $10.3 million resulting from our net loss of $17.4 million and changes in operating assets and liabilities of $1.6 million and offset by net non-cash expenses of $8.7 million. The $8.7 million of non-cash expenses was comprised of $3.7 million of amortization of intangible assets acquired as a result of the Acquisition, a $3.3 million from share-based compensation, a $2.1 million loss on issuance of shares, and $1.6 million change in fair value of warrant liability, and offset by $2.5 million of deferred tax benefits related to the tax and book basis difference on the amortization of intangible assets. The changes in operating assets and liabilities of $1.6 million was comprised primarily of a $1.1 million increase in prepaid expenses and other assets associated with the payments for insurance premiums, letters of credit required by certain customers and software subscription payments.

Net Cash Used In Investing Activities

Our primary investing activities have consisted of capital expenditures.

For the three months ended March 31, 2022, cash used in investing activities was $0.2 million resulting from capital expenditures.

For the three months ended March 31, 2021, cash used in investing activities was less than $0.1 million resulting from capital expenditures.

Net Cash Used in Financing Activities

For the three months ended March 31, ~~2020,~~2022, cash used in ~~investing~~financing activities was ~~$1.1~~$0.1 million ~~resulting from $1.1 million~~primarily due to repayments of ~~capital expenditures associated with~~finance lease ~~improvements and furniture purchases at Questica’s new facility.~~liabilities.

~~Net Cash Provided By (Used in) Financing Activities~~

For the three months ended March 31, 2021, cash used in financing activities was ~~$(1.4)~~$1.4 million primarily due to $8.0 million in redemptions of common shares offset by $6.8 million in proceeds from the issuance of common stock.

For the three months ended March 31, 2020, cash provided by financing activities was $11.3 million primarily due to $11.5 million of proceeds from the issuance of our term loan, net of issuance costs and offset by $0.2 million in repayments of finance lease obligations and contingent consideration payments.

Critical Accounting Policies and Use of Estimates

See Note 3 of the notes to our unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

The impact of recently issued accounting standards is set forth in Note 3, Summary of Significant Accounting Policies, of the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.

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Contractual Obligations and Commitments

As of March 31, ~~2021,~~2022, there were no significant changes to our contractual obligations from those presented as of December 31, ~~2020~~2021 in our ~~Current~~Annual Report on Form 10-K filed with the SEC on February ~~19, 2021.~~18, 2022.

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Item 3. Quantitative and Qualitative Disclosures About Market Risks

During the three ~~months~~ ended March 31, ~~2021,~~2022, there were no material changes to our interest rate risk disclosures, market risk disclosures and foreign currency exchange rate risk disclosures reported in our ~~Current~~Annual Report on Form 10-K filed with the SEC on February ~~19, 2021~~18, 2022 for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, to allow timely decisions regarding required disclosure.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

With respect to the quarter ended March 31, ~~2021,~~2022, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

~~During the quarter ended~~ Based on its evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2021 and in response to the SEC Statement on April 12, 2021, the Company has identified a material weakness associated with its accounting for warrants. The Company inappropriately relied upon the broad consensus among special purpose acquisition companies that these warrants were subject to equity treatment under a fixed accounting model. However, consistent with the SEC Statement, the Company revised its historical financial statements to account for the private warrants as liabilities. The Company is in the process of implementing new policies to remediate the material weakness mainly the adoption of new policies and procedures associated with the accounting of non-routine and complex transactions.2022.

Changes in Internal Control over Financial Reporting

~~We are taking actions to remediate~~During the ~~material weakness relating to our internal control over financial reporting, as described above. Except as otherwise described herein,~~most recently completed fiscal quarter, there ~~was~~has been no change in our internal control over financial reporting ~~that occurred during the period covered by this Quarterly Report on Form 10-Q~~ that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Notwithstanding the identified material weaknesses, management has concluded that the consolidated financial statements included in this quarterly report on Form 10-Q present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. generally accepted accounting principles (U.S. GAAP).

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

OnAs previously disclosed, on March 19, 2021, the Company received a request (the “Initial Request”) from the Securities and Exchange Commission (the “SEC”) for documents relating to the Company’s business combination consummated on February 19, 2019 and related transactions, including those described in a Form 8-K filed by the Company on February 14, 2019. The Company ~~is cooperating~~cooperated in the SEC’s investigation anddelivered its last response to the Initial Request on August 6, 2021. On May 9, 2022, the Company received an additional request from the SEC for documents relating to such business combination and intends to ~~continue to do so.~~cooperate with such additional request and any further requests it receives from the SEC.

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Item 1A.Risk Factors

The reader should carefully consider, in connection with the other information in this Quarterly Report on Form 10-Q, the factors discussed in the section entitled “Risk Factors” of our ~~2020~~2021 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

~~None~~None.

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Item 6.Exhibits.


Exhibit Number		Description
~~10.1~~1.1		~~Amended and Restated Employment~~At Market Issuance Sales Agreement dated ~~April 15, 2021 between~~February 4, 2022 with the Sales Agents with respect to an at-the-market offering program under which the Company may offer and ~~David Farrell.~~sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share having an aggregate offering price of up to $10,000,000 through the Sales Agents, and under which the parties agreed that the At Market Issuance Sales Agreement dated November 25, 2020 between them had terminated (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2022).

2.1†		Agreement and Plan of Merger, dated April 28, 2022, by and among GTY Technology Holdings Inc., GI Georgia Midco Inc. and GI Georgia Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2022).

~~10.2~~3.1		Amended and Restated ~~Employment Agreement dated April 29, 2021 between~~Bylaws of the Company ~~and John Curran.~~(f/k/a GTY Govtech, Inc.) dated July 26, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 27, 2021).

~~31.1~~10.1+		Waiver and Consent by TJ Parass dated January 26, 2022 with respect to the Parass Employment Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2022).

10.2+		Waiver and Consent by John Curran dated January 26, 2022 with respect to the Curran Employment Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2022).

10.3+		Waiver and Consent by David Farrell dated January 26, 2022 with respect to the Farrell Employment Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 26, 2022).

10.4		Second Amendment to Loan and Security Agreement dated April 1, 2022 by and among GTY Technology Holdings Inc., each of the subsidiary guarantors party thereto, the financial institutions parties thereto and Acquiom Agency Services LLC, as agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2022).

10.5+		First Amendment to Amended and Restated Employment Agreement dated April 28, 2022 by and between the Company and John Curran (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 3, 2022).

31.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~31.2*		Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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~~32.1~~32.1**		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~32.2**		Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101.INS*		Inline XBRL Instance Document
~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)

* Filed herewith.

**Furnished herewith.

+	Management contract or any compensatory plan, contract or arrangement.

†	Certain schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request.

3637

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 13^th day of May, ~~2021.~~2022.

GTY TECHNOLOGY HOLDINGS INC.

	/s/ TJ Parass
	Name:	TJ Parass
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	/s/ John Curran
	Name:	John Curran
	Title:	Chief Financial Officer
		(Principal Financial Officer)

3738


	Quarter Ended March 31, 2020
	As Previously Reported		Adjustments		As Revised
Change in fair value of warrant liability	$	—	$	1,563	$	1,563
Net loss	$	15,792	$	1,563	$	17,355
Comprehensive loss	$	13,743	$	1,563	$	15,306
Net loss per share, basic and diluted	$	(0.30)	$	(0.03)	$	(0.33)


Warrant liability – December 31, 2020	$	3,040
Change in fair value of warrant liability		4,038
Warrant liability – March 31, 2021	$	7,078


Nine months ended December 31, 2021		11,012
Year ended December 31, 2022		14,276
Year ended December 31, 2023		14,224
Year ended December 31, 2024		14,263
Year ended December 31, 2025		14,224
Thereafter		29,509
	$	97,508


	November 2020 Credit Facility	PPP Loans	Total
Principal	$ 25,000	$ 2,971	$ 27,971
Payment-in-kind ("PIK") accrued interest	199	—	199
Unamortized deferred issuance costs	(1,476)	—	(1,476)
Term loans, net	$ 23,723	$ 2,971	$ 26,694

Maturity Date	May 2023	April and May 2022
Interest Rate	8% + LIBOR	1%
PIK Interest Rate	2%	0%