10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

OR

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

For the transition period from            to         

GTY TECHNOLOGY HOLDINGS INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, including zip code)

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

Not Applicable

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	GTYH	Nasdaq Stock Market LLC

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

None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  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  x  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	x
Non-accelerated filer	¨	Smaller reporting company	¨
Emerging growth company	x

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 x

As of November 7, 2019, 52,207,635 shares of common stock, par value $0.0001 per share were outstanding.

GTY TECHNOLOGY HOLDINGS INC.

Form 10-Q

For the Quarter Ended September 30, 2019

Table of Contents

		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	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 (Deficit)	5
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

	Successor			Predecessor
	September 30,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	16,884		$	13,217
Investments		-			1,398
Accounts receivable, net		8,732			5,988
Prepaid expenses and other current assets		1,577			1,250
Total current assets		27,193			21,853
Property and equipment, net		2,896			1,124
Right of use assets		6,154			-
Loan receivable - related party		-			177
Intangible assets, net		123,631			1,564
Goodwill		332,976			2,518
Other assets		2,473			2,332
Total assets	$	495,323		$	29,568
Liabilities, Temporary Equity and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	5,372		$	5,969
Contract liabilities		16,151			11,732
Notes payable and accrued expenses - related party		76			-
Warrant liability		-			87
Financing lease obligations - current portion		547			138
Lease liability - current portion		1,761			-
Contingent consideration - current portion		12,208			-
Notes payable		-			450
Total current liabilities		36,115			18,376
Contract and other long-term liabilities		1,596			3,215
Deferred rent		-			62
Long-term debt, less current portion		-			433
Deferred tax liability		37,089			-
Financing lease obligations - less current portion		953			268
Lease liability - less current portion		4,623			-
Contingent consideration - less current portion		55,478			2,092
Total liabilities		135,854			24,446
Commitments and contingencies
Preferred stock		-			42,264
Shareholders’ equity (deficit):
Common stock, par value $0.0001; 400,000,000 shares authorized; 52,822,633 shares issued and 52,207,635 shares outstanding as of September 30, 2019, net of treasury stock		5			-
Exchangeable shares, no par value, 5,568,096 shares issued and outstanding as of September 30, 2019		45,681			-
Acquired Companies' common stock		-			148
Additional paid in capital		367,194			7,835
Accumulated other comprehensive loss		261			(174	)
Treasury stock, at cost, 614,998 shares as of September 30, 2019		(5,160	)		-
Accumulated deficit		(48,512	)		(44,951	)
Total shareholders' equity (deficit)		359,469			(37,142	)
Total liabilities, temporary equity and shareholders’ equity (deficit)	$	495,323		$	29,568

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

3

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

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

	Successor						Predecessor
	Three Months Ended			February 19, 2019 through			January 1, 2019 through			Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019			February 18, 2019			September 30, 2018			September 30, 2018
Revenues	$	8,754		$	20,034		$	4,928		$	7,617		$	21,021
Cost of revenues		2,583			7,090			1,614			2,590			6,862
Gross Profit		6,171			12,944			3,314			5,027			14,159
Operating  expenses
Sales and marketing		3,549			9,086			1,394			2,329			5,975
General and administrative		5,774			15,804			1,744			3,558			9,983
Research and development		3,003			7,610			1,580			2,463			6,688
Amortization of intangible assets		3,830			9,395			-			-			-
Acquisition costs		442			33,191			151			1,635			1,635
Change in fair value of contingent consideration		(812	)		(812	)		-			-			-
Total operating expenses		15,786			74,274			4,869			9,985			24,281
Loss from operations		(9,615	)		(61,330	)		(1,555	)		(4,958	)		(10,122	)
Other income (expense)
Interest income (expense)		(65	)		248			(170	)		(280	)		(343	)
Loss from repurchase of shares		(128	)		(1,032	)		-			-			-
Other income (loss)		(41	)		141			12			(488	)		239
Total other expense, net		(234	)		(643	)		(158	)		(768	)		(104	)
Net loss before income taxes		(9,849	)		(61,973	)		(1,713	)		(5,726	)		(10,226	)
Benefit from (provision for) income taxes		1,149			2,819			-			(658	)		(658	)
Net loss		(8,700	)		(59,154	)		(1,713	)		(6,384	)		(10,884	)
Other comprehensive loss
Foreign currency translation gain		75			261			-			-			-
Total other comprehensive loss		75			261			-			-			-
Comprehensive loss	$	(8,625	)	$	(58,893	)	$	(1,713	)	$	(6,384	)	$	(10,884	)
Net loss		(8,700	)		(59,154	)		(1,713	)		(6,384	)		(10,884	)
Cumulative preferred stock dividends		-			-			-			(336	)		(857	)
Deemed dividend for Exchangable Shares - Series C		-			(183	)
Deemed dividend on Series Seed preferred stock											(37	)		(37	)
Net loss applicable to common shareholders	$	(8,700	)	$	(59,337	)	$	(1,713	)	$	(6,757	)	$	(11,778	)
Net loss per share, basic and diluted	$	(0.17	)	$	(1.18	)
Weighted average common shares outstanding, basic and diluted		52,148,047			50,316,808

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

4

GTY TECHNOLOGY HOLDINGS INC.

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

(Unaudited)

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

Three Months Ended September 30, 2019

																													Accumulated		Total
																				Additional									Other		Shareholders’
	Common Stock					Class A				Class B				Exchangeable Shares						Paid in			Treasury			Accumulated			Comprehensive		Equity
Successor	Shares			Amount		Shares		Amount		Shares		Amount		Shares			Amount			Capital			Stock			Deficit			Loss		(Deficit)
Balance - June 30, 2019		52,155,614		$	5		-	$	-		-	$	-		5,761,741		$	47,617		$	364,614		$	(3,413	)	$	(39,812	)	$	186	$	369,197
Net loss		-			-		-		-		-		-		-			-			-			-			(8,700	)				(8,700	)
Share-based compensation		-			-		-		-		-		-		-			-			556			-			-			-		556
Measurement period adjustment to Common Stock issued for acquisitions		(4,150	)		-		-		-		-		-		-			-			(42	)		-			-			-		(42	)
Common stock repurchases		(250,000	)		-		-		-		-		-		-			-			-			(1,747	)		-			-		(1,747	)
Stock option exercises		112,526			-		-		-		-		-		-			-			130			-			-			-		130
Exchangable shares converted to Common Stock		193,645			-		-		-		-		-		(193,645	)		(1,936	)		1,936			-			-			-		-
Currency translation gain		-			-		-		-		-		-		-			-												75		75
Balance - September 30, 2019		52,207,635		$	5		-	$	-		-	$	-		5,568,096		$	45,681		$	367,194		$	(5,160	)	$	(48,512	)	$	261	$	359,469

Nine Months Ended September 30, 2019

																																	Accumulated		Total
																								Additional									Other		Shareholders’
	Common Stock					Class A						Class B						Exchangeable Shares						Paid in			Treasury			Accumulated			Comprehensive		Equity
Successor	Shares			Amount		Shares			Amount			Shares			Amount			Shares			Amount			Capital			Stock			Deficit			Loss		(Deficit)
Balance - December 31, 2018		-		$	-		898,984		$	-			13,568,821		$	1			-		$	-		$	-		$	-		$	9,920		$	-	$	9,921
Net loss		-			-		-			-			-			-			-			-			-			-			(59,154	)				(59,154	)
Ordinary shares no longer subject to possible redemption		-			-		9,216,438			1			-			-			-			-			88,190			-			722			-		88,913
Private placement of Class A shares, net of costs							12,863,098			2			-			-			-			-			125,256			-			-			-		125,258
Exchange of shares in GTY Merger		36,547,341			4		(22,978,520	)		(3	)		(13,568,821	)		(1	)		-			-			-			-			-			-		-
Common Stock issued for acquisitions		11,969,004			1		-			-			-			-			-			-			119,688			-			-			-		119,689
Shares convertible into Common Stock issued for acquisitions		-			-		-			-			-			-			5,761,741			47,617			-			-			-			-		47,617
Common Stock issued for Exchangeable Shares - Class C		500,000			-		-			-			-			-			-			-			3,860			-			-			-		3,860
Share-based compensation		-			-		-			-			-			-			-			-			2,867			-			-			-		2,867
Private placement of Common Stock, net of costs		3,500,000			-		-			-			-			-			-			-			25,450			-			-			-		25,450
Common stock repurchases		(614,998	)		-		-			-			-			-			-			-			-			(5,160	)		-			-		(5,160	)
Stock option exercises		112,643			-		-			-			-			-			-			-			130			-			-			-		130
Exchangable shares converted to Common Stock		193,645			-		-			-			-			-			(193,645	)		(1,936	)		1,936			-			-			-		-
Currency translation gain		-			-		-			-			-			-			-			-			-			-			-			261		261
Deemed dividend for Exchangeable Shares - Class C		-			-		-			-			-			-			-			-			(183	)		-			-			-		(183	)
Balance - September 30, 2019		52,207,635		$	5		-		$	-			-		$	-			5,568,096		$	45,681		$	367,194		$	(5,160	)	$	(48,512	)	$	261	$	359,469

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

5

GTY TECHNOLOGY HOLDINGS INC.

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

(Unaudited)

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

Predecessor from December 31, 2018 to February 18, 2019 

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

Predecessor from June 30, 2018 to September 30, 2018 

	Predecessor
Balance as of June 30, 2018	$	(22,957	)
Net loss		(6,384	)
Stock compensation		627
Shareholders'/Members' equity activity		(2,335	)
Currency translation loss		(59	)
Balance as of September 30, 2018	$	(31,108	)

Predecessor from December 31, 2017 to September 30, 2018 

	Predecessor
Balance as of December 31, 2017	$	(18,613	)
Net loss		(10,884	)
Stock compensation		670
Shareholders'/Members' equity activity		(2,222	)
Currency translation loss		(59	)
Balance as of September 30, 2018	$	(31,108	)

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

6

GTY TECHNOLOGY HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)

	Successor			Predecessor
	February 19, 2019 through			January 1, 2019 through			Nine Months Ended
	September 30, 2019			February 18, 2019			September 30, 2018
Cash flows from operating activities:
Net loss	$	(59,154	)	$	(1,713	)	$	(10,884	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment		329			177			480
Amortization of intangible assets		9,395			32			301
Amortization of right of use assets		861			165			-
Share-based compensation		2,867			61			647
Deferred income tax benefit		(2,819	)		-			47
Bad debt expense		20			6			16
Loss on disposal of property and equipment		2			-			157
Foreign exchange loss on payment of vested options		21			-			-
Change in fair value of contingent consideration		(812	)		(37	)		(46	)
Change in fair value of warrant liability		-			(18	)		39
Gain on sale of marketable securities		-			-			(3	)
Accrual of Paid In Kind interest		-			-			12
Repayments of Paid In Kind interest		-			-			(23	)
Change in fair value of notes payable converted to stock		-			-			1,387
Interest expense from notes payable converted to stock		-			-			160
Change in fair value of put options		-			-			(99	)
Changes in operating assets and liabilities:
Accounts receivable		(4,789	)		2,190			(642	)
Prepaid expenses and other assets		(150	)		202			(615	)
Accounts payable and accrued liabilities		(6,202	)		(58	)		2,676
Contract and other long-term liabilities		11,402			(723	)		2,445
Lease liabilities		(814	)		-			-
Net cash (used in) provided by operating activities		(49,843	)		284			(3,945	)
Cash flows from investing activities:
Proceeds from cash held in trust		217,642			-			-
Proceeds from sale/disposal of property and equipment		-			1			1
Purchase of marketable securities		-			-			(180	)
Proceeds from related party loan		-			-			(25	)
Proceeds from the sales of marketable securities		-			1,531			563
Payment of internal use software		(793	)		-			-
Acquisitions, net of cash acquired		(179,423	)		-			-
Capital expenditures		(196	)		(15	)		(333	)
Net cash provided by investing activities		37,230			1,517			26
Cash flows from financing activities:
Proceeds from borrowings		-			35			6,231
Repayments of borrowings		(585	)		(69	)		(729	)
Stock options exercises		130			13			23
Contingent consideration payments		-			-			(50	)
Shareholder advances		-
Proceeds from issuances of Predeccesor preferred shares		-			-			9,960
Member distribution		-			(500	)		(859	)
Dividends		-			-			(924	)
Borrowings issuance cost		-			-			(24	)
Deferred cash payment for acquisitions		-			-			(150	)
Common Stock repurchases		(5,160	)		-			-
Redemption of Class A Ordinary Shares		(113,982	)		-			-
Redemption of Exchangable Shares - Class C		(1,323	)		-			-
Proceeds received from private placement of Class A shares, net of costs		125,258			-			-
Proceeds received from private placement of Common Stock , net of costs		25,450			-			-
Repayments of finance lease obligations		(259	)		(19	)		(110	)
Net cash provided by (used in) financing activities		29,529			(540	)		13,368
Effect of foreign currency on cash		(84	)		(721	)		(488	)
Net change in cash and cash equivalents		16,832			540			8,961
Cash and cash equivalents, beginning of period		52			13,929			12,441
Cash and cash equivalents, end of period	$	16,884		$	14,469		$	21,402
Supplemental disclosure of cash flow information:
Cash paid for interest	$	-		$	-		$	-
Cash paid for income taxes	$	-		$	-		$	-
Noncash Investing Activity:
Shares issued for the Acquisition	$	172,307		$	-		$	-
Reduction in convertible note liability	$	1,000		$	-		$	-
Exchangable shares converted to Common Stock	$	1,936		$	-		$	-
Capital leases	$	2,714		$	-		$	-

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

7

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Note 1. Organization and Business Operations

GTY Technology Holdings Inc. (f/k/a GTY Govtech, Inc.), a Massachusetts corporation (“GTY”, the “Company” or “Successor”), is headquartered in Las Vegas, Nevada.

On February 19, 2019 (the “Closing Date”), the Company consummated several acquisitions (collectively, the “Acquisition”), pursuant to which it (i) acquired each of Bonfire Interactive Ltd. (“Bonfire”), CityBase, Inc. (“CityBase”), eCivis Inc. (“eCivis”), Open Counter Enterprises Inc. (“Open Counter”), Questica Inc. and Questica USCDN Inc. (together, “Questica”) and Sherpa Government Solutions LLC (“Sherpa” and together with Bonfire, CityBase, eCivis, Open Counter and Questica, the “Acquired Companies”) and (ii) became the parent company of its predecessor entity, GTY Technology Holdings Inc., a blank check company incorporated in the Cayman Islands (“GTY Cayman”). Until the Acquisition, GTY Cayman did not engage in any operations nor generate any revenues.

In connection with the closing of the Acquisition, the Company changed its name from GTY Govtech, Inc. to GTY Technology Holdings Inc. and became a successor issuer to GTY Cayman and continued the listing of its common stock and warrants on the Nasdaq Capital Market (“NASDAQ”) under the symbols “GTYH” and “GTYHW,” respectively. As of June 2019, the Company’s warrants are no longer listed on any exchange. 

GTY is a public sector SAAS company which 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 following is a brief description of each of the Acquired Companies.

Bonfire

Bonfire Interactive Ltd. 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. 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 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

CityBase, 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

eCivis, 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

Open Counter, a Delaware corporation headquartered in San Francisco, California, 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 also provides professional services related to software implementation.

8

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Questica

Questica, Inc., Questica USCDN Inc., and its wholly-owned subsidiary Questica Ltd., design and develop budgeting software that 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 solution that enables public sector and non-profit organizations to improve and shorten their budgeting cycles. 

Questica 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 the Questica Ltd.’s customers are located in the United States and Canada, and as well as some international customers, primarily located in the United Kingdom and Africa.

Sherpa

Sherpa 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. 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 operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the condensed consolidated financial statements, the Company had an accumulated deficit of approximately $48.5 million at September 30, 2019, a net loss of approximately $59.2 million and approximately $49.8 million net cash used in operating activities for the successor period from February 19, 2019 through September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is attempting to further expand its customer base; scale up its production of various products; and increase revenues; however, the 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. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional funds by way of a public or private offering and its ability to further generate sufficient revenues. While the Company believes in the viability of its platform and in its ability to raise additional funds by way of a 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 recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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, 2018 filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019 and the Company’s Current Report Form 8-K/A filed with the SEC on March 18, 2019. Certain reclassifications have been made to conform to current period presentation.

9

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

The Acquisition was accounted for as a business combination using the acquisition method of accounting. The Company’s financial statement presentation distinguishes the results of operations into two distinct periods: (i) the period before the consummation of the Acquisition, which includes the period from January 1, 2019 to the Closing Date (the “2019 Predecessor Period”), the three and nine months ended September 30, 2018 (the “2018 Predecessor Period”) and (ii) the period after consummation of the Acquisition which includes the period including and after the Closing Date to September 30, 2019 (“2019 Successor Period”), and the three months ended September 30, 2019. The accompanying condensed consolidated financial statements include a black line division which indicates that the Acquired Companies and the Company’s financial information are presented on a different basis and are therefore, not comparable.

Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See Note 4 – Business Combination for a discussion of the estimated fair values of assets and liabilities recorded in connection with the Acquisition.

The historical financial information of GTY Cayman prior to the Acquisition is not being reflected in the Predecessor financial statements as these historical amounts have been determined not to be useful to a user of the financial statements. GTY Cayman’s operations prior to the Acquisition, other than income from the Trust Account (as defined in Note 10. Shareholders’ Equity) investments and transaction expenses, were nominal.

The Company believes that Predecessor activities related to investments, intangible assets, stock-based compensation, goodwill, fair value measurements and notes payable were either quantitatively or qualitatively immaterial. Therefore, the Company did not disclose these Predecessor activities in the following unaudited footnotes.

Principles of Consolidation

The Successor Period condensed consolidated financial statements include all accounts of the Company and its subsidiaries. The Predecessor Period condensed consolidated financial statements include all accounts of the Acquired Companies and the Acquired Companies’ subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements.

Segments

The Company has six operating segments. The Company’s Chief Executive Officer and Chief Financial Officer, who jointly are the Company’s chief operating decision maker, review financial information for each of the Acquired Companies, together with certain consolidated operating metrics, to make decisions about how to allocate resources and to measure the Company’s performance. See Note 11.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash includes cash held in checking and savings accounts. Cash equivalents are comprised of investments in money market mutual funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Accounts Receivable

Accounts receivable consists of amounts due from our customers, which are primarily located throughout the United States and Canada. Accounts receivable are recorded at the invoiced amount, do not require collateral, and do not bear interest.

The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the Company’s customers may have an inability to meet financial obligations, such as bankruptcy and significantly aged receivables outstanding. Uncollectible receivables are written-off in the period management believes it has exhausted every opportunity to collect payment from the customer. Bad debt expense is recorded when events or circumstances indicate an additional allowance is required based on the Company’s specific identification approach.

The allowance for doubtful accounts for the Successor as of September 30, 2019 and for the Predecessor as of December 31, 2018 was immaterial. Bad debt expense for all periods presented was immaterial.

10

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents, and accounts receivable. Cash accounts in a financial institution at times may exceed the Federal depository insurance coverage of $250,000. As of September 30, 2019 and December 31, 2018, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Additionally, all Canadian Dollars (“CDN”) institution amounts are covered by Canada Deposit Insurance Corporation, or CDIC insurance.

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, and the useful lives intangible assets, stock-based compensation, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses.  

Property and Equipment

Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the condensed consolidated statement of operations in the period realized. Property, plant and equipment is depreciated using the straight-line method over five (5) to fifteen (15) years. Internal-use software is amortized on a straight-line basis over its estimated useful life or five (5) years.

Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Capitalized Software Costs

The Company capitalizes costs incurred during the application development stage related to the development of internal-use software and enterprise cloud computing services. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company capitalized $0.2 million and $0.8 million for internal use software, respectively.

Intangible Assets (Successor) 

Intangible assets consist of acquired customer relationships, acquired developed technology, trade names and non-compete agreements which were acquired as part of the Acquisition. The Company determines the appropriate useful life of its intangible assets by performing an analysis of expected cash flows of the acquired assets. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the economic benefits are consumed.

Goodwill (Successor)

Goodwill represents the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed, and it is presented as Goodwill in the accompanying condensed consolidated balance sheet of the Successor.   Under ASC 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill is not amortized but is subject to periodic impairment testing.  ASC 350 requires that an entity assign its goodwill to reporting units and test each reporting unit’s goodwill for impairment at least on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  In our evaluation of goodwill for impairment, which will be performed annually during the fourth quarter, we first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it was more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform the quantitative goodwill impairment test. As a result of the Acquisition, the Company acquired goodwill during the Successor Period. There was minimal goodwill prior to the Acquisition. The Company did not identify any significant events or circumstances that would require it to perform an impairment test as of September 30, 2019. As such, there was no impairment recognized during the Successor Period. 

11

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Business Combinations (Successor)

The Company accounts for business acquisitions using the acquisition method of accounting based on Accounting Standards Codification (“ASC”) 805 — Business Combinations, which requires recognition and measurement of all identifiable assets acquired and liabilities assumed at their fair value as of the date control is obtained. The Company determines the fair value of assets acquired and liabilities assumed based upon its best estimates of the acquisition-date fair value of assets acquired and liabilities assumed in the acquisition. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Subsequent adjustments to fair value of any contingent consideration are recorded to the Company’s condensed consolidated statements of operations.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s condensed consolidated financial statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the three months ended September 30, 2019, adjustments were made within the permitted measurement period that resulted in (i) an increase in the aggregate consideration of the Acquisition of $0.4 million relating to the settlement of the working capital adjustments, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor (the “Measurement Period Adjustments). These Measurement Period Adjustments have been reflected as current period adjustments in the three months ended September 30, 2019 in accordance with the guidance in ASU 2015-16 “Business Combinations.” The Measurement Period Adjustments primarily impacted goodwill, with no effect on earnings or cash in the current period. See Note 4.

Impairment of long-lived assets

The Company reviews long-lived assets, including property and equipment and intangible assets and goodwill for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. There were no impairments recorded for all periods presented.

Leases

Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the condensed consolidated balance sheet as both a right of use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term. 

The Company accounted for leases prior to January 1, 2019 under ASC Topic 840.

Fair Value (Successor)

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 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.

12

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

The Company’s only material financial instruments carried at fair value as of September 30, 2019, with changes in fair value flowing through current earnings, consist of contingent consideration liabilities recorded in conjunction with business combinations and are as follows (in thousands):

			Fair Value Measurement at Reporting Date Using
	Balance as of September 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Contingent consideration – current	$	12,208	$	-	$	-	$	12,208
Contingent consideration – long term		55,478		-		-		55,478
Total liabilities measured at fair value	$	67,686	$	-	$	-	$	67,686

There were no transfers made among the three levels in the fair value hierarchy during the period after consummation of the Acquisition, which includes the period including and after the Closing Date to September 30, 2019.

The following table presents 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 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 Level 3 liabilities measured at fair value from February 18, 2019 to September 30, 2019 were as follows (in thousands):

Contingent consideration - February 18, 2019	$	2,685
Fair value of contingent consideration - Bonfire		325
Fair value of contingent consideration - CityBase		48,410
Fair value of contingent consideration - eCivis		5,859
Fair value of contingent consideration - Questica		9,311
Fair value of contingent consideration - Sherpa		1,898
Change in valuation		(812	)
Change due to fluctuation in foreign currency		10
Contingent consideration - September 30, 2019	$	67,686

The change in valuation was due, in part, to the decreased probabilities of the achievement of certain milestones of some of the acquired entities.

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.

13

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities 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.

Foreign Currency Translation and Transactions

The assets, liabilities and results of operations of certain consolidated entities are measured using their functional currency, which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these entities with the Company, their assets and liabilities are translated to U.S. dollars at currency exchange rates as of the condensed consolidated balance sheet date and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these entities’ condensed consolidated financial statements are reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and total other comprehensive loss on the condensed consolidated statements of operations.

 Revenue Recognition

 The Company adopted the Financial Accounting Standards Board (“FASB”) new revenue recognition framework, ASC 606, Revenue from Contracts with Customers (“ASC 606”), on January 1, 2017 using the full retrospective approach. The adoption of this standard did not have a material impact on prior revenue recognition or on opening equity, as the timing and measurement of revenue recognition for the Company is materially the same under ASC 606 as it was under the prior relevant guidance.

With the adoption of Topic 606, revenues are recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenues recognized will not occur.

The Company determines the amount of revenues to be recognized through application of the following steps:

· Identification of the contract, or contracts with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenues when or as the Company satisfies the performance obligations.

For contracts where the period between when the Company transfers a promised service to the customer and when the customer pays is one year or less, the Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component.

The Company has made a policy election to exclude from the measurement of the transaction price all taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue producing transaction and collected by the Company from a customer. Such taxes may include but are not limited to sales, use, value added and certain excise taxes. 

14

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Disaggregation of Revenues

	Successor				Predecessor
	Three Months Ended		February 19, 2019 through		January 1, 2019 through		Three Months Ended		Nine Months Ended
	September  30, 2019		September 30, 2019		February 18, 2019		September 30, 2018		September 30, 2018
Subscriptions, support and maintenance	$	5,920	$	13,393	$	3,253	$	5,156	$	14,424
Professional services		2,449		5,287		1,269		1,369		4,604
License		344		1,302		383		876		1,672
Asset sales		41		52		23		216		321
Total revenues	$	8,754	$	20,034	$	4,928	$	7,617	$	21,021

Revenues

Subscription, support and maintenance. The Company provides software hosting services that provide customers with access to software 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 to 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 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 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 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 68% and 67% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

Professional services. The Company’s 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 whether the milestone will be achieved. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately 28% and 26% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

License. Revenues from distinct licenses 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 4% and 6% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the client 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 less than 1% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period. 

Contract Liabilities

Contract liabilities primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for subscription services to the Company’s SaaS offerings and related implementation and training. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. The Company receives payments both upfront and over time as services are performed. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. Contract liabilities are reduced as services are provided and the revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in current liabilities as contract liabilities, and the remaining portion is recorded in long-term liabilities as contract liabilities, non-current. Revenues of approximately $6.3 million, $2.2 million, and $8.1 million were recognized for the 2019 Successor Period, the 2019 Predecessor Period, and the nine months ended September 30, 2018, respectively, that was included in the contract liabilities balances at the beginning of the respective periods.

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.

15

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Stock Based Compensation

The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates, involve inherent uncertainties and the application of management’s judgment.

Expected Term — The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility — The Company computes stock price volatility over expected terms based on comparable companies’ historical common stock trading prices.

Risk-Free Interest Rate — The Company bases the risk-free interest rate on the U.S. Treasuries implied yield with an equivalent remaining term.

Expected Dividend — The Company has never declared or paid any cash dividends on common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in valuation models.

The following are the assumptions used for the stock option grant on February 19, 2019:

Exercise price	$	1.82
Expected term (years)		5.1
Expected stock price volatility		74	%
Risk-free rate of interest		2	%

In accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, the Company records forfeitures as they occur.

Net Loss per Share

Net loss per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per common share is computed similar to basic net income per common share 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 Successor Period, diluted and basic loss per share are the same.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at September 30, 2019 are as follows:

Warrants to purchase common stock	27,093,334
Unvested restricted stock units	944,962
Options to purchase common stock	278,623
Total	28,316,919

Income Taxes

Deferred income taxes are provided for the tax effects of temporary differences between (i) the carrying amounts of assets and liabilities for financial reporting purposes and (ii) the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a full valuation allowance against its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive or negative evidence becomes available. No tax related impact was recorded in the financial statements as a result of the adoption of ASU No. 2016-09. 

16

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. Through September 30, 2019, the Company has not identified any material uncertain tax positions for which liabilities would be required to be recorded.

As a result of the Acquisition, a temporary difference between the book fair value and tax basis for the assets acquired of $39.9 million was created, resulting in a deferred tax liability and additional goodwill.

The following is a rollforward of the Company’s deferred tax liability from February 19, 2019 to September 30, 2019 (in thousands):

Balance - February 19, 2019	$	(39,908	)
Income tax benefit (associated with the amortization of intangible assets)		2,819
Balance - September 30, 2019	$	(37,089	)

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $3.6 million, lease liability of approximately $3.8 million.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company has not determined the impact of this guidance on its financial statements.

In August 2018, the FASB issued Accounting Standards Update 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"). 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 ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements and expects to adopt the new standard in the first quarter of 2020.

Note 4. Business Combination

Successor

Business Combination

On February 19, 2019, the Company consummated the Business Combination, pursuant to which it acquired each of Bonfire, CityBase, eCivis, Open Counter, Questica, and Sherpa. In connection with the closing of the Business Combination (the “Closing”), pursuant to the GTY Agreement between the Company, GTY Cayman, and GTY Technology Merger Sub, Inc. (“GTY Merger Sub”), merged with and into GTY Cayman, with GTY Cayman surviving the merger as a direct, wholly-owned subsidiary of the Company, and in connection therewith the Company changed its name from GTY Govtech, Inc. to GTY Technology Holdings Inc. This acquisition qualifies as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill.

17

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Bonfire Acquisition

Under the Bonfire Agreement, at Closing, the Company acquired Bonfire for aggregate consideration of approximately $48.0 million in cash and 2,156,014 shares of Company common stock (valued at $10.00 per share) and 2,161,741 shares of Bonfire Exchangeco, each of which is exchangeable for shares of Company common stock on a one-for-one basis at any time of the holder’s choosing. Of the shares issued to Bonfire Holders, 2,008,283 shares of Company common stock and 2,093,612 exchangeable shares in the capital stock of Bonfire Exchangeco (the “Bonfire Exchangco Shares”) are subject to transfer restrictions for one year, which such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $3.1 million in cash and 690,000 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the Bonfire Holders.

Additionally, in accordance with the Bonfire Agreement, 1,218,937 unvested options to purchase shares of Bonfire common stock were converted into 408,667 options to purchase shares of Company common stock.

During the 2019 Successor Period, 193,645 shares of the Bonfire Exchangeco Shares were converted into the Company’s Common Stock on a one-for-one basis. The Bonfire Exchangeco Shares were subject to the transfer restrictions described above, and the Common Stock issued for these shares is subject to the same transfer restrictions, discussed above.

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the decrease in aggregate consideration of $0.1 million relating to the settlement of the working capital adjustment in accordance with the Bonfire Agreement.

CityBase Acquisition

Under the CityBase Agreement, at Closing, the Company acquired CityBase for aggregate consideration of approximately $62.2 million in cash and 3,155,961 shares of Company common stock (valued at $10.00 per share). Each CityBase Holder may elect to have their shares subject to transfer restrictions for up to one year or to have their shares subject to redemption at the Company’s option for a promissory note in an amount equal to $10.00 per share redeemed, which note would bear interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s)) (which option was not exercised and expired on the 90th day after the Closing). Prior to the consummation of the Business Combination, certain of the CityBase Holders agreed to purchase 380,937 Class A Ordinary Shares of GTY Cayman with the proceeds they would have otherwise received from the closing of the CityBase Transaction, which resulted in an approximate $3.8 million reduction to the amount of cash payable to the CityBase Holders. In addition, approximately $2.1 million in cash and 1,000,000 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the CityBase Holders.

For the three months ended September 30, 2019, the Company recorded measurement period adjustments for (i) the increase in the aggregate consideration of $0.2 million relating to the settlement of the working capital adjustment in accordance with the CityBase Agreement, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor. 

eCivis Acquisition

Under the eCivis Agreement and the eCivis Letter Agreement, at Closing, the Company acquired eCivis for aggregate consideration of approximately $14.0 million in cash and 2,883,433 shares of Company common stock (valued at $10.00 per share) (including 525,060 shares of Company 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 shares not subject to a redemption right are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $3.6 million in cash and 242,200 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the eCivis Holders.

18

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the increase in aggregate consideration of $0.5 million relating to the settlement of the working capital adjustment in accordance with the eCivis Agreement and the eCivis Letter Agreement.

Open Counter Acquisition

Under the Open Counter Agreement and the Open Counter Letter Agreement, at Closing, the Company acquired Open Counter for aggregate consideration of approximately $9.7 million in cash and 1,580,990 shares of Company common stock (valued at $10.00 per share) that were issued to the holders of Open Counter capital stock (the “Open Counter Holders”) (including 100,000 shares of Company common stock which have subsequently been redeemed for a promissory note at the sole discretion of the Company within seven days of the Closing. Such promissory note would bear interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s))). The shares that were not subject to a redemption right are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $1.3 million in cash and 164,554 shares of Company common stock were deposited into escrow for a period of one year to cover certain indemnification obligations of the Open Counter Holders. 

Questica Acquisition

Under the Questica Agreement and the Questica Letter Agreement, at Closing, the Company indirectly acquired Questica for aggregate consideration of approximately $44.4 million in cash and an aggregate of 2,600,000 Class A exchangeable shares in the capital stock of Questica Exchangeco, which is exchangeable into shares of the Company’s common stock, and 1,000,000 Class B shares in the capital stock of Questica Exchangeco, which is not exchangeable into shares of Company common stock, that were issued to the holders of Questica capital stock (the “Questica Holders”). In accordance with the Questica Shareholder Agreement, dated as of February 12, 2019, by and among the Company and certain Questica Holders (the “Questica Shareholder Agreement”), 500,000 Class C exchangeable shares in the capital stock of Questica Exchangeco had been redeemable at the sole discretion of the Company at any time for $5.0 million plus all accrued and unpaid dividends, and may be exchanged for shares of Company common stock beginning on the sixty-first day following the Closing for a number of shares of Company common stock equal to $5.0 million plus accrued and unpaid dividends divided by the lesser of (i) $10.00 or (ii) the 5-day volume weighted average price (“VWAP”) at the time of exchange. In June 2019, these shares were redeemed for 500,000 shares of the Company common stock at the market price of $7.72, or $3.9 million, and transferred to permanent equity, and $1.3 million of cash. The incremental $0.2 million above the stated redemption price was recorded as a deemed dividend in the accompanying condensed consolidated financial statements. The Class A exchangeable shares in the capital stock of Questica Exchangeco are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $0.1 million in cash and 800,000 of the exchangeable shares described above were deposited into escrow for a period of one year to cover certain indemnification obligations of the Questica Holders.

Sherpa Acquisition

Under the Sherpa Agreement and the Sherpa Letter Agreement, at Closing, the Company indirectly acquired Sherpa for aggregate consideration of approximately $4.2 million in cash and 100,000 shares of Company common stock (valued at $10.00 per share) all of which are redeemable for a promissory note bearing interest equal to 5.5% per annum in the first year subsequent to issuance and 8.0% per annum thereafter at the sole discretion of the Company within seven days of the Closing. In addition, approximately $0.9 million in cash was deposited into escrow for a period of one year to cover certain indemnification obligations of the Questica Holders.

19

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the decrease in aggregate consideration of $0.2 million relating to the settlement of the working capital adjustment in accordance with the Sherpa Agreement and the Sherpa Letter Agreement.

During the three months ended September 30, 2019, the Company made the Measurement Period Adjustments that resulted in (i) an increase in the aggregate consideration of the Acquisition of $0.4 million relating to the settlement of the working capital adjustments, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor.  The following is a summary of the revised consideration paid and issued to each Acquired Company including the Measurement Period Adjustments (in thousands):

	Cash Consideration		Stock Consideration			Contingent Consideration		Total		Adjusted Net Assets			Goodwill		Intangibles		Deferred Tax Liability
Bonfire	$	50,971	$	50,078	(1)	$	325	$	101,374	$	3,639		$	81,867	$	22,668	$	6,800
CityBase		64,507		41,518			48,410		154,435		782			119,945		48,155		14,447
eCivis		18,073		31,256			5,859		55,188		(1,788	)		47,878		12,997		3,899
OpenCounter		10,958		17,455			-		28,413		(1,441	)		22,524		10,471		3,141
Questica		44,494		31,000	(2)		9,311		84,805		3,652			57,479		33,821		10,147
Sherpa		4,891		1,000			1,898		7,789		1,066			3,283		4,914		1,474
Total	$	193,894	$	172,307		$	65,803	$	432,004	$	5,910		$	332,976	$	133,026	$	39,908

(1)  Includes $21.6 million of convertible stock consideration

(2)  Includes $31.0 million of convertible stock consideration

The following table represents the revised preliminary allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values, including the Measurement Period Adjustments discussed above. The following revised allocations are considered preliminary and may change within the permissible measurement period, not to exceed one year (in thousands):

	Bonfire			CityBase			eCivis			OpenCounter			Questica			Sherpa			Total
Cash	$	4,641		$	2,191		$	136		$	107		$	6,763		$	632		$	14,470
Accounts receivable, net		323			1,018			720			46			1,257			587			3,951
Prepaid expense and other current assets		607			170			340			-			77			33			1,227
Fixed assets		118			500			56			29			182			2			887
Loan receivable - related party		-			175			-			-			-			-			175
Right of use assets		1,315			-			901			-			296			-			2,512
Other assets		369			783			30			-			1,061			-			2,243
Intangible assets		22,668			48,155			12,997			10,471			33,821			4,914			133,026
Goodwill		81,867			119,945			47,878			22,524			57,479			3,283			332,976
Accounts payable and accrued expenses		(1,085	)		(1,192	)		(582	)		(123	)		(910	)		(188	)		(4,080	)
Contract liabilities		(1,221	)		(816	)		(1,635	)		(484	)		(2,774	)		-			(6,930	)
Lease liability - short term		(366	)		-			-			-			(296	)		-			(662	)
Deferred tax liability		(6,800	)		(14,447	)		(3,899	)		(3,141	)		(10,147	)		(1,474	)		(39,908	)
Other current liabilities		-			-			(3	)		(491	)		(767	)		-			(1,261	)
Capital lease obligations - current portion		-			(139	)		-			-			-			-			(139	)
Contract and other long-term liabilities		(60	)		(1,646	)		(56	)		-			-			-			(1,762	)
Capital lease obligation, less current portion		-			(262	)		-			-			-			-			(262	)
Long term debt		-			-			-			(525	)		-			-			(525	)
Lease liability - long term		(1,002	)		-			(901	)		-			-			-			(1,903	)
Contingent consideration - pre-existing		-			-			(794	)		-			(1,237	)		-			(2,031	)
Total consideration	$	101,374		$	154,435		$	55,188		$	28,413		$	84,805		$	7,789		$	432,004

Transaction Costs

Transaction costs incurred by the Company associated with the Acquisition were $33.2 million from February 19, 2019 through September 30, 2019.

20

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Note 5. Intangible Assets (Successor)

The Company recognized goodwill and certain identifiable intangible assets in connection with business combinations. See Note 4.

Identifiable intangible assets consist of the following as of September 30, 2019 for the Successor (in thousands):

																	Intangible Asset Amortization
																	for the Period February 19, 2019
	Economic																Through
	Life (Years)		Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Gross Total		September 30, 2019		Net Total
Patents / Developed Technology		8	$	10,197	$	31,789	$	3,637	$	5,469	$	6,090	$	1,140	$	58,322	$	4,477	$	53,845
Trade Names / Trademarks		1 - 10		3,491		8,038		2,573		1,217		1,880		306		17,505		1,241		16,264
Customer Relationships		10		8,723		7,840		6,641		3,678		25,721		3,396		55,999		3,432		52,567
Non-Compete Agreements		3		257		488		146		107		130		72		1,200		245		955
			$	22,668	$	48,155	$	12,997	$	10,471	$	33,821	$	4,914	$	133,026	$	9,395	$	123,631

Amortization expense recognized by the Company related to intangible assets for the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019 (Successor) was $3.8 million and $9.4 million, respectively. Amortization expense recognized by the Predecessor for the period from January 1, 2019 through February 18, 2019, the three months ended September 30, 2018, and the nine months ended September 30, 2018 (predecessor) was $0.03 million, $0.2 million and $0.3 million, respectively.

The estimated aggregate future amortization expense for intangible assets is as follows (in thousands):

Three months ended December 31, 2019	$	3,829
Year ended December 31, 2020		15,052
Year ended December 31, 2021		15,010
Year ended December 31, 2022		15,010
Year ended December 31, 2023		15,010
Year ended December 31, 2024		15,010
Thereafter		44,710
	$	123,631

Note 6. Related Party Transactions

Convertible Note

On August 8, 2018, GTY Cayman issued the Convertible Note to GTY Investors, LLC (the “Sponsor”), pursuant to which GTY Cayman was able to borrow up to $1 million from the Sponsor from time to time. The Convertible Note does not bear interest. The Sponsor has the option to convert any amounts outstanding under the Convertible Note, up to $1.0 million in the aggregate, into warrants at a conversion price of $1.50 per warrant. The terms of such warrants will be identical to the private placement warrants. During the period ended March 31, 2019, GTY drew down $0.4 million on the Convertible Note, resulting in $1.0 million principal amount outstanding. The $1.0 million principal amount was offset against amounts due from the Sponsor (see “Agreements and Arrangements with Certain Institutional Investors”) and, as of September 30, 2019, there was no amount outstanding under the Convertible Notes.

Agreements and Arrangements with Certain Institutional Investors

On February 13, 2019, GTY Cayman, the Sponsor, William D. Green, Joseph M. Tucci and Harry L. You (Messrs. Green, Tucci and You, collectively, the “Founders”) entered into agreements and arrangements with certain institutional investors pursuant to which a total of 1,500,000 Class A Ordinary Shares of GTY Cayman were not redeemed in connection with the business combination (the “Outstanding Cayman Shares”). The holder of Outstanding Cayman Shares which were converted into shares of the Company’s common stock on the Closing Date on a one-for-one basis is entitled to put such shares to the Sponsor and the Founders for a purchase price equal to the price at which GTY Cayman redeemed Class A Ordinary Shares in connection with the business combination, $10.29 (the “redemption price”), payment of such purchase price is guaranteed by the Company, and to receive from the Company a cash payment, if and to the extent necessary, but not to exceed $250,000, in order to provide such shareholder with at least a 5% return on such shares above the redemption price. With respect to 1,000,000 of the Outstanding Cayman Shares, GTY Cayman engaged a broker-dealer to facilitate the purchase of the Outstanding Cayman Shares by an institutional investor prior to the Closing for $9.90 per share and agreed to pay such broker-dealer an amount per share in cash equal to the difference between the redemption price and $9.90. In addition, the Sponsor and the Founders entered into agreements prior to the Closing pursuant to which they were obligated to reimburse the holders of an additional 1,942,953 Class A Ordinary Shares that were not redeemed in connection with the business combination (the “Outstanding Class A Shares”) for losses that may be incurred upon the sale of the Outstanding Class A Shares within a specified period following the Closing, up to an agreed-upon limit, and the Company has agreed to guarantee such reimbursement obligations of the Sponsor. During the Q1 2019 Successor Period, the Company, on behalf of the Sponsor, paid $4.0 million for losses incurred upon the sale of the Outstanding Class A Shares and, in turn, the Company reduced its convertible note liability for $1.0 million (see “Convertible Note”). During the nine months ended September 30, 2019, the Sponsor reimbursed the Company for the remaining $3.0 million for such losses on the Outstanding Class A Shares. As of September 30, 2019, the Outstanding Class A Shares are no longer guaranteed by the Founders or the Company. 

21

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Note 7. 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:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Total Intrinsic Value
Outstanding as of February 18, 2019		-		$	-		-	$	-
Granted		408,667			1.82		8.2		-
Exercised		(112,643	)		1.16				-
Forfeited/expired		(17,401	)		1.16				-
Outstanding as of September 30, 2019		278,623		$	2.13		8.2	$	1,316
Options vested and exercisable		80,988		$	2.12		8.1	$	383

For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company recorded approximately $0.3 million and $2.4 million, respectively, of share-based compensation expense related to the options. As of September 30, 2019, the Company has $1.2 million of unrecognized share-based compensation cost. During the Successor Period, share-based compensation expense is recorded as a component of general and administrative expenses.

Restricted Stock Units

During the Successor Period, the Company issued 1,049,237 restricted stock units (“RSUs”) to employees as annual performance awards. A portion of the RSUs will vest in ratable annual installments over either two or four years, as applicable, from the grant date, and the remaining RSUs will 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. The RSUs granted to the Company’s Chief Executive Officer are subject to two different sets of performance-vesting criteria: (i) one RSU grant will vest on the last day of any 120-day trading period ending prior to the third anniversary of the grant date, to the extent that during such period, the average closing price per share of the Company’s common stock equals or exceeds $20, and under certain circumstances, the RSUs may vest if the stock price hurdle is achieved prior to the fourth anniversary of the grant date; and (ii) the other RSU grant will vest subject to the achievement of certain performance conditions over a one-year performance period. In each case, vesting of the RSUs is generally subject to the Chief Executive Officer’s continuous service through each vesting date.

22

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

A summary of the Company's restricted stock units and related information is as follows:

	Number of Shares			Weighted Average Grant Price
Unvested as of as of February 18, 2019		-		$	-
Granted		1,049,237			9.53
Forfeited/expired		(104,275	)		-
Unvested as of September 30, 2019		944,962		$	9.52

For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company recorded approximately $0.2 million and $0.4 million, respectively, of share-based compensation expense related to the RSUs. As of September 30, 2019, the Company had unrecognized stock-based compensation expense related to all unvested restricted stock units of $8.5 million. The weighted average remaining contractual term of unvested RSUs that is time based is approximately one year at September 30, 2019. 758,550 of the RSUs granted above contained performance conditions. No stock-based compensation was recognized during the three months ended September 30, 2019 for these performance RSUs, since achievement of such performance metrics was not considered probable.

Note 8. Leases

The Company leases office space under agreements classified as operating leases that expire on various dates through 2023. 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. The Company does not act as a lessor or have any leases classified as financing leases.

At September 30, 2019, the Company had operating lease liabilities of approximately $6.4 million and right of use assets of approximately $6.2 million, which are included in the condensed consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases (dollars in thousands):

Three Months Ended September 30, 2019 (Successor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	109	$	153	$	77	$	95	$	434
Variable lease cost		-		-		-		-		-
Operating lease expense		109		153		77		95		434
Short-term lease rent expense		-		-		-		-		-
Total rent expense	$	109	$	153	$	77	$	95	$	434

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	108		$	163		$	77		$	34		$	382
Right-of-use assets exchanged for operating lease liabilities	$	-		$	-		$	-		$	3,140		$	3,140
Weighted-average remaining lease term – operating leases		2.7			2.2			2.0			10.7			6.8
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

23

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Nine Months Ended September 30, 2019 (Successor/Predecessor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	210	$	464	$	232	$	164	$	1,070
Variable lease cost		-		-		-		-		-
Operating lease expense		210		464		232		164		1,070
Short-term lease rent expense		-		-		-		-		-
Total rent expense	$	210	$	464	$	232	$	164	$	1,070

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	332		$	485		$	232		$	101		$	1,150
Right-of-use assets exchanged for operating lease liabilities	$	1,292		$	1,541		$	920		$	3,450		$	7,203
Weighted-average remaining lease term – operating leases		2.7			2.2			2.7			10.7			6.9
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

As of September 30, 2019, future minimum lease payments under non-cancellable operating are as follows (in thousands):

	Bonfire			CityBase			eCivis			Questica			Total
Three months ended December 31, 2019	$	113		$	164		$	77		$	36		$	390
Year Ended December 31, 2020		452			662			309			427			1,850
Year Ended December 31, 2021		463			458			309			408			1,638
Year Ended December 31, 2022		235			-			129			410			774
Year Ended December 31, 2023		-			-			-			365			365
Year Ended December 31, 2024		-			-			-			2,754			2,754
Total		1,263			1,284			824			4,400			7,771
Less present value discount		(164	)		(126	)		(84	)		(1,013	)		(1,387	)
Operating lease liabilities	$	1,099		$	1,158		$	740		$	3,387		$	6,384

Note 9. Commitments and Contingencies

Successor

Legal Proceedings

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

Indemnification

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 agreement and the maximum potential amount of future payments 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 the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor have it been sued in connection with these indemnification arrangements.

As of September 30, 2019, and December 31, 2018, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements is not probable or reasonably estimable.

24

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Note 10. Shareholders’ Equity

Initial Public Offering Redemption Shares

In connection with a shareholder meeting called to approve the business combination, the Company provided the holders of its outstanding Class A ordinary shares sold in the Company’s initial public offering (the “public shareholders”) with the opportunity to redeem all or a portion of their public shares. The public shareholders were entitled to redeem their public shares for a pro rata portion of the remaining balance in the trust account established in connection with the Company’s initial public offering for the benefit of the Company’s public shareholders and into which substantially all of the proceeds from the initial public offering were deposited (the “Trust Account”). The remaining 20,289,478 GTY Cayman public shares were recorded at a redemption value and classified as temporary equity upon the completion of the initial public offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In connection with the Business Combination, 11,073,040 Class A ordinary shares of GTY were redeemed for $114.0 million, at a per share price of approximately $10.29. The remaining 9,216,438 shares with a redemption value of $88.9 million were transferred to permanent equity.

Subscription Agreement

Immediately prior to the Closing, pursuant to subscription agreements (the “Subscription Agreements”), dated as of various dates from January 9, 2019 through February 12, 2019, by and among GTY and certain institutional and accredited investors party thereto (the “Subscribed Investors”), GTY Cayman issued to the Subscribed Investors an aggregate of 12,863,098 Class A ordinary shares of GTY for $10.00 per share, for an aggregate cash purchase price of approximately $126.4 million and paid fees of $1.1 million, including three such Subscription Agreements with certain CityBase holders (including Michael Duffy, the chief executive officer of CityBase) for an aggregate of 380,937 Class A ordinary shares of GTY at a price of $10.00 per share, for an aggregate cash purchase price of approximately $3.8 million. The Class A ordinary shares of GTY issued to the Subscribed Investors were cancelled and exchanged on a one-for-one basis for shares of Company common stock at the Closing.

In connection with the Subscription Agreements, immediately prior to the Closing, the Sponsor surrendered to GTY Cayman for cancellation (at no cost to GTY) 231,179 Class B (founder) shares, which have been retroactively adjusted in the accompanying statement of stockholders equity, and sold 500,000 private placement warrants held by it to an accredited investor in a private placement for an aggregate of $250,000 or $0.50 per warrant (which was $1.00 per warrant less than the price originally paid for such warrants).

GTY Merger Share Exchange

In connection with the GTY Merger, all of the issued and outstanding shares of GTY Cayman were exchanged for an equal number of shares of GTY common stock and immediately before the exchange, each outstanding unit was separated into its component Class A ordinary share and warrant.  Upon the exchange, 22,978,520 Class A and 13,568,821 Class B shares of GTY Cayman were exchanged for an aggregate of 36,547,341 shares of common stock of GTY.

Shares issued in the Acquisition

As part of the consideration for the Acquisition, the Company issued (a) 11,973,154 shares of common stock (as adjusted by the Measurement Period Adjustment below), of which 3,937,907 are redeemable at the option of the Company (the “Acquisition Redemption Shares”), (b) 2.6 million Class A and 0.5 million Class C shares (the “Class C Shares”) of Questica Exchangeco (the “Questica Shares”) and 2,161,741 shares of Bonfire Exchangeco shares (collectively, the “Exchange Shares”) that are exchangeable into an equal number of common stock.  The Exchange Shares are recorded as common shares of the Company.  The Company also issued 1,000,000 Class B shares of Questica Shares which are not exchangeable for common stock and thus have no value. The shares issued as consideration in the Acquisition were valued at $10 per share in the accompanying condensed consolidated financial statements. 

The 0.5 million Class C Shares were redeemable at the option of the shareholder at $10 per share, and thus the Company had classified the Class C Shares in the capital stock of Questica Exchangeco as temporary equity in accordance with ASC 480 - "Distinguishing Liabilities from Equity." In June 2019, these shares were redeemed for 0.5 million shares of Common Stock at the market price of $7.72, or $3.9 million, and transferred to permanent equity, and $1.3 million of cash. The incremental $0.2 million above the stated redemption price was recorded as a deemed dividend in the accompanying condensed consolidated financial statements.  

In April 2019, 193,645 shares of the Bonfire Exchangeco Shares were converted into the Company’s Common Stock on a one-for-one basis (see Note 4).

For the three months ended September 30, 2019, there was a Measurement Period Adjustment to change $41,500, or 4,150 shares, of stock consideration to cash consideration (see Note 4).

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NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Common Stock – GTY is authorized to issue 400,000,000 shares of common stock with a par value of $0.0001 per share.

In March 2019, the Company redeemed 100,000 shares of common stock for a promissory note in the principal amount of $1,000,000, bearing interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s)) and included these in Treasury Stock in the accompanying condensed consolidated balance sheets.

In April 2019, the Company repurchased 264,998 shares of common stock for $2.6 million.  These shares were included in Treasury Stock in the accompanying condensed consolidated balance sheets at the stock price on the date of the repurchases, or $2.4 million, and the remaining $0.2 million is included in Loss from repurchase of shares in the condensed consolidated statements of operations and comprehensive loss.

In June 2019, the Company issued 3.5 million shares of common stock in a registered direct offering for $25.5 million, at a price of $7.70 per share, net of $1.5 million of offering costs.

In June 2019, two Bonfire employees cashless exercised 284 stock options and the Company issued 117 shares of common stock. For the three months ended September 30, 2019, Bonfire employees exercised 112,526 stock options for the issuance of shares of common stock. See Note 7.

In July 2019, in accordance with the eCivis Agreement and the eCivis Letter Agreement, the Company repurchased 250,000 shares of common stock for $2.5 million. These shares were included in Treasury Stock in the accompanying condensed consolidated balance sheets at the stock price on the date of the repurchases, or $1.7 million, and the remaining $0.8 million is included in Loss from repurchase of shares in the condensed consolidated statements of operations and comprehensive loss.

Preferred Shares – GTY is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share. As of September 30, 2019, there were no preferred shares issued or outstanding.

Warrants

At September 30, 2019, there were a total of 27,093,334 warrants outstanding. The warrants were originally sold as part of the units offered in the IPO. 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. No fractional shares will be issued upon exercise of the warrants.

The Company may call the 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 warrants were determined to be equity classified in accordance with ASC 815, Derivatives and Hedging.

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NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

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

Note 11. Segment Reporting

The Company conducts the business through the following six operating segments: Bonfire, CityBase, eCivis, Open Counter, Questica and Sherpa.

The accounting policies of the operating segments are the same as those described in Note 3. Non-allocated interest expense and various other administrative costs are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets. The following provides operating information about the Company’s reportable segments for the periods presented (in thousands):

	GTY			Bonfire			CityBase			eCivis			OpenCounter			Questica			Sherpa			Eliminations			Total
Successor
Three Months Ended September 30, 2019
Total revenue	$	-		$	1,174		$	1,551		$	1,638		$	407		$	3,083		$	901		$	-		$	8,754
Cost of goods sold		-			277			958			454			105			653			136			-			2,583
Loss from operations		(2,441	)		(1,634	)		(4,354	)		17			(614	)		(537	)		(52	)		-			(9,615	)
Successor
February 19, 2019 through September 30, 2019
Total revenue	$	-		$	2,385		$	4,634		$	3,200		$	929		$	6,311		$	2,575		$	-		$	20,034
Cost of goods sold		-			643			3,168			1,087			263			1,468			461			-			7,090
Loss from operations		(21,989	)		(7,911	)		(12,821	)		(1,885	)		(1,363	)		(12,611	)		(2,750	)		-			(61,330	)
Predecessor
January 1, 2019 through February 18, 2019
Total revenue	$	-		$	593		$	820		$	673		$	298		$	1,913		$	631					$	4,928
Cost of goods sold		-			124			746			267			51			296			130			-			1,614
Loss from operations		-			(741	)		(1,499	)		(265	)		46			550			354			-			(1,555	)
Predecessor
Three Months Ended September 30, 2018
Total revenue	$	-		$	845		$	1,640		$	1,250		$	393		$	2,420		$	1,069		$	-		$	7,617
Cost of goods sold		-			216			1,225			457			135			498			59			-			2,590
Loss from operations		-			(1,478	)		(3,497	)		(444	)		(350	)		114			697			-			(4,958	)
Predecessor
Nine Months Ended September 30, 2018
Total revenue	$	-		$	2,255		$	4,082		$	3,745		$	1,213		$	7,583		$	2,143		$	-		$	21,021
Cost of goods sold		-			554			3,023			1,283			373			1,458			171			-			6,862
Loss from operations		-			(3,572	)		(7,691	)		(821	)		(348	)		1,096			1,214			-			(10,122	)
Successor
As of September 30, 2019
Goodwill	$	-		$	81,867		$	119,945		$	47,877		$	22,525		$	57,479		$	3,283		$	-		$	332,976
Assets		395,679			107,026			161,734			62,005			31,490			96,796			6,796			(366,203	)		495,323
Predecessor
As of December 31, 2018
Goodwill	$	-		$	-		$	123		$	585		$	-		$	1,810		$	-		$	-		$	2,518
Assets		-			6,329			7,215			2,621			316			11,710			1,377			-			29,568

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

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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 Current Report on Form 8-K/A filed with the SEC on March 18, 2019. 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 which 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, 2018, in the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 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 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 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 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 Interactive Ltd. (“Bonfire”), CityBase, Inc. (“CityBase”), eCivis, Inc. (“eCivis”), Open Counter Enterprises Inc. (“Open Counter”), Questica Inc. (“Questica”), and Sherpa Government Solutions (“Sherpa”). Through our operating subsidiaries, we serve some of the fastest growing segments in the government technology sector, including 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 systems with scalable and efficient Software as a Service, or SaaS, products. Our search led to the acquisition (the “Acquisition”) of Bonfire, CityBase, eCivis, Open Counter, Questica, and Sherpa on February 19, 2019 (the “Closing Date”).

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 increase our customer base by leveraging our comprehensive product portfolio with our existing customer base, investing in direct sales to new customers, and utilizing partnerships with complementary products and services.

The Acquisition was accounted for as a business combination under GAAP and resulted in a change in accounting basis as of the date of the Acquisition. As a result, our condensed consolidated financial statements for the period beginning on February 19, 2019 are presented on a different basis than that for the periods before February 19, 2019, and therefore are not comparable. As a result of the application of the acquisition method of accounting, our condensed consolidated financial statements and certain presentations are separated into two distinct periods to indicate the different ownership and accounting basis between the periods presented: (i) the period before the consummation of the Acquisition, which includes the period from January 1, 2019 to the Closing Date (“2019 Predecessor Period”) and the nine months ended September 30, 2018 (the “2018 Predecessor Period”), and (ii) the periods on and after the consummation of the acquisition, which includes the period including and after the Closing Date to September 30, 2019 (“2019 Successor Period”), and the three months ended September 30, 2019.

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 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.

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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 IT 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 Partnerships.    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 our success 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 provide software hosting services that provide customers with access to software 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. The first year of 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 67% of total revenues for the 2019 Successor Period.

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 whether the milestone will be achieved. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately 26% of total revenues for the 2019 Successor Period.

License. Revenues from distinct licenses 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 6% of total revenues for the 2019 Successor Period.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the client 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. Revenues from asset sales comprised less than 1% of total revenues for the 2019 Successor Period. 

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.

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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 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 incur the costs of compliance associated with being a publicly-traded company, including legal, audit and consulting fees.

Results of Operations

We accounted for the Acquisition as a business combination, which resulted in a new basis of accounting. Refer to Note 3 of the notes to our condensed consolidated financial statements for additional information. As a result of the Acquisition, our condensed consolidated financial statements for the period after February 19, 2019 is presented on a different basis than that for the periods before February 19, 2019 due to the application of purchase accounting as of February 19, 2019 and, therefore, are not comparable.

The Acquisition resulted in the following principal impacts for the period subsequent to the Acquisition date:

· A reduction in revenues in the 2019 Successor Period as a result of the contract liabilities at the Acquisition date being recorded at fair value, an amount less than its then carrying value;

· Increased amortization expense resulting from recording of intangible assets at fair value. We record amortization of acquired developed technology in cost of revenues, amortization of customer relationships in sales and marketing expenses, and amortization of covenants not to compete and tradename intangible assets in general and administrative expenses;

· Contingent consideration issued as part of the Acquisition was recorded at fair value each period with changes in fair value recorded in general and administrative costs; and

· Transaction costs were expensed as incurred as a separate line item in our condensed consolidated statement of operations;

We believe reviewing our operating results for the nine months ended September 30, 2019 by combining the results of the 2019 Predecessor Period and 2019 Successor Period (“S/P Combined Period”) is more useful in discussing our overall operating performance when compared to the 2018 Predecessor Period.

Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

Total revenues

Our total revenues were $8.8 million. Excluding the $1.0 million impact of purchase accounting, our total non-GAAP revenues for the three months ended September 30, 2019 was $9.8 million compared to $7.6 million for the quarter ended September 30, 2018 on a comparable basis, representing a 28% 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 due to the following (in thousands, except percentages):

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	Three Months Ended September 30,
	Generally Accepted Accounting Principles (“GAAP”)										Non-GAAP
	Total Revenues 2019		Total Revenues 2018		Increase / (Decrease) in Dollars			Increase / (Decrease) in %			Total Revenues 2019		Total Revenues 2018		Increase / (Decrease) in Dollars			Increase / (Decrease) in %
Bonfire	$	1,174	$	845	$	329			39	%	$	1,310	$	845	$	465			55	%
CityBase		1,551		1,640		(89	)		(5	)%		1,708		1,640		68			4	%
eCivis		1,638		1,250		388			31	%		1,857		1,250		607			49	%
Open Counter		407		393		14			4	%		532		393		139			35	%
Questica		3,083		2,420		663			27	%		3,450		2,420		1,030			43	%
Sherpa		901		1,069		(168	)		(16	)%		901		1,069		(168	)		(16	)%
Total	$	8,754	$	7,617	$	1,137			15	%	$	9,758	$	7,617	$	2,141			28	%

Bonfire’s, Questica’s and Open Counter’s revenues increased primarily due to an increase in subscription and support and maintenance revenues resulting from an increase in customers from the prior year. eCivis revenues increased primarily as a result of an increase in professional services. Sherpa’s revenues decreased due to a significant decrease in license revenues, partially offset by an increase in professional services revenues.

Total cost of revenues

Our total cost of revenues for the three months ended September 30, 2019 were consistent on a year-over-year basis. The change in cost of revenues for each operating segment is due to the following (in thousands, except percentages):

	Three Months Ended September 30,
	Total Cost of Revenues 2019		Total Cost of Revenues 2018		Increase / (Decrease) in Dollars			Increase / (Decrease) in %
Bonfire	$	277	$	216	$	61			28	%
CityBase		958		1,225		(267	)		(22	)%
eCivis		454		457		(3	)		(1	)%
Open Counter		105		135		(30	)		(22	)%
Questica		653		498		155			31	%
Sherpa		136		59		77			131	%
Total	$	2,583	$	2,590	$	(7	)		0	%

Bonfire

Bonfire’s total cost of revenues increased primarily due to a $0.1 million increase in salaries and benefits. The increase in salaries and benefits was primarily driven by a 7% increase in average headcount from September 30, 2018 to September 30, 2019. Hosting tools and services were materially consistent with the comparative year-over-year period.

CityBase

CityBase’s total cost of revenues decreased primarily due to a $0.2 million decrease in expenses incurred by third-party contractors, a $0.2 million decrease in the cost of kiosks sold, and a $0.1 million decrease in salaries and wages, partially offset by a $0.3 million increase in bank fees associated with its usage fee revenues.

eCivis

eCivis’ total cost of revenues was materially consistent year-over-year.

Open Counter

Open Counter’s total cost of revenues was materially consistent year-over-year.

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Questica

Questica’s total cost of revenues increased due primarily to a 24% increase in average headcount between September 30, 2018 and September 2019 driven by its growth in revenue and number of customers.

Sherpa

Sherpa’s total cost of revenues increased due primarily to additional consultants hired to support its expanding professional services revenues. 

Operating expenses (excluding amortization of intangible assets and acquisition costs)

Our total operating expenses (excluding amortization of intangible assets, acquisition costs and change in fair value of contingent consideration) for the three months ended September 30, 2019 have increased due primarily to increases in headcount in sales and marketing, general and administrative, and research and development resulting from growth in the business. The change in operating expenses for each operating segment is due to the following (in thousands, except percentages):

	Three Months Ended September 30,
	Total Operating Expenses 2019		Total Operating Expenses 2018		Increase / (Decrease) in Dollars		Increase / (Decrease) in %
Bonfire	$	2,188	$	1,901	$	287		15	%
CityBase		3,631		3,032		599		20	%
eCivis		1,348		1,077		271		25	%
Open Counter		615		419		196		47	%
Questica		1,978		1,607		371		23	%
Sherpa		544		314		230		73	%
Corporate		2,022		0		2,022		N/A
Total	$	12,326	$	8,350	$	3,976		48	%

Bonfire

Bonfire’s total operating expense increased due primarily to a 30% increase in sales and marketing and a 10% increase in general and administrative expenses, partially offset by a 7% decrease in research and development. The increase in sales and marketing was primarily due to an increase of stock-based compensation of $0.1 million, a $0.1 million increase in salaries and benefits and a $0.1 million increase in commissions expense. These increases were driven by a 37% increase in average headcount between September 30, 2018 and September 30, 2019.

CityBase

CityBase’s total operating expense increased due primarily to an 82% increase in sales and marketing, a 39% increase in research and development and a 12% increase in general and administrative expenses. The increase in sales and marketing was primarily due to a $0.2 million increase in salaries and benefits driven by a 24% increase in average headcount between September 30, 2018 and September 30, 2019 and a $0.1 million increase in marketing and advertising spend. The increase in research and development was primarily due to a $0.4 million increase in salaries and benefits driven by a 49% increase in average headcount between September 30, 2018 and September 30, 2019.

eCivis

eCivis’ total operating expense increased primarily due to an 87% increase in sales and marketing and a 2% increase in research and development, partially offset by a 16% decrease in general and administrative costs. The increase in sales and marketing was primarily due to a $0.3 million increase in salaries and benefits driven by a 74% increase in average headcount from September 30, 2018 to September 30, 2019. The decrease in general and administrative costs was primarily due to lower oversight costs at the company level post-Acquisition.

Open Counter

Open Counter’s total operating expense increased primarily due to a $0.2 million increase in salaries and benefits driven by a 50% increase in average headcount from September 30, 2018 to September 30, 2019.

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Questica

Questica’s total operating expense increased primarily due to a 53% increase in sales and marketing, a 3% increase in research and development and was offset by a 13% decrease in general and administrative expenses. The increase in sales and marketing is due primarily to a 44% increase in average headcount from September 30, 2018 to September 30, 2019.

Sherpa

Sherpa’s total operating expenses increased due primarily to a $0.3 million increase in salaries and benefits driven by a 53% increase in average headcount from September 30, 2018 to September 30, 2019, partially offset by a decrease in expenses incurred by third-party contractors.

Corporate

Corporate expenses primarily comprised of outside services including legal, accounting and consulting fees, payroll and related expenses, corporate insurance, and stock-based compensation.

Other operating expenses

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. Amortization of intangible assets consists of the amortization of finite lived intangibles resulting from the Acquisition as described in Note 3 of the notes to our condensed consolidated financial statements.

Other income (expense)

Interest income was primarily due to the investments held by GTY Corporate.

Successor/Predecessor (“S/P”) Combined Period Compared to the Nine Months Ended September 30, 2018

Total revenues

Our total revenues for the S/P Combined Period increased on a year-over-year basis. 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. Our revenues for the S/P Combined Period were $25.0 million. Excluding the $3.6 million impact of purchase accounting and combining the results of the 2019 Predecessor Period and 2019 Successor Period, our total non-GAAP adjusted revenues for the nine months ended September 30, 2019 would have been $28.5 million compared to $21.0 million for the nine months ended September 30, 2018 on a comparable basis, representing a 36% increase. The change in revenues for each operating segment is due to the following (in thousands, except percentages): 

							Generally Accepted Accounting Principles (“GAAP”)							Non-GAAP
	February 19, 2019 through September 30, 2019		January 01, 2019 through February 18, 2019		Total S/P Combined 2019		Total Revenues 2018		Increase / (Decrease) in Dollars		Increase / (Decrease) in %			Total Revenues 2019		Total Revenues 2018		Increase / (Decrease) in Dollars		Increase / (Decrease) in %
Bonfire	$	2,385	$	593	$	2,978	$	2,255	$	723		32	%	$	3,498	$	2,255	$	1,243		55	%
CityBase		4,634		820		5,454		4,082		1,372		34	%		5,833		4,082		1,751		43	%
eCivis		3,200		673		3,873		3,745		128		3	%		4,622		3,745		877		23	%
Open Counter		929		298		1,227		1,213		14		1	%		1,642		1,213		429		35	%
Questica		6,311		1,913		8,224		7,583		641		8	%		9,680		7,583		2,097		28	%
Sherpa		2,575		631		3,206		2,143		1,063		50	%		3,262		2,143		1,119		52	%
Total	$	20,034	$	4,928	$	24,962	$	21,021	$	3,941		19	%	$	28,537	$	21,021	$	7,516		36	%

Bonfire’s and Open Counter’s revenues increased primarily due to an increase in subscription, support and maintenance revenues resulting from an increase in customers from the prior year. CityBase’s revenues increased primarily due to an increase in transaction volume and eCivis revenues increased primarily as a result of an increase in professional services. Sherpa’s and Questica’s revenues increased due primarily to an increase in professional services as well as an increase in subscription, support and maintenance revenues.

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Total cost of revenues

Our total cost of revenues for the S/P Combined Period have increased on a year-over-year basis. The increase was driven by an increase in headcount in hosting operations and professional services, an increase in hosting costs due to customer expansion, and an increase in third-party product partnership costs. The change in cost of revenues for each operating segment is due to the following (in thousands, except percentages):

	February 19, 2019 Through September 30, 2019		January 01, 2019 through February 18, 2019		Total S/P Combined 2019		Total Cost of Revenues 2018		Increase / (Decrease) in Dollars			Increase / (Decrease) in %
Bonfire	$	643	$	124	$	767	$	554	$	213			38	%
CityBase		3,168		746		3,914		3,023		891			29	%
eCivis		1,087		267		1,354		1,283		71			6	%
Open Counter		263		51		314		373		(59	)		(16	)%
Questica		1,468		296		1,764		1,458		306			21	%
Sherpa		461		130		591		171		420			246	%
Total	$	7,090	$	1,614	$	8,704	$	6,862	$	1,842			27	%

Bonfire

Bonfire’s total cost of revenues increased primarily due to a $0.2 million increase and salaries and benefits driven by a 21% increase in average headcount from September 30, 2018 to September 30, 2019. The remaining increase was from additional hosting tools and services to support the higher number of customers supported on the platform.

CityBase

CityBase’s total cost of revenues increased primarily due to a $1.6 million increase in bank fees associated with its expansion in usage fee revenues and offset by a $0.4 million decrease in expenses incurred by third-party contractors and a $0.3 million decrease in the cost of kiosks sold.

eCivis

eCivis’ total cost of revenues for the S/P Combined Period was materially consistent year-over-year.

Open Counter

Open Counter’s total cost of revenues for the S/P Combined Period was materially consistent year-over-year.

Questica

Questica’s total cost of revenues increased due primarily to a 22% increase in headcount from September 30, 2018 to September 30, 2019.

Sherpa

Sherpa’s total cost of revenues increased due primarily to an increase in professional services costs to support the increase in professional services revenues. 

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Operating expenses

Our total operating expenses for the S/P Combined Period have increased due primarily to increases in headcount in sales and marketing, general and administrative, and research and development resulting from growth in the business. The change in operating expenses for each operating segment is due to the following (in thousands, except percentages):

	Nine Months Ended September 30,
	February 19, 2019 Through September 30, 2019		January 01, 2019 through February 18, 2019		Total S/P Combined 2019		Total Operating Expenses 2018		Increase / (Decrease) in Dollars		Increase / (Decrease) in %
Bonfire	$	7,559	$	1,210	$	8,769	$	5,067	$	3,702		73	%
CityBase		8,791		1,518		10,309		7,868		2,441		31	%
eCivis		2,976		575		3,551		3,124		427		14	%
Open Counter		1,289		202		1,491		1,000		491		49	%
Questica		4,440		1,066		5,506		4,829		677		14	%
Sherpa		1,180		147		1,327		758		569		75	%
Corporate		6,265		-		6,265		-		6,265		N/A
Total	$	32,500	$	4,718	$	37,218	$	22,646	$	14,572		64	%

Bonfire

Bonfire’s total operating expense increased due to a 128% increase in sales and marketing, a 33% increase in research and development and a 30% increase in general and administrative costs. The increase in sales and marketing was primarily due to a $1.3 million increase in stock-based compensation expense and a $0.9 million increase in salaries and benefits driven by a 59% increase in average headcount from September 30, 2018 to September 30, 2019. The increase in general and administrative expenses was primarily due to a $0.3 million increase in salaries and benefits driven by a 25% increase in average headcount from September 30, 2018 to September 30, 2019. The increase in general and administrative expenses was primarily due to a $0.7 million increase in stock-based compensation expense.

CityBase

CityBase’s total operating expense increased due to a 35% increase in research and development, a 31% increase in sales and marketing and a 12% increase in general and administrative costs. The increase in research and development was primarily due to a $1.9 million increase in salaries and benefits driven by a 68% increase in average headcount from September 30, 2018 to September 30, 2019. The increase in sales and marketing was primarily due to a $0.6 million increase in salaries and benefits driven by a 183% increase in average headcount from September 30, 2018 to September 30, 2019.

eCivis

eCivis’ total operating expense increased due to a 62% increase in sales and marketing and a 14% increase in research and development and was partially offset by a 19% decrease in general and administrative costs. The increase in sales and marketing was primarily due to a $0.4 million increase in salaries and benefits driven by a 46% increase in average headcount from September 30, 2018 to September 30, 2019 and a $0.1 million increase in commission expense. The increase in research and development was primarily due to a $0.1 million increase in salaries and benefits driven by a 19% increase in average headcount from September 30, 2018 to September 30, 2019. The decrease in general and administrative costs was primarily due to a $0.2 million decrease in oversight costs at the company level post-Acquisition.

Open Counter

Open Counter’s total operating expense increased due primarily to a $0.5 million increase in salaries and benefits driven by a 34% increase in average headcount from September 30, 2018 to September 30, 2019.

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Questica

Questica’s total operating expense increased due primarily to a 53% increase in sales and marketing driven primarily by a 33% increase in average headcount from September 30, 2018 to September 30, 2019.

Sherpa

Sherpa’s total operating expenses increased due primarily to a $0.6 million increase in salaries and benefits driven by a 55% increase in average headcount from September 30, 2018 to September 30, 2019.

Corporate

Corporate expenses primarily comprised of outside services including legal, accounting and consulting fees, payroll and related expenses, corporate insurance, and stock-based compensation.

Other operating expenses

Acquisition costs consist primarily of Acquisition transaction costs, capital market advisory fees, and bonuses incurred as a result of the transaction or a change in control. Amortization of intangible assets consists of the amortization of finite lived intangibles resulting from the Acquisition as described in Note 3 of the notes to our condensed consolidated financial statements included in this form 10-Q.

Other income (expense)

Interest income during the S/P Combined Period was primarily due to the investments held by GTY Corporate during the 2019 Successor Period.

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 defined as “non-GAAP financial measures,” which include (i) non-GAAP revenues, (ii) non-GAAP gross profit and non-GAAP gross margin, (iii) and non-GAAP loss from operations ..

We use these non-GAAP financial measures internally in analyzing our financial results and believe 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 its 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 its business combination. 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.

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 its business combination, the amortization of acquired intangible assets, stock-based compensation, acquisition related costs, 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.

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):

36

	Three Months Ended
	September 30, 2019			June 30, 2019			September 30, 2018
Revenues	$	8,754		$	8,246		$	7,617
Purchase accounting adjustment to revenue		1,004			1,699		$	-
Non-GAAP Revenues	$	9,758		$	9,945		$	7,617
Gross Profit	$	6,171		$	5,315		$	5,027
Purchase accounting adjustment to revenue		1,004			1,699		$	-
Non-GAAP Gross Profit	$	7,175		$	7,014		$	5,027
Gross Margin		70	%		64	%		66	%
Non-GAAP Gross Margin		74	%		71	%		66	%
Loss from operations	$	(9,615	)	$	(11,247	)	$	(4,958	)
Purchase accounting adjustment to revenue		1,004			1,699		$	-
Amortization of intangibles		3,830			3,872		$	202
Share-based compensation		556			1,760		$	435
Acquisition costs		442			(2,280	)	$	1,635
Change in fair value of contingent consideration		(812	)		-		$	-
Non-GAAP Loss from operations	$	(4,595	)	$	(6,196	)	$	(2,686	)

	Nine Months Ended September 30,
	2019			2018
Revenues - Successor Period	$	20,034		$	-
Revenues - Predecessor Period		4,928			21,021
Pro forma as Adjusted Revenues		24,962			21,021
Purchase accounting adjustment to revenue		3,575			-
Non-GAAP Pro forma as Adjusted Revenues	$	28,537		$	21,021
Gross Profit - Successor Period	$	12,944		$	-
Gross Profit - Predecessor Period		3,314			14,159
Pro forma as Adjusted Gross Profit		16,258			14,159
Purchase accounting adjustment to revenue		3,575			-
Non-GAAP Pro forma as Adjusted Gross Profit	$	19,833		$	14,159
Gross Margin - Successor Period		65	%
Gross Margin - Predecessor Period		67	%		67	%
Pro forma as Adjusted Gross Margin		65	%		67	%
Non-GAAP Pro forma as Adjusted Gross Margin		69	%		67	%
Loss from operations - Successor Period	$	(61,330	)	$	-
Loss from operations - Predecessor Period		(1,555	)		(10,122	)
Pro forma as Adjusted Loss from operations		(62,885	)		(10,122	)
Purchase accounting adjustment to revenue		3,575			-
Amortization of intangibles		9,427			301
Share-based compensation		2,928			647
Acquisition costs		33,342			1,635
Change in fair value of contingent consideration		(812	)		-
Non-GAAP Pro forma as Adjusted Loss from operations	$	(14,425	)	$	(7,539	)

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Below is a reconciliation of non-GAAP revenues to revenues by operating segment (in thousands, except percentages):

	Three Months Ended September 30,
	Bonfire			CityBase			eCivis			Open Counter			Questica			Sherpa			Total Revenues
GAAP Revenues - 2019	$	1,174		$	1,551		$	1,638		$	407		$	3,083		$	901		$	8,754
Purchase accounting adjustment to revenues		136			157			219			125			367			-			1,004
Non-GAAP Revenues - 2019	$	1,310		$	1,708		$	1,857		$	532		$	3,450		$	901		$	9,758
Predecessor Revenues 2018	$	845		$	1,640		$	1,250		$	393		$	2,420		$	1,069		$	7,617
% change		55	%		4	%		49	%		35	%		43	%		(16	)%		28	%

	Nine Months Ended September 30,
	Bonfire			CityBase			eCivis			Open Counter			Questica			Sherpa			Total Revenues
Pro forma Revenues - S/P combined Period 2019	$	2,978		$	5,454		$	3,873		$	1,227		$	8,224		$	3,206		$	24,962
Purchase accounting adjustment to revenues		520			379			749			415			1,456			56			3,575
(Non-GAAP) Pro forma as Adjusted Revenues 2019	$	3,498		$	5,833		$	4,622		$	1,642		$	9,680		$	3,262		$	28,537
Predecessor Revenues 2018	$	2,255		$	4,082		$	3,745		$	1,213		$	7,583		$	2,143		$	21,021
% change		55	%		43	%		23	%		35	%		28	%		52	%		36	%

Liquidity and Capital Resources

As of September 30, 2019, we had a cash balance of approximately $16.9 million. Through September 30, 2019, our liquidity needs were satisfied through proceeds from our initial public offering and funds held in the Trust Account (see Note 10-Shareholders’ Equity-to the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q), proceeds from the PIPE Transaction (as defined below), and proceeds from our June 2019 registered direct offering.

Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the condensed consolidated financial statements, we had an accumulated deficit of approximately $48.5 million at September 30, 2019, a net loss of approximately $59.2 million and approximately $49.8 million net cash used in operating activities for the successor period from February 19, 2019 through September 30, 2019. These factors raise substantial doubt about our ability to continue as a going concern.

We are attempting to further expand its customer base; scale up its production of various products; and increase revenues; however, our cash position may not be sufficient to support our 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 its ability to further generate sufficient revenues. While we believe in the viability of its platform and in our ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect.

PIPE Transaction

Immediately prior to the closing of the business combination (the “Closing”), pursuant to subscription agreements (the “Subscription Agreements”), dated as of various dates from January 9, 2019 through February 12, 2019, by and among GTY Cayman and certain institutional and accredited investors party thereto (the “Subscribed Investors”), GTY Cayman issued to the Subscribed Investors an aggregate of 12,853,098 Class A ordinary shares of GTY for $10.00 per share, for an aggregate cash purchase price of approximately $126.3 million, including three such Subscription Agreements with certain CityBase holders (including Michael Duffy, the chief executive officer of CityBase) for an aggregate of 380,937 Class A ordinary shares of GTY Cayman at a price of $10.00 per share, for an aggregate cash purchase price of approximately $3.8 million (the “PIPE Transaction”). The Class A ordinary shares of GTY Cayman issued to the Subscribed Investors were cancelled and exchanged on a one-for-one basis for shares of Company common stock at the Closing.

38

Historical Cash Flows

The following table sets forth a summary of our cash flows for the periods indicated (amounts in thousands):

	Successor			Predecessor
	February 19, 2019 through September 30, 2019			January 1, 2019 through February 18, 2019			January 1, 2018 through September 30, 2018
Net cash (used in) provided by operating activities	$	(49,843	)	$	284		$	(3,945	)
Net cash provided by investing activities	$	37,230		$	1,517		$	26
Net cash provided (used in) by financing activities	$	29,529		$	(540	)	$	13,368

Net Cash (Used in) Provided by 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 Successor Period, net cash used in operations was $49.8 million resulting from our net loss of $59.2 million and changes in operating assets and liabilities of $0.6 million and offset by net non-cash expenses of $9.9 million. The $9.9 million of non-cash expenses was comprised of $9.4 million of amortization of intangible assets acquired as a result of the Acquisition and $2.9 million from share-based compensation offset by $2.8 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 $0.6 million was comprised, in part, by a "Make Whole" payment of $0.8 million in conjunction with an agreement for investors to buy a portion of the Acquisition Redemption Shares at a price less than the previously agreed redemption price.

For the Predecessor Period, net cash provided by operations was $0.3 million resulting from our changes in operating assets and liabilities of $1.6 million and net non-cash expenses of $0.4 million offset by our net loss of $1.7 million. The $1.6 million of net cash flows provided as a result of changes in our operating assets and liabilities was primarily due to a $2.2 million decrease in accounts receivable resulting from seasonality in billings and offset by a $0.8 million decrease in accounts payable. The $0.4 million of non-cash expenses was primarily comprised of $0.2 million of depreciation of property and equipment.

For the nine months ended September 30, 2018, net cash used in operations was $3.9 million resulting from our net loss of $10.9 million and offset by changes in operating assets and liabilities of $3.9 million and net non-cash expenses of $3.1 million. The $3.9 million of net cash flows provided as a result of changes in our operating assets and liabilities was due to a $5.1 million increase in accounts payable and accrued liabilities offset by a $0.6 million increase in accounts receivable and a $0.6 million increase in prepaid expenses. The $3.1 million of non-cash expenses was primarily comprised of $1.4 million of the change in fair value of notes payable converted to stock, $0.6 million of share-based compensation, and $0.5 million of depreciation of property and equipment. 

Net Cash Provided by Investing Activities

Our primary investing activities have consisted of investments in marketable securities and capital expenditures. In February 2019, we completed our Acquisition and the resulting cash flow impact is described below in the Successor Period.

For the Successor Period, cash provided by investing activities was $37.2 million resulting from $217.6 million of proceeds from cash held in a trust and offset primarily due to the Acquisition which had a cash purchase price of $179.4 million net of cash acquired and $1.0 million of capital expenditures and capitalization of internal-use software.

For the Predecessor Period, cash provided by investing activities was $1.5 million due to a $1.5 million sale of marketable securities by Questica.

For the nine months ended September 30, 2018, there was no material change in cash provided by investing activities.

39

Net Cash Provided By (Used in) Financing Activities

For the Successor Period, cash provided by financing activities was $29.5 million primarily as a result of the private placement of Class A shares of $125.3 million and proceeds received from the successful registered direct offering of common stock of $25.5 million, net of costs and offset primarily by the redemption of shares in the amount of $114.0 million and $5.2 million of common stock repurchases.

For the Predecessor Period, cash used in financing activities was $0.5 million primarily as a result of member distributions of $0.5 million.

For the nine months ended September 30, 2018, cash provided by financing activities was $13.4 million primarily as a result of $10.0 million of issuances of predecessor preferred shares and $6.2 million of proceeds from borrowings and offset by $0.9 million of dividends and $0.7 million of repayments of borrowings.

Critical Accounting Policies and Use of Estimates

See Note 3 of the notes to our 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. Other than the guarantees described in Note 9-Shareholders’ Equity-Agreements and Arrangements with Certain Institutional Investors to the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q, we have no guarantees or obligations other than those which arise out of normal business operations. 

Contractual Obligations and Commitments

As of September 30, 2019, there were no significant changes to our contractual obligations from those presented as of December 31, 2018 in our Current Report Form 8-K/A filed with the SEC on March 18, 2019.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

During the nine months ended September 30, 2019, 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 Report Form 8-K/A filed with the SEC on March 18, 2019 for the year ended December 31, 2018.

Item 4. Controls and Procedures

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 Chief 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 September 30, 2019, 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 Chief Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

Management does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

40

Changes in Internal Control over Financial Reporting 

In our Annual Report on Form 10-K for the year ended December 31, 2018, we disclosed that the Acquired Companies identified certain material weaknesses in their internal controls over financial reporting. These material weaknesses related to: (i) deficiencies in Bonfire’s period end financial statement close process, (ii) each of CityBase’s, eCivis’s, Open Counter’s and Sherpa’s limited segregation of duties with regard to financial reporting activities such as payroll entry and processing due to the size of their respective accounting departments and (iii) deficiencies in Questica’s period end financial statement close process resulting from, among other things, the preparation of financial statements for the proxy statement/prospectus with a different fiscal year end than its historical fiscal year end.

We believe that, as of September 30, 2019, we have remediated these material weaknesses and improved the effectiveness of our internal control over financial reporting by implementing additional controls related thereto.

The remediation efforts Management took to address the previously identified material weaknesses include, but are not limited to, the following:

· Implementation of specific policies and procedures with detailed instructions to the Acquired Companies in order to adequately communicate the requirements around processes and controls;

· Implementation of controls over manual journal entries and account reconciliations, including improving controls and procedures related to the timeliness and effectiveness of our review and approval procedures;

· Expansion of our financial leadership team by adding employees and external consultants, each with the commensurate knowledge, experience, and training to properly support our financial reporting and accounting functions including overseeing that the first two items listed are timely and adequately implemented; and

· Adoption of formal accounting policies related to non-routine complex transactions, such accounting for business combinations, revenue recognition, equity classification, deferred income taxes and derivative accounting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

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 Part I, “Item 1A: Risk Factors” of the Company’s 2018 Annual Report on Form 10-K and “Item 1A: Risk Factors” of the Company’s 2019 second quarter Quarterly Report on Form 10-Q. 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

41

Item 6. Exhibits.

Exhibit Number	Description
2.1	Amendment No. 3, dated July 29, 2019, to that certain Share Purchase Agreement, by and among Questica Software Inc., Questica USCDN Investments Inc., the Registrant, 1176368 B.C. Ltd., SHOCKT Inc., Dennis Parass, Fernbrook Homes (Hi-Tech) Limited, Allan Booth, and Ross Soft Inc. and Craig Ross as Questica Holders Representative.
10.1	Letter Agreement, dated July 29, 2019, by and between the Registrant and John J. Curran (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the SEC on August 14, 2019).
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	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.
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	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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

42

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 7^th day of November, 2019.

GTY TECHNOLOGY HOLDINGS INC.
	/s/ Stephen Rohleder
	Name:	Stephen Rohleder
	Title:	Chief Executive Officer
		(Principal Executive Officer)
	/s/ John Curran
	Name:	John Curran
	Title:	Chief Financial Officer
		(Principal Financial Officer)

43

EX-2.1

EXHIBIT 2.1

Execution Version

AMENDMENT NO. 3

TO

SHARE PURCHASE AGREEMENT

July 29, 2019

This Amendment No. 3 (this “Amendment”) to the Agreement (as defined hereinafter) is entered into as of the date first written above, by and among Questica Software Inc. (“Questica”), a corporation existing under the laws of British Columbia and which formerly had the name “Questica Inc.”, Questica USCDN Investments Inc. (“Questica USCDN”), a corporation existing under the laws of British Columbia and which formerly had the name “Questica USCDN Inc.”, GTY Technology Holdings Inc., a Cayman Islands exempted company (“GTY”), 1176368 B.C. Ltd., a company incorporated under the laws of British Columbia (“Exchangeco”), and each of SHOCKT Inc., Dennis Parass, Fernbrook Homes (Hi-Tech) Limited, Allan Booth, and Ross Soft Inc. (collectively, the “Questica Holders”) and Craig Ross in his capacity as Questica Holders’ Representative. Reference is made herein to that certain Share Purchase Agreement, dated as of September 12, 2018 (as amended, restated, supplemented and/or modified from time to time, the “Agreement”), by and among the Questica, Questica USCDN, GTY, Exchangeco, the Questica Holders and the Questica Holders’ Representative. Any capitalized term used but not otherwise defined herein shall have the meaning ascribed thereto in the Agreement.

WHEREAS, GTY and the Questica Holders’ Representative desire to extend the period with respect to GTY’s delivery of the Purchase Price Adjustment Statement to the Questica Holders’ Representative, in order to enable GTY to prepare certain supplemental information requested by the Questica Holders’ Representative in a manner that will enable the Questica Holders’ Representative to efficiently review such information.

NOW THEREFORE, in accordance with Section 11.11 of the Agreement and in consideration of the respective representations, warranties, covenants and agreements contained herein and in the Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:

1. Section 1.6(a).

The parties hereto acknowledge and agree that Section 1.6(a) is hereby amended and restated in its entirety to read:

(a)After Closing, GTY shall prepare and, by August 5, 2019, GTY shall deliver to the Questica Holders’ Representative, a statement (together with reasonable supporting documentation) setting forth GTY’s determination of (i) Closing Date Cash, and (ii) Closing Date Indebtedness (the “Purchase Price Adjustment Statement”).

2. Schedule C-1.

The parties hereto acknowledge and agree that Schedule C-1 to the Agreement is hereby amended to add the following new clause “i.” to Item 3 of Schedule C-1 any costs incurred by the Companies at the request of GTY to achieve certain revenue stretch plan metrics agreed to by GTY and the Companies, including, for greater clarity, the cost of hiring, training and employing any additional employees.

3. Miscellaneous.

(a)Except as expressly amended hereby, the Agreement (including the Schedules) and all other documents, agreements and instruments relating thereto are and shall be unmodified and remain in full force and effect, and nothing contained herein shall constitute or be deemed a waiver of any of the rights or obligations of the parties thereto. The parties agree that nothing in this Amendment shall constitute or shall be deemed to constitute a waiver of any rights remedies or defenses, including any concession by (i) the Seller as to the validity in whole or in part, of anything contained in the Statement or (ii) the Buyer as to the validity in whole or in part, of anything contained in the Notice of Disagreement.

(b)On and after the date hereof, each reference to the Agreement shall mean and be a reference to the Agreement as amended hereby, and this Amendment and the Agreement shall be read together and construed as a single instrument. To the extent that a provision of this Amendment conflicts with or differs from a provision of the Agreement, such provision of this Amendment shall prevail and govern for all purposes and in all respects.

(c)Sections 11.7 through 11.17 of the Agreement are hereby incorporated by reference herein mutatis mutandis and shall apply to this Amendment as if specifically stated herein.

[Signature Pages Follow]

2 

IN WITNESS WHEREOF, the parties hereto have executed and deliver this Amendment on the date first written above.

GTY TECHNOLOGY HOLDINGS INC.
By:	/s/ HARRY L. YOU
	Name: Harry L. You
	Title: President & CFO
1176368 B.C. LTD.

By:	/s/ HARRY L. YOU
	Name: Harry L. You
	Title: President & CFO

QUESTICA INC.
By:	/s/ Timothy J. PARASS
	Name: Timothy J. Parass
	Title: President

QUESTICA USCDN INC.
By:	/s/ Timothy J. PARASS
	Name: Timothy J. Parass
	Title: President

CRAIG ROSS, as Questica Holders’ Representative
By:	/s/ Craig Ross
	Name: Craig Ross

QUESTICA HOLDERS:
SHOCKT INC.
By:	/s/ Timothy J. PARASS
	Name: Timothy J. Parass
	Title: President and Secretary
/s/ Dennis Parass
Dennis Parass

FERNBROOK HOMES (HI-TECH) LIMITED
By:	/s/ HOWARD STEINBERG
	Name: Howard Steinberg
	Title: Chief Financial Officer
/s/ allan booth
Allan Booth

ROSS SOFT INC.
By:	/s/ Craig Ross
	Name: Craig Ross
	Title: President

EX-31.1

EXHIBIT 31.1

CERTIFICATION

PURSUANT TO RULE 13a-14 AND 15d-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Stephen Rohleder, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 of GTY Technology Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepting accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 7, 2019	By:	/s/ Stephen Rohleder
		Stephen Rohleder
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

PURSUANT TO RULE 13a-14 AND 15d-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, John Curran, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 of GTY Technology Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepting accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 7, 2019	By:	/s/ John Curran
		John Curran
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of GTY Technology Holdings Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Rohleder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2019

/s/ Stephen Rohleder
Name:	Stephen Rohleder
Title:	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of GTY Technology Holdings Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Curran, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2019

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

XML

Intangible Assets (Successor) - Estimated aggregate amortization expense (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Intangible Assets (Successor)
Three months ended December 31, 2019	$ 3,829
Year ended December 31, 2020	15,052
Year ended December 31, 2021	15,010
Year ended December 31, 2022	15,010
Year ended December 31, 2023	15,010
Year ended December 31, 2024	15,010
Thereafter	44,710
Total	$ 123,631

XML

Business Combination - Summary of consideration paid (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Cash Consideration	$ 193,894
Stock Consideration	172,307
Contingent Consideration	65,803
Total	432,004
Adjusted Net Assets	5,910
Goodwill	332,976	$ 2,518
Intangibles	133,026
Deferred Tax Liability	39,908
Bonfire [Member]
Business Acquisition [Line Items]
Cash Consideration	50,971
Stock Consideration	50,078
Contingent Consideration	325
Total	101,374
Adjusted Net Assets	3,639
Goodwill	81,867
Intangibles	22,668
Deferred Tax Liability	6,800
CityBase holders [Member]
Business Acquisition [Line Items]
Cash Consideration	64,507
Stock Consideration	41,518
Contingent Consideration	48,410
Total	154,435
Adjusted Net Assets	782
Goodwill	119,945
Intangibles	48,155
Deferred Tax Liability	14,447
eCivis [Member]
Business Acquisition [Line Items]
Cash Consideration	18,073
Stock Consideration	31,256
Contingent Consideration	5,859
Total	55,188
Adjusted Net Assets	(1,788)
Goodwill	47,878
Intangibles	12,997
Deferred Tax Liability	3,899
Open Counter [Member]
Business Acquisition [Line Items]
Cash Consideration	10,958
Stock Consideration	17,455
Contingent Consideration	0
Total	28,413
Adjusted Net Assets	(1,441)
Goodwill	22,524
Intangibles	10,471
Deferred Tax Liability	3,141
Questica [Member]
Business Acquisition [Line Items]
Cash Consideration	44,494
Stock Consideration	31,000
Contingent Consideration	9,311
Total	84,805
Adjusted Net Assets	3,652
Goodwill	57,479
Intangibles	33,821
Deferred Tax Liability	10,147
Sherpa [Member]
Business Acquisition [Line Items]
Cash Consideration	4,891
Stock Consideration	1,000
Contingent Consideration	1,898
Total	7,789
Adjusted Net Assets	1,066
Goodwill	3,283
Intangibles	4,914
Deferred Tax Liability	$ 1,474

XML

Business Combination

9 Months Ended

Sep. 30, 2019

Business Combination

Business Combination

Note 4. Business Combination

Successor

Business Combination

On February 19, 2019, the Company consummated the Business Combination, pursuant to which it acquired each of Bonfire, CityBase, eCivis, Open Counter, Questica, and Sherpa. In connection with the closing of the Business Combination (the “Closing”), pursuant to the GTY Agreement between the Company, GTY Cayman, and GTY Technology Merger Sub, Inc. (“GTY Merger Sub”), merged with and into GTY Cayman, with GTY Cayman surviving the merger as a direct, wholly-owned subsidiary of the Company, and in connection therewith the Company changed its name from GTY Govtech, Inc. to GTY Technology Holdings Inc. This acquisition qualifies as a business combination under ASC 805. Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recognized as goodwill.

Bonfire Acquisition

Under the Bonfire Agreement, at Closing, the Company acquired Bonfire for aggregate consideration of approximately $48.0 million in cash and 2,156,014 shares of Company common stock (valued at $10.00 per share) and 2,161,741 shares of Bonfire Exchangeco, each of which is exchangeable for shares of Company common stock on a one-for-one basis at any time of the holder’s choosing. Of the shares issued to Bonfire Holders, 2,008,283 shares of Company common stock and 2,093,612 exchangeable shares in the capital stock of Bonfire Exchangeco  (the “Bonfire Exchangco Shares”) are subject to transfer restrictions for one year, which such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30‑trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $3.1 million in cash and 690,000 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the Bonfire Holders.

Additionally, in accordance with the Bonfire Agreement, 1,218,937 unvested options to purchase shares of Bonfire common stock were converted into 408,667 options to purchase shares of Company common stock.

During the 2019 Successor Period, 193,645 shares of the Bonfire Exchangeco Shares were converted into the Company’s Common Stock on a one-for-one basis.  The Bonfire Exchangeco Shares were subject to the transfer restrictions described above, and the Common Stock issued for these shares is subject to the same transfer restrictions, discussed above.

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the decrease in aggregate consideration of $0.1 million relating to the settlement of the working capital adjustment in accordance with the Bonfire Agreement.

CityBase Acquisition

Under the CityBase Agreement, at Closing, the Company acquired CityBase for aggregate consideration of approximately $62.2 million in cash and 3,155,961 shares of Company common stock (valued at $10.00 per share). Each CityBase Holder may elect to have their shares subject to transfer restrictions for up to one year or to have their shares subject to redemption at the Company’s option for a promissory note in an amount equal to $10.00 per share redeemed, which note would bear interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s)) (which option was not exercised and expired on the 90th day after the Closing). Prior to the consummation of the Business Combination, certain of the CityBase Holders agreed to purchase 380,937 Class A Ordinary Shares of GTY Cayman with the proceeds they would have otherwise received from the closing of the CityBase Transaction, which resulted in an approximate $3.8 million reduction to the amount of cash payable to the CityBase Holders. In addition, approximately $2.1 million in cash and 1,000,000 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the CityBase Holders.

For the three months ended September 30, 2019, the Company recorded measurement period adjustments for (i) the increase in the aggregate consideration of $0.2 million relating to the settlement of the working capital adjustment in accordance with the CityBase Agreement, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor.

eCivis Acquisition

Under the eCivis Agreement and the eCivis Letter Agreement, at Closing, the Company acquired eCivis for aggregate consideration of approximately $14.0 million in cash and 2,883,433 shares of Company common stock (valued at $10.00 per share) (including 525,060 shares of Company 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 shares not subject to a redemption right are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30‑trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $3.6 million in cash and 242,200 shares of Company common stock were deposited into escrow for a period of up to one year to cover certain indemnification obligations of the eCivis Holders.

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the increase in aggregate consideration of $0.5 million relating to the settlement of the working capital adjustment in accordance with the eCivis Agreement and the eCivis Letter Agreement.

Open Counter Acquisition

Under the Open Counter Agreement and the Open Counter Letter Agreement, at Closing, the Company acquired Open Counter for aggregate consideration of approximately $9.7 million in cash and 1,580,990 shares of Company common stock (valued at $10.00 per share) that were issued to the holders of Open Counter capital stock (the “Open Counter Holders”) (including 100,000 shares of Company common stock which have subsequently been redeemed for a promissory note at the sole discretion of the Company within seven days of the Closing. Such promissory note would bear interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s))). The shares that were not subject to a redemption right are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30‑trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $1.3 million in cash and 164,554 shares of Company common stock were deposited into escrow for a period of one year to cover certain indemnification obligations of the Open Counter Holders.

Questica Acquisition

Under the Questica Agreement and the Questica Letter Agreement, at Closing, the Company indirectly acquired Questica for aggregate consideration of approximately $44.4 million in cash and an aggregate of 2,600,000 Class A exchangeable shares in the capital stock of Questica Exchangeco, which is exchangeable into shares of the Company’s common stock, and 1,000,000 Class B shares in the capital stock of Questica Exchangeco, which is not exchangeable into shares of Company common stock, that were issued to the holders of Questica capital stock (the “Questica Holders”). In accordance with the Questica Shareholder Agreement, dated as of February 12, 2019, by and among the Company and certain Questica Holders (the “Questica Shareholder Agreement”), 500,000 Class C exchangeable shares in the capital stock of Questica Exchangeco had been redeemable at the sole discretion of the Company at any time for $5.0 million plus all accrued and unpaid dividends, and may be exchanged for shares of Company common stock beginning on the sixty-first day following the Closing for a number of shares of Company common stock equal to $5.0 million plus accrued and unpaid dividends divided by the lesser of (i) $10.00 or (ii) the 5‑day volume weighted average price (“VWAP”) at the time of exchange. In June 2019, these shares were redeemed for 500,000 shares of the Company common stock at the market price of $7.72,  or $3.9 million, and transferred to permanent equity, and $1.3 million of cash. The incremental $0.2 million above the stated redemption price was recorded as a deemed dividend in the accompanying condensed consolidated financial statements. The Class A exchangeable shares in the capital stock of Questica Exchangeco are subject to transfer restrictions for one year, provided; however, such transfer restrictions may be lifted earlier if, subsequent to the Closing, (i) the last sale price of the Company common stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30‑trading day period commencing at least 150 days after Closing, or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares of Company common stock for cash, securities or other property. In addition, approximately $0.1 million in cash and 800,000 of the exchangeable shares described above were deposited into escrow for a period of one year to cover certain indemnification obligations of the Questica Holders.

Sherpa Acquisition

Under the Sherpa Agreement and the Sherpa Letter Agreement, at Closing, the Company indirectly acquired Sherpa for aggregate consideration of approximately $4.2 million in cash and 100,000 shares of Company common stock (valued at $10.00 per share) all of which are redeemable for a promissory note bearing interest equal to 5.5% per annum in the first year subsequent to issuance and 8.0% per annum thereafter at the sole discretion of the Company within seven days of the Closing. In addition, approximately $0.9 million in cash was deposited into escrow for a period of one year to cover certain indemnification obligations of the Questica Holders.

For the three months ended September 30, 2019, the Company recorded a measurement period adjustment for the decrease in aggregate consideration of $0.2 million relating to the settlement of the working capital adjustment in accordance with the Sherpa Agreement and the Sherpa Letter Agreement.

During the three months ended September 30, 2019, the Company made the Measurement Period Adjustments that resulted in (i) an increase in the aggregate consideration of the Acquisition of $0.4 million relating to the settlement of the working capital adjustments, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor.  The following is a summary of the revised consideration paid and issued to each Acquired Company including the Measurement Period Adjustments (in thousands):

										Adjusted						Deferred
	Cash		Stock			Contingent				Net						Tax
	Consideration		Consideration			Consideration		Total		Assets		Goodwill		Intangibles		Liability
Bonfire	$	50,971	$	50,078	(1)	$	325	$	101,374	$	3,639	$	81,867	$	22,668	$	6,800
CityBase		64,507		41,518			48,410		154,435		782		119,945		48,155		14,447
eCivis		18,073		31,256			5,859		55,188		(1,788)		47,878		12,997		3,899
OpenCounter		10,958		17,455			—		28,413		(1,441)		22,524		10,471		3,141
Questica		44,494		31,000	(2)		9,311		84,805		3,652		57,479		33,821		10,147
Sherpa		4,891		1,000			1,898		7,789		1,066		3,283		4,914		1,474
Total	$	193,894	$	172,307		$	65,803	$	432,004	$	5,910	$	332,976	$	133,026	$	39,908

(1) Includes $21.6 million of convertible stock consideration

(2) Includes $31.0 million of convertible stock consideration

The following table represents the revised preliminary allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values, including the Measurement Period Adjustments discussed above.  The following revised allocations are considered preliminary and may change within the permissible measurement period, not to exceed one year (in thousands):

	Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Total
Cash	$	4,641	$	2,191	$	136	$	107	$	6,763	$	632	$	14,470
Accounts receivable, net		323		1,018		720		46		1,257		587		3,951
Prepaid expense and other current assets		607		170		340		—		77		33		1,227
Fixed assets		118		500		56		29		182		2		887
Loan receivable - related party		—		175		—		—		—		—		175
Right of use assets		1,315		—		901		—		296		—		2,512
Other assets		369		783		30		—		1,061		—		2,243
Intangible assets		22,668		48,155		12,997		10,471		33,821		4,914		133,026
Goodwill		81,867		119,945		47,878		22,524		57,479		3,283		332,976
Accounts payable and accrued expenses		(1,085)		(1,192)		(582)		(123)		(910)		(188)		(4,080)
Contract liabilities		(1,221)		(816)		(1,635)		(484)		(2,774)		—		(6,930)
Lease liability - short term		(366)		—		—		—		(296)		—		(662)
Deferred tax liability		(6,800)		(14,447)		(3,899)		(3,141)		(10,147)		(1,474)		(39,908)
Other current liabilities		—		—		(3)		(491)		(767)		—		(1,261)
Capital lease obligations - current portion		—		(139)		—		—		—		—		(139)
Contract and other long-term liabilities		(60)		(1,646)		(56)		—		—		—		(1,762)
Capital lease obligation, less current portion		—		(262)		—		—		—		—		(262)
Long term debt		—		—		—		(525)		—		—		(525)
Lease liability - long term		(1,002)		—		(901)		—		—		—		(1,903)
Contingent consideration - pre-existing		—		—		(794)		—		(1,237)		—		(2,031)
Total consideration	$	101,374	$	154,435	$	55,188	$	28,413	$	84,805	$	7,789	$	432,004

Transaction Costs

Transaction costs incurred by the Company associated with the Acquisition were $33.2 million from February 19, 2019 through September 30, 2019.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical)	Sep. 30, 2019 $ / shares shares
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001
Preferred Stock, Shares Authorized	1,000,000
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001
Common Stock, Shares Authorized	400,000,000
Common Stock, Shares, Issued	52,822,633
Common Stock, Shares, Outstanding	52,207,635
Exchangeable Shares Outstanding	5,568,096
Exchangeable Shares Issued	5,568,096
Treasury Stock, Shares	614,998

XML

Organization and Business Operations

9 Months Ended

Sep. 30, 2019

Organization and Business Operations

Organization and Business Operations

Note 1. Organization and Business Operations

GTY Technology Holdings Inc. (f/k/a GTY Govtech, Inc.), a Massachusetts corporation (“GTY”, the “Company” or “Successor”), is headquartered in Las Vegas, Nevada.

On February 19, 2019 (the “Closing Date”), the Company consummated several acquisitions (collectively, the “Acquisition”), pursuant to which it (i) acquired each of Bonfire Interactive Ltd. (“Bonfire”), CityBase, Inc. (“CityBase”), eCivis Inc. (“eCivis”), Open Counter Enterprises Inc. (“Open Counter”), Questica Inc. and Questica USCDN Inc. (together, “Questica”) and Sherpa Government Solutions LLC (“Sherpa” and together with Bonfire, CityBase, eCivis, Open Counter and Questica, the “Acquired Companies”) and (ii) became the parent company of its predecessor entity, GTY Technology Holdings Inc., a blank check company incorporated in the Cayman Islands (“GTY Cayman”). Until the Acquisition, GTY Cayman did not engage in any operations nor generate any revenues.

In connection with the closing of the Acquisition, the Company changed its name from GTY Govtech, Inc. to GTY Technology Holdings Inc. and became a successor issuer to GTY Cayman and continued the listing of its common stock and warrants on the Nasdaq Capital Market (“NASDAQ”) under the symbols “GTYH” and “GTYHW,” respectively.  As of June 2019, the Company’s warrants are no longer listed on any exchange.

GTY is a public sector SAAS company which 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 following is a brief description of each of the Acquired Companies.

Bonfire

Bonfire Interactive Ltd. 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. 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 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

CityBase, 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

eCivis, 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

Open Counter, a Delaware corporation headquartered in San Francisco, California, 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 also provides professional services related to software implementation.

Questica

Questica, Inc., Questica USCDN Inc., and its wholly-owned subsidiary Questica Ltd., design and develop budgeting software that 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 solution that enables public sector and non-profit organizations to improve and shorten their budgeting cycles.

Questica 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 the Questica Ltd.’s customers are located in the United States and Canada, and as well as some international customers, primarily located in the United Kingdom and Africa.

Sherpa

Sherpa 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.

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Leases

9 Months Ended

Sep. 30, 2019

Leases

Leases

Note 8. Leases

The Company leases office space under agreements classified as operating leases that expire on various dates through 2023. 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. The Company does not act as a lessor or have any leases classified as financing leases.

At September 30, 2019, the Company had operating lease liabilities of approximately $6.4 million and right of use assets of approximately $6.2 million, which are included in the condensed consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases (dollars in thousands):

Three Months Ended September 30, 2019 (Successor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	109	$	153	$	77	$	95	$	434
Variable lease cost		—		—		—		—		—
Operating lease expense		109		153		77		95		434
Short-term lease rent expense		—		—		—		—		—
Total rent expense	$	109	$	153	$	77	$	95	$	434

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	108		$	163		$	77		$	34		$	382
Right-of-use assets exchanged for operating lease liabilities	$	—		$	—		$	—		$	3,140		$	3,140
Weighted-average remaining lease term – operating leases		2.7			2.2			2.0			10.7			6.8
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

Nine Months Ended September 30, 2019 (Successor/Predecessor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	210	$	464	$	232	$	164	$	1,070
Variable lease cost		—		—		—		—		—
Operating lease expense		210		464		232		164		1,070
Short-term lease rent expense		—		—		—		—		—
Total rent expense	$	210	$	464	$	232	$	164	$	1,070

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	332		$	485		$	232		$	101		$	1,150
Right-of-use assets exchanged for operating lease liabilities	$	1,292		$	1,541		$	920		$	3,450		$	7,203
Weighted-average remaining lease term – operating leases		2.7			2.2			2.7			10.7			6.9
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

As of September 30, 2019, future minimum lease payments under non-cancellable operating are as follows (in thousands):

	Bonfire		CityBase		eCivis		Questica		Total
Three months ended December 31, 2019	$	113	$	164	$	77	$	36	$	390
Year Ended December 31, 2020		452		662		309		427		1,850
Year Ended December 31, 2021		463		458		309		408		1,638
Year Ended December 31, 2022		235		—		129		410		774
Year Ended December 31, 2023		—		—		—		365		365
Year Ended December 31, 2024		—		—		—		2,754		2,754
Total		1,263		1,284		824		4,400		7,771
Less present value discount		(164)		(126)		(84)		(1,013)		(1,387)
Operating lease liabilities	$	1,099	$	1,158	$	740	$	3,387	$	6,384

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Basis of Presentation

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, 2018 filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019 and the Company’s Current Report Form 8-K/A filed with the SEC on March 18, 2019. Certain reclassifications have been made to conform to current period presentation.

The Acquisition was accounted for as a business combination using the acquisition method of accounting. The Company’s financial statement presentation distinguishes the results of operations into two distinct periods: (i) the period before the consummation of the Acquisition, which includes the period from January 1, 2019 to the Closing Date (the “2019 Predecessor Period”), the three and nine months ended September 30, 2018 (the “2018 Predecessor Period”) and (ii) the period after consummation of the Acquisition which includes the period including and after the Closing Date to September 30, 2019 (“2019 Successor Period”), and the three months ended September 30, 2019. The accompanying condensed consolidated financial statements include a black line division which indicates that the Acquired Companies and the Company’s financial information are presented on a different basis and are therefore, not comparable.

Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See Note 4 – Business Combination for a discussion of the estimated fair values of assets and liabilities recorded in connection with the Acquisition.

The historical financial information of GTY Cayman prior to the Acquisition is not being reflected in the Predecessor financial statements as these historical amounts have been determined not to be useful to a user of the financial statements. GTY Cayman’s operations prior to the Acquisition, other than income from the Trust Account (as defined in Note 10. Shareholders’ Equity) investments and transaction expenses, were nominal.

The Company believes that Predecessor activities related to investments, intangible assets, stock-based compensation, goodwill, fair value measurements and notes payable were either quantitatively or qualitatively immaterial. Therefore, the Company did not disclose these Predecessor activities in the following unaudited footnotes.

Principles of Consolidation

Principles of Consolidation

The Successor Period condensed consolidated financial statements include all accounts of the Company and its subsidiaries. The Predecessor Period condensed consolidated financial statements include all accounts of the Acquired Companies and the Acquired Companies’ subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements.

Segments

Segments

The Company has six operating segments. The Company’s Chief Executive Officer and Chief Financial Officer, who jointly are the Company’s chief operating decision maker, review financial information for each of the Acquired Companies, together with certain consolidated operating metrics, to make decisions about how to allocate resources and to measure the Company’s performance. See Note 11.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash includes cash held in checking and savings accounts. Cash equivalents are comprised of investments in money market mutual funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Accounts Receivable

Accounts Receivable

Accounts receivable consists of amounts due from our customers, which are primarily located throughout the United States and Canada. Accounts receivable are recorded at the invoiced amount, do not require collateral, and do not bear interest.

The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the Company’s customers may have an inability to meet financial obligations, such as bankruptcy and significantly aged receivables outstanding. Uncollectible receivables are written-off in the period management believes it has exhausted every opportunity to collect payment from the customer. Bad debt expense is recorded when events or circumstances indicate an additional allowance is required based on the Company’s specific identification approach.

The allowance for doubtful accounts for the Successor as of September 30, 2019 and for the Predecessor as of December 31, 2018 was immaterial. Bad debt expense for all periods presented was immaterial.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents, and accounts receivable. Cash accounts in a financial institution at times may exceed the Federal depository insurance coverage of $250,000. As of September 30, 2019 and December 31, 2018, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Additionally, all Canadian Dollars (“CDN”) institution amounts are covered by Canada Deposit Insurance Corporation, or CDIC insurance.

Use of Estimates

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, and the useful lives intangible assets, stock-based compensation, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the condensed consolidated statement of operations in the period realized. Property, plant and equipment is depreciated using the straight-line method over five  (5)  to fifteen  (15)  years. Internal-use software is amortized on a straight-line basis over its estimated useful life or five  (5)  years.

Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Capitalized Software Costs

Capitalized Software Costs

The Company capitalizes costs incurred during the application development stage related to the development of internal-use software and enterprise cloud computing services. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.  For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company capitalized $0.2 million and $0.8 million for internal use software, respectively.

Intangible Assets (Successor)

Intangible Assets (Successor)

Intangible assets consist of acquired customer relationships, acquired developed technology, trade names and non-compete agreements which were acquired as part of the Acquisition. The Company determines the appropriate useful life of its intangible assets by performing an analysis of expected cash flows of the acquired assets. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the economic benefits are consumed.

Goodwill (Successor)

Goodwill (Successor)

Goodwill represents the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed, and it is presented as Goodwill in the accompanying condensed consolidated balance sheet of the Successor.   Under ASC 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill is not amortized but is subject to periodic impairment testing.  ASC 350 requires that an entity assign its goodwill to reporting units and test each reporting unit’s goodwill for impairment at least on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  In our evaluation of goodwill for impairment, which will be performed annually during the fourth quarter, we first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it was more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform the quantitative goodwill impairment test. As a result of the Acquisition, the Company acquired goodwill during the Successor Period. There was minimal goodwill prior to the Acquisition. The Company did not identify any significant events or circumstances that would require it to perform an impairment test as of September 30, 2019. As such, there was no impairment recognized during the Successor Period.

Business Combinations (Successor)

Business Combinations (Successor)

The Company accounts for business acquisitions using the acquisition method of accounting based on Accounting Standards Codification (“ASC”) 805 — Business Combinations, which requires recognition and measurement of all identifiable assets acquired and liabilities assumed at their fair value as of the date control is obtained. The Company determines the fair value of assets acquired and liabilities assumed based upon its best estimates of the acquisition-date fair value of assets acquired and liabilities assumed in the acquisition. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Subsequent adjustments to fair value of any contingent consideration are recorded to the Company’s condensed consolidated statements of operations.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s condensed consolidated financial statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the three months ended September 30, 2019, adjustments were made within the permitted measurement period that resulted in (i) an increase in the aggregate consideration of the Acquisition of $0.4 million relating to the settlement of the working capital adjustments, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor (the “Measurement Period Adjustments). These Measurement Period Adjustments have been reflected as current period adjustments in the three months ended September 30, 2019 in accordance with the guidance in ASU 2015-16 “Business Combinations.” The Measurement Period Adjustments primarily impacted goodwill, with no effect on earnings or cash in the current period.  See Note 4.

Impairment of long-lived assets

Impairment of long-lived assets

The Company reviews long-lived assets, including property and equipment and intangible assets and goodwill for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. There were no impairments recorded for all periods presented.

Leases

Leases

Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the condensed consolidated balance sheet as both a right of use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

The Company accounted for leases prior to January 1, 2019 under ASC Topic 840.

Fair Value (Successor)

Fair Value (Successor)

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 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 September 30, 2019, with changes in fair value flowing through current earnings, consist of contingent consideration liabilities recorded in conjunction with business combinations and are as follows (in thousands):

			Fair Value Measurement at
			Reporting Date Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Balance as of		Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
Contingent consideration – current	$	12,208	$	—	$	—	$	12,208
Contingent consideration – long term		55,478		—		—		55,478
Total liabilities measured at fair value	$	67,686	$	—	$	—	$	67,686

There were no transfers made among the three levels in the fair value hierarchy during the period after consummation of the Acquisition, which includes the period including and after the Closing Date to September 30, 2019.

The following table presents 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 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 Level 3 liabilities measured at fair value from February 18, 2019 to September 30, 2019 were as follows (in thousands):

Contingent consideration - February 18, 2019	$	2,685
Fair value of contingent consideration - Bonfire		325
Fair value of contingent consideration - CityBase		48,410
Fair value of contingent consideration - eCivis		5,859
Fair value of contingent consideration - Questica		9,311
Fair value of contingent consideration - Sherpa		1,898
Change in valuation		(812)
Change due to fluctuation in foreign currency		10
Contingent consideration - September 30, 2019	$	67,686

The change in valuation was due, in part, to the decreased probabilities of the achievement of certain milestones of some of the acquired entities.

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.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities 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.

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

The assets, liabilities and results of operations of certain consolidated entities are measured using their functional currency, which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these entities with the Company, their assets and liabilities are translated to U.S. dollars at currency exchange rates as of the condensed consolidated balance sheet date and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these entities’ condensed consolidated financial statements are reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and total other comprehensive loss on the condensed consolidated statements of operations.

Revenue Recognition

Revenue Recognition

The Company adopted the Financial Accounting Standards Board (“FASB”) new revenue recognition framework, ASC 606, Revenue from Contracts with Customers (“ASC 606”), on January 1, 2017 using the full retrospective approach. The adoption of this standard did not have a material impact on prior revenue recognition or on opening equity, as the timing and measurement of revenue recognition for the Company is materially the same under ASC 606 as it was under the prior relevant guidance.

With the adoption of Topic 606, revenues are recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenues recognized will not occur.

The Company determines the amount of revenues to be recognized through application of the following steps:

· Identification of the contract, or contracts with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenues when or as the Company satisfies the performance obligations.

For contracts where the period between when the Company transfers a promised service to the customer and when the customer pays is one year or less, the Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component.

The Company has made a policy election to exclude from the measurement of the transaction price all taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue producing transaction and collected by the Company from a customer. Such taxes may include but are not limited to sales, use, value added and certain excise taxes.

Disaggregation of Revenues

Disaggregation of Revenues

	Successor				Predecessor
	Three Months		February 19, 2019		January 1, 2019		Three Months
	Ended		through		through		Ended		Nine Months Ended
	September 30, 2019		September 30, 2019		February 18, 2019		September 30, 2018		September 30, 2018
Subscriptions, support and maintenance	$	5,920	$	13,393	$	3,253	$	5,156	$	14,424
Professional services		2,449		5,287		1,269		1,369		4,604
License		344		1,302		383		876		1,672
Asset sales		41		52		23		216		321
Total revenues	$	8,754	$	20,034	$	4,928	$	7,617	$	21,021

Revenues

Subscription, support and maintenance. The Company provides software hosting services that provide customers with access to software 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 to 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 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 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 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 68% and 67% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

Professional services.    The Company’s 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 whether the milestone will be achieved. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately 28% and 26% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

License.  Revenues from distinct licenses 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 4% and 6% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the client 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 less than 1% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period.

Contract Liabilities

Contract Liabilities

Contract liabilities primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for subscription services to the Company’s SaaS offerings and related implementation and training. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. The Company receives payments both upfront and over time as services are performed. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. Contract liabilities are reduced as services are provided and the revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in current liabilities as contract liabilities, and the remaining portion is recorded in long-term liabilities as contract liabilities, non-current. Revenues of approximately $6.3 million, $2.2 million, and $8.1 million were recognized for the 2019 Successor Period, the 2019 Predecessor Period, and the nine months ended September 30, 2018, respectively, that was included in the contract liabilities balances at the beginning of the respective periods.

Cost of revenues

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.

Stock Based Compensation

Stock Based Compensation

The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates, involve inherent uncertainties and the application of management’s judgment.

Expected Term — The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility — The Company computes stock price volatility over expected terms based on comparable companies’ historical common stock trading prices.Risk-Free Interest Rate — The Company bases the risk-free interest rate on the U.S. Treasuries implied yield with an equivalent remaining term.

Expected Dividend — The Company has never declared or paid any cash dividends on common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in valuation models.

The following are the assumptions used for the stock option grant on February 19, 2019:

Exercise price	$	1.82
Expected term (years)		5.1
Expected stock price volatility		74	%
Risk-free rate of interest		2	%

In accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, the Company records forfeitures as they occur.

Net Loss per Share

Net Loss per Share

Net loss per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per common share is computed similar to basic net income per common share 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 Successor Period, diluted and basic loss per share are the same.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at September 30, 2019 are as follows:

Warrants to purchase common stock	27,093,334
Unvested restricted stock units	944,962
Options to purchase common stock	278,623
Total	28,316,919

Income Taxes

Income Taxes

Deferred income taxes are provided for the tax effects of temporary differences between (i) the carrying amounts of assets and liabilities for financial reporting purposes and (ii) the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a full valuation allowance against its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive or negative evidence becomes available. No tax related impact was recorded in the financial statements as a result of the adoption of ASU No. 2016-09.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. Through September 30, 2019, the Company has not identified any material uncertain tax positions for which liabilities would be required to be recorded.

As a result of the Acquisition, a temporary difference between the book fair value and tax basis for the assets acquired of $39.9 million was created, resulting in a deferred tax liability and additional goodwill.

The following is a rollforward of the Company’s deferred tax liability from February 19, 2019 to September 30, 2019 (in thousands):

Balance - February 19, 2019	$	(39,908)
Income tax benefit (associated with the amortization of intangible assets)		2,819
Balance - September 30, 2019	$	(37,089)

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016‑02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous GAAP. In July 2018, the FASB issued ASU 2018‑11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $3.6 million, lease liability of approximately $3.8 million.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company has not determined the impact of this guidance on its financial statements.

In August 2018, the FASB issued Accounting Standards Update 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"). 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 ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements and expects to adopt the new standard in the first quarter of 2020.

XML

Segment Reporting (Details) - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended	12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor	Predecessor		Predecessor		Predecessor	Predecessor
Total revenues			$ 4,928	$ 8,754	$ 7,617	$ 20,034	$ 21,021
Cost of revenues			1,614	2,583	2,590	7,090	6,862
Loss from operations			(1,555)	(9,615)	(4,958)	(61,330)	(10,122)
Goodwill				332,976		332,976		$ 2,518
Assets				495,323		495,323		29,568
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Total revenues			0	0	0	0	0
Cost of revenues			0	0	0	0	0
Loss from operations			0	(2,441)	0	(21,989)	0
Goodwill				0		0		0
Assets				395,679		395,679		0
Bonfire [Member]
Segment Reporting Information [Line Items]
Total revenues			593	1,174	845	2,385	2,255
Cost of revenues			124	277	216	643	554
Loss from operations			(741)	(1,634)	(1,478)	(7,911)	(3,572)
Goodwill				81,867		81,867		0
Assets				107,026		107,026		6,329
CityBase [Member]
Segment Reporting Information [Line Items]
Total revenues			820	1,551	1,640	4,634	4,082
Cost of revenues			746	958	1,225	3,168	3,023
Loss from operations			(1,499)	(4,354)	(3,497)	(12,821)	(7,691)
Goodwill				119,945		119,945		123
Assets				161,734		161,734		7,215
eCivis [Member]
Segment Reporting Information [Line Items]
Total revenues			673	1,638	1,250	3,200	3,745
Cost of revenues			267	454	457	1,087	1,283
Loss from operations			(265)	17	(444)	(1,885)	(821)
Goodwill				47,877		47,877		585
Assets				62,005		62,005		2,621
Open Counter [Member]
Segment Reporting Information [Line Items]
Total revenues			298	407	393	929	1,213
Cost of revenues			51	105	135	263	373
Loss from operations			46	(614)	(350)	(1,363)	(348)
Goodwill				22,525		22,525		0
Assets				31,490		31,490		316
Questica [Member]
Segment Reporting Information [Line Items]
Total revenues			1,913	3,083	2,420	6,311	7,583
Cost of revenues			296	653	498	1,468	1,458
Loss from operations			550	(537)	114	(12,611)	1,096
Goodwill				57,479		57,479		1,810
Assets				96,796		96,796		11,710
Sherpa [Member]
Segment Reporting Information [Line Items]
Total revenues			631	901	1,069	2,575	2,143
Cost of revenues			130	136	59	461	171
Loss from operations			354	(52)	697	(2,750)	1,214
Goodwill				3,283		3,283		0
Assets				6,796		6,796		1,377
Eliminations [Member]
Segment Reporting Information [Line Items]
Total revenues			0	0	0	0	0
Cost of revenues			0	0	0	0	0
Loss from operations			$ 0	0	$ 0	0	$ 0
Goodwill				0		0		0
Assets				$ (366,203)		$ (366,203)		$ 0

XML

Leases (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Operating leases
Operating lease cost	$ 434	$ 1,070
Variable lease cost	0
Operating lease expense	434	1,070
Short-term lease rent expense	0
Total rent expense	434	1,070
Operating cash flows from operating leases	382	1,150
Right-of-use assets exchanged for operating lease liabilities	$ 3,140	$ 7,203
Weighted-average discount rate - operating leases	7.00%	7.00%
Bonfire [Member]
Operating leases
Operating lease cost	$ 109	$ 210
Variable lease cost	0
Operating lease expense	109	210
Short-term lease rent expense	0
Total rent expense	109	210
Operating cash flows from operating leases	$ 108	332
Right-of-use assets exchanged for operating lease liabilities		$ 1,292
Weighted-average remaining lease term - operating leases	2 years 8 months 12 days	2 years 8 months 12 days
Weighted-average discount rate - operating leases	9.90%	9.90%
CityBase [Member]
Operating leases
Operating lease cost	$ 153	$ 464
Variable lease cost	0
Operating lease expense	153	464
Short-term lease rent expense	0
Total rent expense	153	464
Operating cash flows from operating leases	$ 163	485
Right-of-use assets exchanged for operating lease liabilities		$ 1,541
Weighted-average remaining lease term - operating leases	2 years 2 months 12 days	2 years 2 months 12 days
Weighted-average discount rate - operating leases	10.00%	10.00%
eCivis [Member]
Operating leases
Operating lease cost	$ 77	$ 232
Variable lease cost	0
Operating lease expense	77	232
Short-term lease rent expense	0
Total rent expense	77	232
Operating cash flows from operating leases	$ 77	232
Right-of-use assets exchanged for operating lease liabilities		$ 920
Weighted-average discount rate - operating leases	8.00%	8.00%
Questica [Member]
Operating leases
Operating lease cost	$ 95	$ 164
Variable lease cost	0
Operating lease expense	95	164
Short-term lease rent expense	0
Total rent expense	95	164
Operating cash flows from operating leases	34	101
Right-of-use assets exchanged for operating lease liabilities	$ 3,140	$ 3,450
Weighted-average remaining lease term - operating leases	10 years 8 months 12 days	10 years 8 months 12 days
Weighted-average discount rate - operating leases	4.80%	4.80%

XML

Share-Based Compensation Stock Options (Tables)

9 Months Ended

Sep. 30, 2019

Share-Based Compensation Stock Options

Summary of stock option activity

A summary of stock option activity is as follows:

				Weighted Average
		Weighted		Remaining
		Average		Contractual	Total
	Number of	Exercise		Life	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of February 18, 2019	—	$	—	—	$	—
Granted	408,667		1.82	8.2		—
Exercised	(112,643)		1.16	—		—
Forfeited/expired	(17,401)		1.16	—		—
Outstanding as of September 30, 2019	278,623	$	2.13	8.2	$	1,316
Options vested and exercisable	80,988	$	2.12	8.1	$	383

Summary of restricted stock units

A summary of the Company's restricted stock units and related information is as follows:

		Weighted Average
	Number of Shares	Grant Price
Unvested as of as of February 18, 2019	—	$	—
Granted	1,049,237		9.53
Forfeited/expired	(104,275)		—
Unvested as of September 30, 2019	944,962	$	9.52

XML

Summary of Significant Accounting Policies (Details) - Fair Value, Measurements, Recurring [Member] $ in Thousands	Sep. 30, 2019 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	$ 67,686
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	67,686
Contingent Consideration Current [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	12,208
Contingent Consideration Current [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Contingent Consideration Current [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Contingent Consideration Current [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	12,208
Contingent Consideration long term [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	55,478
Contingent Consideration long term [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Contingent Consideration long term [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	0
Contingent Consideration long term [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Liabilities Fair Value Disclosure	$ 55,478

XML

Shareholder's Equity (Details)	1 Months Ended					2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) employee $ / shares shares	Jul. 31, 2019 USD ($) shares	Jun. 30, 2019 USD ($) $ / shares shares	Apr. 30, 2019 USD ($) shares	Mar. 31, 2019 USD ($) shares	Feb. 18, 2019 USD ($)	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Feb. 19, 2019 $ / shares	Feb. 12, 2019 USD ($) $ / shares shares	Dec. 31, 2018 $ / shares shares
Class of Stock [Line Items]
Common Stock, Shares Authorized	400,000,000						400,000,000		400,000,000	400,000,000
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001						$ 0.0001		$ 0.0001	$ 0.0001
Common Stock, Shares, Issued	52,822,633						52,822,633		52,822,633	52,822,633
Preferred Stock, Shares Authorized	1,000,000						1,000,000		1,000,000	1,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001						$ 0.0001		$ 0.0001	$ 0.0001
Common Stock, Shares, Outstanding	52,207,635						52,207,635		52,207,635	52,207,635
Warrants and Rights Outstanding | $	$ 27,093,334						$ 27,093,334		$ 27,093,334	$ 27,093,334
Debt Instrument, Face Amount | $					$ 1,000,000
Debt Instrument, Interest Rate, Increase (Decrease)					1.00%
Temporary Equity Number Of Shares Redeemed	0		500,000				0		0	0
Temporary Equity, Redemption Price Per Share | $ / shares			$ 7.72									$ 10.00
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 11.50						$ 11.50		$ 11.50	$ 11.50
Stock Repurchased During Period, Value | $							$ 1,747,000			$ 5,160,000
Gain (Loss) From Repurchase Of Shares | $						$ 0	$ (128,000)	$ 0	$ (1,032,000)		$ 0
Stock Issued During Period, Private Placement of Common Stock | $	$ 25,500,000									$ 25,450,000
Share Price | $ / shares	$ 7.70						$ 7.70		$ 7.70	$ 7.70		$ 12.00
Number of Bonfire Employees | employee	2
Measurement Period Adjustment To Common Stock Issued For Acquisitions, Shares							4,150
Measurement Period Adjustment To Common Stock Issued For Acquisitions, Value | $							$ (42,000)
Payments of Stock Issuance Costs | $	$ 1,500,000
Difference of Acquistion Redemption Shares Price and Previously Agreed Redemption Price | $	$ 2,500,000
Cashless Stock Options Exercised	284
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	117								112,643
Temporary Equity Value Of Number of Shares Transferred to Permanent Equity | $			$ 3,900,000
Temporary Equity Value in Cash | $			1,300,000
Temporary Equity, Accretion to Redemption Value | $			$ 200,000
Warrants and Rights Redemption Price Per Share	0.01
Minimum [Member]
Class of Stock [Line Items]
Debt Instrument, Interest Rate, Stated Percentage					8.00%
Share Price | $ / shares	$ 20						$ 20		$ 20	20
Sale of Stock, Price Per Share | $ / shares	$ 18.00						$ 18.00		$ 18.00	$ 18.00
Maximum [Member]
Class of Stock [Line Items]
Debt Instrument, Interest Rate, Stated Percentage					10.00%
Subscription Agreements [Member]
Class of Stock [Line Items]
Common Stock Shares Surrendered													231,179
GTY Merger [Member]
Class of Stock [Line Items]
Temporary Equity Number Of Shares Redeemed	11,073,040						11,073,040		11,073,040	11,073,040
Temporary Equity, Redemption Price Per Share | $ / shares	$ 10.29						$ 10.29		$ 10.29	$ 10.29
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares										0
Private Placement [Member] | Subscription Agreements [Member]
Class of Stock [Line Items]
Sale Of Warrants													500,000
Warrants Issued Value | $													$ 250,000
Warrants Issued Price | $ / shares													$ 0.50
Warrants Stated Or Par Value Per Warrant | $ / shares													1.00
Treasury Stock [Member]
Class of Stock [Line Items]
Stock Repurchased During Period, Value | $		$ 2,500,000		$ 2,600,000			$ 1,747,000			$ 5,160,000
Stock Repurchased During Period, Shares		250,000		264,998
Stock Repurchased During Period, Value At Stock Price | $		$ 1,700,000		$ 2,400,000
Gain (Loss) From Repurchase Of Shares | $		$ 800,000		$ 200,000
Stock Issued During Period, Shares Private Placement of Common Stock	3,500,000
Common Class A [Member]
Class of Stock [Line Items]
Common Stock, Shares Authorized	400,000,000						400,000,000		400,000,000	400,000,000				400,000,000
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001						$ 0.0001		$ 0.0001	$ 0.0001				$ 0.0001
Common Stock, Shares, Issued	0						0		0	0
Common Stock, Shares, Outstanding	0				100,000		0		0	0
Temporary Equity Number Of Shares Redeemed	20,289,478						20,289,478		20,289,478	20,289,478
Stock Repurchased During Period, Value | $										$ 0
Stock Issued During Period, Private Placement of Common Stock | $										$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period										0
Temporary Equity Value Of Number Of Shares Redeemed | $	$ 114,000,000						$ 114,000,000		$ 114,000,000	$ 114,000,000
Temporary Equity Number of Shares Transferred to Permanent Equity	9,216,438						9,216,438		9,216,438	9,216,438
Temporary Equity Value Of Number of Shares Transferred to Permanent Equity | $	$ 88,900,000						$ 88,900,000		$ 88,900,000	$ 88,900,000
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | $	$ 1,100,000
Stock Issued During Period, Shares, Acquisitions										0
Common Class A [Member] | Subscription Agreements [Member]
Class of Stock [Line Items]
Common Stock, Par or Stated Value Per Share | $ / shares													$ 10.00
Common Stock, Shares, Issued													12,863,098
Common Stock, Value, Subscriptions | $													$ 126,400,000
Common Class A [Member] | Subscription Agreements [Member] | CityBase holders [Member]
Class of Stock [Line Items]
Common Stock, Par or Stated Value Per Share | $ / shares													$ 10.00
Common Stock, Shares, Issued													380,937
Common Stock, Value, Subscriptions | $													$ 3,800,000
Common Class A [Member] | GTY Merger [Member]
Class of Stock [Line Items]
Number Of Shares Exchanged During Period	22,978,520
Common Class A [Member] | Questica Exchangeco [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	2,600,000
Common Class B [Member]
Class of Stock [Line Items]
Stock Repurchased During Period, Value | $										$ 0
Stock Issued During Period, Private Placement of Common Stock | $										$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period										0
Stock Issued During Period, Shares, Acquisitions										0
Common Class B [Member] | GTY Merger [Member]
Class of Stock [Line Items]
Number Of Shares Exchanged During Period	13,568,821
Number Of Shares Issued Upon Exchange	36,547,341
Common Class B [Member] | Questica Exchangeco [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	1,000,000
Series A Common Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	11,973,154
Redeemeble Common Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	3,937,907
Common Class C [Member] | Questica Exchangeco [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	500,000
Exchangeable Shares [Member] | Questica Exchangeco [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Acquisitions	2,161,741
Exchangeable Shares [Member] | Bonfire [Member]
Class of Stock [Line Items]
Business Acquisition Shares Exchange				193,645

XML

Share-Based Compensation Stock Options - Additional information (Details) - USD ($)	3 Months Ended	7 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Feb. 19, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		408,667	408,667
Average closing price	$ 7.70	$ 7.70	$ 7.70	$ 12.00
Allocated Share-based Compensation Expense	$ 300,000	$ 2,400,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 1,200,000	$ 1,200,000	$ 1,200,000
Share based Compensation Arrangement by Sharebased Payment Award Options Grants in Period Fair Value			$ 3,600,000
Minimum [Member]
Average closing price	$ 20	$ 20	$ 20
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		1,049,237	1,049,237
Allocated Share-based Compensation Expense	$ 200,000	$ 400,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	8,500,000	$ 8,500,000	$ 8,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms			1 year
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		2 years
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			758,550
Allocated Share-based Compensation Expense	$ 0

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases

Schedule Of Quantitative Information Related To Operating Leases [Table Text Block]

Three Months Ended September 30, 2019 (Successor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	109	$	153	$	77	$	95	$	434
Variable lease cost		—		—		—		—		—
Operating lease expense		109		153		77		95		434
Short-term lease rent expense		—		—		—		—		—
Total rent expense	$	109	$	153	$	77	$	95	$	434

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	108		$	163		$	77		$	34		$	382
Right-of-use assets exchanged for operating lease liabilities	$	—		$	—		$	—		$	3,140		$	3,140
Weighted-average remaining lease term – operating leases		2.7			2.2			2.0			10.7			6.8
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

Nine Months Ended September 30, 2019 (Successor/Predecessor Period)

	Bonfire		CityBase		eCivis		Questica		Total
Operating leases
Operating lease cost	$	210	$	464	$	232	$	164	$	1,070
Variable lease cost		—		—		—		—		—
Operating lease expense		210		464		232		164		1,070
Short-term lease rent expense		—		—		—		—		—
Total rent expense	$	210	$	464	$	232	$	164	$	1,070

	Bonfire			CityBase			eCivis			Questica			Total
Operating cash flows from operating leases	$	332		$	485		$	232		$	101		$	1,150
Right-of-use assets exchanged for operating lease liabilities	$	1,292		$	1,541		$	920		$	3,450		$	7,203
Weighted-average remaining lease term – operating leases		2.7			2.2			2.7			10.7			6.9
Weighted-average discount rate – operating leases		9.9	%		10.0	%		8.0	%		4.8	%		7.0	%

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

As of September 30, 2019, future minimum lease payments under non-cancellable operating are as follows (in thousands):

	Bonfire		CityBase		eCivis		Questica		Total
Three months ended December 31, 2019	$	113	$	164	$	77	$	36	$	390
Year Ended December 31, 2020		452		662		309		427		1,850
Year Ended December 31, 2021		463		458		309		408		1,638
Year Ended December 31, 2022		235		—		129		410		774
Year Ended December 31, 2023		—		—		—		365		365
Year Ended December 31, 2024		—		—		—		2,754		2,754
Total		1,263		1,284		824		4,400		7,771
Less present value discount		(164)		(126)		(84)		(1,013)		(1,387)
Operating lease liabilities	$	1,099	$	1,158	$	740	$	3,387	$	6,384

XML

Summary of Significant Accounting Policies - Change in Level 3 liabilities (Details) - USD ($) $ in Thousands	1 Months Ended	7 Months Ended
	Feb. 18, 2019	Sep. 30, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Change in valuation		$ (812)
Fair Value Of Contingent Consideration Liability		10
Fair Value Adjustments Of Contingent Consideration	$ 2,685	67,686
Bonfire [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Of Contingent Consideration Liability		325
CityBase [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Of Contingent Consideration Liability		48,410
eCivis [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Of Contingent Consideration Liability		5,859
Questica [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Of Contingent Consideration Liability		9,311
Sherpa [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Of Contingent Consideration Liability		$ 1,898

XML

Intangible Assets (Successor) (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended	7 Months Ended		9 Months Ended
	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					5 years
Finite-Lived Intangible Assets, Gross		$ 133,026	$ 133,026	$ 133,026	$ 133,026
Amortization of Intangible Assets	$ 32	3,830	9,395	9,395		$ 301
Finite-Lived Intangible Assets, Net		123,631	123,631	123,631	123,631
Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		58,322	58,322	58,322	58,322
Amortization of Intangible Assets				4,477
Finite-Lived Intangible Assets, Net		53,845	53,845	53,845	$ 53,845
Patents And Development Technology [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					8 years
Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		17,505	17,505	17,505	$ 17,505
Amortization of Intangible Assets				1,241
Finite-Lived Intangible Assets, Net		16,264	16,264	16,264	$ 16,264
Trade Names And Trade Marks [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					10 years
Trade Names And Trade Marks [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					1 year
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					10 years
Finite-Lived Intangible Assets, Gross		55,999	55,999	55,999	$ 55,999
Amortization of Intangible Assets				3,432
Finite-Lived Intangible Assets, Net		52,567	52,567	52,567	$ 52,567
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life					3 years
Finite-Lived Intangible Assets, Gross		1,200	1,200	1,200	$ 1,200
Amortization of Intangible Assets				245
Finite-Lived Intangible Assets, Net		955	955	955	955
Bonfire [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		22,668	22,668	22,668	22,668
Bonfire [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		10,197	10,197	10,197	10,197
Bonfire [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		3,491	3,491	3,491	3,491
Bonfire [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		8,723	8,723	8,723	8,723
Bonfire [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		257	257	257	257
CityBase [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		48,155	48,155	48,155	48,155
CityBase [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		31,789	31,789	31,789	31,789
CityBase [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		8,038	8,038	8,038	8,038
CityBase [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		7,840	7,840	7,840	7,840
CityBase [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		488	488	488	488
eCivis [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		12,997	12,997	12,997	12,997
eCivis [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		3,637	3,637	3,637	3,637
eCivis [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		2,573	2,573	2,573	2,573
eCivis [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		6,641	6,641	6,641	6,641
eCivis [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		146	146	146	146
Open Counter [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		10,471	10,471	10,471	10,471
Open Counter [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		5,469	5,469	5,469	5,469
Open Counter [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		1,217	1,217	1,217	1,217
Open Counter [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		3,678	3,678	3,678	3,678
Open Counter [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		107	107	107	107
Questica [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		33,821	33,821	33,821	33,821
Questica [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		6,090	6,090	6,090	6,090
Questica [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		1,880	1,880	1,880	1,880
Questica [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		25,721	25,721	25,721	25,721
Questica [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		130	130	130	130
Sherpa [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		4,914	4,914	4,914	4,914
Sherpa [Member] | Patents And Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		1,140	1,140	1,140	1,140
Sherpa [Member] | Trade Names And Trade Marks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		306	306	306	306
Sherpa [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		3,396	3,396	3,396	3,396
Sherpa [Member] | Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross		$ 72	$ 72	$ 72	$ 72

XML

Summary of Significant Accounting Policies - Additinal information (Details) - USD ($)	1 Months Ended		2 Months Ended		3 Months Ended		7 Months Ended		9 Months Ended		12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 28, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Jan. 01, 2019
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor		Predecessor		Predecessor				Predecessor	Predecessor
Cash, FDIC Insured Amount					$ 250,000		$ 250,000	$ 250,000	$ 250,000		$ 250,000
Lease, Practical Expedients, Package [true false]									true
Operating Lease, Right-of-Use Asset					6,154,000		6,154,000	6,154,000	$ 6,154,000		0
Operating Lease, Liability					$ 6,384,000		6,384,000	$ 6,384,000	6,384,000
Concentration Risk, Percentage					68.00%			67.00%
Contract with Customer, Liability, Revenue Recognized			$ 2,200,000					$ 6,300,000		$ 8,100,000
Capitalized internal use software					$ 200,000			800,000
Increase in the aggregate consideration									$ 400,000
Conversion of stock consideration to cash									$ 0.04
Depreciation				$ 177,000			329,000			$ 480,000
Finite-Lived Intangible Asset, Useful Life									5 years
Allowance for Doubtful Accounts Receivable, Current											$ 0
Deferred Tax Liabilities, Net	$ 39,908,000			$ 39,908,000	$ 37,089,000		$ 37,089,000	$ 37,089,000	$ 37,089,000
Maximum [Member]
Property, Plant and Equipment, Useful Life									15 years
Minimum [Member]
Property, Plant and Equipment, Useful Life									5 years
Sales Revenue, Net [Member]
Concentration Risk, Percentage									90.00%
Sales Revenue, Net [Member] | Professional Services [Member]
Concentration Risk, Percentage					28.00%			26.00%
Sales Revenue, Net [Member] | License [Member]
Concentration Risk, Percentage					4.00%			6.00%
Accounts Receivable [Member] | UNITED STATES
Concentration Risk, Percentage											0.00%
Accounts Receivable [Member] | CANADA
Concentration Risk, Percentage									0.00%
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset												$ 3,600,000
Operating Lease, Liability												3,800,000
Deferred Rent Credit												$ 0

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Fair Value, by Balance Sheet Grouping [Table Text Block]

			Fair Value Measurement at
			Reporting Date Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Balance as of		Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
Contingent consideration – current	$	12,208	$	—	$	—	$	12,208
Contingent consideration – long term		55,478		—		—		55,478
Total liabilities measured at fair value	$	67,686	$	—	$	—	$	67,686

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Changes in Level 3 liabilities measured at fair value from February 18, 2019 to September 30, 2019 were as follows (in thousands):

Contingent consideration - February 18, 2019	$	2,685
Fair value of contingent consideration - Bonfire		325
Fair value of contingent consideration - CityBase		48,410
Fair value of contingent consideration - eCivis		5,859
Fair value of contingent consideration - Questica		9,311
Fair value of contingent consideration - Sherpa		1,898
Change in valuation		(812)
Change due to fluctuation in foreign currency		10
Contingent consideration - September 30, 2019	$	67,686

Schedule of Disaggregation of revenue

	Successor				Predecessor
	Three Months		February 19, 2019		January 1, 2019		Three Months
	Ended		through		through		Ended		Nine Months Ended
	September 30, 2019		September 30, 2019		February 18, 2019		September 30, 2018		September 30, 2018
Subscriptions, support and maintenance	$	5,920	$	13,393	$	3,253	$	5,156	$	14,424
Professional services		2,449		5,287		1,269		1,369		4,604
License		344		1,302		383		876		1,672
Asset sales		41		52		23		216		321
Total revenues	$	8,754	$	20,034	$	4,928	$	7,617	$	21,021

Schedule of Stock option grant

The following are the assumptions used for the stock option grant on February 19, 2019:

Exercise price	$	1.82
Expected term (years)		5.1
Expected stock price volatility		74	%
Risk-free rate of interest		2	%

Schedule of Net loss per share

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at September 30, 2019 are as follows:

Warrants to purchase common stock	27,093,334
Unvested restricted stock units	944,962
Options to purchase common stock	278,623
Total	28,316,919

Schedule of deferred tax liability

The following is a rollforward of the Company’s deferred tax liability from February 19, 2019 to September 30, 2019 (in thousands):

Balance - February 19, 2019	$	(39,908)
Income tax benefit (associated with the amortization of intangible assets)		2,819
Balance - September 30, 2019	$	(37,089)

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 18, 2019	Sep. 30, 2018	Sep. 30, 2018	Dec. 31, 2018	Sep. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor	Predecessor	Predecessor	Predecessor	Predecessor
Current assets:
Cash and cash equivalents						$ 13,217	$ 16,884
Investments						1,398	0
Accounts receivable, net						5,988	8,732
Prepaid expenses and other current assets						1,250	1,577
Total current assets						21,853	27,193
Property and equipment, net						1,124	2,896
Right of use assets						0	6,154
Loan receivable - related party						177	0
Intangible assets, net						1,564	123,631
Goodwill						2,518	332,976
Other assets						2,332	2,473
Total assets						29,568	495,323
Current liabilities:
Accounts payable and accrued expenses						5,969	5,372
Contract liabilities						11,732	16,151
Notes payable and accrued expenses - related party						0	76
Warrant liability						87	0
Financing lease obligations - current portion						138	547
Lease liability - current portion						0	1,761
Contingent consideration - current portion						0	12,208
Notes payable						450	0
Total current liabilities						18,376	36,115
Contract and other long-term liabilities						3,215	1,596
Deferred rent						62	0
Long-term debt, less current portion						433	0
Deferred tax liability						0	37,089
Financing lease obligations - less current portion						268	953
Lease liability - less current portion						0	4,623
Contingent consideration - less current portion						2,092	55,478
Total liabilities						24,446	135,854
Commitments and contingencies
Preferred stock						42,264	0
Shareholders' equity (deficit):
Common stock, par value $0.0001; 400,000,000 shares authorized; 52,822,633 shares issued and 52,207,635 shares outstanding as of September 30, 2019, net of treasury stock						0	5
Exchangeable shares, no par value, 5,568,096 shares issued and outstanding as of September 30, 2019						0	45,681
Acquired Companies' common stock						148	0
Additional paid in capital						7,835	367,194
Accumulated other comprehensive loss						(174)	261
Treasury stock, at cost, 614,998 shares as of September 30, 2019						0	(5,160)
Accumulated deficit						(44,951)	(48,512)
Total shareholders' equity (deficit)	$ (33,152)		$ (33,152)	$ (31,108)	$ (31,108)		359,469	$ 369,197	$ (22,957)	$ (18,613)
Total liabilities, temporary equity and shareholders' equity (deficit)						$ 29,568	$ 495,323

XML

Intangible Assets (Successor)

9 Months Ended

Sep. 30, 2019

Intangible Assets (Successor)

Intangible Assets (Successor)

Note 5. Intangible Assets (Successor)

The Company recognized goodwill and certain identifiable intangible assets in connection with business combinations. See Note 4. Identifiable intangible assets consist of the following as of September 30, 2019 for the Successor (in thousands):

																Intangible Asset
																Amortization for the
																Period
																February 19, 2019
	Economic													Gross		Through
	Life (Years)	Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Total		September 30, 2019		Net Total
Patents / Developed Technology	8	$	10,197	$	31,789	$	3,637	$	5,469	$	6,090	$	1,140	$	58,322	$	4,477	$	53,845
Trade Names / Trademarks	1 - 10		3,491		8,038		2,573		1,217		1,880		306		17,505		1,241		16,264
Customer Relationships	10		8,723		7,840		6,641		3,678		25,721		3,396		55,999		3,432		52,567
Non-Compete Agreements	3		257		488		146		107		130		72		1,200		245		955
		$	22,668	$	48,155	$	12,997	$	10,471	$	33,821	$	4,914	$	133,026	$	9,395	$	123,631

Amortization expense recognized by the Company related to intangible assets for the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019 (Successor) was $3.8 million and $9.4 million, respectively. Amortization expense recognized by the Predecessor for the period from January 1, 2019 through February 18, 2019, the three months ended September 30, 2018, and the nine months ended September 30, 2018 (predecessor) was $0.03 million, $0.2 million and $0.3 million, respectively.

The estimated aggregate future amortization expense for intangible assets is as follows (in thousands):

Three months ended December 31, 2019	$	3,829
Year ended December 31, 2020		15,052
Year ended December 31, 2021		15,010
Year ended December 31, 2022		15,010
Year ended December 31, 2023		15,010
Year ended December 31, 2024		15,010
Thereafter		44,710
	$	123,631

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies.

Commitments and Contingencies

Note 9. Commitments and Contingencies

Successor

Legal Proceedings

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

Indemnification

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 agreement and the maximum potential amount of future payments 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 the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor have it been sued in connection with these indemnification arrangements.

As of September 30, 2019, and December 31, 2018, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements is not probable or reasonably estimable.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended		7 Months Ended		9 Months Ended		12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor	Predecessor		Predecessor				Predecessor	Predecessor
Cash flows from operating activities:
Net loss			$ (1,713)			$ (59,154)			$ (10,884)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment			177			329			480
Amortization of intangible assets			32	$ 3,830		9,395	$ 9,395		301
Amortization of right of use assets			165			861			0
Share-based compensation			61			2,867			647
Deferred income tax benefit			0			(2,819)			47
Bad debt expense			6			20			16
Loss on disposal of property and equipment			0			2			157
Foreign exchange loss on payment of vested options			0			21			0
Change in fair value of contingent consideration			(37)			(812)			(46)
Change in fair value of warrant liability			(18)			0			39
Gain on sale of marketable securities			0			0			(3)
Accrual of Paid In Kind interest			0			0			12
Repayments of Paid In Kind interest			0			0			(23)
Change in fair value of notes payable converted to stock			0			0			1,387
Interest expense from notes payable converted to stock			0			0			160
Change in fair value of put options			0			0			(99)
Changes in operating assets and liabilities:
Accounts receivable			2,190			(4,789)			(642)
Prepaid expenses and other assets			202			(150)			(615)
Accounts payable and accrued liabilities			(58)			(6,202)			2,676
Contract and other long-term liabilities			(723)			11,402			2,445
Lease liabilities			0			(814)			0
Net cash (used in) provided by operating activities			284			(49,843)			(3,945)
Cash flows from investing activities:
Proceeds from cash held in trust			0			217,642			0
Proceeds from sale of property and equipment			1			0			1
Purchase of marketable securities			0			0			(180)
Proceeds from related party loan			0			0			(25)
Proceeds from the sales of marketable securities			1,531			0			563
Payment of internal use software			0			(793)			0
Acquisitions, net of cash acquired			0			(179,423)			0
Capital expenditures			(15)			(196)			(333)
Net cash provided by investing activities			1,517			37,230			26
Cash flows from financing activities:
Proceeds from borrowings			35			0			6,231
Repayments of borrowings			(69)			(585)			(729)
Stock options exercised			13			130			23
Contingent consideration payments			0			0			(50)
Shareholder advances			0			0			0
Proceeds from issuances of predeccsor preferred shares			0			0			9,960
Member distribution			500			0			859
Dividends			0			0			(924)
Borrowings issuance cost			0			0			(24)
Deferred cash payment for acquisitions			0			0			(150)
Common stock repurchases			0			(5,160)			0
Redemption of Class A ordinary shares			0			(113,982)			0
Redemption of Exchangable Shares - Class C			0			(1,323)			0
Proceeds received from private placement of Class A shares, net of costs			0			125,258			0
Proceeds received from private placement of Common Stock, net of costs			0			25,450			0
Repayments of finance lease obligations			(19)			(259)			(110)
Net cash provided by (used in) financing activities			(540)			29,529			13,368
Effect of foreign currency on cash			(721)			(84)			(488)
Net change in cash and cash equivalents			540			16,832			8,961
Cash and cash equivalents, beginning of period		$ 13,929	13,929			52	14,469	$ 13,929	12,441	$ 12,441
Cash and cash equivalents, end of period	$ 14,469		14,469	$ 16,884	$ 21,402	16,884	$ 16,884	$ 16,884	21,402	$ 13,929
Supplemental disclosure of cash flow information:
Cash paid for interest			0			0			0
Cash paid for income taxes			0			0			0
Noncash Investing Activity:
Shares issued for the Acquisition			0			172,307			0
Reduction in convertible note liability			0			1,000			0
Exchangable shares converted to Common Stock			0			1,936			0
Capital leases			$ 0			$ 2,714			$ 0

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Segment Reporting - Additional Infomation (Details)	3 Months Ended	7 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019
Segment Reporting Information [Line Items]
Concentration Risk, Percentage	68.00%	67.00%
Sales Revenue, Net [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage			90.00%

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Leases - Future minimum lease payments (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Three months ended December 31, 2019	$ 390
Year Ended December 31, 2020	1,850
Year Ended December 31, 2021	1,638
Year Ended December 31, 2022	774
Year Ended December 31, 2023	365
Year Ended December 31, 2024	2,754
Total	7,771
Less present value discount	(1,387)
Operating lease liabilities	6,384
Bonfire [Member]
Three months ended December 31, 2019	113
Year Ended December 31, 2020	452
Year Ended December 31, 2021	463
Year Ended December 31, 2022	235
Year Ended December 31, 2023	0
Year Ended December 31, 2024	0
Total	1,263
Less present value discount	(164)
Operating lease liabilities	1,099
CityBase [Member]
Three months ended December 31, 2019	164
Year Ended December 31, 2020	662
Year Ended December 31, 2021	458
Year Ended December 31, 2022	0
Year Ended December 31, 2023	0
Year Ended December 31, 2024	0
Total	1,284
Less present value discount	(126)
Operating lease liabilities	1,158
eCivis [Member]
Three months ended December 31, 2019	77
Year Ended December 31, 2020	309
Year Ended December 31, 2021	309
Year Ended December 31, 2022	129
Year Ended December 31, 2023	0
Year Ended December 31, 2024	0
Total	824
Less present value discount	(84)
Operating lease liabilities	740
Questica [Member]
Three months ended December 31, 2019	36
Year Ended December 31, 2020	427
Year Ended December 31, 2021	408
Year Ended December 31, 2022	410
Year Ended December 31, 2023	365
Year Ended December 31, 2024	2,754
Total	4,400
Less present value discount	(1,013)
Operating lease liabilities	$ 3,387

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Share-Based Compensation Stock Options (Details) $ / shares in Units, $ in Thousands	1 Months Ended	2 Months Ended	7 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Feb. 17, 2019	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares shares
Share-Based Compensation Stock Options
Number of Shares, Outstanding as of February 18, 2019 | shares			0
Number of Shares, Granted | shares			408,667	408,667
Number of Shares, Exercised | shares	(117)		(112,643)
Number of Shares, Forfeited/expired | shares			(17,401)
Number of Shares, Outstanding as of September 30, 2019 | shares	278,623		278,623	278,623
Number of Shares, Options vested and exercisable | shares	80,988		80,988	80,988
Weighted Average Exercise Price, Outstanding as of February 18, 2019			$ 0
Weighted Average Exercise Price, Granted			1.82
Weighted Average Exercise Price, Exercised			1.16
Weighted Average Exercise Price, Forfeited/expired			1.16
Weighted Average Exercise Price, Outstanding as of September 30, 2019	$ 2.13		2.13	$ 2.13
Weighted Average Exercise Price, Options vested and exercisable	$ 2.12		$ 2.12	$ 2.12
Weighted Average Remaining Contractual Life (in years)		0 years	8 years 2 months 12 days
Weighted Average Remaining Contractual Life (in years), Granted			8 years 2 months 12 days
Weighted Average Remaining Contractual Life (in years), Options vested and exercisable			8 years 1 month 6 days
Total Intrinsic Value, Outstanding as of February 18, 2019 | $			$ 0
Total Intrinsic Value, Granted			$ 0
Total Intrinsic Value, Outstanding as of September 30, 2019 | $	$ 1,316		$ 1,316	$ 1,316
Total Intrinsic Value, Options vested and exercisable | $	$ 383		$ 383	$ 383

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Intangible Assets (Successor) (Tables)

9 Months Ended

Sep. 30, 2019

Intangible Assets (Successor)

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The Company recognized goodwill and certain identifiable intangible assets in connection with business combinations. See Note 4. Identifiable intangible assets consist of the following as of September 30, 2019 for the Successor (in thousands):

																Intangible Asset
																Amortization for the
																Period
																February 19, 2019
	Economic													Gross		Through
	Life (Years)	Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Total		September 30, 2019		Net Total
Patents / Developed Technology	8	$	10,197	$	31,789	$	3,637	$	5,469	$	6,090	$	1,140	$	58,322	$	4,477	$	53,845
Trade Names / Trademarks	1 - 10		3,491		8,038		2,573		1,217		1,880		306		17,505		1,241		16,264
Customer Relationships	10		8,723		7,840		6,641		3,678		25,721		3,396		55,999		3,432		52,567
Non-Compete Agreements	3		257		488		146		107		130		72		1,200		245		955
		$	22,668	$	48,155	$	12,997	$	10,471	$	33,821	$	4,914	$	133,026	$	9,395	$	123,631

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The estimated aggregate future amortization expense for intangible assets is as follows (in thousands):

Three months ended December 31, 2019	$	3,829
Year ended December 31, 2020		15,052
Year ended December 31, 2021		15,010
Year ended December 31, 2022		15,010
Year ended December 31, 2023		15,010
Year ended December 31, 2024		15,010
Thereafter		44,710
	$	123,631

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Going Concern and Liquidity (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended		9 Months Ended
	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Going Concern and Liquidity
Retained Earnings (Accumulated Deficit)		$ (48,512)		$ (48,512)	$ (48,512)	$ (48,512)		$ (44,951)
Net Income (Loss) Attributable to Parent	$ (1,713)	$ (8,700)	$ (6,384)		$ (59,154)	$ (59,154)	$ (10,884)
Net Cash Provided by (Used in) Operating Activities	$ 284			$ (49,843)			$ (3,945)

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Summary of Significant Accounting Policies - Stock option grant (Details)	Feb. 19, 2019 $ / shares
Summary of Significant Accounting Policies
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price	$ 1.82
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	5 years 1 month 6 days
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	74.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.00%

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Going Concern and Liquidity

9 Months Ended

Sep. 30, 2019

Going Concern and Liquidity

Going Concern and Liquidity

Note 2. 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 operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the condensed consolidated financial statements, the Company had an accumulated deficit of approximately $48.5 million at September 30, 2019, a net loss of approximately $59.2 million and approximately $49.8 million net cash used in operating activities for the successor period from February 19, 2019 through September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is attempting to further expand its customer base; scale up its production of various products; and increase revenues; however, the 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. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional funds by way of a public or private offering and its ability to further generate sufficient revenues. While the Company believes in the viability of its platform and in its ability to raise additional funds by way of a 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 recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Share-Based Compensation Stock Options

9 Months Ended

Sep. 30, 2019

Share-Based Compensation Stock Options

Share-Based Compensation Stock Options

Note 7. 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 Average
		Weighted		Remaining
		Average		Contractual	Total
	Number of	Exercise		Life	Intrinsic
	Shares	Price		(in years)	Value
Outstanding as of February 18, 2019	—	$	—	—	$	—
Granted	408,667		1.82	8.2		—
Exercised	(112,643)		1.16	—		—
Forfeited/expired	(17,401)		1.16	—		—
Outstanding as of September 30, 2019	278,623	$	2.13	8.2	$	1,316
Options vested and exercisable	80,988	$	2.12	8.1	$	383

For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company recorded approximately $0.3 million and $2.4 million, respectively, of share-based compensation expense related to the options. As of September 30, 2019, the Company has $1.2 million of unrecognized share-based compensation cost. During the Successor Period, share-based compensation expense is recorded as a component of general and administrative expenses.

Restricted Stock Units

During the Successor Period, the Company issued 1,049,237 restricted stock units (“RSUs”) to employees as annual performance awards. A portion of the RSUs will vest in ratable annual installments over either two or four years, as applicable, from the grant date, and the remaining RSUs will 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. The RSUs granted to the Company’s Chief Executive Officer are subject to two different sets of performance-vesting criteria: (i) one RSU grant will vest on the last day of any 120-day trading period ending prior to the third anniversary of the grant date, to the extent that during such period, the average closing price per share of the Company’s common stock equals or exceeds $20, and under certain circumstances, the RSUs may vest if the stock price hurdle is achieved prior to the fourth anniversary of the grant date; and (ii) the other RSU grant will vest subject to the achievement of certain performance conditions over a one-year performance period. In each case, vesting of the RSUs is generally subject to the Chief Executive Officer’s continuous service through each vesting date.

A summary of the Company's restricted stock units and related information is as follows:

		Weighted Average
	Number of Shares	Grant Price
Unvested as of as of February 18, 2019	—	$	—
Granted	1,049,237		9.53
Forfeited/expired	(104,275)		—
Unvested as of September 30, 2019	944,962	$	9.52

For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company recorded approximately $0.2 million and $0.4 million, respectively, of share-based compensation expense related to the RSUs. As of September 30, 2019, the Company had unrecognized stock-based compensation expense related to all unvested restricted stock units of $8.5 million. The weighted average remaining contractual term of unvested RSUs that is time based is approximately one  year at September 30, 2019.  758,550 of the RSUs granted above contained performance conditions.  No stock-based compensation was recognized during the three months ended September 30, 2019 for these performance RSUs, since achievement of such performance metrics was not considered probable.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor		Predecessor		Predecessor
Revenues	$ 4,928	$ 8,754	$ 7,617	$ 20,034	$ 21,021
Cost of revenues	1,614	2,583	2,590	7,090	6,862
Gross Profit	3,314	6,171	5,027	12,944	14,159
Operating expenses
Sales and marketing	1,394	3,549	2,329	9,086	5,975
General and administrative	1,744	5,774	3,558	15,804	9,983
Research and development	1,580	3,003	2,463	7,610	6,688
Amortization of intangible assets	32	3,830		9,395	301
Acquisition costs	151	442	1,635	33,191	1,635
Change in fair value of contingent consideration	0	(812)	0	(812)	0
Total operating expenses	4,869	15,786	9,985	74,274	24,281
Loss from operations	(1,555)	(9,615)	(4,958)	(61,330)	(10,122)
Other income (expense)
Interest income (expense)	(170)	(65)	(280)	248	(343)
Loss from repurchase of shares	0	(128)	0	(1,032)	0
Other income (loss)	12	(41)	(488)	141	239
Total other expense, net	(158)	(234)	(768)	(643)	(104)
Net loss before income taxes	(1,713)	(9,849)	(5,726)	(61,973)	(10,226)
Benefit from (provision for) income taxes	0	1,149	(658)	2,819	(658)
Net loss	(1,713)	(8,700)	(6,384)	(59,154)	(10,884)
Other comprehensive loss
Foreign currency translation gain	0	75		261
Total other comprehensive loss	0	75	0	261	0
Comprehensive loss	(1,713)	(8,625)	(6,384)	(58,893)	(10,884)
Cumulative preferred stock dividends	0	0	(336)	0	(857)
Deemed dividend for Exchangable Shares - Series C	0	0	0	(183)	0
Deemed dividend on Series Seed preferred stock	0	0	(37)	0	(37)
Net loss applicable to common shareholders	$ (1,713)	$ (8,700)	$ (6,757)	$ (59,337)	$ (11,778)
Net loss per share, basic and diluted	$ 0.00	$ (0.17)	$ 0.00	$ (1.18)	$ 0.00
Weighted average common shares outstanding, basic and diluted	0	52,148,047	0	50,316,808	0

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Segment Reporting

9 Months Ended

Sep. 30, 2019

Segment Reporting

Segment Reporting

Note 11. Segment Reporting

The Company conducts the business through the following six operating segments: Bonfire, CityBase, eCivis, Open Counter, Questica and Sherpa.

The accounting policies of the operating segments are the same as those described in Note 3. Non-allocated interest expense and various other administrative costs are reflected in Corporate. Corporate assets include cash and cash equivalents, prepaid expenses and other current assets. The following provides operating information about the Company’s reportable segments for the periods presented (in thousands):

	GTY		Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Eliminations		Total
Successor
Three Months Ended September 30, 2019
Total revenue	$	—	$	1,174	$	1,551	$	1,638	$	407	$	3,083	$	901	$	—	$	8,754
Cost of goods sold		—		277		958		454		105		653		136		—		2,583
Loss from  operations		(2,441)		(1,634)		(4,354)		17		(614)		(537)		(52)		—		(9,615)
Successor
February 19, 2019 through September 30, 2019
Total revenue	$	—	$	2,385	$	4,634	$	3,200	$	929	$	6,311	$	2,575	$	—	$	20,034
Cost of goods sold		—		643		3,168		1,087		263		1,468		461		—		7,090
Loss from operations		(21,989)		(7,911)		(12,821)		(1,885)		(1,363)		(12,611)		(2,750)		—		(61,330)
Predecessor
January 1, 2019 through February 18, 2019
Total revenue	$	—	$	593	$	820	$	673	$	298	$	1,913	$	631			$	4,928
Cost of goods sold		—		124		746		267		51		296		130		—		1,614
Loss from operations		—		(741)		(1,499)		(265)		46		550		354		—		(1,555)
Predecessor
Three Months Ended September 30, 2018
Total revenue	$	—	$	845	$	1,640	$	1,250	$	393	$	2,420	$	1,069	$	—	$	7,617
Cost of goods sold		—		216		1,225		457		135		498		59		—		2,590
Loss from operations		—		(1,478)		(3,497)		(444)		(350)		114		697		—		(4,958)
Predecessor
Nine Months Ended September 30, 2018
Total revenue	$	—	$	2,255	$	4,082	$	3,745	$	1,213	$	7,583	$	2,143	$	—	$	21,021
Cost of goods sold		—		554		3,023		1,283		373		1,458		171		—		6,862
Loss from operations		—		(3,572)		(7,691)		(821)		(348)		1,096		1,214		—		(10,122)
Successor
As of September 30, 2019
Goodwill	$	—	$	81,867	$	119,945	$	47,877	$	22,525	$	57,479	$	3,283	$	—	$	332,976
Assets		395,679		107,026		161,734		62,005		31,490		96,796		6,796		(366,203)		495,323
Predecessor
As of December 31, 2018
Goodwill	$	—	$	—	$	123	$	585	$	—	$	1,810	$	—	$	—	$	2,518
Assets		—		6,329		7,215		2,621		316		11,710		1,377		—		29,568

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

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Intangible Assets (Successor) - Additional infromation (Details) - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended		7 Months Ended		9 Months Ended	12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Intangible Assets (Successor)
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor	Predecessor		Predecessor			Predecessor	Predecessor
Amortization of Intangible Assets			$ 32	$ 3,830		$ 9,395	$ 9,395	$ 301

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Business Combination - Preliminary allocation of consideration (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Cash	$ 14,470
Accounts receivable, net	3,951
Prepaid expense and other current assets	1,227
Fixed assets	887
Loan receivable - related party	175
Right of use assets	2,512
Other assets	2,243
Intangible assets	133,026
Goodwill	332,976	$ 2,518
Accounts payable and accrued expenses	(4,080)
Contract liabilities	(6,930)
Lease liability - short term	(662)
Deferred tax liability	(39,908)
Other current liabilities	(1,261)
Capital lease obligations - current portion	(139)
Contract and other long-term liabilities	(1,762)
Capital lease obligation, less current portion	(262)
Long term debt	(525)
Lease liability - long term	(1,903)
Contingent consideration - pre-existing	(2,031)
Total consideration	432,004
Bonfire [Member]
Business Acquisition [Line Items]
Cash	4,641
Accounts receivable, net	323
Prepaid expense and other current assets	607
Fixed assets	118
Loan receivable - related party	0
Right of use assets	1,315
Other assets	369
Intangible assets	22,668
Goodwill	81,867
Accounts payable and accrued expenses	(1,085)
Contract liabilities	(1,221)
Lease liability - short term	(366)
Deferred tax liability	(6,800)
Other current liabilities	0
Capital lease obligations - current portion	0
Contract and other long-term liabilities	(60)
Capital lease obligation, less current portion	0
Long term debt	0
Lease liability - long term	(1,002)
Contingent consideration - pre-existing	0
Total consideration	101,374
CityBase holders [Member]
Business Acquisition [Line Items]
Cash	2,191
Accounts receivable, net	1,018
Prepaid expense and other current assets	170
Fixed assets	500
Loan receivable - related party	175
Right of use assets	0
Other assets	783
Intangible assets	48,155
Goodwill	119,945
Accounts payable and accrued expenses	(1,192)
Contract liabilities	(816)
Lease liability - short term	0
Deferred tax liability	(14,447)
Other current liabilities	0
Capital lease obligations - current portion	(139)
Contract and other long-term liabilities	(1,646)
Capital lease obligation, less current portion	(262)
Long term debt	0
Lease liability - long term	0
Contingent consideration - pre-existing	0
Total consideration	154,435
eCivis [Member]
Business Acquisition [Line Items]
Cash	136
Accounts receivable, net	720
Prepaid expense and other current assets	340
Fixed assets	56
Loan receivable - related party	0
Right of use assets	901
Other assets	30
Intangible assets	12,997
Goodwill	47,878
Accounts payable and accrued expenses	(582)
Contract liabilities	(1,635)
Lease liability - short term	0
Deferred tax liability	(3,899)
Other current liabilities	(3)
Capital lease obligations - current portion	0
Contract and other long-term liabilities	(56)
Capital lease obligation, less current portion	0
Long term debt	0
Lease liability - long term	(901)
Contingent consideration - pre-existing	(794)
Total consideration	55,188
Open Counter [Member]
Business Acquisition [Line Items]
Cash	107
Accounts receivable, net	46
Prepaid expense and other current assets	0
Fixed assets	29
Loan receivable - related party	0
Right of use assets	0
Other assets	0
Intangible assets	10,471
Goodwill	22,524
Accounts payable and accrued expenses	(123)
Contract liabilities	(484)
Lease liability - short term	0
Deferred tax liability	(3,141)
Other current liabilities	(491)
Capital lease obligations - current portion	0
Contract and other long-term liabilities	0
Capital lease obligation, less current portion	0
Long term debt	(525)
Lease liability - long term	0
Contingent consideration - pre-existing	0
Total consideration	28,413
Questica [Member]
Business Acquisition [Line Items]
Cash	6,763
Accounts receivable, net	1,257
Prepaid expense and other current assets	77
Fixed assets	182
Loan receivable - related party	0
Right of use assets	296
Other assets	1,061
Intangible assets	33,821
Goodwill	57,479
Accounts payable and accrued expenses	(910)
Contract liabilities	(2,774)
Lease liability - short term	(296)
Deferred tax liability	(10,147)
Other current liabilities	(767)
Capital lease obligations - current portion	0
Contract and other long-term liabilities	0
Capital lease obligation, less current portion	0
Long term debt	0
Lease liability - long term	0
Contingent consideration - pre-existing	(1,237)
Total consideration	84,805
Sherpa [Member]
Business Acquisition [Line Items]
Cash	632
Accounts receivable, net	587
Prepaid expense and other current assets	33
Fixed assets	2
Loan receivable - related party	0
Right of use assets	0
Other assets	0
Intangible assets	4,914
Goodwill	3,283
Accounts payable and accrued expenses	(188)
Contract liabilities	0
Lease liability - short term	0
Deferred tax liability	(1,474)
Other current liabilities	0
Capital lease obligations - current portion	0
Contract and other long-term liabilities	0
Capital lease obligation, less current portion	0
Long term debt	0
Lease liability - long term	0
Contingent consideration - pre-existing	0
Total consideration	$ 7,789

XML

Summary of Significant Accounting Policies - Net loss per share (Details)	9 Months Ended
	Sep. 30, 2019 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	28,316,919
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	27,093,334
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	944,962
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	278,623

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 07, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	GTY Technology Holdings Inc.
Trading Symbol	GTYHU
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		52,822,635
Entity Central Index Key	0001682325
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Amendment Flag	false

XML

Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions

Related Party Transactions

Note 6. Related Party Transactions

Convertible Note

On August 8, 2018, GTY Cayman issued the Convertible Note to GTY Investors, LLC (the “Sponsor”), pursuant to which GTY Cayman was able to borrow up to $1 million from the Sponsor from time to time. The Convertible Note does not bear interest.  The Sponsor has the option to convert any amounts outstanding under the Convertible Note, up to $1.0 million in the aggregate, into warrants at a conversion price of $1.50 per warrant. The terms of such warrants will be identical to the private placement warrants. During the period ended March 31, 2019, GTY drew down $0.4 million on the Convertible Note, resulting in $1.0 million principal amount outstanding. The $1.0 million principal amount was offset against amounts due from the Sponsor (see “Agreements and Arrangements with Certain Institutional Investors”) and, as of September 30, 2019, there was no amount outstanding under the Convertible Notes.

Agreements and Arrangements with Certain Institutional Investors

On February 13, 2019, GTY Cayman, the Sponsor, William D. Green, Joseph M. Tucci and Harry L. You (Messrs. Green, Tucci and You, collectively, the “Founders”) entered into agreements and arrangements with certain institutional investors pursuant to which a total of 1,500,000 Class A Ordinary Shares of GTY Cayman were not redeemed in connection with the business combination (the “Outstanding Cayman Shares”). The holder of Outstanding Cayman Shares which were converted into shares of the Company’s common stock on the Closing Date on a one-for-one basis is entitled to put such shares to the Sponsor and the Founders for a purchase price equal to the price at which GTY Cayman redeemed Class A Ordinary Shares in connection with the business combination, $10.29 (the “redemption price”), payment of such purchase price is guaranteed by the Company, and to receive from the Company a cash payment, if and to the extent necessary, but not to exceed $250,000, in order to provide such shareholder with at least a 5% return on such shares above the redemption price. With respect to 1,000,000 of the Outstanding Cayman Shares, GTY Cayman engaged a broker-dealer to facilitate the purchase of the Outstanding Cayman Shares by an institutional investor prior to the Closing for $9.90 per share and agreed to pay such broker-dealer an amount per share in cash equal to the difference between the redemption price and $9.90. In addition, the Sponsor and the Founders entered into agreements prior to the Closing pursuant to which they were obligated to reimburse the holders of an additional 1,942,953 Class A Ordinary Shares that were not redeemed in connection with the business combination (the “Outstanding Class A Shares”) for losses that may be incurred upon the sale of the Outstanding Class A Shares within a specified period following the Closing, up to an agreed-upon limit, and the Company has agreed to guarantee such reimbursement obligations of the Sponsor. During the Q1 2019 Successor Period, the Company, on behalf of the Sponsor, paid $4.0 million for losses incurred upon the sale of the Outstanding Class A Shares and, in turn, the Company reduced its convertible note liability for $1.0 million (see “Convertible Note”). During the nine months ended September 30, 2019, the Sponsor reimbursed the Company for the remaining $3.0 million for such losses on the Outstanding Class A Shares. As of September 30, 2019, the Outstanding Class A Shares are no longer guaranteed by the Founders or the Company.

XML

Shareholders' Equity

9 Months Ended

Sep. 30, 2019

Shareholders' Equity

Shareholders' Equity

Note 10. Shareholders’ Equity

Initial Public Offering Redemption Shares

In connection with a shareholder meeting called to approve the business combination, the Company provided the holders of its outstanding Class A ordinary shares sold in the Company’s initial public offering (the “public shareholders”) with the opportunity to redeem all or a portion of their public shares. The public shareholders were entitled to redeem their public shares for a pro rata portion of the remaining balance in the trust account established in connection with the Company’s initial public offering for the benefit of the Company’s public shareholders and into which substantially all of the proceeds from the initial public offering were deposited (the “Trust Account”). The remaining 20,289,478 GTY Cayman public shares were recorded at a redemption value and classified as temporary equity upon the completion of the initial public offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In connection with the Business Combination, 11,073,040 Class A ordinary shares of GTY were redeemed for $114.0 million, at a per share price of approximately $10.29. The remaining 9,216,438 shares with a redemption value of $88.9 million were transferred to permanent equity.

Subscription Agreement

Immediately prior to the Closing, pursuant to subscription agreements (the “Subscription Agreements”), dated as of various dates from January 9, 2019 through February 12, 2019, by and among GTY and certain institutional and accredited investors party thereto (the “Subscribed Investors”), GTY Cayman issued to the Subscribed Investors an aggregate of 12,863,098 Class A ordinary shares of GTY for $10.00 per share, for an aggregate cash purchase price of approximately $126.4 million and paid fees of $1.1 million, including three such Subscription Agreements with certain CityBase holders (including Michael Duffy, the chief executive officer of CityBase) for an aggregate of 380,937 Class A ordinary shares of GTY at a price of $10.00 per share, for an aggregate cash purchase price of approximately $3.8 million. The Class A ordinary shares of GTY issued to the Subscribed Investors were cancelled and exchanged on a one-for-one basis for shares of Company common stock at the Closing.

In connection with the Subscription Agreements, immediately prior to the Closing, the Sponsor surrendered to GTY Cayman for cancellation (at no cost to GTY) 231,179 Class B (founder) shares, which have been retroactively adjusted in the accompanying statement of stockholders equity, and sold 500,000 private placement warrants held by it to an accredited investor in a private placement for an aggregate of $250,000 or $0.50 per warrant (which was $1.00 per warrant less than the price originally paid for such warrants).

GTY Merger Share Exchange

In connection with the GTY Merger, all of the issued and outstanding shares of GTY Cayman were exchanged for an equal number of shares of GTY common stock and immediately before the exchange, each outstanding unit was separated into its component Class A ordinary share and warrant. Upon the exchange, 22,978,520 Class A and 13,568,821 Class B shares of GTY Cayman were exchanged for an aggregate of 36,547,341 shares of common stock of GTY.

Shares issued in the Acquisition

As part of the consideration for the Acquisition, the Company issued (a) 11,973,154 shares of common stock (as adjusted by the Measurement Period Adjustment below), of which 3,937,907 are redeemable at the option of the Company (the “Acquisition Redemption Shares”), (b) 2.6 million Class A and 0.5 million Class C shares (the “Class C Shares”) of Questica Exchangeco (the “Questica Shares”) and 2,161,741 shares of Bonfire Exchangeco shares (collectively, the “Exchange Shares”) that are exchangeable into an equal number of common stock. The Exchange Shares are recorded as common shares of the Company. The Company also issued 1,000,000 Class B shares of Questica Shares which are not exchangeable for common stock and thus have no value. The shares issued as consideration in the Acquisition were valued at $10 per share in the accompanying condensed consolidated financial statements.

The 0.5 million Class C Shares were redeemable at the option of the shareholder at $10 per share, and thus the Company had classified the Class C Shares in the capital stock of Questica Exchangeco as temporary equity in accordance with ASC 480 - "Distinguishing Liabilities from Equity."  In June 2019, these shares were redeemed for 0.5 million shares of Common Stock at the market price of $7.72, or $3.9 million, and transferred to permanent equity, and $1.3 million of cash.  The incremental $0.2 million above the stated redemption price was recorded as a deemed dividend in the accompanying condensed consolidated financial statements.

In April 2019, 193,645 shares of the Bonfire Exchangeco Shares were converted into the Company’s Common Stock on a one-for-one basis (see Note 4). 

For the three months ended September 30, 2019, there was a Measurement Period Adjustment to change $41,500, or 4,150 shares, of stock consideration to cash consideration (see Note 4).

Common Stock – GTY is authorized to issue 400,000,000 shares of common stock with a par value of $0.0001 per share.

In March 2019, the Company redeemed 100,000 shares of common stock for a promissory note in the principal amount of $1,000,000, bearing interest at a rate of 8% per annum in the first year after issuance and 10.0% per annum thereafter (subject to an increase of 1% for each additional 6 months that has elapsed without full payment of such note(s)) and included these in Treasury Stock in the accompanying condensed consolidated balance sheets.

In April 2019, the Company repurchased 264,998 shares of common stock for $2.6 million.  These shares were included in Treasury Stock in the accompanying condensed consolidated balance sheets at the stock price on the date of the repurchases, or $2.4 million, and the remaining $0.2 million is included in Loss from repurchase of shares in the condensed consolidated statements of operations and comprehensive loss.

In June 2019, the Company issued 3.5 million shares of common stock in a registered direct offering for $25.5 million, at a price of $7.70 per share, net of $1.5 million of offering costs.

In June 2019, two Bonfire employees cashless exercised 284 stock options and the Company issued 117 shares of common stock. For the three months ended September 30, 2019, Bonfire employees exercised 112,526 stock options for the issuance of shares of common stock.  See Note 7.

In July 2019, in accordance with the eCivis Agreement and the eCivis Letter Agreement, the Company repurchased 250,000 shares of common stock for $2.5 million. These shares were included in Treasury Stock in the accompanying condensed consolidated balance sheets at the stock price on the date of the repurchases, or $1.7 million, and the remaining $0.8 million is included in Loss from repurchase of shares in the condensed consolidated statements of operations and comprehensive loss.

Preferred Shares – GTY is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share. As of September 30, 2019, there were no preferred shares issued or outstanding.

Warrants

At September 30, 2019, there were a total of 27,093,334 warrants outstanding. The warrants were originally sold as part of the units offered in the IPO. 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.  No fractional shares will be issued upon exercise of the warrants.

The Company may call the 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 warrants were determined to be equity classified in accordance with ASC 815, Derivatives and Hedging.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Class A [Member]	Common Class B [Member]	Exchange Shares - Series C [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Acumulated Other Comprehensive income [Member]	Total
Financial Designation, Predecessor and Successor [Fixed List]									Predecessor
Balance at Dec. 31, 2017									$ (18,613)
Net loss									(10,884)
Exchangable shares converted to Common Stock									0
Share-based compensation									670
Shareholders'/Members' equity activity									(2,222)
Balance at Sep. 30, 2018									$ (31,108)
Financial Designation, Predecessor and Successor [Fixed List]									Predecessor
Balance at Dec. 31, 2017									$ (18,613)
Balance at Dec. 31, 2018	$ 0	$ 1	$ 0	$ 0	$ 0	$ 0	$ 9,920	$ 0
Balance (in shares) at Dec. 31, 2018	898,984	13,568,821	0	0
Financial Designation, Predecessor and Successor [Fixed List]									Predecessor
Balance at Jun. 30, 2018									$ (22,957)
Net loss									(6,384)
Share-based compensation									627
Shareholders'/Members' equity activity									(2,335)
Balance at Sep. 30, 2018									$ (31,108)
Financial Designation, Predecessor and Successor [Fixed List]									Predecessor
Balance at Dec. 31, 2018	$ 0	$ 1	$ 0	$ 0	0	0	9,920	0
Net loss									$ (1,713)
Exchangable shares converted to Common Stock									0
Share-based compensation									61
Stock option exercises									13
Currency translation gain (loss)									0
Shareholders'/Members' equity activity									5,629
Balance at Feb. 18, 2019									(33,152)
Balance at Dec. 31, 2018	$ 0	$ 1	$ 0	$ 0	0	0	9,920	0
Balance (in shares) at Dec. 31, 2018	898,984	13,568,821	0	0
Net loss	$ 0	$ 0	$ 0	$ 0	0		(59,154)		(59,154)
Common Stock issued for Exchangeable Shares - Class C	0	0	0	$ 0	3,860		0		3,860
Common Stock issued for Exchangeable Shares - Class C (in shares)				500,000
Ordinary shares no longer subject to possible redemption	$ 1	$ 0	$ 0	$ 0	88,190		722		88,913
Ordinary shares no longer subject to possible redemption (in shares)	9,216,438	0	0	0
Exchange of shares in GTY Merger	$ (3)	$ (1)	$ 0	$ 4	0		0
Exchange of shares in GTY Merger (in shares)	(22,978,520)	(13,568,821)	0	36,547,341
Private placement of Class A shares, net of costs	$ 2	$ 0	$ 0	$ 0	125,256		0		125,258
Private placement of Class A shares, net of costs (in shares)	12,863,098	0	0	0
Common stock issued for acquisitions	$ 0	$ 0	$ 0	$ 1	119,688	0	0	0	119,689
Common stock issued for acquisitions (in shares)	0	0	0	11,969,004
Common Stock repurchases	$ 0	$ 0	$ 0	$ 0	0	5,160	0		5,160
Common Stock repurchases (in shares)				(614,998)
Shares convertible into Common Stock issued for acquisitions	$ 0	$ 0	$ 47,617	$ 0	0	0	0	0	47,617
Shares convertible into Common Stock issued for acquisitions (in shares)	0	0	5,761,741	0
Exchangable shares converted to Common Stock	$ 0	$ 0	$ (1,936)	$ 0	1,936		0
Exchangable shares converted to Common Stock (in shares)	0	0	(193,645)	193,645
Share-based compensation	$ 0	$ 0	$ 0	$ 0	2,867		0		2,867
Private placement of Common Stock, net of costs	0	0	0	$ 0	25,450		0		25,450
Private placement of Common Stock, net of costs (in shares)				3,500,000
Stock option exercises	$ 0	$ 0	$ 0	$ 0	130		0		130
Stock option exercises (in shares)	0	0	0	112,643
Currency translation gain (loss)	$ 0	$ 0	$ 0	$ 0	0		0	261	261
Deemed dividend for Exchangeable Shares - Class C	0	0	0	0	(183)	0	0	0	(183)
Balance at Sep. 30, 2019	$ 0	$ 0	$ 45,681	$ 5	367,194	(5,160)	(48,512)	261	359,469
Balance (in shares) at Sep. 30, 2019	0	0	5,568,096	52,207,635
Balance at Feb. 18, 2019									(33,152)
Net loss									$ (59,154)
Stock option exercises (in shares)									112,643
Currency translation gain (loss)									$ 261
Balance at Sep. 30, 2019	$ 0	$ 0	$ 45,681	$ 5	367,194	(5,160)	(48,512)	261	359,469
Balance (in shares) at Sep. 30, 2019	0	0	5,568,096	52,207,635
Balance at Jun. 30, 2019			$ 47,617	$ 5	364,614	(3,413)	(39,812)	186	369,197
Balance (in shares) at Jun. 30, 2019			5,761,741	52,155,614
Net loss							(8,700)		(8,700)
Common Stock repurchases						1,747			$ 1,747
Measurement period adjustment to Common Stock issued for acquisitions (in shares)				(4,150)					4,150
Measurement period adjustment to Common Stock issued for acquisitions					(42)				$ (42)
Common Stock repurchases (in shares)				(250,000)
Exchangable shares converted to Common Stock			$ (1,936)		1,936
Exchangable shares converted to Common Stock (in shares)			(193,645)	193,645
Share-based compensation					556				556
Stock option exercises					130				130
Stock option exercises (in shares)				112,526
Currency translation gain (loss)								75	75
Balance at Sep. 30, 2019	$ 0	$ 0	$ 45,681	$ 5	$ 367,194	$ (5,160)	$ (48,512)	$ 261	$ 359,469
Balance (in shares) at Sep. 30, 2019	0	0	5,568,096	52,207,635

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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, 2018 filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019 and the Company’s Current Report Form 8-K/A filed with the SEC on March 18, 2019. Certain reclassifications have been made to conform to current period presentation.

The Acquisition was accounted for as a business combination using the acquisition method of accounting. The Company’s financial statement presentation distinguishes the results of operations into two distinct periods: (i) the period before the consummation of the Acquisition, which includes the period from January 1, 2019 to the Closing Date (the “2019 Predecessor Period”), the three and nine months ended September 30, 2018 (the “2018 Predecessor Period”) and (ii) the period after consummation of the Acquisition which includes the period including and after the Closing Date to September 30, 2019 (“2019 Successor Period”), and the three months ended September 30, 2019. The accompanying condensed consolidated financial statements include a black line division which indicates that the Acquired Companies and the Company’s financial information are presented on a different basis and are therefore, not comparable.

Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. See Note 4 – Business Combination for a discussion of the estimated fair values of assets and liabilities recorded in connection with the Acquisition.

The historical financial information of GTY Cayman prior to the Acquisition is not being reflected in the Predecessor financial statements as these historical amounts have been determined not to be useful to a user of the financial statements. GTY Cayman’s operations prior to the Acquisition, other than income from the Trust Account (as defined in Note 10. Shareholders’ Equity) investments and transaction expenses, were nominal.

The Company believes that Predecessor activities related to investments, intangible assets, stock-based compensation, goodwill, fair value measurements and notes payable were either quantitatively or qualitatively immaterial. Therefore, the Company did not disclose these Predecessor activities in the following unaudited footnotes.

Principles of Consolidation

The Successor Period condensed consolidated financial statements include all accounts of the Company and its subsidiaries. The Predecessor Period condensed consolidated financial statements include all accounts of the Acquired Companies and the Acquired Companies’ subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements.

Segments

The Company has six operating segments. The Company’s Chief Executive Officer and Chief Financial Officer, who jointly are the Company’s chief operating decision maker, review financial information for each of the Acquired Companies, together with certain consolidated operating metrics, to make decisions about how to allocate resources and to measure the Company’s performance. See Note 11.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash includes cash held in checking and savings accounts. Cash equivalents are comprised of investments in money market mutual funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Accounts Receivable

Accounts receivable consists of amounts due from our customers, which are primarily located throughout the United States and Canada. Accounts receivable are recorded at the invoiced amount, do not require collateral, and do not bear interest.

The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the Company’s customers may have an inability to meet financial obligations, such as bankruptcy and significantly aged receivables outstanding. Uncollectible receivables are written-off in the period management believes it has exhausted every opportunity to collect payment from the customer. Bad debt expense is recorded when events or circumstances indicate an additional allowance is required based on the Company’s specific identification approach.

The allowance for doubtful accounts for the Successor as of September 30, 2019 and for the Predecessor as of December 31, 2018 was immaterial. Bad debt expense for all periods presented was immaterial.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents, and accounts receivable. Cash accounts in a financial institution at times may exceed the Federal depository insurance coverage of $250,000. As of September 30, 2019 and December 31, 2018, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Additionally, all Canadian Dollars (“CDN”) institution amounts are covered by Canada Deposit Insurance Corporation, or CDIC insurance.

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, and the useful lives intangible assets, stock-based compensation, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses.

Property and Equipment

Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the condensed consolidated statement of operations in the period realized. Property, plant and equipment is depreciated using the straight-line method over five  (5)  to fifteen  (15)  years. Internal-use software is amortized on a straight-line basis over its estimated useful life or five  (5)  years.

Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Capitalized Software Costs

The Company capitalizes costs incurred during the application development stage related to the development of internal-use software and enterprise cloud computing services. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.  For the three months ended September 30, 2019 and the period from February 19, 2019 to September 30, 2019, the Company capitalized $0.2 million and $0.8 million for internal use software, respectively.

Intangible Assets (Successor)

Intangible assets consist of acquired customer relationships, acquired developed technology, trade names and non-compete agreements which were acquired as part of the Acquisition. The Company determines the appropriate useful life of its intangible assets by performing an analysis of expected cash flows of the acquired assets. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the economic benefits are consumed.

Goodwill (Successor)

Goodwill represents the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed, and it is presented as Goodwill in the accompanying condensed consolidated balance sheet of the Successor.   Under ASC 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill is not amortized but is subject to periodic impairment testing.  ASC 350 requires that an entity assign its goodwill to reporting units and test each reporting unit’s goodwill for impairment at least on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  In our evaluation of goodwill for impairment, which will be performed annually during the fourth quarter, we first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it was more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform the quantitative goodwill impairment test. As a result of the Acquisition, the Company acquired goodwill during the Successor Period. There was minimal goodwill prior to the Acquisition. The Company did not identify any significant events or circumstances that would require it to perform an impairment test as of September 30, 2019. As such, there was no impairment recognized during the Successor Period.

Business Combinations (Successor)

The Company accounts for business acquisitions using the acquisition method of accounting based on Accounting Standards Codification (“ASC”) 805 — Business Combinations, which requires recognition and measurement of all identifiable assets acquired and liabilities assumed at their fair value as of the date control is obtained. The Company determines the fair value of assets acquired and liabilities assumed based upon its best estimates of the acquisition-date fair value of assets acquired and liabilities assumed in the acquisition. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Subsequent adjustments to fair value of any contingent consideration are recorded to the Company’s condensed consolidated statements of operations.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s condensed consolidated financial statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the three months ended September 30, 2019, adjustments were made within the permitted measurement period that resulted in (i) an increase in the aggregate consideration of the Acquisition of $0.4 million relating to the settlement of the working capital adjustments, and (ii) the conversion of $0.04 stock consideration to cash consideration for the correction of an investor’s status to a non-accredited investor (the “Measurement Period Adjustments). These Measurement Period Adjustments have been reflected as current period adjustments in the three months ended September 30, 2019 in accordance with the guidance in ASU 2015-16 “Business Combinations.” The Measurement Period Adjustments primarily impacted goodwill, with no effect on earnings or cash in the current period.  See Note 4.

Impairment of long-lived assets

The Company reviews long-lived assets, including property and equipment and intangible assets and goodwill for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. There were no impairments recorded for all periods presented.

Leases

Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the condensed consolidated balance sheet as both a right of use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

The Company accounted for leases prior to January 1, 2019 under ASC Topic 840.

Fair Value (Successor)

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 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 September 30, 2019, with changes in fair value flowing through current earnings, consist of contingent consideration liabilities recorded in conjunction with business combinations and are as follows (in thousands):

			Fair Value Measurement at
			Reporting Date Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
	Balance as of		Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
Contingent consideration – current	$	12,208	$	—	$	—	$	12,208
Contingent consideration – long term		55,478		—		—		55,478
Total liabilities measured at fair value	$	67,686	$	—	$	—	$	67,686

There were no transfers made among the three levels in the fair value hierarchy during the period after consummation of the Acquisition, which includes the period including and after the Closing Date to September 30, 2019.

The following table presents 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 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 Level 3 liabilities measured at fair value from February 18, 2019 to September 30, 2019 were as follows (in thousands):

Contingent consideration - February 18, 2019	$	2,685
Fair value of contingent consideration - Bonfire		325
Fair value of contingent consideration - CityBase		48,410
Fair value of contingent consideration - eCivis		5,859
Fair value of contingent consideration - Questica		9,311
Fair value of contingent consideration - Sherpa		1,898
Change in valuation		(812)
Change due to fluctuation in foreign currency		10
Contingent consideration - September 30, 2019	$	67,686

The change in valuation was due, in part, to the decreased probabilities of the achievement of certain milestones of some of the acquired entities.

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.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities 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.

Foreign Currency Translation and Transactions

The assets, liabilities and results of operations of certain consolidated entities are measured using their functional currency, which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these entities with the Company, their assets and liabilities are translated to U.S. dollars at currency exchange rates as of the condensed consolidated balance sheet date and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these entities’ condensed consolidated financial statements are reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and total other comprehensive loss on the condensed consolidated statements of operations.

Revenue Recognition

The Company adopted the Financial Accounting Standards Board (“FASB”) new revenue recognition framework, ASC 606, Revenue from Contracts with Customers (“ASC 606”), on January 1, 2017 using the full retrospective approach. The adoption of this standard did not have a material impact on prior revenue recognition or on opening equity, as the timing and measurement of revenue recognition for the Company is materially the same under ASC 606 as it was under the prior relevant guidance.

With the adoption of Topic 606, revenues are recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenues recognized will not occur.

The Company determines the amount of revenues to be recognized through application of the following steps:

· Identification of the contract, or contracts with a customer;

· Identification of the performance obligations in the contract;

· Determination of the transaction price;

· Allocation of the transaction price to the performance obligations in the contract; and

· Recognition of revenues when or as the Company satisfies the performance obligations.

For contracts where the period between when the Company transfers a promised service to the customer and when the customer pays is one year or less, the Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component.

The Company has made a policy election to exclude from the measurement of the transaction price all taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue producing transaction and collected by the Company from a customer. Such taxes may include but are not limited to sales, use, value added and certain excise taxes.

Disaggregation of Revenues

	Successor				Predecessor
	Three Months		February 19, 2019		January 1, 2019		Three Months
	Ended		through		through		Ended		Nine Months Ended
	September 30, 2019		September 30, 2019		February 18, 2019		September 30, 2018		September 30, 2018
Subscriptions, support and maintenance	$	5,920	$	13,393	$	3,253	$	5,156	$	14,424
Professional services		2,449		5,287		1,269		1,369		4,604
License		344		1,302		383		876		1,672
Asset sales		41		52		23		216		321
Total revenues	$	8,754	$	20,034	$	4,928	$	7,617	$	21,021

Revenues

Subscription, support and maintenance. The Company provides software hosting services that provide customers with access to software 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 to 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 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 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 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 68% and 67% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

Professional services.    The Company’s 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 whether the milestone will be achieved. Training revenues are recognized as the services are performed. Revenues from professional services comprised approximately 28% and 26% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period, respectively.

License.  Revenues from distinct licenses 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 4% and 6% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period.

Asset sales. Revenues from asset sales are recognized when the asset, typically a kiosk, has been received by the client 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 less than 1% of total revenues for the three months ended September 30, 2019 and the 2019 Successor Period.

Contract Liabilities

Contract liabilities primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for subscription services to the Company’s SaaS offerings and related implementation and training. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. The Company receives payments both upfront and over time as services are performed. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. Contract liabilities are reduced as services are provided and the revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in current liabilities as contract liabilities, and the remaining portion is recorded in long-term liabilities as contract liabilities, non-current. Revenues of approximately $6.3 million, $2.2 million, and $8.1 million were recognized for the 2019 Successor Period, the 2019 Predecessor Period, and the nine months ended September 30, 2018, respectively, that was included in the contract liabilities balances at the beginning of the respective periods.

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.

Stock Based Compensation

The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates, involve inherent uncertainties and the application of management’s judgment.

Expected Term — The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility — The Company computes stock price volatility over expected terms based on comparable companies’ historical common stock trading prices.Risk-Free Interest Rate — The Company bases the risk-free interest rate on the U.S. Treasuries implied yield with an equivalent remaining term.

Expected Dividend — The Company has never declared or paid any cash dividends on common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in valuation models.

The following are the assumptions used for the stock option grant on February 19, 2019:

Exercise price	$	1.82
Expected term (years)		5.1
Expected stock price volatility		74	%
Risk-free rate of interest		2	%

In accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, the Company records forfeitures as they occur.

Net Loss per Share

Net loss per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per common share is computed similar to basic net income per common share 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 Successor Period, diluted and basic loss per share are the same.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at September 30, 2019 are as follows:

Warrants to purchase common stock	27,093,334
Unvested restricted stock units	944,962
Options to purchase common stock	278,623
Total	28,316,919

Income Taxes

Deferred income taxes are provided for the tax effects of temporary differences between (i) the carrying amounts of assets and liabilities for financial reporting purposes and (ii) the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a full valuation allowance against its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive or negative evidence becomes available. No tax related impact was recorded in the financial statements as a result of the adoption of ASU No. 2016-09.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. Through September 30, 2019, the Company has not identified any material uncertain tax positions for which liabilities would be required to be recorded.

As a result of the Acquisition, a temporary difference between the book fair value and tax basis for the assets acquired of $39.9 million was created, resulting in a deferred tax liability and additional goodwill.

The following is a rollforward of the Company’s deferred tax liability from February 19, 2019 to September 30, 2019 (in thousands):

Balance - February 19, 2019	$	(39,908)
Income tax benefit (associated with the amortization of intangible assets)		2,819
Balance - September 30, 2019	$	(37,089)

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016‑02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous GAAP. In July 2018, the FASB issued ASU 2018‑11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $3.6 million, lease liability of approximately $3.8 million.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company has not determined the impact of this guidance on its financial statements.

In August 2018, the FASB issued Accounting Standards Update 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"). 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 ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. ASU 2018-15 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements and expects to adopt the new standard in the first quarter of 2020.

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Business Combination - Additional information (Details) - USD ($)				1 Months Ended			2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Feb. 19, 2019	Feb. 12, 2019	Feb. 12, 2019	Sep. 30, 2019	Mar. 31, 2019	Feb. 12, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross											$ 193,894,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable											172,307,000
Business Acquisition, Share Price	$ 10.00				$ 10.00
Increase in the aggregate consideration											$ 400,000
Business Combination Consideration In Conversion Stock											$ 0.04
Share Price	$ 12.00			$ 7.70				$ 7.70		$ 7.70	$ 7.70
Escrow Deposit	$ 3,100,000
Common Stock Held in Escrow	242,200
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares	1,218,937
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross										408,667	408,667
Dividends unpaid per share	$ 10.00												$ 7.72
Weighted average price			5 days
Number of shares redeemed				500,000
Common stock conversion				$ 3,900,000
Cash transferred				$ 1,300,000
Debt Instrument, Interest Rate, Increase (Decrease)					1.00%
Temporary Equity Number Of Shares Redeemed				0				0		0	0		500,000
Business Combination, Acquisition Related Costs							$ 151,000	$ 442,000	$ 1,635,000	$ 33,191,000		$ 1,635,000
Business Acquisition, Transaction Costs				$ 33,200,000				$ 33,200,000		$ 33,200,000	$ 33,200,000
Maximum [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage					10.00%
Minimum [Member]
Business Acquisition [Line Items]
Share Price				$ 20				$ 20		$ 20	$ 20
Debt Instrument, Interest Rate, Stated Percentage					8.00%
GTY Cayman [Member]
Business Acquisition [Line Items]
Sale of Stock, Number of Shares Issued in Transaction	380,937
Transfer Restriction [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 2,008,283
Bonfire Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	48,000,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 2,156,014
Business Acquisition, Share Price	$ 10.00
Decrease in the aggregate consideration								$ 100,000
Common Stock Held in Escrow	690,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	408,667
Bonfire Acquisition [Member] | Transfer Restriction [Member]
Business Acquisition [Line Items]
Business Acquisition Shares Exchange	2,093,612
CityBase [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 3,155,961
Increase in the aggregate consideration								$ 200,000
Business Combination Consideration In Conversion Stock								$ 0.04
Ecivis Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	14,000,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 2,883,433
Increase in the aggregate consideration								$ 500,000
Share Price	$ 12.00
Escrow Deposit	$ 3,600,000
Dividends unpaid per share	$ 10.00
Temporary Equity Number Of Shares Redeemed	525,060
Open Counter Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 9,700,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 1,580,990
Business Acquisition, Share Price	$ 10.00
Share Price	$ 12.00
Escrow Deposit	$ 1,300,000
Common Stock Held in Escrow	164,554
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Debt Instrument, Interest Rate, Increase (Decrease)	1.00%
Temporary Equity Number Of Shares Redeemed	100,000
Questica Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross						$ 44,400,000
Share Price				$ 12.00				$ 12.00		$ 12.00	$ 12.00
Escrow Deposit				$ 100,000				$ 100,000		$ 100,000	$ 100,000
Common Stock Held in Escrow				800,000				800,000		800,000	800,000
Dividends Payable, Amount Per Share				$ 0.20				$ 0.20		$ 0.20	$ 0.20
Questica Acquisition [Member] | Before Sixty Days [Member]
Business Acquisition [Line Items]
Temporary Equity Value Of Shares Redeemed		$ 5,000,000
Conversion price				$ 7.72				$ 7.72		$ 7.72	$ 7.72
Questica Acquisition [Member] | After Sixty Days [Member]
Business Acquisition [Line Items]
Temporary Equity Value Of Shares Redeemed		$ 5,000,000
Dividends unpaid per share		$ 10.00	$ 10.00			$ 10.00
Sherpa Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 4,200,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 100,000
Business Acquisition, Share Price	$ 10.00
Decrease in the aggregate consideration								$ 200,000
Increase in the aggregate consideration								$ 400,000
Business Combination Consideration In Conversion Stock								$ 0.04
Escrow Deposit	$ 900,000
Debt Instrument, Interest Rate, Stated Percentage	5.50%
Sherpa Acquisition [Member] | Maximum [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Sherpa Acquisition [Member] | Minimum [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	8.00%
City Base Holders Acquisition [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 62,200,000
Business Acquisition, Share Price	$ 10.00
Escrow Deposit	$ 2,100,000
Common Stock Held in Escrow	1,000,000
Debt Instrument, Interest Rate, Increase (Decrease)	1.00%
City Base Holders Acquisition [Member] | Maximum [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	10.00%
City Base Holders Acquisition [Member] | Minimum [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	8.00%
City Base Holders Acquisition [Member] | GTY Cayman [Member]
Business Acquisition [Line Items]
Sale of Stock, Consideration Received on Transaction	$ 3,800,000
Exchangeable Shares [Member] | Bonfire Acquisition [Member]
Business Acquisition [Line Items]
Business Acquisition Shares Exchange	2,161,741									193,645
Class A Exchangeable Shares [Member] | Questica Acquisition [Member]
Business Acquisition [Line Items]
Business Acquisition Shares Exchange						2,600,000
Class B Exchangeable Shares [Member] | Questica Acquisition [Member]
Business Acquisition [Line Items]
Business Acquisition Shares Exchange						1,000,000
Class C Exchangeable Shares [Member] | Questica Acquisition [Member]
Business Acquisition [Line Items]
Business Acquisition Shares Exchange						500,000

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Summary of Significant Accounting Policies - Deferred tax liabilities (Details) - USD ($) $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended
	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Summary of Significant Accounting Policies
Balance as of February 19, 2019				$ (39,908)
Income tax benefit (associated with the amortization of intangible assets)	$ 0	$ 1,149	$ (658)	2,819	$ (658)
Balance - September 30, 2019	$ (39,908)	$ (37,089)		$ (37,089)

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Related Party Transactions (Details) - USD ($)		9 Months Ended
	Feb. 13, 2019	Sep. 30, 2019	Mar. 31, 2019
Related Party Transaction [Line Items]
Compensation Terms For Broker Dealer	an amount per share in cash equal to the difference between the redemption price and $9.90.
Cash Compensation Paid	$ 250,000
Repayments of Convertible Debt	$ 1,000,000
Payments For Loss On Sale Of Shares		$ 4,000,000
Debt Instrument, Face Amount			$ 1,000,000
Loss On Conversion Of Shares		$ 3,000,000
Debt Instrument, Convertible, Terms of Conversion Feature		the option to convert any amounts outstanding under the Convertible Note, up to $1.0 million in the aggregate, into warrants at a conversion price of $1.50 per warrant
Sponsor Convertible Note [Member]
Related Party Transaction [Line Items]
Debt Instrument, Face Amount		$ 1,000,000
Convertible Notes [Member]
Related Party Transaction [Line Items]
Line of Credit Facility, Current Borrowing Capacity		400,000
Debt Instrument, Face Amount		$ 1.0
Common Class A [Member]
Related Party Transaction [Line Items]
Redemption Price Per Share	$ 10.29
Common Stock Shares Issued To Broker	1,000,000
Shares Issued, Price Per Share	$ 9.90
Common Stock Shares Reimbursed Under Obligation	1,942,953
Common Stock shares Not Redeemed	1,500,000

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Leases - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Leases
Operating Lease, Liability	$ 6,384
Operating Lease, Right-of-Use Asset	$ 6,154	$ 0

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Share-Based Compensation Stock Options - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	7 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of Shares, Unvested as of January 1, 2019		0
Number of Shares, Granted	1,049,237	1,049,237
Number of Shares, Forfeited/ Expired	(104,275)
Number of Shares, Unvested as of September 30, 2019	944,962	944,962
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Price, Unvested as of January 1, 2019		$ 0.00
Weighted Average Grant Price, Granted		9.53
Weighted Average Grant Price, Forfeited/ Expired	$ 0.00
Weighted Average Grant Price, Unvested as of September 30, 2019	$ 9.52	$ 9.52

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Summary of Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended	12 Months Ended
	Feb. 18, 2019	Jan. 31, 2019	Feb. 18, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Predecessor	Predecessor		Predecessor		Predecessor	Predecessor
Revenues			$ 4,928	$ 8,754	$ 7,617	$ 20,034	$ 21,021
Subscription and Circulation [Member]
Revenues			3,253	5,920	5,156	13,393	14,424
Professional Services [Member]
Revenues			1,269	2,449	1,369	5,287	4,604
License [Member]
Revenues			383	344	876	1,302	1,672
Asset Sales [Member]
Revenues			$ 23	$ 41	$ 216	$ 52	$ 321

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2019

Business Combination

Business Consideration Paid and Issued [Table Text Block]

										Adjusted						Deferred
	Cash		Stock			Contingent				Net						Tax
	Consideration		Consideration			Consideration		Total		Assets		Goodwill		Intangibles		Liability
Bonfire	$	50,971	$	50,078	(1)	$	325	$	101,374	$	3,639	$	81,867	$	22,668	$	6,800
CityBase		64,507		41,518			48,410		154,435		782		119,945		48,155		14,447
eCivis		18,073		31,256			5,859		55,188		(1,788)		47,878		12,997		3,899
OpenCounter		10,958		17,455			—		28,413		(1,441)		22,524		10,471		3,141
Questica		44,494		31,000	(2)		9,311		84,805		3,652		57,479		33,821		10,147
Sherpa		4,891		1,000			1,898		7,789		1,066		3,283		4,914		1,474
Total	$	193,894	$	172,307		$	65,803	$	432,004	$	5,910	$	332,976	$	133,026	$	39,908

(1) Includes $21.6 million of convertible stock consideration

(2) Includes $31.0 million of convertible stock consideration

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The following table represents the revised preliminary allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition-date fair values, including the Measurement Period Adjustments discussed above.  The following revised allocations are considered preliminary and may change within the permissible measurement period, not to exceed one year (in thousands):

	Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Total
Cash	$	4,641	$	2,191	$	136	$	107	$	6,763	$	632	$	14,470
Accounts receivable, net		323		1,018		720		46		1,257		587		3,951
Prepaid expense and other current assets		607		170		340		—		77		33		1,227
Fixed assets		118		500		56		29		182		2		887
Loan receivable - related party		—		175		—		—		—		—		175
Right of use assets		1,315		—		901		—		296		—		2,512
Other assets		369		783		30		—		1,061		—		2,243
Intangible assets		22,668		48,155		12,997		10,471		33,821		4,914		133,026
Goodwill		81,867		119,945		47,878		22,524		57,479		3,283		332,976
Accounts payable and accrued expenses		(1,085)		(1,192)		(582)		(123)		(910)		(188)		(4,080)
Contract liabilities		(1,221)		(816)		(1,635)		(484)		(2,774)		—		(6,930)
Lease liability - short term		(366)		—		—		—		(296)		—		(662)
Deferred tax liability		(6,800)		(14,447)		(3,899)		(3,141)		(10,147)		(1,474)		(39,908)
Other current liabilities		—		—		(3)		(491)		(767)		—		(1,261)
Capital lease obligations - current portion		—		(139)		—		—		—		—		(139)
Contract and other long-term liabilities		(60)		(1,646)		(56)		—		—		—		(1,762)
Capital lease obligation, less current portion		—		(262)		—		—		—		—		(262)
Long term debt		—		—		—		(525)		—		—		(525)
Lease liability - long term		(1,002)		—		(901)		—		—		—		(1,903)
Contingent consideration - pre-existing		—		—		(794)		—		(1,237)		—		(2,031)
Total consideration	$	101,374	$	154,435	$	55,188	$	28,413	$	84,805	$	7,789	$	432,004

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting

Schedule of Segment Reporting Information, by Segment [Table Text Block]

The following provides operating information about the Company’s reportable segments for the periods presented (in thousands):

	GTY		Bonfire		CityBase		eCivis		OpenCounter		Questica		Sherpa		Eliminations		Total
Successor
Three Months Ended September 30, 2019
Total revenue	$	—	$	1,174	$	1,551	$	1,638	$	407	$	3,083	$	901	$	—	$	8,754
Cost of goods sold		—		277		958		454		105		653		136		—		2,583
Loss from  operations		(2,441)		(1,634)		(4,354)		17		(614)		(537)		(52)		—		(9,615)
Successor
February 19, 2019 through September 30, 2019
Total revenue	$	—	$	2,385	$	4,634	$	3,200	$	929	$	6,311	$	2,575	$	—	$	20,034
Cost of goods sold		—		643		3,168		1,087		263		1,468		461		—		7,090
Loss from operations		(21,989)		(7,911)		(12,821)		(1,885)		(1,363)		(12,611)		(2,750)		—		(61,330)
Predecessor
January 1, 2019 through February 18, 2019
Total revenue	$	—	$	593	$	820	$	673	$	298	$	1,913	$	631			$	4,928
Cost of goods sold		—		124		746		267		51		296		130		—		1,614
Loss from operations		—		(741)		(1,499)		(265)		46		550		354		—		(1,555)
Predecessor
Three Months Ended September 30, 2018
Total revenue	$	—	$	845	$	1,640	$	1,250	$	393	$	2,420	$	1,069	$	—	$	7,617
Cost of goods sold		—		216		1,225		457		135		498		59		—		2,590
Loss from operations		—		(1,478)		(3,497)		(444)		(350)		114		697		—		(4,958)
Predecessor
Nine Months Ended September 30, 2018
Total revenue	$	—	$	2,255	$	4,082	$	3,745	$	1,213	$	7,583	$	2,143	$	—	$	21,021
Cost of goods sold		—		554		3,023		1,283		373		1,458		171		—		6,862
Loss from operations		—		(3,572)		(7,691)		(821)		(348)		1,096		1,214		—		(10,122)
Successor
As of September 30, 2019
Goodwill	$	—	$	81,867	$	119,945	$	47,877	$	22,525	$	57,479	$	3,283	$	—	$	332,976
Assets		395,679		107,026		161,734		62,005		31,490		96,796		6,796		(366,203)		495,323
Predecessor
As of December 31, 2018
Goodwill	$	—	$	—	$	123	$	585	$	—	$	1,810	$	—	$	—	$	2,518
Assets		—		6,329		7,215		2,621		316		11,710		1,377		—		29,568