Upland Software(UPLD) - 2022 Q1 - Quarterly Report

Part I. FINANCIAL INFORMATION This section presents Upland Software's comprehensive financial data and management's analysis for the reporting period Item 1. Financial Statements This section presents Upland Software's unaudited condensed consolidated financial statements for Q1 2022 and 2021, including balance sheets, statements of operations, comprehensive income, equity, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets This subsection provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Total Assets | $1,062,761 | $1,029,007 | | Total Liabilities | $734,177 | $712,719 | | Total Stockholders' Equity | $328,584 | $316,288 | | Cash and cash equivalents | $130,443 | $189,158 | - Total assets increased by $33.75 million, primarily driven by increases in intangible assets and goodwill, while cash and cash equivalents decreased by $58.715 million[9] Condensed Consolidated Statements of Operations This subsection details the company's revenues, expenses, and net loss over a specific period | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total Revenue | $78,716 | $73,969 | | Gross Profit | $53,961 | $49,542 | | Loss from Operations | $(14,777) | $(17,528) | | Net Loss | $(22,831) | $(20,684) | | Net Loss per Common Share, Basic and Diluted | $(0.73) | $(0.69) | - Total revenue increased by 6.4% year-over-year, while net loss widened by 10.4% due to higher operating expenses, despite an improvement in loss from operations[12] Condensed Consolidated Statements of Comprehensive Income (Loss) This subsection presents the total comprehensive income or loss, including net loss and other comprehensive income items | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Loss | $(22,831) | $(20,684) | | Other Comprehensive Income | $23,873 | $13,904 | | Comprehensive Income (Loss) | $1,042 | $(6,780) | - The company reported comprehensive income of $1.042 million for Q1 2022, a significant improvement from a comprehensive loss of $6.780 million in Q1 2021, primarily driven by a substantial unrealized gain on interest rate swaps[15] Condensed Consolidated Statements of Stockholders' Equity This subsection outlines changes in the company's equity accounts over the reporting period | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Total Stockholders' Equity | $328,584 | $316,288 | | Additional Paid-In Capital | $579,638 | $568,384 | | Accumulated Other Comprehensive Income (Loss) | $12,359 | $(11,514) | | Accumulated Deficit | $(263,416) | $(240,585) | | Shares Outstanding | 31,320,765 | 31,096,548 | - Stockholders' equity increased by $12.296 million, largely due to a positive shift in accumulated other comprehensive income (loss) from a deficit to a gain, driven by unrealized gains on interest rate swaps[19] Condensed Consolidated Statements of Cash Flows This subsection details the cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Cash Provided by Operating Activities | $8,222 | $12,503 | | Net Cash Used in Investing Activities | $(62,509) | $(72,900) | | Net Cash Used in Financing Activities | $(4,211) | $(2,095) | | Change in Cash and Cash Equivalents | $(58,715) | $(63,357) | | Cash and Cash Equivalents, End of Period | $130,443 | $186,672 | - Net cash provided by operating activities decreased by $4.281 million year-over-year. Net cash used in investing activities decreased by $10.391 million, while net cash used in financing activities increased by $2.116 million[23] Notes to Condensed Consolidated Financial Statements This subsection provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation and Summary of Significant Accounting Policies This section outlines the foundational principles and key accounting methods used in preparing the financial statements - The financial statements are prepared in conformity with GAAP and include Upland Software, Inc. and its wholly-owned subsidiaries. Management's estimates and assumptions, particularly for revenue recognition, deferred commissions, stock-based compensation, and fair value of interest rate swaps, are crucial. The company assessed no material impact from COVID-19 on its estimates as of May 4, 2022[25][28][29] - The company uses floating-to-fixed interest rate swap agreements to hedge interest rate risk on its $540 million term loans, effectively fixing the rate at 5.4%. As of March 31, 2022, the fair value of these swaps was a $17.8 million asset, up from an $8.4 million liability at December 31, 2021[32] 2. Acquisitions This section details the company's acquisition activities, including consideration paid and their financial impact - Upland completed two acquisitions in Q1 2022: BA Insight (cloud-based enterprise knowledge management) and Objectif Lune (cloud-based document workflow product). These acquisitions contributed $0.8 million and $4.8 million in revenue, respectively, through March 31, 2022[41] 2022 Acquisitions Consideration (in thousands) | Acquisition | Cash | Holdback | Contingent Consideration | Working Capital & Other Adjustments | Total Consideration | | :------------ | :--- | :------- | :----------------------- | :---------------------------------- | :------------------ | | BA Insight | $33,355 | $645 | — | $1,616 | $35,616 | | Objectif Lune | $29,750 | $5,250 | — | — | $35,000 | - Goodwill from these acquisitions totaled $48.768 million in Q1 2022, primarily attributed to expected synergies and the acquired workforce. Total transaction-related expenses for acquisitions were $4.5 million in Q1 2022, up from $4.0 million in Q1 2021[45][46][53] 3. Fair Value Measurements This section describes how the company measures the fair value of its financial instruments and assets - The fair value of the company's interest rate swaps, categorized as Level 2, increased to a $17.8 million asset as of March 31, 2022, from an $8.4 million liability at December 31, 2021, due to rising short-term interest rates[50][51] - As of March 31, 2022, and December 31, 2021, there were no accrued earnout business acquisition contingent consideration liabilities measured as Level 3 instruments, as earnout payments for BlueVenn and Second Street were finalized with no payments made[49] 4. Goodwill and Other Intangible Assets This section provides details on the company's goodwill and other intangible assets, including changes and amortization Goodwill Balance (in thousands) | Metric | Amount | | :-------------------------------- | :------- | | Balance at December 31, 2021 | $457,472 | | Acquired in business combinations | $48,768 | | Adjustment related to prior year business combinations | $1,467 | | Foreign currency translation adjustment | $(2,461) | | Balance at March 31, 2022 | $505,246 | Net Intangible Assets (in thousands) | Intangible Asset | March 31, 2022 Net Carrying Amount | December 31, 2021 Net Carrying Amount | | :----------------- | :--------------------------------- | :---------------------------------- | | Customer relationships | $248,450 | $232,614 | | Trade name | $4,155 | $3,962 | | Developed technology | $47,831 | $43,344 | | Total | $300,436 | $279,920 | - Total amortization expense for intangible assets was $13.8 million in Q1 2022, up from $12.0 million in Q1 2021. The estimated annual amortization expense for the remainder of 2022 is $40.45 million[54][55] 5. Income Taxes This section discusses the company's income tax benefit or provision and related factors - The income tax benefit for Q1 2022 was $0.1 million, primarily from foreign income taxes, offset by changes in deferred tax liabilities related to U.S. tax-deductible goodwill amortization and state taxes[57] - The Q1 2021 tax benefit of $4.4 million was mainly due to the release of a valuation allowance from acquired deferred tax liabilities in the Second Street business combination[58] 6. Debt This section provides information on the company's debt obligations, including terms, covenants, and interest rates Long-term Debt (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Senior secured loans (net of discount) | $517,532 | $518,330 | | Less current maturities | $(3,166) | $(3,167) | | Total long-term debt | $514,366 | $515,163 | - The company's Credit Facility includes a $350 million Term Loan and a $60 million Revolver. An additional $190 million Incremental Term Loan was added in November 2019, bringing the total term loans to $540 million[62][63][171] - Interest rate swaps effectively fix the interest rate on the $540 million term loans at 5.4% for the 7-year term. The Revolver's interest rate remains floating. As of March 31, 2022, the fair value of the interest rate swap was a $17.8 million asset[68][69] - The company was in compliance with all covenants under the Credit Facility as of March 31, 2022. Cash interest costs averaged 5.4% for both Q1 2022 and Q1 2021[75][76] 7. Net Loss Per Share This section presents the calculation of net loss per common share, both basic and diluted Net Loss Per Share (in thousands, except share and per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Loss | $(22,831) | $(20,684) | | Weighted-average common shares outstanding, basic and diluted | 31,163,273 | 29,970,050 | | Net loss per common share, basic and diluted | $(0.73) | $(0.69) | - Due to net losses, basic and diluted loss per share were identical for both periods. Anti-dilutive common share equivalents totaled 2,664,488 as of March 31, 2022[77] 8. Commitments and Contingencies This section discloses the company's contractual obligations and potential liabilities - The company has purchase commitments for hosting services and third-party technology. No material adverse legal proceedings are currently anticipated[78][79] - Indemnification claims from acquisitions are managed through holdbacks or representation and warranty insurance policies, with gain contingencies not recognized until realized[80] 9. Stockholders' Equity This section provides further details on the components of stockholders' equity, including accumulated other comprehensive income and stock-based compensation Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Foreign currency translation adjustment | $(6,704) | $(5,657) | | Unrealized translation gain on intercompany loans | $1,260 | $2,552 | | Unrealized gain (loss) on interest rate swaps | $17,803 | $(8,409) | | Total AOCI | $12,359 | $(11,514) | Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenue | $402 | $442 | | Research and development | $748 | $714 | | Sales and marketing | $1,474 | $1,137 | | General and administrative | $8,995 | $15,531 | | Total | $11,619 | $17,824 | - General and administrative stock-based compensation decreased significantly in Q1 2022, primarily due to a $6.3 million incremental expense in Q1 2021 related to the deemed modification of unvested grants for a former COO[86] 10. Revenue Recognition This section explains the company's policies and methods for recognizing revenue from various sources - Revenue is recognized when control of goods/services is transferred to customers, following a five-step model. Performance obligations include subscription and support, perpetual licenses, and professional services[93][94] - Subscription and support revenue is recognized ratably over the contract term (typically 1-3 years). Perpetual license revenue is recognized upfront when software is made available. Professional services revenue is recognized over time as services are performed[95][96][97] Disaggregated Revenue by Geography (in thousands) | Revenue Type | Geography | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------- | :---------------- | :-------------------------------- | :-------------------------------- | | Subscription and support | United States | $51,344 | $52,955 | | | United Kingdom | $11,590 | $9,394 | | | Canada | $3,468 | $3,338 | | | Other International | $7,225 | $4,966 | | Perpetual license | United States | $737 | $253 | | | United Kingdom | $129 | $11 | | | Canada | $76 | $42 | | | Other International | $836 | $46 | | Professional services | United States | $1,695 | $2,044 | | | United Kingdom | $790 | $664 | | | Canada | $204 | $88 | | | Other International | $622 | $168 | | Total Revenue | | $78,716 | $73,969 | - As of March 31, 2022, approximately $306.1 million of revenue is expected to be recognized from remaining performance obligations, with about 70% expected within the next 12 months[111] 11. Related Party Transactions This section discloses any transactions between the company and its related parties - The Company reported no material related party transactions for the three months ended March 31, 2022[115] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of Upland Software's financial performance and operational results for Q1 2022, covering revenue, expenses, key metrics, liquidity, and critical accounting policies, with a focus on acquisition impacts Overview This section provides a general description of Upland Software's business, strategy, and market position - Upland provides cloud-based software applications for digital transformation across marketing, sales, contact center, project management, information technology, business operations, and human resources/legal functions[121][130] - The company employs a 'land-and-expand' go-to-market strategy, selling primarily through a direct sales organization and supporting over 10,000 customers across various industries[123][124] - Upland's revenue grew from $98.0 million in 2017 to $302.0 million in 2021, a 33% CAGR. Foreign revenue increased to 32% of total revenue in Q1 2022, up from 25% in Q1 2021[125] - The company plans to continue growth through acquisitions, having completed 31 acquisitions from February 2012 through March 31, 2022. Acquisition activity resumed in 2021 and Q1 2022 after a pause due to COVID-19[126][128] Results of Operations This section analyzes the company's financial performance, including revenue, cost of revenue, and operating expenses Consolidated Statements of Operations Data This subsection presents a summary of the company's consolidated statements of operations, including key financial metrics | Metric | 3 Months Ended March 31, 2022 (Amount) | 3 Months Ended March 31, 2022 (% of Revenue) | 3 Months Ended March 31, 2021 (Amount) | 3 Months Ended March 31, 2021 (% of Revenue) | | :-------------------------------- | :------------------------------------- | :------------------------------------------- | :------------------------------------- | :------------------------------------------- | | Total Revenue | $78,716 | 100% | $73,969 | 100% | | Total Cost of Revenue | $24,755 | 31% | $24,427 | 33% | | Gross Profit | $53,961 | 69% | $49,542 | 67% | | Total Operating Expenses | $68,738 | 87% | $67,070 | 91% | | Loss from Operations | $(14,777) | (18)% | $(17,528) | (24)% | | Net Loss | $(22,831) | (29)% | $(20,684) | (28)% | Comparison of the Three Months Ended March 31, 2022 and 2021 This section provides a detailed comparative analysis of the company's financial performance between the two periods Revenue This subsection analyzes the company's revenue performance, including breakdowns by type and contributing factors Revenue Breakdown (in thousands) | Revenue Type | 2022 | 2021 | % Change | | :-------------------- | :----- | :----- | :------- | | Subscription and support | $73,627 | $70,653 | 4% | | Perpetual license | $1,778 | $352 | 405% | | Professional services | $3,311 | $2,964 | 12% | | Total Revenue | $78,716 | $73,969 | 6% | - Total revenue increased by $4.7 million (6%) to $78.7 million in Q1 2022. Acquisitions contributed $10.1 million to this increase, while 'Sunset Assets' and 'Overage Charges' declined by $0.3 million and $2.1 million, respectively. Core Organic Business revenue decreased by $2.1 million[135] - Subscription and support revenue increased by $2.9 million (4%), with acquisitions contributing $8.1 million. Perpetual license revenue saw a significant 405% increase, primarily from the Objectif Lune acquisition[136][137] Cost of Revenue and Gross Profit Percentage This subsection examines the costs associated with generating revenue and the resulting gross profit margin Cost of Revenue and Gross Profit (in thousands) | Metric | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | Cost of subscription and support | $22,069 | $22,682 | (3)% | | Cost of professional services and other | $2,686 | $1,745 | 54% | | Total Cost of Revenue | $24,755 | $24,427 | 1% | | Gross Profit | $53,961 | $49,542 | 9% | | Gross Profit Percentage | 69% | 67% | +2pp | - Cost of subscription and support revenue decreased by $0.6 million (3%), with a $2.5 million decrease in Organic Business costs, mainly due to lower telecom messaging costs after cyclical highs in 2021[141] - Cost of professional services and other revenue increased by $1.0 million (54%), entirely attributable to acquisitions[142] Operating Expenses This subsection analyzes the company's operating expenses, including sales and marketing, research and development, and general and administrative costs Operating Expenses (in thousands) | Expense Category | 2022 | 2021 | % Change | | :----------------------- | :----- | :----- | :------- | | Sales and marketing | $15,593 | $12,432 | 25% | | Research and development | $12,067 | $10,940 | 10% | | General and administrative | $19,614 | $24,369 | (20)% | | Depreciation and amortization | $11,051 | $9,743 | 13% | - Sales and marketing expense increased by $3.2 million (25%), with $2.1 million from acquisitions and $1.1 million from organic business due to increased sales commissions[145] - General and administrative expense decreased by $4.8 million (20%), primarily due to a $5.5 million reduction in Organic Business expenses, driven by lower non-cash stock compensation (a $6.3 million incremental expense in Q1 2021 did not recur)[150] - Depreciation and amortization expense increased by $1.4 million (13%), with acquisitions contributing $1.9 million, partially offset by $0.5 million from fully depreciated/amortized assets[152] Acquisition-related Expenses This subsection details the expenses incurred in connection with business acquisitions Acquisition-related Expenses (in thousands) | Expense Type | 2022 | 2021 | % Change | | :----------------------- | :----- | :----- | :------- | | Acquisition-related expenses | $10,413 | $9,586 | 9% | | Transaction related expenses | $4,500 | $4,000 | 12.5% | | Transformational expenses | $5,900 | $5,600 | 5.4% | - Acquisition-related expenses increased by $0.8 million (9%), driven by both transaction-related and transformational expenses from recent acquisitions in 2022 and 2021[155] Other Income (Expense) This subsection covers non-operating income and expenses, such as interest and other miscellaneous items Other Income (Expense) (in thousands) | Metric | 2022 | 2021 | % Change | | :----------------------- | :----- | :----- | :------- | | Interest expense, net | $(7,762) | $(7,787) | —% | | Other income (expense), net | $(418) | $237 | (276)% | | Total other expense | $(8,180) | $(7,550) | 8% | - Other income (expense), net shifted from an income of $0.2 million in Q1 2021 to an expense of $0.4 million in Q1 2022, primarily due to currency exchange gains (losses)[157] Benefit from (Provision for) Income Taxes This subsection discusses the company's income tax benefit or provision and the factors influencing it Benefit from Income Taxes (in thousands) | Metric | 2022 | 2021 | % Change | | :----------------------- | :----- | :----- | :------- | | Benefit from income taxes | $126 | $4,394 | (97)% | - The income tax benefit decreased significantly by $4.3 million (97%) in Q1 2022. The Q1 2022 benefit was mainly from foreign income taxes, while Q1 2021 included a substantial benefit from the release of a valuation allowance related to business combinations[159] Key Metrics This section presents and reconciles key non-GAAP financial measures used by management to evaluate performance Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | 2022 | 2021 | | :-------------------------------- | :----- | :----- | | Net loss | $(22,831) | $(20,684) | | Depreciation and amortization expense | $14,262 | $12,468 | | Interest expense, net | $7,762 | $7,787 | | Other expense (income), net | $418 | $(237) | | Benefit from income taxes | $(126) | $(4,394) | | Stock-based compensation expense | $11,619 | $17,824 | | Acquisition-related expense | $10,413 | $9,586 | | Purchase accounting deferred revenue discount | $1,929 | $494 | | Adjusted EBITDA | $23,446 | $22,844 | - Adjusted EBITDA increased by $0.602 million (2.6%) to $23.446 million in Q1 2022, reflecting the company's operating performance excluding non-cash and acquisition-related items[164] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash to meet its financial obligations and fund operations - As of March 31, 2022, Upland had $130.4 million in cash and cash equivalents, $60.0 million available under its revolving credit facility, and $526.5 million in outstanding borrowings[167] - Cash and cash equivalents decreased by $58.7 million from December 31, 2021, primarily due to $62.3 million in cash paid for two acquisitions in Q1 2022[167] - Working capital surplus decreased from $106.5 million at December 31, 2021, to $29.9 million at March 31, 2022, which includes $114.5 million of deferred revenue as a current liability[169] Cash Flows from Operating Activities This subsection analyzes the cash generated or used by the company's primary business operations - Net cash provided by operating activities decreased by $4.3 million to $8.2 million in Q1 2022, primarily due to increased acquisition-related cash outflows[179] - Working capital sources included a $9.2 million decrease in accounts receivable and a $1.1 million increase in deferred revenue, while uses included a $4.1 million decrease in accounts payable and a $4.8 million decrease in accrued expenses[179] Cash Flows from Investing Activities This subsection details the cash used for or generated from investments in assets, such as acquisitions and capital expenditures - Cash used in investing activities decreased by $10.4 million to $62.5 million in Q1 2022, mainly due to lower acquisition purchase prices compared to the prior year[182] - Investing activities primarily consist of acquisitions of complementary technologies, products, and businesses, and are expected to continue to expand the company's software library and infrastructure[181][183] Cash Flows from Financing Activities This subsection analyzes the cash flows related to debt, equity, and other financing transactions - Cash used in financing activities increased by $2.1 million to $4.2 million in Q1 2022, driven by a $1.8 million increase in additional consideration paid to sellers (holdbacks) and a $0.5 million increase in net share employee payroll tax settlement payments[185] Critical Accounting Policies and the Use of Estimates This section highlights the accounting policies that require significant judgment and estimates by management - Key accounting policies requiring significant judgment and estimates include revenue recognition, income taxes, deferred sales commissions, business combinations (goodwill and long-lived assets), and stock-based compensation[187] - No material changes to critical accounting policies were reported in Q1 2022 compared to the 2021 Annual Report on Form 10-K[188] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Upland Software's exposure to and management of market risks, including interest rate, foreign exchange, and inflation risks Interest Rate Risk This subsection describes the company's exposure to fluctuations in interest rates and its mitigation strategies - Upland's interest rate risk primarily relates to cash equivalents and variable rate indebtedness. Interest rate swap agreements fix the interest rate on $540 million of term loans at 5.4%, mitigating exposure to variable rates[193] - As of March 31, 2022, with no outstanding debt under the revolving credit facility, a hypothetical 100 basis point change in interest rates would not impact total interest expense[193] Foreign Currency Exchange Risk This subsection outlines the company's exposure to foreign currency fluctuations and their potential impact - The company is exposed to foreign exchange rate fluctuations as it invoices customers and incurs operating expenses in various foreign currencies (e.g., AUD, CAD, GBP, EUR)[194] - A hypothetical 10% change in foreign currency exchange rates could result in a $2.0 million change in revenue for the three months ended March 31, 2022. The company has not engaged in currency hedging strategies to date[194] Inflation This subsection discusses the potential impact of inflation on the company's business and financial results - Inflation has not had a material effect on the business in the last three fiscal years, but potential future inflationary pressures could increase costs and adversely affect financial results if not offset by price increases[196] Item 4. Controls and Procedures This section evaluates Upland Software's disclosure controls and internal control over financial reporting, confirming their effectiveness and reporting no material changes for Q1 2022 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022[199] - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2022[200] Part II. OTHER INFORMATION This section contains additional information not covered in Part I, including updated risk factors and exhibits Item 1A. Risk Factors This section updates previously disclosed risk factors, emphasizing the potential adverse effects of inflation on the company's liquidity, business, financial condition, and operational results - The company may be adversely affected by inflation, which could increase overall cost structure, particularly if commensurate price increases cannot be achieved[205] - Inflation may lead to higher interest rates, capital costs, shipping costs, supply shortages, increased labor costs, and weakening exchange rates[205] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), and 18 U.S.C. Section 1350[209] - The report also includes Inline XBRL formatted financial statements and notes, and a Cover Page Interactive Data File[209] SIGNATURES This section contains the official signatures, certifying the filing of the Quarterly Report on Form 10-Q by Upland Software, Inc. on May 4, 2022 - The report was duly signed on behalf of UPLAND SOFTWARE, INC. by Michael D. Hill, Chief Financial Officer, on May 4, 2022[213]