Company Quick10K Filing
Quick10K
Veritone
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$7.15 20 $145
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-06-25 Officers, Shareholder Vote
8-K 2019-05-22 Officers, Exhibits
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-02-21 Earnings, Exhibits
8-K 2019-01-15 Regulation FD
8-K 2019-01-09 Earnings, Regulation FD, Exhibits
8-K 2018-12-10 Other Events, Exhibits
8-K 2018-11-12 Earnings, Exhibits
8-K 2018-10-15 Officers, Exhibits
8-K 2018-09-06 Regulation FD, Other Events, Exhibits
8-K 2018-08-31 M&A, Sale of Shares
8-K 2018-08-24 Officers
8-K 2018-08-20 Regulation FD
8-K 2018-08-13 Earnings, Exhibits
8-K 2018-08-13 Officers
8-K 2018-08-10 Enter Agreement, Regulation FD, Other Events, Exhibits
8-K 2018-06-29 Officers, Shareholder Vote, Exhibits
8-K 2018-06-20 Enter Agreement, Other Events, Exhibits
8-K 2018-06-01 Enter Agreement, Exhibits
8-K 2018-05-18 Accountant, Exhibits
8-K 2018-03-15 Officers
8-K 2018-02-26 Earnings, Exhibits
8-K 2018-01-17 Regulation FD
HLNE Hamilton Lane 2,570
CEL Cellcom Israel 500
NAN North American Nickel 421
AVID Avid Technology 352
FSBW FS Bancorp 231
EYEN Eyenovia 70
SDPI Superior Drilling Products 25
SOFO Sonic Foundry 0
RKFL B4MC Gold Mines 0
AET Aetna 0
VERI 2019-06-30
Part I. Financial Information
Item 1. Financial Statements
Note 1. Description of Business
Note 2. Presentation and Summary of Significant Accounting Policies
Note 3. Business Combinations
Note 4. Net Loss per Share
Note 5. Financial Instruments
Note 6. Goodwill and Intangible Assets, Net
Note 7. Consolidated Financial Statements Details
Note 8. Commitments and Contingencies
Note 9. Stockholders' Equity
Note 10. Stock Plans
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 veri-ex311_8.htm
EX-31.2 veri-ex312_6.htm
EX-32.1 veri-ex321_7.htm

Veritone Earnings 2019-06-30

VERI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 veri-10q_20190630.htm 10-Q veri-10q_20190630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 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             

Commission File Number: 001-38093

 

Veritone, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-1161641

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

575 Anton Blvd., Suite 100, Costa Mesa, CA 92626

(Address of principal executive offices, including zip code)

(888) 507-1737

(Registrant’s telephone number, including area code)

 

 

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

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

VERI

 

The NASDAQ Stock Market LLC

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

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

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

As of July 31, 2019, 22,223,453 shares of the registrant’s common stock were outstanding.

 

 

 


VERITONE, INC.

QUARTERLY REPORT ON FORM 10-Q

June 30, 2019

TABLE OF CONTENTS

 

Special Note Regarding Forward-Looking Statements

 

 

PART I.

  

FINANCIAL INFORMATION

 

2

Item 1.

  

Financial Statements (Unaudited)

 

2

 

  

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

2

 

  

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018

 

3

 

  

Condensed Consolidated Statements of Stockholders’ Equity as of June 30, 2019

 

4

 

  

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

 

6

 

  

Notes to the Condensed Consolidated Financial Statements

 

7

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

 

29

Item 4.

  

Controls and Procedures

 

29

PART II.

  

OTHER INFORMATION

 

31

Item 1.

  

Legal Proceedings

 

31

Item 1A.

  

Risk Factors

 

31

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

Item 3.

  

Defaults Upon Senior Securities

 

31

Item 4.

  

Mine Safety Disclosures

 

31

Item 5.

  

Other Information

 

31

Item 6.

  

Exhibits

 

32

Signatures

 

33

 

 

 


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain 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”), and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements made in this Quarterly Report on Form 10-Q that are not historical or current facts may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “anticipates,” “believes,” “seeks,” “estimates,” “expects,” “intends,” “continue,” “can,” “may,” “plans,” “potential,” “projects,” “should,” “could,” “will,” “would” or similar expressions and the negatives of those expressions are intended to identify forward-looking statements. Such statements include, but are not limited to, any statements that refer to projections of our future financial condition and results of operations, capital needs and financing plans, competitive position, industry environment, potential growth and market opportunities, acquisition plans and strategies, compensation plans, governance structure and policies and/or the price of our common stock.

The forward-looking statements included herein represent our management’s current expectations and assumptions based on information available as of the date of this report. These statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I of this Quarterly Report on Form 10-Q, and in Item 1 (Business) and Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date of this report.

Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.

1


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERITONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share and share data)

(Unaudited)

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,275

 

 

$

37,539

 

Marketable securities

 

 

4,998

 

 

 

13,565

 

Accounts receivable, net of allowance for doubtful accounts of $71 and $40, respectively

 

 

26,820

 

 

 

29,142

 

Expenditures billable to clients

 

 

4,806

 

 

 

2,695

 

Prepaid expenses and other current assets

 

 

3,625

 

 

 

3,579

 

Total current assets

 

 

80,524

 

 

 

86,520

 

Long-term restricted cash

 

 

1,135

 

 

 

1,237

 

Property, equipment and improvements, net

 

 

3,660

 

 

 

4,008

 

Intangible assets, net

 

 

18,823

 

 

 

20,480

 

Goodwill

 

 

5,420

 

 

 

5,509

 

Total assets

 

$

109,562

 

 

$

117,754

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Accounts payable

 

$

18,459

 

 

$

28,714

 

Accrued media payments

 

 

12,414

 

 

 

7,416

 

Client advances

 

 

14,281

 

 

 

9,639

 

Accrued compensation

 

 

2,819

 

 

 

6,570

 

Other accrued liabilities

 

 

5,721

 

 

 

3,746

 

Total current liabilities

 

 

53,694

 

 

 

56,085

 

Other liabilities

 

 

1,369

 

 

 

1,386

 

Total liabilities

 

 

55,063

 

 

 

57,471

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share; 75,000,000 shares authorized;

21,918,406 and 19,335,220 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

 

22

 

 

 

19

 

Additional paid-in capital

 

 

257,813

 

 

 

230,674

 

Accumulated deficit

 

 

(203,408

)

 

 

(170,411

)

Accumulated other comprehensive income

 

 

72

 

 

 

1

 

Total stockholders' equity

 

 

54,499

 

 

 

60,283

 

Total liabilities and stockholders' equity

 

$

109,562

 

 

$

117,754

 

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

2


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(in thousands, except per share and share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenues

 

$

12,270

 

 

$

4,168

 

 

$

24,395

 

 

$

8,556

 

Cost of revenues

 

 

4,562

 

 

 

820

 

 

 

8,434

 

 

 

1,384

 

Gross profit

 

 

7,708

 

 

 

3,348

 

 

 

15,961

 

 

 

7,172

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

6,448

 

 

 

5,142

 

 

 

12,581

 

 

 

10,890

 

Research and development

 

 

6,351

 

 

 

5,146

 

 

 

13,289

 

 

 

9,674

 

General and administrative

 

 

11,645

 

 

 

7,513

 

 

 

23,335

 

 

 

14,291

 

Total operating expenses

 

 

24,444

 

 

 

17,801

 

 

 

49,205

 

 

 

34,855

 

Loss from operations

 

 

(16,736

)

 

 

(14,453

)

 

 

(33,244

)

 

 

(27,683

)

Other income, net

 

 

51

 

 

 

133

 

 

 

262

 

 

 

316

 

Loss before provision for income taxes

 

 

(16,685

)

 

 

(14,320

)

 

 

(32,982

)

 

 

(27,367

)

Provision for income taxes

 

 

6

 

 

 

10

 

 

 

15

 

 

 

12

 

Net loss

 

$

(16,691

)

 

$

(14,330

)

 

$

(32,997

)

 

$

(27,379

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.80

)

 

$

(0.88

)

 

$

(1.64

)

 

$

(1.69

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

20,759,396

 

 

 

16,314,236

 

 

 

20,138,756

 

 

 

16,192,569

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(16,691

)

 

 

(14,330

)

 

 

(32,997

)

 

 

(27,379

)

Unrealized gain (loss) on marketable securities, net of income

   taxes

 

 

13

 

 

 

61

 

 

 

48

 

 

 

(2

)

Foreign currency translation adjustments, net of income taxes

 

 

45

 

 

 

30

 

 

 

24

 

 

 

20

 

Total comprehensive loss

 

$

(16,633

)

 

$

(14,239

)

 

$

(32,925

)

 

$

(27,361

)

 

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

3


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of December 31, 2018

 

 

19,335,220

 

 

$

19

 

 

$

230,674

 

 

$

(170,411

)

 

$

1

 

 

$

60,283

 

Common stock offerings, net

 

 

1,668,663

 

 

 

2

 

 

 

12,213

 

 

 

 

 

 

 

 

 

12,215

 

Exercise of options

 

 

47,099

 

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

120

 

Common stock purchases under employee stock purchase plan

 

 

64,967

 

 

 

 

 

 

294

 

 

 

 

 

 

 

 

 

294

 

Common stock issued upon vesting of restricted stock units

 

 

35,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Machine Box holdback consideration

 

 

 

 

 

 

 

 

620

 

 

 

 

 

 

 

 

 

620

 

Common stock issued for acquisitions

 

 

766,848

 

 

 

1

 

 

 

3,834

 

 

 

 

 

 

 

 

 

3,835

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,058

 

 

 

 

 

 

 

 

 

10,058

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(32,997

)

 

 

 

 

 

(32,997

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71

 

 

 

71

 

Balance as of June 30, 2019

 

 

21,918,406

 

 

$

22

 

 

$

257,813

 

 

$

(203,408

)

 

$

72

 

 

$

54,499

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of March 31, 2019

 

 

20,197,188

 

 

$

20

 

 

$

244,182

 

 

$

(186,717

)

 

$

14

 

 

$

57,499

 

Common stock offerings, net

 

 

1,006,663

 

 

 

1

 

 

 

8,054

 

 

 

 

 

 

 

 

 

8,055

 

Exercise of options

 

 

27,049

 

 

 

 

 

 

90

 

 

 

 

 

 

 

 

 

90

 

Common stock issued upon vesting of restricted stock units

 

 

35,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Machine Box holdback consideration

 

 

 

 

 

 

 

 

162

 

 

 

 

 

 

 

 

 

162

 

Common stock issued for acquisitions

 

 

651,897

 

 

 

1

 

 

 

70

 

 

 

 

 

 

 

 

 

71

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,255

 

 

 

 

 

 

 

 

 

5,255

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,691

)

 

 

 

 

 

(16,691

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58

 

 

 

58

 

Balance as of June 30, 2019

 

 

21,918,406

 

 

$

22

 

 

$

257,813

 

 

$

(203,408

)

 

$

72

 

 

$

54,499

 

 


4


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of December 31, 2017

 

 

16,158,883

 

 

$

16

 

 

$

170,728

 

 

$

(109,307

)

 

$

(135

)

 

$

61,302

 

Common stock offerings, net

 

 

1,955,000

 

 

 

2

 

 

 

32,534

 

 

 

 

 

 

 

 

 

32,536

 

Common stock issued under employee stock plans, net

 

 

203,551

 

 

 

 

 

 

921

 

 

 

 

 

 

 

 

 

921

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,125

 

 

 

 

 

 

 

 

 

5,125

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(27,379

)

 

 

 

 

 

(27,379

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

18

 

Balance as of June 30, 2018

 

 

18,317,434

 

 

$

18

 

 

$

209,308

 

 

$

(136,686

)

 

$

(117

)

 

$

72,523

 

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance as of March 31, 2018

 

 

16,254,054

 

 

$

16

 

 

$

173,817

 

 

$

(122,479

)

 

$

(208

)

 

$

51,146

 

Common stock offerings, net

 

 

1,955,000

 

 

 

2

 

 

 

32,599

 

 

 

 

 

 

 

 

 

32,601

 

Common stock issued under employee stock plans, net

 

 

108,380

 

 

 

 

 

 

364

 

 

 

 

 

 

 

 

 

364

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,528

 

 

 

 

 

 

 

 

 

2,528

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,330

)

 

 

 

 

 

(14,330

)

Other

 

 

 

 

 

 

 

 

 

 

 

123

 

 

 

91

 

 

 

214

 

Balance as of June 30, 2018

 

 

18,317,434

 

 

$

18

 

 

$

209,308

 

 

$

(136,686

)

 

$

(117

)

 

$

72,523

 

 

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

5


VERITONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(32,997

)

 

$

(27,379

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,719

 

 

 

828

 

Costs of warrants issued

 

 

 

 

 

207

 

Change in fair value of warrant liability

 

 

50

 

 

 

15

 

Provision for doubtful accounts

 

 

44

 

 

 

22

 

Stock-based compensation expense

 

 

11,285

 

 

 

5,125

 

Other

 

 

(19

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,278

 

 

 

(3,914

)

Expenditures billable to clients

 

 

(2,111

)

 

 

(900

)

Prepaid expenses and other current assets

 

 

413

 

 

 

(367

)

Accounts payable

 

 

(10,255

)

 

 

2,421

 

Accrued media payments

 

 

4,998

 

 

 

1,945

 

Client advances

 

 

4,642

 

 

 

1,148

 

Other accrued liabilities

 

 

2,364

 

 

 

(966

)

Other liabilities

 

 

(17

)

 

 

474

 

Net cash used in operating activities

 

 

(16,606

)

 

 

(21,341

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sales of marketable securities

 

 

8,616

 

 

 

14,000

 

Capital expenditures

 

 

(208

)

 

 

(2,899

)

Intangible assets acquired

 

 

(477

)

 

 

(70

)

Acquisition of businesses, net of cash acquired

 

 

(883

)

 

 

 

Net cash provided by investing activities

 

 

7,048

 

 

 

11,031

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from common stock offerings, net

 

 

11,778

 

 

 

32,536

 

Proceeds from exercise of stock options

 

 

120

 

 

 

 

Proceeds from issuances of stock under employee stock plans

 

 

294

 

 

 

921

 

Net cash provided by financing activities

 

 

12,192

 

 

 

33,457

 

Net increase in cash, cash equivalents and restricted cash

 

 

2,634

 

 

 

23,147

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

38,776

 

 

 

29,545

 

Cash, cash equivalents and restricted cash, end of period

 

$

41,410

 

 

$

52,692

 

 

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

6


VERITONE, INC.

Notes to the Condensed Consolidated Financial Statements

(in thousands, except share and per share data and percentages)

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS

Description of Business

Veritone, Inc., a Delaware corporation (“Veritone”) (together with its wholly owned subsidiaries, collectively, the “Company”), is a provider of artificial intelligence (“AI”) based computing solutions. The Company has developed aiWARETM, a proprietary AI operating system that integrates and orchestrates an open ecosystem of top performing cognitive engines, together with a suite of powerful applications, to reveal valuable multivariate insights from vast amounts of unstructured and structured data and conduct cognitive workflows based on these insights.  The Company’s aiWARE platform incorporates proprietary technology to integrate and intelligently orchestrate a wide variety of cognitive engine capabilities to mimic human cognitive functions such as perception, prediction and problem solving in order to quickly, efficiently and cost effectively transform unstructured data into structured data. It stores the results in a time-correlated database, creating a rich, online, searchable index of the unstructured and structured data that users can use and analyze in near real-time through the platform’s suite of general and industry-specific applications to drive business processes and insights. aiWARE is based on an open architecture that enables new cognitive engines and applications to be added quickly and efficiently, resulting in a future proof, scalable and evolving solution that can be easily leveraged for a broad range of industries that capture or use audio, video and other unstructured data including, without limitation, the media and entertainment, legal and compliance, and government vertical markets.

In August 2018, the Company acquired Wazee Digital, Inc. (“Wazee Digital”), a provider of cloud-native digital content management and content licensing services, as discussed in more detail in Note 3. The Wazee Digital offerings serve customers primarily in the media and entertainment market. The Company has integrated its aiWARE platform with these offerings, providing these customers with unique capabilities to enrich and drive expanded revenue opportunities from their content.

In addition, the Company operates a full-service advertising agency. The Company’s expertise in media buying, planning and creative development, coupled with its proprietary technology platform, enables the Company to analyze the effectiveness of advertising in a way that is simple, scalable and trackable. In August 2018, the Company acquired S Media Limited, doing business as Performance Bridge Media (“Performance Bridge”), a podcast advertising agency, as discussed in more detail in Note 3. The Performance Bridge offerings have enhanced the Company’s advertising offerings to include more comprehensive podcast solutions.

NOTE 2. PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. The information included in this Form 10-Q should be read in conjunction with the information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 18, 2019. Interim results for the three and six months ended June 30, 2019 are not necessarily indicative of the results the Company will have for the full year ending December 31, 2019.

The accompanying condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state its financial position, results of operations and cash flows. All significant intercompany transactions have been eliminated in consolidation. The financial data and the other information disclosed in these notes to the condensed consolidated financial statements reflected in the three month period presented are unaudited. The December 31, 2018 balance sheet included herein was derived from the audited financial statements but does not include all disclosures or notes required by GAAP for complete financial statements.

Liquidity and Capital Resources

During 2018 and 2017, the Company generated negative cash flows from operations of $42,227 and $31,911, respectively, and incurred net losses of $61,104 and $59,601, respectively. In the six months ended June 30, 2019, the Company generated negative cash flow from operations of $16,606 and incurred a net loss of $32,997. Also, the Company had an accumulated deficit of $203,408 as of June 30, 2019. Historically, the Company has satisfied its capital needs with the net proceeds from its sales of equity securities, its issuance of convertible debt, and the exercise of common stock warrants. In June 2018, the Company raised net proceeds of $32,780 through an underwritten offering of its common stock, and in the first six months of 2019, the Company raised net proceeds of $12,215 through sales of its common stock under an Equity Distribution Agreement dated June 1, 2018 (the “Equity Distribution Agreement”).

7


The Company expects to continue to generate net losses for the foreseeable future as it makes significant investments in developing and selling its products and services. Also, the Company will continue to evaluate potential acquisitions of, or investments in, companies or technologies that complement its business, which acquisitions may require the use of cash.

Management believes that the Company’s existing balances of cash, cash equivalents and marketable securities, which totaled $45,273 as of June 30, 2019, will be sufficient to meet its anticipated cash requirements for at least twelve months from the date that these financial statements are issued.  However, the Company’s does not expect that its current cash, cash equivalents and marketable securities will be sufficient to support the development of its business to the point at which the Company has positive cash flows from operations, particularly if it uses cash to finance any acquisitions or investments in the future.  The Company plans to meet its future needs for additional capital through equity and/or debt financings. Such equity financings may include sales of common stock under the Company’s Equity Distribution Agreement pursuant to which the Company may offer and sell, from time to time, shares of its common stock having an aggregate available offering price of up to $35,468. Such financing may not be available on terms favorable to the Company or at all.  If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when required, the Company’s ability to continue to support its business growth, scale its infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired.

Use of Accounting Estimates

The preparation of the accompanying condensed consolidated financial statements 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 as of the date of the accompanying condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The principal estimates relate to revenue recognition, allowance for doubtful accounts, the valuation of stock awards and stock warrants, income taxes, and the allocation of net assets acquired from business acquisitions as well as contingent consideration, where applicable. Actual results could differ from those estimates.

Significant Customers

The Company’s top ten customers accounted for approximately 25.9% and 24.9% of the Company’s net revenues for the three and six months ended June 30, 2019, respectively. The Company’s top ten customers accounted for approximately 49.7% and 52.1% of the Company’s net revenues for the three and six months ended June 30, 2018, respectively. No individual customer accounted for 10% or more of the Company’s net revenues for the three and six months ended June 30, 2019.

Significant Accounting Policies

During the six months ended June 30, 2019, there have been no material changes in the Company’s significant accounting policies from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018.

Recently Adopted Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), which provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This standard became effective for the Company beginning in the first quarter of 2019. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which provides guidance on the presentation of restricted cash or restricted cash equivalents and is intended to reduce the diversity in practice of such presentations. This standard requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts on the statement of cash flows. This standard became effective for the Company beginning in the first quarter of 2019. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount that the entity expects to be entitled to receive when products are transferred to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12,” and together with ASU 2014-09, ASU 2016-08 and ASU 2016-10 the “new revenue standard”). The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. As an emerging growth company, the Company is not required to accelerate the application of the revenue standard to interim periods.  The new revenue standard will be effective for the Company for annual reporting periods beginning after December 15, 2018 and to interim periods within annual reporting periods beginning after December 15, 2019.

8


The Company will apply the new revenue standard on a modified retrospective basis with an adjustment to retained earnings to recognize the cumulative effect of adoption. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments under this pronouncement will change the way all leases with duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized in the same manner as capital leases are amortized under current accounting rules, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This standard will be effective for the Company beginning with the first quarter of fiscal year 2020. The Company is currently evaluating the impact this standard will have on its policies and procedures pertaining to its existing and future lease arrangements, its disclosure requirements and its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this update will be effective for the Company beginning with fiscal year 2022, including interim periods, with early adoption permitted. The adoption of the amendments in this update is not expected to have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which provides expanded guidance to simplify the accounting for stock-based compensation by aligning the treatment of stock-based awards for nonemployees with that of stock-based awards for employees. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, as part of its disclosure framework project intended to improve the effectiveness of disclosures in the notes to the financial statements by updating certain disclosure requirements related to fair value measurements. The standard will be effective for the Company beginning in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.

NOTE 3. BUSINESS COMBINATIONS

 

Acquisition of Performance Bridge

 

On August 21, 2018, the Company acquired all of the outstanding capital stock of Performance Bridge by means of a merger of an indirect, wholly owned subsidiary of the Company with and into Performance Bridge, with Performance Bridge surviving the merger as an indirect, wholly owned subsidiary of the Company. The Company paid initial consideration of $5,158 and paid a total of $3,909 in additional contingent earnout amounts based on the achievement of certain revenue milestones by Performance Bridge in its 2018 fiscal year. The initial consideration was comprised of $1,220 paid in cash and the issuance of 349,072 shares of the Company’s common stock, valued at $3,938 based on the Company’s closing stock price on August 21, 2018. The initial consideration was subject to adjustment based on a final calculation of Performance Bridge’s net assets at closing, which was completed in the first quarter of 2019 and resulted in the issuance to the former stockholder of Performance Bridge of an additional 6,482 shares of common stock valued at $34 based on the closing price of the Company’s common stock on January 25, 2019, which was the date both parties agreed upon the final calculation of the adjustment. A portion of the initial consideration, consisting of $120 in cash and 34,335 shares of common stock, was deposited into a third-party escrow account at closing and will be held in such account until August 21, 2020, to secure certain indemnification and other obligations of the former stockholder of Performance Bridge. The additional earnout consideration was comprised of $883 in cash and 574,231 shares of the Company’s common stock, valued at $3,026 based on the closing price of the Company’s common stock on March 28, 2019, which were paid and issued to the former stockholder of Performance Bridge in the second quarter of 2019.

 

The acquisition of Performance Bridge has expanded the Company’s media agency offerings of comprehensive podcast solutions.

 

9


The following table summarizes the fair value of the purchase price consideration for the acquisition of Performance Bridge:

 

Acquisition consideration

Amount

 

Cash consideration at closing

$

1,220

 

Equity consideration at closing

 

3,938

 

Working capital adjustment

 

34

 

Contingent earnout consideration

 

3,770

 

   Estimated purchase price

$

8,962

 

 

The following allocation of the purchase price as of the August 21, 2018 closing date under the acquisition method of accounting is preliminary as to the determination of deferred taxes as the information is not available at the time of this filing. The purchase price allocation is based upon an estimate of the fair value of the assets acquired and the liabilities assumed by the Company in the acquisition:

 

Preliminary purchase price allocation:

Amount

 

   Cash

$

2,283

 

   Accounts receivable

 

3,551

 

   Prepaid and other current assets

 

23

 

   Property and equipment

 

43

 

   Intangible assets

 

5,800

 

   Accounts payable

 

(1,402

)

   Accrued expenses and other current liabilities

 

(4,337

)

   Accrued compensation

 

(42

)

Identifiable net assets acquired

$

5,919

 

Goodwill

 

3,043