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Form 8-K Veritone, Inc. For: Aug 09

August 15, 2022 6:25 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

 

Veritone, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-38093

47-1161641

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

2420 17th St., Office 3002, Denver, CO

 

80202

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (888) 507-1737

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

 

Title of each class

 

Trading

Symbol(s)

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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 Section13(a) of the Exchange Act.

 

 

 


 

 

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

As previously reported, on August 9, 2022, the management and the audit committee (the “Audit Committee”) of the Board of Directors of Veritone, Inc. (the “Company”), after consideration of the relevant facts and circumstances, determined that the Company’s previously issued financial statements as of and for the three months ended March 31, 2022 should no longer be relied upon due to an error related to the calculation of fair value of contingent consideration at the time of the acquisition of PandoLogic Ltd., which led to an understatement of goodwill of $8.0 million, intangible assets of $6.0 million, and contingent consideration of $13.1 million at the time of the acquisition, and an overstatement of subsequent changes in the fair value of the contingent consideration of $6.6 million, and an understatement of subsequent intangible amortization expense of $0.3 million.  The restatement results in a non-cash charge that reduces general and administrative expenses and results in a favorable change to net loss for the three months ended March 31, 2022. The Company does not expect any of the changes described above to have an impact on its cash balances or liquidity. Any related press releases, stockholder communications, investor presentations or other communications describing relevant portions of the financial statements as of and for the three months ended March 31, 2022 should no longer be relied upon.

The Company will restate its prior period financial statements for the three months ended March 31, 2022 in an amendment to its Quarterly Report on Form 10-Q for the three months ended March 31, 2022 to be filed as soon as practicable.  The Company evaluated the aggregate effects of the errors to its previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 or for any quarterly periods included therein. The Company will adjust its consolidated balance sheet as of December 31, 2021 in order to correct this immaterial error in the amendment to its Quarterly Report on Form 10-Q for the three months ended March 31, 2022 The Company will revise its consolidated financial statements as of and for the year ended December 31, 2021 when it files its Form 10-K for the period ended December 31, 2022.

Tables presenting the effects of these adjustments to the Company’s previously issued financial statements as of and for the three months ended March 31, 2022 and as of and for the year ended, December 31, 2021 have been attached to this report as Exhibit 99.1 and are incorporated herein by reference.

The Company’s management identified a material weakness in internal control over financial reporting relating to the appropriate oversight and sufficient review of the work performed by third-party specialists on the Company’s behalf and the coordination of work being performed by more than one specialist.  Such third-party specialists were used in the preparation of (i) the Company’s valuation of contingent consideration, (ii) the Company’s valuation of certain identified intangible assets and (iii) the Company’s purchase price allocation pursuant to ASC 805, Business Combinations, in connection with the acquisition of PandoLogic Ltd.

 

The Company’s management and the Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K with Grant Thornton LLP, the Company’s independent registered public accounting firm.  


 


 

 

Item 9.01. Financial Statements Exhibits

 

(d) Exhibits

 

Exhibit

Number

     Description

 

 

 

 

99.1

  

Revisions to the Company’s consolidated statement of operations for the three months ended March 31, 2022, December 31, 2021, and September 30, 2021 and the Company’s audited consolidated balance sheet as of December 31, 2022

104

  

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

 

Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Certain of these forward-looking statements can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “should,” “could,” “estimate” or “continue” or the plural, negative or other variations thereof or comparable terminology are intended to identify forward-looking statements, and any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Such statements may include, but are not limited to, statements regarding the impact of the Company’s restatement of certain historical financial statements. These forward-looking statements speak only as of the date hereof, and are based on the management’s current assumptions, beliefs and information. As such, the Company’s actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Important factors that could cause such differences include the process of preparing the restated financial statements as of and for the three months ended March 31, 2022 or other subsequent events that would require the Company to make additional adjustments to its previously issued financial statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s objectives or plans will be achieved. The forward-looking statements contained herein reflect the Company’s beliefs, estimates and predictions as of the date hereof, and the Company undertakes no obligation to revise or update the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events for any reason, except as required by law.

 

 

 


 

 

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 hereunto duly authorized.

 

Date: August 12, 2022

Veritone, Inc.

 

 

 

 

By:

/s/ Michael L. Zemetra

 

 

Michael L. Zemetra

 

 

Executive Vice President, Chief Financial Officer

 

 

and Treasurer

 

 

 

 

EXHIBIT 99.1

On August 9, 2022, the management and the audit committee (the “Audit Committee”) of the Board of Directors of Veritone, Inc. (the “Company”), after consideration of the relevant facts and circumstances, determined that the Company’s previously issued financial statements as of and for the three months ended March 31, 2022 should no longer be relied upon due to an error related to the calculation of fair value of contingent consideration at the time of the acquisition of PandoLogic Ltd., which led to an understatement of goodwill, intangible assets, and contingent consideration at the time of the acquisition, and an overstatement of subsequent changes to the fair value of contingent consideration, and an understatement of subsequent intangible amortization expense.

The following tables present the effects of the aforementioned restatement to the specific line items presented in the Company’s previously reported unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 (in thousands, except per share amounts):

 

Condensed Consolidated Balance Sheet (unaudited)

 

 

 

As of March 31, 2022

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Intangible assets, net

 

$

86,563

 

 

$

5,304

 

 

$

91,867

 

Goodwill

 

 

36,630

 

 

 

7,970

 

 

 

44,600

 

Total assets

 

 

469,004

 

 

 

13,274

 

 

 

482,278

 

Contingent consideration, non-current

 

 

35,416

 

 

 

265

 

 

 

35,681

 

Other non-current liabilities

 

 

16,440

 

 

 

776

 

 

 

17,216

 

Total liabilities

 

 

413,004

 

 

 

1,041

 

 

 

414,045

 

Accumulated deficit

 

 

(380,076

)

 

 

12,233

 

 

 

(367,843)

 

Total stockholders' equity

 

 

56,000

 

 

 

12,233

 

 

 

68,233

 

Total liabilities and stockholders' equity

 

 

469,004

 

 

 

13,274

 

 

 

482,278

 

 

Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited)

 

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

General and administrative

 

$

28,917

 

 

$

(6,596

)

 

$

22,321

 

Amortization

 

 

4,693

 

 

 

323

 

 

 

5,016

 

Total operating expenses

 

 

61,485

 

 

 

(6,273)

 

 

 

55,212

 

Loss from operations

 

 

(27,078

)

 

 

6,273

 

 

 

(20,805)

 

Loss before provision for income taxes

 

 

(28,264

)

 

 

6,273

 

 

 

(21,991)

 

Provision for income taxes

 

 

177

 

 

 

(39)

 

 

 

138

 

Net loss

 

 

(28,441

)

 

 

6,312

 

 

 

(22,129)

 

Basic and diluted net loss per share

 

 

(0.80

)

 

 

0.18

 

 

 

(0.62)

 

Total comprehensive loss

 

 

(28,251

)

 

 

6,312

 

 

 

(21,939)

 

 

Condensed Consolidated Statement of Stockholders’ Equity (unaudited)

 

 

 

Accumulated Deficit

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Balance as of December 31, 2021

 

$

(350,958

)

 

$

5,921

 

 

$

(345,037

)

Net loss

 

 

(28,441

)

 

 

6,312

 

 

 

(22,129

)

Balance as of March 31, 2022

 

 

(380,076

)

 

 

12,233

 

 

 

(367,843

)

 

 

Total Stockholders' Equity

 

Balance as of December 31, 2021

 

 

80,579

 

 

 

5,921

 

 

 

86,500

 

Net loss

 

 

(28,441

)

 

 

6,312

 

 

 

(22,129

)

Balance as of March 31, 2022

 

 

56,000

 

 

 

12,233

 

 

 

68,233

 

 


 

 

 

Condensed Consolidated Statement of Cash Flows (unaudited)

 

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(28,441

)

 

$

6,312

 

 

$

(22,129

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,891

 

 

 

321

 

 

 

5,212

 

Change in fair value of contingent consideration

 

 

11,641

 

 

 

(6,596

)

 

 

5,045

 

Change in deferred taxes

 

 

(426

)

 

 

(39

)

 

 

(465

)

There was no impact on cash flows from investing or financing activities.

The Company also evaluated the aggregate effects of the errors to its previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 or for any quarterly periods included therein.

The following tables reflect the impact of the revision to the specific line items presented in the Company’s previously reported consolidated financial statements as of and for the year-ended December 31, 2021 (in thousands, except per share amounts):

 

Consolidated Balance Sheet

 

 

As of December 31, 2021

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Intangible assets, net

 

$

88,247

 

 

$

5,625

 

 

$

93,872

 

Goodwill

 

 

34,058

 

 

 

7,970

 

 

$

42,028

 

Total assets

 

 

504,752

 

 

 

13,595

 

 

 

518,347

 

Contingent consideration, current

 

 

19,988

 

 

 

65

 

 

 

20,053

 

Total current liabilities

 

 

191,276

 

 

 

65

 

 

 

191,341

 

Contingent consideration, non-current

 

 

24,737

 

 

 

6,796

 

 

 

31,533

 

Other non-current liabilities

 

 

13,078

 

 

 

813

 

 

 

13,891

 

Total liabilities

 

 

424,173

 

 

 

7,674

 

 

 

431,847

 

Accumulated deficit

 

 

(350,958

)

 

 

5,921

 

 

 

(345,037

)

Total stockholders' equity

 

 

80,579

 

 

 

5,921

 

 

 

86,500

 

Total liabilities and stockholders' equity

 

 

504,752

 

 

 

13,595

 

 

 

518,347

 

 

Consolidated Statement of Operations and Comprehensive Loss

 

 

 

Year Ended

 

 

 

December 31, 2021

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

General and administrative

 

$

97,918

 

 

$

(6,251

)

 

$

91,667

 

Amortization

 

 

8,497

 

 

 

375

 

 

 

8,872

 

Total operating expenses

 

 

182,554

 

 

 

(5,876

)

 

 

176,678

 

Loss from operations

 

 

(67,249

)

 

 

5,876

 

 

 

(61,373

)

Loss before provision for income taxes

 

 

(67,849

)

 

 

5,876

 

 

 

(61,973

)

Provision for income taxes

 

 

2,744

 

 

 

(45

)

 

 

2,699

 

Net loss

 

 

(70,593

)

 

 

5,921

 

 

 

(64,672

)

Basic and diluted net loss per share

 

 

(2.12

)

 

 

0.18

 

 

 

(1.94

)

Total comprehensive loss

 

 

(70,763

)

 

 

5,921

 

 

 

(64,842

)

 


 

 

 

Consolidated Statement of Stockholders’ Equity

 

 

 

Accumulated Deficit

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Net loss

 

$

(70,593

)

 

$

5,921

 

 

$

(64,672

)

Balance as of December 31, 2021

 

 

(350,958

)

 

 

5,921

 

 

 

(345,037

)

 

 

Total Stockholders' Equity

 

Net loss

 

 

(70,593

)

 

 

5,921

 

 

 

(64,672

)

Balance as of December 31, 2022

 

 

80,579

 

 

 

5,921

 

 

 

86,500

 

 

Consolidated Statement of Cash Flows (unaudited)

 

 

 

Year Ended

 

 

 

December 31, 2021

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(70,593

)

 

$

5,921

 

 

$

(64,672

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,035

 

 

 

375

 

 

 

9,410

 

Change in fair value of contingent consideration

 

 

18,325

 

 

 

(6,251

)

 

 

12,074

 

Change in deferred taxes

 

 

 

 

 

(45

)

 

 

(45

)

 

There was no impact on cash flows from investing or financing activities.

 

 

 

 



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