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Report of Independent Registered Public Accounting Firm
−Removed: To the Shareholders and the Board of Directors of Marchex, Inc.
+Added: To the Stockholders' and the Board of Directors of Marchex, Inc.
Opinion on the Financial Statements
−Removed: We have audited the accompanying Company's Consolidated Balance Sheets of Marchex, Inc.
−Removed: and its subsidiaries (the Company) as of December 31, 2023 and December 31, 2022, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023 and the related notes to the consolidated financial statements (collectively, the financial statements).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 31, 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of Marchex, Inc.
+Added: and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 , and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
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Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee of the board of directors and that:
−Removed: (1) related to an account and disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
−Removed: The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
−Removed: Occurrence of Revenues
−Removed: As described in Note 1 of the consolidated financial statements, the Company generates its revenues through a significant volume of low‑dollar transactions tracked and recorded in a highly automated process within the Company’s internally developed information technology systems.
−Removed: The Company recognizes revenue from its call analytics technology platform when customers pay a fee for each qualified transaction generated per the terms of the customer contract.
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
+Added: The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Occurrence of Pay per Call Revenue
+Added: As described in Note 1 of the consolidated financial statements, the Company generates revenue from the Company's conversational analytics technology platform when customers pay the Company a fee for call, text, or other communication related data element they receive from calls or texts or for each phone number tracked based on a pre-negotiated rate.
Revenue is recognized over time as the service is performed.
−Removed: We identified the occurrence of revenue as a critical audit matter as the processes to track and record revenues are highly automated.
−Removed: These internally developed systems are complex and require an increased audit effort around assessing the reliability of data.
−Removed: Our audit procedures related to the occurrence of revenue included performing the following audit procedures, among others:
+Added: We identified the occurrence of pay per call revenue as a critical audit matter as the processes to track and record the calls on which revenue is recorded is based on data from internally developed systems, which are complex and require an increased audit effort around assessing the reliability of data.
+Added: Our audit procedures related to the occurrence of calls included performing the following audit procedures, among others:
+Added: • We obtained an understanding of the relevant controls related to the occurrence of calls and tested such controls for design and operating effectiveness.
+Added: • In order to assess the accuracy of information generated from the internally developed information systems, we reconciled the total call information to the third-party vendor bills.
+Added: • On a sample basis, we agreed the minutes from the call information to the vendor bill.
+Added: • On a sample basis, we listened to calls to determine the call occurred.
• On a sample basis, we obtained the customer invoice, the supporting call log data from the Company’s internal tracking system relating to the invoiced period, and the underlying customer contracts.
−Removed: For each sample:
−Removed: o We recalculated the invoiced amount based on the call and/or text volume, agreeing the terms and conditions to the customer contract;
−Removed: o We evaluated performance obligations and the applicable billing period, and agreed to the customer billing and recorded revenue during the selected period;
−Removed: o We verified the existence of call data by listening to a sample of recorded calls and of text message data by viewing a sample of text logs and traced to cash received for samples selected;
−Removed: • We performed substantive analytical procedures over the Company’s revenue which included comparing our expected rate per call during the selected period to the rate per call derived from the Company’s call log data and recorded revenue for the selected period;
−Removed: • We verified reliability of system data by obtaining management's analysis of call minutes per the system and compared to third party vendor invoices for completeness and accuracy for a sample of months.
+Added: For each sample we recalculated the invoiced amount.
+Added: • We tested the reasonableness of changes in pay per call revenue by performing trend analysis which compared month-over month revenues.
/s/ RSM US LLP
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Consolidated Balance Sheets
−Removed: As of December 31,
−Removed: (In Thousands, Except Per Share Amounts)
+Added: (in thousands)
Current assets:
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Other assets, net
−Removed: Right-of-use lease asset
+Added: Right-of-use lease assets
Intangible assets from acquisitions, net
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Deferred revenue and deposits
−Removed: Lease liability current
+Added: Operating lease liability, current
Total current liabilities
Deferred tax liabilities
−Removed: Finance lease, non-current
−Removed: Lease liability, non-current
+Added: Finance lease liability, non-current
+Added: Operating lease liability, non-current
Total liabilities
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4,661 shares issued and
−Removed: outstanding at December 31, 2022 and 2023
+Added: outstanding at December 31, 2024 and December 31, 2023
125,000 shares authorized;
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of restricted stock;
−Removed: and 38,662 shares issued and outstanding at December 31, 2023, including 720 shares of restricted stock
+Added: and 38,661 shares issued and outstanding
+Added: at December 31, 2023, including 720 shares of restricted stock
Additional paid-in capital
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Total liabilities and stockholders’ equity
−Removed: See accompanying Notes to Consolidated Financial Statements.
+Added: See accompanying Notes to the Consolidated Financial Statements.
MARCHEX, INC.
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Consolidated Statements of Operations
−Removed: Years Ended December 31,
(in thousands, except per share amounts)
−Removed: Service costs (1)(3)
+Added: Year Ended December 31,
+Added: Cost of revenue
Sales and marketing
2 unchanged sentences
Amortization of intangible assets from acquisitions
−Removed: Acquisition and disposition related benefits
+Added: Acquisition and disposition related costs
Total operating expenses
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Interest income (expense) and other, net
−Removed: Loss before provision for income taxes
+Added: Loss before income tax expense
Income tax expense
Net loss applicable to common stockholders
−Removed: Basic and diluted net loss per Class A share
−Removed: applicable to common stockholders
−Removed: Basic and diluted net loss per Class B share
+Added: Basic and diluted net loss per Class A and B share
applicable to common stockholders
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applicable to common stockholders:
−Removed: (1) Excludes amortization of intangibles from acquisitions
−Removed: (2) Components of amortization of intangibles from acquisitions:
−Removed: Service costs
−Removed: Sales and marketing
−Removed: (3) Components of related party support services fee recovery
−Removed: Service costs
−Removed: Sales and marketing
−Removed: Product development
−Removed: General and administrative
−Removed: See accompanying Notes to Consolidated Financial Statements.
+Added: See accompanying Notes to the Consolidated Financial Statements.
MARCHEX, INC.
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Consolidated Statements of Stockholders’ Equity
−Removed: Treasury stock
−Removed: stockholders ’
(in thousands)
+Added: stockholders ’
Balance at December 31, 2022
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net
+Added: Retirements of treasury stock
Stock-based compensation from options and restricted stock, net of forfeitures
−Removed: Repurchase and retirement of treasury stock
−Removed: Issuance of Class B common stock in connection with prior deferred issuance from acquisition
−Removed: Settlement of a contractual obligation
Balance at December 31, 2023
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Stock-based compensation from options and restricted stock, net of forfeitures
−Removed: Repurchase and retirement of treasury stock
+Added: Issuance of Class B common stock in connection with prior deferred issuance from acquisition
Balance at December 31, 2024
−Removed: See accompanying Notes to Consolidated Financial Statements.
+Added: See accompanying Notes to the Consolidated Financial Statements.
MARCHEX, INC.
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Consolidated Statements of Cash Flows
−Removed: Years Ended December 31,
(in thousands)
+Added: Year Ended December 31,
Cash flows from operating activities:
Net loss applicable to common stockholders
−Removed: Adjustments to reconcile net loss to net cash provided by operating activities:
+Added: Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation
−Removed: Allowance for doubtful accounts and customer credits
+Added: Allowance for credit losses
Deferred income taxes
+Added: Loss on the disposal of capital assets
Stock-based compensation
−Removed: Gain (or loss) on disposal of fixed assets
Change in certain assets and liabilities:
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Accounts payable
−Removed: Accrued expenses and other current liabilities
+Added: Accrued compensation, other accrued, and other liabilities
Deferred revenue and deposits
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Proceeds from sales of property and equipment
−Removed: Net cash used in provided by investing activities
+Added: Net cash used in investing activities
Cash flows from financing activities:
−Removed: Settlement of a contractual obligation
−Removed: Finance lease principal payments
Proceeds from exercises of stock options, issuance and vesting of restricted stock and employee stock purchase plan, net
+Added: Repayments under finance lease liabilities and related obligations
Net cash used in financing activities
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Supplemental disclosure of cash flow information:
−Removed: Foreign government paycheck assistance and rent subsidies (operating activities)
−Removed: Cash paid for operating leases (operating activities)
−Removed: Cash paid during the period for income taxes, net of refunds
−Removed: Supplemental disclosure of non-cash investing and financing activities:
−Removed: Settlement of a contractual obligation
−Removed: See accompanying Notes to Consolidated Financial Statements.
+Added: Cash paid for income taxes
+Added: Cash paid for interest
+Added: Non-cash purchases of property and equipment
+Added: See accompanying Notes to the Consolidated Financial Statements.
MARCHEX, INC.
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Notes to Consolidated Financial Statements
−Removed: Description of Business and Summary of Significant Accounting Policies and Practices
+Added: Description of Business and Summary of Significant Accounting Policies
(a) Description of Business and Basis of Presentation
Marchex, Inc.
−Removed: (the “Company”) was incorporated in the state of Delaware on January 17, 2003.
+Added: was incorporated in the state of Delaware on January 17, 2003.
The Company is a conversation intelligence company that harnesses the power of AI and conversational intelligence to provide actionable insights aligned with prescriptive vertical market data analytics, driving operational excellence and revenue acceleration.
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Through our prescriptive analytics solutions, we enable the alignment of enterprise strategy, empowering businesses to increase revenue through informed decision-making and strategic execution.
−Removed: In October 2020, the Company sold its interests in certain assets related to its Local Leads Platform, Call Marketplace and other assets not related to core conversational analytics and sales engagement solutions.
−Removed: In connection with the divestiture, the Company entered into an administrative support services agreement with the related party purchaser pursuant to which the Company will provide services to the related party purchaser for a support service fee.
−Removed: Divestiture Support Services Agreement of the Notes to the Consolidated Financial Statements for additional information.
−Removed: Basis of Presentation
−Removed: The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.
+Added: The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.
The preparation of our Consolidated Financial Statements requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
−Removed: The Company has used estimates related to several financial statement amounts, including revenues, allowance for doubtful accounts, useful lives for property and equipment and intangible assets, valuation of intangible assets, the fair value of stock options awards, the impairment of goodwill, and the valuation allowance for deferred tax assets.
+Added: The Company has used estimates related to several financial statement amounts, including revenues, the fair value of stock options awards, and the impairment of goodwill.
Actual results could differ from those estimates.
−Removed: (b) Cash and Cash Equivalents
+Added: (b) Going Concern
+Added: Based on our operating plans we believe that our resources will be sufficient to fund our operations, including any investments in strategic initiatives, for at least twelve months from March 14, 2025 , the date of financial statement issuance.
+Added: The Company considers any substantial doubt raised from recent net losses from operations to be alleviated by management's future operating plans, which consist of strategies for product innovation, increased sales, and cost cutting and efficiency efforts.
+Added: When evaluating the Company's ability to continue as a going concern, management analyzed our strong working capital and cash position, positive momentum from year over year operating performance, and absence of any internal or external matters outstanding that would cause operating plans to be significantly revised.
+Added: (c) Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.
Cash equivalents consist primarily of money market funds.
−Removed: (c) Fair Value of Financial Instruments
−Removed: The Company had the following financial instruments as of December 31, 2022 and 2023 :
−Removed: cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities.
−Removed: The carrying value of these financial instruments approximates their fair value based on the liquidity of these financial instruments and their short-term nature.
+Added: The Company maintains cash balances with large financial institutions in excess of federally insured limits.
+Added: (d) Fair Value of Financial Instruments
+Added: The carrying value of financial instruments approximates their fair value based on the liquidity of these financial instruments and their short-term nature.
Further, these financial instruments are considered at Level 1 fair value with observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
−Removed: The following table provides information about the fair value of our cash and cash equivalents balance:
−Removed: Years Ended December 31,
−Removed: (In Thousands)
−Removed: Level 1 Assets:
−Removed: Money market funds
−Removed: Total cash and cash equivalents
Assets, liabilities, and operations of foreign subsidiaries are recorded based on the functional currency of the entity.
For a majority of our foreign operations, the functional currency is the U.S.
−Removed: Assets and liabilities denominated in other than the functional currency is remeasured each month with the remeasurement gain or loss recorded in Interest income (expense) and other, net in the Consolidated Statements of Operations.
−Removed: (d) Accounts Receivable
+Added: Assets and liabilities denominated in a currency other than the functional currency are remeasured each month with the remeasurement gain or loss recorded in Interest income (expense) and other, net in the Consolidated Statements of Operations.
+Added: (e) Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest.
−Removed: Accounts receivable balances are presented net of allowance for doubtful accounts.
−Removed: Allowance for Doubtful Accounts
−Removed: The allowance for doubtful accounts is the Company’s best estimate of the amount of expected credit losses in existing accounts receivable.
+Added: Accounts receivable balances are presented net of allowance for credit losses.
+Added: Allowance for Credit Losses
+Added: The allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in existing accounts receivable.
The Company determines the allowance based on analysis of historical bad debts, customer concentrations, customer creditworthiness and current economic trends.
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Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
−Removed: The allowance for doubtful accounts activity for the periods indicated is as follows:
−Removed: (In Thousands)
−Removed: December 31, 2022
−Removed: December 31, 2023
Allowance for Customer Credits
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The Company determines the allowance for customer credits based on analysis of historical credits and expected revenue adjustments.
−Removed: The allowance for customer credits activity for the periods indicated is as follows:
−Removed: (In Thousands)
−Removed: charged against
−Removed: December 31, 2022
−Removed: December 31, 2023
−Removed: (e) Property and Equipment
+Added: (f) Property and Equipment
Property and equipment are stated at cost.
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Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful life of the software, generally averaging three years .
−Removed: We capitalized software development costs of $ 1.4 million and $ 0.4 million for the year ended December 31, 2022 and 2023 , respectively.
+Added: We capitalized $ 47.2 thousand in software development costs for the year ended December 31, 2024 and $ 0.4 million for the year ended December 31, 2023 .
The Company determines whether an arrangement is a lease or contains a lease at inception of the arrangement.
6 unchanged sentences
Goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment at least annually on November 30, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired.
−Removed: (h) Impairment or Disposal of Long-Lived Assets
+Added: No impairment was recognized for the years ended December 31, 2024 and 2023 .
+Added: (i) Impairment or Disposal of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
−Removed: Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.
+Added: Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the primary asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds fair value.
Assets to be disposed of would be separately presented on the Company's Consolidated Balance Sheets and reported at the lower of their carrying amount or fair value less costs to sell, and no longer depreciated.
−Removed: No impairment was recognized in either 2022 or 2023.
−Removed: (i) Revenue Recognition
+Added: No impairment was recognized for the years ended December 31, 2024 and 2023 .
+Added: (j) Revenue Recognition
We generate the majority of our revenues from conversational intelligence product offerings.
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The Company establishes an allowance for customer credits, which is included in Accounts receivable, net in the Company's Consolidated Balance Sheets, using its best estimate of the amount of expected future reductions in customers’ payment obligations related to delivered services based on analysis of historical credits and expected revenue adjustments.
−Removed: The balance associated with the allowance for customer credits in the Company’s Consolidated Balance Sheet was $ 84.0 thousand and $ 111.0 thousand as of December 31, 2022 and 2023, respectively.
−Removed: The revenue recognized but not yet invoiced (unbilled AR) in the Company's Consolidated Balance Sheets was $ 2.1 million and $ 1.5 million as of December 31, 2022 and 2023.
−Removed: Customer payments received in advance of revenue recognition are considered contract liabilities and are recorded as deferred revenue.
−Removed: The deferred revenue balance in the Company’s Consolidated Balance Sheets as of December 31, 2022 and 2023, was $ 1.4 million and $ 1.2 million , respectively.
−Removed: During the year ended December 31, 2022 and 2023, revenue recognized that was included in the contract liabilities balances at the beginning of the period was $ 1.1 million and $ 1.3 million , respectively.
The majority of the Company’s total revenue is derived from contracts that include consideration that is variable in nature.
−Removed: The variable elements of these contracts primarily include the number of transactions (for example, the number qualified phone calls).
+Added: The variable elements of these contracts primarily include the number of transactions (for example, the number of qualified phone calls).
For contracts with an effective term greater than one year, the Company applies the standard’s practical expedient that permits the exclusion of disclosure of the value of unsatisfied performance obligations for these contracts as the Company’s right to consideration corresponds directly to the value provided to the customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance obligations.
5 unchanged sentences
In addition, the deferred contract cost asset is assessed for impairment on a periodic basis.
−Removed: The Company’s contract acquisition costs are included in other assets, net in the Company's Consolidated Balance Sheets.
+Added: The Company’s contract acquisition costs are included in O ther assets, net in the Company's Consolidated Balance Sheets.
The Company is applying the standard’s practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to acquire certain contracts.
−Removed: As of December 31, 2022 and 2023, the Company had $ 0.2 million and $ 0.3 million of net deferred contract costs, respectively, and the accumulated amortization associated with these costs was $ 1.5 million and $ 1.6 million for the year ended December 31, 2022 and 2023 , respectively.
−Removed: (j) Service Costs
−Removed: Our service costs represent the cost of providing our services to our customers.
−Removed: These costs primarily consist of telecommunication costs, including the use of phone numbers relating to our services;
−Removed: colocation service charges of our network equipment;
+Added: (k) Cost of Revenue
+Added: Our cost of revenue represents the cost of providing our services to our customers.
+Added: These costs primarily consist of cloud computing and hosting costs, telecommunication costs, including the use of phone numbers relating to our services;
bandwidth and software license fees;
1 unchanged sentence
and payroll and related expenses of personnel, including stock based compensation.
−Removed: (k) Advertising Expenses
+Added: The Company has historically reported these costs under the caption "service costs" on the Consolidated Statement of Operations, but determined that the change to "cost of revenue" on a go-forward basis, beginning on December 31, 2024, better aligns the Company's financial reporting to its industry and competitors for comparison.
+Added: (l) Advertising Expenses
Advertising costs are expensed as incurred and include mobile and online advertising and related outside marketing activities, including sponsorships and trade shows.
1 unchanged sentence
Advertising costs were approximately $ 0.4 million and $ 0.7 million for the years ended December 31, 2024 and 2023 , respectively.
−Removed: (l) Product Development
+Added: (m) Product Development
Product development costs consist primarily of expenses incurred by the Company in the research and development, creation, and enhancement of the Company’s products and services.
Research and development costs are expensed as incurred and include compensation and related expenses, costs of computer hardware and software, and costs incurred in developing features and functionality of the services.
−Removed: For the periods presented, substantially all of the product development expenses are research and development.
−Removed: Product development costs are expensed as incurred or capitalized into property and equipment in accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other .
−Removed: FASB ASC Topic 350 requires that cost incurred in the preliminary project and post-implementation stages of an internal use software project be expensed as incurred and that certain costs incurred in the application development stage of a project be capitalized.
−Removed: (m) Income Taxes
+Added: For the periods presented, substantially all of the product development expenses are related to research and development.
+Added: Product development costs are expensed as incurred or capitalized into property and equipment in accordance with FASB ASC 350.
+Added: ASC 350 requires that cost incurred in the preliminary project and post-implementation stages of an internal use software project be expensed as incurred and that certain costs incurred in the application development stage of a project be capitalized.
+Added: (n) Income Taxes
The Company utilizes the asset and liability method of accounting for income taxes.
2 unchanged sentences
The effect on deferred tax assets and liabilities of a change in tax law is recognized in results of operations in the period that includes the enactment date.
−Removed: (n) Stock-Based Compensation
+Added: (o) Defined Contribution 401(k) Plan
+Added: The Company maintains voluntary defined contribution plans, which are qualified, covering employees that meet eligibility requirements.
+Added: Eligible employees may elect to defer and contribute a portion of their eligible compensation to the plans, not to exceed the dollar amounts set by applicable laws.
+Added: Cash contributions by the Company were approximately $ 0.2 million for both the years ended December 31, 2024 and 2023 .
+Added: (p) Stock-Based Compensation
The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense, over the vesting or service period, as applicable, of the stock award using the straight-line method.
The Company accounts for forfeitures as they occur.
−Removed: (o) Concentrations
−Removed: The Company maintains substantially all of its cash and cash equivalents with two financial institutions and are all considered at Level 1 fair value with observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
−Removed: The Company has one customer that represents more than 10% of consolidated revenue for the year ended December 31, 2022 and 2023.
−Removed: At December 31,
−Removed: (In Percentages)
−Removed: The Company has one customer that represents more than 10% of consolidated accounts receivable for the year ended December 31, 2022 and 2023.
−Removed: At December 31,
−Removed: (In Percentages)
−Removed: (p) Net Income (Loss) Per Share
−Removed: The Company computes net income (loss) per share of Class A and Class B common stock using the two class method.
−Removed: Under the provisions of the two class method, basic net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the year.
−Removed: Diluted net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period.
−Removed: The computation of the diluted net income (loss) per share of Class B common stock assumes the conversion of Class A common stock to Class B common stock, while the diluted net income (loss) per share of Class A common stock does not assume the conversion of those shares.
−Removed: In accordance with the two class method, the undistributed earnings (losses) for each year are allocated based on the contractual participation rights of the Class A and Class B common shares and the restricted shares as if the earnings for the year had been distributed.
−Removed: Considering the terms of the Company’s charter which provides that, if and when dividends are declared on its common stock in accordance with Delaware General Corporation Law, equivalent dividends shall be paid with respect to the shares of Class A common stock and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in the Company’s net assets in the event of liquidation, the Company has allocated undistributed earnings (losses) on a proportionate basis.
+Added: (q) Net Loss Per Share
+Added: The Company computes net loss per share of Class A and Class B common stock using the two class method.
+Added: Under the provisions of the two class method, basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the year.
+Added: Diluted net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period.
+Added: The computation of the diluted net loss per share of Class B common stock assumes the conversion of Class A common stock to Class B common stock, while the diluted net loss per share of Class A common stock does not assume the conversion of those shares.
+Added: In accordance with the two class method, the undistributed losses for each year are allocated based on the contractual participation rights of the Class A and Class B common shares and the restricted shares as if the losses for the year had been distributed.
+Added: Considering the terms of the Company’s charter which provides that, if and when dividends are declared on its common stock in accordance with Delaware General Corporation Law, equivalent dividends shall be paid with respect to the shares of Class A common stock and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in the Company’s net assets in the event of liquidation, the Company has allocated undistributed losses on a proportionate basis.
Stockholders' Equity of the Notes to Consolidated Financial Statements for additional information.
Instruments granted in unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities prior to vesting.
−Removed: As such, the Company’s restricted stock awards are considered participating securities for purposes of calculating earnings per share.
+Added: As such, the Company’s restricted stock awards are considered participating securities for purposes of calculating loss per share.
Under the two class method, dividends paid on unvested restricted stock are allocated to these participating securities and therefore impact the calculation of amounts allocated to common stock.
−Removed: The following table presents the computation of basic net loss per share for the periods ended:
−Removed: Years Ended December 31,
+Added: (r) Guarantees
+Added: FASB ASC 460, Guarantees, provides accounting guidance surrounding liability recognition and disclosure requirements related to guarantees.
+Added: In the ordinary course of business, the Company is not subject to potential obligations under guarantees that fall within the scope of ASC 460 except for standard indemnification provisions that are contained within many of the Company’s agreements, and give rise only to the disclosure requirements prescribed by ASC 460.
+Added: In certain agreements, the Company has agreed to indemnification provisions of varying scope and terms with customers, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company and intellectual property infringement claims made by third parties.
+Added: As a result of these provisions, the Company may from time to time provide certain levels of financial support to contract parties to seek to minimize the impact of any associated litigation in which they may be involved.
+Added: To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities therefore have been recorded in the accompanying Consolidated Financial Statements.
+Added: However, the maximum potential amount of the future payments the Company could be required to make under these indemnification provisions could be material.
+Added: (s) Recent Accounting Pronouncement Not Yet Effective
+Added: In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures , which requires public entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid.
+Added: ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be applied on a prospective basis, with early adoption permitted.
+Added: The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.
+Added: In January 2025, the FASB issued ASU 2025-01, which updates the effective date of the November 2024 issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires public entities to improve disclosures about their expenses and provide more detailed information about the types of expenses in commonly presented expense captions.
+Added: ASU 2024-03 is now effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted.
+Added: The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.
+Added: Revenue Recognition
+Added: The majority of the Compan y’s customers are invoiced on a monthly basis following the month of the delivery of services and are required to make payments under standard credit terms.
+Added: Net accounts receivable, including unbilled accounts receivable, consists of the following:
+Added: (In Thousands)
+Added: Accounts receivable:
+Added: Allowance for expected credit losses
+Added: Accounts receivable, net
+Added: Accounts receivable, net was $ 8.4 million as of January 1, 2023, which included Unbilled accounts receivable of $ 2.1 million.
+Added: Customer payments received in advance of revenue recognition are considered contract liabilities and are recorded as deferred revenue.
+Added: The deferred revenue balance and revenue recognized that was included in these contract liabilities at the beginning of the period consists of the following:
+Added: (In Thousands)
+Added: Deferred revenue and deposits
+Added: Revenue recognized in the period from contract liability at beginning of period
+Added: The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales incentive compensation including commissions, are generally deferred and amortized to sales and marketing expense over the estimated life of the relevant customer relationship.
+Added: The Company’s contract acquisition costs shown below consist of $ 0.8 million in Prepaid expenses and other current assets and $ 2.6 million in Other assets, net on the December 31, 2024 Consolidated Balance Sheet.
+Added: The full gross balance was included in Other assets, net at December 31, 2023.
+Added: The net amounts consist of the following:
+Added: (In Thousands)
+Added: Contract assets:
+Added: Gross balance
+Added: Accumulated amortization
+Added: Contract assets, net
+Added: Segment Reporting and Geographic Information
+Added: Operating segments are revenue-producing components of the enterprise for which separate financial information is produced internally for the Company’s management.
+Added: For the years ended December 31, 2024 and 2023 , the Company operated in a single segment comprised of its conversational analytics and related solutions.
+Added: In accordance with ASC 280, Segment Reporting , Edwin Miller, Chief Executive Officer , functions as the Company's chief operating decision maker for segment reporting purposes.
+Added: In November 2023, the FASB issued ASU 2023-07, Segment Reporting , which improved reportable segment disclosure requirements, on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses.
+Added: The Company adopted ASU 2023-07 during the year ended December 31, 2024 with no material impact to the Company's Consolidated Financial Statements.
+Added: Long-lived assets by geographical region are based on the location of the legal entity that owns the assets.
+Added: As of December 31, 2024 and 2023, no significant long-lived assets were held by entities outside of the U.S.
+Added: Revenues from customers by geographical areas are tracked on the basis of the location of the customer.
+Added: The majority of the Company’s revenue and accounts receivable are derived from domestic sales to customers.
+Added: Revenues by geographic region are as follows:
+Added: Year Ended December 31,
+Added: (In Percentages)
+Added: United States
+Added: Canada and other countries
+Added: Concentrations
+Added: The Company maintains substantially all of its cash and cash equivalents with two financial institutions.
+Added: The Company has one customer that generally represents more than 10% of consolidated revenue.
+Added: The table below sets forth the percentage of the Company's consolidated revenue that was attributed to this customer for the periods presented below:
+Added: Year Ended December 31,
+Added: (In Percentages)
+Added: The Company has one customer that generally represents more than 10% of consolidated accounts receivable.
+Added: The Company also has a significant concentration of credit risk arising from receivables due from a network of independent dealers that is above the 10 % threshold.
+Added: These dealers, while independently operated, sell the same brands and collectively represent a substantial portion of the Company's receivables.
+Added: The table below sets forth the percentage of the Company's outstanding receivable balance that was attributed to this customer, and attributed to the aggregated balance due from the independent dealer network, as of the periods presented below:
+Added: (In Percentages)
+Added: Concentration type:
+Added: Independent dealer network A
+Added: Fair Value of Financial Instruments
+Added: The Company had the following financial instruments as of December 31, 2024 and 2023 :
+Added: cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities.
+Added: The carrying value of these financial instruments approximates their fair value based on the liquidity of these financial instruments and their short-term nature.
+Added: Further, these financial instruments are considered at Level 1 fair value with observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
+Added: The following table provides information about the fair value of our cash and cash equivalents balance:
+Added: (In Thousands)
+Added: Level 1 assets:
+Added: Money market funds
+Added: Total cash and cash equivalents
+Added: Stockholders' Equity
+Added: (a) Common Stock and Authorized Capital
+Added: The total number of shares of all classes of capital stock which the Company has authority to issue is 138,500,000 shares, consisting of (i) 137,500,000 shares of common stock, par value $ 0.01 per share, of which 12,500,000 shares are designated Class A common stock and 125,000,000 shares are designated Class B common stock, and (ii) 1,000,000 shares of preferred stock, par value $ 0.01 per share.
+Added: The Company’s board of directors has the authority to designate rights, privileges and restrictions of each such series, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series.
+Added: The Company has two classes of authorized common stock:
+Added: Class A common stock and Class B common stock.
+Added: Except with respect to voting rights, the Class A and Class B shares have identical rights.
+Added: Each share of Class A common stock is entitled to twenty-five votes per share, and each share of Class B common stock is entitled to one vote per share.
+Added: Each share of Class A common stock is convertible at the holder’s option into one share of Class B common stock.
+Added: In accordance with the stockholders’ agreement signed by the founding Class A common stockholders, the following provisions survived the Company’s initial public offering:
+Added: Class A stockholders other than Russell C.
+Added: Horowitz may only sell, assign or transfer their Class A stock to existing Class A stockholders or to the Company and in the event of transfers of Class A stock not expressly permitted by the stockholders’ agreement, such shares of Class A stock shall be converted into shares of Class B common stock.
+Added: In November 2014, the Company’s board of directors authorized a new share repurchase program (“2014 Repurchase Program”), which superseded and replaced any prior repurchase programs.
+Added: Under the 2014 Repurchase Program, the Company is authorized to repurchase up to 3,000,000 shares of the Company’s Class B common stock in the aggregate through open market and privately negotiated transactions, at such times and in such amounts as the Company deems appropriate.
+Added: Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.
+Added: The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions.
+Added: The 2014 Repurchase Program does not have an expiration date and may be expanded, limited or terminated at any time without prior notice.
+Added: The Company made no repurchases under the 2014 Repurchase Program for the years ended December 31, 2024 and 2023.
+Added: Shares repurchased but not yet retired by the Company are classified as treasury stock on the Consolidated Balance Sheet before retirement.
+Added: Retirement of treasury stock results in reductions to common stock and additional paid-in capital.
+Added: (b) Stock Option Plan
+Added: The Company’s active stock incentive plan (“2021 Plan”), which was established in 2021, allows for grants of stock options, restricted stock units and restricted stock awards to eligible participants and such options may be designated as incentive or non-qualified stock options at the discretion of the 2021 Plan’s Administrative Committee.
+Added: Prior to the 2021 Plan, the Company granted stock-based awards under its 2012 Stock Incentive Plan (“2012 Plan”).
+Added: No further awards were made under the 2012 Plan after December 31, 2021.
+Added: The 2021 Plan authorizes up to 3,500,000 shares of Class B common stock that may be issued with respect to awards granted under the 2021 Plan, and provides that the total number of shares of Class B common stock for which options designated as incentive stock options may be granted shall not exceed 3,500,000 shares.
+Added: Annual increases to each of these share limits are to be added on the first day of each fiscal year beginning on January 1, 2022 equal to 3 % of the outstanding common stock (including for this purpose any shares of common stock issuable upon conversion of any outstanding capital stock of the Company) or in the case of incentive stock options, the lesser of (i) 2,000,000 shares of Class B common stock, or (ii) 3 % of the outstanding common stock (including for this purpose any shares of common stock issuable upon conversion of any outstanding capital stock of the Company), or (iii) such number as determined by the Company’s board of directors.
+Added: As a result of this provision, the authorized number of shares available under the 2021 Plan was increased by 1,299,680 and 1,294,725 on January 1, 2024 and 2023, respectively, bringing the aggregate authorized number of shares available under the 2021 Plan to 7,355,971 and 6,056,291 on January 1, 2024 and 2023 , respectively.
+Added: The Company may issue new shares or reissue treasury shares for stock option exercises and restricted stock grants.
+Added: Generally, stock options have 10 -year terms and vest 25 % each year either annually or quarterly, over a 4 -year period and restricted stock awards and units vest 25 % each year annually over a 4 -year period.
+Added: The Company did no t grant any options with exercise prices less than the then current market value during 2024 or 2023.
+Added: The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense over the vesting or service period, as applicable, of the stock award using the straight-line method.
+Added: The Company accounts for forfeitures as they occur.
+Added: Stock-based compensation has been included in the same lines as compensation paid to the same employees in the Consolidated Statements of Operations.
+Added: Stock-based compensation expense was included in the following operating expense categories:
+Added: Year Ended December 31,
+Added: (In Thousands)
+Added: Cost of revenue
+Added: Sales and marketing
+Added: Product development
+Added: General and administrative
+Added: Total stock-based compensation
+Added: Stock-based compensation expense as reported in the Consolidated Statements of Operations for the year ended December 31, 2023, varies from the reported Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2023, because of a reclassification of a $ 0.8 million payment owed to a former employee in connection with the Sonar acquisition.
+Added: This payment was to be made, at the Company's election, in any mix of cash or restricted stock.
+Added: The Company had previously determined its intent and ability to settle this obligation in restricted stock;
+Added: however, in December 2023, the Company chose to settle in cash, resulting in a reclassification of this payment obligation from Additional paid-in capital to Other accrued expenses and current liabilities in the Consolidated Statements of Balance Sheets.
+Added: This caused a decrease to Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity, with no corresponding decrease in stock-based compensation as reported in the Consolidated Statements of Operations, for the year ended December 31, 2023.
+Added: The Company uses the Black-Scholes option pricing model to estimate the per share fair value of stock option grants with time-based vesting.
+Added: The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values.
+Added: For the years ended December 31, 2024 and 2023 , the expected life of each award granted was determined based on historical experience with similar awards, giving consideration to contractual terms, anticipated exercise patterns, and vesting schedules.
+Added: Expected volatility is based on historical volatility levels of the Company’s Class B common stock and the expected volatility of companies in similar industries that have similar vesting and contractual terms.
+Added: The risk-free interest rate is based on the implied yield currently available on U.S.
+Added: Treasury issues with terms approximately equal to the expected life of the option.
+Added: The Company uses an expected annual dividend yield in consideration of the Company’s common stock dividend payments, which we consider to be zero .
+Added: The following assumptions were used in determining the fair value of time-vested stock options granted for the periods indicated:
+Added: Year Ended December 31,
+Added: Expected life (in years)
+Added: Risk-free interest rate
+Added: 3.93 % - 4.43 %
+Added: 3.86 % - 3.93 %
+Added: Expected volatility
+Added: Stock option activity during the period is as follows:
+Added: (in thousands)
+Added: exercise price
+Added: Weighted average
+Added: contractual term
+Added: Balance at December 31, 2023
+Added: Options granted
+Added: Options forfeited
+Added: Options expired
+Added: Options exercised
+Added: Balance at December 31, 2024
+Added: As of December 31, 2024, there was $ 3.1 million of unrecognized compensation costs related to stock options.
+Added: These costs are expected to be recognized over the weighted average period of 2.59 years.
+Added: Restricted stock awards and restricted stock unit activity during the period is as follows:
+Added: (In Thousands)
+Added: Weighted Average
+Added: Unvested at December 31, 2023
+Added: Unvested at December 31, 2024
+Added: Restricted stock awards and restricted stock units are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock.
+Added: Restricted stock awards and restricted stock units are expensed on a straight-line basis over the vesting or service period, as applicable, and forfeitures are recognized as they occur.
+Added: Restricted stock units entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain service conditions.
+Added: As of December 31, 2024, there was $ 0.3 million of unrecognized compensation costs related to restricted stock.
+Added: These costs are expected to be recognized over the weighted average period of 1.08 years.
+Added: Net Loss Per Share
+Added: The Company computes net loss per share of Class A and Class B common stock using the two class method.
+Added: Under the provisions of the two class method, basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the year.
+Added: Diluted net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period.
+Added: The computation of the diluted net loss per share of Class B common stock assumes the conversion of Class A common stock to Class B common stock, while the diluted net loss per share of Class A common stock does not assume the conversion of those shares.
+Added: The following table presents the computation of basic net loss per share applicable to common stockholders for the periods ended:
+Added: Year Ended December 31,
(In Thousands, Except Per Share Amounts)
1 unchanged sentence
Net loss applicable to common stockholders
−Removed: Weighted average number of shares outstanding used to calculate basic net loss per share
+Added: Weighted average number of shares outstanding - basic
Basic net loss per share applicable to common stockholders
The following table presents the computation of diluted net loss per share for the periods ended:
−Removed: Years Ended December 31,
+Added: Year Ended December 31,
(In Thousands, Except Per Share Amounts)
1 unchanged sentence
Net loss applicable to common stockholders
−Removed: Reallocation of net loss for Class A shares as a result of conversion of Class A to Class B shares
+Added: Reallocation of net loss for Class A to Class B shares
Diluted net loss applicable to common stockholders:
−Removed: Weighted average number of shares outstanding used to calculate basic net loss per share
−Removed: Conversion of Class A to Class B common shares outstanding
−Removed: Weighted average number of shares outstanding used to calculate diluted net loss per share
+Added: Weighted average number of shares outstanding - basic
+Added: Conversion of Class A to B common shares outstanding
+Added: Weighted average number of shares outstanding - diluted
Diluted net loss per share applicable to common stockholders
−Removed: The computation of diluted net loss per share excludes the following because their effect would be anti-dilutive (in thousands):
−Removed: • For the years ended December 31, 2022 and 2023, outstanding options to acquire 3,766 and 5,367 shares, respectively, of Class B common stock.
−Removed: • For the years ended December 31, 2022 and 2023, 1,105 and 720 shares of unvested Class B restricted common shares, respectively.
−Removed: • For the years ended December 31, 2022 and 2023, 535 and 63 restricted stock units, respectively.
−Removed: (q) Guarantees
−Removed: FASB ASC Topic 460, Guarantees provides accounting guidance surrounding liability recognition and disclosure requirements related to guarantees.
−Removed: In the ordinary course of business, the Company is not subject to potential obligations under guarantees that fall within the scope of FASB ASC Topic 460 except for standard indemnification provisions that are contained within many of the Company’s agreements, and give rise only to the disclosure requirements prescribed by FASB ASC Topic 460.
−Removed: In certain agreements, the Company has agreed to indemnification provisions of varying scope and terms with customers, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company and intellectual property infringement claims made by third parties.
−Removed: As a result of these provisions, the Company may from time to time provide certain levels of financial support to contract parties to seek to minimize the impact of any associated litigation in which they may be involved.
−Removed: To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities therefore have been recorded in the accompanying Consolidated Financial Statements.
−Removed: However, the maximum potential amount of the future payments the Company could be required to make under these indemnification provisions could be material.
−Removed: (r) Recent Accounting Pronouncement Not Yet Effective
−Removed: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis.
−Removed: In addition, the amendments clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements.
−Removed: ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
−Removed: The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.
−Removed: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
−Removed: Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires public entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid.
−Removed: ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be applied on a prospective basis , with early adoption permitted.
−Removed: The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.
+Added: Anti-dilutive securities
Property and Equipment
Property and equipment consisted of the following:
−Removed: Years Ended December 31,
(In Thousands)
2 unchanged sentences
Furniture and fixtures
−Removed: Leasehold improvements
Construction in progress
1 unchanged sentence
Property and equipment, net
−Removed: (1) Includes the original cost of fully depreciated fixed assets which was $ 13.6 million at December 31, 2022 .
−Removed: Depreciation and amortization expense related to property and equipment was approximately $ 1.6 million and $ 1.8 million for the years ended December 31, 2022 and 2023, respectively.
−Removed: We procured $ 0.8 million of additional server equipment under new financing lease agreements during the year ended December 31, 2023, with current borrowing of $ 0.8 million .
−Removed: The Company has an operating lease for office space for its corporate headquarters in Seattle, Washington which expires on November 30, 2027 .
−Removed: The Company’s prior lease agreement with respect to office space in Seattle, Washington, as amended, was terminated by the Company effective on March 31, 2023.
−Removed: In the first quarter of 2023, we paid approximately $ 671.0 thousand as provided in the lease for the early termination.
−Removed: The Company also has an operating lease for office space in Wichita, Kansas, which continues until December 2025 with an option to extend the term for two additional periods of three years each.
−Removed: The Company has the option to terminate this lease pursuant to certain terms as specified in the lease without any termination fees if notice is provided.
−Removed: The Company recognizes our operating lease agreements in accordance with ASC 842 and recognizes rent expense on a straight-line basis over the lease term with any lease incentives amortized as a reduction of rent expense over the lease term.
−Removed: Lease cost recognized in the Company’s Consolidated Statements of Operations and other information is summarized as follows:
−Removed: Years Ended December 31,
+Added: Depreciation and amortization expense related to property and equipment was as follows:
+Added: Year Ended December 31,
(In Thousands)
+Added: Depreciation and amortization expense
+Added: The Company has operating leases for its corporate office headquarters in Seattle, Washington, and office space in Wichita, Kansas.
+Added: The Company recognizes its operating lease agreements in accordance with ASC 842, Leases , and recognizes rent expense on a straight-line basis over the lease term with any lease incentives amortized as a reduction of rent expense over the lease term.
+Added: Assets under operating leases are included in Right-of-use lease assets, and the related liabilities are included in Operating lease liability, current and Operating lease liability, non-current on the Consolidated Balance Sheets.
+Added: Assets under finance leases, which primarily represent computer equipment, are subject to a rental agreement for a third-party's utilization of this equipment;
+Added: however, we retain our primary obligation under the original financing terms.
+Added: Therefore, the Company does not have a right-of-use asset, but it does carry the lease liability related to this financed equipment, on the Consolidated Balance Sheets.
+Added: The present value of the rent receivable from the rental agreement is included in Other assets, net , and the related lease liability is included in Other accrued expenses and current liabilities and Finance lease liability, non-current on the Consolidated Balance Sheets.
+Added: Lease cost recognized in the Consolidated Statements of Operations and other lease information is summarized as follows:
+Added: Year Ended December 31,
+Added: (In Thousands)
Operating lease cost
−Removed: Short-term operating lease cost
−Removed: Total operating lease cost
+Added: Finance lease cost:
+Added: Amortization of right-of-use assets
+Added: Interest on lease liabilities
+Added: Variable and short-term lease cost
+Added: Total lease cost
Other information:
Weighted-average remaining lease term - operating leases
+Added: Weighted-average remaining lease term - finance leases
Weighted-average discount rate - operating leases
−Removed: (1) The discount rate used to compute the present value of the total lease liabilities as of December 31, 2022 and 2023 was based on the Company’s estimated incremental borrowing rate of similar secured borrowings available to the Company as of the commencement date of lease.
−Removed: Assets under finance leases, which primarily represent computer equipment, are included in Other assets, net , with the related liabilities included in Lease liability current , and Finance lease, noncurrent on the Company's Consolidated Balance Sheets.
−Removed: As of December 31, 2023 the Company’s operating and financing lease liabilities were as follows:
+Added: Weighted-average discount rate - finance leases
+Added: Cash paid for operating leases
+Added: Cash paid for finance leases
+Added: As of December 31, 2024, the Company’s future payments under operating and finance lease liabilities were as follows:
(In Thousands)
1 unchanged sentence
Finance Leases
+Added: 2029 and thereafter
Gross future lease payments
3 unchanged sentences
Total long-term lease liabilities
−Removed: In the fourth quarter of 2023, we entered into a rental agreement for utilization of our financed server equipment.
−Removed: We retain our primary obligation under the original financing terms.
−Removed: Commitments and Contingencies
−Removed: (a) Commitments
−Removed: The Company has commitments for future payments related to office facilities leases, as well as other contractual obligations primarily related to minimum payments due to outside service providers.
−Removed: The Company leases its office facilities under operating lease agreements in accordance with ASC 842 and recognizes rent expense on a straight-line basis over the lease term with any lease incentive amortized as a reduction of rent expense over the lease term.
−Removed: Future minimum payments are approximately as follows:
+Added: Commitments, Contingencies, and Taxes
+Added: The Company has commitments for future payments related to office facilities and financed equipment leases, as well as other contractual obligations primarily related to minimum payments due to outside service providers.
+Added: For information regarding the Company's lease commitments, see Note 9:
+Added: Leases of the Notes to the Consolidated Financial Statements.
+Added: Future minimum payments on the Company's other contractual obligations are approximately as follows:
(In Thousands)
1 unchanged sentence
Total minimum payments
−Removed: 1) For additional information regarding the Company's facilities operating leases, see Note 3.
−Removed: Leases of the Notes to Consolidated Financial Statements for additional information.
−Removed: (b) Contingencies
−Removed: In the third quarter of 2021, the Company was legally released from our repayment obligation under CARES Act loans (the "Loans") administered by the U.S.
−Removed: Small Business Administration (“SBA”), as our application for loan forgiveness was approved by the SBA.
−Removed: It is possible that the SBA could subsequently audit the forgiven Loans.
−Removed: The Company believes it was eligible to receive the Loans, calculated the loan amounts correctly, spent loan proceeds on allowable uses and is entitled to loan forgiveness.
−Removed: The Company will retain its financial documents relating to the Loans for six years as required.
+Added: Contingencies
The Company from time to time is a party to disputes and legal and administrative proceedings arising from the ordinary course of business.
2 unchanged sentences
See (p) Guarantees section of Note 1:
−Removed: Description of Business and Summary of Significant Accounting Policies and Practices of the Notes to Consolidated Financial Statements for additional information
+Added: Description of Business and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information.
+Added: In certain agreements, the Company has agreed to indemnification provisions of varying scope and terms with customers, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company and intellectual property infringement claims made by third parties.
+Added: As a result of these provisions, the Company may from time to time provide certain levels of financial support to contract parties to seek to minimize the impact of any associated litigation in which they may be involved.
+Added: To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities therefore have been recorded in the accompanying Consolidated Financial Statements.
+Added: However, the maximum potential amount of the future payments the Company could be required to make under these indemnification provisions could be material.
On October 21, 2022, the Shareholder Representatives for the former shareholders of Telmetrics, Inc.
3 unchanged sentences
On March 22, 2023, the plaintiffs filed an amended complaint also seeking substantial punitive damages, followed by a second amended complaint on May 9, 2023.
−Removed: On June 7, 2023, the Company filed a motion to compel arbitration and/or dismiss the second amended complaint.
−Removed: The plaintiffs filed a responsive brief on July 5, 2023, and the Company filed a reply brief on July 26, 2023.
On February 2, 2024, the Magistrate Judge issued a report and recommendation advising the U.S.
District Court Judge to dismiss certain claims from the second amended complaint and to allow other claims to proceed to discovery.
−Removed: The parties filed objections to the report and recommendation on February 16, 2024.
+Added: On July 17, 2024, the U.S.
+Added: District Court Judge adopted portions of the Magistrate Judge's recommendation.
+Added: The parties have begun discovery.
While we believe we have meritorious defenses to this lawsuit and are vigorously defending against it, litigation is inherently uncertain and we cannot currently predict the ultimate outcome of this matter.
While any litigation contains an element of uncertainty, the Company is not aware of any legal proceedings or claims which are pending that the Company believes, based on current knowledge, will have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or liquidity.
−Removed: The components of loss before provision for income taxes consist of the following (in thousands):
−Removed: Years Ended December 31,
+Added: The components of the loss before income tax expense consisted of the following:
+Added: Year Ended December 31,
(In Thousands)
United States
−Removed: Loss before provision for income taxes
−Removed: The provision for income taxes consists of the following (in thousands):
−Removed: Years Ended December 31,
+Added: Loss before income tax expense
+Added: Income tax expense consisted of the following:
+Added: Year Ended December 31,
(In Thousands)
3 unchanged sentences
The Company's income tax expense differed from the amounts computed by applying the U.S.
−Removed: federal statutory rate to loss before provision for income taxes as a result of the following:
−Removed: Years Ended December 31,
+Added: federal statutory rate to the loss before provision for income taxes as a result of the following:
+Added: Year Ended December 31,
(In Thousands)
2 unchanged sentences
State taxes, net of valuation allowance
−Removed: Foreign tax differential
−Removed: Non-deductible transaction costs
+Added: Foreign taxes
+Added: Non-deductible items
Stock-based compensation (1)
−Removed: Gain on CARES Act loan
Valuation allowance
−Removed: Other expenses
+Added: Goodwill tax basis difference
Total income tax expense
(1) Includes non-deductible stock-based compensation and excess tax benefits and shortfalls from stock-based compensation
−Removed: The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below and reflects the 21 % U.S.
−Removed: federal statutory rate for 2022 and 2023 (in thousands):
−Removed: Years Ended December 31,
+Added: The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below and reflect the 21 % U.S.
+Added: federal statutory rate for the years ended December 31, 2024 and 2023:
+Added: As of December 31, 2024
(In Thousands)
1 unchanged sentence
Accrued liabilities not currently deductible
−Removed: Intangible assets- excess of financial statement
−Removed: over tax amortization
+Added: Intangible assets-excess of financial statement over tax amortization
Stock-based compensation
Federal net operating and capital losses
−Removed: State, local and foreign net operating and capital loss carryforwards
Research & experimental tax and other credit carryforwards
8 unchanged sentences
Net deferred tax liabilities
−Removed: As of December 31, 2023, the Company’s federal and state NOL carryforwards were approximately $ 175.9 million and $ 60.1 million , respectively.
−Removed: Of the total federal net operating losses reported, we have accumulated $ 44.2 million with an indefinite life as of December 31, 2023.
−Removed: The remaining federal net operating losses and the state net operating losses will begin to expire in 2027 and 2028 , respectively, for income tax purposes.
−Removed: As of December 31, 2023, the Company’s federal research and development credit carryforwards were $ 4.8 million , which will start expiring in 2029 .
+Added: As of December 31, 2024, the Company’s federal and state net operating loss ("NOL") carryforwards were approximately $ 179.8 million and $ 60.1 million , respectively.
+Added: Of the total federal NOL carryforwards reported, we have accumulated $ 56.7 million with an indefinite life as of December 31, 2024.
+Added: The remaining federal and state NOL carryforwards will begin to expire in 2027 and 2028 , respectively, for income tax purposes.
+Added: As of December 31, 2024, the Company’s federal research and development credit carryforwards were $ 6.5 million , which will begin to expire in 2029 .
The Tax Reform Act of 1986 limits the use of NOL and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.
6 unchanged sentences
This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized.
−Removed: We have included the impact of this provision, which results in a deferred tax asset of approximately $ 1.1 million as of December 31, 2022 and $ 1.8 million as of December 31, 2023.
−Removed: At December 31, 2022 and 2023, the Company recorded a valuation allowance of $ 51.8 million , and $ 54.1 million , respectively, against its federal, state, city and foreign net deferred tax assets, as it believes it is more likely than not that these benefits will not be realized.
−Removed: The net change in the total valuation allowance for each of the years ended December 31, 2022 and 2023 was $( 2.3 ) million and $ 2.2 million , respectively.
−Removed: The Company regularly reviews deferred tax assets to assess whether it is more likely than not that the deferred tax assets will be realized and, if necessary, establishes a valuation allowance for portions of such assets to reduce the carrying value.
+Added: The Company regularly reviews deferred tax assets to assess whether it is more likely than not that its deferred tax assets will be realized and, if necessary, establishes a valuation allowance for portions of such assets to reduce the carrying value.
In assessing whether it is more likely than not that the Company’s deferred tax assets will be realized, factors considered included:
historical taxable income, historical trends related to customer usage rates, projected revenues and expenses, macroeconomic conditions, issues facing the industry, existing contracts, the Company’s ability to project future results and any appreciation of its other assets.
−Removed: The Company incurred taxable losses from 2016 through 2022.
−Removed: Based on the level of historical taxable losses and the uncertainty of projections for future taxable income over the periods for which the deferred tax assets are deductible, with the exception of certain insignificant foreign deferred tax assets, the Company concluded that it is not more likely than not that the gross deferred tax assets will be realized.
+Added: The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.
+Added: The Company considered the future reversal of deferred tax liabilities, carryback potential, projected taxable income, and tax planning strategies as well as its history of taxable income or losses in the relevant jurisdictions in making this assessment.
+Added: Based on the level of historical taxable losses and the uncertainty of projections for future taxable income over the periods for which the deferred tax assets are deductible, with the exception of certain insignificant foreign deferred tax assets, the Company concluded that it is not more likely than not that the gross deferred tax assets will be realized and, accordingly, recorded 100 % valuation allowance against these deferred tax assets as of both December 31, 2024 and 2023.
From time to time, various state, federal and other jurisdictional tax authorities undertake audits of the Company and its filings.
1 unchanged sentence
Resolution of uncertain tax positions will impact the Company’s effective tax rate when settled.
−Removed: The Company does not have any significant interest or penalty accruals.
+Added: The Company does not have any significant accruals for uncertain tax positions including interest or penalties.
The provision for income taxes includes the impact of contingency provisions and changes to contingencies that are considered appropriate.
−Removed: The following table summarizes activity related to tax contingencies from January 1, 2022 to December 31, 2023 which are recorded as an offset to deferred tax assets (in thousands):
−Removed: (In Thousands)
−Removed: Gross tax contingencies—January 1, 2022
−Removed: Gross increases to current period tax positions
−Removed: Gross decreases to tax positions associated with prior periods
−Removed: Gross tax contingencies—December 31, 2022
−Removed: Gross increases to current period tax positions
−Removed: Gross tax contingencies—December 31, 2023
The Company files U.S.
3 unchanged sentences
federal, U.S.
−Removed: state, and foreign tax returns filed for years after 2013 are within the statute of limitations and are under examination or may be subject to examination.
−Removed: Stockholders' Equity
−Removed: (a) Common Stock and Authorized Capital
−Removed: The total number of shares of all classes of capital stock which the Company has authority to issue is 138,500,000 shares, consisting of (i) 137,500,000 shares of common stock, par value $ .01 per share, of which 12,500,000 shares are designated Class A common stock and 125,000,000 shares are designated Class B common stock, and (ii) 1,000,000 shares of preferred stock, par value $ .01 per share.
−Removed: The Company’s board of directors has the authority to designate rights, privileges and restrictions of each such series, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series.
−Removed: The Company has two classes of authorized common stock:
−Removed: Class A common stock and Class B common stock.
−Removed: Except with respect to voting rights, the Class A and Class B shares have identical rights.
−Removed: Each share of Class A common stock is entitled to twenty-five votes per share, and each share of Class B common stock is entitled to one vote per share.
−Removed: Each share of Class A common stock is convertible at the holder’s option into one share of Class B common stock.
−Removed: In accordance with the stockholders’ agreement signed by the founding Class A common stockholders, the following provisions survived the Company’s initial public offering:
−Removed: Class A stockholders other than Russell C.
−Removed: Horowitz may only sell, assign or transfer their Class A stock to existing Class A stockholders or to the Company and in the event of transfers of Class A stock not expressly permitted by the stockholders’ agreement, such shares of Class A stock shall be converted into shares of Class B common stock.
−Removed: In November 2014, the Company’s board of directors authorized a new share repurchase program (the “2014 Repurchase Program”), which supersedes and replaces any prior repurchase programs.
−Removed: Under the 2014 Repurchase Program, the Company is authorized to repurchase up to 3,000,000 shares of the Company’s Class B common stock in the aggregate through open market and privately negotiated transactions, at such times and in such amounts as the Company deems appropriate.
−Removed: Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.
−Removed: The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions.
−Removed: The 2014 Repurchase Program does not have an expiration date and may be expanded, limited or terminated at any time without prior notice.
−Removed: The Company has made no repurchases under the 2014 Repurchase Program for the years ended December 31, 2022 and 2023.
−Removed: Shares repurchased but not yet retired by the Company are classified as treasury stock on the Consolidated Balance Sheet before retirement.
−Removed: Retirement of treasury stock results in reductions to common stock and additional paid-in capital.
−Removed: In November 2018, the Company acquired 100 % of the outstanding stock of Callcap for consideration of approximately $ 25.0 million in cash at closing and approximately 3,400,000 shares of Class B common stock to be issued over the four year period following the acquisition date.
−Removed: The issuance of the shares for 2021 and 2022 was deferred as a result of conditional events occurring as specified in terms of the acquisition.
−Removed: In 2022, we paid $ 1.5 million in cash and agreed to transfer $ 335.0 thousand in cash and/or equipment before November 2023 in exchange for settling our contractual obligation to issue 1,340,000 of such shares.
−Removed: The $ 1.5 million cash consideration was recognized as a financing activity on our Consolidated Statements of Cash Flow for the year ended December 31, 2022.
−Removed: In October 2023, the Company settled its $ 335.0 thousand obligation by transferring equipment with a book value of $ 593.0 thousand and receiving $ 65.0 thousand in cash, which resulted in a loss of approximately $ 193.0 thousand that was recognized within Interest income (expense) and other, net on the Consolidated Statements of Operations for the year ended December 31, 2023, and as a combination of non-cash activity and proceeds from sales of fixed assets on our Consolidated Statements of Cash Flow for the year ended December 31, 2023.
−Removed: The remaining shares issuable for the Callcap acquisition were issued in December 2023.
−Removed: In December 2019, the Company acquired 100 % of the outstanding stock of Sonar for consideration of approximately $ 8.5 million in cash at closing and approximately 1,000,000 shares of Class B common stock to be issued over the three-year period following the acquisition date, which have been issued in their entirety.
−Removed: The Company also agreed to issue up to approximately 389,000 shares of Class B common stock based upon the achievement of certain financial target goals by Sonar in 2020 which were not achieved.
−Removed: (b) Stock Option Plan
−Removed: The Company’s stock incentive plan (the “2021 Plan”), which was established in 2021, allows for grants of stock options, restricted stock units and restricted stock awards to eligible participants and such options may be designated as incentive or non-qualified stock options at the discretion of the 2021 Plan’s Administrative Committee.
−Removed: Prior to the 2021 Plan, the Company granted stock-based awards under its 2012 Stock Incentive Plan (the “2012 Plan”).
−Removed: No further awards were made under the 2012 Plan after December 31, 2021.
−Removed: The 2021 Plan authorizes up to 3,500,000 shares of Class B common stock that may be issued with respect to awards granted under the 2021 Plan, and provides that the total number of shares of Class B common stock for which options designated as incentive stock options may be granted shall not exceed 3,500,000 shares.
−Removed: Annual increases to each of these share limits are to be added on the first day of each fiscal year beginning on January 1, 2022 equal to 3 % of the outstanding common stock (including for this purpose any shares of common stock issuable upon conversion of any outstanding capital stock of the Company) or in the case of incentive stock options, the lesser of (i) 2,000,000 shares of Class B common stock, or (ii) 3 % of the outstanding common stock (including for this purpose any shares of common stock issuable upon conversion of any outstanding capital stock of the Company), or (iii) such number as determined by the Company’s board of directors.
−Removed: As a result of this provision, the authorized number of shares available under the 2021 Plan was increased by 1,261,566 and 1,294,725 on January 1, 2022 and 2023, respectively, bringing the aggregate authorized number of shares available under the 2021 Plan to 6,056,291 .
−Removed: The Company may issue new shares or reissue treasury shares for stock option exercises and restricted stock grants.
−Removed: Generally, stock options have 10 -year terms and vest 25 % each year either annually or quarterly, over a 4 -year period and restricted stock awards and units vest 25 % each year annually over a 4 -year period.
−Removed: The Company did no t grant any options with exercise prices less than the then current market value during 2022 and 2023.
−Removed: The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense over the vesting or service period, as applicable, of the stock award using the straight-line method.
−Removed: The Company accounts for forfeitures as they occur.
−Removed: Stock-based compensation has been included in the same lines as compensation paid to the same employees in the Consolidated Statements of Operations.
−Removed: Stock-based compensation expense was included in the following operating expense categories:
−Removed: Years Ended December 31,
−Removed: (In Thousands)
−Removed: Service costs
−Removed: Sales and marketing
−Removed: Product development
−Removed: General and administrative
−Removed: Total stock-based compensation
−Removed: Stock-based compensation expense as reported in the Consolidated Statements of Operations for the year ended December 31, 2023, varies from the reported Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2023, because of a reclassification of a $ 750.0 thousand payment owed to a former employee in connection with the Sonar acquisition.
−Removed: This payment was to be made, at the Company's election, in any mix of cash or restricted stock.
−Removed: The Company had previously determined its intent and ability to settle this obligation in restricted stock;
−Removed: however, in December 2023, the Company chose to settle in cash, resulting in a reclassification of this payment obligation from Additional paid-in capital to Other accrued expenses and current liabilities in the Consolidated Statements of Balance Sheets.
−Removed: This caused a decrease to Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity, with no corresponding decrease in stock-based compensation as reported in the Consolidated Statements of Operations, f or the year ended December 31, 2023.
−Removed: For the years ended December 31, 2022 and 2023, the income tax benefit related to stock-based compensation included in net loss was $ – million for all periods due to the valuation allowance recorded on the deferred tax assets.
−Removed: The Company uses the Black-Scholes option pricing model to estimate the per share fair value of stock option grants with time-based vesting.
−Removed: The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values.
−Removed: For years ended December 31, 2022 and 2023 , the expected life of each award granted was determined based on historical experience with similar awards, giving consideration to contractual terms, anticipated exercise patterns, and vesting schedules.
−Removed: Expected volatility is based on historical volatility levels of the Company’s Class B common stock and the expected volatility of companies in similar industries that have similar vesting and contractual terms.
−Removed: The risk-free interest rate is based on the implied yield currently available on U.S.
−Removed: Treasury issues with terms approximately equal to the expected life of the option.
−Removed: The Company uses an expected annual dividend yield in consideration of the Company’s common stock dividend payments, which we consider to be zero .
−Removed: The following assumptions were used in determining the fair value of time-vested stock options granted for the periods indicated:
−Removed: Years Ended December 31,
−Removed: Expected life (in years)
−Removed: Risk-free interest rate
−Removed: 2.41 % - 4.30 %
−Removed: 3.86 % - 3.93 %
−Removed: Expected volatility
−Removed: Weighted average expected volatility
−Removed: Stock option, restricted stock award, and restricted stock unit activity during the period is as follows:
−Removed: Restricted Stock available for grant
−Removed: (in thousands)
−Removed: (in thousands)
−Removed: exercise price
−Removed: Weighted average
−Removed: contractual term
−Removed: (in thousands)
−Removed: Balance at December 31, 2022
−Removed: Increase to pool January 1, 2023
−Removed: Options granted
−Removed: Restricted stock granted
−Removed: Restricted stock forfeited
−Removed: Options exercised
−Removed: Options expired
−Removed: Options forfeited
−Removed: Balance at December 31, 2023
−Removed: Options exercisable at December 31, 2023
−Removed: Information related to stock compensation activity during the period indicated is as follows:
−Removed: Years Ended December 31,
−Removed: Weighted average fair value of options granted
−Removed: Intrinsic value of options exercised (in thousands)
−Removed: Total grant date fair value of restricted stock vested (in thousands)
−Removed: At December 31, 2023, there was $ 2.8 million of unrecognized stock option compensation expense related to non-vested awards, which is expected to be recognized over a weighted average period of 3.3 years.
−Removed: Restricted stock awards and restricted stock unit activity during the period is as follows:
+Added: state, and foreign tax returns filed for years after 2013 are within the statute of limitations and are subject to review and adjustment by the Internal Revenue Service.
+Added: The following table summarizes activity related to tax contingencies, which are recorded as an offset to deferred tax assets:
(In Thousands)
−Removed: Weighted Average
−Removed: Unvested at December 31, 2022
−Removed: Unvested at December 31, 2023
−Removed: Restricted stock awards and restricted stock units are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock.
−Removed: Restricted stock awards and restricted stock units are expensed on a straight-line basis over the vesting or service period, as applicable, and forfeitures are recognized as they occur.
−Removed: Restricted stock units entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain service conditions.
−Removed: At December 31, 2023, there was $ 0.8 million of unrecognized restricted stock compensation expense related to non-vested restricted stock, which is expected to be recognized over a weighted average period of 2.0 years.
−Removed: (c) Employee Stock Purchase Plan
−Removed: On March 8, 2013, the Company’s board of directors adopted and in May 2013 the stockholders approved the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which became effective on January 1, 2014.
−Removed: The Company authorized an aggregate of 225,000 shares of Class B common stock for issuance under the plan to participating employees.
−Removed: The 2014 ESPP, which expired on December 31, 2023, provided eligible employees the opportunity to purchase the Company’s Class B common stock at a price equal to 95 % of the closing price on the last business day of each purchase period.
−Removed: The 2014 ESPP permitted eligible employees to purchase amounts up to 15 % of their compensation in the purchase period, and no employee was permitted to purchase stock worth more than $ 25,000 in any calendar year, valued as of the first day of each purchase period.
−Removed: During the year ended December 31, 2022, 18,721 shares were purchased at prices ranging from $ 1.25 to $ 2.18 per share.
−Removed: During the year ended December 31, 2023, 15,174 shares were purchased at prices ranging from 1.29 to 2.01 per share.
−Removed: 401(k) Savings Plan
−Removed: The Company maintains voluntary defined contribution plans, which are qualified, covering employees that meet eligibility requirements.
−Removed: Eligible employees may elect to defer and contribute a portion of their eligible compensation to the plans, not to exceed the dollar amounts set by applicable laws.
−Removed: In 2022 and 2023, cash contributions were made in the amount of $ 0.2 m illion and $ 0.2 million res pectively.
−Removed: Segment Reporting and Geographic Information
−Removed: Operating segments are revenue-producing components of the enterprise for which separate financial information is produced internally for the Company’s management.
−Removed: For the years ended December 31, 2022 and 2023 , the Company operated in a single segment comprised of its conversational analytics and related solutions.
−Removed: Long-lived assets by geographical region are based on the location of the legal entity that owns the assets.
−Removed: As of December 31, 2022 and 2023, no significant long-lived assets were held by entities outside of the United States.
−Removed: Revenues from customers by geographical areas are tracked on the basis of the location of the customer.
−Removed: The majority of the Company’s revenue and accounts receivable are derived from domestic sales to customers.
−Removed: Revenues by geographic region are as follows:
−Removed: Years ended December 31,
−Removed: (In Percentages)
−Removed: United States
−Removed: Canada and other countries
−Removed: Identified Intangible Assets
+Added: Gross tax contingencies—January 1, 2023
+Added: Gross increases to current period tax positions
+Added: Gross tax contingencies—December 31, 2023
+Added: Gross increases to current period tax positions
+Added: Gross tax contingencies—December 31, 2024
+Added: Identifiable Intangible Assets from Acquisitions
+Added: Intangible assets from acquisitions represent customer relationships, acquired technology, non-competition agreements, and trade names.
+Added: These assets are determined to have definite lives and are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset.
+Added: The amortization periods range from one to five years .
+Added: As of December 31, 2024, the net identifiable intangible assets have been fully amortized.
Identifiable intangible assets from acquisitions consisted of the following:
11 unchanged sentences
Total identifiable intangible assets from acquisitions
−Removed: Amortizable intangible assets are amortized on a straight-line basis over their useful lives.
−Removed: Customer relationships, acquired technologies, trade names, and non-compete agreements have a weighted average useful life from date of purchase of 5 years, 3 - 5 years, 2 years, 1 - 3 years, respectively.
−Removed: Aggregate amortization expense incurred by the Company for the year ended December 31, 2022 and 2023 was approximately $ 2.1 million and $ 2.0 million , respectively.
−Removed: The entire remaining net carrying amount of acquired identifiable intangible assets subject to amortization as of December 31, 2023, will be fully amortized within the next year, resulting in estimated amortization expense of $ 0.6 million in 2024 .
−Removed: Divestiture Support Services Agreement
−Removed: In October 2020, the Company sold certain assets related to its Local Leads Platform, Call Marketplace and other assets not related to core conversational analytics.
−Removed: The purchaser was a related party controlled by a shareholder and officers of the Company.
−Removed: In connection with the closing, the Company also entered into an administrative support services agreement with the related party purchaser pursuant to which the Company was to provide services to the related party purchaser for a support ser vices fee, with certain guaranteed payments to the Company in the first year and in the second year following closing.
−Removed: Support services fees related to this arrangement totaled $ 6.4 million for the year ended December 31, 2022 and $ 1.5 million for the year ended December 31, 2023 are included in the Company’s Consolidated Statements of Operations, net of the related expenses, within Service costs , Sales and marketing , Product development , and General and administrative .
−Removed: As of December 31, 2022 and 2023, the net amount due from the purchaser of $ 0.7 million and $ 0.4 million respectively, is included in the Company’s Consolidated Balance Sheet within Prepaid expenses and other current assets .
−Removed: Interest income (expense) and other, net
−Removed: Interest income (expense) and other, net consists of the following (in thousands):
−Removed: Years Ended December 31,
−Removed: Interest Income
−Removed: Interest Expense
−Removed: Foreign Currency
+Added: The amortization of intangible assets is separately presented on the Consolidated Statements of Operations;
+Added: if these amortization costs were not separately stated, they would be reported as follows:
+Added: Year Ended December 31,
+Added: (In Thousands)
+Added: Components of amortization of intangibles from acquisitions:
+Added: Cost of revenue
+Added: Sales and marketing
+Added: Divestiture Support Services Fee
+Added: In October 2020, the Company sold certain assets to a related party controlled by a shareholder and officers of the Company.
+Added: In connection with the closing, th e Company also entered into an administrative support services agreement with the related party purchaser pursuant to which the Company was to provide services to the related party purchaser for a support services fee.
+Added: The support services fees are included in the Consolidated Statements of Operations, net of the related expenses, within C ost of revenue, Sales and marketing , Product development , and General and administrative.
+Added: As of December 31, 2024 and 2023 , the net amount due from the purchaser of $ 40.5 thousand and $ 0.4 million , respectively, is included in the Company’s Consolidated Balance Sheet within Prepaid expenses and other current assets .
+Added: The components of related party support services fees in the Consolidated Statements of Operations are as follows:
+Added: Year Ended December 31,
+Added: (In Thousands)
+Added: Components of related party support services fee recovery
+Added: Cost of revenue
+Added: Sales and marketing
+Added: Product development
+Added: General and administrative
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.