What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-04-01 · 271 added, 316 removed, 1174 unchanged (33% of the section changed)

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Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement and civic leadership.

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement, security teams and civic leadership.

In April 2023, we changed the company name, ShotSpotter, Inc., to SoundThinking, Inc., reflecting our broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions.

As part of the rebranding, we introduced our SafetySmart TM platform that includes five data-driven tools consisting of:

(i) our flagship product, ShotSpotter ® (formerly ShotSpotter Respond), our leading outdoor gunshot detection, location and alerting system trusted by 170 cities and 19 universities and corporations as of December 31, 2023, (ii) CrimeTracer (formerly COPLINK X) a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder (formerly ShotSpotter Investigate) a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter (formerly ShotSpotter Connect), which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, and (v) SafePointe , an AI-based weapons detection system, that we added when we acquired SafePointe in August 2023.

We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses, highways, and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive.

As part of the rebranding, we introduced our SafetySmart TM platform that includes six data-driven tools consisting of:

(i) our flagship product, ShotSpotter ® , our leading outdoor gunshot detection, location and alerting system trusted by 177 cities and 20 universities and corporations as of December 31, 2024, (ii) CrimeTracer, a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder, a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter , which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, (v) PlateRanger powered by Rekor ® , an ALPR and vehicle identification solution that leverages AI and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcement, introduced in July 2024 through a strategic partnership with Rekor Systems, Inc.

and (vi) SafePointe , an AI-based weapons detection system.

We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive.

SoundThinking Labs supports innovative uses of the Company's technology to help protect wildlife and the environment.

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Our software sends gunfire data along with the audio of the triggering sound to our Incident Review Center (“IRC”), where our trained incident review specialists are on duty 24 hours a day, seven days a week, 365 days a year to screen and confirm actual gunfire incidents.

Our trained incident review specialists can supplement alerts with additional tactical information, such as the potential presence of multiple shooters or the use of high-capacity weapons.

Our trained incident review specialists can supplement alerts with

additional tactical information, such as the potential presence of multiple shooters or the use of high-capacity weapons.

Gunshot incidents reviewed by our IRC result in alerts typically sent within approximately 45 seconds of the receipt of the gunfire incident.

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We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis.

Our security solutions, ShotSpotter for Highways, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan.

Our ResourceRouter solution, CaseBuilder Crime Gun (formerly ShotSpotter GCM) an offering of CaseBuilder focused on gun violence, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

Our security solutions, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan.

Our ResourceRouter solution, CaseBuilder an offering of CaseBuilder focused on gun violence, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

We generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area between two lanes.

As of December 31, 2024, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract for over 1,076 square miles, of which over 1,074 square miles had gone live.

Coverage areas under contract for ShotSpotter included 170 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 19 campuses/sites across the United States, South Africa and the Bahamas, including some of the largest cities in the United States.

Coverage areas under contract for ShotSpotter included 177 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 20 campuses/sites across the United States, South Africa, Brazil and the Bahamas, including some of the largest cities in the United States.

As of December 31, 2024, we had 277 SafePointe lanes under contract.

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In August 2023, we acquired SafePointe, a provider of an AI-driven next-generation concealed weapons detection solution and added this technology to our SafetySmart platform.

In July 2024, we announced a strategic partnership to create and launch a new end-to-end vehicle and ALPR public safety solution, “PlateRanger, Powered by Rekor.” This collaboration combines SoundThinking's expertise in acoustic gunshot detection and investigative solutions with Rekor's vehicle ALPR solutions.

Since our founding over 28 years ago, SoundThinking has been and continues to be a purpose-led company.

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For the years ended December 31, 2024, 2023 and 2022, revenues from ShotSpotter represented approximately 71%, 70% and 69% of total revenues, respectively.

Our two current largest customers, the City of New York, and the City of Chicago each accounted for 25% and 9%, respectively, of our total revenues for the year ended December 31, 2023.

Our two largest customers, the City of New York and the City of Chicago, each accounted for 23% and 10%, respectively, of our total revenues for the year ended December 31, 2024.

The City of New York and the City of Chicago each accounted for 25% and 9%, respectively, of our total revenues for the year ended December 31, 2023.

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Virgin Islands).

We had net loss of $2.7 million for the year ended December 31, 2023, net income of $6.4 million for the year ended December 31, 2022, and net loss of $4.4 million for the year ended December 31, 2021.

Our contract with the City of Chicago ended in November 2024.

We had net loss of $9.2 million for the year ended December 31, 2024, net loss of $2.7 million for the year ended December 31, 2023, and net income of $6.4 million for the year ended December 31, 2022.

Our accumulated deficit was $104.3 million and $95.1 million as of December 31, 2024 and 2023, respectively.

During the year ended December 31, 2023, the fair value of the contingent consideration that we recorded in connection with our acquisition of Forensic Logic, decreased by $3.2 million, based upon adjustments to recorded liabilities as a result of actual revenues.

During the year ended December 31, 2023, the fair value of the contingent consideration that we recorded in connection with our acquisition of Forensic Logic, decreased to zero by $3.2 million, based upon adjustments to recorded liabilities as a result of actual revenues.

During the year ended December 31, 2024, the fair value of the contingent consideration that we recorded in connection with our acquisition of SafePointe decreased to zero by $0.6 million.

During the year ended December 31, 2023, the fair value of the contingent consideration that we recorded in connection with our acquisition of SafePointe decreased by $2.4 million.

This adjustment was prompted by revised revenue estimates for 2024 and 2025, which were incorporated into our fair value methodology.

The balance sheet within the consolidated financial statements as of and for the year ended December 31, 2023 within this Annual Report Form 10-K have been revised since our financial results for the year were reported in our earnings press release (the “Earnings Press Release”) and included in our Current Report on Form 8-K dated February 27, 2024.

The changes were the result of changes to our purchase price accounting for our acquisition of SafePointe, which we acquired in the third quarter of 2023.

These changes impacted goodwill, accounts receivable and contract assets, and deferred revenue reflected on our balance sheet as of December 31, 2023, which were $34.2 million, $30.7 million and $42.1 million, respectively, as compared to the $33.7 million, $31.6 million and $41.9 million, respectively, initially reported in the Earnings Press Release in our Current Report on Form 8-K dated February 27, 2024.

Additionally, we recorded an escrow claim receivable of $0.6 million.

The information in this Annual Report on Form 10-K amends and supersedes the disclosures in the Earnings Press Release.

These adjustments were prompted by revised revenue estimates for 2024 and 2025, which were incorporated into our fair value methodology.

We have focused on rapidly growing our business and believe that our future growth is dependent on many factors, including our ability to increase our customer base, expand the coverage of our solutions among our existing customers, expand our international presence, increase sales of our security solutions and retain our customers.

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We believe our large and growing installed base of police departments who trust SoundThinking’s products, support, and way of doing business provide revenue growth opportunities.

The ability to cross-sell new products provides an opportunity to grow revenues per customer and lifetime value.

The ability to cross-sell new products provides an opportunity to grow revenues per customer and

lifetime value.

Challenges we face in this area include ensuring our new products are reliable, integrated well with other SoundThinking solutions, and priced and serviced appropriately.

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Net new "go-live" square miles

Net new "go-live" cities

Net new "go-live" cities and universities

Annual recurring revenue (in millions)

* 2024 "go-live" square miles is negative due to the fact that contract with City of Chicago was terminated in 2024.

Revenue Retention Rate

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If our revenue retention rate for a year exceeds 100%, as it did in the years presented above, this indicates a low churn and means that the revenues retained during the year, including from customer expansions, more than offset the revenues that we lost from customers that did not renew their contracts during the year.

As further evidence of our low churn, since our initial public offering in June 2017, we have added over 650 miles of ShotSpotter coverage while losing approximately 15 miles of coverage.

Sales and Marketing Spend per $1.00 of New Annualized Contract Value

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We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis and generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area between two sensors.

Our security solutions, ShotSpotter for Highways, ShotSpotter for Campus, ShotSpotter for Corporate as well as CaseBuilder are typically sold on a subscription basis, each with a customized deployment plan.

Our ResourceRouter solution, CaseBuilder Crime Gun (formerly ShotSpotter GCM) and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

Our security solutions, ShotSpotter for Campus and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan.

Our ResourceRouter, CaseBuilder and CrimeTracer solutions are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

We derive the majority of our revenues from subscription services.

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For SafePointe, we generally invoice the first year's subscription price when the contract is fully executed.

For ShotSpotter for Highways, ShotSpotter for Campus, ShotSpotter for Corporate and CrimeTracer, we generally invoice customers 100% of the total contract value when the subscription service is operational, which is often soon after contract execution.

For ShotSpotter for Campus, ShotSpotter for Corporate and CrimeTracer, we generally invoice customers 100% of the total contract value when the subscription service is operational, which is often soon after contract execution.

All fees billed in advance of services being delivered are recorded as deferred revenue.

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For SafePointe, our pricing model is based on a per-lane basis.

For ShotSpotter for Highways, ShotSpotter for Campus, ShotSpotter for Corporate and CaseBuilder, our pricing model is on a customized-site basis.

For ResourceRouter, CaseBuilder Crime Gun (formerly ShotSpotter GCM) and CrimeTracer, pricing is currently customized, generally tied to the number of sworn police officers in a particular agency.

For ShotSpotter for Campus, ShotSpotter for Corporate and CaseBuilder, our pricing model is on a customized-site basis.

For ResourceRouter, CaseBuilder and CrimeTracer, pricing is currently customized, generally tied to the number of sworn police officers in a particular agency.

We may also offer discounts or other incentives in conjunction with all ShotSpotter sales in an effort to introduce the product, accelerate sales or extend renewals for a longer contract term.

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We recognize this revenue net of margins paid to the intermediary.

We also generate revenues from CaseBuilder Crime Gun, a first-of-its-kind digital case management solution that automates the process by which key information is input, captured and used to identify associated gun crime cases leading to the identification of persons of interest.

Subscriptions for CaseBuilder Crime Gun recognize revenue similar to our ShotSpotter and CrimeTracer products.

We also generate revenues from CaseBuilder, a first-of-its-kind digital case management solution that automates the process by which key information is input, captured and used to identify associated gun crime cases leading to the identification of persons of interest.

Subscriptions for CaseBuilder recognize revenue similar to our ShotSpotter and CrimeTracer products.

With the acquisition of SafePointe, we generate revenues from subscriptions of our AI-based weapons detection system based on the number of entryways, or lanes, being covered.

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We also expect cost of revenues to increase in absolute dollars as we continue to invest in our customer success capabilities to drive growth and value for our customers.

For revenues generated through the sale of a proprietary software license and related maintenance and support services and professional software development services, cost of revenues generally includes employee compensation costs that are relatively fixed, third-party contractor costs, allocated facility costs and overhead, and the costs of billable expenses such as travel and lodging.

billable expenses such as travel and lodging.

The unpredictability of the timing of entering into significant professional services agreements may cause significant fluctuations in our costs which, in turn, may impact our quarterly financial results.

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We have devoted our product development efforts primarily to develop new lower-cost sensor hardware, develop new features, improve functionality of our solutions, and adapt to new technologies or changes to existing technologies.

We are investing in engineering resources to support further development of ResourceRouter, CrimeTracer, CaseBuilder and SafePointe.

We are investing in engineering resources to support further development of ResourceRouter, CrimeTracer, CaseBuilder, PlateRanger and SafePointe.

The focus of this effort will be in the areas of data science modeling, user experience, core application functionality and backend infrastructure improvements, including integration of ShotSpotter gunshot data to enhance forecasting of gun violence.

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Cost of revenues

Impairment of property and equipment

Operating expenses:

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Change in fair value of contingent consideration

Restructuring expense

Total operating expenses

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Net income (loss)

The increase of $11.7 million was primarily attributable to an $11.6 million increase in revenues from new customers and expansions of existing customer coverage areas, and a $1.0 million increase in revenues from SafePointe which was acquired in the third quarter of 2023.

This was partially offset by a decrease of $0.9 million.

Specifically, the revenues from monthly support contracts for the twelve months ending December 31, 2022, were higher due to additional revenues generated from a contract amendment that was delayed from late 2021 and executed in January 2022.

We went live in 25 new ShotSpotter cities.

We expanded in 16 current customer sites, two current universities and one current corporate solution during the year ended December 31, 2023.

The increase in costs of $5.8 million was due primarily to a $4.7 million increase in product costs due to the increase in our customer base and an increase of $1.1 million in material and other costs following our acquisition of SafePointe in the third quarter of 2023.

Gross profit as a percentage of revenues decreased compared with the prior year primarily as a result of lower margins from SafePointe which was acquired in the third quarter of 2023.

The increase of $9.3 million was primarily attributable to an $6.2 million increase in revenues from new customers and expansions of existing customer coverage areas, $2.0 million increase due to 12 months of revenue in 2024 compared to four months in 2023 from acquisition of Safepointe and $2.0 million increase from new CaseBuilder customers.

ShotSpotter went live in 20 new cities and five universities during the year ended December 31, 2024.

Revenue was affected by the delay of approximately $3.5 million of two contract renewals with the City of New York, which were renewed in first quarter of 2025.

The increase in costs of $4.2 million was primarily due to 12 months of expenses related to SafePointe in 2024 compared to four months in 2023, as well as personnel-related costs as we continue to grow our business.

In addition, operating expenses in 2023 included the continent consideration adjustment of $5.7 million in 2023 associated with the Forensic Logic and SafePointe acquisitions.

Gross profit as a percentage of revenues remained stable.

Operating Expenses

Sales and Marketing Expense

Sales and marketing expense increased by $4.5 million and was primarily due to a $1.4 million increase in personnel costs, a $0.8 million increase in tradename asset amortization related to our Forensic Logic acquisition, $0.8 million increase in marketing expense, a $0.7 million increase in consulting and commission expenses, a $0.3 million increase in credit loss expense, and a $0.5 million increase in other costs.

Sales and marketing expense increased by $1.2 million and was primarily due to 12 months of expenses related to SafePointe in 2024 compared to four months in 2023, offset by $0.7 million reduced costs in outside commission.

Research and Development Expense

Research and development expense increased by $2.1 million and was primarily due to a $1.7 million increase in personnel-related costs due to increased headcount and a $0.4 million increase in consulting and outside services expense and other costs.

Research and development expense increased by $1.8 million primarily due to 12 months of expenses related to SafePointe in 2024 compared to four months in 2023.

General and Administrative Expense

General and administrative expense increased by $4.8 million and was primarily due to a $2.3 million increase in consulting and outside services that included acquisition expenses related to our acquisition of SafePointe in the third quarter of 2023, increased legal expense and increased consulting expense for contract employees, a $2.0 million increase in personnel costs and a $0.5 million increase in office expense including insurance costs and other costs.

General and administrative expense increased by $3.3 million and was primarily due to a $2.2 million increase in stock-based compensation, a $0.9 million increase in bonus expense and a $1.4 million increase due to 12 months of expenses related to SafePointe in 2024 compared to four months in 2023, and offset by decrease of $1 million in legal fees related to the 2023 acquisition of SafePointe.

Change in Fair Value of Contingent Consideration

The fair value of contingent consideration related to our acquisitions decreased by $0.6 million during the year ended December 31, 2024.

This was due to a decrease in the fair value of the Forensic Logic contingent consideration liability of $3.2 million, based upon adjustments to recorded liabilities as a result of actual revenues.

This also reflected a decrease in the fair value of the SafePointe contingent consideration liability of $2.5 million, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

This reflected a decrease in the fair value of the SafePointe contingent consideration liability, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

Restructuring Expense

Restructuring expense related to the workforce reduction during 2024 amounted to $0.3 million, consisting of cash expenditures for severance and other employee separation-related costs.

Other Income (Expense), Net

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Comparison of the Years Ended December 31, 2023 and 2022

For discussion of our 2022 results and a comparison with 2021 results please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 that was filed with the SEC on March 14, 2023 (the "2022 Form 10-K").

For discussion of our 2023 results and a comparison with 2022 results please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on April 1, 2024 (the "2023 Form 10-K").

Liquidity and Capital Resources

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Our operations have been financed primarily through net proceeds from the sale of equity, debt financing arrangements and cash from operating activities.

Our principal source of liquidity is cash and cash equivalents totaling $5.7 million as of December 31, 2023.

Our principal source of liquidity is cash and cash equivalents totaling $13.2 million and account receivable of $25.5 million as of December 31, 2024.

On December 31, 2024, our available credit facility was approximately $21.0 million and we had $4.0 million outstanding on our line of credit, which was primarily used to fund our acquisition of SafePointe.

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Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenues growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products, and overall economic conditions.

We may also seek additional capital to fund our

operations, including through the sale of equity or debt financings.

To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders.

We may also seek additional capital to fund our operations, including through the sale of equity or debt financings.

stockholders.

The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.

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The stock repurchase program does not obligate us to purchase any particular amount of common stock and may be suspended or discontinued at any time.

During the year ended December 31, 2023, we repurchased 228,782 shares of our common stock under the 2022 Repurchase Program at an average price of $24.41 per share for approximately $5.6 million.

During the year ended December 31, 2024, we repurchased 418,940 shares of our common stock at an average price of $14.31 per share for approximately $6.0 million, under the 2022 Repurchase Program.

The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired.

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In September 2018, we entered into our Umpqua Credit Agreement, initially providing for borrowing capacity of $10.0 million.

The agreement was amended in November 2022 to increase the size of our available credit facility to $25.0 million with an expiration date of October 15, 2024 and to increase the letter of credit sub-facility to $7.5 million.

In February 2024, we amended the Umpqua Credit Agreement to extend the maturity date from October 15, 2024 to October 15, 2025.

The agreement was amended in November 2022 to increase the size of our available credit facility to $25.0 million with an expiration date of October 15, 2024, and further amended in February 2024 to extend the expiration date to October 15, 2025.

The revolving loan facility is for general working capital purposes.

Our available credit facility as of December 31, 2023 was approximately $18.0 million.

Our available credit facility as of December 31, 2024 was $21.0 million.

On December 31, 2024, there was $4.0 million outstanding on our line of credit.

The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions ” in Part II, Item 1A, Risk Factors , included in this Annual Report on Form 10-K .

We are in compliance with all the covenants under the Umpqua Credit Agreement as of December 31, 2023.

The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions ” in Part I, Item 1A, Risk Factors , included in this Annual Report on Form 10-K .

We are in compliance with all covenants under the Umpqua Credit Agreement as of December 31, 2024.

Comparison of Years Ended December 31, 2024 and 2023

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Operating Activities

Our net income (loss) and cash flows provided by operating activities are significantly influenced by our increase in headcount to support our growth, increase in legal, outside services fees, and sales and marketing expenses, and our ability to bill and collect in a timely manner.

Net cash provided by operating activities decreased $1.2 million in the year ended December 31, 2023 compared to net cash provided in the same period of 2022, primarily due to a decrease of $13.8 million in the change of deferred revenue and a decrease of $1.0 million in the change of accrued and other liabilities offset by a $13.8 million increase in collections.

Our net income (loss) and cash flows provided by operating activities are impacted by more collections and increase in deferred revenue in 2024 and offset by timing of account receivable collection and accruals for increased expenses.

Net cash provided by operating activities increased by $11.3 million in the year ended December 31, 2024 compared to net cash provided in the same period of 2023, primarily due to an increase of $4.4 million in the change of deferred revenue and an increase of $4.4 million in account receivable collection and $1.9 million in other liabilities.

Investing Activities

Our investing activities consist primarily of capital expenditures to install our solutions in customer coverage areas, purchases of property and equipment, and investments in intangible assets and business acquisitions.

Our investing activities consist primarily of capital expenditures to install our solutions in customer coverage areas, purchases of property and equipment, and investments in intangible assets.

Investing activities used $6.4 million and $16.5 million in the years ended December 31, 2024 and 2023, respectively.

We completed our acquisition of SafePointe for approximately $11.0 million in cash, net of $0.4 million cash acquired at closing during the year ended December 31, 2023.

We completed our acquisition of Forensic Logic for approximately $4.6 million in cash, net of $0.3 million cash acquired at closing during the year ended December 31, 2022.

We completed our acquisition of SafePointe for approximately $11.0 million in cash, net of $0.4 million cash acquired at closing during the year December 31, 2023.

Financing Activities

Cash generated by financing activities includes net proceeds from the exercise of stock options and warrants and proceeds from the employee stock purchase plan (“ESPP”) purchases, offset by payments for repurchases of our common stock and debt issuance and financing costs.

Financing activities provided $0.8 million in cash during the year ended December 31, 2023.

This was primarily due to $7.0 million in proceeds from our line of credit which was primarily used to fund our acquisition of SafePointe, approximately $0.2 million in proceeds from the exercise of stock options and $0.7 million in proceeds from ESPP purchases, offset by $5.6 million in payments for repurchases of our common stock, and $1.5 million in contingent liability payments.

Cash generated by financing activities includes net proceeds from the exercise of stock options and proceeds from the employee stock purchase plan (“ESPP”) purchases, offset by payments for repurchases of our common stock and debt.

Financing activities used $8.2 million in cash during the year ended December 31, 2024.

This was primarily due to $3.0 million in payment on our line of credit and $6.0 million in payments for repurchases of our common stock, offset by $0.7 million in proceeds from ESPP purchases.

We paid $1.5 million for contingent consideration liability in 2023 and $5.6 million for common stock repurchase and raised $7.0 million from line of credit.

Comparison of the Years Ended December 31, 2023 and 2022

A discussion of changes in our cash flows from the year ended December 31, 2022 to the year ended December 31, 2023 can be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations" of the 2023 Form 10-K.

Off-Balance Sheet Arrangements

As of December 31, 2023, we did not have any relationships, material commitments or obligations with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements.

We do not engage in off-balance sheet financing arrangements.

In addition, we do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Estimates and Policies

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Revenue Recognition

We generate annual subscription revenues from the deployment of ShotSpotter Respond on a per-square-mile basis and generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area between two sensors.

Our security solutions within ShotSpotter, ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate as well as CaseBuilder and CrimeTracer, are typically sold on a subscription basis, each with a customized deployment plan.

Our ResourceRouter, CaseBuilder Crime Gun and CrimeTracer solutions are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

We generate substantially all of our revenues from the sale of ShotSpotter subscription services, in which gunshot data generated by company-owned sensors and software is sold to our customers through a cloud-based hosting application for a specified contract period.

Typically, the initial contract period is one to three years in length.

The subscription contract is generally noncancelable without cause and these service arrangements do not provide the customer with the right to take possession of the hardware or software supporting the subscription service at any time.

A small portion of our revenues are generated from the delivery of setup services to install company-owned sensors in the customer’s coverage area and other services including training and licenses to integrate with third-party applications.

We generally invoice customers for 50% of the total contract value when the contract is fully executed and for the remaining 50% when the subscription service is operational and ready to go live – that is, when the customer has acknowledged the completion of all the deliverables in the signed customer acceptance form.

We generally invoice subscription service renewals for 100% of the total contract value when the renewal contract is executed.

For the public safety solution, the pricing model is based on a per-square-mile basis.

For security solutions, the pricing model is on a customized-site basis.

For case management and search engine solutions, the pricing model is currently customized, generally tied to the number of sworn police officers in a particular city.

As a result of the process for invoicing contracts and renewals upon execution, cash flows from operations and accounts receivable can fluctuate due to timing of contract execution and timing of deployment.

We recognize revenues upon the satisfaction of performance obligations.

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer a good or service (or bundle of services) to the customer that is distinct.

To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

We determined that the subscription services, training, and licenses to integrate with third-party applications are each distinct services that represent separate performance obligations.

The setup activities are not distinct from the subscription service and are combined into the subscription service performance obligation.

However, setup fees may provide a material right to the customer that has influence over the customers' decision to renew.

All setup fees are assessed on a quantitative and qualitative basis to determine whether they represent a distinct performance obligation.

The total contract value is allocated to each performance obligation identified based on the standalone selling price of the service and any discounts are allocated pro-rata to the identified performance obligations.

For contracts that have an original duration of one year or less, we use the practical expedient applicable to such contracts and do not consider the time value of money.

We believe revenue recognition for gunshot detection services is subject to uncertainty because of the timing of renewal contracts or work orders.

Revenues from subscription services are recognized ratably, on a straight-line basis, over the term of the subscription.

Revenues from material rights are recognized ratably over the period in which they are determined to provide a material right to the customer, which is generally three years.

Revenues from training and licenses to integrate with third-party applications are recognized upon delivery which generally occurs when the subscription service is operational and ready to go live.

Subscription renewal fees are recognized ratably over the term of the renewal, which is typically one year.

While most customers elect to renew their agreements, in some cases, they may not be able to obtain the proper approvals or funding to complete the renewal prior to expiration.

For these customers, we stop recognizing subscription revenues at the end of the current contract term, even though services may continue to be provided for a period of time until the renewal process is completed.

Once the renewal is complete, we recognize subscription revenues for the period between the expiration of the original term of the agreement and the completion of the renewal process in the month in which the renewal is executed.

If a customer declines to renew its subscription, the remaining fees from material rights, if any, are immediately recognized.

Revenue Recognition – Software License, Maintenance and Support, and Professional Services

We also generate revenues from the sale of (i) a software license and related maintenance and support services of our proprietary software technology and (ii) professional software development services to a single customer, through a sales channel intermediary.

We have been serving this customer for more than ten years.

The sales channel intermediary contract includes software licensing and related maintenance and support services.

The contract also provides for the procurement of professional services, such as for software development and testing for product feature enhancements, by executing supplementary work orders.

We recognize revenue from the software license and related maintenance and support services revenues upon the satisfaction of performance obligations.

We determined that the term-based software license should be combined with the maintenance and support services as a single performance obligation.

The nature of the maintenance and support services, inclusive of our obligation to provide additional, unspecified software functionality over the license term, in allowing this single customer to be flexible in utilizing the customized software to respond to the changing regulatory environment, are critical to the customer’s ability to derive benefit and value from the license.

Contractually, we provide continuous access to the software, maintenance and support services, helpdesk, and

technical support over the contract term, hence a time-elapsed method is used to recognize revenue.

There is a fixed and variable component to the maintenance and support services.

Revenues from the software license and fixed maintenance and support services are recognized ratably over the term of the contract because our obligation to provide the license and related support services is uniform over the license term.

The variable portion is based on time and materials provided for higher-level technical support.

We generally invoice for both the fixed and time and materials services a month in arrears.

For our time and materials services, we have elected the right-to-invoice practical expedient, allowing us to recognize revenue based on the amount we have the right to invoice the customer, provided that amount directly corresponds with the value of our completed performance to date.

This approach results in revenue recognition as we perform the services and incurs the costs.

If this customer does not renew prior to the contract term expiring, we stop recognizing revenues at the end of the current contract term, even though services may continue to be provided for a period of time until the renewal process is completed.

Once the renewal is complete, we recognize the revenues for the period between the expiration of the original contract term and the completion of the renewal process in the month in which the renewal is executed.

Professional services revenue consists of fees typically associated with the design, development, and testing of product feature enhancements requested by the customer.

The customer procures additional development services as needed, and generally based upon annual development plans negotiated by and between the customer and us.

Professional services do not result in significant customization of the maintenance and support services and are considered distinct services.

All, and any part of the output, of our professional services towards such product feature enhancements, belong to the customer.

The contract price and billing schedule are stated in each work order and we generally invoice in monthly installments upon the commencement of each work order.

We also have a contract for an enterprise CaseBuilder solution through a second sales channel intermediary that includes supplemental professional services to integrate CaseBuilder with the customer's existing systems that will remain in place.

This contract includes fixed fees for these professional services.

We satisfy the performance obligations for these professional services over time as the performance of work typically creates or enhances an asset that the customer controls as the asset is created or enhanced.

As these product feature enhancements each have a fixed contract fee, we recognize revenue over time proportionally as work is performed, based on cumulative resource costs incurred as a percentage of total forecast costs for the project.

Management uses significant judgment in making these estimates, which affect the timing of revenue recognition, including how much revenue to recognize in each period, and in estimating the timing of revenue recognition for remaining performance obligations.

Gross Versus Net Presentation

Our single software license and related service agreement was facilitated through a sales channel intermediary.

We present the total value of the billings to the customer as revenue (or gross) and that portion of the billings to the customer retained by the sales channel intermediary as a sales cost which is included in sales and marketing in the accompanying statement of operations, as we have determined that we are the principal in the arrangement.

Our conclusion is based on our role in controlling the goods and services consumed by the end-customer throughout the license term or development life cycle, combined with our control over the price charged to the end-user for such goods and services, and the inability of the sales channel intermediary to direct or control the services provided to the customer.

The fees paid to the sales channel intermediary are expensed as incurred as it relates to a period of performance of one year, and the sales channel intermediary is paid the same rate of commission on license term renewals or additional professional services that are sold to the customer.

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers.

Subscription revenue is recognized over the term of the subscription as services are provided.

Key judgments include:

Identification of Performance Obligations – Our subscription contracts often include multiple components, such as access to our platform, customer support, and periodic software updates.

We assess whether these components are distinct and require separate revenue recognition.

Determination of Standalone Selling Prices (SSP) – When contracts contain multiple performance obligations, we allocate transaction prices based on the relative SSP of each component.

This requires management judgment, particularly when there is no observable selling price.

Timing of Revenue Recognition – Subscription fees are generally recognized ratably over the contract term.

However, upfront fees and non-refundable payments require assessment to determine whether they represent a separate performance obligation.

Stock-Based Compensation

We recognize stock-based compensation expense for equity awards granted to our employees, directors, and consultants that can be settled in shares of our common stock.

Stock-based compensation expense is based on the

grant date fair value estimate for each award as determined by our board of directors.

We recognize these compensation costs on a straight-line basis over the requisite service period of the award.

Restricted stock unit awards are valued using the grant date market closing price of our common stock as traded on the Nasdaq Capital Market .

We estimate the fair value of stock option awards at the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and are freely transferable.

The fair values generated by the model may not be indicative of the actual fair values of our awards as it does not consider other factors important to those stock-based payment awards, such as continued employment, periodic vesting requirements and limited transferability.

We measure stock options and other stock-based awards granted to employees, directors and other service providers based on their fair value on the date of grant and recognize compensation expense of those awards over the requisite service period.

We recognize the impact of forfeitures on stock-based compensation expense as forfeitures occur.

We apply the straight-line method of expense recognition.

We use the Black-Scholes option-pricing model to determine the fair value of stock options and ESPP shares.

The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions to determine the fair value of the awards, including the expected term

of the award and the price volatility of the underlying stock.

We calculate the fair value of the awards by using the Black-Scholes option-pricing model with the following assumptions:

Expected Volatility - We estimate volatility based on the historical volatility of our stock.

Expected Term - The expected term of the awards represents the period that the stock-based awards are expected to be outstanding.

We estimate expected term based on our historical experience with stock option grants.

Risk-Free Interest Rate - We estimate the risk-free interest rate based on the yield on the U.S.

Treasury yield curve in effect at the grant date.

Expected Dividend Yield - We have not declared or paid dividends to date and does not anticipate declaring dividends.

As such, expected dividend yield is zero.

Business Acquisitions

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We performed our annual test for goodwill impairment as of October 1, 2024 and concluded that no impairment charge was necessary.

Valuation and Impairment of Long-Lived Assets

Our intangible assets with a finite life are primarily composed of developed technology, customer relationships, and tradenames acquired in conjunction with the acquisition.

We make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions.

Intangible assets are generally amortized on a straight-line basis over their estimated useful lives of 3 to 14 years.

We base the useful lives and related amortization expense on the period of time we estimate the assets will generate revenue or otherwise be used.

We also periodically review the lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the assets.

If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase.

The assessment of whether an indication of impairment exists is performed at the end of each reporting period and requires the application of judgment, historical experience, and external and internal sources of information.

We make estimates in determining the future cash flows and discount rates in the quantitative impairment test to compare the fair value to the carrying value.

We account for income taxes under the asset and liability approach.

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Notes to Consolidated Financial Statements

Report of Independent R egistered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the stockholders and the board of directors of SoundThinking, Inc.:

Opinion on the Financial Statements

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of SoundThinking, Inc.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

SafePointe, LLC Acquisition – Fair Value of Intangible Assets

Critical Audit Matter Description

As discussed in Note 4 to the consolidated financial statements, on August 18, 2023, the Company accounted for the SafePointe, LLC acquisition as a business combination.

The Company allocated a portion of the purchase price to an acquired software technology and customer relationship, which were assigned acquisition-date fair values of $9.2 million and $2.5 million, respectively.

We identified the fair value of the software technology and customer relationship associated with the acquisition as a critical audit matter.

A high degree of subjective auditor judgment was involved in evaluating certain inputs to the relief from royalty and multi-period excess earnings methods used to determine the fair value software technology and customer relationships.

The key input used in the relief from royalty method was the royalty rate.

The key input used in the multi-period excess earnings method was the attrition assumption.

There was limited observable market information and the calculated fair value of the assets was sensitive to possible changes in these key inputs.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included substantively testing, with the assistance of firm personnel with expertise in the application of fair value and valuation methodologies, the appropriateness of the inputs used in management’s process for determining the fair value of the identifiable intangibles, which included the following procedures:

• Obtained management’s purchase price allocation detailing fair values assigned to the acquired tangible and intangible assets and purchase consideration.

• Obtained the valuation report prepared by a valuation specialist engaged by management to assist in the purchase price allocation, including determination of fair values assigned to acquired identifiable intangible assets.

We reviewed the qualifications of the specialist and tested the key inputs in the valuation methods.

• Utilized an internal valuation specialist to assist the engagement team in evaluating:

the methodologies used and whether they were acceptable for the underlying acquisitions and whether such methodologies were being applied correctly, the appropriateness of the royalty rate and attrition assumption used by independently calculating the amounts based on comparable guideline companies, comparable rates for market participants and also other transactions.

• Evaluated the Company’s forecasted future cash flows for acquired business by reviewing historical results and obtaining audit evidence for future expected customer growth as well as the reasonableness of other key assumptions used by management.

• Performed inquiries of personnel at SafePointe, LLC that were highly involved in the development of the forecasts to evaluate the reasonableness of revenue and margin forecasts.

SafePointe, LLC Acquisition – Contingent Consideration

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Long-Lived Asset Impairment Evaluation

Critical Audit Matter Description

As discussed in Note 4 to the consolidated financial statements, on August 18, 2023, the Company accounted for the SafePointe, LLC acquisition as a business combination.

The acquisition included contingent consideration, which had an acquisition date fair value of $3 million.

We identified the fair value of the contingent consideration associated with the acquisition as a critical audit matter.

A high degree of subjective auditor judgment was involved in evaluating certain inputs to the Monte Carlo simulation used to determine the fair value of the contingent consideration.

The key inputs used in the Monte Carlo simulation were the revenue discount rate, revenue volatility and payment discount rate.

There was limited observable market information and the calculated fair value of the liability was sensitive to possible changes in these key inputs.

As described in Note 2 to the consolidated financial statements, the Company reviews its long-lived assets periodically to determine whether indicators of potential impairment exist.

Potential impairment is determined by comparing the carrying value of the assets with the expected undiscounted future cash flows to be provided by activities of the business or related asset groups.

If the sum of the expected undiscounted future cash flows is less than the carrying value, an impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the asset.

Management identified triggering events during the year ended December 31, 2024, for specific asset groups, that indicated that long-lived assets could potentially be impaired and performed an impairment test with respect to such asset groups.

While the impairment test did not result in the recording of any impairment loss, the impairment test is complex and involves a high degree of auditor judgment and subjectivity when determining the asset groups to be evaluated for impairment, estimating expected future cash flows to be provided by activities of the identified asset groups, and estimating fair values of the assets or asset groups when applicable.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included substantively testing, with the assistance of firm personnel with expertise in the application of fair value and valuation methodologies, the appropriateness of the inputs used in management’s process for determining the fair value of the identifiable contingent consideration, which included the following procedures:

• Obtained management’s purchase price allocation detailing fair values assigned to the acquired tangible and intangible assets and purchase consideration

We reviewed the qualifications of the specialist and tested the key inputs in the valuation methods.

• Utilized an internal valuation specialist to assist the engagement team in evaluating:

the methodologies used and whether they were acceptable for the underlying acquisitions and whether such methodologies were being applied correctly, the appropriateness of the revenue discount rate, revenue volatility, payment discount rate, royalty rate and attrition assumption used by independently calculating the amounts based on comparable guideline companies, comparable rates for market participants and also other transactions.

• Evaluated the Company’s forecasted future revenue for the acquired business by reviewing historical results and obtaining audit evidence for future expected customer growth as well as the reasonableness of other key assumptions used by management.

• Performed inquiries of personnel at SafePointe, LLC that were highly involved in the development of the forecasts to evaluate the reasonableness of revenue and margin forecasts.

The primary procedures we performed to address this critical audit matter included substantively testing the appropriateness of the judgments and assumptions used by management in conducting its impairment analysis, including:

• Confirmed the appropriateness of the asset groups evaluated in performing management’s impairment analysis.

• Tested management’s significant assumptions used including forecasted revenue and forecasted fixed and variable costs used in estimating the net cash flows expected to be provided by the activities of the asset groups, including the completeness and accuracy of the underlying data supporting the assumptions.

• Evaluated audit evidence from events and transactions occurring after the measurement date.

• Performed a sensitivity analysis over the growth rates, operating margin, and other assumptions used in management’s analysis compared to historical performance.

• Compared previously forecasted financial information to historical results to assess the reasonableness of future forecasted financial information used in the analysis.

• Evaluated consistency of assumptions used in management’s analysis with market and industry data.

• Evaluated the consistency of assumptions used in management’s analysis with assumptions used in other areas of the audit.

We have served as the Company's auditor since 2017.

Baker Tilly US, LLP

/S/ Baker Tilly US, LLP

Minneapolis, MN

April 1, 2024

March 31, 2025

SoundThinking, Inc.

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Accounts payable

Accrued expenses and other current liabilities

Line of credit

Deferred revenue, short-term

Accrued expenses and other current liabilities

Total current liabilities

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General and administrative

Restructuring expense

Change in fair value of contingent consideration

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See accompanying notes to consolidated financial statements.

ShotSpotter, Inc.

SoundThinking, Inc.

Consolidated State ments of Comprehensive Income (Loss)

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Exercise of stock options

Issuance of common stock in connection with exercise of warrants

Repurchase of common stock

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Vesting of restricted stock units

Issuance of common stock for acquisition

Stock-based compensation

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Vesting of restricted stock units

Issuance of common stock for acquisition

Stock-based compensation

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Deferred taxes

Loss on disposal of property and equipment

Allowance for credit losses

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Payment of contingent consideration liability

Proceeds from line of credit

Proceeds from (Payment on) line of credit

Proceeds from exercise of stock options

Repurchases of common stock

Proceeds from exercise of warrants

Proceeds from employee stock purchase plan

Net cash provided by (used in) financing activities

Change in cash, cash equivalents and restricted cash

Change in cash, cash equivalents

Effect of exchange rate on cash and cash equivalents

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Supplemental cash flow disclosures:

Cash paid for interest

Cash paid for tax

Non-cash investing and financing activities:

Property and equipment purchases included in accounts payable

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SoundThinking, Inc.

(the “Company”) brings the power of digital transformation to law enforcement and security personnel by providing precision-policing and security solutions, combining data-driven solutions and strategic advisory services for law enforcement and civic leadership.

As of December 31, 2023, the Company had approximately 250 customers and to date have worked with approximately 2,100 agencies to he lp drive more efficient, effective, and equitable public safety outcomes.

As of December 31, 2024, the Company had approximately 328 customers and to date have worked with approximately 2,100 agencies to help drive more efficient, effective, and equitable public safety outcomes.

In April 2023, the Company's name changed to SoundThinking, Inc., reflecting its broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions.

As part of the rebrand, the Company introduced its SafetySmart platform that includes five data-driven tools consisting of (i) its flagship product, ShotSpotter® (formerly ShotSpotter Respond), the leading outdoor gunshot detection, location and alerting system trusted by 170 cities and 19 universities and corporation s as of December 31, 2023, (ii) CrimeTracer (formerly COPLINK X), a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve crimes, (iii) CaseBuilder (formerly ShotSpotter Investigate), a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter (formerly ShotSpotter Connect) that directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, and (v) SafePointe, an AI-based weapons detection system, that the Company added when it acquired SafePointe, LLC (“SafePointe”) in August 2023.

As part of the rebrand, the Company introduced its SafetySmart platform that includes six data-driven tools consisting of (i) its flagship product, ShotSpotter ® , the leading outdoor gunshot detection, location and alerting system trusted by 177 cities and 20 universities and corporations as of December 31, 2024, (ii) CrimeTracer, a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve crimes, (iii) CaseBuilder, a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter that directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, (v) PlateRanger powered by Rekor ® , an advanced license plate recognition ("ALPR") and vehicle identification solution that leverages artificial intelligence ("AI") and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcement, introduced in July 2024 through a strategic partnership with Rekor Systems, Inc and (vi) SafePointe, an AI-based weapons detection system.

The Company offers its solutions on a software-as-a-service subscription model to its customers.

ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate, are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses, highways, and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive.

ShotSpotter for Campus and ShotSpotter for Corporate, are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses, and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive.

In 2019, the Company created a technology innovation unit, SoundThinking Labs, to expand its efforts supporting innovative uses of its technology to help protect wildlife and the environment.

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The Company generates annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis and generates annual subscription revenues from the deployment of SafePointe on a per-lane basis.

The Company's three security solutions, ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate, as well as CaseBuilder, CrimeTracer and ResourceRouter are typically sold on a subscription basis, each with a customized deployment plan.

The Company generates a majority of its revenues from the sale of ShotSpotter subscription services, in which gunshot data generated by Company-owned sensors and software is sold to customers through a cloud-based hosting application for a specified contract period.

The Company's three security solutions, ShotSpotter for Campus and ShotSpotter for Corporate, as well as CaseBuilder, CrimeTracer and ResourceRouter are typically sold on a subscription basis, each with a customized deployment plan.

The Company generates a majority of its revenues from the sale of platform subscription services, in which gunshot data generated by Company-owned sensors and software is sold to customers through a cloud-based hosting application for a specified contract period.

Typically, the initial contract period is one to three years in length.

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A small portion of the Company’s revenues are generated from the delivery of setup services to install Company-owned sensors in the customer’s coverage area and other services including training and a license to integrate with third-party applications.

For ShotSpotter, the Company generally invoices customers for 50 % of the total contract value when the contract is fully executed and for the remaining 50 % when the subscription service is operational and ready to go live – that is, when the customer has acknowledged the completion of all the deliverables in the signed customer acceptance form.

The Company generally invoices customers for 50% of the total contract value when the contract is fully executed and for the remaining 50% when the subscription service is operational and ready to go live – that is, when the customer has acknowledged the completion of all the deliverables in the signed customer acceptance form.

This applies to ShotSpotter, ShotSpotter for ShotSpotter for Campus, ShotSpotter for Corporate, CaseBuilder, ResourceRouter and SafePointe.

If it is a multi-year contract, the Company invoices 50% of the first-year fees upon contract execution and the remaining 50% of the first-year fees when the service is operational and ready to go live.

The following years are invoiced 100% at each annual anniversary.

For SafePointe, the Company generally invoices the first year's subscription price when the contract is fully executed.

For ShotSpotter for Highways, ShotSpotter for Campus, ShotSpotter for Corporate, CaseBuilder and CrimeTracer, the Company generally invoices subscription service renewals for 100 % of the total contract value when the renewal contract is executed.

For CrimeTracer, the Company generally invoices the first year's subscription price when the contract is fully executed.

The Company invoices CrimeTracer subscription service renewals for 100% of the total contract value when the renewal contract is executed.

All fees billed in advance of services being delivered are recorded as deferred revenue.

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For SafePointe, the pricing model is based on a per-lane basis.

For ShotSpotter for Highways, ShotSpotter for Campus, ShotSpotter for Corporate and CaseBuilder, the pricing model is on a customized-site basis.

For ShotSpotter for Campus, ShotSpotter for Corporate and CaseBuilder, the pricing model is on a customized-site basis.

For ResourceRouter and CrimeTracer, pricing is currently customized, generally tied to the number of sworn police officers in a particular city.

The Company may also offer discounts or other incentives in conjunction with all ShotSpotter sales in an effort to introduce the product, accelerate sales or extend renewals for a longer contract term.

As a result of the process for invoicing contracts and

renewals upon execution, cash flows from operations and accounts receivable can fluctuate due to timing of contract execution and timing of deployment.

The Company may also offer discounts or other incentives in conjunction with all ShotSpotter sales in an effort to introduce the product, accelerate sales or extend renewals for a

longer contract term.

The Company recognizes revenues upon the satisfaction of performance obligations.

At contract inception, the Company assesses the services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of services) that is distinct.

At contract inception, the Company assesses the services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a product or service (or bundle of services) that is distinct.

To identify the performance obligations, the Company considers all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

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The Company presents the total value of the billings to the end-user as revenue (or gross) and that portion of the billings to the customer retained by the sales channel intermediary as a sales cost which is included in sales and marketing in the accompanying statement of operations, as the Company determined that it is the principal in the arrangement.

The Company’s conclusion is based on its role in controlling the goods and services consumed by the end-customer throughout the license term or development life cycle, combined with its control over the price charged to the end-user for such goods and services, and the inability of the sales channel intermediary to direct or control the services provided to the customer.

The Company’s conclusion is based on its role in controlling the products and services consumed by the end-customer throughout the license term or development life cycle, combined with its control over the price charged to the end-user for such products and services, and the inability of the sales channel intermediary to direct or control the services provided to the customer.

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The Company periodically evaluates the collectability of its accounts receivable and provides an allowance for credit losses based on the Company’s historical experience.

At December 31, 2023, the Company has an allowance for credit losses of $ 0.1 million.

There was no allowance as of December 31, 2022.

The Company had an allowance for credit losses of $ 0.3 million and $ 0.1 million at December 31, 2024 and 2023 , respectively.

Concentrations of Risk

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As of December 31, 2024 , the Company had approximately $ 12.4 million, $ 5,000 , and $ 7,000 deposited with the Company's three domestic financial institutions for which $ 250,000 is insured per institution under FDIC limits.

Concentration of Accounts Receivable and Contract Assets — At December 31, 2023, two customers accounted for 24 % and 10 % of the Company’s total accounts receivable.

Concentration of Accounts Receivable and Contract Assets — At December 31, 2024 , one customer accounted for 19 % of the Company’s total accounts receivable.

At December 31, 2023 , two customers accounted for 24 % and 10 % of the Company’s total accounts receivable.

Concentration of Revenues — For the year ended Dece mber 31, 2023, two customers accounted for 25 % and 9 %, respectively, of the Company’s revenues.

For the year ended December 31, 2022, two customers accounted for 30 % and 10 %, respectively, of the Company’s revenues.

For the year ended December 31, 2021, two customers accounted for 28 % and 14 %, respectively, of the Company’s revenues.

Concentration of Revenues — For the year ended December 31, 2024 , two customers accounted for 23 % and 10 % , of the Company’s revenues.

For the year ended December 31, 2023 , two customers accounted for 25 % and 9 %, of the Company’s revenues.

For the year ended December 31, 2022, two customers accounted for 30 % and 10 %, of the Company’s revenues.

Concentration of Suppliers — The Company relies on a limited number of suppliers and contract manufacturers.

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The Company operates as one reportable segment.

It performed its annual test for goodwill impairment as of October 1, 2023 and concluded

that no goodwill impairment charge was necessary.

It performed its annual test for goodwill impairment as of October 1, 2024 and concluded that

no goodwill impairment charge was necessary.

Since inception through December 31, 2024 , the Company has no t recorded any goodwill impairment.

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The terms of the license agreement require the Company to pay a one-time fee of $ 5,000 for each license sold to a customer allowing the customer to integrate their ShotSpotter service with a third-party application, such as a video management system, with a minimum annual amount due of $ 75,000 .

In 2023, the Company incurred $ 155,000 related to this agreement.

In 2023, 2022, and 2021, the Company incurred only the $ 75,000 minimum amount.

The Company incurred $ 155,000 in 2023 and the minimum amount of $ 75,000 in 2022 related to this agreement.

The license agreement terminated in November 2023 .

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An asset’s or a liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Stock Repurchases

The Company has a stock repurchase program that is executed through purchases made from time to time, including in the open market.

The Company retires repurchased shares of common stock, reducing common stock with any excess of cost over par value recorded to accumulated deficit.

Issued and outstanding shares of common stock are reduced by the number of shares repurchased.

No treasury stock is recognized in the consolidated financial statements.

In August 2022, the Inflation Reduction Act enacted a 1% excise tax on net share repurchases after December 31, 2022.

Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired.

Stock-Based Compensation

The Company generally grants options to purchase shares of its common stock to its employees, directors and non-employees for a fixed number of shares with an exercise price equal to the fair value of the underlying shares at the grant date.

All stock option grants are accounted for using the fair value method, and stock-based compensation expense is recognized ratably over the requisite service period as the underlying options vest.

Stock-based compensation expense is recognized ratably over the requisite service period as the underlying options vest.

The Company uses the Black-Scholes option pricing model to measure the fair value of its stock options.

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The Company determines whether an arrangement constitutes a lease at inception and records lease liabilities and right-of-use assets on our consolidated balance sheets at lease commencement.

We measure lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or our incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

The Company measure lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or our incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease and are included in operating lease right-of-use assets, accrued expenses and other current liabilities and other liabilities (long term) on the Company’s consolidated balance sheets.

The Company has made an accounting policy election to not recognize short-term leases, or leases that have a lease term of 12 months or less at commencement date, within its consolidated balance sheets and to recognize those lease payments in the consolidated statements of operations and comprehensive income (loss) on a straight-line basis over the lease term.

The Company records income taxes in accordance with the liability method of accounting.

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Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standards Board ("FASB”) issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

The amendments in this ASU replace the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects current expected credit loss and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The guidance was effective at the beginning of the Company’s first quarter of fiscal 2023.

The Company adopted this ASU effective January 1, 2023 .

The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements Not Yet Effective

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances prior reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments.

The guidance also requires disclosure of the Chief Operating Decision Maker's (“CODM”) position for each segment and detail of how the CODM uses financial reporting to assess their segment’s performance.

The new guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted.

The Company does not expect implementation of the new guidance to have a material impact on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which provides amendments to improve reportable segment disclosures requirements.

The Company adopted ASU 2023-07 for the fiscal year beginning January 1, 2024 .

As a result, the Company has included the additional required disclosures in Note 19 with retrospective presentation to all prior periods presented in the financial statements.

The adoption of ASU 2023-07 did no t impact the Company’s results of operations, cash flows, or balance sheets.

Improvements to Income Tax Disclosures

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ASU 2023-09 enhances the transparency of income tax disclosures, primarily by requiring public business entities to disclose on an annual basis, specific categories in the rate reconciliation tabular presentation, as well as by providing additional information for reconciling items that meet a quantitative threshold.

The ASU also requires disaggregated disclosures of federal, state and foreign income tax taxes paid.

The ASU also requires disaggregated disclosures of federal, state and foreign income taxes paid.

The new guidance is effective for fiscal years beginning after December 15, 2024.

The Company expects the adoption of this guidance will modify its disclosures, but will not have an impact on the Company's financial position and results of operations.

The Company does not expect implementation of the new guidance to have a material impact on its unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Effective

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure of specific information about costs and expenses within relevant expense captions on the face of the income statement, qualitative descriptions for expense captions not specifically disaggregated quantitatively, and the total amount and definition of selling expenses for interim and annual reporting periods.

This standard is effective for the Company's annual reporting period beginning January 1, 2027 and interim reporting periods beginning January 1, 2028 and should be applied on a retrospective or prospective basis, with early adoption permitted.

We are currently assessing the impact of adopting this standard on our consolidated financial statements.

Revenue Related Disclosures

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Revenue recognized during the year from new billings

Foreign currency impact

Ending balance

The following table presents remaining performance obligations for contractually committed revenues as of December 31, 2024 (in thousands):

In its Annual Report on Form 10-K for the year ended December 31, 2023, the Company identified an incorrect classification of the disclosure in the changes in deferred revenue.

The revenue recognized during the year from the beginning deferred revenue balance was reported as $36.8 million and corrected to $41.3 million, and revenue recognized during the year from new billings was reported as $53.4 million and corrected to $48.9 million.

The timing of revenue recognition included in the table above is based on estimates of go-live dates for contracts not yet live.

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During the year ended December 31, 2024, the Company recognized revenues of $ 99.3 million from customers in the United States and $ 2.7 million from customers in South Africa , the Bahamas and Uruguay.

During the year ended December 31, 2022, the Company recognized revenues of $ 80.2 million from customers in the Unit ed States and $ 0.8 million from customers in South Africa and the Bahamas.

During the year ended December 31, 2023 , the Company recognized revenues of $ 90.8 million from customers in the Unit ed States and $ 1.9 million from customers in South Africa and the Bahamas and Uruguay .

During the year ended December 31, 2022, the Company recognized revenues of $ 80.2 million from customers in the United States and $ 0.8 million from customers in South Africa and the Bahamas.

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The Company will amortize the acquired customer relationships for 12 years , the acquired software technology for 11 years and the acquired tradename for 9 years .

There were no acquisition-related expenses for the year ended December 31, 2024.

Acquisition-related expenses were $ 0.8 million for the year ended December 31, 2023, and are included in general and administrative expense.

Forensic Logic, LLC

During the first quarter of 2022, the Company completed the acquisition of 100 % of the membership interests in Forensic Logic, LLC (“Forensic Logic”) for purchase consideration of $ 4.9 million in cash, subject to working capital adjustments, and $ 14.3 million in the form of 464,540 shares of the Company's common stock based on the closing price on the date of acquisition.

The purchase consideration also included a contingent earnout payable based on Forensic Logic’s revenues generated during 2022 and 2023.

The acquisition date fair value of the contingent earnout was $ 12.4 million, resulting in a total purchase consideration of $ 31.6 million.

The Forensic Logic acquisition was accounted for as a business acquisition in accordance with ASC 805, Business Combinations .

The following table summarizes the assignment of fair value to the identified assets and liabilities recorded as of the acquisition date (in thousands):

Cash and cash equivalents

Accounts receivable and contract assets

Property and equipment, net

Operating lease right-of-use assets

Software technology

Customer relationships

Accrued expenses and other current liabilities

Operating lease liabilities

Deferred revenue

Total estimated consideration

Goodwill primarily represents the value of cash flows from future customers and the employee workforce.

The Company expects to deduct the amortization of goodwill and intangible assets for tax purposes.

A portion of the amortization deduction will commence upon settlement of contingent consideration liabilities.

The Company valued the intangible assets using income-based approaches.

Significant assumptions included forecasts of revenues, cost of revenues, researc h and development expense, sales and marketing expense, general and administrative expense, technology lives, royalty rates, working capital rates, customer attrition rates and other estimates.

The Company discounted the cash flows at 24 %, reflecting the risk profile of the assets.

Acquisition-related expenses totaled $ 0.1 million for the year ended December 31, 2022, which is included in general and administrative expense.

Pro Forma Information

The unaudited pro forma combined revenue and net income presented below have been prepared as if the Company had acquired SafePointe and Forensic Logic on January 1, 2021 and is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021.

The unaudited pro forma financial information has been derived from the consolidated statements of operations of the Company, SafePointe and Forensic Logic for the below periods.

The historical financial information has been adjusted in the unaudited combined pro forma information based upon currently available information and certain estimates and assumptions.

The actual effect of the transactions ultimately may differ from the pro forma adjustments included herein.

However, management believes that the assumptions used to prepare the pro forma adjustments provide a reasonable basis for presenting the significant effects of the transactions as currently contemplated and that the pro forma adjustments are factually supportable, give appropriate effect to the expected impact of events that are directly attributable to the transactions, and reflect those items expected to have a continuing impact on the Company.

The unaudited pro forma combined revenue for the years ended December 31, 2023, 2022 and 2021 would have been $ 93.9 million, $ 81.8 million and $ 64.8 million, respectively.

The unaudited pro forma combined net income (loss) for the years ended December 31, 2023, 2022 and 2021, would have been $( 4.2 ) million, $ 4.4 million and $( 9.2 ) million, respectively.

Fair Value Measurements

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This fair value measurement is classified as Level III within the fair value hierarchy as prescribed by ASC 820, Fair Value Measurement .

During the years ended December 31, 2023 and 2022, the fair value of the contingent consideration was decreased b y $ 3.2 million and $ 9.2 million, respectively, based upon adjustments to recorded liabilities as a result of actual revenues.

During the years ended December 31, 2023 and 2022, the fair value of the contingent consideration was decreased to zero b y $ 3.2 million and $ 9.2 million, respectively, based upon adjustments to recorded liabilities as a result of actual revenues.

As a result of actual revenue recognized, the company did no t pay any amounts under the contingent consideration and no further contingent payments remain.

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This fair value measurement is classified as Level III within the fair value hierarchy as prescribed by ASC 820, Fair Value Measurement .

During the year ended December 31, 2023, the fair value of the contingent consideration was decreased by $ 2.4 million based upon revised estimated 2024 and 2025 revenue targets.

The changes in the fair value of the aggregate contingent consideration liability are summarized below (in thousands):

During the year ended

December 31, 2024 and 2023 , the fair value of the contingent consideration was decreased by $ 0.6 million and $ 2.4 million, respectively, based upon revised estimated 2024 and 2025 revenue targets.

The changes in the fair value of the aggregate contingent consideration liability all of which were classified as Level III are summarized below (in thousands):

Year Ended December 31,

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Payment of contingent consideration liability

Contingent consideration - Forensic Logic (Note 4 - Acquisitions)

Contingent consideration - SafePointe (Note 4 - Acquisitions)

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There were no transfers into or out of Level III during the year ended December 31, 2024 and 2023.

The Company has $ 10.0 million in a money market fund.

The fair value measurement was classified as Level I within the fair value hierarchy as prescribed by Accounting Standards Codification 820-10-35-37 ("ASC 820, Fair Value Measuremen t").

The Company records its financial assets and liabilities at fair value.

The carrying amounts of certain of the Company’s financial instruments, including cash, trade and other receivables, net, and accounts payable, approximate their fair value due to their short maturities.

The changes in goodwill for 2024 and 2023 are as follows (in thousands):

Beginning balance

Acquisition of Forensic Logic (Note 4 - Acquisitions)

Acquisition of SafePointe (Note 4 - Acquisitions)

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December 31, 2024

Weighted-Average Amortization Period (in years)

Accumulated Amortization

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Total intangible assets, net

Intangible amortization expense was $ 3.9 million, $ 2.8 million, and $ 1.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Intangible assets amortization expense was $ 3.9 million, $ 3.9 million, and $ 2.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table presents future intangible asset amortization as of December 31, 2024 (in thousands):

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Prepaid insurance

Other prepaid expenses

Short-term deposits

Other prepaid expenses

Accounts receivable and contract assets, net (in thousands):

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Accumulated depreciation and amortization

Depreciation and amortization expense during the years ended December 31, 2023, 2022 and 2021 was $ 6.7 million, $ 6.4 million, and $ 5.8 million, respectively.

Depreciation expense during the years ended December 31, 2024, 2023 and 2022 was $ 6.2 million, $ 6.7 million, and $ 6.4 million, respectively.

Accrued expenses and other current liabilities (in thousands):

Personnel-related accruals

Contingent consideration liability

Operating lease liabilities

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Sales/use tax payable

State income tax payable

Other liabilities (long-term) (in thousand):

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The Company has a Credit Agreement with Umpqua Bank (the "Credit Agreement"), which allows borrowings of up to $ 25.0 million under a revolving facility and provides for a letter of credit sub-facility of up to $ 7.5 million.

As of December 31, 2023, the Credit Agreement expired on October 15, 2024 .

The Credit Agreement had an original expiration date of October 15, 2024 .

On February 12, 2024, the Company entered into an amendment to the Credit Agreement extending the maturity date to October 15, 2025 .

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Under the Credit Agreement, the Company has the option to select an interest rate based on either (1) a base rate, which fluctuates daily and is the greater of (a) the prime rate in effect as of any date of determination and (b) the SOFR rate as of such date of determination plus 1.0 % per annum or (2) a SOFR rate, which can be for a period of 30 , 90 or 180 days at the Company’s option and is equal to the SOFR rate as published by CME Group Benchmark Administration Limited, in each case plus 2.0 % per annum.

Any letters of credit issued under the Credit Agreement will be subject to a fee of 2.0 % per annum.

Any letters of credit issued under the Credit Agreement

will be subject to a fee of 2.0 % per annum.

Borrowings under the Credit Agreement may be repaid and re-borrowed at any time prior to termination of the Credit Agreement.

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As of December 31, 2024 , there was $ 4.0 million outstanding on the Company's line of credit, which the Company borrowed in August 2023 to partially fund the acquisition of SafePointe.

There were no amounts outstanding on December 31, 2022.

There were $ 7.0 million outstanding on December 31, 2023.

The interest expense recorded for the year ended December 31, 2024 was $ 0.4 million, based on a weighted-average interest rate of 6.28 %.

Related Party Transactions

During the year ended December 31, 2023, 2022 and 2021, the Company recogniz ed $ 0.1 mil lion, $ 0.8 million, and $ 0.1 million in revenues, respectively, from SoundThinking Labs projects with charitable organizations that have received donations from one of the Company’s directors and one of the Company’s significant shareholders.

During the years ended December 31, 2024, 2023 and 2022, the Company recogniz ed $ 0.1 mil lion, $ 0.1 million, and $ 0.8 million in revenues, respectively, from SoundThinking Labs projects with charitable organizations that have received donations from one of the Company’s directors and one of the Company’s significant shareholders.

The domestic and foreign components of net income (loss) before income tax were as follows (in thousands):

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Year Ended December 31,

Total provision (benefit) for income tax

Total provision for income tax

A reconciliation of income taxes at the statutory federal income tax rate to income tax expense included in the accompanying consolidated statements of operations is as follows (in thousands):

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The valuation allowance changed by $ 2.4 million during the year ended December 31, 2024.

This is different than 2023, which includes an increase to the valuation allowance related to ASC 805 Business Combination accounting and to certain changes in temporary differences that give rise to deferred tax liabilities related to indefinite-lived intangible assets.

which includes an increase to certain changes in temporary differences that give rise to deferred tax liabilities related to indefinite-lived intangible assets.

At December 31, 2024 and 2023 , the Company had available net operating loss carryforwards of approximately $ 50.0 million and $ 57.9 million, respectively, for federal income tax purposes, of which $ 45.1 million were generated before 2018 and will begin to expire in 2030 .

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Increases for current year tax positions

Decreases for prior year tax positions

Increases for prior year tax positions

Balance as of December 31, 2024

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Years beyond the normal statutes of limitations remain open to audit by tax authorities due to tax attributes generated in earlier years which are being carried forward and may be audited in subsequent years when utilized.

Restructuring

In the second quarter of 2024, the Company restructured its workforce and eliminated 3 % of its total headcount to more effectively allocate its resources and to reduce operational costs.

Additionally, the Company terminated a building lease early for a location that was no longer in use.

Restructuring expense related to the workforce reduction during twelve months ended December 31, 2024 amounted to $ 0.3 million, consisting of cash expenditures for severance and other employee separation-related costs .

Restructuring expenses related to the lease termination were $ 0.1 million, comprising of early termination fees and monthly rent .

These restructuring expenses were recorded in operating expense, net, in the consolidated statement of operations.

As of December 31, 2024, the Company had no restructuring liabilities.

Capital Stock

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Although the board of directors has authorized the stock repurchase program, it does not obligate the Company to repurchase any specific dollar amount or number of shares, there is no expiration date for the stock repurchase program, and the stock repurchase program may be modified, suspended or terminated at any time and for any reason.

During the year ended December 31, 2023, the Company repurchased 228,782 shares of its common stock at an average price of $ 24.41 per share for $ 5.6 million.

During the year ended December 31, 2022, the Company repurchased 106,992 shares of its common stock at an average price of $ 28.81 per share for $ 3.1 million and used up the remaining balance under the stock repurchase program authorized in May 2019.

During the year ended December 31, 2024 , the Company repurchased 418,940 shares of its common stock at an average price of $ 14.31 per share for a total of $ 6.0 million under its stock repurchase program.

During the year ended December 31, 2023 , the Company repurchased 228,782 shares of its common stock at an average price of $ 24.41 per

share for $ 5.6 million.

The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired.

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During the year ended December 31, 2023, the Company modified options to accelerate vesting for two individuals in respect of an aggregate of 6,734 options.

The Company accounted for these as modifications of those awards and recognized net incremental compensation expense of approximately $ 52,000 during the year ended December 31, 2023.

The Company accounted for these as modifications of those

awards and recognized net incremental compensation expense of approximately $52,000 during the year ended December 31, 2023.

There was no modification in 2024.

Additional information for stock options at December 31, 2024 were as follows:

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Restricted Stock Units

The Company grants RSUs under the 2017 Plan to executive management and its non-employee directors.

The Company grants RSUs under the 2017 Plan to executive management, its non-employee directors and other directors.

RSUs granted to executive management generally vest over four years , while RSUs granted to non-employee directors generally vest annually.

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Compensation expense for RSUs is based upon the estimated fair value of the awards on the date of grant.

A s ummary of RSU activities during 2023, 2022 and 2021 is as follows:

A summary of RSU activities during 2024, 2023 and 2022 is as follows:

Grant Date Fair Value per RSU

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During the year ended December 31, 2022, the Company modified RSUs to accelerate vesting for two individuals in respect of 5,849 RSUs and cancelled the award of another individual in respect of 1,887 RSUs.

The Company accounted for these as modifications of those awards and recognized net incremental compensation expense of $ 0.01 million during the year ended December 31, 2022.

The Company accounted for these as modifications of those awards and recognized net incremental compensation expense of $0.01 million during

the year ended December 31, 2022.

The incremental compensation cost is measured as the excess of the fair value of the modified award over the fair value of the original award immediately before its terms were modified and recognized as compensation expense on the date of modification for vested awards.

There was no modification in 2024.

Performance-based restricted stock units

During the year ended December 31, 2023, the Company granted certain executive management RSU awards, subject to certain performance-based vesting conditions ("PRSUs").

The PRSUs totaled 23,569 shares, at a grant date fair value of $ 20.12 per share, the closing stock price on the grant date, and will vest on February 15, 2025, based on 2023 performance targets achieved, subject to the officer's continuous service as an officer of the Company through such date.

Compensation expense related to the PRSUs is estimated each period based on the fair value of the target stock unit at the grant date and the most probable level of achievement of the performance conditions.

Compensation expense related to these awards was approximately $ 0.1 million for the year ended December 31, 2023.

During the year ended December 31, 2024, the Company granted to members of the Company's management team RSU awards with performance-based vesting conditions (“PSUs”), totaling 544,228 shares at a grant date fair value of $17.74 per share, the closing stock price on the grant date.

These PSUs vest in one installment at the end of three years in 2027, based on the satisfaction of revenue and Adjusted EBITDA performance goals for fiscal year 2026, as determined by the Compensation and Human Capital Committee of the Board of Directors of the Company.

Compensation expense related to the PSUs is estimated each period based on the fair value of the target stock unit at the grant date and the most probable level of achievement of the performance conditions.

Compensation expense related to these awards was approximately $1.3 million and $0.1 million for the years ended December 31, 2024 and 2023.

2017 Employee Stock Purchase Plan

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No participant will have the right to purchase shares of common stock in an amount that has a fair market value of more than $ 25,000 determined as of the first day of the applicable purchase period, for each calendar year.

The 2017 ESPP contains a provision which provides for an automatic annual share increase on January 1 of each year, in an amount equal to the lesser of (1) 2 % of the total number of shares of common stock outstanding on December 31 st of the preceding calendar year, (2) 150,000 shares or (3) such number of shares as determined by the board of directors.

The Company's board of directors authorized the automatic increase to the 2017 ESPP plan for the year ended December 31, 2023.

The 2017 ESPP contains a provision which provides for an automatic annual share increase on January 1 of each year, in an amount equal to the lesser of (1) 2 % of the total number of shares of common stock outstanding on December 31 st of the preceding calendar year, (2) 150,000 shares or (3) such lesser number of shares as determined by the board of directors.

The Company's board of directors turned down the automatic increase to the 2017 ESPP plan for the year ended December 31, 2024 .

The following table summarizes the activity of shares available under the 2017 ESPP:

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In January 2022, as part of the Forensic Logic acquisition, the Company acquired the non-cancelable operating leases of Forensic Logic's offices in Walnut Creek, California and Tucson, Arizona, which expire in June 2025 and February 2026, respectively.

The Walnut Creek office lease was early terminated in April 2024.

Neither lease has significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses.

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The Company has elected the practical expedient to group lease and non-lease components for all leases.

In measuring the lease liability upon acquisition, the Company used a discount rate of 3.25 % which reflects the Company’s incremental borrowing rate for a similar asset and similar term as of the date of acquisition.

In measuring the lease liability upon acquisition, the Company used a discount rate of 3.25% for the Tucson office which reflects the Company’s incremental borrowing rate for a similar asset and similar term as of the date of acquisition.

In January 2024, the Company executed a new lease in Iselin, New Jersey which commenced in April 2024 and expires in March 2029 .

The lease has no significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses.

The lease contains an option to extend the term for an additional period of three years subject to certain terms and conditions.

The Company has elected the practical expedient to group lease and non-lease components for all leases.

In measuring the lease liability upon acquisition, the Company used a discount rate of 7.33 % for the Iselin, New Jersey office which reflects the Company’s incremental borrowing rate for a similar asset and similar term as of the date of commencement.

The operating lease cost recognized for the years ended December 31, 2024, 2023 and 2022 , was $ 1.1 mi llion, $ 1.0 million and $ 0.6 million, respectively.

The Company’s operating leases have a weighted average remaining lease term of 2.74 years and weighted average discount rate of 4.5 %.

Supplemental information related to the operating leases as follows (in thousands):

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Commitments and Contingencies

Contingencies

On August 28, 2018, Silvon S.

Simmons (the "Plaintiff") amended a complaint against the City of Rochester, New York, and various city employees, filed in the United States District Court, Western District of New York, to add the Company and employees as defendants.

The amended complaint alleges conspiracy to violate plaintiff's civil rights, denial of the right to a fair trial, and malicious prosecution.

The Plaintiff claims that SoundThinking colluded with the City of Rochester to fabricate and create gunshot alert evidence to secure Plaintiff's conviction.

On the basis of the allegations, the Plaintiff has petitioned for compensatory and punitive damages and other costs and expenses, including attorney's fees.

The Company believes that the Plaintiff's claims are without merit and are disputing them vigorously.

Simmons (the “Plaintiff”) amended a complaint against the City of Rochester, New York and various city employees, filed in the United States District Court, Western District of New York, to add us and employees as defendants.

The amended complaint alleges conspiracy to violate the Plaintiff's civil rights, denial of the right to a fair trial, and malicious prosecution.

In September 2024, SoundThinking was dismissed from the lawsuit.

The Company may become subject to legal proceedings, as well as demands and claims that arise in the normal course of business.

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As a result, a settlement of, or an unfavorable outcome on, any of the matters referenced above or other litigation matters could have a material adverse effect on the Company’s business, operating results, financial condition, and cash flows.

Segment Reporting

The Company operates as a single operating segment.

The Company’s chief operating decision maker is one individual and has the role of President and Chief Executive Officer (the "CODM").

The CODM reviews financial information including operating results and assets on a consolidated basis and is regularly provided with only the consolidated expenses as noted on the face of the income statement.

For information about how the Company derives revenue, as well as the Company’s accounting policies, refer to Note 2—Summary of Significant Accounting and Reporting Policies.

Subsequent Events

Management evaluated subsequent events through April 1, 2024, which was the date the financial statements were available to be issued, and determined that there are no subsequent events to be reported.

Management evaluated subsequent events through March 31, 2025, which was the date the financial statements were available to be issued, and determined that there are no subsequent events to be reported.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNT ANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13-a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2024, our disclosure controls and procedures were not effective to provide reasonable assurance that the information we are required to file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of a material weakness in our internal control over financial reporting discussed below.

Notwithstanding the identified material weakness described below, management does not believe that the material weakness had an adverse effect on our reported operating results or financial condition and management has determined that the consolidated financial statements and other information included in this report and other periodic filings present fairly in all material respects our financial condition, results of operations, and cash flows at and for the periods presented in accordance with U.S.

GAAP, and does not modify or change financial guidance provided by the Company.

Changes in Internal Control over Financial Reporting

In January 2022, we completed the acquisition of Forensic Logic and in August 2023, we completed the acquisition of SafePointe.

We continue to integrate internal controls at Forensic Logic and SafePointe into our control structure.

With the exception of these changes, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

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Our management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

Based on the results of our evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.

Based on the results of our evaluation, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2024 as a result of the material weakness in our internal control over financial reporting discussed below.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the assessment of our internal control

over financial reporting described above, management identified the following deficiencies that individually, or in the aggregate, constituted a material weakness in our internal control over financial reporting as of December 31, 2024:

Management identified a material weakness in the design of the controls related to the verification of the completeness and accuracy of data used in schedules supporting the consolidated financial statements but is confident that the weakness does not modify or change financial guidance provided by the company.

Remediation Plan

We have initiated certain measures to remediate this material weakness, including fully documenting our processes, training our personnel and monitoring our controls, related to the verification of the completeness and accuracy of data used in schedules supporting the consolidated financial statements.

We may need to implement additional appropriate measures in the future.

However, there can be no assurance that we will be able to fully remediate this material weakness or that our remedial actions will prevent this weakness from re-occurring in the future.

OTHER INFORMATION

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Incorporated by Reference

Amended Restated Certificate of Incorporation

Amended and Restated Certificate of Incorporation

April 11, 2023

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Form of Common Stock Certificate

Investors' Rights Agreement, by and among ShotSpotter, Inc.

and the investors listed on Exhibit A thereto, dated July 12, 2012

Description of Capital Stock

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2017 Equity Incentive Plan

April 1, 2024

Forms of Option Agreement and Option Grant Notice under the 2017 Equity Incentive Plan

April 1, 2024

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Restricted Terms and Conditions under the 2017 Equity Incentive Plan

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2017 Employee Stock Purchase Plan

April 1, 2024

Form of Restricted Stock Unit Grant Notice for Directors

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and Erin Edwards dated September 21, 2023

April 1, 2024

Lease Agreement between Washington Township Health Care District and ShotSpotter, Inc., dated August 16, 2021

17 unchanged sentences

February 12, 2024

Amended and Restated Nonemployee Director Compensation Policy, dated February 14, 2023

March 14, 2023

Amended and Restated Nonemployee Director Compensation Policy, dated June 27, 2024

August 15, 2024

SoundThinking, Inc.

Insider Trading Policy

List of Subsidiaries

April 1, 2024

Consent of Baker Tilly US, LLP, Independent Registered Public Accounting Firm for SoundThinking, Inc.

6 unchanged sentences

SoundThinking, Inc, Incentive Compensation Recoupment Policy

April 1, 2024

Inline XBRL Instance Document

5 unchanged sentences

SOUNDTHINKING, INC.

April 1 , 2024

March 31, 2025

President and Chief Executive Officer

April 1 , 2024

March 31, 2025

Chief Financial Officer

5 unchanged sentences

Director (Principal Executive Officer)

April 1, 2024

March 31, 2025

Chief Financial Officer (Principal Financial

and Accounting Officer)

April 1, 2024

March 31, 2025

/s/ Pascal Levensohn

April 1, 2024

March 31, 2025

Pascal Levensohn

/s/ Ruby Sharma

April 1, 2024

March 31, 2025

/s/ William J.

April 1, 2024

March 31, 2025

/s/ Deborah Grant

April 1, 2024

March 31, 2025

Deborah Grant

/s/ Roberta S.

April 1, 2024

March 31, 2025

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis