Item 8. Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary Data.
Page Number
VERITONE, INC.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 248 )
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Consolidated Balance Sheets
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Consolidated Statements of Operations and Comprehensive Loss
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Consolidated Statements of Stockholders’ Equity (Deficit)
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Consolidated Statements of Cash Flows
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Notes to Consolidated Financial Statements
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Veritone, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Veritone, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Going concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has debt service obligations, negative working capital and has incurred historical negative cash flows and recurring losses. These conditions, along with other matters as set forth in Note 3, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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.
Consolidated financial statements - impact of internal control over financial reporting
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As described in management’s annual report on internal control over financial reporting included at Item 9A. of Form 10-K for the year ended December 31, 2025, the Company reported material weaknesses related to the control environment, risk assessment, information and communication, and control activities related to information technology general controls (“ITGC”) and determining the appropriate accounting for non-routine revenue transactions (collectively “material weaknesses"). The prevention, detection, and correction of material misstatements of the consolidated financial statements, is dependent, in part, on management (i) designing and maintaining an effective control environment, including maintaining sufficient resources within the accounting and financial reporting department to review complex financial reporting transactions; and updating and distributing accounting policies and procedures across the organization (ii) designing and implementing effective information and communication process to identify and assess the source of and controls necessary to ensure the reliability of information used in financial reporting and that communicates relevant information about roles and responsibilities for internal control over financial reporting and (iii) designing and implementing effective process-level control activities and information technology general controls related to financial reporting processes. We identified the impact on our audit of the material weaknesses as a critical audit matter.
The principal consideration for our determination that the impact on our audit of the material weaknesses is a critical audit matter is that especially challenging auditor judgment was required in designing audit procedures and evaluating audit evidence due to the ineffective system of internal control over financial reporting, which affects substantially all consolidated financial statement account balances and disclosures.
Our audit procedures related to the material weaknesses included the following, among others.
• We determined the nature and extent of audit procedures that are responsive to the identified material weaknesses and evaluated the evidence obtained from the procedures performed.
• We lowered the threshold used for investigating differences noted for recorded amounts.
• We selected larger sample sizes for tests of details.
• We substantively tested the accuracy and completeness of system-generated reports used in the audit and more extensively tested these reports.
• We increased the extent of supervision over the execution of audit procedures.
Revenue from contracts with customers involving non-cash consideration
As described in Note 3 to the financial statements, during the year ended December 31, 2025, the Company entered into revenue contracts in which software licenses were exchanged for non-cash consideration. The transaction price in these arrangements is determined based on the estimated fair value of non-cash consideration at contract inception, if readily determinable, or the stand-alone selling price of the software if the fair value of the non-cash consideration is not readily determinable. Determining the transaction price in these arrangements involves significant management judgment and estimation, particularly in the absence of readily observable market prices for the goods exchanged. We identified the transaction price of contracts with customers involving non-cash consideration as a critical audit matter.
The principal considerations for our determination that the transaction price of contracts with customers involving non-cash consideration is a critical audit matter included the following. Management’s determination of the transaction price using estimates of fair value or stand-alone selling price involved significant measurement uncertainty due to limited observable inputs for the assets and licenses exchanged. In addition, during the performance of our audit procedures, we identified certain misstatements in the transaction price initially determined by the Company and recognized as revenue. Although such misstatements were corrected by the Company and reflected in these consolidated financial statements, the identification of misstatements along with the other factors described contributed to our assessment of a significant risk of material misstatement associated with revenue transactions involving non-cash consideration and necessitated an increased extent of audit effort, including auditor subjectivity and judgement in applying audit procedures and evaluating the Company’s accounting for these transactions.
Our audit procedures related to the transaction price of revenue contracts with customers involving non-cash consideration included the following, among others.
• We evaluated the reasonableness of the methodology applied by the Company to determine the fair value or stand-alone selling price, including evaluating whether observable inputs were utilized in accordance with accounting principles generally accepted in the United States.
• We consulted with our national office regarding the accounting for the revenue transactions involving non-cash consideration
• We developed an independent expectation of the stand-alone selling price for selected transactions considering evidence of observable inputs and compared our expectation to the Company’s estimate.
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• We evaluated the reasonableness of prospective financial information used in the fair value measurement of the transaction price by comparing forecasts to historical results and considering the impact of internal and external economic factors, as well as evaluating management’s intent and ability to carry out courses of action underpinning the prospective financial information.
• We conducted sensitivity analyses on key assumptions to assess the impact of estimation uncertainty associated with certain assumptions.
• We evaluated the consistency of the assumptions used in the measurement of the transaction price with evidence obtained in other areas of the audit.
• We evaluated the appropriateness of the Company’s adjustments that were recorded to correct the misstatements that were identified as a result of our audit procedures.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2018.
Phoenix, Arizona
April 15, 2026
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VERITONE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts)
December 31,
2025 December 31,
2024
ASSETS
Current assets:
Cash and cash equivalents $ 27,426 $ 16,911
Accounts receivable, net 36,768 31,997
Prepaid expenses and other current assets 9,720 10,498
Total current assets 73,914 59,406
Property, equipment, and improvements, net 9,582 10,052
Intangible assets, net 38,639 59,500
Goodwill 54,256 53,110
Restricted cash 289 407
Other assets 5,600 15,585
Total assets $ 182,280 $ 198,060
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 16,487 $ 11,023
Deferred revenue 12,290 12,056
Term Loan, current portion (Note 5) — 7,750
Convertible notes, current portion (Note 5) 45,317 —
Accrued purchase compensation, current portion 1,500 1,200
Accrued expenses and other current liabilities 28,186 28,928
Total current liabilities 103,780 60,957
Convertible Notes (Note 5) — 90,135
Term Loan, non-current portion (Note 5) — 21,316
Accrued purchase compensation, non-current portion — 900
Other non-current liabilities 10,376 11,300
Total liabilities 114,156 184,608
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $ 0.001 par value; 150,000 and 75,000 shares authorized as of December 31, 2025 and December 31, 2024, respectively; 92,627 and 40,218 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively
93 41
Additional paid-in capital 645,962 480,477
Accumulated other comprehensive income 1,081 214
Accumulated deficit ( 579,012 ) ( 467,280 )
Total stockholders’ equity 68,124 13,452
Total liabilities and stockholders’ equity $ 182,280 $ 198,060
See the accompanying notes to consolidated financial statements.
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VERITONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
Year Ended
December 31,
2025 December 31,
2024
Revenue $ 92,192 $ 92,637
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) 29,608 27,254
Sales and marketing 42,689 39,837
Research and development 20,711 26,817
General and administrative 53,264 58,425
Depreciation and amortization 27,174 28,510
Total operating expenses 173,446 180,843
Operating loss ( 81,254 ) ( 88,206 )
Interest expense, net 10,224 12,071
Gain on troubled debt restructuring ( 1,448 ) —
Loss on debt extinguishment 14,443 —
Other expense (income), net 7,487 ( 84 )
Loss from continuing operations before income taxes ( 111,960 ) ( 100,193 )
Benefit from income taxes ( 228 ) ( 3,861 )
Net loss from continuing operations ( 111,732 ) ( 96,332 )
Net income from discontinued operations, net of income taxes (inclusive of gain on sale of $ 66,553 for the year ended December 31, 2024)
— 58,948
Net loss $ ( 111,732 ) $ ( 37,384 )
Loss per share:
Loss per share from continuing operations, basic and diluted $ ( 1.76 ) $ ( 2.53 )
Earnings per share from discontinued operations, basic and diluted $ — $ 1.55
Loss per share, basic and diluted $ ( 1.76 ) $ ( 0.98 )
Weighted-average common shares outstanding used in computing loss per share, basic and diluted 63,316 38,035
Comprehensive loss:
Net loss $ ( 111,732 ) $ ( 37,384 )
Foreign currency translation gain, net of income taxes 867 224
Total comprehensive loss $ ( 110,865 ) $ ( 37,160 )
See the accompanying notes to consolidated financial statements.
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VERITONE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
Common Stock
Shares Amount Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity
Balance as of December 31, 2023 37,186 $ 38 $ 468,015 $ ( 10 ) $ ( 429,896 ) $ 38,147
Common stock issued under employee stock plans 1,318 1 554 — — 555
Common stock withheld for employee taxes and other ( 292 ) — ( 1,093 ) — —
( 1,093 )
Common stock issued in connection with warrant exercises 298 — — — — —
Common stock issued in connection with at-the-market offering, net of offering costs 1,708 2 4,499 — — 4,501
Stock-based compensation — — 8,502 — — 8,502
Net loss — — — — ( 37,384 ) ( 37,384 )
Foreign currency translation adjustment, net of income taxes — — — 224 — 224
Balance as of December 31, 2024 40,218 $ 41 $ 480,477 $ 214 $ ( 467,280 ) $ 13,452
Common stock issued under employee stock plans 1,024 1 545 — — 546
Common stock withheld for employee taxes and other ( 198 ) — ( 622 ) — — ( 622 )
Common stock and pre-funded warrants issued in connection with registered direct offering and private placement, net of offering costs 35,030 35 125,605 — — 125,640
Common stock issued in connection with term loan amendments 482 — 873 — — 873
Common stock issued in connection with at-the-market offering, net of offering costs 10,033 10 28,996 — — 29,006
Common stock issued in connection with exercises of pre-funded warrants 5,413 5 49 — — 54
Common stock issued in connection with repurchase of convertible senior notes 625 1 3,161 — — 3,162
Stock-based compensation — — 6,878 — — 6,878
Net loss — — — — ( 111,732 ) ( 111,732 )
Foreign currency translation adjustment, net of income taxes — — — 867 — 867
Balance as of December 31, 2025 92,627 $ 93 $ 645,962 $ 1,081 $ ( 579,012 ) $ 68,124
See the accompanying notes to consolidated financial statements.
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VERITONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
December 31,
2025 December 31,
2024
Cash flows from operating activities:
Net loss $ ( 111,732 ) $ ( 37,384 )
Less: net income from discontinued operations, net of income taxes — ( 58,948 )
Net loss from continuing operations ( 111,732 ) ( 96,332 )
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities from continuing operations:
Depreciation and amortization 27,174 28,510
Stock-based compensation 6,686 7,705
Non-cash interest expense 4,456 4,206
Deferred income taxes ( 1,338 ) ( 4,892 )
Provision for credit losses 915 1,144
Reduction in carrying amount of operating lease right-of-use assets 886 829
Gain on troubled debt restructuring ( 3,548 ) —
Loss on debt extinguishment 14,443 —
Non-cash barter revenue ( 1,511 ) —
Change in fair value of earnout receivable 7,667 ( 1,357 )
Changes in operating assets and liabilities:
Accounts receivable ( 5,686 ) 948
Prepaid expenses and other current assets 2,323 1,332
Other assets 2,334 180
Accounts payable 5,356 ( 5,461 )
Deferred revenue 234 ( 757 )
Accrued expenses and other current liabilities ( 1,804 ) 2,134
Other non-current liabilities ( 60 ) 2,504
Net cash used in operating activities from continuing operations ( 53,205 ) ( 59,307 )
Net cash provided by operating activities from discontinued operations — 34,584
Net cash used in operating activities ( 53,205 ) ( 24,723 )
Cash flows from investing activities:
Capital expenditures ( 4,978 ) ( 6,098 )
Proceeds from sale of Veritone One, net of cash divested — 2,850
Sale of non-marketable equity investment — 1,800
Net cash used in investing activities from continuing operations ( 4,978 ) ( 1,448 )
Net cash used in investing activities from discontinued operations — ( 160 )
Net cash used in investing activities ( 4,978 ) ( 1,608 )
Cash flows from financing activities:
Repayment of principal on senior secured term loan ( 41,176 ) ( 36,324 )
Repayment of principal on convertible debt ( 38,656 ) —
Proceeds from issuance of stock and pre-funded warrants under registered direct offerings and at-the-market offering, net of offering costs 154,700 4,501
Debt issuance and extinguishment costs ( 5,367 ) —
Proceeds from issuance of stock under employee stock plans, net 545 555
Taxes paid related to net share settlement of equity awards ( 622 ) ( 943 )
Settlement of deferred consideration for acquisitions — ( 1,800 )
Net cash provided by (used in) financing activities from continuing operations 69,424 ( 34,011 )
Net cash used in financing activities from discontinued operations — ( 3,051 )
Net cash provided by (used in) financing activities 69,424 ( 37,062 )
Effect of exchange rates on cash, cash equivalents, and restricted cash ( 844 ) 405
Net change in cash, cash equivalents, and restricted cash 10,397 ( 62,988 )
Cash, cash equivalents, and restricted cash, beginning of period 17,318 80,306
Cash, cash equivalents, and restricted cash, end of period 27,715 17,318
Cash, cash equivalents, and restricted cash included in continuing operations $ 27,715 $ 17,318
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Income taxes paid $ 2,008 $ 563
Interest paid $ 6,299 $ 11,366
Non-cash investing and financing activities:
Stock-based compensation capitalized as part of internal-use software $ 192 $ 375
Lease liabilities arising from right-of-use assets $ 1,840 $ —
Shares issued for debt issuance costs $ 873 $ —
Common stock issued in connection with repurchase of convertible senior notes $ 3,162 $ —
Fair value of earnout receivable - sale of Veritone One $ — $ 6,310
Fair value of indemnification receivable - sale of Veritone One $ — $ 5,150
Capital expenditures included in accounts payable $ 108 $ —
See the accompanying notes to consolidated financial statements.
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VERITONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Veritone, Inc., a Delaware corporation (“Veritone,” and together with its subsidiaries, collectively, the “Company”), is a provider of artificial intelligence (“AI”) computing solutions. The Company’s proprietary AI operating system, aiWARE™, uses machine learning algorithms, or AI models, together with a suite of powerful applications, to reveal valuable insights from vast amounts of structured and unstructured data. aiWARE serves as the foundation for the Company’s AI solutions and bespoke applications and offers access to hundreds of cognitive categories through one common software infrastructure. Highly modular and customizable, aiWARE enables expansive scale with the flexibility to deploy in the cloud, at the edge or in hybrid environments. The Company’s aiWARE platform offers capabilities that are designed to mimic human cognitive functions such as perception, prediction and problem solving, enabling users to quickly, efficiently and cost effectively transform unstructured data into structured data, and analyze and optimize data to drive business processes and insights. aiWARE is based on an open architecture that enables new AI models, applications and workflows to be added quickly and efficiently, resulting in a scalable and evolving solution that can be leveraged by organizations across a range of industries.
The Company offers Software Products & Services to Commercial Enterprise and Public Sector customers using the Company’s aiWARE platform and Veritone Hire solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of such solutions.
The Company also offers Managed Services, which include cloud-native digital content management solutions and content licensing services and representation services, through among other things, its VeriAds Network, which is comprised of programs that enable broadcasters, podcasters and social media influencers to generate incremental revenue. These offerings leverage the Company’s aiWARE technologies, providing customers with unique capabilities to enrich and drive expanded revenue opportunities from their content.
Through October 17, 2024 (the “Divestiture Closing Date”), the Company operated a full-service advertising agency through a wholly-owned subsidiary, Veritone One (as defined below), that leveraged aiWARE to provide differentiated Managed Services to its customers. On October 17, 2024, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”), by and among the Company, Veritone One, LLC, a wholly-owned subsidiary of the Company (“Veritone One”), and Oxford Buyer, LLC (“Purchaser”), an affiliate of Insignia Capital Group L.P., pursuant to which, among other things, Purchaser acquired from the Company all of the issued and outstanding equity of Veritone One (such transaction, the “Divestiture”). Veritone One’s services included media planning and strategy, advertisement buying and placement, campaign messaging, clearance verification and attribution, and custom analytics, specializing in host-endorsed and influencer advertising across primarily radio, podcasting, streaming audio, social media and other digital media channels. The Company determined that the Divestiture represents a strategic shift that will have a material effect on the Company’s operations and financial results. Therefore, the historical financial results of Veritone One are reflected in these consolidated financial statements as discontinued operations and, as such, have been excluded from continuing operations for all periods presented on a retrospective basis, unless otherwise stated. Refer to Note 4, Discontinued Operations, Business Combinations, and Divestiture , for further details.
2. Revision of Previously Issued Financial Statements
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During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025 the Company’s management identified immaterial errors within the Company’s previously issued unaudited condensed consolidated financial statements as of and for the quarterly period ended June 30, 2025 as included in the Company’s previously filed Q2 2025 Form 10-Q. The immaterial errors resulted in: (i) an $ 0.8 million overstatement of revenue, a $ 0.7 million overstatement of accounts receivable and corresponding $ 0.7 million overstatement of cost of revenue (exclusive of depreciation and amortization) and accrued expenses and other current liabilities, ii) $ 0.4 million overstatement of cost of revenue (exclusive of depreciation and amortization) and accrued expenses and other current liabilities and iii) a $ 1.3 million understatement of goodwill, a $ 0.7 million understatement in intangible assets, net and a corresponding $ 2.0 million overstatement of accumulated other comprehensive income (loss). The foregoing was corrected through out of period corrections in the quarter ended September 30, 2025
The Company evaluated the materiality of the errors and concluded the errors were not material to Q2 2025. The financial statements for the quarterly period ended June 30, 2025 have been revised in this Annual Report to correct the errors.
The following table presents a reconciliation of our unaudited condensed consolidated financial information as originally reported to the revised amounts as of and for three and six months ended June 30, 2025:
Condensed Consolidated Balance Sheet
As of June 30, 2025
(in thousands, except for per share amounts) As Previously Reported Adjustment As Revised
Accounts receivable, net 31,859 ( 694 ) 31,165
Total current assets 57,940 ( 694 ) 57,246
Intangible assets, net 47,732 698 48,430
Goodwill 53,110 1,260 54,370
Total assets 186,806 1,264 188,070
Accrued expenses and other current liabilities 28,446 ( 1,000 ) 27,446
Total current liabilities 64,842 ( 1,000 ) 63,842
Total liabilities 185,588 ( 1,000 ) 184,588
Accumulated other comprehensive income (loss) ( 866 ) 1,958 1,092
Accumulated deficit ( 513,953 ) 306 ( 513,647 )
Total stockholders' equity 1,218 2,264 3,482
Total liabilities and stockholders' equity 186,806 1,264 188,070
Condensed Consolidated Statement of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2025
(in thousands, except for per share amounts) As Previously Reported Adjustment As Revised
Revenue 24,013 ( 820 ) 23,193
Cost of revenue (exclusive of depreciation and amortization) 7,478 ( 1,126 ) 6,352
Operating loss ( 19,318 ) 306 ( 19,012 )
Net loss ( 26,798 ) 306 ( 26,492 )
Loss per share, basic and diluted $( 0.54 ) $ 0.01 $( 0.53 )
Foreign currency translation loss (gain), net of income taxes ( 660 ) 1,958 1,298
Total comprehensive loss ( 27,458 ) 2,264 ( 25,194 )
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For the Six Months Ended June 30, 2025
(in thousands, except for per share amounts) As Previously Reported Adjustment As Revised
Revenue 46,476 ( 820 ) 45,656
Cost of revenue (exclusive of depreciation and amortization) 15,312 ( 1,126 ) 14,186
Operating loss ( 40,952 ) 306 ( 40,646 )
Net loss ( 46,673 ) 306 ( 46,367 )
Loss per share, basic and diluted $( 0.95 ) $ 0.01 $( 0.94 )
Foreign currency translation loss (gain), net of income taxes ( 1,080 ) 1,958 878
Total comprehensive loss ( 47,753 ) 2,264 ( 45,489 )
Condensed Consolidated Statement of Cash Flows
For the Six Months Ended June 30, 2025
(in thousands) As Previously Reported Adjustment As Revised
Cash flows from operating activities:
Net loss $ ( 46,673 ) $ 306 $ ( 46,367 )
Accounts receivable ( 530 ) 694 164
Accrued expenses and other current liabilities ( 2,797 ) ( 1,000 ) ( 3,797 )
Net cash used in operating activities ( 25,277 ) $ — ( 25,277 )
3. Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.
Liquidity, Capital Resources, and Going Concern
Pursuant to the requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements—Going Concern , management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued.
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As of December 31, 2025, the Company had cash and cash equivalents of approximately $ 27,426 , a working capital deficit of $ 29,866 and accounts receivable, net of $ 36,768 , and the amount outstanding under its debt obligations was $ 45,317 , net of unamortized discounts, all of which related to the Convertible Notes. Additionally, for the year ended December 31, 2025, net loss was $ 111,732 and net cash used in operating activities was $ 53,205 . The Company’s ability to continue as a going concern is dependent on its ability to generate significant cash flows, obtain sufficient proceeds from any future offerings of securities, and/or obtain alternative financing prior to the maturity of the Convertible Notes in November 2026. The Company expects operating losses to continue in the foreseeable future as it continues to invest in growing its business. To alleviate these conditions, management is actively engaged in discussions to obtain alternative financing prior to the maturity of the Convertible Notes in November 2026. However, there can be no assurance that the Company will be able to obtain alternative financing as it is ultimately outside of the control of the Company.
Due to the Company’s projected cash needs (which includes amounts that will become due under the Convertible Notes upon their maturity in November 2026) combined with its current liquidity level and history of net losses and cash used to fund operating activities, there is substantial doubt regarding the Company’s ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements.
The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. This also means that the accompanying consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainties described above, which could be material.
Reclassifications
Certain reclassifications were made to the prior period consolidated statement of operations and consolidated statement of cash flows to conform to the current period presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenues and expenses.
Significant items subject to estimates and assumptions include, but are not limited to, allowance for credit losses, purchase accounting, impairment of long-lived assets, the valuation of contingent consideration, including future escrow and earnout consideration on the divestiture of Veritone One, the valuation of senior secured debt, the valuation of non-cash consideration received in barter transactions, the valuation of stock awards and stock warrants, and income taxes, where applicable.
There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including lingering economic disruption caused by international conflicts, financial instability, the global inflationary environment and elevated interest rates and the imposition of tariffs, trade tensions, and global trade disputes. The Israel-Hamas and Iran conflicts have also adversely impacted the Company’s business operations because the Company has an office and personnel based in Herzliya, Israel. The Company is not aware of any specific event or circumstance that would require an update to its estimates or assumptions or a revision of the carrying value of its assets or liabilities as of the date of filing of this Annual Report on Form 10-K.
These estimates and assumptions may change as new events occur and additional information is obtained. As a result, actual results could differ materially from these estimates and assumptions.
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Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU improves reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this guidance during the fourth quarter of 2024 did not have a material financial impact on the Company’s consolidated financial statements and the Company has added increased disclosures within the Segment Information section of Note 3, Significant Accounting Policies , to its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU improves the transparency of income tax disclosures by requiring: (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. Additionally, the amendments in this ASU improve the effectiveness and comparability of disclosures by: (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with Regulation S-X, and (2) removing disclosures that no longer are considered cost beneficial or relevant. The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this guidance prospectively during the fourth quarter of 2025 and determined it did not have a material financial impact on the Company’s consolidated financial statements and the Company has added increased disclosures within the income taxes disclosures within Note 13, Income Taxes , to its consolidated financial statements.
New Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods that is generally not presented in the financial statements today. The amendments in this update are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . This ASU allows entities to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The amendments in this update are effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This ASU modernizes the accounting for software costs that are accounted for under Subtopic 350-40 and improves the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. The amendments in this update are effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
Cash Equivalents
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable consist primarily of amounts due from the Company’s clients and customers under normal trade terms. Past due is generally considered greater than 90 days outstanding, but this can vary depending on common business practices for certain products and customers.
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The Company maintains an allowance for expected credit losses to record accounts receivable at their net realizable value. Inherent in the assessment of the allowance for credit losses are certain judgments and estimates relating to, among other things, the Company’s customers’ access to capital, customers’ willingness and ability to pay, general economic conditions and the ongoing relationship with customers. The Company calculates the expected credit losses on a pool basis for those receivables that have similar risk characteristics aligned with the types of accounts receivable listed in the accounts receivable table above. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues. The allowance for expected credit losses is determined by analyzing the Company’s historical write-offs and the current aging of receivables. Adjustments to the allowance may be required in future periods depending on how issues considered such as the financial condition of customers and the general economic climate may change or if the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments. The Company has not historically had material write-offs due to uncollectible accounts receivable.
Trade Credits
The Company provides software licenses as barter transactions in exchange for other assets, such as trade credits, in the ordinary course of business. Trade credits may be redeemed for advertising media, VDR revenue share or other goods and services made available by certain partners and are recorded at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the software promised to the customer. Management monitors trade credit usage and evaluates the need for potential write-downs for estimated trade credits that are expected to remain unused prior to their expiration based on forecasted usage.
Property, Equipment and Improvements
Property, equipment and improvements are stated at cost. Repairs and maintenance to these assets are charged to expense as incurred. Major improvements enhancing the function and/or useful life of the related assets are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives (or lease term, if shorter) of the related assets. At the time of retirement or disposition of these assets, the cost and accumulated depreciation or amortization are removed from the accounts and any related gains or losses are recorded in the Company’s statements of operations and comprehensive loss.
The Company capitalizes qualifying proprietary software development costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (i) the preliminary project stage is completed, and (ii) it is probable that the software will be completed and placed in service for its intended use. Capitalization ceases when the software is substantially complete and ready for its intended use including the completion of all significant testing. Costs related to preliminary project activities and post implementation operating activities are expensed as incurred. The Company capitalizes certain costs related to specific upgrades and enhancements when it is probable that expenditures will result in additional functionality of the software.
The useful lives of property, equipment and improvements are as follows:
• Property and equipment (includes capitalized internal use software development costs) — 3 years
• Leasehold improvements — 5 years or the remaining lease term, whichever is shorter
The Company assesses the recoverability of property, equipment and improvements whenever events or changes in circumstances indicate that their carrying value may not be recoverable. No property, equipment and improvements were impaired in the periods presented.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method. Intangible assets include acquired developed technology, licensed technology, customer relationships, noncompete covenants, and trademarks and tradenames. Intangible assets are amortized on a straight-line basis over the applicable amortization period as set forth below.
The amortization periods for intangible assets are as follows:
• Developed technology — 3 to 5 years
• Customer relationships — 5 to 7 years
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• Noncompete agreements — 3 to 4 years
• Trademarks and trade names — 2 to 10 years
• Licensed technology — shorter of the term of the agreement, or the estimated useful life — 3 to 5 years
Intangible asset amortization expense is recorded in depreciation and amortization on the consolidated statements of operations and comprehensive loss.
Impairment of Goodwill and Long-Lived Assets
Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. The Company’s annual impairment test is performed as of May 31 each year. In assessing goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of such reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if it elects to bypass the qualitative analysis, then it is required to perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit.
The Company reviews long-lived assets to be held and used, other than goodwill, for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows directly associated with the asset are compared with the asset’s carrying amount. If the estimated future cash flows from the use of the asset are less than the carrying value, an impairment charge would be recorded to write down the asset to its estimated fair value.
On May 31, 2025, the Company performed its annual goodwill impairment assessment. The Company determined that an indicator of impairment was present driven by a sustained decrease in the Company's stock price, and as a result, the Company performed a quantitative goodwill impairment assessment as of May 31, 2025 using the enterprise approach, which estimates fair value based on the overall value of the business, including debt, and determined that goodwill was not impaired, as the estimated fair value of the Company’s single reporting unit exceeded its carrying value.
As of June 30, 2025 the Company performed an updated analysis using a market approach, which estimates fair value based on the Company’s market capitalization and an estimate of a reasonable range of values of a control premium. The Company determined that goodwill was not impaired, as the estimated fair value of the Company’s reporting unit exceeded its carrying value. Additionally, as of May 31, 2025 and June 30, 2025, the Company performed a quantitative analysis of the recoverability of each of the Company’s asset groups. The result of the analyses was that the assets were not impaired, as the expected undiscounted cash flows exceeded the carrying value for each asset group.
No impairment of goodwill or long-lived assets was recorded for the years ended December 31, 2025 and 2024.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:
• Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;
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• Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
• Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company classifies its cash equivalents within Level 1 of the fair value hierarchy on the basis of valuations based on quoted prices for the specific securities in an active market.
The Company’s stock warrants are categorized as Level 3 within the fair value hierarchy. Stock warrants are recorded within equity in the Company’s consolidated balance sheets as of December 31, 2025 and 2024. The Term Loan Warrants (as defined below) have been recorded at their fair values using a probability weighted expected return model or Black-Scholes-Merton option pricing model. These models incorporate contractual terms and assumptions regarding expected term, risk-free rates and volatility. The value of the Company’s stock warrants would increase if a higher risk-free interest rate was used and would decrease if a lower risk-free interest rate was used. Similarly, a higher volatility assumption would increase the value of the stock warrants, and a lower volatility assumption would decrease the value of the stock warrants. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.
The Company’s contingent compensation is categorized as Level 1 within the fair value hierarchy. Contingent compensation is recorded within accrued purchased compensation, current portion and accrued purchase compensation, non-current in the Company’s consolidated balance sheets as of December 31, 2025 and 2024.
The Company’s strategic minority investments are categorized as Level 3 within the fair value hierarchy. These investments are recorded at cost within other assets in the Company’s consolidated balance sheets as of December 31, 2025 and 2024. The Company will monitor these investments to determine whether an other-than-temporary decline in value indicates that impairment charges may be required. The Company will also re-measure its investments if there is an observable transaction in a similar class of security to our investments.
The Company made an accounting policy election to record the earnout receivable related to the Veritone One divestiture at fair value at inception, and it is categorized as Level 3 within the fair value hierarchy. The earnout receivable of $ 0 and $ 7,667 is recorded within other assets in the Company’s consolidated balance sheets as of December 31, 2025 and 2024, respectively. The earnout receivable for the Veritone One divestiture has been recorded at its fair value using a Monte Carlo simulation pricing model due to the variability of estimating future revenues associated with the Company’s earnout. These models incorporate contractual terms and assumptions regarding financial forecasts for Veritone One, discount rates, and volatility of forecasted revenue. The value of the Veritone One earnout receivable would decrease if a lower discount rate was used and would increase if a higher discount rate was used. Similarly, a higher revenue volatility assumption would increase the value of the Veritone One earnout receivable, and a lower revenue volatility assumption would decrease the value of the Veritone One earnout receivable. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.
The Company’s other financial instruments consist primarily of cash, accounts receivable and accounts payable. The Company has determined that the carrying values of these financial instruments approximate fair value for the periods presented due to their short-term nature and the relatively stable current interest rate environment.
Restricted Cash
Restricted cash consists primarily of collateral required as security for the Company’s corporate credit cards.
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Leases
Under ASC 842, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Lessees are required to classify leases as either finance or operating leases and to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. The Company determines the initial classification and measurement of its ROU assets and lease liabilities at the lease commencement date and thereafter if modified. ROU 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. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its existing credit arrangements, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise any such options. Lease costs for the Company's operating leases are recognized on a straight-line basis within operating expenses over the lease term.
The Company has elected to not separate lease and non-lease components for real estate leases and, as a result, accounts for lease and non-lease components as one component. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less. For these leases, lease payments are recognized on a straight-line basis over the lease term and variable payments in the period in which the obligation is incurred.
Revenue Recognition
The Company recognizes revenue under its contracts with customers in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company derives its revenues primarily from two sources: (1) Software Products & Services consists of revenues generated from Commercial Enterprise and Public Sector customers using the Company’s aiWARE platform and hiring solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of such solutions, and (2) Managed Services, which are principally composed of content licensing revenues made up primarily of fees from customers for licenses to third-party content owners’ digital content, representation fees and to a lesser extent, advertising revenues. The Company disaggregates revenue between Software Products & Services and Managed Services based on the types of services, sales channel and customers. Software Products and Services includes both Commercial Enterprise and Public Sector customers as the economic factors including types of services, sales channels and timing of cash flows are not materially different.
The Company recognizes revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company follows a five-step process to determine revenue recognition, as follows:
• Identifies the contract(s) with a customer;
• Identifies the performance obligations in the contract;
• Determines the transaction price;
• Allocates the transaction price to the performance obligations in the contract; and
• Recognizes revenue when (or as) performance obligations are satisfied.
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The Company enters into contracts with customers that may include promises to transfer multiple services. The Company evaluates these services to determine whether they represent distinct, separately identifiable performance obligations that should be accounted for separately or as a single performance obligation. For contracts containing multiple performance obligations, to meet the allocation objective of ASC 606, the Company allocates the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which the Company would sell a promised service separately to a customer. For certain arrangements, the determinations regarding whether a contract contains multiple performance obligations and, if so, the SSP of each performance obligation, may require estimation by management if the SSP is not directly observable.
Software Products & Services Revenues
On-premise software
The Company enters into software license agreements with customers that provide for the on-premises deployment of its aiWARE platform or components thereof. These software licenses grant customers a right to use the software as it exists at the point in time the license is granted. The software has significant standalone functionality and does not require ongoing updates or support from the Company to remain functional. Accordingly, the Company recognizes revenue for these distinct software licenses at a point in time, which occurs when the software is made available for download and the customer obtains control.
In certain transactions that included on-premises licenses, the Company also provides post-contract customer support (“PCS”), professional services, and other support services in conjunction with the software license. These additional services represent distinct performance obligations and are recognized as control transfers to the customer. The Company allocates the transaction price to each performance obligation based on their relative standalone selling prices.
In certain instances, the Company sells on-premises software licenses in barter transactions where the Company receives consideration in the form of trade credits (non-cash consideration) that may be used in exchange for services or other assets used in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the software promised to the customer. Barter revenues are included on the Company’s consolidated statements of operations and comprehensive loss within Revenue.
aiWARE Revenues
The Company has agreements with its customers under which it provides customers with access to and use of the Company’s aiWARE and digital content management platforms. Under most agreements, the Company provides access to the platform, specified applications and associated data ingestion, hosting and/or processing services, and standard user support. Fees for these services typically take the form of a fixed monthly subscription fee, with certain contracts specifying usage-based fees for data processing services in excess of the data processing services included as part of such subscription services. Fees for excess usage-based data processing services are accounted for as variable consideration. In certain cases, the fixed monthly subscription fee may adjust during each monthly period of the contract based on changes in the monthly volume of services, at the rates established in the contract. These contracts typically have terms ranging from one to three years, with renewal options, and do not contain refund-type provisions. All significant services provided as part of these subscription arrangements are highly interdependent and constitute a single performance obligation comprised of a series of distinct services transferred to the customer in a similar manner throughout the contract term (collectively, the “subscription services”). The fixed subscription fees are recognized as revenue over the contract term using the output method of passage of time, as this best depicts the pattern of control transfer. If a portion of the term of a contract is cancellable, the Company determines the transaction price for, and recognizes revenue ratably over, the non-cancellable portion of the term of the contract. The Company receives fees from advertisers or resellers as consideration for combined software and services performed by the Company. The amount expected to be received from the advertiser or through the reseller represents the Company's fees which are recognized when the Company's services are transferred to the customer. The Company concluded that it is the principal in delivering these products to customers and as a result reports revenue on a gross basis. In certain SaaS arrangements with broadcasters, the fees for subscription services are paid by broadcasters with advertising inventory that is provided to and monetized by the Company. The Company recognizes revenue for these arrangements based on the estimated fair value of the advertising inventory.
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The Company also makes data processing, storage and transfer services available to customers through its aiWARE and digital content management platforms under usage-based arrangements with no minimum fees, either separately or in addition to subscription services as described above. Fees are charged for actual usage of such services at the rates specified in the contract for each particular service. Each of these distinct services represents an individual performance obligation. When sold in connection with subscription services, the Company considers the allocation guidance of ASC 606.
Variable consideration for usage-based data processing, storage and transfer related services is recognized in the month in which it is earned, as the payment terms relate to a specific outcome (amount of data or content processed, stored or transferred) of delivering the distinct time or content increment (the month) of services, and represents the fees to which the Company expects to be entitled for providing the services, and allocating the variable fees in this way is consistent with the allocation objective of ASC 606.
Under Veritone Data Refinery ("VDR") agreements, the Company has a single performance obligation, which is to deliver training data content to the customer. The Company recognizes VDR revenue when the content is delivered to the customer. The Company is considered the principal under VDR agreements due to obtaining control prior to transfer of the assets, and the Company records the revenue from the customer gross of royalties due to the content owner. The Company typically invoices VDR customers at the time the content is delivered.
The Company also enters into software license agreements with customers under which the Company provides software representing an on-premises deployment of its aiWARE platform or components thereof. Under these license agreements, the customer is responsible for the installation and configuration of the software in the customer-controlled environment. The Company recognizes the license fees as revenue under these agreements at the time that the software is made available by the Company for download by the customer. In certain instances, the Company will provide software under such arrangements as a barter transaction in exchange for services or other assets in the ordinary course of business.
The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the software delivered to the customer. Revenue is recognized on barter transactions when the software is made available by the Company for download by the customer. Barter revenues are included in the Company’s consolidated statements of operations and comprehensive loss within Revenue.
The Company typically invoices its aiWARE SaaS customers for subscription services monthly, for on-premises software at the time the software is made available for download by the customer and for professional services either monthly or in accordance with an agreed upon invoicing schedule. Invoices are typically due and payable within 30 days following the date of invoice. Amounts that have been invoiced are recorded in revenue or in deferred revenue, depending on whether transfer of control to customers of the promised services has occurred.
Talent Acquisition Solutions Revenues
Revenue is generated through various types of talent acquisition software solutions that principally consist of subscription-based talent acquisition products, subscription revenue for recruitment software-as-a-service (“SaaS”) solutions and access to the Company’s online talent networks, programmatic talent acquisition products, and other recruitment services. The Company previously referred to these solutions as “hiring solutions” and now refer to these solutions and services as “Talent Acquisition.” Subscription contracts do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts.
Subscription Fee Revenue
Subscription fee revenue from SaaS applications and access to the Company’s online talent networks are generally recognized ratably over the contractual term of the arrangement beginning on the date that service is made available to the customer.
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Revenue for Broadbean is generated through various types of talent acquisition software solutions that principally consist of subscription-based talent acquisition products, subscription revenue for recruitment SaaS solutions and access to the Broadbean’s online talent networks, transactional talent acquisition products, and other recruitment services. Subscription contracts do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts. Subscription fee revenue from SaaS applications and access to Broadbean’s online talent networks, which makes up the majority of Broadbean’s revenues, are generally recognized ratably over the contractual term of the arrangement beginning on the date that service is made available to the customer. Broadbean does not offer financing alternatives to customers and there are no rights of return, warranties, or other variable consideration in contracts with customers. Payment terms are generally net 30 days. In most cases, Broadbean acts as a principal with respect to the goods and services it sells providing for gross revenue.
Media Revenue
Media buy is a service offered by Broadbean to purchase media for job postings, job advertising space, etc. from various third-party jobsites (e.g., LinkedIn) on behalf of customers. Broadbean then uses the media that has been purchased for the customer’s job listings and advertisements. Broadbean does not typically control the media prior to its transfer to the customer and as a result records revenue on a net basis as the Company is acting as an agent in the transaction.
Broadbean reports revenue net of sales and other taxes collected from customers to be remitted to government authorities.
Implementation and Customization Revenue
Broadbean implementation and customization revenue include, amongst other items, account setup, customization of job boards that customer uses, training, additional languages, testing, user acceptance testing, project management, and customized reports.
The criteria for implementation and customization revenue to be considered as separate performance obligations requires them to be distinct in the context of the contract and not integral to the customer receiving value from the product (ASC 606-10-25-19). The determination was made that since a customer can use the product without additional integration or personalized setup services, and the product and the integration are not highly interrelated or interdependent and the Company is not providing a significant integration service in the contract to produce a combined output, the implementation and customization performance obligations are distinct. Performance obligations are typically fulfilled within one month of signing, and the Company recognizes these revenues at the point in time the performance obligation is satisfied.
Contracts With Multiple Performance Obligations
For contracts with customers that contain multiple performance obligations, the individual performance obligations are accounted for separately when they are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis. The Company utilizes directly observable stand-alone selling prices where available. In the event directly observable stand-alone selling prices are not available, the Company will estimate stand-alone selling prices. The Company determines estimated stand-alone selling prices based on their overall pricing objectives, taking into consideration market conditions and entity-specific factors, including the size of arrangements, length of term, customer demographics, and the types of users within arrangements.
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Programmatic Hiring Solutions
The Company generates revenue primarily from platform services where it provides its customers access to intelligent hiring services, including ad placements on job boards. Revenue is derived from AI-enabled services, which uses software and algorithms to match buyers and sellers of digital job advertising in a technology-driven marketplace. The Company provides the use of its hiring solutions to clients to execute digital hiring campaigns at scale, which are typically ordered through monthly purchasing commitments. The Company charges customers a fee based on various performance indicators as outlined in our customer contracts including job advertisements placed, potential job applicants or other outputs of services placed through its platform, which is accounted for as variable consideration. All services provided as part of these arrangements are highly interdependent and constitute a single performance obligation comprised of a series of distinct services transferred to the customer in a similar manner throughout the contract term. Revenue is recognized over time using the input method of cost incurred as platform services are provided during each campaign as this best depicts the transfer of control. The Company determined that it is not a principal in the purchase and sale of job placements in its arrangements, and as a result, reports its revenue on a net basis for solution fees charged to clients. Costs to source applicants are recorded monthly over the period the services are delivered as an offset to revenue.
Managed Services Revenues
Influencer Representation
The Company earns commissions on its clients’ successful engagements. As part of the client representation business, the Company represents, supports and advocates for its clients in the sourcing, negotiating, and execution of income generating engagements. The Company’s clients consist primarily of influencers in the social media market. In addition, the Company earns revenue through live event campaigns and content creation services, where an event sponsor will engage the Company to promote their respective brand through influencers and social media around a live event such as a popular concert or music festival.
The Company’s promise, as well as its performance obligation, under the Company’s representation arrangements is to achieve a successful engagement for its clients, which is fulfilled when its clients perform in accordance with the terms of their respective engagements. Accordingly, the Company recognizes commission revenue when a client achieves a successful engagement, as this is when a client also obtains control of the representation service. The Company will recognize live event campaign and content creation revenue when its performance obligations are complete, which include completion of the underlying live event campaign, and campaign delivery and acceptance by the campaign sponsor.
The Company’s clients may receive a fixed fee for their services or receive a combination of a fixed fee and the potential to earn variable consideration. Such variable consideration is generally based on performance of social media posts or direct marketing campaigns promoted in the posts. Commission revenue from variable consideration is estimated using the most likely amount method due to the resolution of the variable consideration within a short period of time. The Company is determined to be an agent with respect to the representation services, and therefore revenues will be recognized net of the amounts paid to the influencer.
Advertising Revenues
For certain advertising products, the Company provides advertisers with the opportunity to reach unique ad units and markets. Leveraging our aiWARE platform to programmatically manage clearance, verification and analysis of advertising performance, we create marketable advertising products through the curation of our broadcaster and influencer networks. We receive fees from advertisers or resellers as consideration for combined software and services performed by us. The amount expected to be received from the advertiser or through the reseller represents our fees which are recognized when our services are transferred to the customer. The Company concluded that it is the principal in delivering these products to customers and as a result reports revenue on a gross basis.
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Licensing Revenues
The Company has agreements with third-party owners of digital content pursuant to which the Company licenses those assets to customers and remits royalties to the content owners. In licensing such third-party digital content, the Company hosts public and private content libraries on the Company’s platform to enable customers to view and search for digital content to be licensed, establishes and negotiates with customers the scope and term of, and the prices for, licenses to those digital content, and makes the licensed digital content available to the end-customers. The Company is considered the principal under most agreements that have this range of services due to obtaining control prior to transfer of the assets, and the Company records the revenue from the customer gross of royalties due to the content owner. In limited cases, the Company does not obtain control prior to transfer of the assets, and accordingly, the Company records revenues net of royalties due to the content owner.
The Company licenses digital content under (i) individual license agreements, pursuant to which the customer licenses a particular digital content (or set of digital content) for a specified license fee, and (ii) bulk license agreements, pursuant to which the customer pays a fixed fee to have access to view and search third-party owners’ content and to license a specified number of minutes of that content in each year over the term of the contracts, which typically range from one to three years, with certain contracts specifying usage-based license fees for additional digital content that may be licensed by the customer. Additionally, the Company provides additional services as rights and clearances, and footage assurance to obtain the necessary permissions for a property or talent likeness to be used in advertising.
Under individual license agreements, the Company has a single performance obligation, which is to make the licensed digital content available to the customer, generally by download. The Company recognizes the license fees charged for the digital content as revenue when the licensed digital content are made available to the customer.
Under bulk license agreements, the Company’s obligations include hosting the content libraries for access and searching by the customer, updating the libraries with new content provided by the content owner, and making assets selected by the customer available for download, throughout the term of the contract. All of these services are highly interdependent and constitute a single performance obligation comprised of a series of distinct services transferred to the customer in a similar manner throughout the contract term. The predominant item in the single performance obligation is a license providing a right to access the content and/or content library throughout the license period. For these arrangements, the Company recognizes the total fixed fees under the contract as revenue ratably over the term of the contract as the performance obligation is satisfied, as this best depicts the pattern of control transfer. If the customer selects digital content in excess of the amount included in the fixed fees under the contract, the Company constrains the variable consideration until the usage occurs and recognizes such usage-based license fees as the digital content are made available to the customer, consistent with the usage-based royalty accounting of ASC 606.
Under rights and clearances services, the Company has a single performance obligation, which is to perform a series of interrelated promises to obtain the rights and clearance for the customer to use the likeness of a specified talent or specific intellectual property of a specific company. The Company recognizes rights and clearance revenue at the point in time the content is delivered to the customer.
Gross Versus Net Revenue Recognition
The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis, net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. The Company has determined that it acts as the principal in providing all of its services with the exception of certain content licensing services, representation services, and programmatic advertising services, where the Company recognizes its fees on a net basis.
Remaining Performance Obligations
As of December 31, 2025, the aggregate amount of the transaction prices under the Company’s contracts allocated to the Company’s remaining performance obligations was $ 27,315 , approximately 59 % of which the Company expects to recognize as revenue over the next twelve months , and the remainder thereafter to be recognized primarily over the next 3 years. This aggregate amount excludes amounts allocated to remaining performance obligations under contracts that have an original duration of one year or less and variable consideration that is allocated to remaining performance obligations. Excluded based on this policy are balances related to Talent Acquisition solutions representing gross purchase orders to be satisfied in less than one year. Revenues will be recognized net of costs to fulfill these orders.
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Cost of Revenue (Exclusive of Depreciation and Amortization)
Cost of revenue related to the Company’s Software Products & Services consists primarily of fees charged by vendors for cloud infrastructure, computing and storage services and cognitive processing services related to the operation of the Company’s platforms. The Company’s arrangements with cloud infrastructure providers typically require fees that are based on computing time, data storage and transfer volumes, and reserved computing capacity. The Company also pays fees to third-party providers of AI models, which are generally based upon the hours of media processed through their models.
Cost of revenue related to the Company’s Managed Services include royalties paid to content owners on revenue generated from the Company’s licensing of their content, and fees charged by vendors that provide products and services in support of the Company’s live event services, content creation services, and obtaining of talent and property clearances.
Advertising and Marketing Costs
Advertising and marketing costs are expensed as incurred and are primarily included in sales and marketing expenses in the Company’s consolidated statements of operations and comprehensive loss. Advertising and marketing costs include personnel-related costs for sales and marketing resources, online and print advertising, public relations, tradeshows, and sponsorships. For the years ended December 31, 2025 and 2024, the Company recorded expense of $ 4,150 and $ 3,789 , respectively, for advertising and marketing costs.
Research and Development Costs and Software Development Costs
Research and development costs are expensed as incurred. Computer software development costs and website development costs are expensed as incurred, except for internal use software that qualify for capitalization as described below.
The costs of internal use software that is developed to meet the Company’s needs and will not be marketed externally are subject to capitalization under ASC 350-40. The Company expenses costs incurred in the preliminary project and post-implementation stages of software development and capitalizes costs incurred in the application development stage and costs associated with significant enhancements to existing internal use software applications. These capitalized costs are included in property, equipment and improvements, net on the consolidated balance sheets and are amortized using the straight-line method over an estimated useful life of three years commencing when the software project is ready for its intended use. The Company had additions of $ 4,726 of software development costs in 2025 and $ 6,765 of software development costs in 2024.
Stock-Based Compensation
Stock-based compensation expense is estimated at the grant date based on the fair value of the award.
The fair values of restricted stock and restricted stock unit awards granted by the Company are based on the closing market price of the Company’s common stock on the date of grant.
The Company estimates the fair values of stock options having time-based vesting conditions, as well as purchase rights under the Company’s Employee Stock Purchase Plan (“ESPP”), using the Black-Scholes-Merton option pricing model. The Company’s performance-based stock options vest if a specified target price for the Company’s common stock is achieved. The Company estimates the fair values of performance-based stock options utilizing a Monte Carlo simulation model, to estimate the date that the specified stock price targets will be achieved (the attainment date), and the Black-Scholes-Merton option pricing model. A fair value is determined for each tranche of such performance-based stock options that is tied to a particular stock price target.
Determining the appropriate fair values of stock options and ESPP purchase rights at the grant date requires significant judgment, including estimating the volatility of the Company’s common stock, the expected term of awards, and the derived service periods for each tranche of performance stock options. In determining fair values, the Company estimated volatility based on the historical volatility of its own common stock.
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The expected term for stock options other than performance-based stock options represents the period of time that stock options are expected to be outstanding and is determined using the simplified method. Under the simplified method, the expected term is calculated as the midpoint between the weighted average vesting date and the contractual term of the options. The expected term for performance-based stock options considers the remaining term of the option after the attainment date and the ratio of the stock price at the attainment date to the option exercise price.
The risk-free rate is based on the implied yield of U.S. Treasury notes as of the grant date with a remaining term approximately equal to the expected term of the award.
The assumptions used in the Company’s Black-Scholes-Merton option-pricing and Monte Carlo simulation models represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.
The fair value of stock-based awards (other than performance-based stock options) is amortized using the straight-line attribution method over the requisite service period of the award, which is generally the vesting period. For performance-based stock options, expense is recognized over a graded-vesting attribution basis over the period from the grant date to the estimated attainment date, which is the derived service period of each tranche of the award.
In recording stock-based compensation expense, the Company accounts for actual forfeitures as they occur and does not estimate forfeitures.
If performance options are modified, the fair values and the new derived service periods of the modified awards as of the date of modification and the fair values of the original awards immediately before the modification are determined. The amount of incremental compensation expense resulting from the modification of each award is equal to the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. The incremental compensation expense is recognized over the new derived service period of the modified award.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are established for temporary differences between the financial statement carrying amounts and the tax bases of the Company’s assets and liabilities using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
The Company assesses the likelihood that the deferred tax assets will be recovered from future taxable income and, if recovery is not more likely than not, the Company establishes a valuation allowance to reduce the deferred tax assets to the amounts expected to be realized. Realization of the deferred tax assets is dependent on the Company generating sufficient taxable income in future years to obtain a benefit from the reversal of temporary differences and from net operating losses.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to determine whether the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. If the first test is met, then the second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.
In December 2023, the FASB issued guidance to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this guidance require additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The Company prospectively adopted this guidance for the year ended December 31, 2025. See Note 13, Income Taxes for additional disclosures, including a reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate and federal and foreign cash taxes paid.
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Foreign Currency
The functional currency of the Company's foreign subsidiary in Israel is the U.S. dollar. Accordingly, monetary assets and liabilities of the Company's foreign subsidiaries are remeasured into U.S. dollars at the exchange rates in effect at the reporting date, non-monetary assets and liabilities are re-measured at historical rates, and revenue and expenses are re-measured at average exchange rates in effect during each reporting period. Foreign currency transaction gains and losses are recognized in other income (expense), net within the consolidated statements of operations. The functional currency of the Company's remaining international subsidiaries is the local currency of the country in which they operate. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each reporting period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized as a cumulative translation adjustment and included in accumulated other comprehensive income (loss).
Comprehensive Loss
Comprehensive loss consists of net loss and other gains and losses affecting equity that are excluded from net loss. These consist of foreign currency translation adjustments.
Segment Information
The Company operates as one reportable segment. The Company reports segment information based on the internal reporting used by the chief operating decision maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segment. The Company’s CODM is its Chief Executive Officer. The CODM assesses performance and decides how to allocate resources using consolidated net loss as reported within the Company’s consolidated statements of operations. The CODM also uses loss from operations to assess the performance of the segment to allocate resources, including but not limited to, employees, property, financial and capital, primarily the annual budget and periodic forecasting process. The CODM considers variances to budget or forecast on a monthly, quarterly and annual basis in making these decisions about allocating capital and personnel to the segment. The Company, through its single reportable segment, is managed on a consolidated basis.
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Significant segment expenses, which represent the difference between revenue and loss from continuing operations before provision for income taxes, consist of the following:
Year Ended
December 31,
2025 December 31,
2024
Revenue $ 92,192 $ 92,637
Less:
Cost of revenue (exclusive of depreciation and amortization shown separately below) 29,608 27,254
Personnel costs 70,116 76,567
Consultants 3,614 5,064
Marketing 4,150 3,789
Accounting fees 5,666 4,205
Legal fees 2,953 2,506
Outside services 1,678 1,834
Software expenses 7,732 7,975
Stock-based compensation expense 6,686 7,705
Severance 1,320 2,888
Depreciation and amortization 27,174 28,510
Other segment items 12,749 12,546
Operating loss ( 81,254 ) ( 88,206 )
Interest expense, net 10,224 12,071
Gain on troubled debt restructuring ( 1,448 ) —
Loss on debt extinguishment 14,443 —
Other expense (income), net 7,487 ( 84 )
Benefit from income taxes ( 228 ) ( 3,861 )
Net income from discontinued operations, net of income taxes (inclusive of gain on sale of $ 66,553 for the year ended December 31, 2024)
— 58,948
Net loss $ ( 111,732 ) $ ( 37,384 )
Other segment items include occupancy, insurance, and other costs.
Significant Customers
No customers accounted for 10% or more of the Company’s revenue for the years ended December 31, 2025 and 2024, respectively. One individual customer accounted for 12 % of the Company’s accounts receivable as of December 31, 2025. No individual customer accounted for more than 10% of the Company’s accounts receivable as of December 31, 2024.
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with what management believes are quality financial institutions in the United States and management reviews its capital investment policies on an annual basis. At times, the value of the United States deposits exceeds federally insured limits. The Company has not experienced any losses in such accounts.
Business Combinations
The results of a business acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values as of the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.
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Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.
The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination.
Troubled Debt Restructuring
The Company evaluates all modifications to its debt agreements in accordance with ASC 470-60, Debt – Troubled Debt Restructurings by Debtors. A debt restructuring is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.
Concessions may include, but are not limited to:
• A reduction in the stated interest rate,
• An extension of the maturity date,
• A reduction in the principal amount, or
• a combination of the above.
When a debt restructuring qualifies as a TDR, the Company evaluates whether the restructuring represents a modification or an extinguishment of debt. If the future undiscounted cash flows of the restructured debt are less than the carrying amount of the original debt, a gain is recognized in the period of the restructuring. If the total future cash payments under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount of the payable is made. Instead, the company calculates a New Effective Interest Rate (‘EIR’) based on the revised terms of the restructured payable. The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on this rate in future periods.
Discontinued Operations
During the third quarter of 2024, the Company determined that Veritone One met the criteria to be classified as held for sale and discontinued operations. As a result, the historical financial results of Veritone One are reflected in these consolidated financial statements as discontinued operations and, as such, have been excluded from continuing operations for all periods presented on a retrospective basis, unless otherwise stated. In addition to the financial results of Veritone One, the Company also included in discontinued operations (i) direct deal costs and (ii) allocated interest expense, including prepayment premium and acceleration of amortization of debt discount and issuance cost as a result of the sale of Veritone One. Refer to Note 4, Discontinued Operations, Business Combinations, and Divestiture , for further details.
4. Discontinued Operations, Business Combinations, and Divestiture
Discontinued Operations and Divestiture of Veritone One
On the Divestiture Closing Date, the Company completed the sale of its wholly-owned subsidiary, Veritone One, LLC (formerly Veritone One, Inc., referred herein collectively as “Veritone One”), to Oxford Buyer, LLC (“Purchaser”), an affiliate of Insignia Capital Group L.P., pursuant to an Equity Purchase Agreement, by and among the Company, Veritone One and the Purchaser (the “Purchase Agreement”). Veritone One operated the Company’s full-service advertising agency business and its disposal represents a strategic shift that will have a major impact on the Company’s operations and financial results, as it enables the Company to focus on its core software and applications and reduce its dependency on advertising related services. As a result, Veritone One met both the held for sale and discontinued operations presentation criteria and comprised operations and cash flows that could be distinguished, operationally and for financial reporting purposes, from the rest of the Company. Since the Company operates as one reporting unit, the Company allocated goodwill to discontinued operations on a relative fair value basis in comparison to the value of the overall company.
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In connection with the Divestiture, the Company and the Purchaser entered into a transition services agreement. The transition services agreement outlines the information technology, people, and facility support the Company expected to provide to the Purchaser for a period of six months after the Divestiture Closing Date with options to be extended. The total service fee amount for each service would not exceed the actual costs to provide such service. The transition services agreement terminated as of April 15, 2025.
The Divestiture was structured as a simultaneous “sign and close” transaction and closed on the Divestiture Closing Date. On the Divestiture Closing Date, the Company received cash proceeds of $ 59,053 , which reflected the aggregate purchase price of $ 104,000 (the “Veritone One Sale Price”), less $ 18,000 subject to an earnout described below, $ 20,297 of purchase price adjustments, and $ 6,650 placed in escrow accounts described below. The Company may receive the earnout of either $ 18,000 , $ 13,000 , $ 8,000 , $ 3,000 , or $ 0 in cash proceeds based on the achievement of certain net revenue targets by Veritone One between January 1, 2025 and December 31, 2025 (as further described in the Purchase Agreement, the "Earnout"). As of December 31, 2025 Veritone One did not meet the net revenue targets to achieve the earnout.
Of the amounts placed in escrow, $ 1,500 was placed in an escrow account for potential purchase price adjustments and an aggregate of $ 5,150 was placed in escrow accounts for the potential satisfaction of post-closing indemnification claims (the “Indemnity Escrow”), in each case subject to the terms and limitations set forth in the Purchase Agreement. As a result of the Divestiture, the Company recorded a one-time gain of $ 66,533 during the year ended December 31, 2024, which represented the purchase consideration provided, the net assets and liabilities of the divestiture retired at the purchase date, less the $ 3,006 in divestiture-related expenses, and is included in net income from discontinued operations in the consolidated statements of operations and comprehensive loss. At the October 17, 2024, Closing Date, the Company's estimate of the fair value of the Earnout was $ 6,310 . At December 31, 2024, the Company’s estimate of the fair value of the Earnout of $ 7,667 and Indemnity Escrow of $ 5,150 was reported on the corresponding balance sheet in other prepaid expenses and other assets, current and other assets, long term, respectively.
On May 15, 2025, the Company and the Purchaser determined that the closing purchase price exceeded the final purchase price, and jointly instructed the escrow agent to release from the purchase price adjustment escrow (i) $ 1,372 to the Purchaser and (ii) the remaining balance of $ 128 to the Company. On October 22, 2025, $ 3,650 was released from the Indemnity Escrow and returned to the Company in accordance with the terms of the Purchase Agreement. As of December 31, 2025 there is $ 1,500 remaining attributed to the Indemnity Escrow which is classified within prepaid expenses and other current assets.
The Purchase Agreement contains customary representations, warranties and covenants of each of the parties to the Agreement. The Purchase Agreement also includes indemnification provisions whereby the Company will indemnify the Purchaser and other related indemnified parties for losses arising out of, among other things, inaccuracies in, or breaches of, the representations, warranties and covenants of the Company or Veritone One. The Purchaser and the other related indemnified parties will be able to make post-closing indemnification claims against the Indemnity Escrow, subject to the terms and limitations set forth in the Purchase Agreement. In addition, under the Purchase Agreement, the Company is subject to non-competition and non-solicitation provisions pursuant to which, among other things, the Company agreed not to engage in certain competitive activities with respect to Veritone One’s business or solicit Veritone One employees or customers for a period of four years following the Divestiture.
Veritone One’s results of operations for the year ended December 31, 2024 are disclosed as discontinued operations and excluded from continuing operations within the Company’s consolidated financial statements and notes thereto.
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The operating results of the Company's discontinued operations for the year ended December 31, 2024 were as follows:
Year Ended
December 31,
2024
Revenue $ 24,408
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) 742
Sales and marketing 5,037
Research and development 61
General and administrative 8,876
Depreciation and amortization 260
Total operating expenses 14,976
Operating income 9,432
Interest expense, net 16,941
Gain on sale ( 66,533 )
Income before income taxes 59,024
Income taxes 76
Net income from discontinued operations, net of income taxes $ 58,948
Depreciation and amortization allocated to discontinued operations during the year ended December 31, 2024 was $ 260 . Interest expense, net allocated to discontinued operations during the year ended December 31, 2024 was $ 16,941 , inclusive of $ 9,161 related to the write-off of debt discount and issuance costs on the term loan and a $ 3,051 prepayment penalty on the term loan. Stock based compensation expense from discontinued operations was $ 422 for the year ended December 31, 2024.
The carrying amounts of the net assets of the Company's discontinued operations as of October 17, 2024 was $ 974 . The gain on the sale of Veritone One was calculated as follows:
Cash consideration at closing $ 59,053
Fair value of earnout receivable 6,310
Estimated proceeds from escrow 5,150
Less: transaction costs which were paid with cash consideration received at closing ( 3,006 )
Adjusted consideration 67,507
Less: net carrying value of discontinued operations ( 974 )
Gain on Sale $ 66,533
Sale of Veritone Energy Solutions Group
On June 30, 2023, the Company completed the sale of its Veritone Energy solutions group to GridBeyond Limited, an Ireland-based privately held company (“GridBeyond”) that delivers AI-powered energy solutions, pursuant to an asset purchase agreement. The Company received 4,160,644 shares of Series B Preference Shares in GridBeyond valued at approximately $ 2,021 as of June 30, 2023, as well as $ 549 in cash. The sale resulted in a pre-tax gain of $ 2,572 in the second quarter of 2023. The group did not meet the criteria of discontinued operations because the disposal did not have a major effect on the Company’s operations and financial results. In April 2024, the Company sold its interest in GridBeyond for $ 1,800 in cash, resulting in a loss on sale of $ 172 and a foreign exchange loss of $ 49 , recorded in other expense (income), net during the second quarter of 2024.
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5. Debt
Convertible Senior Notes
In November 2021, the Company issued $ 201,250 aggregate principal amount of 1.75 % convertible senior notes in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The issuance included the full exercise of an option granted by the Company to the initial purchasers of the Convertible Notes to purchase an additional $ 26,250 aggregate principal amount of Convertible Notes. The Convertible Notes are senior, unsecured obligations of the Company and rank senior in right of payment to all of the Company’s indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment with all existing and future liabilities of the Company that are not so subordinated; effectively junior to any of secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of the Company’s current or future subsidiaries. The Convertible Notes bear interest at a rate of 1.75 % per year payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2022. The Convertible Notes will mature on November 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with the terms of the Convertible Notes.
Holders of the Convertible Notes may convert all or any portion of their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2026, only under the following conditions: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2022 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business days period after any five consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Convertible Notes on each such trading day; (3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the applicable redemption date; or (4) upon the occurrence of specified corporate events. On or after May 15, 2026, holders may convert all or any portion of their Convertible Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.
The conversion rate for the Convertible Notes initially is 27.2068 shares of the Company’s common stock per $ 1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 36.76 per share of common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or following the Company’s issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event or who elects to convert its Convertible Notes called (or deemed called) for redemption during the related redemption period, as the case may be.
The Company may not redeem the Convertible Notes prior to November 20, 2024. The Company may redeem for cash all or any portion of the Convertible Notes (subject to certain limitations), at its option, on or after November 20, 2024 if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.
If the Company undergoes a fundamental change prior to the maturity date, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Convertible Notes. The fundamental change repurchase price will be equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The total debt issuance costs incurred and recorded by the Company amounted to $ 6,304 , which were recorded as a reduction to the face amount of the Convertible Notes and are being amortized to interest expense using the effective interest method over the contractual term of the Convertible Notes. The effective interest rate on the Convertible Notes is approximately 2.42 % per annum.
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In December 2022, the Company repurchased $ 60,000 of its Convertible Notes from a limited number of holders in privately negotiated transactions for an aggregate purchase price of $ 39,029 . For accounting purposes, pursuant to FASB ASC Topic 470, Debt (“ASC 470”), these transactions were accounted for as an extinguishment of the Convertible Notes. The Company recognized a gain on extinguishment of $ 19,097 as a result, which was recorded in (gain) loss on extinguishment of debt within the Company’s consolidated statement of income during the fourth quarter of 2022.
In December 2023, the Company repurchased $ 50,000 of its Convertible Notes from a limited number of holders in privately negotiated transactions for an aggregate purchase price of $ 37,500 . For accounting purposes, pursuant to ASC 470, these transactions were accounted for as an extinguishment of the Convertible Notes. The Company recognized a gain on extinguishment of $ 30,023 as a result, which was recorded in (gain) loss on extinguishment of debt within the Company’s consolidated statement of income during the fourth quarter of 2023.
In November 2025, the Company repurchased $ 45,670 of its Convertible Notes from a limited number of holders in privately negotiated transactions for an aggregate purchase consideration of $ 39,049 , in cash which included $ 393 of accrued interest, plus 625,000 shares of common stock with a fair value of $ 3,162 . As the Company was experiencing financial difficulties and the debt holders granted a concession, these transactions were accounted for under the TDR guidance. As the future undiscounted cash flows were less than the carrying amount of the debt, the Company recognized a gain of $ 1,448 . The Company paid third party fees of $ 2,100 in connection with the transaction, which reduced the gain recorded. The gain on TDR reduced basic and diluted loss per share by $ 0.02 per share during the year ended December 31, 2025.
As of December 31, 2025, the outstanding principal on the Convertible Notes was $ 45,580 , the unamortized debt issuance costs were $ 263 , and the carrying amount was $ 45,317 which was recorded to Convertible Notes, current portion within the Company’s consolidated balance sheet. As of December 31, 2024, the outstanding principal on the Convertible Notes was $ 91,250 , the unamortized debt issuance costs were $ 1,115 , and the carrying amount was $ 90,135 , which was recorded to Convertible Notes, within the Company’s consolidated balance sheet. The fair value of the Convertible Notes was approximately $ 42,890 and $ 39,373 as of December 31, 2025 and 2024, respectively, and was determined by utilizing over-the-counter market quotes, which are considered Level 2 inputs as defined in Note 7, Fair Value Measurements .
During the years ended December 31, 2025 and 2024, the Company recognized $ 2,038 and $ 2,171 , respectively, of interest expense relating to the Convertible Notes, which included $ 549 and $ 574 , respectively, relating to non-cash interest expense relating to amortization of debt issuance costs.
In connection with the 2022 pricing of the Convertible Notes, with the full exercise by the initial purchasers of their option to purchase additional Convertible Notes in November 2021, the Company paid approximately $ 18,616 to enter into capped call transactions with respect to its common shares (the “Capped Call Transactions”) with various financial institutions. Subsequently, in conjunction with the repurchases of portions of the Convertible Notes, during December 2022, December 2023, and November 2025, the Company entered into agreements with the option counterparties to the Capped Call Transactions to terminate a portion of such existing transactions. See Note 11, Stockholders’ Equity , for additional discussion on the Capped Call Transactions entered into in conjunction with the issuance of these Convertible Notes.
Senior Secured Term Loan
On December 13, 2023, the Company entered into a $ 77,500 Term Loan with a syndicate of financial institutions as lenders (the “Lenders”). The Term Loan was set to mature upon the earlier of: (1) December 13, 2027; or (2) August 14, 2026 if the outstanding principal on the Convertible Notes exceeded $ 30,000 as of that date. All indebtedness outstanding under the Term Loan was guaranteed by each of the Company’s direct and indirect material subsidiaries and secured by the equity interests and substantially all of the assets of the Company and its direct and indirect material subsidiaries. The initial discount on the Term Loan of $ 23,807 along with the capitalized issuance costs of $ 3,120 began to be amortized to interest expense over the term of the loan using the effective interest method.
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During its term, the Term Loan bore interest at a rate of Term SOFR plus 8.50 % per annum, with a 3.00 % floor for Term SOFR. Interest was due at least quarterly on amounts outstanding under the Term Loan. The Term Loan was payable in consecutive quarterly installments, which began in June 2024, with the outstanding balance of the Term Loan payable on the scheduled maturity date. In addition, the Term Loan, as amended, required mandatory prepayments from the net cash proceeds received for, among other things, (i) certain asset sales as described above, and (ii) insurance recoveries on loss of property that were not otherwise reinvested in other assets of the Credit Parties at a 10 % prepayment premium. The Company had the option to elect to prepay the Term Loan, in whole or in part, in cash, subject to a make-whole premium during the first year of the Term Loan, a 14.0 % prepayment premium during the second year of the Term Loan, and a 7.0 % premium during the third year of the Term Loan.
The Term Loan has certain customary default provisions, representations and warranties and affirmative and negative covenants.
In October 2024, and in conjunction with the Divestiture, the Company, as required by the terms of the Credit Agreement, used net proceeds from the sale to pay down $ 30,512 in principal and $ 3,051 in prepayment premiums and $ 252 in accrued interest on the Term Loan, as of December 31, 2024, after giving effect to such repayment, $ 41,176 aggregate principal amount remained outstanding under the Term Loan. During the year ended December 31, 2024, $ 17,234 was recognized in interest expense which is presented in net income from discontinued operations. This amount included $ 1,762 in amortization of initial discounts and issuance costs, write off of $ 9,161 of the unamortized debt discount and issuance costs at the time of the partial repayment of the Term Loan in October 2024, and the prepayment penalty of $ 3,051 , and is included in net income from discontinued operations.
Interest expense was allocated to discontinued operations using the proportion of the principal repayment required to be made as a result of the Divestiture over the total Term Loan principal outstanding at the Divestiture Closing Date. Interest on debt that was required to be repaid as a result of a disposal was allocated to discontinued operations, as was the case under the Credit Agreement. As a result, the Company allocated interest expense and amortization of discounts and issuance costs relating to repayment of the Term Loan, as required by the Divestiture, to discontinued operations. For the year ended December 31, 2024, the Company allocated $ 17,234 of interest expense, including amortization of initial discounts and issuance costs, to discontinued operations as a result of the Divestiture.
On March 13, 2025, the Company entered into a Limited Consent (the “Limited Consent”) to the Credit Agreement, with the lenders and administrative agent party thereto. Pursuant to the Limited Consent, the lenders consented to the delivery by the Company of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2024 and a report of the Company’s independent certified public accountants relating thereto that do not meet certain requirements of the Credit Agreement requiring, among other things, delivery of audited consolidated financial statements and a report thereon of the Company’s independent certified public accountants that are unqualified as to going concern. As consideration for the Limited Consent, the Company paid an aggregate of $ 1,000 in cash to the lenders party to the Limited Consent.
On April 24, 2025, the Company entered into a First Amendment to Credit and Guaranty Agreement (the “First Amendment”). The First Amendment provided that (a) the minimum Consolidated Liquidity (as defined in the Credit Agreement) covenant was reduced from $ 15,000 to $ 10,000 for the period of time beginning on April 24, 2025 and extending through June 16, 2025, and (b) the mandatory prepayment covenant under the Credit Agreement with respect to asset sales was amended to (i) require that 100 % of the Net Asset Sale Proceeds (as defined in the Credit Agreement) be used to repay the obligations under the Credit Agreement (increased from 60 % of the Net Asset Sale Proceeds prior to the First Amendment), and (ii) clarify the requirement that the Company use all future proceeds that it received in connection with the previously closed sale of its formerly wholly-owned subsidiary, Veritone One, including any earn-out payments and releases of previously escrowed amounts, to repay obligations under the Credit Agreement. In connection with obtaining the requisite lenders’ consent to the First Amendment, the Company issued to the consenting lenders 228,311 shares of the Company’s common stock, representing a number of shares having an aggregate value equal to $ 500 , based on a price per share of $ 2.19 , which was the closing price per share of the Company’s common stock on The Nasdaq Global Market on April 23, 2025, the trading day immediately prior to the effective date of the First Amendment. For accounting purposes, pursuant to ASC 470”, this transaction was accounted for as a modification of the Credit Agreement. The $ 500 of costs were recorded on the Company’s consolidated balance sheet and were amortized using the effective-interest method.
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On June 13, 2025, the Company entered into a Second Amendment to Credit and Guaranty Agreement (the “Second Amendment”). The Second Amendment provided that the minimum Consolidated Liquidity (as defined in the Credit Agreement) covenant was (i) reduced to $ 5,000 for the period of time beginning on June 13, 2025 and extending through June 30, 2025, (ii) increased to $ 10,000 for the period of time beginning on July 1, 2025 and extending through August 31, 2025 and (iii) increased to $ 15,000 beginning on September 1, 2025 and extending through maturity. In connection with obtaining the requisite lenders’ consent to the Second Amendment, the Company issued to the consenting lenders 253,744 shares of the Company’s common stock, representing a number of shares having an aggregate value equal to $ 373 , based on a price per share of $ 1.47 , which was the closing price per share of the Company’s common stock on The Nasdaq Global Market on June 12, 2025, the trading day immediately prior to the effective date of the Second Amendment. For accounting purposes, pursuant to ASC 470, this transaction was accounted for as a modification of the Credit Agreement. The $ 373 of costs were recorded on the Company’s consolidated balance sheet and were amortized over the life of the Credit Agreement using the effective-interest method until November 2025 when the Term Loan was repaid in full.
On June 30, 2025, the Company entered into a Third Amendment to Credit and Guaranty Agreement (the “Third Amendment”). The Third Amendment provided that Consolidated Liquidity (as defined in the Credit Agreement) (i) could not be less than $ 5,000 for the period of time beginning on June 13, 2025 and extending through August 31, 2025 and (ii) would be increased to $ 15,000 beginning on September 1, 2025 and extending through maturity. The Company did not pay a consent fee in connection with the Third Amendment.
On August 29, 2025, the Company entered into a Fourth Amendment to Credit and Guaranty Agreement (the “Fourth Amendment”). The Fourth Amendment provided that Consolidated Liquidity (as defined in the Credit Agreement) (i) could not be less than $ 5,000 for the period of time beginning on June 13, 2025 and extending through September 12, 2025 and (ii) would be increased to $ 15,000 beginning on September 13, 2025 and extending through maturity. The Company did not pay a consent fee in connection with the Fourth Amendment. Except as set forth in the Limited Consent, the First Amendment, the Second Amendment, the Third Amendment, and the Fourth Amendment, the terms of the Credit Agreement remained unchanged. As of December 31. 2024 and up to the date of repayment, the Company was in compliance with its debt covenants under the Term Loan, as amended.
On October 23, 2025, the Company, as required by the terms of the Term Loan, used net proceeds from the partial release of the Indemnity Escrow to pay down $ 3,562 in principal, $ 29 in accrued interest, and $ 356 in prepayment premiums on the Term Loan.
On November 12, 2025, the Company repaid in full all amounts outstanding under the Term Loan, or approximately $ 31,801 , as well as $ 480 of accrued interest and $ 4,452 of prepayment premiums in accordance with the terms of the Term Loan. For accounting purposes, pursuant to ASC 470, this transaction was accounted for as an extinguishment of the Term Loan. The Company recognized a loss on extinguishment of $ 14,443 as a result, which is inclusive of third-party fees of $ 451 and was recorded in loss on debt extinguishment within the Company’s consolidated statement of operations and comprehensive loss during the fourth quarter of 2025.
During the year ended December 31, 2025, the Company repaid a total amount of $ 41,176 on amounts outstanding under the Term Loan. During the year ended December 31, 2024, the Company repaid a total amount of $ 36,324 on amounts outstanding under the Term Loan. As of December 31, 2025 and 2024, the amount outstanding under the Term Loan was $ 0 and $ 41,176 , respectively.
During the year ended December 31, 2025, the Company recognized $ 7,915 of interest expense relating to the Term Loan, which included $ 3,908 relating to non-cash interest expense relating to the debt discount. For the year ended December 31, 2024, interest expense related to the Term Loan including amortization of initial discounts and issuance costs, was 10,528 . The effective annual interest rate was approximately 34.2 %.
In connection with the Term Loan, the Company issued warrants to the Lenders (the “Term Loan Warrants”) to purchase up to 3,008,540 shares of the Company’s common stock at an exercise price of $ 2.576 per share with a termination date of December 12, 2028. At the date of issuance, the Company classified the Warrants as equity and recognized them in additional paid-in capital within its consolidated balance sheet. As of December 31, 2025, there were 2,508,683 Warrants that remained unexercised and outstanding.
Capped Calls
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In connection with the 2022 pricing of the Convertible Notes, with the full exercise by the initial purchasers of their option to purchase additional Convertible Notes in November 2021, the Company used approximately $ 18,616 of the net proceeds from the issuance of the Convertible Notes to enter into privately negotiated capped call transactions, which are referred to as the capped calls, with various financial institutions.
The capped call transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of the Company’s common stock underlying the Convertible Notes. The capped call transactions are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset some or all of any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions. The initial cap price of the capped calls is $ 48.55 per share of common stock, which represents a premium of 75 % over the last reported sale price of the Company’s common stock of $ 27.74 per share on November 16, 2021, and is subject to certain customary adjustments under the terms of the capped calls; provided that the cap price will not be reduced to an amount less than the strike price of $ 35.76 per share.
The capped call transactions are separate transactions and are not part of the terms of the Convertible Notes. The capped calls met the criteria for classification as equity and, as such, are not remeasured each reporting period and are included as a reduction to additional paid-in-capital within stockholders’ equity.
In connection with the 2025 repurchase of the Convertible Notes, the Company entered into transactions to unwind a portion of the capped calls. The Company did not receive any proceeds from the unwinding of the capped calls in 2025.
6. Loss Per Share
The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:
Year Ended
(In thousands) December 31,
2025 December 31,
2024
Stock options and restricted stock units issued and outstanding 10,206 10,563
Warrants to purchase common stock 2,655 2,779
Common stock issuable in connection with convertible senior notes 1,240 2,483
Total 14,101 15,825
7. Fair Value Measurements
The Company applies the provisions of FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), for its financial and non-financial assets and liabilities. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
• Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 inputs are unobservable inputs for the asset or liability.
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Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are comprised primarily of domestic and foreign bank accounts and money market funds. These cash and cash equivalents are valued based on Level 1 inputs which consist of quoted prices in active markets. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the Company’s cash and cash equivalents. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents approximated their estimated fair value. As such, there are no unrealized gains or losses related to the Company’s cash and cash equivalents.
Purchase Consideration
On March 1, 2022, the Company completed its acquisition of 100 % of an influencer-based management company (the “March 2022 Acquisition”). As part of the consideration, the seller may receive contingent consideration (the “March 2022 Acquisition Contingent Compensation”) of up to $ 4,500 in cash. In July 2023, the Company entered into an amendment the March 2022 Acquisition securities purchase agreement (the “March 2022 Acquisition Contingent Compensation Amendment”) which provides that the March 2022 Acquisition Contingent Compensation was reduced to $ 3,500 and payment of the March 2022 Acquisition Contingent Compensation is now tied to employment status of the seller through December 31, 2025, irrespective of the actual financial performance of the acquired company. As the amount became fixed under the March 2022 Acquisition Contingent Compensation Amendment, the Company determined that the March 2022 Acquisition Contingent Compensation should no longer be categorized as Level 3 within the fair value hierarchy at the time of the amendment and was moved to Level 1 within the fair value hierarchy.
Veritone One Earnout Receivable
The Company made an accounting policy election to record the earnout receivable related to the Veritone One divestiture at fair value at inception, and it is categorized as Level 3 within the fair value hierarchy. The earnout receivable is recorded within other assets in the Company’s consolidated balance sheets as of December 31, 2025 and 2024. The earnout receivable for the Veritone One divestiture has been recorded at its fair value using a Monte Carlo simulation pricing model due to the variability of estimating future revenues associated with the Company’s earnout. These models incorporate contractual terms and assumptions regarding financial forecasts for Veritone One, discount rates, and volatility of forecasted revenue. The value of the Veritone One earnout receivable would decrease if a lower discount rate was used and would increase if a higher discount rate was used. Similarly, a higher revenue volatility assumption would increase the value of the Veritone One earnout receivable, and a lower revenue volatility assumption would decrease the value of the Veritone One earnout receivable. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.
The following table sets forth the significant assumptions utilized to determine the fair value of the earnout receivable related to the sale of Veritone One as of December 31, 2025 and 2024:
December 31,
2025 December 31,
2024
Internal rate of return — % 23.0 %
Risk-free rate — % 4.9 %
Revenue volatility — % 10.0 %
The following table presents a summary of the change in the fair value of the earnout receivable, which was primarily driven by Veritone One not meeting the revenue targets associated with the earnout in order to collect the receivable. The earnout receivable is included in Other assets within the Company's consolidated balance sheets as of December 31, 2024:
Veritone One Earnout Receivable
Fair value as of December 31, 2024 $ 7,667
Change in fair value included in Other expense (income), net ( 7,667 )
Fair value as of December 31, 2025 $ —
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Stock Warrants
On the Closing Date of the Term Loan, the Company issued Term Loan Warrants to the Lenders to purchase up to 3,008,540 shares of the Company’s common stock at an exercise price of $ 2.576 per share. During the year ended December 31, 2024, 499,857 of these warrants were net settled in exchange for 298,110 shares of the Company’s common stock. No warrants were net settled during the year ended December 31, 2025. As of December 31, 2025, the Lenders held warrants to purchase 2,508,683 shares of Common Stock.
In addition, the Company has 145,945 common stock warrants with an exercise price of $ 13.61 which expire with various dates in 2027 which were issued in 2017.
All of the Company’s outstanding stock warrants are categorized as Level 3 within the fair value hierarchy. Stock warrants are equity classified and have been recorded at their fair value using either a probability weighted expected return model, the Monte Carlo simulation model or the Black-Scholes option-pricing model. These models incorporate contractual terms, maturity, risk-free interest rates and volatility. The value of the Company’s stock warrants would increase if a higher risk-free interest rate was used and would decrease if a lower risk-free interest rate was used. Similarly, a higher volatility assumption would increase the value of the stock warrants, and a lower volatility assumption would decrease the value of the stock warrants. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.
Investments
The Company holds a strategic investment in a technology company that was determined to not have a readily determinable fair value. This investment is carried at a cost of $ 2,750 on the Company’s consolidated balance sheets within other assets as of December 31, 2025 and 2024 and is categorized as Level 3 within the fair value hierarchy.
In June 2023, the Company acquired a strategic investment in GridBeyond that did not have a readily determinable fair value. This investment was carried at a cost equal to its initial estimated fair value of $ 2,021 on the Company’s consolidated balance sheets within other assets as of June 30, 2023, with that initial estimated fair value based on third party valuation at the time of the transaction and was categorized as Level 3 within the fair value hierarchy. In April 2024, the Company sold its investment in GridBeyond for $ 1,800 in cash, resulting in a loss on sale of $ 172 and a foreign exchange loss of $ 49 , recorded in other expense (income), net during the year ended December 31, 2024.
Because these investments do not have readily determinable fair values, the Company has elected to measure these investments under ASC 321, Investments—Equity Securities , at cost minus impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. No impairment was recorded for the years ended December 31, 2025 and 2024. The Company re-measures its investments if there is an observable transaction in a class of security similar to the Company’s investments and there were no such re-measurements for the years ended December 31, 2025 and 2024.
8. Goodwill and Other Intangible Assets
Goodwill recorded in connection with the Company’s acquisitions is primarily attributable to the assembled workforce and anticipated operational synergies. Goodwill was $ 54,256 and $ 53,110 as of December 31, 2025 and 2024, respectively. There were no impairments of goodwill during the year ended December 31, 2025 and 2024.
The Company has only one reporting unit and evaluates goodwill for impairment at the single reporting unit level. As a result, there is no goodwill assigned specifically to Veritone One and goodwill pertaining to discontinued operations is allocated based on the relative fair value of Veritone One and the remaining business.
The following table displays the changes in the carrying amount of goodwill:
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Balance at December 31, 2024 $ 53,110
Foreign currency translation 1,146
Balance at December 31, 2025 $ 54,256
The gross carrying amounts and accumulated amortization of the Company’s finite-lived intangible assets as of December 31, 2025 and 2024 were as follows:
December 31, 2025
Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Developed technology $ 44,474 $ ( 40,345 ) $ 4,129
Customer relationships 99,225 ( 65,122 ) 34,103
Trademarks and trade names 2,300 ( 1,893 ) 407
Total finite-lived intangible assets $ 145,999 $ ( 107,360 ) $ 38,639
December 31, 2024
Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Developed technology $ 44,100 $ ( 33,561 ) $ 10,539
Customer relationships 99,000 ( 50,866 ) 48,134
Trademarks and trade names 2,300 ( 1,473 ) 827
Total finite-lived intangible assets $ 145,400 $ ( 85,900 ) $ 59,500
Amortization expense related to developed technology, customer relationships, and trademarks and trade names is recorded in depreciation and amortization within the Company’s consolidated statements of operations. Amortization expense of finite-lived intangible assets was $ 21,670 and $ 24,011 for the years ended December 31, 2025 and 2024, respectively.
The following table presents future amortization of the Company’s finite-lived intangible assets as of December 31, 2025:
Amount
2026 $ 17,168
2027 13,541
2028 7,870
2029 20
2030 20
2031 20
Total $ 38,639
9. Consolidated Financial Statement Details
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Consolidated Balance Sheets Details
Cash and Cash Equivalents
As of December 31, 2025 and 2024, the Company had cash and cash equivalents of $ 27,426 and $ 16,911 .
Accounts Receivable, Net and Allowance for Credit Losses
Accounts receivable consisted of the following:
As of
December 31,
2025 December 31,
2024
Accounts receivable - Managed Services (1) $ 13,600 $ 5,100
Accounts receivable - Software Products and Services 24,996 27,810
38,596 32,910
Less: allowance for expected credit losses ( 1,828 ) ( 913 )
Accounts receivable, net $ 36,768 $ 31,997
Accounts receivable - Managed Services reflects the amounts due from the Company’s licensing and representation customers.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
December 31,
2025 December 31,
2024
Prepaid expenses $ 5,383 $ 5,234
Indemnification escrow holdback 1,500 3,650
Other receivables 121 854
Trade credits 1,557 —
Other current assets 1,159 760
Prepaid expenses and other current assets $ 9,720 $ 10,498
During the year ended December 31, 2025 the Company reduced the indemnification escrow as a result of the terms within the Veritone One Purchase Agreement. Refer to Note 4, Discontinued Operations, Business Combinations, and Divestiture , for additional information.
Property, Equipment and Improvements, Net
Property, equipment and improvements, net consisted of the following:
As of
December 31,
2025 December 31,
2024
Property and equipment $ 3,738 $ 4,963
Internal use software development costs 16,533 14,100
Leasehold improvements 464 1,620
20,735 20,683
Less: accumulated depreciation ( 11,153 ) ( 10,631 )
Property, equipment and improvements, net $ 9,582 $ 10,052
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Depreciation expense was $ 5,504 and $ 4,499 for the years ended December 31, 2025 and 2024, respectively. Of the $ 3,738 and $ 4,963 in property and equipment as of December 31, 2025 and 2024, $ 426 and $ 2,745 consisted of work in progress not yet placed in service for internal use software development costs, respectively. Depreciation of internal use software development costs was $ 5,085 and $ 3,669 for the years ended December 31, 2025 and 2024, respectively.
The Company’s property, equipment and improvements, net by geographic area are as follows:
As of
December 31,
2025 December 31,
2024
United States $ 6,059 $ 6,973
United Kingdom 3,333 2,846
Others 190 233
Total property, equipment and improvements, net $ 9,582 $ 10,052
Other Assets
Other assets consisted of the following:
December 31,
2025 December 31,
2024
Fair value of earnout receivable $ — $ 7,667
Investments 2,970 2,990
Deferred tax assets 835 1,773
Operating lease right-of-use assets 1,794 840
Other 1 2,315
Other assets $ 5,600 $ 15,585
Accrued expenses and other current liabilities consisted of the following:
December 31,
2025 December 31,
2024
Accrued compensation $ 4,288 $ 4,504
Taxes payable 3,760 5,645
Current portion of operating lease liabilities 620 698
Royalties payable 7,246 3,199
Accrued trade payables 12,272 14,882
Accrued expenses and other current liabilities $ 28,186 $ 28,928
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Other Non-Current Liabilities
Other non-current liabilities consisted of the following:
As of
December 31,
2025 December 31,
2024
Deferred tax liability $ 4,111 $ 6,387
Income taxes payable 2,499 2,241
Operating lease liability 1,285 150
Unclaimed escrow liability 2,481 2,500
Other — 22
Other non-current liabilities $ 10,376 $ 11,300
Contract Liabilities
Contract liabilities consist of deferred revenue. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. The portion of deferred revenue that is anticipated to be recognized as revenue during the succeeding twelve-month period is recorded as deferred revenue within the Company's consolidated balance sheets. Deferred revenue was comprised of the following:
Deferred Revenue
Balance as of December 31, 2024 $ 12,056
Less: revenue recognized ( 30,711 )
Additions to deferred revenue 30,945
Balance as of December 31, 2025 $ 12,290
Consolidated Statements of Operations and Comprehensive Loss Details
Revenue
Software Products & Services consists of revenue generated from the Company’s aiWARE platform, including its VDR product, and Talent Acquisition solutions, any related support and maintenance services, and any related professional services associated with the deployment and/or implementation of such solutions.
Managed Services consists of revenues generated from content licensing customers, representation services, and, to a lesser extent, from advertising customers and related services.
The table below illustrates the presentation of our revenues based on the above definitions:
Year Ended
December 31, 2025 December 31, 2024
Software Products & Services $ 65,819 $ 61,068
Managed Services:
Representation Services 6,800 12,550
Licensing 19,573 19,019
Total Managed Services 26,373 31,569
Total revenue $ 92,192 $ 92,637
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During the year ended December 31, 2025 and 2024, $ 31,700 and $ 29,644 of our consolidated revenue was from customers outside of the U.S. and predominately in Europe.
10. Leases, Commitments, and Contingencies
Leases
The Company leases certain office space under non-cancellable lease agreements which expire between 2026 and 2030. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional one to five years . For certain leases, these optional periods have been considered in the determination of the right-of-use assets and lease liabilities associated with these leases as the Company has determined it is reasonably certain it will exercise the renewal options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company classifies right-of-use assets within other assets and operating lease liabilities within accrued expenses and other current liabilities and non-current other liabilities within the consolidated balance sheet.
In January 2025, the Company entered into a non-cancellable agreement to lease office space in London to replace its existing office space. The base rent is approximately $ 2,622 , translated at the December 31, 2025 spot rate, in the aggregate over the original lease term of 71 months from the commencement date.
The components of lease cost are as follows:
Year Ended
December 31,
2025 December 31,
2024
Lease cost:
Fixed operating lease cost $ 576 $ 1,049
Short-term lease cost 169 2
Variable lease cost (1) 391 290
Total lease cost $ 1,136 $ 1,341
(1) Variable lease costs, which include items such as real estate taxes, common area maintenance, and changes based on an index or rate, are not included in the calculation of the right-of-use assets and are recognized as incurred.
As of December 31, 2025, maturities of operating lease liabilities were as follows:
Amount
2026 $ 710
2027 444
2028 444
2029 444
2030 444
Total lease payments 2,486
Less: imputed interest ( 581 )
Present value of lease liabilities $ 1,905
The weighted-average remaining lease term and the weighted-average discount rate used to calculate the present value of lease liabilities are as follows:
December 31,
2025 December 31,
2024
Weighted-average remaining lease term 4.6 years 1.2 years
Weighted-average discount rate 11.4 % 8.8 %
Supplemental cash flow information related to leases is as follows:
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Year Ended
December 31,
2025 December 31,
2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 624 $ 2,917
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases $ 1,840 $ —
Deferred Purchase Consideration
In connection with its acquisition of an influencer-based management company in March 2022, the Company committed to make deferred purchase consideration payments totaling $ 3,500 contingent upon recipient’s continued employment through December 31, 2025. The first payment of $ 1,000 was made in the first quarter of 2024, the second payment of $ 1,000 was made in the first quarter of 2025, and the final payment of $ 1,500 was made in the first quarter of 2026.
On August 11, 2022, the Company acquired certain assets of Vision Semantics Limited (“VSL”), a U.K.-based company focused on AI-powered video analytics and surveillance software solutions. In connection with its acquisition of VSL in August 2022, the Company committed to make a purchase consideration payment of $ 300 on the 18-month anniversary of the closing date of the acquisition, which the Company paid during the first quarter of 2024.
Legal and Other Contingencies
From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company currently is not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on the Company’s results of operations, financial position or cash flows.
In December 2024, the Company received $ 2,500 in unclaimed funds associated with the PandoLogic acquisition from its escrow agent. Based on the jurisdiction of the potential future claims and underlying statute of limitations, the Company has recognized the unclaimed funds as part of other non-current liabilities within its consolidated balance sheets, which amounted to $ 2,481 and $ 2,500 as of December 31, 2025 and 2024, respectively, and will continue to evaluate the merit of such claims.
11. Stockholders’ Equity
At the Market Program
On November 19, 2024, the Company entered into a sales agreement (the "Sales Agreement") with Needham & Company, LLC and H.C. Wainwright & Co., LLC (the “Sales Agents”), to establish an “at-the-market” equity offering program (the "ATM Program"), pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 35,000 from time to time through the Sales Agents. Sales under the Sales Agreement were conducted as “at-the-market” equity offerings as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on The Nasdaq Global Market or other trading markets for the Company’s common stock. The issuance and sale of shares was made pursuant to the Company’s registration statement on Form S-3 (File No. 333-280148), which became effective on June 21, 2024, and the related prospectus supplement filed with the SEC on November 19, 2024. From inception through its termination in October 2025, the Company received $ 33,507 in net proceeds from sales of 11,740,454 shares of its common stock pursuant to the ATM Program.
January 2025 Registered Direct Offering
On January 2, 2025, the Company issued and sold an aggregate of 4,414,878 shares of common stock at a price of $ 2.53 per share and pre-funded warrants to purchase up to 3,608,838 shares of common stock at a price of $ 2.52 per pre-funded warrant (the “January 2025 Pre-Funded Warrants”), with an exercise price of $ 0.01 , in a registered direct offering with Esousa Group Holdings, LLC. The aggregate net proceeds were approximately $ 19,947 , after deducting offering expenses.
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The January 2025 Pre-Funded Warrants generally cannot be exercised if the holder’s aggregate beneficial ownership would be more than 9.99 % of the total issued and outstanding shares of the Company’s common stock following such exercise. The exercise price and number of shares of common stock issuable upon the exercise of the January 2025 Pre-Funded Warrants are subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the warrant agreement.
The January 2025 Pre-Funded Warrants were evaluated pursuant to ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging . The Company classified the January 2025 Pre-Funded Warrants as a component of stockholders’ equity within additional paid-in capital and recorded them at fair value on the issuance date, which approximated their sales price. The January 2025 Pre-Funded Warrants were equity classified because they were freestanding financial instruments that are legally detachable and separately exercisable, were immediately exercisable, did not embody an obligation for the Company to repurchase its common shares, permitted the holders to receive a fixed number of common shares upon exercise, were indexed to the Company’s common shares and met the equity classification criteria.
On October 17, 2025, the January 2025 Pre-Funded Warrants were exercised in full, and as of December 31, 2025, no warrants remained outstanding.
June 2025 Registered Direct Offering and Private Placement
On June 30, 2025, the Company agreed to issue and sell an aggregate of 6,452,293 shares of the Company’s common stock at a price of $ 1.09 per share and pre-funded warrants to purchase up to 1,804,587 shares of the Company’s common stock (the “June 2025 Pre-Funded Warrants”), priced at $ 1.08 per pre-funded warrant, with an exercise price of $ 0.01 per share, to certain institutional and accredited investors in a registered direct offering. The sale and issuance of shares and warrants were completed on July 1, 2025. The aggregate net proceeds were approximately $8,095, after deducting placement agent fees and offering expenses.
The June 2025 Pre-Funded Warrants provide that the holder may not exercise any portion of the June 2025 Pre-Funded Warrants to the extent that immediately prior to or after giving effect to such exercise, the holder (together with its affiliates) would beneficially own more than 9.99 % of the Company’s outstanding common stock (the “Maximum Percentage”) after such exercise. By written notice to the Company, the holder may from time to time increase or decrease the Maximum Percentage to any other percentage specified not in excess of 19.99 % (the “Maximum Cap”). Subject to the Maximum Percentage or, as applicable, the Maximum Cap, the June 2025 Pre-Funded Warrants are immediately exercisable and may be exercised at any time until the June 2025 Pre-Funded Warrants are exercised in full. If, at the time of exercise, there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance or resale of the shares of common stock issuable from time to time upon exercise of the June 2025 Pre-Funded Warrants, in lieu of making cash payment otherwise contemplated to be made to the Company upon exercise of a June 2025 Pre-Funded Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the June 2025 Pre-Funded Warrants. The exercise price and number of shares of common stock issuable upon the exercise of the June 2025 Pre-Funded Warrants are subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the June 2025 Pre-Funded Warrants.
The June 2025 Pre-Funded Warrants were evaluated pursuant to ASC 480 and ASC 815. The Company classified the June 2025 Pre-Funded Warrants as a component of stockholders’ equity within additional paid-in capital and recorded them at fair value on the issuance date, which approximated their sales price. The June 2025 Pre-Funded Warrants were equity classified because they were freestanding financial instruments that are legally detachable and separately exercisable, were immediately exercisable, did not embody an obligation for the Company to repurchase its common shares, permitted the holders to receive a fixed number of common shares upon exercise, were indexed to the Company’s common shares and met the equity classification criteria.
On October 17, 2025, the June 2025 Pre-Funded Warrants were exercised in full, and as of December 31, 2025, no warrants remained outstanding.
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Additionally, on June 30, 2025, pursuant to the terms of a securities purchase agreement (the :RDO Purchase Agreement’), the Company and Ryan Steelberg, the Company’s President, Chief Executive Officer and Chairman of its Board of Directors, as trustee of The RSS Living Trust dated April 6, 2012 (the “RSS Trust”) entered into a securities purchase agreement (the “Steelberg Purchase Agreement”), pursuant to which the RSS Trust agreed to purchase from the Company, and the Company agreed to issue and sell to the RSS Trust, up to 709,220 shares of the Company’s common stock for a gross aggregate offering price of $ 1,000 , at a price per share equal to the greater of (i) $ 1.41 (representing the consolidated closing bid price of the Company’s common stock on June 27, 2025) and (ii) the consolidated closing bid price of the Company’s common stock on the date that is the second full trading day after the date on which the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (“Q2 Form 10-Q”) is filed with the SEC (such transaction, the “Private Placement” and such shares, the “Private Placement Shares”).
The Private Placement Shares were initially classified as a liability within the Company’s consolidated balance sheet pursuant to ASC 480. The Private Placement Shares were liability classified because the Company was obligated to deliver a variable number of shares based on the closing bid price of its common stock on the trading day preceding the closing date, while the monetary obligation was fixed at inception. The liability was recorded at its fair value of approximately $ 1,000 , equal to the gross aggregate offering price of the Private Placement Shares.
The Private Placement closed on August 13, 2025, the third full trading day after the filing of the Company’s Q2 Form 10-Q with the SEC. In connection with the closing of the Private Placement, the Company issued 366,300 shares of its common stock at a price per share of $ 2.73 , the consolidated closing bid price of the Company’s common stock on August 12, 2025, and simultaneously extinguished the liability related to the Private Placement Shares as described above. The aggregate net proceeds were approximately $ 916 , after deducting placement agent fees and offering expenses. The Private Placement Shares were not registered under the Securities Act and were offered pursuant to the exemption from registration provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The RSS Trust is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act.
September 2025 Underwritten Public Offering
On September 12, 2025, the Company issued and sold an aggregate of 10,931,560 shares of common stock at a price of $ 2.63 per share in an underwritten public offering. The aggregate net proceeds were approximately $ 26,532 , after deducting underwriting discounts and commissions and offering expenses.
October 2025 Underwritten Public Offering
On October 17, 2025, the Company issued and sold an aggregate of 12,864,494 shares of common stock at a price of $ 5.83 per share to certain institutional and accredited investors in a registered direct offering. The aggregate net proceeds were approximately $70,150, after deducting underwriting discounts and commissions and offering expenses.
Capped Call Transactions
In November 2021, in connection with the issuance of the Convertible Notes, the Company paid approximately $ 18,616 to enter into Capped Call Transactions with various financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common shares was greater than the strike price of the Capped Call Transactions, initially set at $ 35.76 per common share, with such reduction of potential dilution subject to a cap based on the cap price initially set at $ 48.55 per common share. The strike price and cap price were subject to certain adjustments under the terms of the Capped Call Transactions. Therefore, as a result of executing the Capped Call Transactions, the Company in effect was only exposed to potential net dilution once the market price of its common shares exceeded the adjusted cap price. As a result of the Capped Call Transactions, the Company’s additional paid-in capital within shareholders’ deficit on its consolidated balance sheet was reduced by $ 18,616 during the fourth quarter of 2021.
During December 2022, December 2023, and November 2025, in connection with the Company’s repurchases of portions of the Convertible Notes, the Company entered into partial settlement agreements with the option counterparties to the Capped Call Transactions to terminate a portion of such existing transactions, in each case, in a notional amount corresponding to the aggregate principal amount of Convertible Notes that were repurchased. The Company did not receive any amount of cash as part of the settlement during the year ended December 31, 2025.
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12. Stock-Based Compensation
2014 Stock Incentive Plan
In 2014, the Company’s Board of Directors and stockholders approved and adopted the 2014 Stock Option/Stock Issuance Plan (the “2014 Plan”), which was amended in March 2015, October 2016 and April 2017. Under the 2014 Plan, incentive stock options, nonstatutory stock options, restricted stock and restricted stock units may be granted to eligible employees, directors and consultants. The Company’s Board of Directors resolved not to make any further awards under the 2014 Plan following the completion of the Company’s IPO. The 2014 Plan will continue to govern all outstanding awards granted thereunder.
2017 Stock Incentive Plan
In April 2017, the Board and stockholders approved and adopted the 2017 Stock Incentive Plan (the “2017 Plan”), which became effective on May 11, 2017. Under the 2017 Plan, incentive stock options, nonstatutory stock options, stock appreciation rights, stock awards and restricted stock units may be granted to employees, non-employee directors, consultants and advisors. The Board resolved not to make any further awards under the 2017 Plan following the adoption of the Company’s 2023 Plan (as defined below) by the Company’s stockholders in June 2023. The 2017 Plan will continue to govern all outstanding awards granted thereunder.
2018 Performance-Based Stock Incentive Plan
In June 2018, the Company’s stockholders approved the Company’s 2018 Performance-Based Stock Incentive Plan (the “2018 Plan”), and approved grants under the 2018 Plan of nonstatutory stock options, having performance-based vesting conditions tied to the future achievement of stock price milestones by the Company (each, a “Performance Option”), to the Company’s Chief Executive Officer for 1,809,900 shares (the “CEO Award”) and to the Company’s President for 1,357,425 shares (the “President Award”). In May 2018, the CEO Award and the President Award had been approved by a special committee of the Board of Directors of the Company (the “Special Committee”), and the 2018 Plan had been approved by the Company’s Board of Directors, subject to stockholder approval.
The 2018 Plan allows the Company to grant Performance Options to its executive officers and other employees as an incentive for them to remain in service with the Company and to further align their interests with the interests of the Company’s stockholders. A total of 4,200,000 shares of the Company’s common stock have been authorized for issuance under the 2018 Plan. On March 30, 2023, the Board approved an Amended and Restated Inducement Grant Plan that increased the number of shares reserved for issuance thereunder by 425,000 shares, to an aggregate of 1,175,000 shares.
As of December 31, 2025, there were no shares of common stock available for future grant under the 2018 Plan.
Inducement Grant Plan
In October 2020, the Company’s Board of Directors (the “Board”) adopted the Company’s Inducement Grant Plan (the “Inducement Grant Plan”). Under the Inducement Grant Plan, nonstatutory stock options, stock appreciation rights, stock awards, restricted stock units and dividend equivalent rights may be granted as an inducement material for eligible persons to enter into employment with the Company in accordance with NASDAQ Marketplace Rule 5635(c)(4) and the related guidance under NASDAQ IM 5635-1, and any amendments or supplements thereto. The Company has initially reserved 750,000 shares of common stock for issuance under the Inducement Grant Plan. As of December 31, 2025, an aggregate of 447,178 shares of common stock were available for future grant under the Inducement Grant Plan.
2023 Equity Incentive Plan
The Company’s 2023 Equity Incentive Plan (as amended, the “2023 Plan”) was approved by our Board in March 2023 and by our stockholders in June 2023 at our annual meeting. The 2023 Plan became effective immediately following the close of business on June 8, 2023 (the “2023 Plan Effective Time”). Under the 2023 Plan, the Compensation Committee or our Board has authority to grant incentive stock options to our employees and employees of certain subsidiaries, and to grant nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of stock awards to our employees, directors and consultants and the employees and consultants of our affiliates. In March 2025, our Board approved the Amended and Restated 2023 Equity Incentive Plan that increased the number of shares reserved for issuance thereunder by 2,500,000 shares. The Amended and Restated 2023 Equity Incentive Plan was approved by our stockholders in June 2025 at our annual meeting.
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Under the 2023 Plan, the Company may grant up to 5,000,000 shares of our common stock plus the aggregate of (A) the number of shares of our common stock which were available for the grant of new awards under the 2014 Plan and 2017 Plan as of the 2023 Plan Effective Time, and (B) all Returning Shares (as defined below), if any, as they become available from time to time. “Returning Shares” means shares of our common stock subject to an outstanding award granted under the 2014 Plan or 2017 Plan and that, following the 2023 Plan Effective Time: (1) are not issued because such stock award or any portion thereof expires or otherwise terminates without all of the shares covered by such stock award having been issued; (2) are not issued because such stock award or any portion thereof is settled in cash; (3) are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares; (4) are withheld or reacquired to satisfy the exercise, strike or purchase price; or (5) are withheld or reacquired to satisfy a tax withholding obligation. The Board may suspend or terminate the 2023 Plan at any time. The aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options granted under the 2023 Plan is 2,000,000 shares. The authority to grant new incentive stock options under the 2023 Plan will terminate on March 30, 2033.
As of December 31, 2025, an aggregate of 3,758,603 shares of our common stock were available for future grant under the 2023 Plan.
Terms of Awards Under Stock Plans
The 2014 Plan, 2017 Plan, 2018 Plan, Inducement Grant Plan and 2023 Plan are collectively referred to herein as the “Stock Plans.” The Stock Plans are administered by the Compensation Committee of the Board of Directors, which determines the recipients and the terms of the awards granted (with the exception of the CEO Award and President Award, which were approved by the Special Committee). All stock options granted under the Stock Plans have exercise prices equal to or greater than the fair market value of the Company’s common stock on the grant date, and expire ten years after the grant date, subject to earlier expiration in the event of termination of the optionee’s continuous service with the Company as further described in each Stock Plan. The vesting of all awards granted under the Stock Plans is generally subject to the awardee’s continuous service with the Company, with certain exceptions, as further described in each Stock Plan.
The Company has granted to employees, non-employee directors and consultants awards of stock options, restricted stock and restricted stock units that are subject to time-based vesting conditions. The time-based stock options that have been granted to employees and consultants generally vest over a period of four years (with the exception of certain stock options granted to the Company’s Chief Executive Officer and President in 2017, which vested over a period of three years , and certain other limited exceptions). Restricted stock units that have been awarded to employees generally vest, in some cases, over periods of one to four years . The restricted stock units awarded to members of the Company’s Board of Directors under the automatic grant program provisions of the 2023 Plan generally vest over a period of one year .
The Company has also granted Performance Options under the 2018 Plan, the 2017 Plan and the Inducement Grant Plan. All such Performance Options become exercisable in three equal tranches based on the achievement of specific stock price milestones for the Company’s common stock. These stock price milestones were amended in August 2020 with respect to substantially all of the Performance Options outstanding at such time, as discussed below. For each tranche to become exercisable, the closing price per share of the Company’s common stock must meet or exceed the applicable stock price target for a period of 30 consecutive trading days. In the first quarter of 2021, the Company achieved all of the stock price milestones and, accordingly, substantially all of the then-outstanding Performance Options have vested in full.
In addition, in April 2024, the Company granted Performance Stock Units under the 2023 Plan to the Chief Executive Officer and the Chief Financial Officer. All such Performance Stock Units become eligible to vest upon the achievement of certain revenue and non-GAAP net income targets for 2024. The Company failed to achieve either of the financial targets for 2024 and, accordingly, all of the Performance Stock Units granted under the 2023 Plan in 2024 were forfeited.
Stock-Based Compensation
The Company recognizes stock-based compensation expense for awards granted under the Stock Plans ratably over the requisite service period. For awards subject to time-based vesting conditions, the service period is generally the vesting period. For Performance Options, a derived service period is estimated for each tranche under the Monte Carlo simulation model. The Company also recognizes stock-based compensation expense related to the Company’s ESPP ratably over each purchase interval.
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The Company has also issued shares of common stock to consultants in exchange for services under separate agreements outside of the Stock Plans. These share-based payment transactions are measured based on the fair value of the common stock issued and are recognized in the period in which the services are rendered.
The fair values of time-based stock options granted under the Stock Plans and purchase rights under the ESPP are determined as of the grant date using the Black-Scholes-Merton option-pricing model. There were no options granted during the years ended December 31, 2025 and 2024.
The assumptions used in calculating the fair values of purchase rights granted under the ESPP during the years ended years ended December 31, 2025 and 2024 are set forth in the table below:
Year Ended December 31, Year Ended December 31,
2025 2024
Expected term (in years) 0.5 — 2.0 0.5 — 2.0
Expected volatility 101 % — 129 % 106 % — 139 %
Risk-free interest rate 3.87 % — 4.28 % 4.60 % — 4.60 %
Stock Options
The following table summarizes the activities for all stock options under the Company’s stock-based compensation plans for the year ended December 31, 2025:
Number of Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value(1)
Outstanding as of December 31, 2024(2) 8,438 $ 12.93 3.16 years $ 152
Granted — $ —
Exercised(3) ( 80 ) $ 3.53
Forfeited or expired(4) ( 400 ) $ 11.78
Outstanding as of December 31, 2025(2) 7,958 $ 13.08 3.20 years $ 424
Exercisable as of December 31, 2025(5) 7,918 $ 13.11 3.18 years $ 412
Vested and expected to vest as of December 31, 2025(6) 7,958 $ 13.08 3.20 years $ 424
(1) The intrinsic value is the amount by which the current market value of the underlying stock exceeds the exercise price of the stock awards.
(2) Includes 3,530 and 3,620 performance condition stock options as of December 31, 2025 and 2024, respectively.
(3) Includes 4 performance condition stock options.
(4) Includes 86 performance condition stock options.
(5) Includes 3,530 performance condition stock options.
(6) Includes 3,530 performance condition stock options.
There were no stock options granted during the years ended December 31, 2025 and 2024. The total intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $ 173 and $ 161 , respectively.
As of December 31, 2025, the total unrecognized compensation cost related to all nonvested stock options was $ 1,026 and the related weighted-average period over which it is expected to be recognized was approximately 1.02 years.
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Restricted Stock Units
The following table summarizes the activities for all RSUs under the Company’s stock-based compensation plans for the year ended December 31, 2025:
Number of Shares Weighted-Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2024(1) 1,902 $ 4.94
Granted(2) 1,758 $ 3.26
Vested ( 772 ) $ 4.84
Forfeited(3) ( 572 ) $ 4.97
Outstanding as of December 31, 2025(1) 2,316 $ 3.69
(1) Includes 323 and 248 performance condition RSUs as of December 31, 2025 and 2024, respectively.
(2) Includes 323 performance condition RSUs.
(3) Includes 248 performance condition RSUs.
The total vesting date fair value of RSUs which vested during the years ended December 31, 2025 and 2024 was $ 2,193 and $ 3,071 , respectively.
As of December 31, 2025, the total unrecognized compensation cost related to all nonvested RSUs was $ 4,433 and the related weighted-average period over which it is expected to be recognized was approximately 1.78 years.
Stock-Based Compensation Expense
The following table provides information about stock-based compensation expense by award type:
Year Ended
December 31,
2025 December 31,
2024
Stock options $ 1,475 $ 2,091
Restricted stock units 3,651 5,043
Employee stock purchase plan 1,560 993
Total stock-based compensation expense $ 6,686 $ 8,127
The following table provides information about stock-based compensation expense by financial statement line item:
Year Ended
December 31,
2025 December 31,
2024
Cost of revenue (exclusive of depreciation and amortization) $ — $ —
Sales and marketing 1,069 1,047
Research and development 1,170 1,480
General and administrative 4,447 5,600
Total stock-based compensation expense $ 6,686 $ 8,127
Stock-based compensation expense capitalized as part of internal-use software was $ 192 and $ 375 for the years ended December 31, 2025 and 2024, respectively.
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13. Income Taxes
The components of loss from continuing operations before income taxes were as follows:
Year Ended
December 31,
2025 December 31,
2024
Domestic $ ( 91,023 ) $ ( 73,159 )
Foreign ( 20,937 ) ( 27,034 )
Total $ ( 111,960 ) $ ( 100,193 )
Income taxes were as follows:
Year Ended
December 31,
2025 December 31,
2024
Current tax expense:
Federal $ — $ 51
State 221 397
Foreign 883 446
Total current tax expense 1,104 894
Deferred tax expense:
Federal ( 15,707 ) ( 13,381 )
State ( 5,317 ) ( 6,016 )
Foreign ( 4,242 ) ( 4,781 )
Change in valuation allowance 23,934 19,423
Total deferred tax expense ( 1,332 ) ( 4,755 )
Total tax expense $ ( 228 ) $ ( 3,861 )
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The significant categories of temporary differences that gave rise to deferred income tax assets and liabilities were as follows:
December 31,
2025 December 31,
2024
Deferred tax assets:
Net operating loss carryforwards $ 59,394 $ 44,928
Stock-based compensation 21,131 21,460
Accrued expenses 364 165
Capital loss carryforward 5,678 5,031
Capitalized research and development 15,640 15,856
Fixed assets 225 341
Operating lease liabilities 54 134
Research credits 9,902 9,283
Interest expense carryforward 9,337 4,836
Other 1,537 1,368
Gross deferred tax assets 123,262 103,402
Less: valuation allowance ( 117,740 ) ( 93,159 )
Total deferred tax assets 5,522 10,243
Deferred tax liabilities:
Operating lease right-of-use assets ( 52 ) ( 132 )
Unremitted foreign earnings ( 1,419 ) ( 1,086 )
Installment sale — ( 2,090 )
Intangible assets and goodwill ( 7,326 ) ( 11,549 )
Other — —
Total deferred tax liabilities ( 8,797 ) ( 14,857 )
Total net deferred tax assets $ ( 3,275 ) $ ( 4,614 )
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The following table presents a reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to our income before income taxes:
Year Ended December 31, 2025
Amount % of Income Before Income Taxes
U.S. federal statutory income tax rate $ ( 23,511 ) 21.00 %
State and local income taxes, net of federal income tax effect (1) 176 ( 0.16 ) %
Foreign tax effects
Israel
Changes in Israel valuation allowances 2,950 ( 2.63 ) %
Other ( 583 ) 0.52 %
Other countries 1,090 ( 0.97 ) %
Effect of cross-border tax laws
Subpart F 1,104 ( 0.99 ) %
Other 317 ( 0.28 ) %
Tax credits ( 260 ) 0.23 %
Changes in valuation allowance 16,785 ( 15.00 ) %
Nontaxable or nondeductible items
Stock compensation and officers' compensation 1,169 ( 1.04 ) %
Other 45 ( 0.04 ) %
Changes in unrecognized tax benefits 226 ( 0.20 ) %
Other adjustments 264 ( 0.24 ) %
( 228 ) 0.20 %
(1) State taxes in California, Maryland, Texas and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
The reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate is as follows:
Year Ended
December 31, 2024
Tax expense at United States statutory rate 21.00 %
Increase (decrease) in tax resulting from:
State taxes, net of federal effect 3.75 %
Impact of foreign operations ( 1.39 ) %
Research & development credits 0.68 %
Stock-based compensation ( 1.26 ) %
Change in valuation allowance ( 18.94 ) %
Total 3.84 %
The Company has evaluated the available positive and negative evidence supporting the realization of its gross deferred tax assets, including its cumulative losses, and the amount and timing of future taxable income, and has determined it is more likely than not that historical U.S. federal and state deferred tax assets will not be realized. Accordingly, the Company recorded a valuation allowance as of December 31, 2025 and 2024 against these deferred tax assets.
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The change in the valuation allowance for the years ended December 31, 2025 and 2024 is as follows:
Year Ended
December 31,
2025 December 31,
2024
Valuation allowance, at beginning of year $ 93,159 $ 93,566
Increase (decrease) recognized in other comprehensive income (loss) 647 ( 311 )
Increase recognized in tax provision, continuing operations 23,934 19,423
Increase recognized in tax provision, discontinued operations — ( 19,519 )
Valuation allowance, at end of year $ 117,740 $ 93,159
As of December 31, 2025, the Company continues to provide a valuation allowance against federal and state deferred tax assets that are not expected to be realizable. The Company continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If the Company’s assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which the determination is made.
As of December 31, 2025, the Company has federal, state, and foreign income tax net operating loss carryforwards of approximately $ 195,092 , $ 173,325 , and $ 40,035 respectively. The U.S. federal and state net operating losses are projected to expire beginning in 2037 and 2030, respectively, unless previously utilized. Net federal operating loss carryforwards generated after January 1, 2018 may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. The foreign net operating loss carryforwards do not expire. In addition, the Company had federal and state research and development credit carryforwards of approximately $ 8,131 and $ 5,195 , respectively, as of December 31, 2025. The federal research and development credit will begin to expire in 2036 if unused and the state research and expenditure credit may be carried forward indefinitely. Utilization of the Company’s U.S. net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations set forth in Internal Revenue Code Section 382 and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. As of December 31, 2025, the Company has foreign net loss carryforwards of $ 40,035 which can be carried forward indefinitely.
In accordance with the U.S. global intangible low-taxed income (“GILTI”) provisions, we include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. We account for the GILTI tax in the period in which it is incurred, and therefore have not provided any deferred tax impacts of GILTI in our consolidated financial statements.
As of December 31, 2025 and 2024, the Company had approximately $ 7,457 and $ 6,954 respectively, of unrecognized tax benefits of which $ 3,775 would impact the Company’s effective tax rate if recognized. If recognized, $ 4,777 would result in a deferred tax asset for tax attribute carryforwards, out of which $ 2,891 is expected to require a full valuation allowance based on present circumstances. The Company estimates that none of its unrecognized tax benefits will materially change within the next twelve months. As of December 31, 2025 and 2024, amounts accrued for interest were recorded within income tax expense and were $ 180 and $ 71 , respectively, and amounts accrued for penalties of $ 430 and $ 381 , were also recorded within income tax expense, respectively.
A reconciliation of the unrecognized tax benefits from January 1, 2024 to December 31, 2025 is as follows:
Year Ended
December 31,
2025 December 31,
2024
Unrecognized tax benefit as of January 1 $ 6,954 $ 6,873
Gross increase for tax positions for the prior year ( 62 ) ( 303 )
Gross decrease for tax positions for the prior year 497 393
Gross increase for tax positions of the current year 140 170
Gross decrease for lapse of statute of limitations ( 72 ) ( 179 )
Unrecognized tax benefits balance at December 31 $ 7,457 $ 6,954
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The Company is subject to taxation in the United States, Israel, the United Kingdom, France, Australia, and various U.S. states. In general, the U.S. federal statute of limitations is three years. However, the Internal Revenue Service may still adjust a tax loss or credit carryover in the year the tax loss or credit carryover is utilized. As such, our U.S. federal tax returns and state tax returns are open for examination since inception. The Israeli statute of limitations period is generally three years commencing at the end of the year in which the return was filed. The United Kingdom statute of limitations period is generally one year commencing the day the Company has filed its tax return, or, for larger companies, the statutory due date of such return. The France statute of limitations period is generally three years commencing at the end of the year that has triggered the tax liability. The Australia statute of limitations period is generally four years commencing the day the Company has filed its tax return. The Company is not currently under examination from income tax authorities in the jurisdictions in which the Company does business.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”), which, among others, implements a 15% corporate alternative minimum tax based on the adjusted financial statement income for certain large corporations and a 1% excise tax on net share repurchases. The minimum tax and excise tax, if applicable, are effective for fiscal years beginning after December 31, 2022. The IRA had no material impact on our financial position, results of operations or cash flows. We will continue to monitor additional future guidance from the IRS.
On July 4, 2025, the U.S. enacted H.R. 1 “A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14”, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA contains significant provisions, including the permanent extension or restoration of certain expiring corporate income tax provisions, originally introduced by the Tax Cuts and Jobs Act of 2017, and incremental modifications to the international framework. The legislation has multiple effective dates, with certain provisions effective for the tax year beginning after December 31, 2024, and others effective for tax years beginning after December 31, 2025. Veritone has evaluated the OBBBA provisions enacted and has included the related impact in the provision for income taxes. The OBBBA did not have a material impact to our tax expense in 2025 and is not expected to have a material impact on future periods.
Cash paid for income taxes was as follows:
Year Ended December 31, 2025
Federal $ —
State
Massachusetts 124
Other states 366
Foreign
United Kingdom 650
Israel 843
Other foreign 25
—
$ 2,008
14. Related Party Transactions
Steel Holdings Consulting Agreement
On January 4, 2023, the Company entered into a consulting agreement with Steel Holdings, LLC effective January 1, 2023 (the “Steel Holdings Consulting Agreement”). Steel Holdings, LLC is an entity affiliated with Chad Steelberg, formerly a member of the Board, as well as the Company’s former Chairman of the Board and former Chief Executive Officer. Under the Steel Holdings Consulting Agreement, the Company retained Mr. Steelberg as a consultant to provide ongoing Chief Executive Officer transition services and to manage and oversee the further development of the Company’s aiWARE platform.
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In January 2024, the Company entered into an amended and restated independent contractor services agreement with Steel Holdings, LLC (the “Amended Consulting Agreement”), which superseded and replaced the Steel Holdings Consulting Agreement, and which terminated by its terms on December 31, 2025. Pursuant to the Amended Consulting Agreement, Mr. Steelberg will provide technical advisory services related to the Company’s software, software architecture and technology strategy as requested by the Company’s Chief Executive Officer until December 31, 2025, the termination date of the Amended Consulting Agreement. In consideration for such services, the Company paid Steel Holdings, LLC $ 1,000 in cash on July 1, 2024 and agreed to pay Steel Holdings, LLC $ 50 per month in cash for the period from January 2024 through December 2025. The Company reimbursed Steel Holdings, LLC for reasonable and documented expenses incurred in connection with providing the services in accordance with the Company’s standard travel and expense policies.
The Company determined that all future payments under the Amended Consulting Agreement are probable and estimable, and that substantially all benefits earned under the agreement relate to past services rendered. As such, the Company recognized a resulting acceleration charge of $ 1,484 to general and administrative expenses within its consolidated statement of operations during the year ended December 31, 2024. The Amended Consulting Agreement expired by its terms on December 31, 2025.
In January 2026, following the termination of the Amended Consulting Agreement, the Company entered into a new independent contractor services agreement with Steel Holdings, LLC (the “2026 Consulting Agreement”). Pursuant to the 2026 Consulting Agreement, Mr. Steelberg will provide technical advisory services related to the Company’s software and services, including strategic government sales and business development services, identification and pursuit of prospective customers, partners, and revenue opportunities, and supporting the Company’s go-to-market execution, as requested by the Company’s Chief Executive Officer until December 31, 2026, the termination date of the 2026 Consulting Agreement. In consideration for such services, the Company will pay to Steel Holdings, LLC $ 12,500 per month in cash for the period from January 2026 through December 2026. The Company will reimburse Steel Holdings, LLC for reasonable and documented expenses incurred in connection with providing the services in accordance with the Company’s standard travel and expense policies.
The 2026 Consulting Agreement may be terminated by either party with 90 days’ notice. If the Company terminates the 2026 Consulting Agreement for any reason other than Steel Holdings, LLC’s material breach, then any remaining compensation payments under the 2026 Consulting Agreement will become due and payable.
Appointment of Ryan Steelberg
Ryan Steelberg, the Company’s Chief Executive Officer, was appointed Chairman of the Board effective January 22, 2024, replacing Chad Steelberg who resigned as Chairman of the Board effective the same date. Chad Steelberg continued to serve as a member of the Company’s Board until his resignation effective as of March 12, 2025.
RSS Trust Private Placement
On June 30, 2025, pursuant to the terms of the RDO Purchase Agreement, the Company and Ryan Steelberg, as trustee of the RSS Trust, entered into the Steelberg Purchase Agreement, pursuant to which the RSS Trust agreed to purchase from the Company, and the Company agreed to issue and sell to the RSS Trust, up to 709,220 shares of the Company’s common stock for a gross aggregate offering price of $ 1,000 , at a price per share equal to the greater of (i) $ 1.41 (representing the consolidated closing bid price of the Company’s common stock on June 27, 2025) and (ii) the consolidated closing bid price of the Company’s common stock on the date that is the second full trading day after the date on which the Q2 Form 10-Q is filed with the SEC. The Private Placement closed on August 13, 2025, the third full trading day after the filing of the Company’s Q2 Form 10-Q with the SEC. In connection with the closing of the Private Placement, the Company issued 366,300 shares of its common stock at a price per share of $ 2.73 , the consolidated closing bid price of the Company’s common stock on August 12, 2025. Refer to Note 11, Stockholders’ Equity , for additional information.
There were no other material related party transactions during the year ended December 31, 2025.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
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