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00

014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2023

OR

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

For the transition period from to

Commission File Number: 001-38107

 

SoundThinking, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-0949915

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

39300 Civic Center Dr., Suite 300

Fremont, California

94538

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (510) 794-3100

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 

 

 

Common stock, par value $0.005 per share

SSTI

The Nasdaq Capital Market

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

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

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

As of November 10, 2023 the registrant had 12,720,608 shares of common stock, $0.005 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements

2

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Comprehensive Income (Loss)

4

 

Condensed Consolidated Statements of Stockholders’ Equity

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

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

18

Item 3.

Qualitative and Quantitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

 

Item 1

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

62

Item 6.

Exhibits

62

Exhibit Index

63

Signatures

65

 

 

 

1


 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

SoundThinking, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

Unaudited

 

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,800

 

 

$

10,479

 

Accounts receivable and contract assets, net

 

 

24,966

 

 

 

30,957

 

Prepaid expenses and other current assets

 

 

3,514

 

 

 

3,225

 

Total current assets

 

 

34,280

 

 

 

44,661

 

Property and equipment, net

 

 

21,717

 

 

 

21,988

 

Operating lease right-of-use assets

 

 

2,549

 

 

 

3,240

 

Goodwill

 

 

33,728

 

 

 

22,971

 

Intangible assets, net

 

 

37,898

 

 

 

27,318

 

Other assets

 

 

2,785

 

 

 

2,570

 

Total assets

 

$

132,957

 

 

$

122,748

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

3,285

 

 

$

1,633

 

Line of credit

 

 

7,000

 

 

 

 

Deferred revenue, short-term

 

 

37,221

 

 

 

41,907

 

Accrued expenses and other current liabilities

 

 

10,482

 

 

 

9,965

 

Total current liabilities

 

 

57,988

 

 

 

53,505

 

Deferred revenue, long-term

 

 

1,125

 

 

 

1,813

 

Deferred tax liability

 

 

937

 

 

 

685

 

Other liabilities

 

 

4,797

 

 

 

5,800

 

Total liabilities

 

 

64,847

 

 

 

61,803

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock: $0.005 par value; 20,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Common stock: $0.005 par value; 500,000,000 shares authorized;
12,720,608 and 12,243,929 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

64

 

 

 

62

 

Additional paid-in capital

 

 

167,169

 

 

 

153,573

 

Accumulated deficit

 

 

(98,761

)

 

 

(92,400

)

Accumulated other comprehensive loss

 

 

(362

)

 

 

(290

)

Total stockholders' equity

 

 

68,110

 

 

 

60,945

 

Total liabilities and stockholders' equity

 

$

132,957

 

 

$

122,748

 

 

See accompanying notes to condensed consolidated financial statements.

2


 

SoundThinking, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

 

$

23,977

 

 

$

18,775

 

 

$

66,672

 

 

$

60,005

 

Costs

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

10,225

 

 

 

8,473

 

 

 

28,881

 

 

 

25,130

 

Impairment of property and equipment

 

 

 

 

 

 

 

72

 

 

 

 

Total costs

 

 

10,225

 

 

 

8,473

 

 

 

28,953

 

 

 

25,130

 

Gross profit

 

 

13,752

 

 

 

10,302

 

 

 

37,719

 

 

 

34,875

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

6,289

 

 

 

5,357

 

 

 

19,580

 

 

 

16,727

 

Research and development

 

 

3,186

 

 

 

2,409

 

 

 

8,896

 

 

 

7,570

 

General and administrative

 

 

5,677

 

 

 

3,866

 

 

 

15,806

 

 

 

11,710

 

Change in fair value of contingent consideration

 

 

82

 

 

 

(5,405

)

 

 

(923

)

 

 

(8,842

)

Total operating expenses

 

 

15,234

 

 

 

6,227

 

 

 

43,359

 

 

 

27,165

 

Operating income (loss)

 

 

(1,482

)

 

 

4,075

 

 

 

(5,640

)

 

 

7,710

 

Other income (expense), net

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

(42

)

 

 

11

 

 

 

64

 

 

 

26

 

Other expense, net

 

 

(51

)

 

 

(53

)

 

 

(142

)

 

 

(306

)

Total other expense, net

 

 

(93

)

 

 

(42

)

 

 

(78

)

 

 

(280

)

Income (loss) before income taxes

 

 

(1,575

)

 

 

4,033

 

 

 

(5,718

)

 

 

7,430

 

Provision for income taxes

 

 

299

 

 

 

 

 

 

643

 

 

 

 

Net income (loss)

 

$

(1,874

)

 

$

4,033

 

 

$

(6,361

)

 

$

7,430

 

Net income (loss) per share, basic

 

$

(0.15

)

 

$

0.33

 

 

$

(0.52

)

 

$

0.61

 

Net income (loss) per share, diluted

 

$

(0.15

)

 

$

0.33

 

 

$

(0.52

)

 

$

0.60

 

Weighted-average shares used in computing net income (loss) per share, basic

 

 

12,480,830

 

 

 

12,167,632

 

 

 

12,320,119

 

 

 

12,156,980

 

Weighted-average shares used in computing net income (loss) per share, diluted

 

 

12,480,830

 

 

 

12,357,136

 

 

 

12,320,119

 

 

 

12,306,839

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

SoundThinking, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

 

$

(1,874

)

 

$

4,033

 

 

$

(6,361

)

 

$

7,430

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment, net of taxes

 

 

1

 

 

 

(78

)

 

 

(72

)

 

 

(101

)

Comprehensive income (loss)

 

$

(1,873

)

 

$

3,955

 

 

$

(6,433

)

 

$

7,329

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


 

SoundThinking, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at January 1, 2023

 

 

12,243,929

 

 

$

62

 

 

$

153,573

 

 

$

(92,400

)

 

$

(290

)

 

$

60,945

 

Exercise of stock options

 

 

10,063

 

 

 

 

 

 

127

 

 

 

 

 

 

 

 

 

127

 

Repurchase of common stock

 

 

(35,369

)

 

 

 

 

 

(1,256

)

 

 

 

 

 

 

 

 

(1,256

)

Issuance of common stock from RSUs vested

 

 

25,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,220

 

 

 

 

 

 

 

 

 

2,220

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

(17

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,790

)

 

 

 

 

 

(1,790

)

Balance at March 31, 2023

 

 

12,243,780

 

 

 

62

 

 

 

154,664

 

 

 

(94,190

)

 

 

(307

)

 

 

60,229

 

Exercise of stock options

 

 

4,097

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Repurchase of common stock

 

 

(100,401

)

 

 

 

 

 

(2,392

)

 

 

 

 

 

 

 

 

(2,392

)

Issuance of common stock from ESPP purchases

 

 

25,193

 

 

 

 

 

 

483

 

 

 

 

 

 

 

 

 

483

 

Issuance of common stock from RSUs vested

 

 

56,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,479

 

 

 

 

 

 

 

 

 

2,479

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56

)

 

 

(56

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,697

)

 

 

 

 

 

(2,697

)

Balance at June 30, 2023

 

 

12,229,335

 

 

 

62

 

 

 

155,251

 

 

 

(96,887

)

 

 

(363

)

 

 

58,063

 

Exercise of stock options

 

 

3,054

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Repurchase of common stock

 

 

(93,012

)

 

 

 

 

 

(1,947

)

 

 

 

 

 

 

 

 

(1,947

)

Issuance of common stock from RSUs vested

 

 

27,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from acquisitions

 

 

554,217

 

 

 

2

 

 

 

11,289

 

 

 

 

 

 

 

 

 

11,291

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,573

 

 

 

 

 

 

 

 

 

2,573

 

Foreign currency translation gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,874

)

 

 

 

 

 

(1,874

)

Balance at September 30, 2023

 

 

12,720,608

 

 

$

64

 

 

$

167,169

 

 

$

(98,761

)

 

$

(362

)

 

$

68,110

 

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at January 1, 2022

 

 

11,703,430

 

 

$

58

 

 

$

132,780

 

 

$

(98,785

)

 

$

(238

)

 

$

33,815

 

Exercise of stock options

 

 

8,528

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Repurchase of common stock

 

 

(57,623

)

 

 

 

 

 

(1,634

)

 

 

 

 

 

 

 

 

(1,634

)

Issuance of common stock from RSUs vested

 

 

22,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from acquisition

 

 

464,540

 

 

 

3

 

 

 

14,263

 

 

 

 

 

 

 

 

 

14,266

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,855

 

 

 

 

 

 

 

 

 

1,855

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

 

 

73

 

Net income

 

 

 

 

 

 

 

 

 

 

 

387

 

 

 

 

 

 

387

 

Balance at March 31, 2022

 

 

12,141,630

 

 

 

61

 

 

 

147,277

 

 

 

(98,398

)

 

 

(165

)

 

 

48,775

 

Exercise of stock options

 

 

686

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Repurchase of common stock

 

 

(49,369

)

 

 

 

 

 

(1,450

)

 

 

 

 

 

 

 

 

(1,450

)

Issuance of common stock from ESPP purchases

 

 

20,630

 

 

 

 

 

 

489

 

 

 

 

 

 

 

 

 

489

 

Issuance of common stock from RSUs vested

 

 

41,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,131

 

 

 

 

 

 

 

 

 

2,131

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96

)

 

 

(96

)

Net income

 

 

 

 

 

 

 

 

 

 

 

3,010

 

 

 

 

 

 

3,010

 

Balance at June 30, 2022

 

 

12,154,775

 

 

 

61

 

 

 

148,449

 

 

 

(95,388

)

 

 

(261

)

 

 

52,861

 

Exercise of stock options

 

 

13,475

 

 

 

 

 

 

249

 

 

 

 

 

 

 

 

 

249

 

Issuance of common stock from RSUs vested

 

 

23,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,157

 

 

 

 

 

 

 

 

 

2,157

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(78

)

 

 

(78

)

Net income

 

 

 

 

 

 

 

 

 

 

 

4,033

 

 

 

 

 

 

4,033

 

Balance at September 30, 2022

 

 

12,191,762

 

 

$

61

 

 

$

150,855

 

 

$

(91,355

)

 

$

(339

)

 

$

59,222

 

 

See accompanying notes to condensed consolidated financial statements.

5


 

SoundThinking, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,