Veritone, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated August 10, 2018, discloses two material definitive agreements entered into by Veritone, Inc. to acquire Wazee Digital, Inc. and S Media Limited (Performance Bridge). The report details the terms of these mergers, which were announced on August 13, 2018, with closings expected by the end of August 2018.
Key Financial Metrics and Transaction Terms
The filing does not provide Veritone's standalone revenue, profit, cash flow, or debt metrics for the reporting period. The financial data presented relates exclusively to the consideration for the two acquisitions:
- Wazee Digital Acquisition: Aggregate consideration of $15 million, split evenly between $7.5 million in cash and $7.5 million in Veritone common stock. The stock portion is valued based on the 20-day volume-weighted average trading price prior to the agreement date.
- Performance Bridge Acquisition: Initial consideration of $6 million, plus contingent earnout payments of up to $5 million based on 2018 revenue milestones. Total potential consideration is $11 million.
- Payment Structure (Performance Bridge): Both initial and earnout consideration will be paid 20% in cash and 80% in Veritone common stock.
Material Changes and Transaction Details
The primary material change is the expansion of Veritone's business through the acquisition of two entities. Key structural details include:
- Wazee Merger: Wazee will survive as a wholly-owned subsidiary. Series E and Series D preferred stockholders will receive consideration in cash and stock. Series C-1, Series C, Series A preferred stock, and common stock will be cancelled without consideration.
- Performance Bridge Merger: Performance Bridge will survive as an indirect, wholly-owned subsidiary. The sole stockholder will receive the initial and potential earnout consideration.
- Indemnification: For the Wazee deal, a portion of the consideration will be escrowed, and the company will obtain a representation and warranty insurance policy, with costs shared equally.
Guidance, Outlook, and Risks
Management expects both mergers to close by the end of August 2018. The filing contains forward-looking statements regarding the expected benefits of the acquisitions, market share of the combined company, and the integration of management teams. These statements are subject to significant uncertainties and risks, including the failure to achieve revenue milestones for the Performance Bridge earnout.
Conditions to Closing: The transactions are subject to customary conditions, including the absence of legal injunctions, accuracy of representations, no material adverse effect on the targets, and the delivery of audited financial statements for Wazee's 2017 fiscal year. The Wazee agreement includes a termination right if the merger is not consummated by September 14, 2018.
Investor Verification Checklist
- Verify the final closing dates for both the Wazee and Performance Bridge mergers.
- Confirm the final valuation of the stock consideration based on the specific trading periods defined in the agreements.
- Monitor whether Performance Bridge achieves the revenue milestones required to trigger the $5 million earnout.
- Review the audited 2017 financial statements of Wazee Digital, which are a condition to closing.
- Assess the impact of the cash outflows ($7.5M for Wazee + 20% of $6M for Performance Bridge) on Veritone's liquidity.