Veritone, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Veritone, Inc. on August 9, 2022. The filing addresses a determination by management and the Audit Committee that previously issued financial statements for the three months ended March 31, 2022, should no longer be relied upon due to accounting errors related to the acquisition of PandoLogic Ltd.
Key Financial Metrics and Adjustments
The filing details specific adjustments required for the restatement of the period ended March 31, 2022, stemming from errors in calculating the fair value of contingent consideration:
- Goodwill: Previously understated by $8.0 million.
- Intangible Assets: Previously understated by $6.0 million.
- Contingent Consideration: Previously understated by $13.1 million at the time of acquisition.
- Subsequent Fair Value Changes: Previously overstated by $6.6 million.
- Intangible Amortization Expense: Previously understated by $0.3 million.
The restatement results in a non-cash charge that reduces general and administrative expenses, leading to a favorable change to the net loss for the three months ended March 31, 2022. The filing explicitly states that these changes do not impact cash balances or liquidity.
Material Changes and Internal Controls
Management evaluated the errors under SEC Staff Accounting Bulletins No. 99 and No. 108 and determined they were not material to the Annual Report on Form 10-K for the year ended December 31, 2021, or any quarterly periods included therein. However, the consolidated balance sheet as of December 31, 2021, will be adjusted in an upcoming amendment to the Form 10-Q.
Management identified a material weakness in internal control over financial reporting. This weakness relates to the oversight and review of work performed by third-party specialists regarding:
- Valuation of contingent consideration.
- Valuation of identified intangible assets.
- Purchase price allocation under ASC 805 for the PandoLogic acquisition.
Outlook, Risks, and Management Commentary
The Company will restate its prior period financial statements in an amendment to its Quarterly Report on Form 10-Q for the three months ended March 31, 2022, to be filed as soon as practicable. The consolidated financial statements for the year ended December 31, 2021, will be revised when the Form 10-K for the period ended December 31, 2022, is filed.
Management has discussed these matters with Grant Thornton LLP, the independent registered public accounting firm. The filing includes standard forward-looking statement disclaimers regarding the uncertainties of the restatement process.
Investor Verification Checklist
- Verify the upcoming amendment to the Form 10-Q for the three months ended March 31, 2022, for the restated financial figures.
- Review Exhibit 99.1 for detailed tables presenting the effects of adjustments on the statement of operations and balance sheet.
- Monitor future filings for the remediation plan regarding the identified material weakness in internal controls over third-party specialist oversight.
- Confirm that no cash flow or liquidity impacts are realized from the non-cash accounting adjustments.