October 23, 2024 - EX-99.3 - 8-K: Current report filing

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information for the years ended December 31, 2022 and 2023 and the six months ended June 30, 2024 and as of June 30, 2024 is presented to assist readers in understanding the nature and effects of the Divestiture (as defined below). All amounts in the unaudited pro forma condensed combined financial information are in thousands except share and per share amounts.

On October 17, 2024 (the Closing Date), Veritone, Inc. (the Company or VERI) entered into an Equity Purchase Agreement (the Agreement), by and among the Company, Veritone One, Inc., 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) for a total purchase price of up to $104.0 million, subject to purchase price adjustments and the achievement of certain earnout targets as described in the Companys Current Report on Form 8-K to which this unaudited pro forma condensed combined financial information and related notes are appended. The Divestiture was structured as a simultaneous sign and close transaction and closed on the Closing Date. On the Closing Date, the Company received cash proceeds of $59.1 million. Additionally, $1.5 million was placed in a specified escrow account for potential purchase price adjustments and an aggregate of $5.2 million was placed in specified 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 Agreement. The Company may receive up to an additional $18.0 million in cash proceeds in the form of an earnout subject to the achievement of certain net revenue targets by Veritone One between January 1, 2025 and December 31, 2025 (as further described in the Agreement). On October 22, 2024, the Company used net cash proceeds from the Divestiture to repay $30.5 million principal amount of its outstanding term loan, plus accrued interest and a prepayment premium in an aggregate amount of $3.3 million (collectively, the Term Loan Repayment).

Previously, on June 13, 2023, the Company acquired Broadbean, a talent acquisition software-as-a-service technology, pursuant to a securities and asset purchase agreement dated as of May 27, 2023 (the Broadbean Acquisition). The Company presented the acquisition of Broadbean in unaudited pro forma condensed combined financial statements filed with the Securities and Exchange Commission on August 28, 2023. The Broadbean Acquisition combined with the Divestiture referred herein as the Transactions.

The unaudited pro forma condensed combined financial information gives effect to the Divestiture, including the Term Loan Repayment, and in certain periods, the Divestiture, the Term Loan Repayment, and the Broadbean Acquisition (defined below). The unaudited pro forma condensed combined financial information and related notes are based on and should be read in conjunction with:

the accompanying notes to the unaudited pro forma condensed combined financial information;

the historical audited consolidated financial statements of the Company and the related notes, and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Companys Form 10-K for the fiscal year ended December 31, 2023 filed on April 1, 2024;

the historical audited consolidated financial statements of the Company and the related notes, and Managements Discussion and Analysis of Financial Condition and Results of Operations, included in the Companys Form 10-K for the fiscal year ended December 31, 2022 filed on March 16, 2023;

the historical unaudited consolidated financial statements of the Company and the related notes, and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Companys Quarterly Report on Form 10-Q for the three-month period and six-month period ended June 30, 2024 filed on August 14, 2024; and

the unaudited pro forma condensed combined information for the Broadbean Acquisition for the fiscal year ending December 31, 2022 and as of and for the three-months ended March 31, 2023 filed on the Companys Amendment No. 1 to its Current Report on Form 8-K/A on August 28, 2023.

The unaudited pro forma condensed combined financial information is provided for illustrative informational purposes only and has been derived from the historical consolidated financial statements of the Company and is presented based on available information and certain assumptions that management believes are reasonable and that are described in the accompanying notes. Differences between these preliminary estimates and the final divestiture accounting may arise, and these differences could have a material effect on the unaudited pro forma condensed combined financial information and the Companys future results of operations and financial position. The unaudited pro forma condensed combined financial information is not necessarily, and should not be assumed to be, an indication of the actual results that would have been achieved had the Transactions been completed as of the dates indicated or that may be achieved in the future.

The unaudited pro forma condensed combined financial information has been prepared by the Company in accordance with Regulation S-X Article 11, Pro Forma Financial Information. The unaudited pro forma condensed combined financial information reflects certain costs related to the Divestiture, but does not reflect any potential integration costs, anticipated operating efficiencies, cost savings or revenue opportunities that may result from the Transactions.

Unaudited Pro forma Condensed Combined Balance Sheet

As of June 30, 2024


in thousands, except per share and share data	Veritone June 30, 2024 Historical			Divestiture			Divestiture Transaction Adjustments			Note Ref		Pro Forma Combined
Assets
Cash and cash equivalents	$	46,024		$	(43,095	)	$	21,366			(a)	$	24,295
Accounts receivable, net		53,927			(26,962	)							26,965
Expenditures billable to clients		28,949			(28,949	)
Prepaid expenses and other current assets		13,010			(7,017	)							5,993

Total Current Assets		141,910			(106,023	)		21,366					57,254

Property, equipment and improvements, net		9,788			(533	)							9,255
Intangible assets, net		71,447											71,447
Goodwill		79,828			(26,718	)							53,110
Long-term restricted cash		933											933
Other Assets		17,896			(10,532	)		12,894			(b)		20,258

Total Assets		321,802			(143,806	)		34,260					212,257


Liabilities And Stockholders Equity (Deficit)
Current Liabilities:
Accounts payable		33,366			(22,670	)		(47	)		(c)		10,649
Accrued media payments		69,300			(66,685	)							2,615
Client advances		33,341			(33,129	)							212
Deferred revenue		13,466											13,466
Term Loan, current portion		7,750						(3,129	)		(d)		4,621
Accrued purchase consideration, current		919											919
Other accrued liabilities		23,516			(906	)							22,610

Total Current Liabilities		181,658			(123,390	)		(3,177	)				55,092

Convertible Notes, non-current		89,846											89,846
Term Loan, non-current		43,890						(17,723	)		(d)		26,167
Accrued purchase consideration, non-current		600											600
Other non-current liabilities		11,502											11,502

Total liabilities		327,496			(123,390	)		(20,899	)				183,207
Commitments and Contingencies
Stockholders Equity
Common stock, par value $0.01 per share, 75,000,000 share authorized; 37,964,361 and 37,186,348 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		39											39
Additional paid-in capital		471,603											471,603
Accumulated deficit		(477,325	)		(20,416	)		55,160			(e)		(442,581	)
Accumulated other comprehensive Income (loss)		(11	)										(11	)

Total Stockholders Equity (Deficit)		(5,694	)		(20,416	)		55,160					29,050

Total Liabilities And Stockholders Equity (Deficit)	$	321,802		$	(143,806	)	$	34,260				$	212,257

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial information.

Unaudited Pro forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2024


in thousands, except per share and share data	Veritone June 30, 2024 Historical			Divestiture			Transaction Adjustments		Note Ref		Pro Forma Combined
Revenue	$	62,628		$	(14,417	)	$				$	48,211
Operating expenses:
Cost of revenue		13,626			(337	)						13,289
Sales and marketing		24,478			(3,414	)						21,064
Research and development		15,860										15,860
General and administrative		36,185			(5,472	)						30,713
Amortization		11,981										11,981

Total operating expenses		102,130			(9,223	)						92,907

Loss from operations		(39,502	)		(5,194	)						(44,696	)
Other Income (expense), net		(9,015	)					35,796		(h)		26,781

Loss before provision for income taxes		(48,517	)		(5,194	)		35,796				(17,915	)
(Benefit from) provision for income taxes		(1,088	)		(32	)		191		(i)		(929	)

Net Income (loss)		(47,429	)		(5,162	)		35,605				(16,986	)

Net loss per share:
Basic and diluted	$	(1.26	)								$	(0.45	)
Weighted average shares outstanding:
Basic and diluted		37,583,623										37,583,623

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial information.

Unaudited Pro forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2023


				Broadbean			Broadbean
				(Historical Prior to			Acquisition			Pro Forma
	Veritone			Acquisition) After			Transaction			Combined
	2023			Reclassifications			Adjustments			Veritone Prior to						Transaction			Note	Pro Forma
in thousands, except per share and share data	Historical			(Note (f))			(Note (g))			Divestiture			Divestiture			Adjustments			Ref	Combined
Revenue	$	127,560		$	14,953		$			$	142,513		$	(27,574	)	$				$	114,939
Operating expenses:
Cost of revenue		28,256			2,396						30,652			(470	)						30,182
Sales and marketing		52,024			6,040						58,064			(7,594	)						50,470
Research and development		42,090			753						42,843										42,843
General and administrative		73,811			3,809						77,620			(11,531	)		3,942		(j)		70,031
Amortization		23,715			908			1,816			26,439			(680	)						25,759

Total operating expenses		219,896			13,906			1,816			235,617			(20,275	)		3,942				219,284

Loss from operations		(92,336	)		1,047			(1,816	)		(93,104	)		(7,299	)		(3,942	)			(104,345	)
Gain on debt extinguishment		30,023									30,023										30,023
Other Income (expense), net		640			(4,373	)					(3,733	)		1			319		(k)		(3,413	)

Loss before provision for income taxes		(61,673	)		(3,326	)		(1,816	)		(66,814	)		(7,298	)		(3,623	)			(77,735	)
(Benefit from) provision for income taxes		(3,048	)		1,068			(454	)		(2,434	)		(228	)						(2,662	)

Net loss		(58,625	)		(4,394	)		(1,362	)		(64,380	)		(7,070	)		(3,623	)			(75,073	)

Net loss per share:
Basic and diluted	$	(1.59	)																	$	(2.03	)
Weighted average shares outstanding:
Basic and diluted		36,909,919																			36,909,919

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial information.

Unaudited Pro forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2022


in thousands, except per share and share data	Veritone 2022 Historical			Broadbean (Historical Prior to Acquisition) After Reclassifications (Note (f))			Broadbean Acquisition Transaction Adjustments (Note (g))			Pro Forma Combined Veritone Prior to Divestiture			Divestiture			Transaction Adjustments	Note Ref	Pro Forma Combined
Revenue	$	149,728		$	32,617		$			$	182,345		$	(34,859	)	$		$	147,486
Operating expenses:
Cost of revenue		27,432			6,301						33,733			(1,360	)				32,373
Sales and marketing		51,345			13,740						65,085			(8,127	)				56,958
Research and development		43,589			1,952						45,541								45,541
General and administrative		44,177			8,594			3,752			56,523			(11,721	)				44,802
Amortization		21,180			3,046			2,969			27,195			(1,137	)				26,058

Total operating expenses		187,723			33,633			6,721			228,077			(22,345	)				205,732

Loss from operations		(37,995	)		(1,016	)		(6,721	)		(45,732	)		(12,514	)				(58,246	)
Gain on debt extinguishment		19,097									19,097								19,097
Other Income (expense), net		(4,350	)		(160	)					(4,510	)							(4,510	)

Loss before provision for income taxes		(23,248	)		(1,176	)		(6,721	)		(31,145	)		(12,514	)				(43,659	)
(Benefit from) provision for income taxes		2,309			(1,669	)		(1,680	)		(1,040	)							(1,040	)

Net loss		(25,557	)		493			(5,041	)		(30,105	)		(12,514	)				(42,619	)

Net loss per share:
Basic and diluted	$	(0.71	)															$	(1.18	)
Weighted average shares outstanding:
Basic and diluted		36,033,560																	36,033,560

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial information.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(Amounts in thousands, except per share data)

Note 1. Basis of Presentation

The following unaudited condensed combined pro forma financial information presents the pro forma effects of the following (collectively, the Transactions) for the respective periods based on available information and certain assumptions that the Company believes are reasonable and supportable:

The Broadbean Acquisition for the periods wherein the financial position or results of operations are not included in the Companys historical results; and

The Divestiture, including the use of proceeds from the Divestiture to repay a portion of the outstanding principal amount of the Companys outstanding term loan plus accrued interested and a prepayment premium.

The unaudited pro forma condensed combined financial statements and related notes have been prepared in accordance with Article 11 of Regulation S-X (as amended by final rule, Release No. 33-10786) and using the acquisition method of accounting as described in Accounting Standards Codification 805, Business Combinations (ASC 805) for the Broadbean Acquisition as applicable for the respective periods as described below. Additionally, the Divestiture presentation also considers guidance in Accounting Standards Codification 205, Presentation of Financial Statements for discontinued operations. Classification differences in Broadbeans historical balances were captured in the unaudited pro forma condensed combined statements of operations for periods where such alignment is necessary. Any capitalized terms in these notes that are not otherwise defined have the meaning provided to such terms in the preamble to the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information reflects that the signing and closing of the Divestiture occurred simultaneously and therefore no reclassification to held for sale has been reflected. Additionally, the unaudited pro forma condensed combined financial information does not reflect any potential integration costs, anticipated operating efficiencies, cost savings or revenue opportunities that may result from the Transactions. The Divestiture sale proceeds include an earn-out contingent upon net revenue results of Veritone One through calendar year 2025. On the Closing Date, the Company received cash proceeds of $59.1 million. Additionally, cash of $1.5 million was placed in a specified escrow account for potential purchase price adjustments and an aggregate of $5.2 million was placed in an Indemnity Escrow, in each case subject to the terms and limitations set forth in the Agreement. The Company may receive up to an additional $18.0 million in cash proceeds in the form of an earnout subject to the achievement of certain net revenue targets by Veritone One between January 1, 2025 and December 31, 2025 (as further described in the Agreement). Management has estimated the fair value of the expected future cash to be received as $6.2 million.

The unaudited pro forma condensed combined balance sheet as of June 30, 2024, gives effect to the Divestiture, including the Term Loan Repayment, as if the Divestiture had been consummated on June 30, 2024. No adjustment related to the Broadbean Acquisition is necessary as the financial position of Broadbean was fully reflected in the Companys historical balances as of June 30, 2024.

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2024 gives effect to the Divestiture, including the Term Loan Repayment, as if it had occurred on January 1, 2022. No adjustments are necessary for the Broadbean Acquisition as Broadbean was fully consolidated in the Companys results for the six months ended June 30, 2024.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 gives effect to the Transactions as if they had occurred on January 1, 2022.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 gives effect to the Transactions as if they had occurred on January 1, 2022.

The unaudited pro forma condensed combined financial information presented herein is for informational purposes only and is not indicative of the financial position or results of operations that would have occurred if the Transactions had been completed as of the dates set forth above, nor are they indicative of the future results of operations or consolidated financial position of the Company following the Transactions.

Differences between these preliminary estimates and the final acquisition and divestiture accounting may arise and these differences could have a material effect on the accompanying unaudited pro forma condensed combined financial information and the Companys future results of operations and financial position.

Note 2. Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

The following is a description of transaction accounting adjustments reflected in the unaudited pro forma condensed combined balance sheet.

Reflects cash consideration received for the Divestiture net of loan repayment and transaction costs


Cash Consideration Received

Cash consideration received	59,053
Less:
Transaction costs, settled at close	(3,875	)
Loan Repayment, including accrued interest and prepayment premium	(33,811	)
Net Cash Received	21,366

Reflects the sale proceeds placed in escrow accounts and estimated fair value of the contingent portion of the Divestiture sale proceeds that may be received by the Company in a future period

Reflects the settlement at close of accrued transaction costs

Reflects the repayment of the term loan with associated impacts as follows:


Debt Repayment
Non-current Debt Impact
Principal amount pay down	27,382
OID write-off	(9,660	)

Net Impact to long-term debt	17,723
Current Debt, principal pay down	3,129

Represents the equity impact of sale proceeds of the Divestiture


Cash proceeds received	59,053
Cash proceeds held in escrow (deferred proceeds)	6,650
Estimated fair value of contingent proceeds	6,244
Less: transaction costs and term loan interest	(4,076	)
Less: prepayment premium and write-off of debt discount	(12,711	)
Total equity impact of sale proceeds	55,160

Note 3. Notes to Unaudited Pro Forma Condensed Combined Statements of Operations

The following is a description of transaction accounting adjustments reflected in the unaudited pro forma condensed combined statements of operations.

Broadbean (Historical Prior to Acquisition) After Reclassifications reflects the reclassifications and adjustments associated with the Broadbean Acquisition. Information with respect to those reclassifications can be found in the Companys Amendment No. 1 to its Current Report on Form 8-K/A, filed with the Securities and Exchange Commission on August 28, 2023.

Broadbean Acquisition Transaction Adjustments reflects the Transaction Accounting Adjustments for the Broadbean Acquisition. Information with respect to those adjustments can be found in the Companys Amendment No. 1 to its Current Report on Form 8-K/A, filed with the Securities and Exchange Commission on August 28, 2023.

Reflects the impact to Other income (expense) for the six months ended June 30, 2024 of the following:


Other income (expense)	six months ended June 30, 2024
Reduction in interest expense due to debt paydown		3,626
Prepayment penalty due to debt paydown		(3,051	)
Write-off of prorata portion of capitalized debt discount		(9,660	)
Gain on sale of business		44,881
Total Adjustment		35,796

Reflects the tax effect of the transaction accounting adjustments in the six months ended June 30, 2024. The estimate was determined by calculating the difference between the tax provision with and without the transaction accounting adjustments. The estimate assumes the transaction will be taxed as an asset deal for tax purposes.

Reflects the transaction costs associated with the Divestiture which are not reflected in the historical results and which were incurred prior to, or in conjunction with, close of the Divestiture.

Reflects the historical interest expense associated to the Term Loan repayment in conjunction with the Divestiture for the year-ended December 31, 2023.

Note 4. Unaudited Pro Forma Net Loss per Share


Shares and per share individual units	For the 12 months ending December 31, 2022			For the 12 months ending December 31, 2023			For the 6 months ending June 30, 2024
Pro forma weighted-average shares outstanding (Basic and diluted)
Historical weighted-average shares outstanding		36,033,560			36,909,919			37,583,623

Pro forma basic weighted-average shares outstanding		36,033,560			36,909,919			37,583,623

Pro forma earnings per share
Pro forma net income		(42,619	)		(75,073	)		(16,986	)
Pro forma basic and diluted earnings per share	$	(1.18	)	$	(2.03	)	$	(0.45	)

Unaudited pro forma net loss per share for all periods excludes potentially dilutive shares of common stock that would have been antidilutive. No new shares were issued related to the Transactions.

Form: 8-K

Documents