FiscalNote Holdings Inc

Previous wording

As a result of our acquisitions, we have, and will continue to incur, significant non-cash amortization expense related to the amortization of purchased intangibles, which have reduced our operating income by approximately $0.8 million and $1.3 million during the three months ended June 30, 2024 and 2023, respectively, and $1.8 million and $2.4 million during the six months ended June 30, 2024 and 2023, respectively.

Current wording

As a result of our acquisitions, we have, and will continue to incur, significant non-cash amortization expense related to the amortization of purchased intangibles, which have reduced our operating income by approximately $0.8 million and $1.3 million during the three months ended September 30, 2024 and 2023, respectively, and $2.6 million and $3.7 million during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

subscription revenue of approximately $0.1 million and $0.3 million during the three months ended June 30, 2024 and 2023 and approximately $0.3 million and $0.6 million during the six months ended June 30, 2024 and 2023; and

Current wording

Subscription revenue of approximately $0.1 million and $0.2 million during the three months ended September 30, 2024 and 2023 and approximately $0.4 million and $0.5 million during the nine months ended September 30, 2024 and 2023; and

Previous wording

Non-subscription advisory revenue of approximately $0.5 million during the three months ended June 30, 2023 and approximately $1.3 million during the six months ended June 30, 2023.

Current wording

Non-subscription advisory revenue of approximately $1.1 million and $2.4 million during the three and nine months ended September 30, 2023.

Previous wording

Subscription revenue of approximately $3.2 million during the three months ended June 30, 2023 and approximately $2.8 million and $6.2 million during the six months ended June 30, 2024 and 2023;

Current wording

Subscription revenue of approximately $3.4 million during the three months ended September 30, 2023 and approximately $2.8 million and $9.6 million during the nine months ended September 30, 2024 and 2023;

Previous wording

Non-subscription event revenue of approximately $0.3 million during the three and six months ended June 30, 2023;

Current wording

Non-subscription event revenue of approximately $0.2 million and $0.5 million during the three and nine months ended September 30, 2023;

Previous wording

Run-rate revenue of approximately $15.2 million at December 31, 2023 and $13.6 million at June 30, 2023; and

Current wording

Run-rate revenue of approximately $15.2 million at December 31, 2023 and $14.3 million at September 30, 2023; and

Previous wording

Annual Recurring Revenue ("ARR") of approximately $14.7 million at December 31, 2023 and $13.2 million at June 30, 2023.

Current wording

Annual Recurring Revenue ("ARR") of approximately $14.7 million at December 31, 2023 and $13.7 million at September 30, 2023.

Previous wording

At the end of the second quarter of 2023 the Company had approximately 760 employees. In conjunction with the Company's product rationalization, business simplification, and cost takeout actions, the Company's full-time equivalent headcount reduced by approximately 145 from the end of the second quarter of 2023 through June 30, 2024. As a result, the Company has seen a reduction in overall costs across all operating expenses. Management will continue evaluating the Company's product portfolio for additional rationalization opportunities, both to further reduce the complexity of the business and ongoing operating expenses and to raise capital through opportunistic divestitures where appropriate.

Current wording

At the beginning of the third quarter of 2023 the Company had approximately 760 employees. In conjunction with the Company's product rationalization, business simplification, and cost takeout actions, the Company's full-time equivalent headcount reduced by approximately 175 from the beginning of the third quarter of 2023 through September 30, 2024. As a result, the Company has seen a reduction in overall costs across all operating expenses. Management will continue evaluating the Company's product portfolio for additional rationalization opportunities, both to further reduce the complexity of the business and ongoing operating expenses and to raise capital through opportunistic divestitures where appropriate. For example, as discussed in Note 18, Subsequent Events, the Company sold the Aicel business on October 31, 2024.

Previous wording

Approximately 90% of our revenues are subscription based, which leads to high revenue predictability. Our ability to retain existing subscription customers is a key performance indicator that helps explain the evolution of our historical results and is a leading indicator of our revenues and cash flows for subsequent periods. We use ARR as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring subscription customer contracts. We calculate ARR on a parent account level by annualizing the contracted subscription revenue, and our total ARR as of the end of a period is the aggregate thereof. ARR is not adjusted for the impact of any known or projected future customer cancellations, upgrades or downgrades, or price increases or decreases. The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals. ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.

Current wording

Approximately 90% of our revenues are subscription based. Our ability to retain existing subscription customers is a key performance indicator that helps explain the evolution of our historical results and is a leading indicator of our revenues and cash flows for subsequent periods. We use ARR as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring subscription customer contracts. We calculate ARR on a parent account level by annualizing the contracted subscription revenue, and our total ARR as of the end of a period is the aggregate thereof. ARR is not adjusted for the impact of any known or projected future customer cancellations, upgrades or downgrades, or price increases or decreases. The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals. ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.

Previous wording

Our ARR at June 30, 2024 and December 31, 2023, was $109.0 million and $126.1 million, respectively. Excluding Board.Org, our ARR at December 31, 2023 and June 30, 2023 was $111.4 million and $107.0 million, respectively.

Current wording

Our ARR at September 30, 2024 and December 31, 2023, was $109.5 million and $126.1 million, respectively. Excluding Board.org, our ARR at December 31, 2023 and September 30, 2023 was $111.4 million and $109.3 million, respectively.

Previous wording

Management also monitors Run-Rate Revenue, which we define as ARR plus non-subscription revenue earned during the last twelve months. We believe Run-Rate Revenue is an instructive indicator of our total revenue growth, incorporating the non-subscription revenue that we believe is a meaningful contribution to our business as a whole. Although our non-subscription business is non-recurring, we regularly sell different advisory services to repeat customers. The amount of actual subscription and non-subscription revenue that we recognize over any 12-month period is likely to differ from Run-Rate Revenue at the beginning of that period, sometimes significantly. Our Run-Rate Revenue at June 30, 2024 and December 31, 2023, was approximately $120.6 million and $139.7 million, respectively. Excluding Board.org, our Run-Rate Revenue at December 31, 2023 and June 30, 2023 was $124.5 million and $121.4 million, respectively.

Current wording

Management also monitors Run-Rate Revenue, which we define as ARR plus non-subscription revenue earned during the last twelve months. We believe Run-Rate Revenue is an instructive indicator of our total revenue growth, incorporating the non-subscription revenue that we believe is a meaningful contribution to our business as a whole. Although our non-subscription business is non-recurring, we regularly sell different advisory services to repeat customers. The amount of actual subscription and non-subscription revenue that we recognize over any 12-month period is likely to differ from Run-Rate Revenue at the beginning of that period, sometimes significantly. Our Run-Rate Revenue at September 30, 2024 and December 31, 2023, was approximately $119.4 million and $139.7 million, respectively. Excluding Board.org, our Run-Rate Revenue at December 31, 2023 and September 30, 2023 was $124.5 million and $123.9 million, respectively.

Previous wording

Our NRR, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level. Customers from acquisitions are not included in NRR until they have been part of our condensed consolidated results for 12 months. Accordingly, the 2023 and 2022 Acquisitions are not included in our NRR for the three months ended June 30, 2023. Our calculation of NRR for any fiscal period includes the positive recurring revenue impacts of selling additional licenses and services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our NRR may fluctuate as a result of a number of factors, including the level of our revenue base, the level of penetration within our customer base, expansion of products and features, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies. NRR was 98% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Our NRR, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level. Customers from acquisitions are not included in NRR until they have been part of our condensed consolidated results for 12 months. Accordingly, the 2023 and 2022 Acquisitions are not included in our NRR for the three months ended September 30, 2023. Our calculation of NRR for any fiscal period includes the positive recurring revenue impacts of selling additional licenses and services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our NRR may fluctuate as a result of a number of factors, including the level of our revenue base, the level of penetration within our customer base, expansion of products and features, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies. NRR was 99% and 100% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

We derive our revenues from subscription revenue arrangements and advisory, advertising and other revenues. Subscription revenues accounted for approximately 93% and 90% of our total revenues for the six months ended June 30, 2024 and 2023.

Current wording

We derive our revenues from subscription revenue arrangements and advisory, advertising and other revenues. Subscription revenues accounted for approximately 93% and 90% of our total revenues for the nine months ended September 30, 2024 and 2023.

Previous wording

Comparison of the Consolidated Results for the Three and Six Months Ended June 30, 2024 and June 30, 2023

Current wording

Comparison of the Consolidated Results for the Three and Nine Months Ended September 30, 2024 and September 30, 2023

Previous wording

Subscription revenue of $27.2 million for the three months ended June 30, 2024 decreased $2.3 million, or 8%, from $29.5 million for the three months ended June 30, 2023. Subscription revenue of $56.8 million for the six months ended June 30, 2024 decreased $1.2 million for the six months ended June 30, 2023.

Current wording

Subscription revenue of $27.2 million for the three months ended September 30, 2024 decreased $2.8 million, or 9%, from $30.1 million for the three months ended September 30, 2023. Subscription revenue of $84.0 million for the nine months ended September 30, 2024 decreased $4.0 million for the nine months ended September 30, 2023.

Previous wording

The decrease in subscription revenue during the three and six month periods is largely due to the impact from the sale of Board.org on March 11, 2024. This is partially offset by organic growth combined with increased revenue from the 2023 Acquisition, which was completed on January 27, 2023.

Current wording

The decrease in subscription revenue during the three and nine month periods is largely due to the impact from the sale of Board.org on March 11, 2024. This is partially offset by organic growth combined with increased revenue from the 2023 Acquisition, which was completed on January 27, 2023.

Previous wording

Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer. North America revenues decreased primarily for the reasons stated above. Revenues outside of North America increased primarily due to our acquisition of Dragonfly on January 27, 2023 (included in Europe).

Current wording

Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer. North America revenues decreased primarily for the reasons stated above. Asia revenues decreased primarily due to non-recurring revenues from 2023. Revenues outside of North America increased primarily due to our acquisition of Dragonfly on January 27, 2023 (included in Europe).

Previous wording

Cost of revenues, including amortization was $6.9 million for the three months ended June 30, 2024, as compared to $9.5 million for the three months ended June 30, 2023. The decrease of $2.6 million, or 28%, was primarily attributable to the sale of Board.org on March 11, 2024 combined with a decrease from workforce planning actions made primarily throughout the second half of 2023 combined with decreases in amortization expense of $0.6 million and $0.4 million related to data center costs.

Current wording

Cost of revenues, including amortization was $6.2 million for the three months ended September 30, 2024, as compared to $10.4 million for the three months ended September 30, 2023. The decrease of $4.2 million, or 40%, was primarily attributable to the sale of Board.org on March 11, 2024, a decrease in amortization expense of $2.3 million, of which $1.9 million was recognized in the third quarter of 2023 related to a revision in useful lives of certain of its developed technology assets, combined with a decrease from workforce planning actions made primarily throughout the second half of 2023.

Previous wording

Cost of revenues, including amortization was $14.1 million for the six months ended June 30, 2024, as compared to $18.4 million for the six months ended June 30, 2023. The decrease of $4.3 million, or 23%, was primarily attributable to the sale of Board.org on March 11, 2024 combined with a decrease from workforce planning actions made primarily throughout the second half of 2023 combined with decreases in amortization expense of $0.7 million and $0.8 million related to data center costs.

Current wording

Cost of revenues, including amortization was $20.3 million for the nine months ended September 30, 2024, as compared to $28.9 million for the nine months ended September 30, 2023. The decrease of $8.5 million, or 30%, was primarily attributable to the sale of Board.org on March 11, 2024, a decrease in amortization expense of $3.0 million, of which $1.9 million was recognized in the third quarter of 2023 related to a revision in useful lives of certain of its developed technology assets, a decrease from workforce planning actions made primarily throughout the second half of 2023, and combined with decreases in data center costs of $0.9 million.

Previous wording

Research and development expense was $3.2 million for the three months ended June 30, 2024 as compared to $4.5 million for the three months ended June 30, 2023. The decrease of $1.3 million, or 29%, was primarily attributable to a decrease of $1.2 million of workforce planning actions made throughout the second half of 2023 combined with a decrease of $0.1 million attributable to the sale of Board.org on March 11, 2024.

Current wording

Research and development expense was $3.3 million for the three months ended September 30, 2024 as compared to $4.5 million for the three months ended September 30, 2023. The decrease of $1.3 million, or 28%, was primarily attributable to a decrease of $1.2 million of workforce planning actions made throughout the second half of 2023 combined with a decrease attributable to the sale of Board.org on March 11, 2024.

Previous wording

Research and development expense was $6.7 million for the six months ended June 30, 2024 as compared to $9.6 million for the six months ended June 30, 2023. The decrease of $2.9 million, or 31%, was primarily attributable to a decrease of $2.5 million of workforce planning actions made throughout the second half of 2023 combined with a decrease of $0.2 million attributable to the sale of Board.org on March 11, 2024.

Current wording

Research and development expense was $9.9 million for the nine months ended September 30, 2024 as compared to $14.2 million for the nine months ended September 30, 2023. The decrease of $4.2 million, or 30%, was primarily attributable to a decrease of $3.7 million of workforce planning actions made throughout the second half of 2023 combined with a decrease of $0.2 million attributable to the sale of Board.org on March 11, 2024.

Previous wording

Sales and marketing expense was $18.4 million for the six months ended June 30, 2024 as compared to $24.0 million for the six months ended June 30, 2023. The decrease of $5.6 million, or 23%, was primarily attributable to a decrease of the workforce planning actions made throughout the second half of 2023 combined with a decrease attributable to the sale of Board.org on March 11, 2024.

Current wording

Sales and marketing expense was $27.5 million for the nine months ended September 30, 2024 as compared to $35.2 million for the nine months ended September 30, 2023. The decrease of $7.7 million, or 22%, was primarily attributable to a decrease of the workforce planning actions made throughout the second half of 2023 combined with a decrease attributable to the sale of Board.org on March 11, 2024 and a decrease of stock compensation expense of $0.5 million.

Previous wording

Editorial expense was relatively flat at $4.5 million for the three months ended June 30, 2024 as compared to $4.8 million for the three months ended June 30, 2023.

Current wording

Editorial expense was relatively flat at $4.6 million for the three months ended September 30, 2024 as compared to $4.5 million for the three months ended September 30, 2023.

Previous wording

Editorial expense was relatively flat at $9.1 million for the six months ended June 30, 2024 as compared to $9.0 million for the six months ended June 30, 2023.

Current wording

Editorial expense was relatively flat at $13.8 million for the nine months ended September 30, 2024 as compared to $13.5 million for the nine months ended September 30, 2023.

Previous wording

General and administrative expense was $27.3 million for the six months ended June 30, 2024 as compared to $34.4 million for the six months ended June 30, 2023. The decrease of $7.1 million, or 21%, was primarily attributable to a decrease of $2.0 million of stock compensation expense for vested awards, workforce planning actions made throughout the second half of 2023, and a reduction in legal and accounting costs.

Current wording

General and administrative expense was $10.6 million for the three months ended September 30, 2024 as compared to $14.4 million for the three months ended September 30, 2023. The decrease of $3.8 million, or 26%, was primarily attributable to a decrease of $1.7 million of stock compensation expense for vested awards and workforce planning actions made throughout the second half of 2023.

Previous wording

General and administrative expense was $11.3 million for the three months ended June 30, 2024 as compared to $16.2 million for the three months ended June 30, 2023. The decrease of $4.9 million, or 30%, was primarily attributable to a decrease of $2.0 million of stock compensation expense for vested awards, workforce planning actions made throughout the second half of 2023, and a reduction in legal and accounting costs.

Current wording

General and administrative expense was $38.0 million for the nine months ended September 30, 2024 as compared to $48.8 million for the nine months ended September 30, 2023. The decrease of $10.9 million, or 22%, was primarily attributable to a decrease of $4.2 million of stock compensation expense for vested awards, workforce planning actions made throughout the second half of 2023, and a reduction in legal and accounting costs.

Previous wording

Impairment of goodwill was $5.8 million recognized during the first quarter of 2023 related to the impairment of goodwill in the ESG reporting unit. No impairment of goodwill was recorded in the three or six months ended June 30, 2024.

Current wording

Impairment of goodwill was $5.8 million recognized during the first quarter of 2023 related to the impairment of goodwill in the ESG reporting unit. No impairment of goodwill was recorded in the three or nine months ended September 30, 2024.

Previous wording

Transaction gains were $0.0 million for the three months ended June 30, 2024, as compared to transaction costs of $0.3 million for the three months ended June 30, 2023. The change of $0.3 million relates to the acquisition of Dragonfly in 2023.

Current wording

Transaction gains were $0.0 million for the three months ended September 30, 2024, as compared to transaction gains of $0.6 million for the three months ended September 30, 2023. The change of $0.6 million primarily relates to contingent compensation expense gains in 2023 related to the reversing of previously recognized earnout liabilities partially offset by changes in earnout liabilities related to our 2021 Acquisitions.

Previous wording

Transaction costs were $0.0 million for the six months ended June 30, 2024, as compared to transaction costs of $1.7 million for the six months ended June 30, 2023. The change of $1.7 million relates to the acquisition of Dragonfly in 2023.

Current wording

Transaction gains were $0.0 million for the nine months ended September 30, 2024, as compared to transaction costs of $1.1 million for the nine months ended September 30, 2023. The change of $1.1 million relates to costs of $1.4 million related to the acquisition of Dragonfly in 2023 and non-capitalized costs related to the Business Combination, partially offset by contingent compensation gains from the reversal of previously recognized expense and earnout liabilities.

Previous wording

Interest expense was $5.3 million for the three months ended June 30, 2024 as compared to $7.2 million for the three months ended June 30, 2023. The decrease in interest expense of $1.8 million was primarily due to the repayment of the Senior Term Loan.

Current wording

Interest expense was $5.6 million for the three months ended September 30, 2024 as compared to $8.0 million for the three months ended September 30, 2023. The decrease in interest expense of $2.4 million was primarily due to the repayment of the Senior Term Loan.

Previous wording

Interest expense was $12.7 million for the six months ended June 30, 2024 as compared to $13.8 million for the six months ended June 30, 2023. The decrease in interest expense of $1.2 million was primarily due to the repayment of the Senior Term Loan.

Current wording

Interest expense was $18.3 million for the nine months ended September 30, 2024 as compared to $21.9 million for the nine months ended September 30, 2023. The decrease in interest expense of $3.6 million was primarily due to the repayment of the Senior Term Loan.

Previous wording

Change in fair value of financial instruments was a $0.3 million gain for the six months ended June 30, 2024 as compared to a $11.7 million gain for the six months ended June 30, 2023. The change in financial instruments of $11.4 million is primarily related to the change in the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination combined with the changes in the Dragonfly Seller Convertible Notes, New GPO Note, and the Era Convertible Notes.

Current wording

Change in fair value of financial instruments was a $3.5 million loss for the three months ended September 30, 2024 as compared to a $7.2 million gain for the three months ended September 30, 2023. The change in financial instruments of $10.7 million is primarily related to the changes in the Dragonfly Seller Convertible Notes and New GPO Note partially offset by the change in the fair value adjustment of the warrant liabilities.

Previous wording

Change in fair value of financial instruments was a $0.9 million gain for the three months ended June 30, 2024 as compared to a $3.0 million loss for the three months ended June 30, 2023. The change in financial instruments of $3.9 million is primarily related to the change in the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination combined with the changes in the Dragonfly Seller Convertible Notes, New GPO Note, and the Era Convertible Notes.

Current wording

Change in fair value of financial instruments was a $3.2 million loss for the nine months ended September 30, 2024 as compared to a $18.9 million gain for the nine months ended September 30, 2023. The change in financial instruments of $22.1 million is primarily related to the change in the fair value adjustment of the warrant liabilities that were assumed in connection with the Business Combination combined with the changes in the Dragonfly Seller Convertible Notes, New GPO Note, and the Era Convertible Notes.

Previous wording

Reflects the non-cash impact of the following: (i) charge of $49 in the first quarter of 2024 and $31 in the second quarter of 2024 related to the unrealized loss on investments; (ii) gain of $4 in the first quarter of 2024 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions; (iii) impairment of goodwill of $5,837 in the first quarter of 2023, (iv) loss from equity method investment of $34 in the first quarter of 2023 and $56 in the second quarter of 2023,and (v) charge of $2 in the first quarter of 2023 and $2 in the second quarter of 2023 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions.

Current wording

Reflects the non-cash impact of the following: (i) charge of $49 in the first quarter of 2024, $31 in the second quarter of 2024, and $17 in the third quarter of 2024 related to the unrealized loss on investments; (ii) gain of $4 in the first quarter of 2024 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions; (iii) impairment of goodwill of $5,837 in the first quarter of 2023, (iv) charge of $115 in the third quarter of 2023 related to the unrealized loss on investments; (v) loss from equity method investment of $34 in the first quarter of 2023, loss from equity method investment of $56 in the second quarter of 2023, and a gain from equity method investment of $147 in the third quarter of 2023, and (vi) charge of $2 in the first quarter of 2023, a charge of $2 in the second quarter of 2023, and a gain of $672 in the third quarter of 2023 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions.

Previous wording

Reflects (i) $3,474 non-cash loss contingency charge related to the settlement with GPO FN Noteholder LLC recorded in the second quarter of 2023 and (ii) accounting and legal costs incurred associated with the settlement with GPO FN Noteholder LLC totaling $168 in the first quarter of 2023 and $248 in the second quarter of 2023.

Current wording

Reflects (i) $3,474 non-cash loss contingency charge related to the settlement with GPO FN Noteholder LLC recorded in the second quarter of 2023 and (ii) accounting and legal costs incurred associated with the settlement with GPO FN Noteholder LLC totaling $168 in the first quarter of 2023, $248 in the second quarter of 2023, and $201 in the third quarter of 2023.

Previous wording

Historically the Company’s cash flows from operations have not been sufficient to fund its current operating model and the Company funded operations through raising equity and debt. At June 30, 2024, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $38.4 million compared to $24.4 million at December 31, 2023.

Current wording

Historically the Company’s cash flows from operations have not been sufficient to fund its current operating model and the Company funded operations through raising equity and debt. At September 30, 2024, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $33.4 million compared to $24.4 million at December 31, 2023.

Previous wording

The Company had a negative working capital balance of $37.8 million (excluding cash and short-term investments) at June 30, 2024 and had an accumulated deficit of $778.6 million and $816.4 million as of June 30, 2024 and December 31, 2023, respectively, and has incurred net losses of $33.8 million (excluding the gain on sale of business) for the six months ended June 30, 2024 and $50.2 million for the six months ended June 30, 2023, respectively. Management expects that significant on-going operating and capital expenditures will be necessary to continue to implement the Company’s business plan of entering new markets, acquiring new businesses and technologies, and investing in infrastructure and product development.

Current wording

The Company had a negative working capital balance of $45.8 million (excluding cash and short-term investments) at September 30, 2024 and had an accumulated deficit of $793.5 million and $816.4 million as of September 30, 2024 and December 31, 2023, respectively, and has incurred net losses of $48.7 million (excluding the gain on sale of business) for the nine months ended September 30, 2024 and $64.7 million for the nine months ended September 30, 2023, respectively. Management expects that significant on-going operating and capital expenditures will be necessary to continue to implement the Company’s business plan of entering new markets, acquiring new businesses and technologies, and investing in infrastructure and product development.

Previous wording

During the six months ended June 30, 2024, we made cash interest payments totaling $8.5 million related to the Senior Term Loan.

Current wording

During the nine months ended September 30, 2024, we made cash interest payments totaling $11.7 million related to the Senior Term Loan.

Previous wording

The Company elected to account for the New GPO Note using the fair value option. The New GPO Note was recorded at its June 30, 2023 acquisition date fair value of $36.6 million. The Company initially recorded a loss contingency of $11.7 million in its fiscal year 2022 financial statements representing the difference between the fair value of the shares returned by the Investor and the fair value of the New GPO Note on the date of exchange. With the execution of the Exchange and Settlement Agreement and New GPO Note, the Company recorded an additional loss on settlement with GPO of $3.5 million in the condensed consolidated statement of operations for the three and six months ended June 30, 2023.

Current wording

The Company elected to account for the New GPO Note using the fair value option. The New GPO Note was recorded at its June 30, 2023 acquisition date fair value of $36.6 million. The Company initially recorded a loss contingency of $11.7 million in its fiscal year 2022 financial statements representing the difference between the fair value of the shares returned by the Investor and the fair value of the New GPO Note on the date of exchange. With the execution of the Exchange and Settlement Agreement and New GPO Note, the Company recorded an additional loss on settlement with GPO of $3.5 million in the condensed consolidated statement of operations for the nine months ended September 30, 2023.

Previous wording

Four convertible noteholders with an aggregate principal amount (including accrued paid in kind interest) of $10.5 million as of the Closing Date elected not to convert their notes into shares of capital stock of the Company in conjunction with Closing. The convertible notes are unsecured, earn payable in kind interest of 15% per annum, payable in kind monthly, and mature in 2025.

Current wording

Four convertible noteholders with an aggregate principal amount (including accrued paid in kind interest) of $10.5 million as of the Closing Date elected not to convert their notes into shares of capital stock of the Company in conjunction with Closing. The convertible notes are unsecured, earn payable in kind interest of 15% per annum, payable in kind monthly, and mature in July and November of 2025. The notes that mature in July 2025 are recorded in the current maturities of long-term debt.