SOUNDTHINKING INC

Previous wording

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement and civic leadership. In April 2023, we introduced our SafetySmart TM platform that includes five data-driven tools consisting of: (i) our flagship product, ShotSpotter® (formerly ShotSpotter Respond), a leading outdoor gunshot detection, location and alerting system trusted by 176 cities and 18 universities and corporations as of June 30, 2024, (ii) CrimeTracer™ (formerly COPLINK X) a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder™ (formerly ShotSpotter Investigate) a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter™ (formerly ShotSpotter Connect), which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, and (v) SafePointe™, an AI-based weapons detection system, that we added when we acquired SafePointe in August 2023. We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses, highways, and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive. SoundThinking Labs supports innovative uses of our technology to help protect wildlife and the environment.

Current wording

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement and civic leadership. In April 2023, we introduced our SafetySmart TM platform that includes five data-driven tools consisting of: (i) our flagship product, ShotSpotter® (formerly ShotSpotter Respond), a leading outdoor gunshot detection, location and alerting system trusted by 177 cities and 18 universities and corporations as of September 30, 2024, (ii) CrimeTracer™ (formerly COPLINK X) a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder™ (formerly ShotSpotter Investigate) a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter™ (formerly ShotSpotter Connect), which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, and (v) SafePointe™, an AI-based weapons detection system, that we added when we acquired SafePointe in August 2023. We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Highways, ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses, highways, and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive. SoundThinking Labs supports innovative uses of our technology to help protect wildlife and the environment.

Previous wording

In the second quarter of 2024, we announced a strategic partnership to create and launch a new end-to-end vehicle and License Plate Reader (“LPR”) public safety solution, “PlateRanger, Powered by Rekor.” This collaboration brings together two industry leaders, combining SoundThinking's expertise in acoustic gunshot detection and investigative solutions with Rekor's best-in-class vehicle LPR solutions. PlateRanger is expected to be positioned as a part of our SafetySmart platform starting in September 2024, marking SoundThinking's expansion into the growing LPR market.

Current wording

In the second quarter of 2024, we announced a strategic partnership to create and launch a new end-to-end vehicle and License Plate Reader (“LPR”) public safety solution, “PlateRanger, Powered by Rekor.” This collaboration brings together two industry leaders, combining SoundThinking's expertise in acoustic gunshot detection and investigative solutions with Rekor's best-in-class vehicle LPR solutions.

Previous wording

We offer our solutions on a software-as-a-service subscription model to our customers. We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis. Our security solutions, ShotSpotter for Highways, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. CaseBuilder, ResourceRouter, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city. We generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area of an entryway. As of June 30, 2024, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract for 1,184 square miles, of which 1,171 square miles had gone live. Coverage areas under contract for ShotSpotter included 176 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 18 campuses/sites across the United States, South Africa, Uruguay and the Bahamas, including some of the largest cities in the United States. As of June 30, 2024, we had 179 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

Current wording

We offer our solutions on a software-as-a-service subscription model to our customers. We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis. Our security solutions, ShotSpotter for Highways, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. CaseBuilder, ResourceRouter, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city. We generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area of an entryway. As of September 30, 2024, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract for 1,193 square miles, of which 1,187 square miles had gone live. Coverage areas under contract for ShotSpotter included 177 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 18 campuses/sites across the United States, South Africa, Uruguay and the Bahamas, including some of the largest cities in the United States. As of September 30, 2024, we had 218 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

Previous wording

We generated revenues of $52.4 million and $42.7 million for the six months ended June 30, 2024 and 2023, respectively, representing an increase of 23%. For the six months ended June 30, 2024 and 2023 revenues from ShotSpotter represented approximately 69% and 72% of total revenues, respectively. Our two current largest customers, the City of New York and the City of Chicago, accounted for 26% and 10%, respectively, of our total revenues for the six months ended June 30, 2024. The City of New York and the City of Chicago accounted for 26% and 10%, respectively, of our total revenues for the six months ended June 30, 2023.

Current wording

We generated revenues of $26.3 million and $24.0 million for the three months ended September 30, 2024 and 2023, respectively, representing an increase of 10%. For the three months ended September 30, 2024 and 2023, revenues from ShotSpotter represented approximately 65% and 69% of total revenues, respectively. Our two current largest customers, the City of New York and the City of Chicago, accounted for 23% and 11%, respectively, of our total revenues for the three months ended September 30, 2024, and 24% and 9%, respectively, of our total revenues for the three months ended September 30, 2023.

Previous wording

We generated revenues of $27.0 million and $22.1 million for the three months ended June 30, 2024 and 2023, respectively, representing an increase of 22%. For the three months ended June 30, 2024 and 2023 revenues from ShotSpotter represented approximately 69% and 73% of total revenues, respectively. Our two current largest customers, the City of New York and the City of Chicago, accounted for 25% and 10%, respectively, of our total revenues for the three months ended June 30, 2024. The City of New York and the City of Chicago accounted for 25% and 9%, respectively, of our total revenues for the three months ended June 30, 2023.

Current wording

We generated revenues of $78.6 million and $66.7 million for the nine months ended September 30, 2024 and 2023, respectively, representing an increase of 18%. For the nine months ended September 30, 2024 and 2023, revenues from ShotSpotter represented approximately 67% and 71% of total revenues, respectively. Our two current largest customers, the City of New York and the City of Chicago, accounted for 25% and 11%, respectively, of our total revenues for the nine months ended September 30, 2024. The City of New York and the City of Chicago accounted for 25% and 9%, respectively, of our total revenues for the nine months ended September 30, 2023.

Previous wording

For the three months ended June 30, 2024 and 2023, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $26.3 million and $21.6 million, respectively, or 98% of total revenues for both periods. For the six months ended June 30, 2024 and 2023, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $51.1 million and $41.8 million, respectively, or 98% of total revenues for both periods.

Current wording

For the three months ended September 30, 2024 and 2023, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $26.0 million and $23.5 million, respectively, or 99% of total revenues for both periods. For the nine months ended September 30, 2024 and 2023, revenues generated within the United

Previous wording

We had a net loss of $0.8 million and $2.7 million for the three months ended June 30, 2024 and 2023, respectively. We had a net loss of $3.7 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively. Our accumulated deficit was $98.8 million and $95.1 million at June 30, 2024 and December 31, 2023, respectively.

Current wording

We had a net loss of $1.4 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively. We had a net loss of $5.1 million and $6.4 million for the nine months ended September 30, 2024 and 2023, respectively. Our accumulated deficit was $100.2 million and $95.1 million at September 30, 2024 and December 31, 2023, respectively.

Previous wording

We will also focus on expanding our business by introducing new products and services to existing customers, such as ResourceRouter, CrimeTracer and, as a result of our acquisition in August 2023 of SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. We believe that developing and acquiring products for law enforcement in adjacent categories is a path for additional growth. We believe our large and growing installed base of police departments who trust SoundThinking’s products, support, and way of doing business provide revenue growth opportunities. The ability to cross-sell new products provides an opportunity to grow revenues per customer and lifetime value. We continue to see robust cross-selling momentum, with Newport News adding our CrimeTracer and CaseBuilder solutions to complement our ShotSpotter and ResourceRouter solutions that they have already implemented. Challenges we face in this area include ensuring our new products are reliable, integrated well with other SoundThinking solutions, and priced and serviced appropriately. In some cases, we will need to bring in new skill sets to properly develop, market, sell or service these new products depending on the categories they represent.

Current wording

We continue to focus on expanding our business by introducing new products and services to existing customers, such as ResourceRouter, CrimeTracer and, as a result of our acquisition in August 2023 of SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. We believe that developing and acquiring products for law enforcement in adjacent categories is a path for additional growth. We believe our large and growing installed base of police departments who trust SoundThinking’s products, support, and way of doing business provide revenue growth opportunities. The ability to cross-sell new products provides an opportunity to grow revenues per customer and lifetime value. We continue to see cross-selling opportunities, with Newport News adding our CrimeTracer and CaseBuilder solutions to complement our ShotSpotter and ResourceRouter solutions that they have already implemented. Challenges we face in this area include ensuring our new products are reliable, integrated well with other SoundThinking solutions, and priced and serviced appropriately. In some cases, we will need to bring in new skill sets to properly develop, market, sell or service these new products depending on the categories they represent.

Previous wording

With respect to international sales, we believe that we have the potential to expand our coverage within existing areas, and to pursue opportunities in Latin America and other regions of the world. By adding additional sales resources in strategic locations, we believe we will be better positioned to reach these markets. However, we recognize that we have limited international operational experience and currently operate in a limited number of regions outside of the United States. Operating successfully in international markets will require significant resources and management attention and will subject us to additional regulatory, economic, and political risks. We may face additional challenges that may delay contract execution related to negotiating with governments in transition, the use of third-party integrations and consultants. Moreover, we anticipate that different political and regulatory considerations that vary across different jurisdictions could extend or make more difficult to predict the length of what is already a lengthy sales cycle.

Current wording

With respect to international sales, we believe that we have the potential to expand our coverage within existing areas, and to pursue opportunities in Latin America and other regions of the world. By adding additional sales resources in strategic locations, we believe we will be better positioned to reach these markets. For example, in October 2024, we secured a three-year agreement to expand ShotSpotter coverage in Montevideo, Uruguay, doubling deployment footprint in the capital city. However, we recognize that we have limited international operational experience and currently operate in a limited number of regions outside of the United States. Operating successfully in international markets will require significant resources and management attention and will subject us to additional regulatory, economic, and political risks. We may face additional challenges that may delay contract execution related to negotiating with governments in transition, the use of third-party integrations and consultants. Moreover, we anticipate that different political and regulatory considerations that vary across different jurisdictions could extend or make more difficult to predict the length of what is already a lengthy sales cycle.

Previous wording

Net new “go-live” cities and universities represent the number of cities and universities covered by deployments of our gunshot detection ShotSpotter solution that were formally approved by customers during the period, both from initial and expanded customer deployments, net of cities and universities that ceased to be “live” during the period due to customer cancellations. New cities and universities include deployed coverage areas that may have been sold, or booked, in a prior period. We focus on net new “go-live” cities and universities as a key business metric to measure our operational performance and market penetration. Our net new “go-live” cities and universities in the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Net new “go-live” cities and universities represent the number of cities and universities covered by deployments of our gunshot detection ShotSpotter solution that were formally approved by customers during the period, both from initial and expanded customer deployments, net of cities and universities that ceased to be “live” during the period due to customer cancellations. New cities and universities include deployed coverage areas that may have been sold, or booked, in a prior period. We focus on net new “go-live” cities and universities as a key business metric to measure our operational performance and market penetration. Our net new “go-live” cities and universities in the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Our condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Current wording

Our unaudited condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Previous wording

The increase in revenues of $4.9 million was primarily attributable to a $3.5 million increase in revenues from new customers, expansion of existing customer coverage areas, additional cross-selling revenue, including from Newport News, which added our CrimeTracer and CaseBuilder solutions to complement already implemented ShotSpotter and ResourceRouter solutions, and additional revenues from SafePointe that we acquired in the third quarter of 2023, and an increase of $1.4 million in professional services revenue due to higher and earlier achievement of professional services revenue from our Technologic Solutions group. ShotSpotter went “live” in three new cities and expanded with four current cities, two commercial customers and one university during the three months ended June 30, 2024.

Current wording

The increase in revenues of $2.3 million was primarily attributable to a $2.2 million increase in revenues from new customers, expansion of existing customer coverage areas, additional cross-selling revenue, including from Newport News, which added our CrimeTracer and CaseBuilder solutions to complement already implemented ShotSpotter and ResourceRouter solutions, and additional revenues from SafePointe that we acquired in the third quarter of 2023. ShotSpotter went “live” in four new cities and one university, and expanded with eight current cities during the three months ended September 30, 2024.

Previous wording

The increase in cost of revenues of $1.4 million was due primarily to an increase of approximately $1.0 million in product costs due to the increase in our customer base. The increase also reflects an increase of approximately $0.4 million in personnel costs due to our SafePointe acquisition in the third quarter of 2023.

Current wording

The increase in cost of revenues of $0.8 million was due primarily to an increase of approximately $0.8 million in product costs due to the increase in our customer base.

Previous wording

Research and development expense increased by $0.4 million, primarily due to increased headcount as a result of our SafePointe acquisition in the third quarter of fiscal 2023.

Current wording

Research and development expense increased by $0.2 million, primarily due to increased headcount.

Previous wording

The fair value of the SafePointe contingent consideration liability decreased by $0.6 million during the three months ended June 30, 2024, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

Current wording

The fair value of the SafePointe contingent consideration liability was unchanged during the three months ended September 30, 2024, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

Previous wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. A $0.3 million provision for income taxes was recorded in both the six months ended June 30, 2024 and 2023.

Current wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. A $0.3 million provision for income taxes was recorded in the three months ended September 30, 2024 and 2023.

Previous wording

The following table sets forth selected condensed consolidated statements of operations data for the three months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our consolidated statements of operations data for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The increase in revenues of $9.7 million was primarily attributable to a $7.1 million increase in revenues from new customers, expansion of existing customer coverage areas, contributions from the SafePointe acquisition in the third quarter of 2023 and an increase of $2.6 million in professional services revenue. We went live in 13 new ShotSpotter cities and one university and expanded in six current cities, two commercial customers and one university during the six months ended June 30, 2024.

Current wording

The increase in revenues of $11.9 million was primarily attributable to a $9.0 million increase in revenues from new customers, expansion of existing customer coverage areas and revenue related to solutions from our SafetySmart platform, and an increase of $2.9 million in professional services revenue. We went live in 17 new ShotSpotter cities and two universities, and expanded with 14 current cities, two commercial customers and one university during the nine months ended September 30, 2024.

Previous wording

The increase in cost of revenues of $2.4 million was due primarily to an increase in product costs due to the increase in our customer base and an increase in personnel costs due to our SafePointe acquisition in the third quarter of 2023.

Current wording

The increase in cost of revenues of $3.2 million was due primarily to an increase in product costs due to the increase in our customer base and an increase in personnel costs due to our SafePointe acquisition in the third quarter of 2023.

Previous wording

Sales and marketing expense increased by $1.1 million, primarily due to salaries, commissions and other personnel costs as a result of increased headcount and increased revenue. This includes $0.4 million in additional expense as a result of our SafePointe acquisition in the third quarter of fiscal 2023.

Current wording

Sales and marketing expense increased by $2.0 million, primarily due to salaries, commissions and other personnel costs as a result of increased headcount and increased revenue. This includes $0.5 million in additional expense as a result of our SafePointe acquisition in the third quarter of fiscal 2023.

Previous wording

Research and development expense increased by $1.3 million, primarily due to increased headcount, of which $0.7 million is attributable to our SafePointe acquisition.

Current wording

Research and development expense increased by $1.5 million, primarily due to increased headcount, of which $1.0 million is attributable to our SafePointe acquisition.

Previous wording

General and administrative expense increased by $2.6 million and was due primarily to increased personnel-related costs, and increases in travel costs, insurance and other costs.

Current wording

General and administrative expense increased by $2.6 million and was due primarily to increased personnel-related costs, and increases in travel costs, insurance and other costs, offset by a decrease of $0.7 million in acquisition-related expenses.

Previous wording

The fair value of the SafePointe contingent consideration liability decreased by $0.6 million during the six months ended June 30, 2024, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

Current wording

The change in fair value of the SafePointe contingent consideration liability was $0.6 million during the nine months ended September 30, 2024, based upon revised 2024 and 2025 revenue estimates utilized in the fair value methodology to estimate the contingent liability for the earnouts.

Previous wording

The increase in other expense, net was primarily due to a one-time restructuring expense of $0.3 million comprised of workforce reduction severance and other employee separation-related costs and restructuring costs related to a lease termination for a location that was no longer in use. The increase was also due to interest expense related to the line of credit of $0.3 million in the six months ended June 30, 2024. The line of credit was primarily used to fund our acquisition of SafePointe.

Current wording

The increase of $0.3 million in restructuring expense was due to a one-time restructuring charge comprised of workforce reduction severance and other employee separation-related costs and restructuring costs related to a lease termination for a location that was no longer in use.

Previous wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. A $0.2 million provision for income taxes was recorded in the three months ended June 30, 2024. A $0.3 million provision for income taxes was recorded in the three months ended June 30, 2023.

Current wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. A $0.7 million and $0.6 million provision for income taxes was recorded in the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Our operations have been financed primarily through net proceeds from the sale of equity, debt financing arrangements and cash from operating activities. Our principal source of liquidity is cash and cash equivalents totaling $9.8 million and accounts receivable of $35.7 million as of June 30, 2024. On June 30, 2024, our available credit facility was approximately $18.0 million and we had $7.0 million outstanding on our line of credit, which was primarily used to fund our acquisition of SafePointe. On August 1, 2024, we repaid $3.0 million on our line of credit. Following this payment, we have an outstanding balance of $4.0 million on our line of credit.

Current wording

Our operations have been financed primarily through net proceeds from the sale of equity, debt financing arrangements and cash from operating activities. Our principal source of liquidity is cash and cash equivalents totaling $15.3 million and accounts receivable of $25.9 million as of September 30, 2024. On September 30, 2024, our available credit facility was approximately $21.0 million and we had $4.0 million outstanding on our line of credit, which was primarily used to fund our acquisition of SafePointe.

Previous wording

We believe our existing cash and cash equivalents, our available credit facility and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. We believe that the costs to perform the short-term deferred revenue is relatively low compared to the balance of $43.0 million. However, should additional working capital be needed, we can utilize our unused credit facility. We believe that we will meet longer term expected future working capital and capital expenditure requirements through a combination of cash flows from operating activities, available cash balances and our available credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Additionally, there is no guarantee debt or equity financing will be available to us on terms that are favorable to us, or at all.

Current wording

We believe our existing cash and cash equivalents, our available credit facility and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. We believe that the costs to perform the short-term deferred revenue is relatively low compared to the balance of $43.5 million. However, should additional working capital be needed, we can utilize our unused credit facility. We believe that we will meet longer term expected future working capital and capital expenditure requirements through a combination of cash flows from operating activities, available cash balances and our available credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Additionally, there is no guarantee debt or equity financing will be available to us on terms that are favorable to us, or at all.

Previous wording

During the six months ended June 30, 2024, we repurchased 134,150 shares of our common stock at an average price of $14.86 per share for approximately $2.0 million, under the 2022 Repurchase Program. The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired. As of June 30, 2024, $17.4 million remains available under the 2022 Repurchase Program.

Current wording

During the nine months ended September 30, 2024, we repurchased 418,940 shares of our common stock at an average price of $14.31 per share for approximately $6.0 million, under the 2022 Repurchase Program. The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired. As of September 30, 2024, $13.4 million remains available under the 2022 Repurchase Program.

Previous wording

In September 2018, we entered into our Umpqua Credit Agreement, initially providing for borrowing capacity of $10.0 million. The agreement was amended in November 2022 to increase the size of our available credit facility to $25.0 million with an expiration date of October 15, 2024. An additional amendment occurred in February 2024 to extend the expiration date to October 15, 2025. The revolving loan facility is for general working capital purposes. Our available credit facility as of June 30, 2024 was $18.0 million. On June 30, 2024 and December 31, 2023, there was $7.0 million outstanding on our line of credit. On August 1, 2024, we repaid $3.0 million on our line of credit. Following this payment, we have an outstanding balance of $4.0 million on our line of credit. The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions”in Part II, Item 1A, Risk Factors, included in this Quarterly Report on Form 10-Q. We are in compliance with all covenants under the Umpqua Credit Agreement as of June 30, 2024.

Current wording

In September 2018, we entered into our Umpqua Credit Agreement, initially providing for borrowing capacity of $10.0 million. The agreement was amended in November 2022 to increase the size of our available credit facility to $25.0 million with an expiration date of October 15, 2024. An additional amendment occurred in February 2024 to extend the expiration date to October 15, 2025. The revolving loan facility is for general working capital purposes. Our available credit facility as of September 30, 2024 was $21.0 million. On September 30, 2024 and December 31, 2023, there was $4.0 million and $7.0 million outstanding on our line of credit, respectively. The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions”in Part II, Item 1A, Risk Factors, included in this Quarterly Report on Form 10-Q. We are in compliance with all covenants under the Umpqua Credit Agreement as of September 30, 2024.

Previous wording

The following table presents a summary of our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table presents a summary of our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Net cash provided by operating activities increased by $8.1 million during the six months ended June 30, 2024 compared to the same period in 2023. This was primarily due to increased deferred revenue of $12.1 million, an increase in accrued liabilities and other liabilities of $1.2 million, a decrease in prepaid expenses of $0.8 million, an increase in cash flows from operations adjusted for non-cash operating expenses of $2.2 million, offset by increased accounts receivables of $8.2 million.

Current wording

Net cash provided by operating activities increased by $12.4 million during the nine months ended September 30, 2024 compared to the same period in 2023. This was primarily due to increased deferred revenue of $13.4 million, an increase in cash flows from operations adjusted for non-cash operating expenses of $3.1 million and an increase in accrued expenses and other current liabilities of $1.5 million, offset by a decrease in accounts payable of $2.1 million, an increase in accounts receivables of $2.4 million and a decrease in prepaid expenses of $0.9 million.

Previous wording

Investing activities used $3.8 million in the six months ended June 30, 2024. This was primarily driven by investments in property and equipment installed for our solutions in customer coverage areas. Investing activities used $3.3 million in the six months ended June 30, 2023, primarily for investments in installed property and equipment.

Current wording

Net cash used in investing activities was $5.1 million in the nine months ended September 30, 2024. This was primarily driven by investments in property and equipment installed for our solutions in customer coverage areas. Investing activities used $15.8 million in the nine months ended September 30, 2023, primarily for the acquisition of SafePointe for $11.0 million, investments in property and equipment installed for our solutions in customer coverage areas of $4.4 million and $0.4 million used for investments in intangibles and other assets, including intellectual property assets.

Previous wording

Financing activities includes net proceeds from the exercise of stock options, proceeds from the employee stock purchase plan purchases and proceeds from our line of credit, offset by payments for repurchases of our common stock and contingent consideration liabilities earned and repayments on our line of credit.

Current wording

Financing activities includes net proceeds from the exercise of stock options, proceeds from the employee stock purchase plan purchases and proceeds from our line of credit, offset by payments for repurchases of our common stock and contingent consideration liabilities earned and payments on our line of credit.

Previous wording

Financing activities used $1.6 million in the six months ended June 30, 2024, and reflect common stock repurchases of approximately $2.0 million, offset by $0.4 million in proceeds from our employee purchase plan. Financing activities used $4.5 million in the six months ended June 30, 2023. This was driven by $3.6 million in payments for repurchases of our common stock and the payout of $1.5 million for the Technologic contingent consideration offset by $0.5 million in proceeds from our employee stock plan purchase and $0.1 million in proceeds from the exercise of stock options.

Current wording

Net cash used in financing activities was $8.5 million in the nine months ended September 30, 2024, and reflect common stock repurchases of approximately $6.0 million and payments on our line of credit of $3.0 million, offset by $0.4 million in proceeds from our employee purchase plan. Financing activities provided $0.5 million in the nine months ended September 30, 2024. This was driven by $7.0 million in proceeds from our line of credit, $0.5 million in proceeds from our employee stock plan purchase and $0.1 million in proceeds from the exercise of stock options, offset by $5.6 million in payments for repurchases of our common stock and the payout of $1.5 million for the Technologic contingent consideration.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of our condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of revenues, assets, liabilities, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances and evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

Current wording

Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of revenues, assets, liabilities, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances and evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

Previous wording

See Note 2, Summary of Significant Accounting Policies, in the notes to our condensed, consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

See Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.