SOUNDHOUND AI INC

Current report

Although SoundHound is not directly impacted by the tariffs as a software-as-a-service (SaaS) provider, SoundHound’s business or stock price may be adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures on our customers implemented by the U.S. and other governments.

Current report

Recently there have been significant changes to U.S. trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, trade policies and tariffs affecting products from outside of the U.S. For example, in early April, 2025, the current U.S. presidential administration announced significant new tariffs on foreign imports into the U.S. from about 90 nations. Although SoundHound is not directly impacted by the tariffs as a software-as-a-service (SaaS) provider, the extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business partners are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, and exemptions or exclusions that may be granted. Any new or additional tariffs on goods imported to the U.S. could also increase the cost of our business partners and reduce their margins, which may eventually impact the demand of our products and services or our pricing strategy, depending on our business partners' ability to mitigate tariffs through alternative sourcing or manufacturing or allocate tariff costs to counterparties. Additionally, U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations. As a result of these dynamics, we cannot predict the impact to our business or stock price that may be caused by any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries.

Previous report

We may engage in future acquisitions or strategic transactions which may require us to seek additional financing or financial commitments, increase our expenses and/or present significant distractions to our management.

Previous report

In January 2024, we completed our acquisition of SYNQ3 and in August 2024, we completed our acquisition of Amelia and we continue to actively evaluate opportunities to grow and enhance our business and technologies. In the event we engage in an acquisition or other strategic transaction, including by making an investment in another company, we may need to acquire additional financing. Obtaining financing through the issuance or sale of additional equity and/or debt securities, if possible, may not be at favorable terms and may result in additional dilution to our current stockholders. Additionally, any such transaction may require us to incur non-recurring or other charges, may increase our near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results. For example, an acquisition or strategic transaction, may entail numerous operational and financial risks, including the risks outlined above and additionally:

Previous report

•exposure to unknown financial or product liabilities;

Previous report

•disruption of our business and diversion of our management's time and attention in order to develop acquired products or technologies;

Previous report

•higher than expected acquisition and integration costs;

Previous report

•write-downs of assets or goodwill or impairment charges;

Previous report

•increased amortization expenses;

Previous report

•difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

Previous report

•impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

Previous report

•inability to retain key employees of any acquired businesses.

Previous report

Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete could have a material adverse effect on our business, results of operations, financial condition and prospects.

Previous report

If intangible assets and goodwill that we recorded in connection with our acquisitions, including our SYNQ3 and Amelia acquisitions, become impaired, we may have to take significant charges against earnings, which would have a negative impact on our financial condition and results of operations.

Previous report

We record goodwill and intangible assets at fair value upon the acquisition of a business. Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired. Under generally accepted accounting principles in the United States, we must assess, at least annually and potentially more frequently, whether the value of indefinite-lived intangible assets and goodwill have been impaired. Intangible assets and goodwill will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.

Previous report

As a part of our growth strategy, we have made and may continue to make selected acquisitions of complementary products and/or businesses. Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations:

Previous report

•problems maintaining uniform procedures, controls and policies with respect to our financial accounting systems;

Previous report

•difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience;

Previous report

•the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders (which in the case of certain of our prior acquisitions were significant);

Previous report

•the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions;

Previous report

•inconsistencies in standards, controls, procedures, and policies;

Previous report

•assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities, including product liability, that are difficult to identify or accurately quantify; and

Previous report

In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, finance, legal, and information technologies. There can be no assurance that any of the acquisitions we may make will be successful or will be, or will remain, profitable. Our failure to successfully address the foregoing risks may prevent us from achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all.

Previous report

The integration of our acquisitions, and in particular, our acquisitions of SYNQ3 and Amelia, may result in significant accounting charges that adversely affect the financial results of our company.

Previous report

The financial results of our company may be adversely affected by cash expenses and non-cash accounting charges incurred in connection with our acquisitions. In addition to the anticipated cash charges, costs associated with the amortization of intangible assets are expected. The price of our common stock could decline to the extent our financial results are materially affected by the foregoing charges or if the foregoing charges are larger than anticipated.

Previous report

Our acquisitions may result in unexpected consequences to our business and results of operations.

Previous report

Although we believe that our recently acquired businesses will generally be subject to risks similar to those to which we are subject to in our existing operations, we may not have discovered all risks applicable to these businesses during the due diligence process. Some of these risks could produce unexpected and unwanted consequences for us. Undiscovered risks may result in us incurring financial liabilities, which could be material and have a negative impact on our business operations.

Previous report

The existence of a material weakness in internal control over financial reporting of one of our acquired entities may adversely affect our ability to provide timely and reliable financial results.

Previous report

A material weakness is a deficiency, or a combination of deficiencies, in the internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s financial statements will not be prevented or detected on a timely basis. To the extent that any material weakness or significant deficiency exists in the internal control over financial reporting of an acquired entity or a potential acquired entity, such material weakness or significant deficiency may adversely affect our ability to accurately assess such potential acquisition, and, if acquired, may negatively affect our ability to provide timely and reliable financial information necessary for the conduct of our business and the satisfaction of our reporting obligations under the federal securities laws. For example, Amelia identified material weaknesses in its reporting system in connection with its fiscal 2023 audit, relating to revenue recognition, financial close processes and income taxes. As of the date of our acquisition of Amelia, such material weaknesses had not yet been successfully remediated. In addition, as disclosed in our Annual Report, our management identified material weaknesses in our internal control over financial reporting. While we are in the process of addressing our material weaknesses as discussed in our Annual Report and this Quarterly Report on Form 10-Q, elements of our remediation plan can only be accomplished over time and we can offer no assurance that these initiatives will ultimately have the intended effects.

Previous report

Failure to realize the benefits expected from our recent acquisitions could adversely affect the value of our common stock.

Previous report

The success of our recent acquisitions will depend, in part, on our ability to:

Previous report

•integrate SYNQ3’s and Amelia’s customer bases and capitalize on our cross-selling opportunities;

Previous report

•realize cost savings from reduced back-office and infrastructure expenses, eliminate duplicative company and management structure costs;

Previous report

•operate our combined businesses efficiently, achieve the strategic operating objectives for our business and realize significant cost savings and synergies;

Previous report

•realize the attractive risk-adjusted equity returns from our acquisitions for our stockholders; and

Previous report

•capitalize on the embedded and/or underexploited expansion opportunities offered by our acquisitions that we can expand upon.

Previous report

However, to realize the anticipated benefits of our acquisitions we must successfully integrate their businesses in a manner that permits those benefits and cost savings to be realized. Although we expect benefits to result from these acquisitions, there can be no assurance that we will be able to successfully realize these benefits. The challenges involved in this integration will be complex and time consuming and may require a disproportionate amount of resources and management attention and could result in the loss of valuable employees, the disruption of each company’s ongoing business or inconsistencies in standards, controls, procedures, practices, and policies that could adversely impact our operations. If we do not successfully manage these and related issues and challenges, we may not achieve the anticipated benefits of these acquisitions and our revenue, expenses, operating results, financial condition and stock price could be materially adversely affected.