SSTI 10-K & 10-Q changes, risk factors and insider trading

Risks Related to Our GrowthBusiness and Operations

IfThe we are unable to manage our growth effectively, we may not be able to take advantageoccurrence of market opportunities or develop new solutions or upgrades to our existing solutions, satisfy customer requirements, maintain the quality and security of our solutions or execute on our business plan, any of the foregoing would impede or delay our ability to maintain or increase the amount of revenues derived from these customers, which could have a material adverse effect on our business, operating results and financial condition.

changes in our customers’customers'; and potential customers’customers' budgets;

the timing of satisfying revenuesrevenue recognition criteria in connection with initial deployment and renewals;

the concentration of our revenue in a small number of large contracts with the potential for fluctuations and delays; and general economic factors, such as the imposition of tariffs, inflation, rising interest rates, past and potential future disruptions in access to bank deposits and lending commitments due to bank failures, and political conditions, both domestically and internationally.

For example, our revenues with regardrespect to certain customers have varied significantly during recent years. The City of Chicago did not renew our contract in November 2024. The City of Chicago was our second largest customer by revenue in 2023 and 2024. As a result, the concentrationsignificance of our largest customer by revenue, for the year ended December 31, 2024, the City of New YorkYork, andincreased the City of Chicago as our two largest customers accounted forfrom 23% and 10% of the Company’s total revenues, respectively. Our contract with the City of Chicago ended in November 2024 and we renewed our two contracts with the City of New York in the first quarter of 2025. The ending of our contractrevenue withfor the2024 Cityto 29% of Chicagoour andrevenue anyfor 2025. Any inability to renew or delays in renewal of our contract with the City of New York in the future or any of the other factors above or other factors discussed elsewhere in this report will result in fluctuations in our revenues and operating results, meaning that quarter-to-quarter comparisons of our revenues, results of operations and cash flows may not necessarily be indicative of our future performance.

Because of the fluctuations described above, our ability to forecast revenues is limited and we may not be able to accurately predict our future revenues or results of operations. In addition, we base our current and future expense levels on our operating plans and sales forecasts, and our operating expenses are expected to increase in the short term. Accordingly, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenues, and even a small shortfall in revenues could disproportionately and adversely affect our financial results for that quarter. The variability and unpredictability of these and other factors could result in our failing to meet or exceed financial expectations for a given period.

We recognize subscription revenues over the term of a subscription agreement. Once we enter into a ShotSpotter contract with a customer, there is a delay until we begin recognizing revenues while we survey the coverage areas, obtain any required consents for installation, and install our sensors, which together can take up to several months or more. We begin recognizing revenues from a ShotSpotter sale only when all of these steps are complete and the solution is live. As with ShotSpotter contracts, CaseBuilder, CrimeTracer, ResourceRouter and SafePointe are typically sold on a subscription basis, each with a customized deployment plan. For CaseBuilder, ResourceRouter and SafePointe contracts, there is a delay until we begin recognizing revenues from such contracts when the subscription service is operational and ready to go live. For CrimeTracer, we generally invoice the first year's subscription price when the contract is fully executed. While most of our customers elect to renew their subscription agreements following the expiration of a term, in some cases, they may not be able to obtain the proper approvals or funding to complete the renewal prior to such expiration. For these customers, we stop recognizing subscription revenues at the end of the current term, even though we may continue to provide services for a period of time while the renewal process is completed. Once the renewal is complete, we then recognize subscription revenues for the period between the expiration of the term of the agreement and the completion of the renewal process.

We had a net loss of $9.2$9.4 million for the year ended December 31, 20242025 and as of December 31, 2024,2025, we had an accumulated deficit of $104.3$113.7 million. Although we posted net income in 2020 and 2022, we had a net loss in 2021 and 2023. We are not certain whether we will be able to maintain enough revenues from sales of our solutions to sustain or increase our growth or maintain profitability in the future. We also expect our costs to increase in future periods, which could negatively affect our future operating results if our revenues do not increase. In particular, we have previously and expect to continue to expend substantial financial and other resources on:

higher costs to procure the sensors required for our solutions due to inflationary pressures or tariffs;

research and development related to our solutions, including investments in our engineering and technical teams and investments in AI;

Government entities often require highly specialized contract terms that may differ from our standard arrangements. For example, if the federal government provides grants to certain state and local governments for our solutions, and such governments do not continue to receive these grants, then these customers have the ability to terminate their contracts with us without penalty. Government entities often impose compliance requirements that are complicated, require preferential pricing or “most favored nation” terms and conditions, or are otherwise time-consuming and expensive to satisfy. Compliance with these special standards or satisfaction of such requirements could complicate our efforts to obtain business or increase the cost of doing so. Due to the nature of our business as a software-as-a-service provider, we are occasionally unable to meet certain requirements related to the utilization of small businesses in providing our services. Even if we do meet these special standards or requirements, the increased costs associated with providing our solutions to government customers could harm our margins. Additionally, even once we have secured a government contract, the renewal process can be lengthy and as time-consuming as the initial sale, and we may be providing our service for months past the contract expiration date without certainty if the renewal agreement will be signed or not. During periods of economic uncertainty resulting from the past and potential future disruptions in access to bank deposits and lending commitments due to bank failures, geopolitical developments such as the conflicts between Ukraine and Russia and in the Middle East, and other macroeconomic pressures in the United States and the global economy such as the imposition of tariffs, rising inflation and interest rates, supply chain constraints, labor market shortages, energy prices and recession fears, and any associated impact on economic conditions, these risks are more pronounced than usual, as government entities struggle with reduced levels of resources related to implications of such global events.

Changes in the underlying regulatory conditions, political landscape or required procurement procedures that affect these types of customers could be introduced prior to the completion of our sales cycle, making it more difficult or costly to finalize a contract with a new customer or expand or renew an existing customer relationship. For example, customers may require a competitive bidding process with extended response deadlines, review or appeal periods, or customer attention may be diverted to other government matters, postponing the consideration of the purchase of our products. SuchWe are experiencing a delayed contract renewal with Puerto Rico which, contrary to our prior dealings with them, has a new requirement of issuing a formal request for proposal process in order to renew an agreement. This delay and other such delays could harm our ability to provide our solutions efficiently and to grow or maintain our customer base.

Our sales process involves educating prospective customers and existing customers about the use, technical capabilities and benefits of our solutions. Prospective customers, especially government agencies, often undertake a prolonged evaluation process that may last up to nine months or moremore, with an even longer process for international customers, and that typically involves comparing the benefits of our solutions to alternative uses of funds. We may spend substantial time, effort and money on our sales and marketing efforts without any assurance that our efforts will produce any sales.

Additionally, events affecting our customers’ budgets or missions may occur during the sales cycle that could negatively impact the size or timing of a purchase after we have invested substantial time, effort and resources into a potential sale, contributing to more unpredictability in the growth of our business. If we are unable to succeed in closing sales with new and existing customers, our business, operating results and financial condition will be harmed. For example, we are working on a delayed contract renewal with Puerto Rico which, contrary to our prior dealings with them, has a new requirement of issuing a formal request for proposal process in order to renew an agreement. During periods of economic uncertainty resulting from the past and potential future disruptions in access to bank capital and lending commitments due to bank failures, geopolitical developments such as the conflicts between Ukraine and Russia and in the Middle East, and other macroeconomic pressures in the United States and the global economy, such as the imposition of tariffs, rising inflation and interest rates, supply chain constraints, labor market shortages, energy prices and recession fears, and any associated impact on economic conditions, this risk is more pronounced than usual, as our customers’ priorities may change or they may have greater uncertainty regarding the availability of funding for our solutions as a result.

Our reputation and our business may be harmed by inaccurate reporting, which could have an adverse impact on new sales or renewals or expansions of coverage areas by existing customers, which would adversely impact our financial results and future prospects. For example, in July 2021, VICE Media, LLC (“VICE”) falsely accused us of illegal behavior, which has had a material adverse effect on our business. We initiated a defamation lawsuit against VICE that has since been dismissed.

Economic uncertainties or downturns could adversely affect our business and operating results. Negative conditions in the general economy both in the United States and abroad, including past and potential future disruptions in access to bank deposits and lending commitments due to bank failures, conditions resulting from changes in gross domestic product growth, labor market shortages, the imposition of tariffs, inflation, interest rates, financial and credit market fluctuations, political deadlock, natural catastrophes, warfare, geopolitical tensions, such as the ongoing conflicts between Russia and Ukraine and in the Middle East, terrorist attacks, climate change and global pandemics, could cause a decrease in funds available to our existing and potential customers and negatively affect the rate of growth of our business. Changes in the availability of federal funding, such as under ARPA, and the leadership of federal agencies under the Trump administration, including return-to-office policy, hiring freeze, layoffs, and other policies implemented byfederal DOGE,agencies under the Trump Administration, may lead to changes in the operations of federal agencies, which may adversely impact our business and operating results.

We may be adversely affected by ongoing social unrest, protests against racial inequality,inequality and protests against police brutality and movements such as “Defund the Police” or increases in such unrest that may occur in the future, and such unrest may be exacerbated by inaccurate information or negative publicity regarding our solutions. These events may directly or indirectly affect police agency budgets and funding available to current and potential customers. Participants in these events may also attempt to create the perception that our solutions are contributing to the “problem” which may adversely affect us, our business and results of operations, including our revenues, earnings and cash flows from operations.

Natural disasters, infectious disease outbreaks, power outages orand other events impactingoutside of our control may impact us or our customers couldand harm our operating results and financial condition.

Any of our facilities or operations may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, tornadoes, hurricanes, wildfires, floods, nuclear disasters, acts of terrorism or other criminal activities, global pandemics, and power outages, which may render it difficult or impossible for us to operate our business for some period of time or decrease productivity. For example, our primary IRC and a data center that hosts some of our customer services are located in the San Francisco Bay Area, a region known for seismic activity. Our facilities would likely be costly to repair or replace, and any such efforts would likely require substantial time. In addition, like many companies, at the beginning of the COVID-19 pandemic, we implementedexpect ato work from home policy. We expectcontinue to work in a hybrid work model for the foreseeable future. This policy may negatively impact productivity of our employees.

Under the Umpquacredit Creditagreement Agreement,governing our revolving credit facility with Columbia Bank, we are subject to various negative covenants that limit, subject to certain exclusions, our ability to incur indebtedness, make loans, invest in or secure the obligations of other parties, pay or declare dividends, make distributions with respect to our securities, redeem outstanding shares of our stock, create subsidiaries, materially change the nature of our business, enter into related party transactions, engage in mergers and business combinations, the acquisition or transfer of our assets outside of the ordinary course of business, grant liens or enter into collateral relationships involving company assets or reincorporate, reorganize or dissolve the company. These covenants could adversely affect our financial health and business and future operations by, among other things:

making it more difficult to satisfy our obligations, including under the terms of the UmpquaColumbia Credit Agreement;

We are also required to maintain certain financial covenants tied to our leverage, interest charges and profitability. Our ability to meet such covenants (those negative covenants discussed in the preceding paragraph) or other restrictions can be affected by events beyond our control, and our failure to comply with the financial and other covenants would be an event of default under the UmpquaColumbia Credit Agreement. If an event of default under the UmpquaColumbia Credit Agreement, has occurred and is continuing, the outstanding borrowings thereunder could become immediately due and payable, and we would then be required to cash collateralize any letters of credit then outstanding, and the lender could refuse to permit additional borrowings under the facility. We have in the past obtained waivers for the financial covenant tied to our profitability, the acquisition and investment covenants related to our acquisition of SafePointe and name change covenant for failure to provide notice of our corporate name change and of the name change of LEEDS, LLC to Technologic Solutions, LLC. We cannot assure you that we would have sufficient assets to repay those borrowings and, if we are unable to repay those amounts, the lender could proceed against the collateral granted to them to secure such indebtedness. We have pledged substantially all of our assets as collateral, and an event of default would likely have a material adverse effect on our business.

The competitive landscape for our security solutions is evolving.evolving and new competitors may enter the market for our public safety solutions.

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement, security teams and civic leadership. In April 2023, we changed the company name, ShotSpotter, Inc., to SoundThinking, Inc., reflecting our broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions. As part of the rebranding, we introduced ourthe SafetySmartTM platform that includes six data-driven tools consisting of: (i) our flagship product, ShotSpotter®, our leading outdoor gunshot detection, location and alerting system trusted by 177178 cities and 2022 universities and corporations as of December 31, 2024,2025; (ii) CrimeTracer™,CrimeTracerTM, aan leadingagency-wide lawcrime enforcementdata searchand engineintelligence platform that enables investigatorsinvestigators, analysts, patrol officers and command staff to search through more than one billion criminal justice records from across jurisdictionsjurisdictions, leverage dashboards and AI-assisted tools to generate tactical leadsleads, and quickly make intelligent connections to solve cases,cases; (iii) CaseBuilder™,CaseBuilderTM, a one-stop investigative case management system for tracking, reporting, and collaborating on cases,cases; (iv) ResourceRouter™,ResourceRouterTM, 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,safety; (v) PlateRanger™PlateRangerTM powered by Rekor®, an ALPR and vehicle identification solution that leverages AI and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcement, introduced in July 2024 through a strategic partnership with Rekor Systems, Inc.enforcement and (vi) SafePointe™,SafePointeTM, an AI-based weapons detection system.system designed to provide discreet, high-throughput screening that complements physical security measures without compromising visitor experience. These solutions may operate independently or together as an integrated system that connects detection, data analysis, resource deployment and case management workflows. We also offer other security solutionsuse-case withinspecific our flagship product offering ShotSpotter,solutions, including ShotSpotter for Campus and ShotSpotter for CorporateCorporate, thatwhich are typically smaller-scale deployments of ShotSpotter gunshot detection vertically marketed to universities, corporate campuses 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. In the first quarter of 2025, we rolled out a perimeter-based sniper gunshot detection solution targeting utility substations, with initial pilots aimed at utility customers, conducted through SoundThinking Labs. SoundThinking Labs supports innovative usesuse cases of the Company's technology to help protect wildlife and the environment.

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 Campus,Campus and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our ResourceRouter solution, CaseBuilderCaseBuilder, an offering of CaseBuilder focused on gun violence,PlateRanger 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 between two lanes. As of December 31, 2024,2025, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract for over 1,0761,092 square miles, of which over 1,0741,064 square miles had gone live. Coverage areas under contract for ShotSpotter included 177178 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 2022 campuses/sites across the United States, South Africa, BrazilBrazil, Uruguay and the Bahamas, including some of the largest cities in the United States. As of December 31, 2024,2025, we had 277291 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

We generated revenues of $102.0$104.1 million, $92.7$102.0 million,million and $81.0$92.7 million for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively, representing year-over-year increases of 10%2% and 14%.10%. For the years ended December 31, 2024,2025, 20232024 and 2022,2023, revenues from ShotSpotter represented approximately 71%,64%, 70%71% and 69%70% of total revenues, respectively. Our two largest customers,customer, the City of New York, accounted for 29% of our total revenues for the year ended December 31, 2025. The City of New York and the City of Chicago,Chicago each accounted for 23% and 10%, respectively, of our total revenues for the year ended December 31, 2024. The City of New York and the City of Chicago each accounted for 25% and 9%, respectively, of our total revenues for the year ended December 31, 2023. The City of New York and the City of Chicago each accounted for 30% and 10%, respectively, of our total revenues for the year ended December 31, 2022. Substantially all of our revenues for the years ended December 31, 2024,2025, 20232024 and 20222023 were derived from customers within the United States (including Puerto Rico and the U.S. Virgin Islands). Our contract with the City of Chicago ended in November 2024.

We had net loss of $9.4 million for the year ended December 31, 2025, net loss of $9.2 million for the year ended December 31, 2024,2024 and net loss of $2.7 million for the year ended December 31, 2023, and net income of $6.4 million for the year ended December 31, 2022.2023. Our accumulated deficit was $104.3$113.7 million and $95.1$104.3 million as of December 31, 20242025 and 2023,2024, respectively.

We have focused on rapidly growing our business and believe that our future growth is dependent on many factors, including our ability to increase our customer base, expand the coverage of our solutions among our existing customers, expand our international presence, increase sales of our security solutions and retain our customers. Our future growth will primarily depend on the market acceptance for outdoor gunshot detection solutions and expanding into new markets for our other security solutions. Challenges we face in this regard include our target customers not having access to adequate funding sources, the fact that contracting with government entities can be complex, expensive and time-consuming, the fact that our typical sales cycle is often very long and difficult to estimate accurately and the fact that negative publicity about our company can and has caused current and potential future customers to evaluate the sales of our solutions more than in the past. We expect international sales cycles to be even longer than our domestic sales cycles. To combat these challenges, we invest in research and development, increase awareness of our solutions, invest in new sales and marketing campaigns, often in different languages for international sales, and hire additional sales representatives to drive sales to continue to maintain our position as a market leader. In addition, we believe that entering into strategic partnerships with other service providers to cities and municipalities offers another potential avenue for expansion.

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 of SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. For instance, we have an opportunity to grow in the healthcare vertical with California’s AB 2975 mandate, which requires weapons detection systems in all general acute care and psychiatric hospitals in 2027. We believe this legislation has created a substantial addressable market opportunity for us. 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 will also focus on expanding into new markets in conjunction with new regulations in California requiring weapons detection systems in hospitals and exploring other new markets such as casinos. 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. Consistent with this strategy, we expanded our suite of solutions with the acquisitions of Technologic, Forensic Logic and SafePointe.

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, including our recent hire of a Vice President in Brazil, 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.

Net new “go-live” cities represent the number of cities covered by deployments of our gunshot detection solutions that were formally approved by customers during the year, both from initial and expanded customer deployments, net of cities that ceased to be “live” during the year due to customer cancellations. New cities include deployed coverage areas that may have been sold, or booked, in a prior period. We focus on net new “go-live” cities as a key business metric to measure our operational performance and marketcustomer penetration.reach.

We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis and generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area between two sensors. Our security solutions, ShotSpotter for Campus and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our ResourceRouter, CaseBuilderCaseBuilder, PlateRanger and CrimeTracer solutions are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city.

We derive the majority of our revenues from subscription services. We recognize subscription fees ratably, on a straight-line basis, over the term of the subscription, which for new customers is typically initially one to three years in length. Customer contracts include one-time set-up fees for the set-up of our sensors in the customer’s coverage areas, training,training and third-party integration licenses. If the set-up fees are deemed to be a material right, they are recognized ratably over three to five years depending on the contract term. Training and third-party integration license fees are recognized upon delivery.

For ShotSpotter sales to cities, we generally invoice customers for 50% of the total contract value when the contract is fully executed and for the remaining 50% when the subscription service is operational and ready to go live – that is, when the customer has acknowledged the completion of all the deliverables in the signed customer acceptance form. For SafePointe, we generally invoice 50% of the first year's subscription price when the contract is fully executed.executed and the remaining 50% as described above. For ShotSpotter for Campus, ShotSpotter for Corporate and CrimeTracer, we generally invoice customers 100% of the total contract value when the subscription service is operational, which is often soon after contract execution. All fees billed in advance of services being delivered are recorded as deferred revenue. The timing of when new miles go live can be uncertain and, as a result, can have a significant impact on the levels of revenues and deferred revenue from quarter to quarter.

For ShotSpotter, our pricing model is based on a per-square-mile basis. For SafePointe, our pricing model is based on a per-lane basis. For ShotSpotter for Campus, ShotSpotter for CorporateCorporate, CaseBuilder and CaseBuilder,PlateRanger, our pricing model is on a customized-site basis. For ResourceRouter, CaseBuilderCaseBuilder, PlateRanger and CrimeTracer, pricing is currently customized, generally tied to the number of sworn police officers in a particular agency. We may also offer discounts or other incentives in conjunction with all ShotSpotter sales in an effort to introduce the product, accelerate sales or extend renewals for a longer contract term. As a result of our process for invoicing contracts and renewals upon execution, our cash flow from operations and accounts receivable can fluctuate due to timing of contract execution and timing of deployment.

Costs include the cost of revenues and impairment of property and equipment. Cost of revenues for ShotSpotter primarily includes depreciation expense associated with capitalized customer acoustic sensor networks, communication expenses, costs related to hosting our service applications, costs related to operating our IRC, providing remote and on-site customer support and maintenance and forensic services, providing customer training and onboarding services, certain personnel and related costs of operations, stock-based compensation and allocated overheads that include information technology, facility and equipment depreciation costs. Cost of revenues for our SafePointe solution are similar except that depreciation of the capitalized customer equipment is smaller due to the lower costs of SafePointe customer equipment.

The cost of revenues for CrimeTracer, ResourceRouterResourceRouter, CaseBuilder and CaseBuilderPlateRanger is generally related to employee compensation costs and data center hosting services, both of which are relatively fixed.

We are also investing in research and development resources in conjunction with our SoundThinking Labs projects and initiatives. The initial focus of these efforts is to develop innovative sensor applications as well as to test and expand the functionality of our outdoor sensors in challenging environmental conditions. As mentioned above, we are piloting a perimeter-based sniper gunshot detection solution targeting utility substations, with initial pilots aimed at utility customers.

The increase of $9.3$2.1 million was primarily attributable to an $6.2$9.0 million increase in revenues from new customers and expansions of existing customer coverage areas, $2.0$3.7 million increase duein torevenue 12from monthsNew York City, $3.5 million of catch-up revenue from two three-year contract renewals with the New York City Police Department which were renewed in 2024the comparedfirst to four months in 2023 from acquisitionquarter of Safepointe2025 and $2.0$0.8 million increase from newPuerto CaseBuilderRico, customers.offset by a reduction in revenue due to non-renewal of contracts of $14.9 million of which $9.7 million was related to the City of Chicago. ShotSpotter went live in 2010 new cities and five2 universities during the year ended December 31, 2024. Revenue was affected by the delay of approximately $3.5 million of two contract renewals with the City of New York, which were renewed in first quarter of 2025.

Gross profit as a percentage of revenues remaineddecreased stable.2% compared to 2024.

Sales and marketing expense increaseddecreased by $1.2$2.0 million and wasmillion, primarily due to 12$1.7 monthsmillion ofin expensescommission expense related to SafePointebrokerage services for the contract with the NYPD in 2024 comparedwithout toa fourcorresponding monthsservice for the contract with the NYPD in 2023,2025 offsetand bya $0.7decrease of $0.3 million reduced costs in outsideother commission.sales and marketing expense.

Research and development expense increased by $1.8$1.9 millionmillion, primarily due to 12an monthsincrease of expenses$1.0 million in consulting expense associated with SafePointe and a $0.9 million increase in IT expense related to SafePointeour investments in 2024enhancing comparedour toAI four months in 2023.capabilities.

Restructuring expense related to the workforce reduction during 20242025 amounted to $0.3$0.2 million, consisting of cash expenditures for severance and other employee separation-related costs.costs and in 2024 the restructuring expense of $0.3 million was related to a workforce reduction.

Other income (expense) did not increase materially compared with the prior year.

For discussion of our 20232024 results and a comparison with 20222023 results please refer to Part II, Item 7, "“Management's Discussion and Analysis of Financial Conditions and Results of Operations"” in our Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 that was filed with the SEC on AprilMarch 1,31, 20242025 (the "2023“2024 Form 10-K"”).

Our operations have beenare 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 $13.2$15.8 million and accountaccounts receivable of $25.5$28.6 million as of December 31, 2024.2025. On December 31, 2024, our available credit facility was approximately $21.0 million and2025, we had $4.0$36.0 million outstandingavailable onborrowing capacity under our linerevolving ofcredit credit, which was primarily used to fund our acquisition of SafePointe.facility.

We believe our existing cash and cash equivalent balances, 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 despite our negative working capital, the costs to perform the short-term deferred revenue is relatively low compared to the balance of $38.4our deferred revenue of $40.0 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 revenuesrevenue 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 that debt or equity financing will be available to us on terms that are favorable to us, or at all.

In November 2022, our board of directors approved a new stock repurchase program (the "“2022 Repurchase Program"”) for up to $25.0 million of our common stock. The shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or by other methods in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of our common stock, general market and economic conditions and applicable legal requirements. The stock repurchase program does not obligate us to purchase any particular amount of common stock and may be suspended or discontinued at any time.

InWe Septemberhave 2018,a 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 availablerevolving credit facility for available borrowings of up to $25.0$40.0 million under our Credit Agreement with anColumbia expirationBank date(previously ofknown as Umpqua Bank) (the “Credit Agreement”). The credit facility matures on October 15, 2024, and further amended in February 2024 to extend the expiration date to October 15, 2025.2027. The revolving loancredit facility is for general working capital purposes. Our available credit facility as of December 31, 2024 was $21.0 million. On December 31, 2024,2025, therewe washad $4.0 million outstanding on our line of credit.credit, with an available borrowing capacity of $36.0 million. 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 I, Item 1A, Risk Factors, included in this Annual Report on Form 10-K. We are in compliance with all covenants under the Umpqua Credit Agreement as of December 31, 2024.2025.

Our net income (loss) and cash flows provided by operating activities are impacted by more collections and increase in deferred revenue in 20242025 and offset by timing of account receivable collection and payments for accruals for increased expenses.

Net cash provided by operating activities increaseddecreased by $11.3$12.9 million in the year ended December 31, 20242025 compared to net cash provided in the same period of 2023,2024, primarily due to ana increasedecrease of $4.4$8.8 million in account receivable collection from contracts with the New York City Police Department, a decrease of $2.5 million in the change of deferred revenue and an increase of $4.4 million in account receivable collection and $1.9$2.6 million in other liabilities.

Our investing activities consist primarily of business acquisition expenditures, capital expenditures to install our solutions in customer coverage areas, purchases of property and equipment, and investments in intangible assets.

Investing activities used $6.4$4.5 million and $16.5$6.4 million in the years ended December 31, 20242025 and 2023,2024, respectively. WeThis completedwas ourprimarily acquisitiondriven by investments of SafePointe$4.4 formillion approximatelyand $11.0$6.3 million in cash,property netand ofequipment $0.4installed millionfor cashour acquiredsolutions atin closingcustomer duringcoverage theareas yearin December2025 31,and 2023.2024, respectively.

Financing activities used $2.4 million in cash during the year ended December 31, 2025. This was primarily due to $3.0 million in payments for repurchases of our common stock, offset by $0.6 million in proceeds from ESPP purchases. Financing activities used $8.2 million in cash during the year ended December 31, 2024. This was2024, primarily due to $3.0 million in payment on our line of credit and $6.0 million in payments for repurchases of our common stock, offset by $0.7 million in proceeds from ESPP purchases. We paid $1.5 million for contingent consideration liability in 2023 and $5.6 million for common stock repurchase and raised $7.0 million from line of credit.purchases

For a full description of our revenue policy, refer to Note 2. Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. Subscription revenue is recognized over the term of the subscription as services are provided.

Determination of Standalone Selling Prices (SSP) – When contracts contain multiple performance obligations, we allocate transaction prices based on the relative SSP of each component. This requires management judgment, particularly when there is no observable selling price.

Timing of Revenue Recognition – Subscription fees are generally recognized ratably over the contract term. However, upfront fees and non-refundable payments require assessment to determine whether they represent a separate performance obligation.

Goodwill represents the excess of amounts paid over the fair value of net assets acquired from a business acquisition. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units and determination of the fair value of each reporting unit. We have concluded there is only one reporting unit for purposes of performing the goodwill impairment test. The fair value of eachthe reporting unit is estimated primarily through the use of market capitalization as a key input. This analysis involves calculating our market capitalization, which is derived from multiplying our closing stock price by the number of outstanding shares, and then comparing it against the net asset value. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment. We performed our annual test for goodwill impairment as of October 1, 20242025 and concluded that no impairment charge was necessary.

The assessment of whether an indication of impairment exists is performed at the end of each reporting period and requires the application of judgment, historical experience, and external and internal sources of information. We make estimates in determining the future cash flows and discount rates in the quantitative impairment test to compare the fair value to the carrying value. There was no impairment charge during the year ended December 31, 2025 We account for income taxes under the asset and liability approach. Under this method, deferred tax assets, including those related to tax loss carryforwards and credits, and deferred tax liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We recognize the tax benefit for an uncertain tax position when it meets the more likely than not threshold for recognition.

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement, security teams and civic leadership. In April 2023, we changed the company name, ShotSpotter, Inc., to SoundThinking, Inc., reflecting our broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions. As part of the rebranding, we introduced the SafetySmartTMSafetySmart™ platform that includes sixseven data-driven tools consisting of: (i) our flagship product, ShotSpotter®, our leading outdoor gunshot detection, location and alerting system trusted by 173171 cities and 21 universities and corporations as of MarchJune 31,30, 2026, (ii) CrimeTracer™, an agency-wide crime data and intelligence platform that enables investigators, analysts, patrol officers and command staff to search through more than one billion criminal justice records from across jurisdictions, leverage dashboards and AI-assisted tools to generate tactical leads, and quickly make intelligent connections to solve cases, (iii) CaseBuilder™, a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter™, 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, (v) PlateRanger™ powered by Rekor®, an ALPR and vehicle identification solution that leverages AI and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcementenforcement, (vi) Field Agent, an AI layer that transforms public safety data into actionable intelligence and (vivii) SafePointe™, an AI-based weapons detection system designed to provide discreet, high-throughput screening that complements physical security measures without compromising visitor experience. These solutions may operate independently or together as an integrated system that connects detection, data analysis, resource deployment and case management workflows. We also offer other security use-case specific solutions, including ShotSpotter for Campus and ShotSpotter for Corporate, which are typically smaller-scale deployments of ShotSpotter gunshot detection vertically marketed to universities, corporate campuses 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. In the first quarter of 2025, we rolled out a perimeter-based sniper gunshot detection solution targeting utility substations, with initial pilots aimed at utility customers, conducted through SoundThinking Labs. SoundThinking Labs supports innovative use cases of the Company's technology to help protect wildlife and the environment.

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 Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our ResourceRouter solution, CaseBuilder, PlateRanger 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 between two sensors. As of MarchJune 31,30, 2026, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract covered over 1,0731,072 square miles, of which over 1,0441,047 square miles had gone live. Coverage areas under contract for ShotSpotter included 173171 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 21 campuses/sites across the United States, South Africa, Uruguay, Brazil and the Bahamas, and included some of the largest cities in the United States. As of MarchJune 31,30, 2026, we had 295365 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

We continue to see growing interest in our newerother solutions, including CrimeTracer. We expect CrimeTracer to also contribute to growth during 2026, although revenues from ShotSpotter are expected to continue representing a majority of our revenues for the foreseeable future. SoundThinking Labs projects are generally conducted in coordination with a sponsoring charitable organization and may or may not be revenue-producing. When they are revenue-producing, they will generally be sold on a cost-plus basis. As such, SoundThinking Labs projects will normally produce gross margins significantly lower than most of our other solutions. Additionally, in early 2021, we added newhave pricing programs for Tier 4 and 5 law enforcement agencies (those with fewer than 100 sworn officers) that allow them to contract for our gunshot detection solutions to cover a footprint of less than three square miles, using standardized coverage parameters, at a discounted annual subscription rate.

We generated revenues of $24.2$23.9 million and $28.3$25.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, representing a decrease of 15%.8%. For the three months ended MarchJune 31,30, 2026 and 2025, revenues from ShotSpotter represented approximately 67%64% and 58%68% of total revenues, respectively. Our current largest customer, the City of New York, accounted for 27% of our total revenues for the three months ended MarchJune 31,30, 2026. The City of New York accounted for 37%25% of our total revenues for the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026 and 2025, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $23.4$23.0 million and $27.6$25.2 million, respectively, or 97%96% and 97% of total revenues, respectively.

We had a net loss of $7.0$4.8 million and $1.5$3.1 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. We had a net loss of $11.8 million and $4.6 million for the six months ended June 30, 2026 and 2025, respectively. Our accumulated deficit was $120.7$125.5 million and $113.7 million at MarchJune 31,30, 2026 and December 31, 2025, respectively.

We haveare focused on rapidly growing our business and believe that our future growth is dependent on many factors, including our ability to increase our customer base, expand the coverage of our solutions among our existing customers, expand our international presence, increase sales of our security solutions and retain our customers. Our future growth will primarily depend on the market acceptance for outdoor gunshot detection solutions and expanding into new markets for our other security solutions. Challenges we face in this regard include our target customers not having access to adequate funding sources, the fact that contracting with government entities can be complex, expensive and time-consuming, the fact that our typical sales cycle is often very long and difficult to estimate accurately and the fact that negative publicity about our company can and has caused current and potential future customers to evaluate the sales of our solutions more than in the past. We expect international sales cycles to be even longer than our domestic sales cycles. To combat these challenges, we invest in research and development, increase awareness of our solutions, invest in new sales and marketing campaigns, often in different languages for international sales, and hire additional sales representatives to drive sales to continue to maintain our position as a market leader. In addition, we believe that entering into strategic partnerships with other service providers to cities and municipalities offers another potential avenue for expansion.

We will also focus on expanding our business by introducing new products and services to existing customers, such as ResourceRouter,CrimeTracer, CrimeTracerPlateRanger and SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. For instance, we have an opportunity to grow in the healthcare vertical with California’s AB 2975 mandate, which requires weapon detection systems in all general acute care and psychiatric hospitals in 2027. We believe this legislation has created a substantial, addressable market opportunity for us. In addition, we also continue to develop and enhance mobile and field-based capabilities. We have introduced drone-as-first-responder which is a ShotSpotter-to-drone integration to help agencies respond in real time and is live in 16 cities, and SafetySmart Field Agent, which is an AI-powered user experience which enables public safety officers to obtain public safety data, e.g., gunfire data from ShotSpottter,ShotSpotter crime data from ResourceRouter,and license plate reads from PlateRanger,PlateRanger through one unified experience. 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 will also focus on expanding into new markets in conjunction with new regulations in California requiring weapons detection systems in hospitals and exploring other new markets such as casinos. 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.

Net new “go-live” cities and universities represent the number of cities and universities covered by deployments of our gunshot detection solution, ShotSpotter, 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. For the three and six months ended MarchJune 31,30, 2026, we went live in one new city and with one new customer but had some customer cancellations. Our net new “go-live” cities and universities were as follows:

We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis and generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, a lane being the detection area between two sensors. Our security solutions, ShotSpotter for Campus and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our CrimeTracer, ResourceRouter, CaseBuilder and CrimeTracerPlateRanger solutions are also sold on a subscription basis that is generally customized based on the number of sworn officers in a particular city. Our PlateRanger solution is also sold on a subscription basis based on the placement and number of installed cameras.basis.

We also generate revenues from CaseBuilder, a first-of-its-kind digital case management solution that automates the process by which key information is input, captured and used to identify associated gun crime cases leading to the identification of persons of interest. Subscriptions for CaseBuilder recognize revenue similar to our ShotSpotter and CrimeTracer products. Revenue is also generated through sales channel intermediaries that include enhanced services. The sales channel intermediary contract includes an enterprise CaseBuilder solution with supplemental professional services to integrate CaseBuilder with the customer’s existing systems that will remain in place.

In the first quarter of 2026, we implemented a reduction in force affecting approximately 15 employees to more effectively allocate our resources and to reduce operational costs. Restructuring expense related to the workforce reduction during the threesix months ended MarchJune 31,30, 2026, amounted to $0.5 million, consisting of cash expenditures for severance and other employee separation-related costs. We plan to keep our operating expenses relatively flat as compared to fiscal year 2025, which will be driven in part by planned cost reductions across our operating structure, offset by planned increases in research and development, largely to support efforts to execute our growth strategy

We are investing in engineering and data science resources to support further development of ResourceRouter, CrimeTracer, CaseBuilder, PlateRangerdevelop and SafePointe.improve our products across the SafetySmart platform. The focus of this effort will be in the areas of data science modeling, user experience, core application functionality and backend infrastructure improvements, including integration of ShotSpotter gunshot data to enhance forecasting of gun violence.

In the near term, we expect our general and administrative expenses to increasebe inrelatively both absolute dollars andflat as acompared percentageto offiscal revenuesyear as we grow our business.2025.

Comparison of Three Months Ended MarchJune 31,30, 2026 and 2025

The following table sets forth selected condensed consolidated statements of operations data for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The increase in total costs of $1.2$0.3 million was due primarily to an increase of $0.8$0.2 million due to an increase in information technology and facility costs and an increase of $0.1 million in cost of revenue due to the increase in our customer base and an increase of $0.4 million in impairment of property and equipment.

Sales and marketing expense decreased by $0.8$0.6 million, primarily due to decreased expense in commission expense related to brokerage services for the contract with the NYPD.New York City Police Department.

General and administrative expense increaseddecreased by $0.2 million, primarily due to anongoing increasecost inoptimization legal fees, offset by a decrease in stock-based compensation expense.initiatives.

The increase of $0.5 million in restructuring expense was due to a restructuring charge comprised of workforce reduction severance and other employee separation-related costs and restructuring costs.costs incurred in the first quarter of 2026.

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 valuation allowance against deferred tax assets, as applicable. A $29,000$0.1 million and $0.1$0.2 million in provision for income taxes was recorded in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Our operations have been financed primarily through net proceeds from debt financing arrangements and cash from operating activities. Our principal source of liquidity is cash and cash equivalents totaling $14.2$6.4 million and accounts receivable of $21.9$24.5 million as of MarchJune 31,30, 2026. On MarchJune 31,30, 2026, we had approximately $36.0 million of available borrowing capacity under our revolving credit facility, with $4.0 million outstanding on our line of credit.

There were no share repurchases during the three and six months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, $10.5 million remains available under the 2022 Repurchase Program.

We have a revolving credit facility under our Credit Agreement with Columbia Bank (“Columbia Bank Credit Agreement”) with a revolving credit commitment of $40.0 million and letter of credit sub-facility of $7.5 million that matures on October 15, 2027. Any amounts outstanding under the letter of credit sub-facility reduce the amount available for the Company to borrow under the revolving facility. The revolving loan facility is for general working capital purposes. Our available credit facility as of MarchJune 31,30, 2026 was $36.0 million. On MarchJune 31,30, 2026, there was $4.0 million outstanding on our line of credit. The Columbia Bank Credit Agreement subjects us to certain restrictive and financial covenants. We are in compliance with all the covenants under the Columbia Bank Credit Agreement as of MarchJune 31,30, 2026.

Comparison of ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

Our net loss and cash flows provided by (used in) operating activities are significantly influenced by our increase in headcount to support our growth, increase in legal expenses, outside services fees, sales and marketing expenses and our ability to bill and collect in a timely manner.

Net cash providedused byin operating activities increased by $0.3$5.9 million during the threesix months ended MarchJune 31,30, 2026 resulting in net cash providedused byin operating activities of $0.2$7.3 million compared to net cash used in operating activities of $0.1$1.4 million during the same period of 2025. This was primarily due to an increase in net loss of $7.2 million, a $7.1 million increase in deferred revenue, a decrease in non-cash activities of $2.2 million and a decrease of $11.0$0.2 million accounts receivable collections and a $1.2 million decrease in prepaid and other assets, offset by aan $4.7increase of $9.5 million increase in deferredaccounts revenue,receivable and a $1.5$1.3 million increase in accrued expenses and other liabilitiesliabilities, andcompared ato $0.1the millionprior increasecomparative in accounts payable invoicing.period.

Investing activities used $1.7$2.4 million in the threesix months ended MarchJune 31,30, 2026. This was primarily driven by investments in property and equipment installed for our solutions in customer coverage areas. Investing activities used $0.9$2.3 million in the threesix months ended MarchJune 31,30, 2025, for investments in property and equipment installed for our solutions in customer coverage areas.

Financing activities includes net proceeds from theour employee stock purchase plan and exercise of stock options, offset by payments for repurchases of our common stock.

Financing activities provided cash of $0.2 million in the threesix months ended MarchJune 31,30, 2026 from our employee stock purchase plan. Financing activities used $0.6 million in the six months ended June 30, 2025 reflectwhich reflects payment of $0.5$1.0 million for repurchases of our common stock.stock, offset by proceeds of $0.4 million from our employee stock purchase plan.

Our critical accounting estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025 (our “2025 Annual Report on Form 10-K”) and the notes to the audited consolidated financial statements appearing in our 2025 Annual Report on Form 10-K, filed with the SEC on March 30, 2026. As of MarchJune 31,30, 2026, there have been no material changes to our critical accounting policies and estimates from those disclosed in our 2025 Annual Report on Form 10-K.