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SoundHound Misstates Net Loss Second Consecutive Year

Artificial intelligence firm understated its net loss by more than $5.3 million over multiple periods, suggests none of its accounts can be trusted.

March 18, 2024

SoundHound AI, Inc. (SOUN), a developer of artificial intelligence (AI) voice assistants, has misstated its net loss for the second time in as many years.

The company botched the accounting for its equity line of credit (ELOC), the classification of lender fees and allocation of warrants in connection with its term loan, and incorrectly recorded in-kind dividends for its Series A preferred stock.

The accounting errors resulted in two inaccurate quarterly reports in 2023 and an inaccurate annual filing in 2022 in which SoundHound:

—Understated net loss to common shareholders by $2.25 million, or 10.26% in the quarter ended June 30, 2023
—Understated net loss to common shareholders by $1.74 million, or 6.61% in the quarter ended March 31, 2023
—Understated net loss to common shareholders by $$1.34 million, or 1.16% for the year ended December 31 2022

SoundHound says the errors are not material and will not correct inaccurate prior filings.

The corrections were made in the company’s latest annual report which was not filed on time due to the identification of control deficiencies:

"...related to substantially all accounts and disclosures."

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