Marin Software (MRIN) 10-K/A 2023 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2023

OR

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-35838

Marin Software Incorporated

(Exact name of registrant as specified in its charter)

Delaware	20-4647180
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

149 New Montgomery Street, 4th Floor

San Francisco, California, 94105

(Address of principal executive offices)

(415) 399-2580

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	MRIN	The Nasdaq Capital Market

Securities registered pursuant to section 12(g) of the Act:

Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Based on the closing price of the registrant’s Common Stock on The Nasdaq Global Market of $0.59 on the last business day of the registrant’s most recently completed second fiscal quarter, which was June 30, 2023, the aggregate market value of its shares held by non-affiliates was approximately $9.1 million. Shares of the registrant’s Common Stock held by each executive officer and director were excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 15, 2024, there were approximately 18,067,139 shares of the registrant’s Common Stock outstanding.

EXPLANATORY NOTE

Marin Software Incorporated (together with its subsidiaries, “Marin,” “our,” or the "Company") is filing this Amendment No. 1 on Form 10-K/A (this "Form 10-K/A") to amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, initially filed with the Securities and Exchange Commission (the "SEC") on February 23, 2024 (the “Original Filing”). This Form 10-K/A amends Item 15 of Part IV of the Original Filing for an immaterial typographical error included in Note 1. Organization and Summary of Significant Accounting Policies.

This Form 10-K/A consists solely of the cover page, this explanatory note, Part II. Item 8. “Financial Statements and Supplementary Data” in its entirety, Part IV. Item 15. “Exhibits and Financial Statement Schedules” in its entirety, the signature page, and the new certifications from the Company’s Principal Executive Officer and Principal Financial Officer.

This Form 10-K/A speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing. This Form 10-K/A does not modify or update in any way the disclosures made in the Original Filing, except as described above, and should be read in conjunction with the Original Filing and with the Company’s subsequent filings with the SEC.

2

MARIN SOFTWARE INCORPORATED

TABLE OF CONTENTS

		Page
PART II.		4
Item 8.	Financial Statements and Supplementary Data	4
PART IV.		5
Item 15.	Exhibits and Financial Statement Schedules	5
Signatures		28

3

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information in response to this item is included in our consolidated financial statements, together with the report thereon of Grant Thornton LLP, in Item 15 of this Form 10-K/A under the heading “Exhibits, Financial Statement Schedules,” and in Item 7 of the Original Filing under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

4

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1) Financial Statements

The following financial statements are presented in response to Part II, Item 8, under the heading “Financial Statements and Supplementary Data”:

The supplementary financial information required by Item 8 is included in Part II, Item 7 of the Original Filing under the heading “Quarterly Results of Operations Data,” which is incorporated herein by reference.

(2) Financial Statement Schedules

All schedules are omitted because they are not applicable, not required or the information is included in the accompanying consolidated financial statements or notes thereto.

(3) Exhibits

		Incorporated by Reference
Exhibit Number	Description of Document	Form	File No.	Exhibit	Filing Date	Filed Herewith
1.1	Equity Distribution Agreement dated August 2, 2021, by and between Marin Software Incorporated and JMP Securities LLC.	8-K	001-35838	1.3	8/3/2021
2.1	Asset Purchase Agreement by and among the Registrant and SharpSpring, Inc. dated November 21, 2019.	8-K	001-35838	99.1	11/21/2019
3.1	Restated Certificate of Incorporation.	10-Q	001-35838	3.1	5/9/2013
3.2	Restated Bylaws.	8-K	001-35838	3.1	3/22/2022
3.3	Certificate of Amendment to Certificate of Incorporation.	8-K	001-35838	3.1	10/5/201717
4.1	Form of Common Stock Certificate.	S-1/A	333-186669	4.1	3/15/2013
4.2	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.	10-K	001-35838	4.2	3/23/2020
10.1	Form of Indemnification Agreement.	10-K	001-35838	10.1	3/1/2019
10.2#	2006 Equity Incentive Plan and forms of stock option agreement and stock option exercise agreement.	S-1	333-186669	10.2	2/13/2013
10.3#	2013 Equity Incentive Plan and forms of stock option agreement, stock option exercise agreement, restricted stock agreement, and RSU award agreement.	S-1/A	333-186669	10.3	3/4/2013
10.4#	2013 Employee Stock Purchase Plan and form of subscription agreement.	S-1/A	333-186669	10.4	3/4/2013
10.5#	Form of Severance and Change in Control Agreement between the Registrant and each of the executive officers.	S-1/A	333-186669	10.9	3/11/2013
10.6#	Executive Bonus Compensation Plan.	10-K	001-35838	10.11	2/20/2015
10.7#	Description of Director Compensation Program.	10-K	001-35838	10.9	2/24/2022
10.8#	Transition and Separation Agreement, dated as of September 14, 2015, by and between the Registrant and Christopher A. Lien.	10-Q	001-35838	10.4	11/5/2015
10.9#	Offer Letter, dated as of August 23, 2016, by and between the Registrant and Christopher A. Lien.	10-Q	001-35838	10.1	11/9/2016
10.10†	Revenue Share Agreement, dated December 11, 2019, by and between the Registrant and Google LLC.	10-K	001-35838	10.16	3/14/2019
10.11#	Offer Letter, dated August 23, 2016, by and between the Registrant and Wister Walcott.	10-K	001-35838	10.17	3/14/2019

5

10.12#	Offer Letter, dated December 5, 2019, by and between the Registrant and Robert Bertz.	10-K	001-35838	10.18	3/23/2020
10.13#	Amended and Restated Severance and Change in Control Agreement, dated January 28, 2021, by and between the Registrant and Robert Bertz.	10-K	001-35838	10.17	2/26/2021
10.14	Amendment No. 1 to Google Revenue Share Agreement, dated as of March 17, 2020, by and between the Registrant and Google LLC.	10-K	001-35838	10.20	3/23/2020
10.15#	Form of Waiver under Change in Control and Severance Agreement	8-K	001-35838	99.1	5/21/2020
10.16†	Revenue Share Agreement entered into as of September 17, 2021 by and between Google and Marin Software Incorporated.	10-Q	001-35838	10.21	11/4/2021
10.17#	Amended and Restated 2013 Equity Incentive Plan.	10-Q	001-35838	10.1	5/4/2023
10.18#	Forms of stock option agreement and restricted stock unit agreement pursuant to the Amended and Restated 2013 Equity Incentive Plan.	S-8	333-273818	4.6	8/8/2023
10.19#	Amended and Restated 2013 Employee Stock Purchase Plan and form of subscription agreement.	10-Q	001-35838	10.2	5/4/2023
10.20#	Form of subscription agreement pursuant to the Amended and Restated 2013 Employee Stock Purchase Plan.	S-8	333-273818	4.8	8/8/2023
10.21#	Compensation Recovery Policy	10-Q	001-35838	10.3	5/4/2023
21.1	Subsidiaries of the Registrant.	10-K	001-35838	21.1	2/23/2024
23.1	Consent of Grant Thornton LLP, independent registered public accounting firm.	10-K	001-35838	23.1	2/23/2024
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	Inline XBRL Instance Document	10-K	001-35838	101.INS	2/23/2024
101.SCH	Inline XBRL Taxonomy Schema Linkbase Document	10-K	001-35838	101.SCH	2/23/2024
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document	10-K	001-35838	101.CAL	2/23/2024
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document	10-K	001-35838	101.DEF	2/23/2024
101.LAB	Inline XBRL Taxonomy Labels Linkbase Document	10-K	001-35838	101.LAB	2/23/2024
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document	10-K	001-35838	101.PRE	2/23/2024
104	Cover Page Interactive Date File (formatted as Inline XBRL)					X

* As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Form 10-K/A and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of the Registrant under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

# Represents a management contract or compensatory plan.

† Confidential treatment has been granted for portions of this exhibit pursuant to Rule 24b-2 promulgated under the Exchange Act. These portions have been omitted and submitted separately to the Securities and Exchange Commission.

6

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Marin Software Incorporated

 

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Marin Software Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a net loss of $22 million during the year ended December 31, 2023, and as of that date, the Company had an accumulated deficit of approximately $344 million and negative operating cash flows. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2018.

San Jose, California
February 23, 2024

7

Marin Software Incorporated

Consolidated Balance Sheets

(in thousands, except per share data)

	December 31,
	2023			2022
Assets:
Current assets:
Cash and cash equivalents	$	11,363		$	27,957
Accounts receivable, net		3,864			4,521
Prepaid expenses and other current assets		1,548			2,016
Total current assets		16,775			34,494
Property and equipment, net		120			3,213
Right-of-use assets, operating leases		1,912			3,844
Other non-current assets		508			533
Total assets	$	19,315		$	42,084
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	664		$	1,011
Accrued expenses and other current liabilities		2,099			3,513
Operating lease liabilities		1,518			1,645
Total current liabilities		4,281			6,169
Operating lease liabilities, non-current		394			2,199
Other long-term liabilities		1,001			1,002
Total liabilities		5,676			9,370
Commitments and contingencies (Note 11)
Stockholders' equity:
Convertible preferred stock, $0.001 par value - 10,000 shares authorized, no shares issued and outstanding at December 31, 2023 and 2022, respectively		—			—
Common stock, $0.001 par value - 142,857 shares authorized, 18,064 and 17,226 shares issued and outstanding at December 31, 2023 and 2022, respectively		18			17
Additional paid-in capital		358,869			355,996
Accumulated deficit		(344,251	)		(322,334	)
Accumulated other comprehensive loss		(997	)		(965	)
Total stockholders' equity		13,639			32,714
Total liabilities and stockholders' equity	$	19,315		$	42,084

The accompanying notes are an integral part of these consolidated financial statements.

8

Marin Software Incorporated

Consolidated Statements of Comprehensive Loss

(in thousands, except per share data)

	Years Ended December 31,
	2023			2022
Revenues, net	$	17,731		$	20,019
Cost of revenues		11,635			12,795
Gross profit		6,096			7,224
Operating expenses:
Sales and marketing		6,520			6,997
Research and development		10,235			11,832
General and administrative		8,871			10,396
Impairment loss on long-lived assets		3,276			—
Total operating expenses		28,902			29,225
Loss from operations		(22,806	)		(22,001	)
Other income, net		739			4,079
Loss before benefit from income taxes		(22,067	)		(17,922	)
Income tax expense (benefit), net		(150	)		305
Net loss		(21,917	)		(18,227	)
Foreign currency translation adjustments		(32	)		79
Comprehensive loss	$	(21,949	)	$	(18,148	)
Net loss per share available to common stockholders, basic and diluted	$	(1.24	)	$	(1.15	)
Weighted-average shares used to compute net loss per share available to common stockholders, basic and diluted		17,656			15,891

The accompanying notes are an integral part of these consolidated financial statements.

9

Marin Software Incorporated

Consolidated Statements of Stockholders’ Equity

(in thousands)

											Accumulated
					Additional						Other			Total
	Common Stock				Paid-In			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital			Deficit			Loss			Equity
Balances at December 31, 2021		15,532	$	15	$	351,394		$	(304,107	)	$	(1,044	)	$	46,258
Issuance of common stock through at-the-market offering, net of offering costs of $95 (Note 10)		1,073		1		1,332			—			—			1,333
Issuance of common stock from vesting of restricted stock units (Note 3)		594		—		—			—			—			—
Tax withholding related to vesting of restricted stock units		—		—		(434	)		—			—			(434	)
Issuance of common stock under employee stock purchase plan		27		1		36			—			—			37
Stock-based compensation expense		—		—		3,668			—			—			3,668
Net loss		—		—		—			(18,227	)		—			(18,227	)
Foreign currency translation adjustments		—		—		—			—			79			79
Balances at December 31, 2022		17,226		17		355,996			(322,334	)		(965	)		32,714
Issuance of common stock from vesting of restricted stock units (Note 3)		825		1		—			—			—			1
Tax withholding related to vesting of restricted stock units		—		—		(238	)		—			—			(238	)
Issuance of common stock under employee stock purchase plan		13		—		6			—			—			6
Stock-based compensation expense		—		—		3,105			—			—			3,105
Net loss		—		—		—			(21,917	)		—			(21,917	)
Foreign currency translation adjustments		—		—		—			—			(32	)		(32	)
Balances at December 31, 2023		18,064	$	18	$	358,869		$	(344,251	)	$	(997	)	$	13,639

The accompanying notes are an integral part of these consolidated financial statements.

10

Marin Software Incorporated

Consolidated Statements of Cash Flows

(in thousands)

	Years Ended December 31,
	2023			2022
Operating activities:
Net loss	$	(21,917	)	$	(18,227	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		19			447
Amortization of internally developed software		1,701			1,810
Amortization of right-of-use assets		1,528			2,832
Amortization of deferred costs to obtain and fulfill contracts		366			352
Forgiveness of Paycheck Protection Program loan		—			(3,117	)
Impairment on long-lived assets		3,276			—
Loss on disposals of property and equipment and right-of-use assets		3			28
Unrealized foreign currency losses		46			80
Stock-based compensation related to equity awards		3,006			3,555
Provision for bad debts		(414	)		16
Deferred income tax benefits		(70	)		48
Changes in operating assets and liabilities
Accounts receivable		1,037			73
Prepaid expenses and other assets		183			(102	)
Accounts payable		(353	)		31
Accrued expenses and other liabilities		(1,466	)		(2,786	)
Operating lease liabilities		(1,528	)		(3,177	)
Net cash used in operating activities		(14,583	)		(18,137	)
Investing activities:
Purchases of property and equipment		—			(24	)
Capitalization of internally developed software		(1,807	)		(1,740	)
Net cash used in investing activities		(1,807	)		(1,764	)
Financing activities:
Proceeds from issuance of common shares through at-the-market offering, net of offering costs		—			1,333
Repayment of Paycheck Protection Program loan		—			(203	)
Employee taxes paid for withheld shares upon equity award settlement		(206	)		(424	)
Proceeds from employee stock purchase plan, net		(3	)		34
Net cash (used in)/provided by financing activities		(209	)		740
Effect of foreign exchange rate changes on cash and cash equivalents		5			61
Net decrease in cash and cash equivalents		(16,594	)		(19,100	)
Cash and cash equivalents:
Beginning of year		27,957			47,057
End of year	$	11,363		$	27,957
Supplemental disclosures of other cash flow information:
Cash paid for (received from) income taxes		85		$	168
Supplemental disclosures of non-cash investing and financing activities:
Forgiveness of Paycheck Protection Program loan		—		$	3,117
Issuance of common stock under employee stock purchase plan	$	6		$	37

The accompanying notes are an integral part of these consolidated financial statements.

11

Marin Software Incorporated

Notes to Consolidated Financial Statements

(dollars and share numbers in thousands, except per share data)

1. Organization and Summary of Significant Accounting Policies

Organization

Marin Software Incorporated ("Marin", "Marin Software", or the “Company”) was incorporated in Delaware in March 2006. The Company provides enterprise marketing software for advertisers and agencies to integrate, align and amplify their digital advertising spend across the web and mobile devices. Offered as a unified software-as-a-service (“SaaS”) advertising management solution for search, social and eCommerce advertising, the Company’s platform helps digital marketers convert precise audiences, improve financial performance and make better decisions.

References to “2023” and “2022” shall mean the years ended December 31, 2023 and 2022, respectively. All amounts presented in these notes to the consolidated financial statements are in thousands, except where noted.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Reclassifications

Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company is subject to uncertainties such as the impact of future events, economic and political factors and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations and if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Significant estimates and assumptions by management affect the allowances for doubtful accounts and customer revenue credits, and the accounting for income taxes.

Liquidity and Going Concern

The Company has incurred significant losses in each fiscal year since its incorporation in 2006, and management expects such losses to continue in the future. The Company incurred net losses of $21,917 and $18,227 in 2023 and 2022, respectively. As of December 31, 2023, the Company had an accumulated deficit of $344,251. The Company had cash and cash equivalents of $11,363 as of December 31, 2023. Historically, the Company has relied primarily on the sale of its capital stock to fund operating activities. Management expects to incur additional losses and experience negative operating cash flows into the foreseeable future.

In July 2023, the Company commenced a restructuring plan that included a global reduction-in-force and other cost saving actions to reduce its expenses (the "2023 Restructuring Plan"). The 2023 Restructuring Plan resulted in the reduction of the Company's global employees by approximately 64 full-time employees during the second half of 2023, reducing its total headcount by approximately 37% from 172 as of June 30, 2023 to 108 as of December 31, 2023. As of December 31, 2023, the 2023 Restructuring Plan has been substantially completed.

The Company’s ability to achieve its business objectives, and to continue to meet its obligations, is dependent upon maintaining a certain level of liquidity, which is impacted by several factors, such as its ability to manage its cash flows, including the effectiveness of cost saving measures that the Company has implemented in the second half of 2023, its ability to maintain its strategic partnerships, its ability to increase new bookings, the extent of customer acceptance, retention and use of its MarinOne platform, and general macroeconomic conditions such as inflation or the extent and duration of any recession. Although the Company has pursued, and may continue to pursue, additional sources of liquidity, including additional equity and debt financing, there is no assurance that any additional financing will be available on acceptable terms, or at all. Failure to manage its cash flows, improve customer retention rates, or raise additional capital would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

12

Based on the funds the Company has available as of the date of the filing of this Form 10-K/A and its history of recurring losses and negative operating cash flows, there is substantial doubt raised about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is substantially dependent upon its ability to achieve its intended business objectives. If the Company is unable to achieve its intended business objectives, it is probable that the Company may be required to initiate further cost savings activities, extend payment terms with suppliers, liquidate assets where possible, or wind-up operations. These actions could materially impact the Company’s business, results of operations and future prospects. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern for one year after the filing date of the accompanying consolidated financial statements.

The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the Company’s uncertainty related to its ability to continue as a going concern. These adjustments could materially impact the Company’s accompanying consolidated financial statements.

In August 2021, the Company filed a new shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on August 19, 2021 and provides that the Company may offer its common stock, preferred stock, debt securities, warrants, subscription rights and units having an aggregate offering price of up to $100,000. As part of this new 2021 registration statement, the Company entered into a third equity distribution agreement with JMP Securities and established a new $50,000 “at-the-market” securities offering facility pursuant to which it may be able to issue and sell shares of its common stock. During the year ended December 31, 2022, the Company sold 1.1 million shares of its common stock under this new equity distribution agreement and received proceeds of approximately $1.3 million, net of offering costs of $0.1 million, at a weighted average sales price of $1.33 per share. In accordance with the SEC’s Instruction I.B.6 of Registration Statement on Form S-3, the Company adjusted the maximum aggregate market value of the securities that may be sold pursuant to this current "at-the-market" securities offering facility from $50,000 to approximately $22,800 based on the market capitalization of the Company on the date the Company filed its Annual Report on Form 10-K for the year ended December 31, 2021.

The Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s accompanying consolidated financial statements.

Revenue Recognition

The Company generates revenues principally from subscriptions either directly with advertisers or with advertising agencies to its platform for the management of search, social and eCommerce advertising. The Company also generates revenues from strategic agreements with certain leading publishers. Under these strategic agreements, the Company receives consideration based on a percentage of the search advertising spend that customers manage on its platform. Revenues are recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Refer to Note 2 for further discussion on the Company's revenues.

Cost of Revenues

Cost of revenues primarily consists of costs related to hosting the Company’s cloud-based platform, providing implementation and ongoing customer support, data communications expenses, salaries and benefits of operations and support personnel, software license fees, costs associated with website development activities, indirect overhead, amortization expense associated with capitalized internally developed software and property and equipment depreciation.

Stock-Based Compensation Expense

Stock-based compensation expense is measured at grant date based on the fair value of the award and is expensed on a straight-line basis over the requisite service period. Restricted stock units (“RSUs”) are measured based on the fair market values of the underlying common stock on the dates of grant. Shares of common stock are issued on the vesting dates. Fair values of stock option awards are determined on the date of grant using the Black-Scholes option-pricing model. In applying this option-pricing model, the Company’s determination of the fair value of the stock option award on the date of grant is affected by the Company’s fair value of its common stock, as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility, actual and projected stock option exercise behaviors and risk-free interest rate.

For stock option and RSU awards with time-based vesting, the Company recognizes stock-based compensation expense over the requisite service period using the straight-line method, based on awards ultimately expected to vest. The Company recognizes forfeitures on stock options and RSU awards as they occur. Refer to Note 3 for further information.

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Impairment of Long-Lived Assets

The Company evaluates long-lived assets for potential impairment whenever adverse events or changes in circumstances or business climate indicate that expected undiscounted future cash flows related to such long-lived assets may not be sufficient to support the net book value of such assets. An impairment loss is recognized only if the carrying value of the long-lived asset, or asset group, is not recoverable and exceeds its fair value. The carrying value of the long-lived asset, or asset group, is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset, or asset group. Refer to Note 7 for further information.

Research and Development

Research and development costs are expensed as incurred, except for certain internal software development costs, which may be capitalized as noted above. Research and development costs consist of personnel costs, including salaries, stock-based compensation expense, benefits and bonuses, as well as non-personnel costs such as professional fees payable to third-party development resources, amortization of intangible assets and allocated overhead costs.

Advertising and Promotion

Advertising and promotional costs are expensed as incurred and included in sales and marketing expense in the accompanying consolidated statements of comprehensive loss. Advertising and promotion expense totaled $909 and $653 for 2023 and 2022, respectively, included in sales and marketing on the consolidated statements of comprehensive loss.

Employee Benefit Plans

The Company sponsors a 401(k) defined contribution plan (the "401(k) Plan") covering all employees in the United States and a statutorily required defined contribution pension plan (the "DCP Plan") covering all employees in the United Kingdom. The Company made contributions of $242 and $91 to the 401(K) Plan in 2023 and 2022, respectively, and contributions of $65 and $69 to the DCP Plan in 2023 and 2022, respectively.

Sales Taxes

Sales and other taxes collected from customers and remitted to governmental authorities are presented on a net basis and thus excluded from revenues.

Foreign Currency

For international subsidiaries whose functional currency is not the U.S. Dollar, the Company re-measures the monetary assets and liabilities of these subsidiaries to U.S. Dollars using rates of exchange in effect at the balance sheet date. Nonmonetary assets and liabilities are re-measured to U.S. Dollars using historical exchange rates, and other accounts are re-measured using average exchange rates in effect during each period presented. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss on the accompanying consolidated balance sheets, and related periodic movements are summarized as a line item in the consolidated statements of comprehensive loss.

The Company records net gains and losses resulting from foreign exchange transactions as a component of other income, net. Aggregate foreign currency gains (losses) included in determining net loss were $(137) and $(127) in 2023 and 2022, respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company accounts for uncertain tax positions using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes a liability for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The liability is adjusted in light of changing facts and circumstances, such as the outcome of a tax audit. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense, though such amounts were not material in 2023 or 2022. The Company does not expect that changes in the liability for uncertain tax positions for the next twelve months will have a material impact on the Company’s consolidated financial position or results of operations.

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Segment Reporting

The Company defines the term “chief operating decision maker” to be the Company's Chief Executive Officer. The Company's Chief Executive Officer reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating of financial performance. Accordingly, the Company has determined that it operates as a single reporting and operating segment.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity from the Company’s date of purchase of 90 days or less to be cash equivalents. Deposits held with financial institutions are likely to exceed the amount of insurance on these deposits. Cash equivalents consist of money market funds which are readily convertible into cash and have original maturity dates of less than three months from the date of their respective purchases. Cash equivalents were $10,548 and $26,645 as of December 31, 2023 and 2022, respectively.

Allowance for Credit Losses

The allowance for credit losses reflects the Company’s best estimate of probable losses inherent in the Company’s receivables portfolio determined by a forward-looking current expected credit loss model. The Company performs a regular review of its customers’ payment histories and associated credit risks and it generally does not require collateral from its customers. Certain contracts with advertising agencies contain sequential liability provisions, whereby the agency does not have an obligation to pay the Company until payment is received from the agency’s customers. In these circumstances, the Company evaluates the credit worthiness of the agency’s customers, in addition to the agency itself. The Company maintains an allowance for credit losses which reflects its best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. General reserves are maintained on a collective basis by considering factors such as historical experience, the age of the receivable balances, current economic conditions and a reasonable and supportable forecast of future economic conditions. The allowance for credit losses charges are included as a component of general and administrative expenses. The following are changes in the allowance for credit losses for the periods presented:

	Years Ended December 31,
	2023			2022
Balances at beginning of year	$	736		$	786
Addition to (reduction in) expense		29			16
Write-offs and other deductions		(264	)		(66	)
Balances at end of year	$	501		$	736

Revenue Credits

From time to time, the Company provides revenue credits to customers. These typically relate to customer disputes and billing adjustments and are recorded as a reduction of revenues, net. Reserves for these revenue credits are accounted for as variable consideration under authoritative revenue recognition guidance and are estimated based on historical credit activity. As of December 31, 2023 and 2022, the Company recorded an allowance for potential customer revenue credits in the amount of $12 and $110, respectively.

Fair Value of Financial Instruments

The Company’s financial instruments, including accounts receivable, accounts payable and accrued expenses are carried at cost, which approximates fair value because of the short-term nature of those instruments. Based on borrowing rates available to the Company and the Company’s credit risk profile, the carrying value of outstanding lease liabilities approximates fair value as well. The Company measures and reports certain financial assets at fair value on a recurring basis, including its investments in money market funds.

The fair value hierarchy prioritizes the inputs into three broad levels, which are:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, or substantially the full term of the financial instrument

Level 3 - Inputs are unobservable inputs based on the Company's assumptions

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Account balances measured at fair value on a recurring basis include the following as of the dates presented:

	December 31,
	2023						2022
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	10,548	$	—	$	—	$	26,645	$	—	$	—

The Company’s cash equivalents balance as of December 31, 2023 and 2022 consisted of money market funds that are classified as Level 1 financial instruments as they have active markets. The fair value of the Company’s money market funds approximated amortized cost and, as such, there were no unrealized gains or losses on money market funds as of December 31, 2023 and 2022.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and accounts receivable. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits. The Company has not experienced any loss relating to cash and cash equivalents in these accounts. The Company performs periodic credit evaluations of its customers and generally does not require collateral.

As of December 31, 2023 and 2022, accounts receivable from one long-term strategic agreement with Google, as described in Note 2, accounted for 46% and 40%, respectively, of the Company's total accounts receivable, net. Revenues, net from the same long-term strategic agreement accounted for 40% and 36% of total revenues, net for the years ended December 31, 2023 and 2022, respectively.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Major additions and improvements are capitalized while repairs and maintenance that do not extend the life of the asset are charged to operations as incurred. Depreciation and amortization expense is allocated to both cost of revenues and operating expenses.

Internally Developed Software

Costs incurred in the development phase are capitalized and amortized over the product’s estimated useful life, which is three years. The Company expenses all costs incurred that relate to planning and post implementation phases of development. Development phase costs generally include salaries and personnel costs and third-party contractor expenses associated with software development, configuration and coding. Capitalized costs related to internally developed software under development are treated as construction in progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. For 2023 and 2022, the Company capitalized $1,906 and $1,853 of costs related to internally developed software, respectively. Amortization of capitalized costs related to internally developed software was $1,701 and $1,810 for 2023 and 2022, respectively. As of December 31, 2023 and 2022, unamortized internally developed software costs, including construction in progress, totaled $3,276 and $3,071, respectively. Amortization of internally developed software is reflected in cost of revenues. Costs associated with minor enhancements and maintenance are expensed as incurred.

Leases

The Company has operating leases for space at a data center and for office space worldwide. New contractual arrangements are evaluated at inception to determine if the contract is or contains a lease. For any contracts that are or contain a lease, the Company determines the appropriate classification of each identified lease as operating or finance. For all identified leases, the Company records the related lease liabilities and right-of-use ("ROU") assets based on the future minimum lease payments over the lease term, which only includes options to renew the lease if it is reasonably certain that the Company will exercise that option. For leases with original terms of 12 months or less, the Company recognizes the lease expense as incurred and does not recognize lease liabilities and ROU assets.

Lease liabilities are measured based on the future minimum lease payments discounted over the lease term. The Company uses the discount rate implicit in the lease whenever that rate is readily determinable. For leases where no such rate is determinable, the Company uses its incremental borrowing rate, or the rate of interest that Company would have to pay to borrow an amount equal to the lease payments, on a collateralized basis over a similar term and in a similar economic environment. Current and non-current operating lease liabilities are presented on the consolidated balance sheet, while current finance lease liabilities are included in accrued expenses and other current liabilities, and non-current finance lease liabilities are included in other long-term liabilities on the consolidated balance sheets.

ROU assets are measured based on the associated lease liabilities, adjusted for any lease incentives such as tenant improvement allowances. ROU assets for operating leases are presented as non-current assets on the consolidated balance sheet, while ROU assets for finance leases are included within property and equipment, net. For operating leases, the Company recognizes the expense for lease payments on straight-line basis over the lease term. Refer to Note 8 for further discussion on the Company’s leases.

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Borrowings

The Company accounted for its Paycheck Protection Program ("PPP") Loan as debt under the guidance in Accounting Standards Codification 470, Debt. As such, the outstanding amount was reflected as a note payable in the Company’s consolidated balance sheets, the proceeds were reflected under financing activities in the Company’s consolidated statement of cash flows and interest expense was accrued and recognized in the Company’s statement of operations. An aggregate principal amount of $3,117 of the Loan was forgiven in January 2022 and the Company repaid the remaining outstanding balance of approximately $200 in February 2022. The forgiveness of a $3,117 of the PPP Loan amount in January 2022 was reflected as a gain on debt extinguishment in the Company’s statement of operations and as an adjustment to cash from operating activities in the Statements of Cash Flows. The $200 repayment was reflected as a financing activity in the Statements of Cash Flows. Refer to Note 9 for further information.

Recently Adopted Accounting Pronouncements

On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326), using the modified retrospective transition method. Upon adoption, the Company changed its impairment model to utilize a forward-looking current expected credit losses model in place of the incurred loss methodology for financial instruments measured at amortized cost, primarily the Company’s accounts receivable. The cumulative effect from adoption was immaterial to the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Effective

In November 2023, the Financial Standards Accounting Board ("FASB") issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280) ("ASU 2023-07"). ASU 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures (Topic 740) ("ASU 2023-09"). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

2. Revenues

Revenue Recognition

The Company determines revenue recognition through the following steps:

•

Identification of the contract, or contracts, with a customer;

•

Identification of the performance obligations in the contract;

•

Determination of the transaction price;

•

Allocation of the transaction price to the performance obligations in the contract; and

•

Recognition of revenue when, or as, the Company satisfies a performance obligation.

Subscriptions

The Company's subscription contracts provide advertisers with access to the Company's advertising management platform. Advertisers do not have the right to take possession of the software supporting the services at any time. These contracts are generally one year or less in length, though certain contracts extend up to two years. The subscription fee under most contracts consists of the greater of a minimum monthly platform fee or variable consideration based on the volume of advertising spend managed through the Company’s platform at the contractual percentage of spend. The variable portion generally includes tiered pricing, whereby the percentage of spend charged decreases as the value of advertising spend increases. Generally the tiered pricing resets monthly and is consistent throughout the contract term. The Company has concluded that this volume-based pricing approach does not constitute a future material right as the pricing tiers are consistent throughout the term of the contract and similar pricing is typically offered to similar classes of customers within the same geographical areas and markets. Certain subscription contracts consist of only a flat monthly platform fee. Subscription fees are generally invoiced on a monthly basis in arrears based on the actual amount of advertising spend managed on the platform. In certain limited circumstances, the Company will invoice an advertiser in advance for the contractual minimum monthly platform fee for a defined future period, which is typically three to 12 months.

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The Company’s subscription services comprise a single stand-ready performance obligation satisfied over time as the advertiser simultaneously receives and consumes the benefit from the Company’s performance. This performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress. Revenues derived from these arrangements are recognized over time using an output method based upon the passage of time as this provides a faithful depiction of the pattern of transfer of control. Fixed minimum monthly platform fees are recognized ratably over the contract term as the single performance obligation is satisfied. Variable fees are allocated to the distinct month of the series in which they are earned because the terms of the variable payments relate specifically to the outcome from transferring the distinct time increment (month) of service and because such amounts reflect the fees to which the Company expects to be entitled for providing access to the advertising management platform for that period, consistent with the allocation objective of authoritative revenue guidance under ASC 606.

Expected future revenues for subscription services related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2023 were as follows:

	Subscription Services Revenues
2024	$	1,015
2025		268
Total	$	1,283

The Company applies the optional exemption under ASC 606 and does not disclose the value of unsatisfied performance obligations on subscription contracts with an original term of one year or less. The amounts disclosed above as remaining performance obligations consist primarily of fixed or monthly minimum fees under contracts with an original expected duration of greater than one year. The amounts exclude estimates of variable consideration such as volume-based contracts, as well as anticipated renewals of contracts.

Strategic Agreements

The Company has entered into long-term strategic agreements with certain leading search publishers. Under these strategic agreements, the Company receives consideration based on a percentage of the search advertising spend that its customers manage on its platform. These strategic agreements are generally billed on a quarterly basis.

The majority of the Company’s strategic agreement revenue is concentrated in one revenue share agreement executed with Google. The first Google agreement was executed in December 2018, with an effective date of October 1, 2018 and expired in September 2021 (the “Original Google Revenue Share Agreement”). Under the Original Google Revenue Share Agreement, which constituted a single performance obligation, the Company was eligible to receive both fixed and variable revenue share payments based on a percentage of the search advertising spend that is managed through the Company’s platform. The Original Google Revenue Share Agreement required the Company to reinvest a specified percentage of these revenue share payments in its search technology platform to drive innovation. The performance obligation was expected to be satisfied ratably over the two-year contractual term using the output method based upon the passage of time, as Google simultaneously receives and consumes the benefit from the Company’s performance, which provides a faithful depiction of the pattern of transfer of control.

In September 2021, the Company entered into a New Revenue Share Agreement with Google, which agreement has a scheduled three-year term beginning on October 1, 2021 (the "New Google Revenue Share Agreement") and continuing through September 30, 2024. This agreement is similar to the Original Google Revenue Share Agreement in that the Company is eligible to receive fixed and variable revenue share payments based on a percentage of the search advertising spend that is managed through the Company’s platform and in that the Company is required to reinvest a specified percentage of these revenue share payments in its search technology platform to drive innovation. The Company expects to recognize revenues totaling approximately $5,363 for the year ending December 31, 2024, related to remaining performance obligations under this New Google Revenue Share Agreement.

The Company evaluates the total amount of variable revenue share payments expected to be earned from the New Google Revenue Share Agreement by using the most likely method, as it believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations and the Company's best judgment. The Company includes estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For the years ended December 31, 2023 and 2022, the Company recognized $7,150 as revenues from the New Google Revenue Share Agreement.

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Disaggregation of Revenues, net

Revenues, net by geographic area, based on the billing location of the customer, were as follows for the periods presented:

	Years Ended December 31,
	2023		2022
United States of America	$	14,213	$	15,867
United Kingdom		2,038		2,272
Other (1)		1,480		1,880
Total revenues, net	$	17,731	$	20,019

(1)

No individual country within the “Other” category accounted for 10% or more of revenues, net for any period presented.

Revenues, net by nature of services performed were as follows for the periods presented:

	Years Ended December 31,
	2023		2022
Subscriptions	$	10,585	$	12,722
Strategic agreements		7,146		7,297
Total revenues, net	$	17,731	$	20,019

Advertisers from outside of the United States represented 20% and 21% of total revenues for the years ended December 31, 2023 and 2022, respectively. The New Google Revenue Share Agreement accounted for approximately 40% and 36% for the years ended December 31, 2023 and 2022, respectively. Additionally, two customers accounted for approximately 24% of total revenues for the year ended December 31, 2023. No additional customers represented greater than 10% of the Company's revenues for the years ended December 31, 2023 and 2022.

Contract Balances

Accounts receivable, net

The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoice amount, net of any allowances for doubtful accounts and revenue credits. A receivable is recognized in the period the Company provides the underlying services or when the right to consideration is unconditional. Included in the balance of accounts receivable, net as of December 31, 2022 was $1,788, of unbilled receivables related to the New Google Revenue Share Agreement.

Customer advances

In certain situations, the Company receives cash payments from customers in advance of its performance of the underlying services. These advances from customers are included within accrued expenses and other current liabilities on the accompanying consolidated balance sheets.

Costs to Obtain and Fulfill Contracts

The Company capitalizes certain contract acquisition costs, consisting primarily of commissions and related payroll taxes, when customer contracts are signed. The Company also capitalizes certain contract fulfillment costs, consisting primarily of the portion of the payroll and fringe benefits of the Company’s professional services team that relates directly to performing on-boarding and integration services for new and existing customers (collectively, “deferred costs to obtain and fulfill contracts”).

The deferred costs to obtain and fulfill contracts are amortized over the expected period of benefit, which the Company has determined to be approximately 30 months. This expected period of benefit takes into consideration the duration of the Company’s customer contracts, historical contract renewal rates, the underlying technology and other factors. Amortization expense for deferred costs to obtain and fulfill contracts is included in sales and marketing expense and cost of sales, respectively, on the accompanying consolidated statements of comprehensive loss. There were no impairment losses related to costs capitalized in 2023 and 2022.

The Company classifies deferred costs to obtain and fulfill contracts as current or non-current based on the timing of when the related amortization expense is expected to be recognized. The current portion of these deferred costs is included in prepaid expenses and other current assets, while the non-current portion is included in other non-current assets on the accompanying consolidated balance sheets. Changes in the balances of deferred costs to obtain and fulfill contracts during the year ended December 31, 2023 were as follows:

	Deferred Costs to Obtain Contracts			Deferred Costs to Fulfill Contracts
Balances at December 31, 2022	$	344		$	131
Costs deferred		207			70
Amortization		(263	)		(103	)
Balances at December 31, 2023	$	288		$	98

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3. Stock-based Compensation

Stock-based Compensation Expense

Stock-based compensation expense was allocated as follows:

	Years Ended December 31,
	2023		2022
	(in thousands)
Cost of revenues	$	307	$	481
Sales and marketing		502		596
Research and development		825		996
General and administrative		1,372		1,482
	$	3,006	$	3,555

For stock-based awards granted by the Company, stock-based compensation cost is measured as of the grant date based on the fair value of the award and is subsequently expensed over the requisite service period. Stock-based compensation capitalized as internally developed software was $99 and $113 for 2023 and 2022, respectively.

Equity Award Plans

The Company may grant, or has granted, stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and stock bonuses under the following equity incentive plans:

2006 Plan

In April 2006, the Company’s Board of Directors (the “Board”) adopted and the stockholders approved the 2006 Stock Option Plan (“2006 Plan”), which provided for the grant of incentive and non-statutory stock options.

2013 Plan

In February 2013 the Board adopted and the stockholders approved the 2013 Equity Incentive Plan (“2013 Plan”), which became effective on March 21, 2013. At that time, the Company ceased to grant equity awards under the 2006 Plan. Under the 2013 Plan, 643 shares of common stock were originally reserved for issuance. Additionally, all reserved and unissued shares under the 2006 Plan were eligible for issuance under the 2013 Plan. The 2013 Plan authorized the award of incentive and non-statutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and stock bonuses to the Company’s employees, directors, consultants, independent contractors and advisors. On January 1 of each calendar year through 2023, the number of shares of common stock reserved under the 2013 Plan automatically increased by an amount equal to 5% of the total outstanding shares as of the immediately preceding December 31, or such lesser number of shares as determined by the Board. Pursuant to terms of the 2013 Plan, the shares available for issuance increased by 861 shares of common stock on January 1, 2023. The 2013 Plan has expired in accordance with its terms and the Company has ceased granting awards under this plan.

Amended and Restated Plan

On March 24, 2023, the Board approved the Amended and Restated 2013 Equity Incentive Plan ("Amended and Restated Plan") under which incentive and non-statutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and stock bonuses may be awarded to the Company’s employees, directors, consultants, independent contractors and advisors. Under the Amended and Restated Plan, 425 shares of common stock have been reserved for issuance. Additionally, shares that cease to be subject to equity awards that have been granted under the 2006 Plan and the 2013 Plan are eligible for issuance under the Amended and Restated Plan. On January 1 of each calendar year through 2033, the number of shares of common stock reserved under the Amended and Restated Plan will automatically increase by an amount equal to 5% of the total outstanding shares as of the immediately preceding December 31, or such lesser number of shares as determined by the Board. The Company's stockholders approved the Amended and Restated Plan at the Company's 2023 annual stockholder meeting on May 25, 2023.

Stock Options

Under the 2006 Plan, the 2013 Plan and the Amended and Restated Plan, the term of options granted may not exceed ten years. Unless the terms of an optionee's stock option agreement provide otherwise, if an optionee's service relationship with the Company, or any of its affiliates, ceases for any reason other than disability or death, the optionee may exercise the vested portion of any options for three months after the date of such termination. If an optionee's service relationship with the Company, or any of its affiliates, ceases due to disability or death (or an optionee dies within a certain period following cessation of service), the optionee or a beneficiary may exercise any vested options for a period of 12 months. In no event, however, may an option be exercised beyond the expiration of its term.

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A summary of stock option activity under the 2006 Plan and the 2013 Plan is as follows:

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contract Term (in Years)		Aggregate Intrinsic Value
Balance at December 31, 2021		383		$	23.23		4.85	$	—
Options forfeited and cancelled		(46	)		49.87		—
Balance at December 31, 2022		337		$	19.59		4.45	$	—
Options forfeited and cancelled		(16	)		76.91		—
Balance at December 31, 2023		321		$	16.78		3.63	$	—
Options exercisable as of December 31, 2023		321		$	16.78		3.63
Options vested as of December 31, 2023		321			16.78		3.63
Options vested and expected to vest as of December 31, 2023		321			16.78		3.63

There were no grants or exercises of stock options in 2023 or 2022. As of December 31, 2023, there was no unrecognized compensation cost related to options. The total estimated fair value of options vested was $31 during 2023 and 2022, respectively.

RSUs

A summary of RSU activity under the 2013 Plan and Amended and Restated Plan is as follows:

	RSUs Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value Per Unit
Granted and unvested at December 31, 2021		1,542		$	4.60
RSUs granted		1,142			1.90
RSUs vested		(594	)		3.72
RSUs cancelled and withheld to cover taxes		(276	)		5.91
Granted and unvested at December 31, 2022		1,814		$	2.99
RSUs granted		1,482			1.23
RSUs vested		(825	)		2.97
RSUs cancelled and withheld to cover taxes		(746	)		2.99
Granted and unvested at December 31, 2023		1,725		$	1.48

As of December 31, 2023, there was $1,431 of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.2 years. The Company uses the fair market value of the underlying common stock on the dates of grant to determine the fair value of RSUs.

Employee Stock Purchase Plan

In February 2013, the Board and stockholders approved the 2013 Employee Stock Purchase Plan (“2013 ESPP”), under which 143 shares of common stock were originally reserved for issuance. The 2013 ESPP became effective on March 22, 2013. The 2013 ESPP generally provides for six-month purchase periods ending in May and November and the purchase price for shares of common stock purchased under the 2013 ESPP is 85% of the lesser of the fair market value of the common stock on (1) the first trading day of the applicable offering period and (2) the last trading day of each purchase period in the applicable offering period. On January 1 of each calendar year following the first offering date, the number of shares reserved under the 2013 ESPP automatically increased by an amount equal to 1% of the total outstanding shares as of immediately preceding December 31, but not to exceed 100 shares. Pursuant to terms of the 2013 ESPP, the shares available for issuance increased by 100 shares on January 1, 2023. The 2013 ESPP has expired in accordance with its terms.

On March 24, 2023, the Board approved the Amended and Restated 2013 Employee Stock Purchase Plan ("Amended and Restated ESPP") which provides for six-month purchase periods ending in May and November of each year with the purchase price for each share of common stock purchased being 85% of the lesser of the fair market value of the common stock on (1) the first trading day of the applicable offering period and (2) the last trading day of each purchase period in the applicable offering period. Under the Amended and Restated ESPP, 432 shares of common stock have been reserved for issuance. The Company's stockholders approved the Amended and Restated ESPP at the Company's 2023 annual stockholder meeting on May 25, 2023.

The Company estimates the fair value of purchase rights under the 2013 ESPP and Amended and Restated ESPP using the Black-Scholes valuation model. The fair value of each purchase right under the 2013 ESPP and Amended and Restated ESPP is estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with assumptions substantially similar to those used for the valuation of stock option awards, with the exception of the expected life. The expected life is estimated to be six months, which is consistent with the purchase periods under the 2013 ESPP and Amended and Restated ESPP.

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4. Restructuring Activities

2023 Restructuring Plan

In the third quarter of 2023, the Company commenced the 2023 Restructuring Plan, which included a global reduction-in-force and other cost saving actions to reduce its operating costs, resulting in the reduction of the Company’s global employees by approximately 64 employees reducing its total headcount by approximately 37% from 172 as of June 30, 2023 to 108 as of December 31, 2023. As of December 31, 2023, the Company had substantially completed the 2023 Restructuring Plan and had no restructuring liability outstanding related to the 2023 Restructuring Plan.

During the year ended December 31, 2023, the Company recorded $1,821 of restructuring-related expenses in connection with the 2023 Restructuring Plan in the accompanying consolidated statements of comprehensive loss, of which $837 was included in research and development, $673 was included in cost of revenues, $189 was included in general and administrative and $122 was included in sales and marketing.

2020 Restructuring Plan

In the third quarter of 2020, the Company commenced the implementation of a restructuring and reduction-in-force plan to reduce the Company’s operating costs and address the impact of the COVID-19 pandemic, which ultimately resulted in the reduction of the Company’s global workforce by approximately 60 employees, approximately half of which were located outside of the United States. The majority of the planned workforce reductions were substantially completed during 2020.

For the year ended December 31, 2022, the Company recorded $266 of restructuring-related expenses in connection with the 2020 Restructuring Plan in the accompanying consolidated statements of comprehensive loss, of which $171 was included in research and development, $78 was included in general and administrative and $17 was included in cost of revenues.

5. Net Loss Per Share Available to Common Stockholders

Basic net loss per share of common stock is calculated by dividing the net loss available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of shares of common stock, excluding common stock subject to repurchase, and, if dilutive, potential shares of common stock outstanding during the period. Basic and diluted net loss per share was the same for all periods presented, as the impact of all potentially dilutive securities outstanding was anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share:

	Years Ended December 31,
	2023			2022
Net loss available to common stockholders	$	(21,917	)	$	(18,227	)
Weighted average number of shares, basic and diluted		17,656			15,891
Basic and diluted net loss per common share available to common stockholders	$	(1.24	)	$	(1.15	)

The following table presents the potential shares of common stock outstanding that were excluded from the computation of diluted net loss per share available to common stockholders for the periods presented because including them would have been anti-dilutive:

	Years Ended December 31,
	2023		2022
Options to purchase common stock		321		337
Unvested RSUs		1,725		1,814
Total		2,046		2,151

6. Income Taxes

The components of the Company’s loss before provision for (benefit from) income taxes are as follows:

	Years Ended December 31,
	2023			2022
United States of America	$	(21,851	)	$	(18,455	)
International		(216	)		533
Loss before provision for (benefit from) income taxes	$	(22,067	)	$	(17,922	)

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The components of the provision for (benefit from) income taxes were as follows:

	Years Ended December 31,
	2023			2022
Current income tax provision:
State	$	10		$	25
Foreign		(90	)		232
Total current income tax provision		(80	)		257
Deferred income tax benefit:
Foreign		(70	)		48
Total deferred income tax benefit		(70	)		48
Provision for (benefit from) income taxes	$	(150	)	$	305

The differences in the total provision for (benefit from) income taxes that would result from applying the 21% federal statutory rate in 2023 and 2022 to the loss before provision for income taxes and the reported provision for income taxes were as follows:

	Years Ended December 31,
	2023			2022
Tax benefit at U.S. statutory rate	$	(4,634	)	$	(3,763	)
Change in valuation allowance		2,131			6,009
Stock-based compensation		461			(6	)
Uncertain tax positions		(31	)		(32	)
State income taxes, net of federal benefit		(637	)		(1,288	)
Foreign income and withholding taxes		147			8
Other permanent differences		154			81
Expired other credits		2,269			—
PPP loan forgiveness		—			(667	)
Provision to return adjustments		(10	)		(37	)
Provision for (benefit from) income taxes	$	(150	)	$	305

Major components of the Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:

	December 31,
	2023			2022
Non-current deferred tax assets:
Net operating loss	$	41,327		$	37,783
Research and development credits		9,820			9,820
Other credits		1,292			4,165
Operating lease liabilities		516			1,037
Stock-based compensation		983			1,164
Property and equipment and intangible assets		956			—
Capitalized research and development		1,709			912
Accruals and reserves		68			133
Gross non-current deferred tax assets		56,671			55,014
Right-of-use assets, operating leases		(516	)		(1,037	)
Property and equipment and intangible assets		-			(23	)
Total non-current deferred tax liabilities		(516	)		(1,060	)
Total deferred tax assets		56,155			53,954
Valuation allowance		(56,055	)		(53,924	)
Net deferred tax assets (liabilities)	$	100		$	30

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The Tax Reform Act of 1986, as amended, imposes restrictions on the utilization of net operating losses and tax credit carryforwards in certain situations where changes occur in the stock ownership of a corporation. Utilization of a domestic net operation loss or tax credit carryforward may be subject to a substantial limitation due to ownership changes that may have occurred or that could occur in the future, as required by Internal Revenue Code Section 382 ("IRC Section 382"), as well as similar state provisions. Accordingly, a company’s ability to use net operating losses may be limited as prescribed under IRC Section 382. Events which may cause limitations in the amount of the net operating losses that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The Company last assessed the application of IRC Section 382 during the fourth quarter of 2017 and concluded that no such limitation currently applies. These conclusions are monitored in future periods as circumstances dictate, such as significant changes in the Company's stock ownership. In the event the Company experiences any subsequent changes in ownership, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized.

As of December 31, 2023, the Company had federal and state net operating loss carryforwards of approximately $163,439 and $144,131, respectively. The federal net operating loss carryforward will begin expiring in 2027 and the state net operating loss carryforward will begin expiring in 2025. As of December 31, 2023, the Company had federal and state research and development credits of approximately $6,123 and $6,451, respectively. The federal research and development credits will begin expiring in 2026. The state research and development credits are not currently subject to expiration. As of December 31, 2023, the Company had approximately $1,123 of state enterprise zone credits which begin to expire in 2024; approximately $2,872 expired unutilized in 2023.
 

The Company has recorded a full valuation allowance against its otherwise recognizable deferred income tax assets as of December 31, 2022 and 2021 (except for the deferred income tax assets associated with certain of the Company’s foreign subsidiaries). The Company has determined, after evaluating all positive and negative historical and prospective evidence, that it is more likely than not that the deferred income tax assets will not be realized (except for those associated with certain of the Company's foreign subsidiaries). The valuation allowance increased by $2,131 and $6,009 for the years ended December 31, 2023, and December 31, 2022, respectively.

The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. These audits include questioning the timing and amount of deduction, the nexus of income among various tax jurisdictions and compliance with state, local and foreign tax laws. The Company is not currently under any examination by any federal, state or foreign tax authorities. Because of net operating loss and credit carryforwards, all of the Company’s tax years dating to inception in 2006 remain open to examination.

Uncertain Tax Positions

As of December 31, 2023 and 2022, the Company had uncertain tax positions of $984 and $985, respectively, that if recognized would impact the annual effective tax rate. During 2023 and 2022, the Company did not have any material interest or penalties related to uncertain tax positions. The aggregate changes in the balance of gross uncertain tax positions were as follows:

Ending balance as of December 31, 2021	$	9,055
Decrease in balances related to lapses in statutes of limitations		(94	)
Ending balance as of December 31, 2022		8,961
Increase in balances related to tax positions taken during the prior period		30
Decrease in balances related to lapses in statutes of limitations		(31	)
Ending balance as of December 31, 2023	$	8,960

It is reasonably possible that uncertain tax positions existing as of December 31, 2023 could decrease by approximately $368 within the next twelve months.

7. Balance Sheet Components

The following table shows the components of property and equipment as of the dates presented:

		December 31,
	Estimated Useful Life	2023			2022
Software, including internally developed software	3 years	$	34,972		$	33,073
Computer equipment	3 to 4 years		18,080			18,622
Leasehold improvements	Shorter of useful life or lease term		512			512
Office equipment, furniture and fixtures	3 to 5 years		94			630
Total property and equipment			53,658			52,837
Less: Accumulated depreciation and amortization			(50,262	)		(49,624	)
Less: Accumulated impairment losses			(3,276	)		—
Property and equipment, net		$	120		$	3,213

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Depreciation and amortization of internally developed software for the year ended December 31, 2023 and 2022 was $1,720 and $2,257, respectively.

During the fourth quarter of 2023, the Company concluded that indictors of impairment were present with respect to its sole asset group, which was determined by the Company to be the consolidated entity, due to the current economic environment and the Company’s history of recurring losses and negative operating cash flows. As a result, the Company compared the sum of undiscounted future cash flows of the asset group to its respective carrying amount and recorded an impairment loss on long-lived assets of $3,276 as the difference between the carrying amount of the asset group and its estimated fair value for the year ended December 31, 2023 in the consolidated statements of comprehensive loss. The Company estimated the fair value of long-lived assets using a direct comparison market approach valuation method based on recent observable transactions of comparable transactions and assets.

The following table shows the components of accrued expenses and other current liabilities as of the dates presented:

	December 31,
	2023		2022
Accrued salary and payroll-related expenses	$	872	$	1,460
Accrued liabilities		376		535
Income taxes payable		192		464
Advanced billings and customer credits (1)		636		1,016
Other		23		38
Total accrued expenses and other current liabilities	$	2,099	$	3,513

(1) During the year ended December 31, 2023 the Company wrote off customer credit balances of $443 as credits to bad debt expense. No customer credit balances were written off during the year ended December 31, 2022.

8. Leases

Operating and Finance Leases

The Company's primary operating lease is for space at a data center which was renewed in April 2022 and expires in 2025. In April 2023, the Company finalized exercising an option to decrease the space at the data center under the operating lease. As a result, the Company remeasured its lease liability and adjusted its ROU assets by $565, respectively, during 2023.

The Company evaluates new contractual arrangements at inception to determine if the contract is or contains a lease. For any contracts that are or contain a lease, the Company determines the appropriate classification of each identified lease as operating or finance. For all identified leases, the Company records the related lease liabilities and ROU assets based on the future minimum lease payments over the lease term, which only includes options to renew the lease if it is reasonably certain that the Company will exercise that option. For leases with original terms of twelve months or less, the Company recognizes the lease expense as incurred and does not recognize lease liabilities and ROU assets.

Lease liabilities are measured based on the future minimum lease payments discounted over the lease term. The Company uses the discount rate implicit in the lease whenever that rate is readily determinable. For leases where no such rate is determinable, the Company uses its incremental borrowing rate, or the rate of interest that Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and in a similar economic environment. As of December 31, 2023, the weighted-average rate used in discounting the lease liabilities for ROU operating leases was 6.0%. Current and non-current operating lease liabilities are presented on the condensed consolidated balance sheet.

Operating lease costs, consisting primarily of rental expense, were approximately $1,842 and $3,654 for the years ended December 31, 2023 and 2022, respectively. Variable rent expense was not material for the years ended December 31, 2023 or 2022.

The maturities of operating lease liabilities as of December 31, 2023 are as follows:

	Operating Leases
2024	$	1,584
2025		396
Total lease payments		1,980
Less: Amount representing imputed interest		(68	)
Present value of lease liabilities		1,912
Less: Current portion of lease liabilities		(1,518	)
Non-current portion of lease liabilities	$	394

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Supplemental cash flow information related to operating leases was as follows:

	Years Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,842	$	3,974
ROU assets obtained in exchange for lease liabilities:	$	161	$	5,015

Subleases

The Company sublet portions of its San Francisco office space under an agreement that expired in July 2022. Income from this sublease agreement was included in other income, net, on the accompanying consolidated statements of comprehensive loss. Sublease income for the year ended December 31, 2022 was $587.

9. Borrowings

In April 2020, the Company entered into an original loan agreement with Harvest Small Business Finance, LLC as the lender (“Lender”) for a loan in an aggregate principal amount of $3,320 (the “Loan”) pursuant to the PPP under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and implemented by the U.S. Small Business Administration (the “SBA”). The Loan was originally evidenced by a Note dated effective as of April 2020, but such Note was replaced by a Note with substantially the same terms, but with an updated effective date of May 2020 to account for a delay in disbursement of funds. The Loan matured two years from the date of first disbursement of the Loan, which occurred in May 2020. The Company received the loan proceeds on May 12, 2020. The Loan bore interest at a rate of 1% per annum. Initially, all payments were deferred through the ten-month anniversary of the date of the Note. The Paycheck Protection Flexibility Act of 2020, P.L. 116-142, extended the deferral period for loan payment to the date that SBA remits the borrower’s loan forgiveness amount to the Lender. The PPP provided that borrowers may apply for forgiveness of amounts due under the Loan, with the amount of potential Loan forgiveness to be calculated based on payroll costs, any mortgage interest payments, any covered rent payments and any covered utilities payments during the 10-week period beginning on the date of first disbursement of the Loan. An aggregate principal amount of $3,117 of the Loan was forgiven in January 2022 and the Company repaid the remaining outstanding balance of approximately $200 in February 2022.

10. Shelf Registration and At-the-Market Offering

On March 14, 2019, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on May 10, 2019 and enables the Company to offer its common stock, preferred stock, debt securities, warrants, subscription rights and units having an aggregate offering price of up to $50,000. As part of this shelf registration, the Company entered into an equity distribution agreement with JMP Securities, pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $13,000 through an at-the-market offering program administered by JMP Securities. The Company was not required to sell any securities under this offering program. JMP Securities was entitled to compensation of up to 5.0% of the gross proceeds from sales of the Company’s common stock pursuant to the equity distribution agreement.

For the year ended December 31, 2020, the Company sold 2,726 shares of its common stock under this equity distribution agreement and received proceeds of $7,500, net of offering costs of $463, at a weighted average sales price of $2.92 per share. For the year ended December 31, 2019, the Company sold 658 shares of its common stock under this equity distribution agreement and received proceeds of $1,643, net of offering costs of $210, at a weighted average sales price of $2.82 per share. During February 2021, the Company sold an additional 1,186 shares of its common stock under the equity distribution agreement and received proceeds of $3,025, net of offering costs of $157, at a weighted average sales price of $2.68 per share. After such sales, no additional amounts were available to be sold under this equity distribution agreement.

On July 15, 2021, the Company increased the size of the remaining $37,000 available on the Initial Registration Statement by an additional $3,000 allowing it to offer securities with an aggregate gross sales price of up to $40,000. The Company also entered into a new equity distribution agreement with JMP Securities (the “July 2021 equity distribution agreement”) under which it could sell shares of its common stock up to a gross aggregate sales price of $40,000 through an at-the-market offering program administered by JMP Securities. JMP Securities was entitled to fees of 3% of the gross proceeds from sales of the Company’s common stock under this July 2021 equity distribution agreement. In July 2021 the Company sold 4,316 shares of its common stock under the July 2021 equity distribution agreement and received proceeds of $38,800, net of $1,200 in fees to JMP Securities, at a weighted average sales price of $9.27 per share, which resulted in the Company exhausting the amounts available for sale under the 2021 equity distribution agreement.

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On August 3, 2021, the Company filed a new shelf registration statement on Form S-3 with the SEC (the “2021 Registration Statement”), which was declared effective by the SEC on August 19, 2021 and provides that the Company may offer its common stock, preferred stock, debt securities, warrants, subscription rights and units having an aggregate offering price of up to $100,000. As part of this 2021 Registration Statement, the Company entered into a third equity distribution agreement with JMP Securities and established a new $50,000 “at-the-market” securities offering facility, pursuant to which, the Company may be able to issue and sell shares of the Company common stock. During the year ended December 31, 2022, the Company sold 1.1 million shares of its common stock under this new equity distribution agreement and received proceeds of approximately $1.3 million, net of offering costs of $0.1 million at a weighted average sales price of $1.33 per share. In accordance with the SEC’s Instruction I.B.6 of Registration Statement on Form S-3, the Company is adjusting the maximum aggregate market value of the securities that may be sold pursuant to this current "at-the-market" securities offering facility from $50,000 to approximately $22,800 based on the market capitalization of the Company on the date the Company filed its Annual Report on Form 10-K for the year ended December 31, 2021.

11. Commitments and Contingencies

Legal Matters

From time to time, the Company may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters, which arise in the ordinary course of business. In accordance with GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling was to occur in any specific period or if a loss becomes probable and estimable, there exists the possibility of a material adverse impact on the Company’s results of operations, financial position or cash flows. As of December 31, 2023, no material amounts are recorded related to legal proceedings on the consolidated balance sheet.

Indemnification

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, each party may indemnify, defend and hold the other party harmless with respect to such claim, suit or proceeding brought against it by a third party alleging that the indemnifying party’s intellectual property infringes upon the intellectual property of the third party, or results from a breach of the indemnifying party’s representations and warranties or covenants, or that results from any acts of negligence or willful misconduct. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these obligations on the consolidated balance sheets as of December 31, 2023 and 2022.

The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors’ and officers’ insurance policy that enables the Company to recover a portion of any future amounts paid. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these obligations on the consolidated balance sheets as of December 31, 2023 and 2022.

Other Contingencies

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 6, 2024.

MARIN SOFTWARE INCORPORATED
By:	/s/ Robert Bertz
	Robert Bertz
	Chief Financial Officer

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