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What changed in FiscalNote Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FiscalNote Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+158 added−172 removedSource: 10-K (2025-04-01) vs 10-K (2024-03-15)

Top changes in FiscalNote Holdings, Inc.'s 2024 10-K

158 paragraphs added · 172 removed · 123 edited across 4 sections

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−1 removed12 unchanged
Biggest changeProperties. The Company’s principal executive offices and global headquarters are located in Washington, D.C., and consist of approximately 65,000 square feet of space under a lease that expires on May 31, 2031.
Biggest changeProperties. The Company’s principal executive offices and global headquarters are located in Washington, D.C., and consist of approximately 65,000 square feet of space under a lease that expires on May 31, 2031. We also maintain a presence in a 35 number of other jurisdictions internationally, including Oxford and London, United Kingdom; Brussels, Belgium; Gurugram, India; Singapore; and Sydney, Australia.
The Company has obtained SOC-2 certification for many of its products, which subjects those products to an annual compliance audit conducted by a third party, and we work to include progressively more products within the scope of the audit year over year. 37 We view cybersecurity as a shared responsibility throughout the Company.
The Company has obtained SOC-2 certification for many of its products, which subjects those products to an annual compliance audit conducted by a third party, and we work to include progressively more products within the scope of the audit year over year. We view cybersecurity as a shared responsibility throughout the Company.
We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to, and breaches of, our data and systems, including malware and computer virus attacks.
We face a number of cybersecurity risks in connection with our business. Although such risks have no t materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to, and breaches of, our data and systems, including malware and computer virus attacks.
We are not currently a party to any litigation or regulatory proceeding that we expect to have a material adverse effect on our business, results of operations, financial conditions or cash flows. 38 It em 4. Mine Safety Disclosures. Not applicable. 39 PART II
We are not currently a party to any litigation or regulatory proceeding that we expect to have a material adverse effect on our business, results of operations, financial conditions or cash flows. It em 4. Mine Safety Disclosures. Not applicable. 36 PART II
At a management level, we periodically perform tabletop exercises incorporating external resources, advisors and relevant members of the Board as needed. The Company requires all employees to participate in an annual cybersecurity training reviewed by the information security function, and management regularly communicates with employees about potential cybersecurity risks and methods for reporting incidents.
At a management level, we have performed tabletop exercises incorporating external resources, advisors and relevant members of the Board as needed. The Company requires all employees to participate in an annual cybersecurity training reviewed by the information security function, and management regularly communicates with employees about potential cybersecurity risks and methods for reporting incidents.
The information security team is responsible for, among other matters: • designing, implementing and periodically assessing our cybersecurity safeguards and related policies and procedures, including those pertaining to encryption standards, antivirus protection, remote access, multi-factor authentication, data classification, device management, and the use of the internet, social media, email and wireless devices; • monitoring current and emerging cybersecurity threats to which the business may become exposed; and • providing oversight of risks of cybersecurity threats associated with our use of third-party service providers, including reviewing such engagements when proposed in order to identify and assess risks potentially arising therefrom.
The information security team works cross-functionally, with significant involvement from other members of senior management and oversight by the Board. 34 The information security team is responsible for, among other matters: • designing, implementing and periodically assessing our cybersecurity safeguards and related policies and procedures, including those pertaining to encryption standards, antivirus protection, remote access, multi-factor authentication, data classification, device management, and the use of the internet, social media, email and wireless devices; • monitoring current and emerging cybersecurity threats to which the business may become exposed; and • providing oversight of risks of cybersecurity threats associated with our use of third-party service providers, including reviewing such engagements when proposed in order to identify and assess risks potentially arising therefrom.
Our cybersecurity risk management program is led primarily by our Vice President - Cybersecurity & DevOps, who has over 15 years’ experience in cybersecurity, information technology, and related compliance and holds a Certified Information Systems Security Professional certification. The information security team works cross-functionally, with significant involvement from other members of senior management and oversight by the Board.
Our cybersecurity risk management program is led primarily by our Vice President - Cybersecurity & DevOps, who has over 15 years’ experience in cybersecurity, information technology, and related compliance and holds a Certified Information Systems Security Professional certification.
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We also maintain a presence in a number of other jurisdictions within the United States and internationally, including Baton Rouge, LA; Madison, WI; Austin, TX; Oxford and London, United Kingdom; Brussels, Belgium; Gurugram, India; Seoul, South Korea; Singapore; and Sydney, Australia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged
Biggest changeThe Company does not have any publicly announced plan or programs for share purchases. Item 6. (Reserved) 40
Biggest changeThe Company does not have any publicly announced plan or programs for share purchases.
Dividend Policy We have not paid any cash dividends on our Common Stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.
Dividend Policy We have not paid any cash dividends on our Common Stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay cash dividends for the foreseeable future.
In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. Unregistered Sales of Equity Securities. None. Issuer Purchases of Equity Securities. The Company had no transactions regarding purchases of common stock during the quarter ended December 31, 2023.
In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. Unregistered Sales of Equity Securities. None. Issuer Purchases of Equity Securities. The Company had no transactions regarding purchases of common stock during the quarter ended December 31, 2024.
Holders As of March 1, 2024, there were approximately 347 holders of record of our Class A Common Stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares of Class A Common Stock or Public Warrants through nominee names, there were two holders of record of our Class B Common Stock, and there were three holders of record of our Private Warrants.
Holders As of March 24, 2025, there were approximately 315 holders of record of our Class A Common Stock, which amount does not include participants of The Depository Trust Company or beneficial owners holding shares of Class A Common Stock or Public Warrants through nominee names, there were two holders of record of our Class B Common Stock, and there were three holders of record of our Private Warrants.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

108 edited+35 added−47 removed71 unchanged
Biggest changeThese charges were partially offset by a non-cash gain of approximately $16.1 million related to the mark-to-market of the public and private warrants liability the Company is required to fair value at each reporting date and $7.7 million non-cash gain from the forgiveness of the Company's PPP Loan. 48 The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table presents our results of operations for the periods indicated: Year Ended December 31, Change (In thousands) 2023 2022 $ % Revenues: Subscription $ 119,082 $ 100,522 $ 18,560 18 % Advisory, advertising, and other 13,563 13,243 320 2 % Total revenues 132,645 113,765 18,880 17 % Operating expenses: (1) Cost of revenues 40,251 31,937 8,314 26 % Research and development 18,186 20,736 (2,550 ) (12 )% Sales and marketing 45,722 42,678 3,044 7 % Editorial 17,869 15,956 1,913 12 % General and administrative 65,550 77,801 (12,251 ) (16 )% Amortization of intangible assets 11,509 10,451 1,058 10 % Impairment of goodwill and intangible assets 32,064 - 32,064 NM% Transaction (gains) costs, net (767 ) 2,395 (3,162 ) (132 )% Total operating expenses 230,384 201,954 28,430 14 % Operating loss (97,739 ) (88,189 ) (9,550 ) 11 % Interest expense, net 29,940 95,741 (65,801 ) (69 )% Change in fair value of financial instruments (15,983 ) (12,747 ) (3,236 ) 25 % Gain on PPP loan upon extinguishment - (7,667 ) 7,667 NM% Loss on debt extinguishment, net - 45,250 (45,250 ) NM% Loss on settlement 3,474 11,700 (8,226 ) (70 )% Other expense, net 68 1,045 (977 ) (93 )% Net loss before income taxes (115,238 ) (221,511 ) 106,273 (48 )% Provision (benefit) from income taxes 223 (3,254 ) 3,477 (107 )% Net loss $ (115,461 ) $ (218,257 ) $ 102,796 (47 )% (1) Amounts include stock-based compensation expenses, as follows: Year Ended December 31, Change 2023 2022 $ % Cost of revenues $ 283 $ 81 $ 202 249 % Research and development 1,384 1,007 377 37 % Sales and marketing 2,057 762 1,295 170 % Editorial 400 603 (203 ) (34 )% General and administrative 22,933 35,594 (12,661 ) (36 )% Revenue: Subscription Revenue Subscription revenue of $119.1 million for the year ended December 31, 2023 increased $18.6 million, or 18%, from $100.5 million for the year ended December 31, 2022. 49 Change for the Year Ended December 31, 2023 vs December 31, 2022 (In thousands) $ % Subscription Revenue change driver: Increase from 2023 Acquisitions $ 6,694 100 % Increase from 2022 Acquisitions 1,229 171 % Impact of 2021 Acquisitions deferred revenue adjustment 1,896 100 % Decrease from discontinued products (480 ) (43 )% Increase from organic business 9,221 9 % Subscription Revenues, net (total change) $ 18,560 18 % During 2021 the Company acquired 10 businesses (including FactSquared that was acquired on December 31, 2020, respectively).
Biggest changeYear Ended December 31, 2023 During the year ended December 31, 2023 the Company recognized several non-cash items including, a non-cash charge of $32.1 million from the impairment of goodwill and other long-lived assets, $16.0 million gain related to the mark-to-market of the public and private warrants liability and debt liabilities that the Company is required to fair value at each reporting date, and an additional non-cash loss on settlement with GPO of $3.5 million. 44 The Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 The following table presents our results of operations for the periods indicated: Year Ended December 31, Change (In thousands) 2024 2023 $ % Revenues: Subscription $ 111,073 $ 119,082 $ (8,009 ) (7 )% Advisory, advertising, and other 9,193 13,563 (4,370 ) (32 )% Total revenues 120,266 132,645 (12,379 ) (9 )% Operating expenses: (1) Cost of revenues 25,639 40,251 (14,612 ) (36 )% Research and development 12,828 18,186 (5,358 ) (29 )% Sales and marketing 35,055 45,722 (10,667 ) (23 )% Editorial 18,528 17,869 659 4 % General and administrative 50,236 65,550 (15,314 ) (23 )% Amortization of intangible assets 9,925 11,509 (1,584 ) (14 )% Impairment of goodwill and intangible assets - 32,064 (32,064 ) NM Transaction (gains) costs, net (4 ) (767 ) 763 (99 )% Total operating expenses 152,207 230,384 (78,177 ) (34 )% Operating loss (31,941 ) (97,739 ) 65,798 (67 )% Gain on sales of businesses (72,017 ) - (72,017 ) NM Interest expense, net 23,589 29,940 (6,351 ) (21 )% Change in fair value of financial instruments 6,408 (15,983 ) 22,391 (140 )% Loss on settlement - 3,474 (3,474 ) (100 )% Other expense, net 26 68 (42 ) (62 )% Net income (loss) before income taxes 10,053 (115,238 ) 125,291 (109 )% Provision from income taxes 536 223 313 140 % Net income (loss) $ 9,517 $ (115,461 ) $ 124,978 (108 )% (1) Amounts include stock-based compensation expenses, as follows: Year Ended December 31, Change 2024 2023 $ % Cost of revenues $ 412 $ 283 $ 129 46 % Research and development 1,554 1,384 170 12 % Sales and marketing 1,567 2,057 (490 ) -24 % Editorial 687 400 287 72 % General and administrative 13,729 22,933 (9,204 ) (40 )% Revenue: Subscription Revenue Subscription revenue of $111.1 million for the year ended December 31, 2024 decreased $8.0 million, or 7%, from $119.1 million for the year ended December 31, 2023.
The warrant and derivative liabilities are marked to market each reporting period in accordance with ASC 820 with all gains and losses being recorded within the consolidated statement of operations and comprehensive loss. Income taxes We use the asset and liability method of accounting for income taxes.
The warrant and derivative liabilities are marked to market each reporting period in accordance with ASC 820 with all gains and losses being recorded within the consolidated statement of operations and comprehensive income (loss). Income taxes We use the asset and liability method of accounting for income taxes.
Our company’s subscription arrangements are generally non-cancelable and do not contain refund-type provisions. Our company recognizes revenues upon the satisfaction of its performance obligation(s) (upon transfer of control of promised goods or services to its customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services.
Our company’s subscription arrangements are generally non-cancelable and do not contain refund-type provisions. Our company recognizes revenues upon the satisfaction of its performance obligation(s) (upon transfer of control of promised goods or services to its customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services. 57
If the fair value of the reporting unit is less than its carrying value, that difference represents an impairment. 59 Determining the useful life of an intangible asset also requires judgment. Acquired intangible assets (customer relationships, patents and technologies, and tradenames) are expected to have determinable useful lives. Finite-lived intangible assets are amortized to expense over their estimated lives.
If the fair value of the reporting unit is less than its carrying value, that difference represents an impairment. Determining the useful life of an intangible asset also requires judgment. Acquired intangible assets (customer relationships, patents and technologies, and tradenames) are expected to have determinable useful lives. Finite-lived intangible assets are amortized to expense over their estimated lives.
Net cash provided by financing activities during the year ended 57 December 31, 2023 primarily consisted of $6.0 million from Amendment No. 1 to the Senior Term Loan and $5.5 million from the issuance of the Era Note partially offset by the payments on long-term debt of $0.1 million combined with $0.7 million from the proceeds from the exercise of stock options.
Net cash provided by financing activities during the year ended December 31, 2023 primarily consisted of $6.0 million from Amendment No. 1 to the Senior Term Loan and $5.5 million from the issuance of the Era Note partially offset by the payments on long-term debt of $0.1 million combined with $0.7 million from the proceeds from the exercise of stock options.
Upon Closing, we began to incur additional public company expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources. Factors Impacting the Comparability of Our Operating Results Acquisitions Acquisitions affect the comparability of our financial statements from period to period.
Upon Closing, we began to incur additional public company expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources. Factors Impacting the Comparability of Our Operating Results Acquisitions and Disposals Acquisitions and disposals affect the comparability of our financial statements from period to period.
The Dragonfly Convertible Note is subordinate to our Senior Credit Facility, accrues interest of 8% per annum, payable in kind or in cash, and matures in January 2028. Era Convertible Note On December 8, 2023, we issued a convertible note in connection with the Company's strategic commercial partnership with Era.
The Dragonfly Convertible Note is subordinate to our Senior Credit Facility, accrues interest of 8% per annum, payable in kind or in cash, and matures in January 2028. 52 Era Convertible Note On December 8, 2023, we issued a convertible note in connection with the Company's strategic commercial partnership with Era.
Advertising revenue is primarily generated by delivering advertising in our own publications (Roll Call and CQ) in both print and digital formats. Revenue for print advertising is recognized upon publication of the advertisement. Revenue for digital advertising is recognized over the period of the advertisement or, if the contract contains impression guarantees, based on delivered impressions.
Advertising revenue is primarily generated by delivering advertising in our own publications (Roll Call and CQ) in both print and digital formats. Revenue for print advertising is recognized upon publication of the advertisement. Revenue 42 for digital advertising is recognized over the period of the advertisement or, if the contract contains impression guarantees, based on delivered impressions.
The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may 43 occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals.
The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals.
Adjusted Gross Profit and Adjusted Gross Profit Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. They should not be considered as replacements for gross profit and gross profit margin, as determined by GAAP, or as measures of our profitability.
Adjusted Gross Profit and Adjusted Gross Profit Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. They should not be considered as replacements for gross profit and gross profit margin, as determined by GAAP, or as measures of our 41 profitability.
In addition, although other companies in our industry may report measures titled EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate non-GAAP 45 financial measures, which reduces their comparability.
In addition, although other companies in our industry may report measures titled EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate non-GAAP financial measures, which reduces their comparability.
Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law.
Future realization of deferred tax assets ultimately 56 depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law.
Where applicable, 44 we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure.
Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure.
The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the consolidated statements of operations and comprehensive loss in the period that includes the enactment date.
The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the consolidated statements of operations and comprehensive income (loss) in the period that includes the enactment date.
Our quarterly NRR for the last eight quarters follows: For the Quarters Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, 2022 2022 2022 2022 2023 2023 2023 2023 Net Revenue Retention 98 % 99 % 99 % 100 % 96 % 98 % 100 % 99 % Non-GAAP Financial Measures In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance.
Our quarterly NRR for the last eight quarters follows: For the Quarters Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, 2023 2023 2023 2023 2024 2024 2024 2024 Net Revenue Retention 96% 98% 100% 99% 96% 98% 99% 98% Non-GAAP Financial Measures In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance.
Our management team assesses our performance based on these key performance indicators because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance. Annual Recurring Revenue (“ARR”) Approximately 90% of our revenues are subscription based, which leads to high revenue predictability.
Our management team assesses our performance based on these key performance indicators because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance. Annual Recurring Revenue (“ARR”) Over 90% of our revenues are subscription based, which leads to high revenue predictability.
The New GPO Note bears interest at a rate of 7.50% per annum payable quarterly in arrears, as follows: (i) for the first year following the date of issuance, interest will be payable in kind by adding interest to the principal amount of the New GPO Note; and (ii) for any period thereafter, interest will be payable in cash or freely tradeable shares of Class A Common Stock, at the Company’s option, with the value per share determined with reference to the trailing 30-day volume weighted average trading price prior to the interest payment date, subject to certain exceptions under which the Company will be permitted to pay PIK Interest.
The GPO Convertible Note bears interest at a rate of 7.50% per annum payable quarterly in arrears, as follows: (i) for the first year following the date of issuance, interest was payable in kind by adding interest to the principal amount; and (ii) for any period thereafter, interest will be payable in cash or freely tradeable shares of Class A Common Stock, at the Company’s sole option, with the value per share determined with reference to the trailing 30-day volume weighted average trading price prior to the interest payment date, subject to certain exceptions under which the Company will be permitted to pay PIK Interest.
The New GPO Note is subject to customary anti-dilution adjustments for stock splits and similar transactions and, subject to standard exceptions, weighted average anti-dilution protection. The principal amount, together with accrued interest thereon, of the New GPO Note is redeemable by the Company in whole or in part based on certain conditions as defined in the New GPO Note.
The GPO Convertible Note is subject to customary anti-dilution adjustments for stock splits and similar transactions and, subject to standard exceptions, weighted average anti-dilution protection. The principal amount, together with accrued interest thereon, is redeemable by the Company in whole or in part based on certain conditions as defined in the GPO Convertible Note.
The 55 exchange and settlement are non-cash exchanges in the consolidated statement of cash flows. The before mentioned transactions closed on July 3, 2023. The New GPO Note will mature on July 3, 2028, unless earlier redeemed or repurchased by the Company or converted in accordance with the terms thereof.
The exchange and settlement are non-cash exchanges in the consolidated statement of cash flows. The before mentioned transactions closed on July 3, 2023. The GPO Convertible Note will mature on July 3, 2028, unless earlier redeemed or repurchased by the Company or converted in accordance with the terms thereof.
Cash used in operating activities in 2023 was driven by a net loss of $115.5 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $90.1 million, primarily including impairment of goodwill and other long-lived assets of $32.1 million, non-cash and paid-in kind interest expense of $10.0 million, stock-based compensation expense of $27.1 million, loss on settlement with GPO of $3.5 million, a gain due to the change in fair value of financial instruments of $16.0 million, amortization and depreciation of $32.3 million, and other non-cash expenses of $1.1 million and the effect of changes in operating assets and liabilities that resulted in cash outflows of $10.2 million.
Cash used in operating activities in 2023 was driven by a net loss of $115.5 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $90.1 million, primarily including impairment of goodwill and other long-lived assets of $32.1 million, non-cash and paid-in kind interest expense of $10.0 million, stock-based compensation expense of $27.1 million, loss on settlement with GPO of $3.5 million, a gain due to the change in fair value of financial instruments of $16.0 million, amortization and depreciation of $32.3 million (including the non-cash amortization from deferred costs to obtain revenue contracts), and other non-cash expenses of $1.1 million and the effect of changes in operating assets and liabilities that resulted in cash outflows of $10.2 million.
Subscription revenues account for approximately 90% of our total revenues for the years ended December 31, 2023 and 2022. Subscription revenue Subscription revenues consist of revenue earned from subscription-based arrangements that provide customers the right to use the Company’s software and products in a cloud-based infrastructure.
Subscription revenues account for approximately 92% and 90% of our total revenues for the years ended December 31, 2024 and 2023. Subscription revenue Subscription revenues consist of revenue earned from subscription-based arrangements that provide customers the right to use the Company’s software and products in a cloud-based infrastructure.
The New GPO Note is subordinate to the Company’s obligations under its Senior Term Loan which limits certain actions that the Company and the Investor may take under the New GPO Note.
The GPO Convertible Note is subordinate to the Company’s obligations under its Senior Term Loan which limits certain actions that the Company and the GPO Investor may take under the GPO Convertible Note.
Commitments and Contingencies Our principal commitments consist of obligations under leases for office space. For more information regarding our lease obligations, see Note 5, Leases in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Commitments and Contingencies Our principal commitments consist of our debt service obligations and leases for office space. For more information regarding our lease obligations, see Note 5, Leases in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
As a consequence of the Business Combination, we became an SEC-registered and NYSE-listed company, which may require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
As a consequence of the Business Combination, we became an SEC-registered and NYSE-listed company, which required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period.
We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level.
Revenue Recognition Subscription revenues are recurring in nature and include subscription fees from customers accessing our company’s cloud-based infrastructure, digital content, transcripts, news and analysis, images, video and podcast data.
Critical Accounting Policy Revenue Recognition Subscription revenues are recurring in nature and include subscription fees from customers accessing our company’s cloud-based infrastructure, digital content, transcripts, news and analysis, images, video and podcast data.
The debt obligations are subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the Company’s unaudited consolidated statement of operations. The Company estimates the fair value of the debt obligation using a lattice model.
Accordingly, the Company recognizes the debt obligations upon inception at fair value. The debt obligations are subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the Company’s unaudited consolidated statement of operations. The Company estimates the fair value of the debt obligation using a lattice model.
The Company has outstanding public and private warrants, both of which do not meet the criteria for equity classification and are accounted for as liabilities. Accordingly, the Company recognizes the warrants as liabilities at fair value and adjusts the warrants to fair value at each reporting period.
Warrant Liabilities The Company has outstanding public and private warrants, both of which do not meet the criteria for equity classification and are accounted for as liabilities. The Company recognizes the warrants as liabilities at fair value at each reporting period.
In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected. Our total capital expenditures were $7.9 million and $11.4 million for the years ended December 31, 2023 and 2022, respectively.
In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected. Our total capital expenditures were $8.9 million and $7.9 million for the years ended December 31, 2024 and 2023, respectively.
Interest expense, net Interest expense, net, consists of expense related to interest on our borrowings, the amortization and write off of debt issuance costs and original discount, and interest related to certain derivative instruments. Fair value of warrant and derivative liabilities The fair value of warrant and derivative liabilities are accounted for in accordance with ASC 815 and ASC 480.
Interest expense, net Interest expense, net, consists of expense related to interest on our borrowings, the amortization and write off of debt issuance costs and original discount, and interest related to certain derivative instruments. 43 Change in fair value of financial instruments The fair value of financial instruments are accounted for in accordance with ASC 815 and ASC 480.
For example, future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values.
For example, future changes in the judgments, assumptions and estimates that are used in our impairment 55 testing for goodwill, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values.
The Company initially recorded a loss contingency of $11,700 in its fiscal year 2022 financial statements representing the difference between the fair value of the shares returned by the Investor and the fair value of the New GPO Note on the date of exchange.
The Company initially recorded a loss contingency of $11.7 million in its fiscal year 2022 financial statements representing the difference between the fair value of the shares returned by the Investor and the fair value of the GPO Convertible Note on the date of exchange.
ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies. Our ARR at December 31, 2023 and December 31, 2022 was $126.1 million and $113.3 million, respectively.
ARR 40 should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies. Our ARR at December 31, 2024 and December 31, 2023 was $107.5 million and $126.1 million, respectively.
Customers from acquisitions are not included in NRR until they have been part of our consolidated results for 12 months. Accordingly, the 2023 Acquisitions are not included in our NRR for the year ended December 31, 2023 and the 2022 Acquisitions are not included in our NRR for the year ended December 31, 2022.
Customers from acquisitions are not included in NRR until they have been part of our condensed consolidated results for 12 months. Accordingly, the 2023 Acquisition was not included in our NRR for the year ended December 31, 2023.
With the execution of the Exchange and Settlement Agreement and New GPO Note, the Company recorded an additional loss on settlement with GPO of $3,474 in the consolidated statement of operations for the year ended December 31, 2023.
With the execution of the Exchange and Settlement Agreement and GPO Convertible Note, the Company recorded an additional loss on settlement of $3.5 million in the consolidated statement of operations for the year ended December 31, 2023.
In connection with such reviews, management decided to cease actively selling and therefore sunset certain non-core products, representing, in aggregate: • subscription revenue of approximately $1.0 million and $1.3 million during the years ended December 31, 2023 and 2022; and • Non-subscription advisory revenue of approximately $3.0 million and $3.2 million during the years ended December 31, 2023 and 2022.
In connection with such reviews, management decided to cease actively selling and therefore sunset certain non-core products, representing, in aggregate: • Subscription revenue of approximately $0.5 million and $1.0 million during the years ended December 31, 2024 and 2023; and • Non-subscription advisory revenue of approximately $3.0 million during the year ended December 31, 2023 (no corresponding revenue during the year ended December 31, 2024).
Convertible Notes Four convertible noteholders with an aggregate principal amount (including accrued paid in kind interest) of $10.5 million as of the Closing Date elected not to convert their notes into shares of capital stock of the Company in conjunction with Closing.
Convertible Notes Four unsecured convertible noteholders with an aggregate principal amount (including accrued paid in kind interest) of $16.2 million as of the Closing Date of the Business Combination elected not to convert their notes into shares of capital stock of the Company in conjunction with the Closing of the Business Combination.
New GPO Note On June 30, 2023 (the “Subscription Date”), the Company entered into an Exchange and Settlement Agreement (the “Exchange and Settlement Agreement”) with GPO FN Noteholder LLC (the “Investor”) pursuant to which (i) the Investor returned 5,881,723 shares of Class A Common Stock held by the Investor to the Company for cancellation, (ii) the Company issued to the Investor a subordinated convertible promissory note in an initial principal amount of $46,794 (the “New GPO Note”), and (iii) the parties agreed to a mutual settlement and release of all claims (including, but not limited to, any claims by the Investor for additional shares or money damages resulting from the entry into the Merger Agreement, relating to or arising from the conversion of the Amended and Restated Senior Secured Subordinated Promissory Note, dated December 29, 2020, previously issued by a subsidiary of the pre-business combination FiscalNote Holdings, Inc. to the Investor.
See also Note 9, Debt , in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. 51 GPO Convertible Note On June 30, 2023 (the “Subscription Date”), the Company entered into an Exchange and Settlement Agreement (the “Exchange and Settlement Agreement”) with GPO FN Noteholder LLC (the “GPO Investor”) pursuant to which (i) the GPO Investor returned 5,881,723 shares of Class A Common Stock held by the Investor to the Company for cancellation, (ii) the Company issued to the GPO Investor a subordinated convertible promissory note in an initial principal amount of $46,794 (the “GPO Convertible Note”), and (iii) the parties agreed to a mutual settlement and release of all claims (including, but not limited to, any claims by the GPO Investor for additional shares or money damages resulting from the entry into the Merger Agreement, relating to or arising from the conversion of the Amended and Restated Senior Secured Subordinated Promissory Note, dated December 29, 2020, previously issued by a subsidiary of the pre-business combination FiscalNote Holdings, Inc. to the GPO Investor.
Management expects that on-going operating and capital expenditures may be necessary to continue to implement the Company’s business plan of entering new markets, future acquisitions, and infrastructure and product development.
Management expects that on-going operating and capital expenditures may be necessary to continue to implement the Company’s business plan of entering new markets, acquiring new business and technologies, and investing in infrastructure and product development.
The Era Convertible Note is contractually subordinated to the Company's obligations under its senior secured indebtedness, has cash interest at a rate equal to the applicable federal rate published by the Internal Revenue Service beginning on the six-month anniversary of the issuance date, and matures in December 2027.
The First Era Convertible Note was contractually subordinated to the Company's obligations under its senior secured indebtedness, had a cash interest rate equal to the applicable federal rate published by the Internal Revenue Service beginning on the six-month anniversary of the issuance date, and had a maturity date of December 8, 2027.
Our principal debt outstanding at December 31, 2023 and December 31, 2022 consisted of the following (excluding any debt discounts and fair value adjustments, as applicable): (In thousands) December 31, 2023 December 31, 2022 Senior Term Loan $ 158,228 $ 150,647 New GPO Note 48,575 - Convertible Notes 14,052 12,219 Dragonfly Convertible Note 12,223 - Era Convertible Note 5,500 - Aicel Convertible Note 1,156 1,174 PPP Loan 144 251 Total Principal Outstanding $ 239,878 $ 164,291 Senior Term Loan In connection with the Closing, FiscalNote entered into a $150.0 million new senior term loan facility (the “Senior Term Loan”) with Runway Growth Finance Corp., ORIX Growth Capital, LLC, Clover Orochi LLC, and ACM ASOF VIII SaaS FinCo LLC (together the “Senior Lenders”).
Our principal debt outstanding at December 31, 2024 and December 31, 2023 consisted of the following (excluding any debt discounts and fair value adjustments, as applicable): As of December 31, (In thousands) 2024 2023 Senior Term Loan $ 88,595 $ 158,228 GPO Convertible Note 50,434 48,575 Convertible Notes 16,165 14,052 Dragonfly Convertible Note 13,030 12,223 Era Convertible Notes - 5,500 Aicel Convertible Note - 1,156 PPP Loan 36 144 Total Principal Outstanding $ 168,260 $ 239,878 Senior Term Loan In connection with the Closing of the Business Combination on July 29, 2022, FiscalNote entered into a $150.0 million new senior term loan facility, as amended, (the “Senior Term Loan”) with Runway Growth Finance Corp., ORIX Growth Capital, LLC, Clover Orochi LLC, and ACM ASOF VIII SaaS FinCo LLC (together the “Senior Lenders”).
In addition to the negative covenants, there were four financial covenants in place at December 31, 2023: a minimum cash balance requirement, annual recurring revenue requirement, an adjusted EBITDA requirement (as defined in the Senior Term Loan, as amended) and a capital expenditure limitation. At December 31, 2023, the Company was in compliance with all of the covenants.
In addition to the negative covenants, there were four financial covenants in place at December 31, 2024: a minimum cash balance requirement, annual recurring revenue requirement, an adjusted EBITDA requirement and a capital expenditure limitation. At December 31, 2024 the Company was in compliance with the minimum cash balance requirement, capital expenditure limitation, an adjusted EBITDA requirement.
Change in fair value of financial instruments Change in fair value of financial instruments was a $16.0 million gain for the year ended December 31, 2023 as compared to a $12.7 million gain for the year ended December 31, 2022.
Change in fair value of financial instruments Change in fair value of financial instruments was a $6.4 million loss for the year ended December 31, 2024 as compared to a $16.0 million gain for the year ended December 31, 2023.
The annual interest of the Senior Term Loan consists of two components: a cash interest component of (a) the greater of (i) Prime Rate 54 plus 5.0% per annum and (ii) 9.0% payable monthly in cash, and (b) interest payable in kind component of 1.00% per annum, payable in kind monthly.
The annual interest of the Senior Term Loan consists of two components: a cash interest component of (a) the greater of (i) Prime Rate plus 5.0% per annum and (ii) 9.0% payable monthly, and (b) interest 50 payable in kind component of 1.00% per annum, payable in kind monthly. The Senior Credit Facility will mature on July 29, 2027.
At December 31, 2023, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $24.4 million compared to $61.2 million at December 31, 2022.
At December 31, 2024, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $35.3 million compared to $24.4 million at December 31, 2023.
Investing activities Net cash used in investing activities in the year ended December 31, 2023 was $20.3 million compared to $10.2 million in the year ended December 31, 2022.
Investing activities Net cash provided by investing activities in the year ended December 31, 2024 was $89.2 million compared to net cash used by investing activities was $20.3 million in the year ended December 31, 2023.
Among other things, Amendment No. 3 provides for: (a) the extension of the July 2023 Deferred Fee from July 29, 2023 to July 29, 2024, (b) the increase of the July 2023 Deferred Fee from $1,734 to $2,034, and (c) the revision to the minimum annual recurring revenue and adjusted EBITDA covenants (as both are defined in the Senior Term Loan).
Among other things, Amendment No. 3 provides for: (a) the extension of the July 2023 Deferred Fee from July 29, 2023 to July 29, 2024, (b) the increase of the July 2023 Deferred Fee from $1,734 to $2,034, and (c) increase of the Restatement Date Final Agreement from $7,410 and $8,970 and (d) the revision to the minimum annual recurring revenue and adjusted EBITDA covenants (as both are defined in the Credit Agreement).
Research and development Research and development expenses include the costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with the creation and testing of the products we offer, related software subscriptions, consulting and contractor fees and allocated overhead. 46 Sales and marketing Sales and marketing expenses consist primarily of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for our sales and marketing staff, including commissions, related software subscriptions, consulting fees, marketing programs and allocated overhead.
Research and development Research and development expenses include the costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with the creation and testing of the products we offer, related software subscriptions, consulting and contractor fees and allocated overhead.
We plan to invest a portion of the available capital resources in building innovative products, acquiring complementary businesses, attracting new customers and expanding our leadership role in the legal and regulatory information market. We drive growth both organically and through acquisitions.
We plan to invest a portion of the available capital resources in building innovative products, attracting new customers and expanding our leadership role in the legal and regulatory information market which will allow us to drive growth organically.
Adjusted Gross Profit and Adjusted Gross Profit Margin We define Adjusted Gross Profit as Adjusted Revenue minus cost of revenues, before amortization of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Adjusted Revenues.
Adjusted Gross Profit and Adjusted Gross Profit Margin We define Adjusted Gross Profit as Total revenue minus cost of revenues, before amortization of capitalized software development costs and acquired developed technology, before impairment of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Total revenues.
Research and development Research and development expense was $18.2 million for the year ended December 31, 2023 as compared to $20.7 million for the year ended December 31, 2022.
Research and development Research and development expense was $12.8 million for the year ended December 31, 2024 as compared to $18.2 million for the year ended December 31, 2023.
Transaction costs, net Transaction benefits were $0.8 million for the year ended December 31, 2023, as compared to transaction costs of $2.4 million for the year ended December 31, 2022.
Transaction costs, net Transaction gains were $0.0 million for the year ended December 31, 2024, as compared to transaction gains of $0.8 million for the year ended December 31, 2023.
We regularly evaluate acquisitions and investment opportunities in complementary businesses to supplement our existing platform, enable us to enter new markets and ensure that we are well positioned to provide critical insights to the regulated sectors of the future.
We evaluate acquisitions and investment opportunities in complementary businesses to supplement our existing platform, enable us to enter new markets and ensure that we are well positioned to provide critical insights to the regulated sectors of the future. Past acquisitions have enabled us to deliver innovative solutions in new categories and enhance the functionality of our existing products.
Financing activities Net cash provided by financing activities in the year ended December 31, 2023 was $12.1 million, compared to $111.5 million for the year ended December 31, 2022.
Financing activities Net cash used in financing activities in the year ended December 31, 2024 was $71.4 million, compared to net cash provided by financing activities was $12.1 million for the year ended December 31, 2023.
FiscalNote ingests unstructured legislative and regulatory data, and employs AI and data science to deliver structured, relevant and actionable information in order to facilitate key operational and strategic decisions by global enterprises, midsized and smaller businesses, government institutions, trade groups and nonprofits.
In its core products, FiscalNote ingests unstructured data on legislative and regulatory developments, and overlays that data with sophisticated in-house AI and data science experts to deliver structured, relevant and actionable information in order to facilitate key operational and strategic decisions by global enterprises, midsized and smaller businesses, government institutions, trade groups and nonprofits.
In conjunction with the sale of Board.org, the Company amended its Senior Term Loan, which, among other things, revised the day when principal repayments must begin from August 2025 to August 2026, and revised certain of its financial debt covenants. See Note 19, Subsequent Events in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
In conjunction with the sale of Oxford Analytica and Dragonfly, the Company amended its Senior Term Loan, which, among other things, revised certain of its financial debt covenants. See Note 19, Subsequent Events in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
(b) Reflects the non-cash impact from the mark to market adjustments on our warrant and derivative liabilities.
(b) Reflects the non-cash impact from the mark to market adjustments on our financial instruments.
(c) Reflects the non-cash impact of the following for fiscal year 2023: (i) impairment of goodwill of $5,837 in the first quarter of 2023, (ii) impairment of goodwill of $20,004 and other long-lived assets of $6,223, each recorded in the fourth quarter of 2023, (iii) gain from equity method investment of $66, (iii) gain of $2,573 from the change in fair value related to the contingent consideration and contingent compensation related to the Acquisitions; and (iv) unrealized loss on short-term investments of $97.
Reflects the non-cash impact of the following for fiscal year 2023: (i) impairment of goodwill of $5,837 in the first quarter of 2023 and $20,004 in the fourth quarter, (ii) impairment of other long-lived assets of $6,223 in the fourth quarter of 2023, (iii) loss of $34 in the first quarter, loss of $56 in the second quarter, gain of $147 in the third quarter, and gain of $9 in the fourth quarter from our equity method investment, (iv) charge of $2 in the first quarter, charge of $2 in the second quarter, gain of $672 in the third quarter, and gain of $1,905 in the fourth quarter from the change in fair value related to the contingent consideration and contingent compensation related to the Acquisitions; and (v) unrealized loss of $115 in the third quarter and unrealized gain of $18 in the fourth quarter from our investments, respectively.
Our management team assesses our performance based on these non-GAAP measures because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance. We believe these measures are useful for investors for the same reasons.
Certain Non-GAAP Measures We present Adjusted Gross Profit, Adjusted Gross Profit Margin, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin which are non-GAAP financial measures. Our management team assesses our performance based on these non-GAAP measures because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance.
The Company had a negative working capital balance of $40.3 million (excluding cash) at December 31, 2023 and had an accumulated deficit of $816.4 million and $700.7 million as of December 31, 2023 and December 31, 2022, and has incurred net losses of $115.5 million and $218.3 million for the years ended December 31, 2023 and 2022, respectively.
The Company had a negative working capital balance of $29.3 million (excluding cash and short-term investments) at December 31, 2024 and had an accumulated deficit of $806.9 million and $816.4 million as of December 31, 2024 and December 31, 2023, and has incurred net losses of $62.5 million (excluding the gain on sale of businesses) and $115.5 million for the years ended December 31, 2024 and 2023, respectively.
Upon the occurrence of an event of default, in addition to the lenders being able to declare amounts outstanding under the Senior Term Loan due and payable the lenders can elect to increase the interest rate by 5.0% per annum. See also Note 9, "Debt", in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Upon the occurrence of an event of default, in addition to the lenders being able to declare amounts outstanding under the Senior Term Loan due and payable the lenders can elect to increase the interest rate by 5.0% per annum.
General and administrative General and administrative expenses are primarily related to our executive offices, finance and accounting, human resources, legal, internal operations and other corporate functions. These expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses, along with professional fees, depreciation and other allocated overhead.
Editorial Editorial expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for the editorial team involved in acquiring, creating, and distributing content and allocated overhead. General and administrative General and administrative expenses are primarily related to our executive offices, finance and accounting, human resources, legal, internal operations and other corporate functions.
On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Our actual results may differ from these estimates under different assumptions or conditions.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by Adjusted Revenue. We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in this Annual Report on Form 10-K because these non-GAAP measures are key measures used by management to evaluate our business, measure our operating performance and make strategic decisions.
We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in this Annual Report on Form 10-K because these non-GAAP measures are certain key measures used in conjunction with GAAP measures used by the Chief Operating Decision Maker in making decisions to assist management in evaluating our business, measuring our operating performance and making strategic decisions.
Therefore, we evaluate both qualitative and quantitative factors, including the estimated life cycles of our offerings and our customer attrition. Business Combinations Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies.
Business Combinations Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies.
At any time prior to the July 3, 2028, the Investor is entitled to convert all or any portion of the principal amount of the New GPO Note and accrued interest thereon into shares of Class A Common Stock at $8.28 per share.
At any time prior to July 3, 2028, the GPO Investor is entitled to convert all or any portion of the principal and accrued interest thereon into shares of Class A Common Stock based on a conversion price of $7.56 (subject to future adjustment pursuant to the terms of the GPO Convertible Note).
While the Company’s future projections indicate that the Company will have sufficient liquidity to meet its obligations in the normal course of business within one year from the date of this filing, our ability to maintain our minimum cash requirement, fund our future cash interest requirements under our senior term loan and fund our operating expenses and capital expenditure requirements will depend in part on general economic, financial, competitive, legislative, regulatory and other conditions that may be beyond our control.
Our ability to maintain our minimum cash requirement, fund our future cash interest requirements under our senior term loan and fund our operating expenses and capital expenditure requirements will depend in part on general economic, financial, competitive, legislative, regulatory and other conditions that may be beyond our control.
Transaction costs, net Transaction costs consist of acquisition related costs (including due diligence, accounting, legal, and other professional fees, incurred from acquisition activity), fair value adjustments to contingent consideration due to sellers, and non-capitalizable costs.
During the year ended December 31, 2023 an impairment of intangible assets of $6,223 has been identified and recorded. Transaction costs, net Transaction costs consist of acquisition related costs (including due diligence, accounting, legal, and other professional fees, incurred from acquisition activity), fair value adjustments to contingent consideration due to sellers, and non-capitalizable costs.
Cash used in operating activities in the year ended December 31, 2022 was driven by a net loss of $218.3 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $162.7 million, primarily including non-cash interest expense of $52.0 million, paid in kind interest of $11.0, loss on debt extinguishment of $45.3 million, stock-based compensation expense of $38.0 million, a gain due to the change in fair value of warrant liabilities of $15.8 million, loss contingency of $11.7 million, and amortization and depreciation of $23.6 million, and the effect of changes in operating assets and liabilities that resulted in cash outflows of $17.1 million.
Cash used in operating activities in 2024 was driven by net income of $9.5 million, which is adjusted for the exclusion of non-cash expenses and other adjustments totaling $10.9 million, primarily including the gain on sale of businesses of $72.0 million, non-cash and paid-in kind interest expense of $11.0 million, stock-based compensation expense of $17.9 million, a loss due to the change in fair value of financial instruments of $6.4 million, amortization and depreciation of $23.6 million (including the non-cash amortization from deferred costs to obtain revenue contracts) , and other non-cash expenses of $2.1 million and the effect of changes in operating assets and liabilities that resulted in cash outflows of $3.9 million.
Such gross proceeds were offset by $45.2 million transaction costs, which principally consisted of advisory, legal and other professional fees, and were recorded in Additional Paid-in Capital, net of proceeds from the DSAC trust and $3.5 million of debt issuance costs paid out of the proceeds of the Senior Term Loan on the Closing Date, of which $2.8 million was capitalized and $0.7 million included in the loss on debt extinguishment. 41 Cumulative debt repayments, inclusive of accrued but unpaid interest, of $210.7 million were paid in conjunction with the close, which consisted of a $75.3 million repayment of the First Out Term Loan, $61.7 million repayment of the Last Out Term Loan, a $50.0 million payment used to retire the non-converting portion of the Senior Secured Subordinated Promissory Note, a $16.3 million repayment of the 8090 FV Subordinated Promissory Note, and $7.4 million repayment of the 2021 Seller Notes.
Cumulative debt repayments, inclusive of accrued but unpaid interest, of $210.7 million were paid in conjunction with the close, which consisted of a $75.3 million repayment of the First Out Term Loan, $61.7 million repayment of the Last Out Term Loan, a $50.0 million payment used to retire the non-converting portion of the Senior Secured Subordinated Promissory Note, a $16.3 million repayment of the 8090 FV Subordinated Promissory Note, and $7.4 million repayment of the 2021 Seller Notes.
Cash Flow Summary The following tables summarizes our cash flows for the periods presented: Years Ended December 31, (In thousands) 2023 2022 Net loss $ (115,461 ) $ (218,257 ) Net cash provided by (used in): Operating activities $ (35,494 ) $ (72,625 ) Investing activities $ (20,317 ) $ (10,242 ) Financing activities $ 12,077 $ 111,530 Operating activities Cash used in operating activities consists of net loss adjusted for certain non-cash items including depreciation and amortization, stock based compensation, changes in fair value of warrant liabilities, non-cash interest expense, and loss on debt extinguishment, as well as the effect of changes in working capital and other activities.
Cash Flow Summary The following tables summarizes our cash flows for the periods presented: Years Ended December 31, (In thousands) 2024 2023 Net income (loss) $ 9,517 $ (115,461 ) Net cash (used in) provided by: Operating activities $ (5,298 ) $ (35,494 ) Investing activities $ 89,168 $ (20,317 ) Financing activities $ (71,432 ) $ 12,077 Operating activities Cash used in operating activities consists of net income (loss) adjusted for certain non-cash items including depreciation and amortization, gain on sale of businesses, stock-based compensation, changes in fair value of financial instruments, non-cash interest expense, and loss on settlement, as well as the effect of changes in working capital and other activities. 53 Cash used in operating activities in the year ended December 31, 2024 was $5.3 million, an increase of $30.2 million compared to the year ended December 31, 2023.
The convertible notes are unsecured, earn payable in kind interest of 15% per annum, payable in kind monthly, and mature in 2025. Dragonfly Seller Convertible Note On January 27, 2023, we acquired Dragonfly and financed part of the purchase with the issuance of convertible notes.
Dragonfly Seller Convertible Note On January 27, 2023, we acquired Dragonfly and financed part of the purchase with the issuance of convertible notes.
The warrant liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations. The fair value of the public warrants is estimated based on the quoted market price of such warrants.
The determination of the fair value of the warrant liabilities may require company specific inputs such as stock price volatility and discount rate and are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations and comprehensive income (loss).
Revenue by Geography The below tables present our revenues split by geographic region for the periods presented: Year Ended December 31, Change (In thousands) 2023 2022 $ % North America $ 107,108 $ 98,951 $ 8,157 8 % Europe 19,749 10,072 9,677 96 % Australia 1,193 1,122 71 6 % Asia 4,595 3,620 975 27 % Total revenues $ 132,645 113,765 $ 18,880 17 % Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer.
Revenue by Geography The below tables present our revenues split by geographic region for the periods presented: Year Ended December 31, Change (In thousands) 2024 2023 $ % North America $ 95,503 $ 107,108 $ (11,605 ) -11 % Europe 21,792 19,749 2,043 10 % Australia 1,276 1,193 83 7 % Asia 1,695 4,595 (2,900 ) -63 % Total revenues $ 120,266 132,645 $ (12,379 ) -9 % Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer.
Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities. Editorial Editorial expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for the editorial team involved in acquiring, creating, and distributing content and allocated overhead.
Sales and marketing Sales and marketing expenses consist primarily of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for our sales and marketing staff, including commissions, related software subscriptions, consulting fees, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities.
The Company elected to account for the New GPO Note using the fair value option. The New GPO Note was recorded at its June 30, 2023 acquisition date fair value of $36,583.
The GPO Convertible Note was recorded at its June 30, 2023 acquisition date fair value of $36.6 million.
Since the beginning of 2021 we completed 12 acquisitions, including the following: On January 27, 2023, we completed the acquisition of Dragonfly for up to $25.2 million (the "2023 Acquisition"), which included a combination of cash, stock, convertible notes and contingent payments.
On January 27, 2023, we completed the acquisition of Dragonfly for up to $25.2 million (the "2023 Acquisition"), which included a combination of cash, stock, convertible notes and contingent payments. Direct and indirect costs incurred related to our acquisition of Dragonfly totaled $1.4 million during the year ended December 31, 2023.
Recently Issued Accounting Pronouncements For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 1, Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements During the periods presented, we did not engage in any off-balance sheet financing activities or other arrangements that have or are reasonably likely to have a current or future material effect on our financial condition or results of operations. 54 Recently Issued Accounting Pronouncements For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 1, Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Net cash used in investing activities in the year ended December 31, 2022 primarily consisted of cash paid of $10.1 million of software development costs and $1.3 million of capital expenditures, offset by $1.1 million cash acquired from the acquisition of Aicel, net of cash paid for the assets acquisition of DT-Global.
Net cash provided by investing activities in the year ended December 31, 2024 primarily consisted of $98.1 million of cash proceeds for the sale of Board.org and Aicel, offset by cash paid for capital expenditures of $8.9 million primarily related to software development costs.
We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the 60 reversals of existing temporary differences and tax planning strategies.
We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed7 unchanged
Biggest changeTotal revenue during the year ended December 31, 2023, was negatively impacted by approximately 2.0% compared to the year ended December 31, 2022. Interest Rate Risk We are subject to market risk associated with changing interest rates within our variable rate Senior Term Loan. Our exposure to changes in interest rates is associated with the Prime Rate.
Biggest changeTotal revenue during the year ended December 31, 2024, was positively impacted by approximately 1.0% compared to the year ended December 31, 2023. Interest Rate Risk We are subject to market risk associated with changing interest rates within our variable rate Senior Term Loan. Our exposure to changes in interest rates is associated with the Prime Rate.
Inflation Risk Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our business. 62
Inflation Risk Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our business. 58
Assuming no change in the outstanding borrowings on our Senior Term Loan, we estimate that a one percentage point increase in the Prime Rate would increase our annual cash interest expense by approximately $1.6 million on an annual basis.
Assuming no change in the outstanding borrowings on our Senior Term Loan, we estimate that a one percentage point increase in the Prime Rate would increase our annual cash interest expense by approximately $0.9 million on an annual basis.
As of December 31, 2023, we had outstanding borrowings on our Senior Term Loan of $158.2 million that bears interest at a floating rate based on the Prime Rate plus an applicable margin. At December 31, 2023 the interest on our Senior Term Loan was 13.50%.
As of December 31, 2024, we had outstanding borrowings on our Senior Term Loan of $88.6 million that bears interest at a floating rate based on the Prime Rate plus an applicable margin. At December 31, 2024 the interest on our Senior Term Loan was 12.75%.
Removed
See Note 19, Subsequent Events in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for a discussion of the changes that Amendment No 4 to the Senior Term Loan will make to the outstanding balance and interest of the Senior Term Loan.

Other NOTE 10-K year-over-year comparisons