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Summary of Business and Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2025
Accounting Policies [Abstract] |
Summary of Business and Significant Accounting Policies | Note 1. Summary of Business and Significant Accounting Policies Description of Business FiscalNote Holdings, Inc. (“FiscalNote,” or the “Company”) is a leading Software as a Service ("SaaS") technology provider of policy and regulatory intelligence. By uniquely combining proprietary artificial intelligence ("AI") technology, comprehensive data, and decades of trusted analysis, FiscalNote helps customers efficiently manage political and business risk. Since 2013, the Company has pioneered solutions that deliver critical insights, enabling effective decision making and giving organizations the competitive edge they need. Home to PolicyNote, CQ, Roll Call, VoterVoice, and many other industry-leading products and brands, FiscalNote serves thousands of customers worldwide with its global offices in North America, Europe, Asia and Australia. The Company is headquartered in Washington, D.C. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet and its results of operations, including its comprehensive loss, temporary equity, stockholders' equity (deficit), and cash flows. All adjustments are of a normal recurring nature. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for any subsequent quarters or for the fiscal year ending December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Liquidity and Going Concern In accordance with Accounting Standards Codification Topic 205-40, Going Concern, the Company evaluates whether there are certain conditions and events, when considered in the aggregate, which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s cash, cash equivalents, restricted cash, and short-term investments were $46.9 million at March 31, 2025, compared with $35.3 million at December 31, 2024. Further, the Company had a negative working capital balance of $32.5 million (excluding cash and short-term investments) at March 31, 2025 and had an accumulated deficit of $811.1 million and $806.9 million as of March 31, 2025 and December 31, 2024, respectively, and incurred net losses (excluding the effect of the gain on sale of businesses) of $20.0 million and $21.0 million for the three months ended March 31, 2025 and 2024, respectively. Management expects that significant 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. Historically, the Company’s cash flows from operations have not been sufficient to fund its current operating model and the Company funded operations through debt and selling assets (see Note 4, Acquisitions and Dispositions). The Company has implemented various cost saving measures throughout 2024 and 2025 to rationalize its cost structure and is actively evaluating additional cost saving opportunities and sources of capital. The Company may execute other strategic alternatives to maximize stakeholder value, including further expense reductions, sale of all or portions of the business, corporate capital restructuring or formal reorganization, or liquidation of assets. As disclosed in Note 8, Debt, the Company is subject to certain financial covenants. The Company’s ability to maintain compliance with these financial covenants is based on the Company’s current expectations regarding revenues, collections, cost structure, current cash burn rate and other operating assumptions, which in part, depend on general economic, financial, competitive, legislative, regulatory, and other conditions. Additionally, the Company has approximately $10,961 of convertible notes maturing on April 15, 2026 (Note 8, Debt-Amended Legacy Notes). Within one year from the date of this filing, without any actions taken by management and lenders, it is probable that the Company will not be compliant with one, or all, of its financial covenants. At the time that the Company does not maintain compliance with all of its financial covenants, the lenders may declare the amounts outstanding due and payable at which time the Company would not be able to satisfy the lenders' rights. Accordingly, the Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of this filing. There can be no assurance that any necessary additional financing in the future will be available on terms acceptable to the Company, or at all. If the Company raises funds in the future by issuing equity securities, dilution to stockholders will occur and may be substantial. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of common stock. If the Company raises funds in the future by issuing additional debt securities, these debt securities could have rights, preferences, and privileges senior to those of preferred and common stockholders. The terms of any additional debt securities or borrowings could impose significant restrictions on the Company’s operations. The capital markets have experienced in the past, and may experience in the future, periods of upheaval that could impact the availability and cost of equity and debt financing. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Segments The Company is the leading technology provider of global policy and market intelligence and operates out of a single operating segment. The Company derives revenues from customers by delivering critical, actionable legal and policy insights in a rapidly evolving political, regulatory and macroeconomic environment. The Company's chief operating decision making ("CODM") is the chief executive officer. The chief operating decision maker assesses performance for the single operating segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net (loss) income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The Company does not have intra-equity sales or transfers. The Company operates as a single operating segment as the chief operating decision maker manages the business activities on a consolidated basis. The primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss). The CODM uses net income (loss) and operating income (loss) to evaluate the performance of the Company's ongoing operations and as part of the Company's internal planning and forecasting processes. Information on Net income (loss) and Operating income (loss) is disclosed in the Consolidated Statement of Operations. Segment expenses and other segment items are provided to the CODM on the same basis as disclosed in the Consolidated Statement of Operations. The CODM does not evaluate performance or allocate resources based on assets of the single segment, and therefore such information is not presented in the notes to the financial statements. Earnings per Share Basic earnings per share ("EPS") is calculated by dividing the net income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period and the weighted average number of dilutive common stock equivalents outstanding for the period determined using the if-converted method (convertible debt instruments) or treasury-stock method (warrants and share-based payment arrangements). For purposes of this calculation, common stock issuable upon conversion of debt, options and warrants are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive. Fair Value of Financial Instruments The Company has elected the fair value option for the GPO Convertible Note, Dragonfly Seller Convertible Notes, and the Era Convertible Notes, refer to Note 8, Debt for further details. The Company records changes in fair value through the condensed consolidated statement of operations where the portion of the change that results from a change in the instrument-specific credit risk is recorded separately in accumulated other comprehensive income, if applicable. Additionally, under the fair value option, all issuance costs are expensed in the period that the debt is incurred. Investments The Company has invested in highly liquid investments that have investment-grade ratings. These investments are accounted for at fair value through the condensed consolidated statement of operations. The Company is able to easily liquidate these into cash; accordingly, the Company has presented these investments as available for current operations and are presented as short-term investments within current assets in the condensed consolidated balance sheets. Purchases and sales of short-term investments are classified in the investing section of our consolidated statement of cash flows. Concentrations of Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company generally maintains its cash and cash equivalents with various nationally recognized financial institutions. The Company’s cash and cash equivalents at times exceed amounts guaranteed by the Federal Deposit Insurance Corporation. The Company considers cash on deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At March 31, 2025, approximately 81% of the Company’s cash and cash equivalents were held at JPMorgan Chase Bank, N.A. The Company does not require collateral for accounts receivable. The Company maintains an allowance for its doubtful accounts receivable due to estimated credit losses. This allowance is based upon historical loss patterns, the number of days billings are past due, collection history of each customer, an evaluation of the potential risk of loss associated with delinquent accounts and current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss patterns. The Company records the allowance against bad debt expense through the condensed consolidated statements of operations, included in sales and marketing expense, up to the amount of revenues recognized to date. Any incremental allowance is recorded as an offset to deferred revenue on the condensed consolidated balance sheets. Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success. As of March 31, 2025 and December 31, 2024, allowance for credit losses of $1,471 and $1,343, respectively, was included in the accounts receivable, net balance. No single customer accounted for more than 10% of the Company's accounts receivable balance as of March 31, 2025 and December 31, 2024. Revenues derived from the U.S. Federal Government were 18% and 17% of revenues for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and December 31, 2024, assets located in the United States were approximately 97% and 85% percent of total assets, respectively. As of March 31, 2025 one vendor accounted for more than 10% of the Company's accounts payable balance. Two vendors individually accounted for more than 10% of the Company’s accounts payable balance as of December 31, 2024. During the three months ended March 31, 2025 and 2024, one vendor represented more than 10% of the total purchases made. Recent Accounting Pronouncements Not Yet Effective In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to disclose disaggregated information about a reporting entity's effective tax rate reconciliation as well as additional information on income taxes paid. For public entities, ASU 2023-09 is required to be adopted for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures. In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), as amended by ASU 2025-01, which requires public entities to disclose disaggregated information about certain income statement line items in the notes to the financial statements. For public entities, ASU 2024-03 is required to be adopted for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

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