NEW YORK, April 03, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against SoundHound AI, Inc. (“SoundHound”” or the “Company”) (NASDAQ: SOUN) and certain officers. The class action, filed in the United States District Court for the Northern District of California, and docketed under 25-cv-02915, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired SoundHound securities between May 10, 2024 and March 3, 2025, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are an investor who purchased or otherwise acquired SoundHound securities during the Class Period, you have until May 27, 2025 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
SoundHound provides an independent voice artificial intelligence (“AI”) platform that purportedly enables businesses across industries to deliver high-quality conversational experiences to their customers.
At all relevant times, the Company has identified material weaknesses in its internal control over financial reporting. Specifically, SoundHound has acknowledged that it has “lacked sufficient oversight of activities related to its internal control over financial reporting,” and that due to “rapid business growth,” “changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting, which [has] resulted in the Company not designing and maintaining effective controls related to substantially all accounts and disclosures,” including “effective controls to verify appropriate accounting for complex financing transactions.” However, SoundHound has consistently represented that it is “in the process of designing and implementing controls and taking other actions to remediate” the foregoing material weaknesses.
In January 2024, SoundHound acquired all of the issued and outstanding equity of SYNQ3, a provider of voice AI and other technology solutions to the restaurant industry, for total purchase consideration of $15.8 million (the “SYNQ3 Acquisition”). Then, in August 2024, the Company acquired Amelia Holdings, Inc. (“Amelia”), a privately-held conversational AI software company involved in the development and delivery of AI and automation solutions and related services, for a “[p]urchase price of $80M in cash and equity, with partial payment and assumption of Amelia’s debt, as well as future earnout potential aligned to revenue milestone achievements” (the “Amelia Acquisition”). SoundHound has stated that these “strategic acquisitions” contributed to the Company’s “breakthrough year” in 2024, “expanding [its] leadership position in voice and conversational AI.”
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the material weaknesses in SoundHound’s internal controls over financial reporting impaired the Company’s ability to effectively account for corporate acquisitions; (ii) in addition, the Company overstated the extent to which it had remediated, and/or its ability to remediate, the material weaknesses in its internal controls over financial reporting; (iii) as a result of the foregoing material weaknesses, SoundHound’s reported goodwill following the Amelia Acquisition was inflated and would need to be corrected; (iv) further, SoundHound would likely require extra time and expense to effectively account for the SYNQ3 and Amelia Acquisitions; (v) the foregoing increased the risk that the Company would be unable to timely file certain financial reports with the United States Securities and Exchange Commission (“SEC”); and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On March 4, 2025, SoundHound disclosed in a filing with the SEC that it would be unable to timely file its Annual Report for 2024 (the “2024 10-K”). SoundHound stated that “[d]ue to the complexity of accounting for [the SYNQ3 and Amelia Acquisitions], the Company require[d] additional time to prepare financial statements and accompanying notes” and that it “ha[d] identified material weaknesses in its internal control over financial reporting.”
On this news, SoundHound’s stock price fell $0.61 per share, or 5.86%, to close at $9.72 per share on March 4, 2025.
Then, on March 11, 2025, SoundHound filed its 2024 10-K. In the 2024 10-K, SoundHound stated, in relevant part, that, as of December 31, 2024, “[t]he Company did not design and maintain effective controls related to the identification of and accounting for certain non-routine, unusual or complex transactions, including the accounting for complex financing transactions and acquisitions”—disclosing for the first time that the Company’s lack of effective controls was impairing its ability to account for corporate acquisitions.
Further, in discussing the Amelia Acquisition, the 2024 10-K stated, in relevant part, that, during the year ended December 31, 2024, as a result of the foregoing material weaknesses related to the Company’s ability to account for corporate acquisitions, SoundHound “recorded adjustments to correct certain errors in the preliminary purchase price allocation that existed as of [August 6, 2024 (the “Amelia Acquisition Date”)],” which “decreased the contingent earnout consideration by $5.3 million, decreased the accounts payable by $3.7 million, decreased the accrued liabilities by $1.2 million, increased deferred revenue by $0.3 million and increased the deferred tax liabilities by $0.7 million” and “[a]s a result of the adjusted [Amelia Acquisition Date] fair value of contingent earnout consideration recognized, assets acquired and liabilities assumed, we recorded a decrease of $9.3 million to the goodwill recognized.”
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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CONTACT:
Danielle Peyton
Pomerantz LLP
dpeyton@pomlaw.com
646-581-9980 ext. 7980
