x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
Delaware | 84-1797523 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
8484 Georgia Ave., Suite 700 Silver Spring, Maryland | 20910 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Symbol(s) | Name of exchange on which registered | |||||||||||||
Common Stock, par value $0.0001 | CURI | NASDAQ | ||||||||||||||
Warrants, each exercisable for one share of Common stock at an exercise price of $11.50 per share | CURIW | NASDAQ |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||||||||||||
Emerging growth company | ☒ |
TABLE OF CONTENTS
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Item 1A. | ||||||||||||
Item 1C. | ||||||||||||
i
Part I
CERTAIN DEFINED TERMS
In this Annual Report on Form 10-K,Contents unless otherwise stated or unless the context otherwise requires:
“App Services” means applications developed for iOS, Android, streaming media players and smart tv operating systems.
“Board” means the board of directors of the Company.
“Bundled MVPD Business” refers to our ability to convey a broad scope of rights, including 24/7 “linear” channels, on-demand content library, mobile rights and/or pricing and packaging flexibility, in exchange for an annual fixed fee or fee per subscriber as part of a multi-year agreement.
“Bundled MVPD Partners” means affiliate relationships with MVPDs, broadband and wireless companies in the U.S. and international territories.
“Business Combination” means the acquisitions and transactions contemplated by that certain Agreement and Plan of Merger, dated August 10, 2020.
“Bylaws” means the Amended and Restated Bylaws of CuriosityStream Inc.
“Charter” means the Second Amended and Restated Certificate of Incorporation of CuriosityStream Inc.
“Common Stock” means the Common Stock of the Company, par value $0.0001 per share.
“Code” means the Internal Revenue Code of 1986, as amended.
“Content Licensing Business” means CuriosityStream’s licensing of existing content to certain media companies in a traditional content licensing deal or selected rights to content prior to production.
“DGCL” means the Delaware General Corporation Law.
“Direct Service” or “Direct to Consumer Business” means App Services together with O&O Service.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“GAAP” means United States generally accepted accounting principles, consistently applied, as in effect from time to time.
“IPO” means SAQN’s initial public offering of Units consummated on November 22, 2019.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.
“Legacy CuriosityStream” means Curiosity Inc., a Delaware corporation (formerly named CuriosityStream Operating Inc., and prior to the consummation of the Business Combination, CuriosityStream Inc.).
“MVPDs” means multichannel video programming distributors.
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“NASDAQ” means The NASDAQ Capital Market.
“Nebula” means Watch Nebula LLC.
“O&O Service” means our owned and operated website.
“Omnibus Incentive Plan” means our 2020 Omnibus Incentive Plan.
“Partner Direct Business” means, collectively, MVPDs that include Comcast and Cox, and vMVPDs and digital distributors that include Amazon Prime Video Channels, Roku Channels, Sling TV and YouTube TV.
“PIPE” means the issuance and sale to the PIPE Investors, an aggregate of 2,500,000 shares of Common Stock for an aggregate purchase price of $25,000,000 pursuant to Subscription Agreements between the Company and the PIPE Investors.
“PIPE Investors” means certain third-party investors in the PIPE.
“PIPE Warrants” means the 353,000 warrants issued to PIPE Investors in connection with our Business Combination.
“Private Placement Warrants” means the 3,676,000 warrants issued to Software Acquisition Holdings LLC in a private placement that closed concurrently with our IPO.
“Public Warrants” means the 7,475,000 warrants sold as part of the Units in the IPO.
“SAQN” means Software Acquisition Group Inc. prior to the consummation of the Business Combination.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“SVOD” means subscription video on-demand.
“Units” means the units of SAQN, each consisting of one share of Common Stock and one-half of one Warrant, with each such Public Warrant entitling the holder thereof to purchase one share of Common Stock at a price of $11.50 per share, subject to certain adjustments. On October 14, 2020, the Company’s Common Stock and Public Warrants were listed on NASDAQ under the new trading symbols of “CURI” and “CURIW,” respectively, and all of SAQN’s units separated into their component parts of (i) one share of Common Stock and (ii) one-half (1/2) of one warrant and ceased trading on NASDAQ.
“vMVPDs” means virtual MVPDs.
“Warrants” means the Private Placement Warrants, the PIPE Warrants and Public Warrants.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
•suggest and serve content to its subscriber base;
•meet the needs of distributor partners;
•increase and retain its subscriber base and increase subscriber hours;
•enter into integrated partnerships with corporate partners and advertisers;
•develop integrated brand partnerships;
•attract and retain sponsors;
effectively market for online sponsorship;
•anticipate trends in video consumption;
•compete for subscribers and sponsorship spending with other content services;
•protect against the loss, misuse, and alteration of customers’ personally identifiable information;
•meet future liquidity requirements;
•continue operating under existing laws and licensing regimes;
•license content at favorable rates;
anticipate•realize the uncertainties inherent in the development of newintended efficiencies and benefits from our business linesstrategies and business strategies;
•achieve positive net cash flow and profitability; • |
identify, recruit, retain, incentivize and integrate existing and new employees, advisors and consultants;
•attract, train and retain effective officers, key employees and directors;
increase brand awareness;
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upgrade and maintain information technology systems, including backup systems;
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acquire, and enhance the capabilities of, its intellectual property;
•protect its intellectual property by relying on confidentiality and license agreements with our employees, consultants and third parties, and on trademark and copyright laws;
•obtain additional capital, including use of the debt market and through the issuance of various types of securities;
•enhance future operating and financial results;
•meet international and education market expansion plans, including by managing and adjusting its business to address varying international markets;
•comply with laws and regulations applicable to its business;
•stay abreast of modified or new laws and regulations applying to its business, including copyright and privacy regulation;
improve its review process for complex accounting standards;
•negotiate content and other licensing agreements;
•invest in content and marketing, including investments in original programming;
•invest in our corporate governance, including adding personnel and systems to its administrative and revenue-generating functions;
•maintain the listing of our securities with NASDAQ
•anticipate the impact of new U.S. federal, state and international income tax laws, including the impact on deferred tax assets.
•an inability to maintain and develop new and existing revenue-generating relationships and partnerships or to significantly increase the Company’s subscriber base and retain customers;
•a failure to develop, acquire and maintain an adequate breadth and depth of content;
•the Company’s inability to protect its intellectual property;
•the impact of content and pricing changes on subscriber growth;
•increased competition in the subscription video on-demand market segment; • |
the possibility that the Company may be unable to access financing sources;
•a failure to attract new and qualified personnel in a timely and effective manner and retain existing personnel;
•adverse changes in applicable laws or regulations, including but not limited to privacy laws, tax laws, securities regulations and accounting standards;
•a failure to maintain adequate privacy and data security systems and protocols;
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•general economic conditions and economic conditions specific to the internet, online commerce and the media industry; and
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•If our efforts to attract and retain users are not successful, our business will be adversely affected.
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Labor shortages could adversely affect•If we do not continuously provide value to our users, including making improvements to our service in a manner that is favorably received by them, our revenue, results of operations;
•We have a limited operating history and history of net losses, and we anticipate that we will experience net losses for the foreseeable future;
•Our operating results are expected to be difficult to predict based on a number of factors that also may affect our long-term performance;
•If we are not able to manage our growth, our business could be adversely affected;
•We may be unable to realize intended efficiencies and benefits from our ongoing cost-savings initiatives, which may adversely affect our profitability, financial condition or our business.
•Certain of our growth strategies are untested, unproven or not yet fully developed;
•If we experience excessive rates of user churn, our revenues and business will be harmed;
•If our efforts to build a strong brand identity and improve user satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our operating results may be adversely affected;
•We may be unable to compete successfully against current and future competitors, and competitive pressures could harm our business and prospects;
•We face risks, such as unforeseen costs and potential liability, in connection with content we acquire, produce, license and/or distribute through our service;
•We rely upon a number of partners to make our service available on their platforms and devices;
We are subject to payment processing risk;
•Distributors’ failure to promote our content could adversely affect our revenue and could adversely affect our business results;
•If we fail to maintain or, in newer markets establish, a positive reputation with consumers concerning our service includingand the content we offer, we may not be able to attract or retain users, we may face regulatory scrutiny and our operating results may be adversely affected;
•Changes in competitive offerings for video entertainment, including the potential rapid adoption of piracy-based video offerings, could adversely impact our business;
If government regulations relating to the internet or other areas of our business change, we may need to alter the manner in which we conduct our business or incur greater operating expenses;
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•Changes in how we market our service, or increases in our advertising rates, could adversely affect our marketing expenses and user levels may be adversely affected;
We may find it difficult to successfully compete without significant capital investment or loans beyond what is available to us in current and future capital raising efforts;
•Emerging industry trends in digital advertising may pose challenges for our ability to forecast or optimize our advertising inventory, which may adversely impact our ability to capture advertising spend;
•Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business;
•Our business emphasizes rapid innovation and prioritizes long-term user engagement over short-term financial condition or results of operations, which strategy could have an adverse impact on our business, operating results and financial condition;
•If content providers or other rights holders refuse to license streaming content or other rights upon terms acceptable to us, our business could be adversely affected;
•We may find it difficult to successfully compete without significant capital investment or loans beyond what is available to us in current and future capital raising efforts
Our cash and cash equivalents could be affected if the financial institutions•Any significant disruption in whichor unauthorized access to our computer systems or those of third parties that we holdutilize in our cash and cash equivalents fail;
If the technology we use in operating our business fails, is unavailable,operations, including those relating to cybersecurity or does not operate to expectations, our business and results of operation could be adversely impacted;
We could be subject to economic, political, regulatory and other risks arising from cyber-attacks, could result in a loss or degradation of service, unauthorized access, harm to our international operations;reputation, disclosure or destruction of data, including user and
•NASDAQ may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions; and
Item
BUSINESS
Corporate History and Background
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SAQN, a blank check company, was incorporated as a Delaware corporation on May 9, 2019, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Business Overview
Created
In January 2024, we rebranded our service that offers these audio and video courses and talks "Curiosity University."
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Also in 2021, the Company partnered with SPIEGELSpiegel TV to accelerate international expansion of CuriosityStream services, taking a one-third stake in the German venture owned by a German media company, Spiegel, and a German documentary producer, Autentic. The joint venture, SPIEGELSpiegel TV includes distribution ofGeschichte und Wissen GmbH & Co. KG (the “Spiegel Venture”), operates two linear cabledocumentary channels including(including one branded as Curiosity Channel,"Curiosity Channel"), together with an SVOD service and a FAST channel, as well as revenue sharing on a localized CuriosityStream SVOD service in German-speaking Europe.
In addition, Our Smart Bundle pricing remains unchanged. However, we may in the future increase the price of these existing subscription plans, which may have a positive effect on our revenue from this line of our business.
In addition to our Direct to Consumer Business and Partner Direct Business, we have affiliate relationships with our Bundled MVPD Partnersand vMVPDs, which are broadband and wireless companies in the US and international territories to whom we can offer a broad scope of rights, including 24/7 “linear” channels, our on-demand content library, mobile rights and pricing and packaging flexibility, in exchange for an annual fixed fee or fee per subscriber as part of a multi-year agreement. This Bundled MVPD Business offers us the advantages of long-cycle and recurring revenue and the potential to access hundreds of millions of paying subscribers globally. As a young and digital-native company, we are not laden with some of the overhead costs nor over-dependent on lines of business that may hamper the growth of legacy media companies.
Our
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Our business model relies on the collaboration of (1)ads while delivering our content team, which works with more than 150 production companies and distributors across the world to create and acquire programming, (2) our legal and finance teams, which structure and formalize agreements, (3) our creative services and content operations teams, which develop all of the marketing materials, metadatathrough advertising-based video-on-demand (AVOD), transactional video-on-demand (TVOD), free advertising-supported streaming television (FAST), YouTube and other assets associated with a piecesimilar distribution channels.
Our revenue forResults
Please see “
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for a more detailed discussion of our product and service lines and channels through which we generate revenue.Competition
Seasonality
Intellectual Property
Our registered trademarks in the United StatesU.S. include “Curiosity,” “CuriosityStream” and “One Day University.”
among others.
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Government Regulation
As a company conducting business on the internet, we are subject to several foreign and domestic laws and regulations relating to information and network security, data protection, privacy, and governmental access to data, among other things. Many of these laws and regulations are still evolving and could be interpreted, updated, or new laws passed in ways that could harm our business. In the area of information and network security and data protection, the laws in the United States,U.S., the European Union (the “EU”), and other jurisdictions globally can require specified actions to maintain the confidentiality, integrity and availability of networks and data. Additionally, laws in many U.S. states require companies to implement specific information security controls to protect certain types of personally identifiable information. Likewise, U.S. states, the EU, China, and other jurisdictions have laws in place requiring companies to notify users, regulators, and sometimes law enforcement if there is a security breach that compromises certain categories of information, including personal information and personally identifiable information.
Privacy Policy
Employees
We had approximately 78 and 83 full-time employees on average, during 20222023 and 2021,2022, respectively. As of December 31, 2022,2023, we had approximately 65employed 48 full-time employees, all of whom were located in the U.S. During 2023, we eliminated 20 positions, including 13 positions eliminated as part of a December 2023 restructuring. Our eliminated roles during the year were primarily in the areas of technology, operations and programming.
factors.
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advisory firm, to review our compensation structure. Our compensation program is designed to attract, retain, and motivate highly qualified employees and executives and is comprised of a mix of competitive base salary, bonus and equity compensation awards, as well as other employee benefits. Almost all current employees have received equity grants with vesting conditions designed to facilitate the retention of personnel and the opportunity to benefit financially from the Company’sour potential future growth and profitability. Our 401(k) Retirement Plan includesretirement plan contributions include a Company100% match of up 100 percent of contributions up to 3 percentfor the first 3% of the employee’s compensationbase salary and a 50 percent Company50% match of contributions between 3 percent3% and 5 percent5% of the employee’s compensation.
base salary.
In addition, the health and safety of our employees and communities are of primary concern to us. During the COVID-19 pandemic and its aftermath, we took significant steps to protect our workforce, including:
Mandating or allowing remote or hybrid work for all employees;
Establishing additional cleaning and sanitization practices in the Office;
Implementing touchless contact points for most doors in the Office;
Establishing physical distancing procedures for employees in the Office, as necessary;
Requiring (as necessary) or promoting face coverings to be worn in the Office during certain periods and under certain circumstances and having disposable face coverings available for use,
Implementing HEPA air filter system in the conference room in the Office; and
Installing self-service hand sanitizer dispensers in the Office.
Item
RISK FACTORS
Risks Related to the Company’s Business
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pricing, commensurate with the lowered growth rate, such that our margins, liquidity and results of operations may be adversely impacted, and our ability to operate at a net-loss may be strained. If we are unable to successfully compete with current and new competitors in providing compelling content, retaining our existing users and attracting new users, our business will be adversely affected. Further, if excessive numbers of users cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate to replace these users with new users.
The coronavirus (COVID-19) pandemic
The coronavirus (COVID-19) pandemic and the various responses to it created significant volatility, uncertainty and economic disruption. In response to government mandates, health care advisories and in otherwise responding to employee and vendor concerns, we altereddiscontinue certain aspects of our operations. Other business partners similarly had their operations altered or temporarily suspended. Production pauses caused us and may cause us in the future to temporarily have less new content available on our service, which could negatively impact consumer demand for and member retention to our service and the number of paid memberships. Temporary production pauses or permanent shutdowns in production could result in content asset impairments or other charges and will change the timing and amount of cash outflows associated with production activity.
Recently, there has been a return to more normal societal interactions, including the way we operate our business. However, the full extent to which the COVID-19 pandemic and the various responses to it impact our business, operations and financial results continues to depend on numerous evolving factorsbusiness partnerships that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the availability and cost to access the capital markets; the effect on our customers and customer demand for and ability to pay for our services; increased competition with alternative media platforms and technologies; disruptionsno longer believe are additive or restrictions on our employees’ ability to work and travel; interruptions or restrictions related to the provision of streaming services over the internet, including impacts on content delivery networks and streaming quality; and any stoppages, disruptions or increased costs associated with our development, production, post-production, marketing and distribution of original programming. Future disruptions arising from the ongoing and any new pandemics could have a significant negative impact on our costs of doing business and otherwise negatively impact our results of operations. We will continue to actively monitor the effects of the COVID-19 pandemic on our business and may take further actions that alter our business operations, the potential effects of which on our
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business and financial results, customers, suppliers or vendors are unclear. In addition to the potential direct impactscomplementary to our business the global economy may continueor strategic direction. These initiatives are intended to reduce operating costs [and to strengthen focus on our core business]. If we do not successfully manage our current cost-savings activities, our expected efficiencies, benefits and cost savings might be impacted as a result of the actions taken in response to COVID-19, including through elevated inflation, supply chain disruptions and a sensitive and evolving labor market. To the extent that such a weakened global economy impacts consumers’ abilitydelayed or willingness to pay for our service or vendors’ ability to provide services to us, especially those related to our distribution and content productions, our business and results of operation may be negatively impacted.
Labor shortages could adversely affect our results of operations.
In 2022 and 2021, many companies experienced labor shortages and other labor-related issues, which were pronounced as a result of the COVID-19 pandemic. A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels, federal unemployment subsidies, increased wages offered by other employers, elevated rates of inflation, vaccine mandates and other government regulationsnot realized, and our responses thereto. As more employers offer remote work, we may have more difficulty recruiting for jobs that require on-site attendance. We have recently observed an overall tighteningoperations and increasingly competitive labor market. If we are unable to hire and retain employees capable of performing at a high level, our business could be adversely affected. A sustained labor shortage, lackdisrupted. In addition, we may incur additional impairment charges related to fixed assets, goodwill and other intangibles, which may be material and may exceed our estimates. Furthermore, a disruption to our operations or business may cause employee morale and productivity to suffer and may result in unwanted employee attrition. Such disruptions require substantial management time and attention and may divert management from other important work or result in a failure to meet operational targets. Moreover, we could make changes to, or experience delays in executing, any cost-savings initiatives, any of skilled labor, or increased turnover within our employee base, caused by COVID-19 or as a result of general macroeconomic factors,which could have a material adverse impact on our businesscause further disruption and operating results.
additional unanticipated expense.
You should consider
We have experienced significant net losses since our inception and, given$290.0 million. Given the significant operating and capital expenditures associated with our business plan, we anticipate continuing to incur net losses for the foreseeable future. If we do achieve profitability, we cannot be certain that we will be able to sustain or increase such profitability. We incurred a net loss of approximately $50.9$48.9 million for the year ended December 31, 2022. We2023, and we have not generated positive cash flow from operations wesince our inception. We may not be able to operate at a net loss indefinitely, and we cannot be certain that we will be able to generate positive cash flow from operations in the future.
•our ability to maintain and develop new and existing revenue-generating relationships;
•our ability to improve or maintain gross margins in our business;
•the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and governance;
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•our ability to significantly increase our subscriber base and retain customers;
•our ability to enforce our contracts and collect receivables from third parties;
•our ability to develop, acquire and maintain an adequate breadth and depth of content via original productions, co-productions, commissions and/or licenses; • |
changes by our competitors to their product and service offerings;
•increased competition;
•changes in promotional support or other aspects of our relationships with our partners through which we make our service available, including the MVPDs and/or the vMVPDs, through which we offer our content;
•our ability to effectively manage the development of new business segments and markets, and determine appropriate contract and licensing terms;
•our ability to maintain and develop new and existing marketing relationships;
•our ability to maintain, upgrade and develop our website, our applications through which we offer our service on our customers’ devices and our internal computer systems;
•fluctuations in the use of the internet for the purchase of consumer goods and services such as those offered by us;
•technical difficulties, system downtime or internet disruptions;
•our ability to attract new and qualified personnel in a timely and effective manner and retain existing personnel;
•conflicts of interest involving our founder and principal stockholder, John Hendricks;
•our ability to attract and retain sponsors and prove that our sponsorship offerings are effective enough to justify a pricing structure that is profitable for us;
•the success of our content licensing to other media companies;
•our ability to successfully manage the integration of operations and technology resulting from possible future acquisitions;
•governmental regulation and taxation policies; and
•general economic conditions and economic conditions specific to the internet, online commerce and the media industry.
rapidlysignificantly since we launched our subscription service in March 2015. We anticipate that further expansion of our operations will be required to achieve significant growth in our products, lines of business and user base and to take advantage of favorable market opportunities. Any future expansion will likely place significant demands on our managerial, operational, administrative and financial resources. If we are not ableunable to respond effectively to new or increased demands that arise because of our growth, or, if in responding, our management is materially distracted from our current operations, our business may be adversely affected. In addition, if we do not have sufficient breadth and depth of content necessary to satisfy increased demand arising from growth in our user base, our user satisfaction may be adversely affected.are continuing to expandhave expanded our operations internationally, scaling our serviceseeking to effectively and reliably handle anticipated growth in both users and features related to our service. As our offerings evolve, we are14
managing and adjusting our business to address varied content offerings, consumer customs and practices, different technology infrastructure, different markets for factual video content, as well as differing legal and regulatory environments. As we scaleexpand our service and introduce new features such as our free streaming channel, Curiosity Now, and our Smart Bundle plan, we are developing technology and utilizing third-party “cloud” computing, technology and other services. We are building out expertise in a number of disciplines, including creative, marketing, legal, finance, and licensing, which requiresThese efforts require significant resources, operational efficiency and management attention. If we are not able to manage the growing complexity of our business in an efficient manner, including improving, refining or revising our systems and operational practices related to our operations and original content development, our business may be adversely affected.
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corporate social responsibility market, expanding into the branded partnerships market, developing our Content Licensing Businessbusiness and developing our in-house production studio, Curiosity Studios.Studios, as well as our increasing focus on AVOD, TVOD and FAST channels. Our content is primarily in the English language with subtitling or dubbing in Spanish, Mandarin, Russian, Swedish, German, Dutch, Danish, Finnish, Norwegian and Slovenian in parts of our library and the world where demand exists and we have the language version rights. Our rights to the international distribution of portions of our co-produced or licensed content are subject to certain geographic and platform or media restrictions. However, we intend to seek partnerships with strong platforms in international territories, subject, in each case, to any then-existing geographic and media restrictions on the distribution of any of our content. There can be no assurance that these international partnerships will be successful or result in our meeting revenue targets.
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We rely upon a number of partners to make our service available on their platforms and devices.
If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements. The termination of our ability to process payments on any major payment method would significantly impair our ability to operate our business.
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determining success. Any decision by those distributors not to distribute or promote our content or to promote our competitors’ content to a greater extent than they promote our content could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.
In addition, new technological developments, including the development and use of generative artificial intelligence, are rapidly evolving. If our competitors gain an advantage by using such technologies, our ability to compete effectively and our results of operations could be adversely impacted. Companies also may enter into business combinations or alliances that strengthen their competitive positions.
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Emerging industry trends in digital advertising may pose challenges for our ability to forecast or optimize our advertising inventory, which may adversely impact our ability to capture advertising spend.
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Our business emphasizes rapid innovation and prioritizes long-term user engagement over short-term financial condition or results of operations, which strategy could have an adverse impact on our business, operating results and financial condition.
As a result of a sustained decrease in our share price during the second quarter of 2022, we concluded that a triggering event had occurred, and conducted impairment testing of our goodwill balance. As a result of this impairment test, webalance and recognized a goodwillan impairment charge of $2.8 millionto goodwill.
During the second quarter of 2022, we also determined there werethat impairment indicators existed with respect to certain of the Company’sour finite-lived intangible assets. As a result, we performed an impairment test by comparing the carrying values of the intangible assets to their respective fair values, which were determined based on forecasted future cash flows. As a result of this impairment test, we recorded an impairment charge of $0.8 millionto those finite-lived intangible assets during the second quarter of 2022.
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expectations are not met, or if market factors outside of our control change significantly, then our reporting unit or intangible assets might become impaired in the future, adversely affecting our operating results and financial position. The carrying amounts of our content assets goodwill and finite-lived intangible assets are susceptible to impairment risk if there are unfavorable changes in such assumptions, estimates and market factors. To the extent that business conditions deteriorate or key assumptions and estimates differ significantly from our management’s expectations, it may be necessary to recognize additional impairment charges in the future.
Risks Related to Intellectual Property
Additionally, as the market for the digital distribution of content grows, a broader role for CMOs in the remuneration of authors, performers and other beneficiaries of neighboring rights is likely to expose us to greater distribution expenses in certain markets.
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proceedings or other legal actions. We have filed and we expect to file from time to time for trademark applications. Nevertheless, these applications may not be approved, third parties may challenge any copyrights or trademarks issued to or held by us, third parties may knowingly or unknowingly infringe our intellectual property rights, and we may not be able to prevent infringement or misappropriation without substantial expense to us. If the protection of our intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to users and potential users may become confused in the marketplace, and our ability to attract users may be adversely affected.
In addition, the use or adoption of new and emerging technologies may increase our exposure to intellectual property claims, and the availability of copyright and other intellectual property protection for artificial
Risks Related to Liquidity
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We have a substantial amount of obligations, including streaming content obligations, which, together with any debt we may incur in the future, could adversely affect our financial position, and we may not be able to generate sufficient cash to service our obligations.
We have a substantial amount of obligations, including streaming content obligations. Moreover, we may incur substantial indebtedness in the future and expect to incur other obligations, including additional streaming content obligations. As of December 31, 2022, we had approximately $2.9 million of total content liabilities as reflected on our consolidated balance sheet. Such amount does not include content commitments that do not meet the criteria for liability recognition, the amounts of which are significant. For more information on our content obligations, including those not on our balance sheet, see Note 14 in the accompanying notes to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Our obligations, including content obligations, may:
make it difficult for us to satisfy our other financial obligations;
limit our ability to use our cash flow, borrow additional funds or obtain other additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;
require us to use a substantial portion of our cash flow from operations to make debt service payments and pay our other obligations when due;
limit our flexibility to plan for, or react to, changes in our business and industry;
place us at a competitive disadvantage compared to our less leveraged competitors; and
increase our vulnerability to the impact of adverse economic and industry conditions.
The long-term and fixed cost nature of our content commitments may limit our operating flexibility and could adversely affect our liquidity and results of operations.
In connection with licensing content, we typically enter into multi-year commitments with content providers. We also enter into multi-year commitments for content that we produce, either directly or through third parties, including elements associated with these productions such as non-cancellable commitments under talent agreements. The payment terms of these agreements are not tied to usage or the size of our user base but may be determined by costs of production or tied to such factors as titles licensed. Such commitments, to the extent estimable under accounting standards, are included in Note 14 in the accompanying notes to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Given the multiple-year duration and largely fixed cost nature of content commitments, if user acquisition and retention do not meet our expectations, our margins may be adversely impacted. Payment terms for certain content commitments, such as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby we do not cash flow the production of such content. To the extent user and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of content commitments and accelerated payment requirements of certain agreements. In addition, the long-term and largely fixed cost nature of our content commitments may limit our flexibility in planning for or reacting to changes in our business and the markets in which we operate. If we license and/or produce content that is not favorably received by consumers in a territory, or is unable to be shown in a territory, acquisition and retention may be adversely impacted and given the long-term and fixed cost nature of our content commitments, we may not be able to adjust our content offerings quickly and our results of operations may be adversely impacted.
We may not be able to generate sufficient cash to service our obligations and any debt we may incur in the future.
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certain financial, business and other factors beyond our control. Since inception, our cash flows from operating activities have been negative. We may be unable to attain a level of cash flows from operating activities or maintain the level of liquidity sufficient to permit us to pay our obligations, including amounts due under our streaming content obligations, and the principal, premium, if any, and interest on any debt we incur. We may or may not be able to accurately predict the ultimate impact on our levels of liquidity from our cash flows and such predictions are subject to change.
Risks Related
generate sufficient cash to service our obligations.
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systems, or with the internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver streaming content. Service interruptions, errors in our software or the unavailability of computer systems or data used in our operations, delivery or user interface could diminish the overall attractiveness of our user service to existing and potential users.
operations.
We rely upon Amazon Web Services (“AWS”) to operate certain aspects of our service and any disruption of or interference with our use of AWS would impact our operations and our business would be adversely affected.
AWS provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a “cloud” computing service. We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by AWS. Currently, we run the vast majority of our computing on AWS. In addition, Amazon’s retail division competes with us for users, and Amazon could use, or restrict our use of, AWS to gain a competitive advantage against us. Because we rely heavily on AWS for computing infrastructure and we cannot easily switch our AWS operations to another cloud provider, any disruption of or interference with our use of AWS would impact our operations and our business would be adversely affected.
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help market our service, process payments and otherwise manage the daily operations of our business. If our technology or that of third parties we utilize in our operations fails or otherwise operates improperly, including as a result of “bugs” in our development and deployment of software, our ability to operate our service, retain existing users and add new users may be impaired. In addition, any harm to our users’ personal computers or other devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.
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Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business.
the Company’s Business
and the following:29
The global
30
Risks Related See
We could be subjectour computer systems or those of third parties that we utilize in our operations, including those relating to economic, political, regulatory and other riskscybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized access, harm to our international operations.
Operating in international markets requires significant resourcesreputation, disclosure or destruction of data, including user and management attention and will subject us to regulatory, economic and political risks that may be different fromcorporate information, or incremental to those in the United States. In addition to the risks that we face in the United States, our international operations involve risks thattheft of intellectual property, including digital content assets, which could adversely affectimpact our business including:
new and different sources of competition;
different and more stringent user protection, data protection, privacy and other laws, including data localization requirements;
adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, and the related application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate tax determination is uncertain;
different or more onerous or costly rights society collection royalties and charges;
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difficulties in complying with territorial licenses;
difficulties and costs associated with staffing and managing foreign operations;
management distraction;
political or social unrest, global hostilities and economic instability, including the military invasion of Ukraine by Russian forces and the economic sanctions imposed by the U.S. and other nations on Russia, Belarus and certain Russian organizations and individuals;
compliance with U.S. laws such as the Foreign Corrupt Practices Act, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials;
difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions;
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foreign intellectual property laws, such as the EU copyright directive, or changes to such laws, which may be less favorable than U.S. law and, among other issues, may impact the economics of creating or distributing content, anti-piracy efforts, or our ability to protect or exploit intellectual property rights;
fluctuations in currency exchange rates, which have and may continue to impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk, which we do not currently hedge against but may do so in the future;
profit repatriation and other restrictions on the transfer of funds;
differing payment processing systems as well as consumer use and acceptance of electronic payment methods, such as payment cards;
censorship requirements that cause us to remove or edit content or make other accommodations that lead to consumer disappointment or dissatisfaction with our service;
low usage and/or penetration of internet-connected consumer electronic devices;
availability of reliable broadband connectivity and wide area networks in targeted areas for expansion;
integration and operational challenges as well as potential unknown liabilities in connection with companies we may acquire or control;
differing, and often more lenient, laws and consumer understanding/attitudes regarding the illegality of piracy;
negative impacts from trade disputes; and
implementation of regulations designed to stimulate the local production of film and TV series in order to promote and preserve local culture and economic activity, including local content quotas, investment obligations, and levies to support local film funds. For example, the EU recently revised its Audio Visual Media Services Directive to require that European works comprise at least thirty (30) percent of media service providers’ catalogs, and to require prominence of those works.
These and other factors may cause us to adjust our business plans, including expanding or ceasing certain operations in certain countries, and the execution of our strategies. Our failure to manage any of these risks successfully could harm our international operations and could have an adverse effect on our overall business and results of operations.
We are potentially subject to taxation related risks in multiple jurisdictions, and changes in U.S. and non-U.S. tax laws could have a material adverse effect on our business, cash flow, results of operations or financial condition.
We are a U.S.-based company potentially subject to tax in multiple U.S. and non-U.S. tax jurisdictions. Significant judgment will be required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Proposals to reform U.S. tax laws could significantly impact how U.S. companies are taxed and may increase our U.S. corporate effective tax rate. Although we cannot predict whether or in what form any
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such proposals will pass, certain proposals under consideration, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense, and cash flows. In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the EU, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. If U.S. or non-U.S. tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.
In particular, taxing authorities in many jurisdictions have targeted online platforms as a means to collect indirect taxes in connection with transactions taking place over the Internet. An increasing number of jurisdictions are considering or have adopted new tax measures, such as digital services taxes or online sales taxes, targeting online commerce. Such taxes generally are imposed on digital transactions executed by a non-resident entity with a local end-user or local end-consumer. If enacted and applicable, such taxes may increase our worldwide effective tax rate, create tax and compliance obligations in jurisdictions in which we previously had none and adversely affect our financial position. Proliferation of these or similar unilateral tax measures may continue unless broader international tax reform is implemented.
Risks Related to Human Resources
We may lose key employees or may be unable to hire qualified employees, and the failure to maintain and improve our company culture may adversely affect our business.
Risks Related
Our stock price may change significantly and you could lose alleliminate 20 full time positions or part of your investment as a result.
The trading priceabout 30% of our Common Stock is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelatedDecember 31, 2022, workforce. These reductions may negatively affect our culture or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Relating to the Company’s Business” and the following:
results of operations that vary from the expectations of securities analysts and investors;
results of operations that vary from those of our competitors;
changes in expectations as tocreate uncertainty regarding our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
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declines in the market prices of stocks generally;
strategic actions by us or our competitors;
announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;
any significant change in our management;
changes in general economic or market conditions or trends in our industry or markets;
changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
future sales of our Common Stock or other securities;
investor perceptions or the investment opportunity associated with our Common Stock relative to other investment alternatives;
the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
the developmentemployment needs, and sustainability of an active trading market for our Common Stock;
actions by institutional or activist stockholders;
changes in accounting standards, policies, guidelines, interpretations or principles; and
other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
These broad market and industry fluctuations may adversely affect the market price of our Common Stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Common Stock is low. Declines in the market price of our Common Stock or failure of the market price to increase could also harmtherefore limit our ability to retain key employees, reduce our access to capital, incur impairment charges and otherwise harm our business. During the year ended December 31, 2022, there was a decline in the Company’s market capitalization, based upon the Company’s publicly quoted share price, below the Company’s carrying or book value. As a result of the sustained decline in our share price, we were required to perform impairment testing of our content assets, goodwill, definite-lived intangible assets, and other long-lived assets, which resulted in impairment charges being recorded in the period related to our goodwill and certain definite-lived intangible asset balances, which is discussed in further detail under Note 2 in the accompanying notes to our consolidated financial statements.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
If securities analysts do not publish researchhire qualified personnel or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
The trading market for our Common Stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the analysts
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who do cover us downgrade our stock or industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
Because there are no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on your investment in our Common Stock unless you sell your shares of our Common Stock for a price greater than that which you paid for it.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment (for any debt we may incur in the future) and there are no current plans to pay cash dividends on shares of our Common Stock for the foreseeable future. The declaration, amount and payment of any future dividends on shares of our Common Stock will be at the sole discretion of our Board. Our Board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our Board may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any future indebtedness we incur. As a result, you may not receive any return on an investment in our Common Stock unless you sell your shares of our Common Stock for a price greater than that which you paid for it.
Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our Common Stock to decline.
The mass sale of shares of our Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
In particular, the shares of our Common Stock reserved for future issuance under our Omnibus Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements (if any) and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable, and the general availability of Rule 144 to such affiliates. A total of 7,725,000 shares of our Common Stock were reserved for issuance under our Omnibus Incentive Plan at inception. In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our Common Stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of Common Stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders.
Certain of our stockholders may engage in business activities that compete with us or otherwise conflict with our interests.
Certain of our stockholders are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Our Charter provides that none of the stockholder parties, any of their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The stockholder parties also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
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We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Common Stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and may remain an emerging growth company for up to five years following our initial public offering. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act Section 404, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplementcontribute to the auditor’s report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation, and exemptions from the requirementsunplanned loss of holding a nonbinding advisory vote on executive compensation and stockholder approvalhighly skilled employees through attrition.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards.
NASDAQ may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.Contents
Our Common Stock and Warrants are listed on NASDAQ. We cannot assure you that our securities will continue to be listed on NASDAQ in the future. In order to continue listing our securities on NASDAQ, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000 for companies trading on NASDAQ), a minimum number of holders of our securities (generally 300 public holders) and a $1.00 minimum share price.
If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
a limited availability of market quotations for our securities;
reduced liquidity for our securities;
a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
a limited amount of news and analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since our Common Stock and Warrants are listed on NASDAQ, they are covered securities. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If we were to be no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
An active, liquid trading market for our Common Stock may not be sustained, which may make it difficult for you to sell the Common Stock you purchased.
We cannot predict the extent to which investor interest in us will sustain a trading market or how active and liquid that market would remain. If an active and liquid trading market is not sustained, you may have difficulty selling any shares of our Common Stock that you purchase at a price above the price you purchased it or at all. The failure of an active and liquid trading market to continue would likely have a material adverse effect on the value of our Common Stock. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Certain provisions of our Charter and Bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
These provisions provide for, among other things:
the ability of our Board to issue one or more series of preferred stock;
advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;
certain limitations on convening special stockholder meetings;
limiting the ability of stockholders to act by written consent;
providing that our Board is expressly authorized to make, alter or repeal our Bylaws;
the removal of directors only for cause and only upon the affirmative vote of holders of at least a majority of the shares of Common Stock entitled to vote generally in the election of directors; and
that certain provisions may be amended only by the affirmative vote of at least 66.7% of the shares of Common Stock entitled to vote generally in the election of directors.
These anti-takeover provisions could make it more difficult for a third-party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
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Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our Charter provides that, subject to limited exceptions, any (1) derivative action or proceeding brought on our behalf, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee to us or our stockholders, (3) action asserting a claim arising pursuant to any provision of the DGCL or our Charter or Bylaws, or (4) action asserting a claim governed by the internal affairs doctrine shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware. Our Charter provides that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, the exclusive forum provision shall not apply to claims seeking to enforce any liability or duty created by the Exchange Act. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our Charter described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our Charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
General Risk Factors
Our Private Placement Warrants are accounted for as liabilities and the changes in value of our Private Placement Warrants could have a material effect on our financial results.
On April 12, 2021, the SEC Staff issued a statement, expressing its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the balance sheet as opposed to equity (“the SEC Staff Statement”). As a result, we amended the accounting treatment of our Private Placement Warrants and included the derivative liabilities related to the embedded features contained within our Private Placement Warrants on our consolidated balance sheets as of December 31, 2022 and 2021 contained in this Annual Report on Form
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We incur significant costs as a result of operating as a public company.
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UNRESOLVED STAFF COMMENTS
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PROPERTIES
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LEGAL PROCEEDINGS
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MINE SAFETY DISCLOSURES
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Market Information
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Dividends
Holders
Recent Sales
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Overview
CreatedFounded by John Hendricks, founder of the Discovery Channel and former Chairman of Discovery Communications, CuriosityStream is a media and entertainment company that offers premium video and audio programming across the principal categories of factual entertainment, including science, history, society, nature, lifestyle and technology. Our mission is to provide premium factual entertainment that informs, enchants and inspires.
Year Ended December 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Direct to Consumer (Subscriptions—O&O and App Services) | $ | 29,489 | 38 | % | $ | 23,519 | 33 | % | ||||||||
Partner Direct (License Fees—Affiliates) | 4,631 | 6 | % | 4,240 | 6 | % | ||||||||||
Bundled Distribution (License Fees—Affiliates) | 11,726 | 14 | % | 14,332 | 20 | % | ||||||||||
Content Licensing | 24,691 | 32 | % | 24,758 | 35 | % | ||||||||||
Enterprise (Subscriptions—O&O Service) | 5,520 | 7 | % | 1,302 | 2 | % | ||||||||||
Other | 1,986 | 3 | % | 3,110 | 4 | % | ||||||||||
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Total Revenues | $ | 78,043 | $ | 71,261 | ||||||||||||
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Year Ended December 31, | $ Change | % Change | |||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Direct Business | $ | 34,592 | 61 | % | $ | 34,120 | 44 | % | $ | 472 | 1.4 | % | |||||||||||||||||||||||
Content Licensing | 14,047 | 25 | % | 24,691 | 32 | % | (10,644) | (43 | %) | ||||||||||||||||||||||||||
Bundled Distribution | 6,316 | 11 | % | 11,726 | 15 | % | (5,410) | (46 | %) | ||||||||||||||||||||||||||
Enterprise | 141 | — | % | 5,520 | 7 | % | (5,379) | (97 | %) | ||||||||||||||||||||||||||
Other | 1,793 | 3 | % | 1,986 | 3 | % | (193) | (10 | %) | ||||||||||||||||||||||||||
Total revenues | $ | 56,889 | 100 | % | $ | 78,043 | 100 | % | $ | (21,154) | (27 | %) | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Cost of revenues | $ | 35,553 | 35 | % | $ | 51,536 | 39 | % | (15,983) | (31 | %) | ||||||||||||||||||||||||
General and administrative | 29,447 | 29 | % | 37,479 | 28 | % | (8,032) | (21 | %) | ||||||||||||||||||||||||||
Advertising and marketing | 17,390 | 17 | % | 40,709 | 31 | % | (23,319) | (57 | %) | ||||||||||||||||||||||||||
Impairment of content assets | 18,970 | 19 | % | — | 0 | % | 18,970 | n/m* | |||||||||||||||||||||||||||
Impairment of goodwill and intangible assets | — | — | % | 3,603 | 3 | % | (3,603) | n/m* | |||||||||||||||||||||||||||
Total operating expenses | $ | 101,360 | 100 | % | $ | 133,327 | 100 | % | $ | (31,967) | (24 | %) | |||||||||||||||||||||||
Operating loss | (44,471) | (55,284) | 10,813 | (20 | %) | ||||||||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||||||||
Change in fair value of warrant liability | 213 | 5,404 | (5,191) | (96 | %) | ||||||||||||||||||||||||||||||
Interest and other income | 1,272 | 176 | 1,096 | 623 | % | ||||||||||||||||||||||||||||||
Equity interests loss | (5,404) | (846) | (4,558) | 539 | % | ||||||||||||||||||||||||||||||
Loss before income taxes | $ | (48,390) | $ | (50,550) | $ | 2,160 | (4 | %) | |||||||||||||||||||||||||||
Provision for income taxes | 506 | 367 | 139 | 38 | % | ||||||||||||||||||||||||||||||
Net loss | $ | (48,896) | $ | (50,917) | $ | 2,021 | (4 | %) | |||||||||||||||||||||||||||
* Percentage not meaningful |
Our Smart Bundle pricing remains unchanged. However, we may in the future increase the price of these existing subscription plans, which may have a positive effect on our revenue from this line of our business.
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In addition toThe following table details our Direct Business for the years ended December 31, 2023, and 2022:
Year Ended December 31, | $ Change | % Change | |||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Direct-to-Consumer: | |||||||||||||||||||||||||||||||||||
O&O Consumer Service | $ | 26,502 | 77 | % | $ | 25,549 | 75 | % | $ | 953 | 4 | % | |||||||||||||||||||||||
App Services | 3,384 | 10 | % | 3,940 | 12 | % | (556) | (14 | %) | ||||||||||||||||||||||||||
Total Direct-to-Consumer | 29,886 | 86 | % | 29,489 | 86 | % | 397 | 1 | % | ||||||||||||||||||||||||||
Partner Direct Business | 4,706 | 14 | % | 4,631 | 14 | % | 75 | 2 | % | ||||||||||||||||||||||||||
Total Direct Business | $ | 34,592 | 100 | % | $ | 34,120 | 100 | % | $ | 472 | 3 | % | |||||||||||||||||||||||
In
The following table details our Content Licensing results for the years ended December 31, 2023, and 2022:
Year Ended December 31, | $ Change | % Change | |||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Library sales* | $ | 11,739 | 84 | % | $ | 6,131 | 25 | % | $ | 5,608 | 91 | % | |||||||||||||||||||||||
Presales | 2,308 | 16 | % | 18,560 | 75 | % | (16,252) | (88 | %) | ||||||||||||||||||||||||||
Total Content Licensing | $ | 14,047 | 100 | % | $ | 24,691 | 100 | % | $ | (10,644) | (43 | %) | |||||||||||||||||||||||
* The 2023 amount includes $9.9 million from trade and barter transactions. |
Our certain Enterprise subscription agreements.
ads while delivering our content through advertising-based video-on-demand (AVOD), transactional video-on-demand (TVOD), free advertising-supported streaming television (FAST), YouTube and other similar distribution channels.
Key Factors Affecting Results of Operations
Our future operating results and cash flows are dependent upon a number of opportunities, challenges, and other factors, including our ability to efficiently grow our subscriber base, increase our prices and expandmarketing our service, offerings to maximize subscriber lifetime value. In particular, we believe thatpersonnel costs, and distribution fees.
Revenues
Currently, the main sources of our revenue are (i) subscriber fees from the Direct to Consumer Business and Direct Subscribers, (ii) license fees from affiliates who receive subscriber fees for access to CuriosityStream content from such affiliates’ subscribers (“Partner Direct Business” and “Partner Direct Subscribers”), (iii) bundled license fees from distribution affiliates (“Bundled MVPD Business” and “Bundled MVPD Subscribers”), (iv) license fees from content licensing arrangements (“Content Licensing”), (v) subscriber fees from our Enterprise business, and (vi) Other revenue, including advertising and sponsorships. As ofended December 31, 2023, and 2022, we had approximately 23our operating expenses were 101.4 million paying subscribers, including Direct Subscribers, Partner Direct Subscribers, Bundled MVPD Subscribers, and Enterprise subscribers.
Since the Company was founded in 2015, we have generated the majority133.3 million, respectively, a decrease of our$32.0 million, or 24%.
43
subscription plans, which may have a positive effect on ourDistribution fees include payment processing fees and revenue from this line of our business. The MVPD, vMVPDshare arrangements with Smart Bundle and digital distributor partners, making upas well as fees owed to the Spiegel Venture related to our Partner Direct Business pay us a license fee. We recognize subscription revenues ratably during each subscriber’s monthly or yearly subscription period.German SVOD service. We pay a fixed percentage distribution fee to our partners for subscribers accessing our platform via App Services to compensate these partners for access to their customer and subscriber bases. OurThe MVPD, vMVPD and digital distributor partners making up our Partner Direct business pay us a license fee, and host and stream our content to their customers via their own platforms, such as set top boxes in the case of most MVPDs. We do not incur billing, streaming or backend costs associated with content distribution through our MVPD, vMVPD and digital distributor partners.
Operating Costs
Our primary operating costs relate to the
Year Ended December 31, | $ Change | % Change | |||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Content amortization | $ | 22,905 | 64 | % | $ | 39,291 | 76 | % | $ | (16,386) | (42 | %) | |||||||||||||||||||||||
Other* | 12,648 | 36 | % | 12,245 | 24 | % | $ | 403 | 3 | % | |||||||||||||||||||||||||
Total cost of revenues | $ | 35,553 | 100 | % | $ | 51,536 | 100 | % | $ | (15,983) | (31 | %) | |||||||||||||||||||||||
* Includes commissions, distribution, production and broadcast, promotions and sponsorships, and other expenses. |
Year Ended December 31, | $ Change | % Change | |||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Payroll and related | $ | 12,186 | 41 | % | $ | 15,016 | 40 | % | $ | (2,830) | (19 | %) | |||||||||||||||||||||||
Professional services | 6,295 | 21 | % | 8,145 | 22 | % | (1,850) | (23 | %) | ||||||||||||||||||||||||||
Stock-based compensation | 3,999 | 14 | % | 6,644 | 18 | % | (2,645) | (40 | %) | ||||||||||||||||||||||||||
Restructuring1 | 819 | 3 | % | — | — | % | 819 | n/m2 | |||||||||||||||||||||||||||
Other3 | 6,148 | 21 | % | 7,674 | 20 | % | (1,526) | (20 | %) | ||||||||||||||||||||||||||
Total general and administrative | $ | 29,447 | 100 | % | $ | 37,479 | 100 | % | (8,032) | (21 | %) | ||||||||||||||||||||||||
1 Comprised primarily of severance and workforce optimization costs resulting from a December 2023 reduction in workforce. | |||||||||||||||||||||||||||||||||||
2 Percentage not meaningful. | |||||||||||||||||||||||||||||||||||
3 Includes facilities costs, depreciation and amortization, insurance, technology and subscriptions, travel and other expenses. |
payroll and related costs of a $2.6 million and $2.8 million, driven by our smaller average workforce size in 2023 as well as reduced incentive compensation. Professional services costs also declined 23% as we streamlined various outside services during the year and brought certain finance and operations functions internal.
Further,
44
Results of Operations
The financial data in the following table sets forth selected financial information derived from our audited consolidated financial statementscontent assets for the yearsyear ended December 31, 2022 and 2021 and shows our results2023. In comparison, no such impairment of operations as a percentage of revenue or as a percentage of costs, as applicable, for the periods indicated. We conduct business through one operating segment, CuriosityStream.
Year ended December 31, | ||||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Subscriptions | $ | 35,009 | 45 | % | $ | 24,821 | 35 | % | $ | 10,188 | 41 | % | ||||||||||||
License fees | 41,048 | 52 | % | 43,330 | 61 | % | (2,282 | ) | (5 | %) | ||||||||||||||
Other | 1,986 | 3 | % | 3,110 | 4 | % | (1,124 | ) | (36 | %) | ||||||||||||||
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Total Revenues | $ | 78,043 | 100 | % | $ | 71,261 | 100 | % | $ | 6,782 | 10 | % | ||||||||||||
Operating expenses | ||||||||||||||||||||||||
Cost of revenues | 51,536 | 39 | % | 36,673 | 30 | % | 14,863 | 41 | % | |||||||||||||||
Advertising and marketing | 40,709 | 30 | % | 52,208 | 42 | % | (11,499 | ) | (22 | %) | ||||||||||||||
General and administrative | 37,479 | 28 | % | 34,859 | 28 | % | 2,620 | 8 | % | |||||||||||||||
Impairment of goodwill and intangible assets | 3,603 | 3 | % | — | 0 | % | 3,603 | n/ m | ||||||||||||||||
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Total operating expenses | $ | 133,327 | 100 | % | $ | 123,740 | 100 | % | $ | 9,587 | 8 | % | ||||||||||||
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Operating loss | (55,284 | ) | (52,479 | ) | (2,805 | ) | 5 | % | ||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||
Change in fair value of warrant liability | 5,404 | 15,182 | (9,778 | ) | (64 | %) | ||||||||||||||||||
Interest and other income | 176 | 486 | (310 | ) | (64 | %) | ||||||||||||||||||
Equity interests loss | (846 | ) | (464 | ) | (382 | ) | 82 | % | ||||||||||||||||
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Loss before income taxes | $ | (50,550 | ) | $ | (37,275 | ) | $ | (13,275 | ) | 36 | % | |||||||||||||
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Provision for income taxes | 367 | 360 | 7 | 2 | % | |||||||||||||||||||
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Net loss | $ | (50,917 | ) | $ | (37,635 | ) | $ | (13,282 | ) | 35 | % | |||||||||||||
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n/m – percentage not meaningful
Revenue
Revenue for the years ended December 31, 2022 and 2021content assets was $78.0 million and $71.2 million, respectively. The increase of $6.8 million, or 10% is primarily due to a $10.2 million increase in subscription revenue, partially offset by a $2.3 million decrease in license fee revenue, and a $1.1 million decrease in license fee revenue.
The increase in subscription revenue of $10.2 million resulted primarily from a $6.0 million increase in subscriber fees received from Direct Subscribers for annual and monthly plans and a $4.2 million increase in corporate subscriptions related to subscription bulk agreements.
The decrease in license fee revenue of $2.3 million is due to an adjustment recorded as a result of an amendment to one of the Company’s content licensing agreements.
The decrease in other revenue of $1.1 million is primarily due to a incurred one-timeduring 2022 services agreement entered into with an affiliate.
45
Operating Expenses
Operating expenses for the years ended December 31, 2022, and 2021 were $133.3 million and $123.7 million, respectively. This increase2023, we separately performed an analysis of $9.6 million, or 8%, primarily resulted from the following:
our investments in equity method investees to determine if an “other-than-temporary” impairment existed.Cost of Revenues: Cost of revenues forDuring the year ended December 31, 2022, increased to $51.5 million from $36.7 million for the year ended December 31, 2021. Cost of revenues primarily includes content amortization, hosting and streaming delivery costs, payment processing costs and distribution fees, commission costs and subtitling and broadcast costs. This increase of $14.8 million, or 41%, is primarily due to the increase in content amortization of $11.4 million, primarily driven by the increase in content licensing arrangements and an increase in the number and cost of titles published during 2022 compared to 2021. The balance of the increase in cost of revenues is due to an increase in revenue share expense related to bundled arrangements with other streaming services of $3.4 million compared to the prior period.
Advertising & Marketing: Advertising and marketing expenses for the year ended December 31, 2022, decreased to $40.7 million from $52.2 million for the year ended December 31, 2021. This decrease of $11.5 million, or 22% is primarily due to a net decrease in digital and tv advertising of $11.7 million, and a decrease of $10.0 million in agency fees, partner platforms, and brand awareness advertising compared to the prior year, partially offset by an increase in radio and print advertising of $10.2 million compared to the prior period.
General and Administrative: General and administrative expenses for the year ended December 31, 2022, increased to $37.5 million from $34.9 million for the year ended December 31, 2021. This increase of $2.6 million, or 8%, is primarily attributed to an increase in legal, accounting, and other professional fees of $1.3 million, an increase in salaries and other compensation expense of $0.2 million, as well as immaterial changes across various cost categories totaling a $1.1 million increase.
We expect to incur additional expenses in future periods as we continue to invest in our corporate governance to support the Company’s activities as a public company, including adding personnel and systems to our administrative and revenue-generating functions.
Impairment of Goodwill and Intangible Assets: We also recorded a goodwill and intangibles asset impairment charge of $3.6 million during the year ended December 31, 2022 as a result of the impairment analyses performed. The impairment charge was applied against the entire balance of goodwill and substantially all of the intangible assets balance. There were no such impairment charges recorded during the year ended December 31, 2021.
Operating loss for the years ended December 31, 2022,
Equity Method Investment Loss
During
For additional information, including the significant assumptions used to determine fair value, see
Note 7 - Stockholders Equity, in the Notes to Consolidated Financial Statements.Interest and other income forOther Income
46
Equity InterestsMethod Investment Loss
Provision2023, and 2022, we had a provision for Income Taxes
Dueincome taxes of $0.5 million and $0.4 million, respectively, due to generating losses before income taxes in each of the years ended December 31, 2022, and 2021, we had a provision for income taxes of $0.4 million in each respective period.year. The provision for income taxes is primarily related to foreign withholding income taxes. Our provision for income taxes differs from the federal statutory rate primarily due to the Company being in a full valuation allowance position and not recognizing a tax benefit attributable to generated losses for either federal or state income tax purposes.
Net Loss
Net loss for the years ended December 31, 2022, and 2021 was $50.9 million and $37.6 million, respectively. The increase in net loss of $13.3 million, or 35%, is primarily due to the decrease in the change in the fair value of warrant liability of $9.8 million and the increase in total operating expenses of $9.6 million, partially offset by the increase in total revenues of $6.8 million, in each case during the year ended December 31, 2022 compared to the year ended December 31, 2021, as described above.
On February 8, 2021, we consummated a registered public offering (the “Offering”) of 6,500,000 shares of Common Stock plus an over- allotment option, exercised in full by the underwriters, to purchase up to 975,000 additional shares of Common Stock. The net proceeds to us from the Offering were $94.1 million, after deducting $6.8 million in underwriting discounts and commissions and transaction expenses. We also incurred offering expenses in connection with the Offering of $0.7 million. During the year ended December 31, 2021, we received funds of approximately $54.9 million for the exercise of 4.8 million Public Warrants.
long term.
Our principal uses offinancing.
47
Flow Analysis
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (39,523 | ) | $ | (73,242 | ) | ||
Net cash provided by (used in) investing activities | 62,701 | (74,935 | ) | |||||
Net cash (used in) provided by financing activities | (218 | ) | 148,340 | |||||
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Net increase in cash, cash equivalents and restricted cash | $ | 22,960 | $ | 163 | ||||
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2022:
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Net cash used in operating activities | $ | (16,172) | $ | (39,523) | |||||||
Net cash provided by investing activities | 14,003 | 62,701 | |||||||||
Net cash used in financing activities | (123) | (218) | |||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (2,292) | $ | 22,960 |
The following table presents a summary of our cash flows from operating activities for the years ended December 31, 2023, and 2022:
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Net loss | (48,896) | (50,917) | |||||||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||
Change in fair value of warrant liability | (213) | (5,404) | |||||||||
Additions to content assets | (18,316) | (34,771) | |||||||||
Change in content liabilities | (2,455) | (6,822) | |||||||||
Amortization of content assets | 22,905 | 39,291 | |||||||||
Impairment of content assets, goodwill and intangible assets | 18,970 | 3,603 | |||||||||
Stock-based compensation | 3,999 | 6,644 | |||||||||
Equity interests loss | 5,404 | 846 | |||||||||
Other non-cash items | 1,003 | 3,031 | |||||||||
Changes in operating assets and liabilities | 1,427 | 4,976 | |||||||||
Net cash used in operating activities | (16,172) | (39,523) |
The
The net cash outflow used by operating activities for the year ended December 31, 2021, was primarily due to our $37.6 million net loss, $34.0 million
Cash Flow Provided by (Used in)
During
48
of $151.9 million, investment in Nebula and Spiegel Venture of $9.6 million and acquisitions of One Day University (“ODU”) and Now You Know Media Inc. (“Learn25”) of $5.4 million, which were partially offset by sales and maturities of investments in debt securities of $92.3 million.
Cash Flow from Financing Activities
During the year ended December 31, 2022, and 2021, we recorded net cash outflow from financing activities of $0.2 million and a net cash inflow from financing activities of $148.3 million, respectively. The net cash inflow during the year ended December 31, 2021 of $148.3 million was primarily attributable to the receipt of proceeds from the issuance of Common Stock of $94.1 million (net of $6.8 million of underwriting discounts and commissions), the exercise of 4.8 million Public Warrants resulting in cash proceeds of $54.9 million, and the exercise of stock options of $0.5 million, partially offset by the payments of transaction costs related to the issuance of Common Stock of $0.7 million, with no comparable activity during the year ended December 31, 2022. Further, the net cash outflow during the year ended December 31, 2022 was primarily attributed to withholding tax payments of $0.2 million related to the vesting of restricted stock units, compared to $0.5 million of such outflows during the year ended December 31, 2021.
withholding.
Off Balance Sheet Arrangements
Critical Accounting Policies and Estimates
49
abandoned.
50
reporting unit was below its carrying value. The Company performed an interim goodwill impairment test of its goodwill as of June 30, 2022, and recognized a goodwill impairment charge of $2.8 million duringfor the three months ended June 30, 2022, as the fair value of the reporting unit was less than the related carrying value. This charge iswas included in impairment of goodwill and intangible assets onin the Company’s consolidated statementstatements of operations for the year ended December 31, 2022.
Recognition
The Company generates revenue from monthly subscription fees from its O&O Consumer Service. CuriosityStream subscribers enter into month-to-month or annual subscriptions with the Company. The Company bills the monthly subscriber on each subscriber’s monthly anniversary date and recognizes the revenue ratably over each monthly membership period. The annual subscription fees are collected by the Company at the start of the annual subscription period and are recognized ratably over the subsequent twelve-month period. Revenues are presented net of the taxes that are collected from subscribers and remitted to governmental authorities.
The Company also earns subscription revenues through its App Services. These subscriptions are similar to the O&O Service subscriptions, but are generated based on agreements with certain streaming media players as well as with Smart TV brands and gaming consoles. Under these agreements, the streaming media player
51
typically bills the subscriber directly and then remits the collected subscriptions to the Company, net of a distribution fee. The Company recognizes the gross subscription revenues when earned and simultaneously recognizes the corresponding distribution fees as an expense. The Company is the principal in these relationships as the Company retains control over service delivery to its subscribers.
The Company has distribution agreements which grant a licensee limited distribution rights to the Company’s programs for varying terms, generally in exchange for a fixed license fee. Revenue is recognized once the content is made available for the licensee to use.
License Fees—Content Licensing
The Company’s performance obligations include (1) access to its SVOD platform viause, which represents the Company’s O&O Service and App Services, (2) access to the Company’s content assets, and (3) licenses of specific program titles. In contracts containing the right to access the Company SVOD platform, the performance obligationpoint in time that control is satisfied as access to the SVOD platform is provided post any free trial period. In contracts which contain access to the Company’s content assets, the performance obligation is satisfied as access to the content is provided. For contracts with licenses of specific program titles, the performance obligation is satisfied as that content is made available for the customer to use.
Recently Issued and Adopted Financial Accounting Standards
transferred.
As an EGC, the
52
incentives of $1.3 million. The Company did not have any finance lease liabilities as of the adoption date. There was no cumulative effect adjustment to the opening balance of accumulated deficit as of January 1, 2022. Adoption of this new guidance did not have a material impact on the consolidated statements of operations or cash flows. Refer to Note 13 - Leases in the Notes to Consolidated Financial Statements for further information regarding the impact of adoption of Topic 842 on the Company’s consolidated financial statements.
Accounting Standards Effective in Future Periods
In June 2016, the FASB issued ASU 2016-13, No. 2016-13, “Financial Instruments-CreditFinancial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ ("ASU 2016-03”2016-02').” The amendments in this update introduceintroduced a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent toThe Company determines its allowance for doubtful accounts based on historical loss experience, customer financial condition, and current economic conditions. The Company adopted the initial standards, the FASB has also issued several ASUs to clarify specific topics. ASU 2016-13 isnew standard effective for the Company’s fiscal year beginning January 1, 2023. The Company doesThis adoption did not expect the implementation of ASU 2016-13 to have a material impact on itsthe Company's consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
53
F-2 | ||||||||
F-3 | ||||||||
F-4 | ||||||||
F-5 | ||||||||
F-6 | ||||||||
F-7 | ||||||||
F-8 |
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||
(in thousands, except par value) | (in thousands, except par value) | 2023 | 2022 | |||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 40,007 | $ | 15,216 | ||||||||||||||||||||||||||
Restricted cash | 500 | 2,331 | ||||||||||||||||||||||||||||
Short-term investments in debt securities | 14,986 | 65,833 | ||||||||||||||||||||||||||||
Accounts receivable, net | 10,899 | 23,493 | ||||||||||||||||||||||||||||
Other current assets | 3,118 | 6,413 | ||||||||||||||||||||||||||||
Total current assets | 69,510 | 113,286 | ||||||||||||||||||||||||||||
Investments in debt securities | — | 15,430 | ||||||||||||||||||||||||||||
Investments in equity method investees | ||||||||||||||||||||||||||||||
Investments in equity method investees | ||||||||||||||||||||||||||||||
Investments in equity method investees | 10,766 | 9,987 | ||||||||||||||||||||||||||||
Property and equipment, net | 1,094 | 1,342 | ||||||||||||||||||||||||||||
Content assets, net | 68,502 | 72,682 | ||||||||||||||||||||||||||||
Intangibles, net | 251 | 1,369 | ||||||||||||||||||||||||||||
Goodwill | — | 2,793 | ||||||||||||||||||||||||||||
Operating lease right-of-use assets | ||||||||||||||||||||||||||||||
Operating lease right-of-use assets | ||||||||||||||||||||||||||||||
Operating lease right-of-use | 3,702 | — | ||||||||||||||||||||||||||||
Other assets | 288 | 689 | ||||||||||||||||||||||||||||
Total assets | $ | 154,113 | $ | 217,578 | ||||||||||||||||||||||||||
Liabilities and stockholders’ equity (deficit) | ||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||
Content liabilities | ||||||||||||||||||||||||||||||
Content liabilities | ||||||||||||||||||||||||||||||
Content liabilities | $ | 2,862 | $ | 9,684 | ||||||||||||||||||||||||||
Accounts payable | 6,065 | 3,428 | ||||||||||||||||||||||||||||
Accrued expenses and other liabilities | 7,752 | 12,429 | ||||||||||||||||||||||||||||
Deferred revenue | 14,281 | 22,430 | ||||||||||||||||||||||||||||
Total current liabilities | 30,960 | 47,971 | ||||||||||||||||||||||||||||
Warrant liability | 257 | 5,661 | ||||||||||||||||||||||||||||
Non-current operating lease liabilities | 4,648 | — | ||||||||||||||||||||||||||||
Other liabilities | 622 | 2,011 | ||||||||||||||||||||||||||||
Total liabilities | 36,487 | 55,643 | ||||||||||||||||||||||||||||
Stockholders’ equity (deficit) | ||||||||||||||||||||||||||||||
Common stock, $0.0001 par value – 125,000 shares authorized as of December 31, 2022 and December 31, 2021; 52,853 shares issued and outstanding as of December 31, 2022; 52,677 shares issued and outstanding as of December 31, 2021 | 5 | 5 | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||||
Common Stock, $0.0001 par value – 125,000 shares authorized as of December 31, 2023 and December 31, 2022; 53,286 shares issued and outstanding as of December 31, 2023; 52,853 shares issued and outstanding as of December 31, 2022 | ||||||||||||||||||||||||||||||
Common Stock, $0.0001 par value – 125,000 shares authorized as of December 31, 2023 and December 31, 2022; 53,286 shares issued and outstanding as of December 31, 2023; 52,853 shares issued and outstanding as of December 31, 2022 | ||||||||||||||||||||||||||||||
Common Stock, $0.0001 par value – 125,000 shares authorized as of December 31, 2023 and December 31, 2022; 53,286 shares issued and outstanding as of December 31, 2023; 52,853 shares issued and outstanding as of December 31, 2022 | ||||||||||||||||||||||||||||||
Additional paid-in capital | 358,760 | 352,334 | ||||||||||||||||||||||||||||
Accumulated other comprehensive loss | (40 | ) | (222 | ) | ||||||||||||||||||||||||||
Accumulated deficit | (241,099 | ) | (190,182 | ) | ||||||||||||||||||||||||||
Total stockholders’ equity (deficit) | 117,626 | 161,935 | ||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 154,113 | $ | 217,578 | ||||||||||||||||||||||||||
Total stockholders’ equity | ||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | 78,043 | $ | 71,261 | ||||
Operating expenses | ||||||||
Cost of revenues | 51,536 | 36,673 | ||||||
Advertising and marketing | 40,709 | 52,208 | ||||||
General and administrative | 37,479 | 34,859 | ||||||
Impairment of goodwill and intangible assets | 3,603 | — | ||||||
133,327 | 123,740 | |||||||
Operating loss | (55,284 | ) | (52,479 | ) | ||||
Change in fair value of warrant liability | 5,404 | 15,182 | ||||||
Interest and other income | 176 | 486 | ||||||
Equity interests loss | (846 | ) | (464 | ) | ||||
Loss before income taxes | (50,550 | ) | (37,275 | ) | ||||
Provision for income taxes | 367 | 360 | ||||||
Net loss | $ | (50,917 | ) | $ | (37,635 | ) | ||
Net loss per share | ||||||||
Basic | $ | (0.96 | ) | $ | (0.73 | ) | ||
Diluted | $ | (0.96 | ) | $ | (1.02 | ) | ||
Weighted average number of common shares outstanding | ||||||||
Basic | 52,787 | 51,482 | ||||||
Diluted | 52,787 | 51,789 |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
Net loss | $ | (50,917 | ) | $ | (37,635 | ) | ||
Other comprehensive income (loss) | ||||||||
Unrealized gain (loss) on available for sale securities | 182 | (232 | ) | |||||
Total comprehensive loss | $ | (50,735 | ) | $ | (37,867 | ) | ||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance as of December 31, 2020 | 40,289 | $ | 4 | $ | 197,507 | $ | 10 | $ | (152,547 | ) | $ | 44,974 | ||||||||||||
Net loss | — | — | — | — | (37,635 | ) | (37,635 | ) | ||||||||||||||||
Stock-based compensation, net | 80 | — | 6,510 | — | — | 6,510 | ||||||||||||||||||
Issuance of Common Stock | 7,475 | 1 | 94,100 | — | — | 94,101 | ||||||||||||||||||
Common Stock issuance costs | — | — | (707 | ) | — | — | (707 | ) | ||||||||||||||||
Exercise of Options | 120 | — | 502 | — | — | 502 | ||||||||||||||||||
Exercise of Warrants | 4,733 | — | 54,422 | — | — | 54,422 | ||||||||||||||||||
Cancellation of escrow shares | (20 | ) | — | — | — | — | — | |||||||||||||||||
Other comprehensive loss | — | — | — | (232 | ) | — | (232 | ) | ||||||||||||||||
Balance as of December 31, 2021 | 52,677 | $ | 5 | $ | 352,334 | $ | (222 | ) | $ | (190,182 | ) | $ | 161,935 | |||||||||||
Net loss | — | — | — | — | (50,917 | ) | (50,917 | ) | ||||||||||||||||
Stock-based compensation, net | 176 | — | 6,426 | — | — | 6,426 | ||||||||||||||||||
Other comprehensive income | — | — | — | 182 | — | 182 | ||||||||||||||||||
Balance as of December 31, 2022 | 52,853 | $ | 5 | $ | 358,760 | $ | (40 | ) | $ | (241,099 | ) | $ | 117,626 | |||||||||||
Year Ended December 31, | |||||||||||
(in thousands, except per share data) | 2023 | 2022 | |||||||||
Revenues | $ | 56,889 | $ | 78,043 | |||||||
Operating expenses | |||||||||||
Cost of revenues | 35,553 | 51,536 | |||||||||
Advertising and marketing | 17,390 | 40,709 | |||||||||
General and administrative | 29,447 | 37,479 | |||||||||
Impairment of content assets | 18,970 | — | |||||||||
Impairment of goodwill and intangible assets | — | 3,603 | |||||||||
Total operating expenses | 101,360 | 133,327 | |||||||||
Operating loss | (44,471) | (55,284) | |||||||||
Change in fair value of warrant liability | 213 | 5,404 | |||||||||
Interest and other income | 1,272 | 176 | |||||||||
Equity interests loss | (5,404) | (846) | |||||||||
Loss before income taxes | (48,390) | (50,550) | |||||||||
Provision for income taxes | 506 | 367 | |||||||||
Net loss | $ | (48,896) | $ | (50,917) | |||||||
Net loss per share | |||||||||||
Basic | $ | (0.92) | $ | (0.96) | |||||||
Diluted | $ | (0.92) | $ | (0.96) | |||||||
Weighted average number of common shares outstanding | |||||||||||
Basic | 53,044 | 52,787 | |||||||||
Diluted | 53,044 | 52,787 |
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Net loss | $ | (48,896) | $ | (50,917) | |||||||
Other comprehensive income (loss) | |||||||||||
Unrealized gain on available for sale securities | 40 | 182 | |||||||||
Total comprehensive loss | $ | (48,856) | $ | (50,735) |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (50,917 | ) | $ | (37,635 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Change in fair value of warrant liability | (5,404 | ) | (15,182 | ) | ||||
Additions to content assets | (34,771 | ) | (65,637 | ) | ||||
Change in content liabilities | (6,822 | ) | 7,568 | |||||
Amortization of content assets | 39,291 | 27,881 | ||||||
Depreciation and amortization expenses | 699 | 612 | ||||||
Impairment of goodwill and intangible assets | 3,603 | — | ||||||
Amortization of premiums and accretion of discounts associated with investments in debt securities, net | 1,191 | 3,085 | ||||||
Stock-based compensation | 6,644 | 6,964 | ||||||
Equity interests loss | 846 | 464 | ||||||
Other non-cash items | 1,141 | 240 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | 11,862 | (16,236 | ) | |||||
Other assets | 3,355 | (2,652 | ) | |||||
Accounts payable | 2,654 | (127 | ) | |||||
Accrued expenses and other liabilities | (4,645 | ) | 7,414 | |||||
Deferred revenue | (8,250 | ) | 9,999 | |||||
Net cash used in operating activities | (39,523 | ) | (73,242 | ) | ||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (130 | ) | (351 | ) | ||||
Business acquisitions | — | (5,362 | ) | |||||
Investment in equity method investees | (2,438 | ) | (9,638 | ) | ||||
Sales of investments in debt securities | 22,893 | 50,377 | ||||||
Maturities of investments in debt securities | 43,873 | 41,900 | ||||||
Purchases of investments in debt securities | (1,497 | ) | (151,861 | ) | ||||
Net cash provided by (used in) investing activities | 62,701 | (74,935 | ) | |||||
Cash flows from financing activities | ||||||||
Exercise of stock options | — | 502 | ||||||
Exercise of warrants | — | 54,898 | ||||||
Payments related to tax withholding | (218 | ) | (454 | ) | ||||
Proceeds from issuance of Common Stock | — | 94,101 | ||||||
Payment of offering costs | — | (707 | ) | |||||
Net cash (used in) provided by financing activities | (218 | ) | 148,340 | |||||
Net increase in cash, cash equivalents and restricted cash | 22,960 | 163 | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 17,547 | 17,384 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 40,507 | $ | 17,547 | ||||
Supplemental disclosure: | ||||||||
Cash paid for taxes | $ | 614 | $ | 269 | ||||
Cash paid for operating leases | 486 | 348 | ||||||
Right-of-use (1) | 3,965 | — |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
(in thousands) | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 52,677 | $ | 5 | $ | 352,334 | $ | (222) | $ | (190,182) | $ | 161,935 | ||||||||||||||||||||||||
Net loss | — | — | — | — | (50,917) | (50,917) | |||||||||||||||||||||||||||||
Stock-based compensation, net | 176 | — | 6,426 | — | — | 6,426 | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | 182 | — | 182 | |||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 52,853 | $ | 5 | $ | 358,760 | $ | (40) | $ | (241,099) | $ | 117,626 | ||||||||||||||||||||||||
Net loss | — | — | — | — | (48,896) | (48,896) | |||||||||||||||||||||||||||||
Stock-based compensation, net | 434 | — | 3,876 | — | — | 3,876 | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 40 | — | 40 | |||||||||||||||||||||||||||||
Balance as of December 31, 2023 | 53,287 | $ | 5 | $ | 362,636 | $ | — | $ | (289,995) | $ | 72,646 |
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (48,896) | $ | (50,917) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||
Change in fair value of warrant liability | (213) | (5,404) | |||||||||
Additions to content assets | (18,316) | (34,771) | |||||||||
Change in content liabilities | (2,455) | (6,822) | |||||||||
Amortization of content assets | 22,905 | 39,291 | |||||||||
Depreciation and amortization expenses | 496 | 699 | |||||||||
Impairment of content assets | 18,970 | — | |||||||||
Impairment of goodwill and intangible assets | — | 3,603 | |||||||||
Amortization of premiums and accretion of discounts associated with investments in debt securities, net | 26 | 1,191 | |||||||||
Stock-based compensation | 3,999 | 6,644 | |||||||||
Equity interests loss | 5,404 | 846 | |||||||||
Other non-cash items | 481 | 1,141 | |||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | 6,139 | 11,862 | |||||||||
Other assets | 855 | 3,355 | |||||||||
Accounts payable | (1,295) | 2,654 | |||||||||
Accrued expenses and other liabilities | (4,542) | (4,645) | |||||||||
Deferred revenue | 270 | (8,250) | |||||||||
Net cash used in operating activities | (16,172) | (39,523) | |||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | (5) | (130) | |||||||||
Investment in equity method investees | (992) | (2,438) | |||||||||
Sales of investments in debt securities | — | 22,893 | |||||||||
Maturities of investments in debt securities | 15,000 | 43,873 | |||||||||
Purchases of investments in debt securities | — | (1,497) | |||||||||
Net cash provided by investing activities | 14,003 | 62,701 | |||||||||
Cash flows from financing activities | |||||||||||
Payments related to tax withholding | (123) | (218) | |||||||||
Net cash used in provided by financing activities | (123) | (218) | |||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (2,292) | 22,960 | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 40,507 | 17,547 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 38,215 | $ | 40,507 | |||||||
Supplemental disclosure: | |||||||||||
Cash paid for taxes | $ | 195 | $ | 614 | |||||||
Cash paid for operating leases | 466 | 486 | |||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | — | 3,965 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 40,007 | $ | 15,216 | ||||
Restricted cash | 500 | 2,331 | ||||||
Cash, cash equivalents and restricted cash | $ | 40,507 | $ | 17,547 | ||||
(in thousands) | Spiegel Venture | Nebula | Total | ||||||||||||||
Balance, December 31, 2022 | $ | 2,899 | $ | 7,867 | $ | 10,766 | |||||||||||
Investments in equity method investees | 992 | — | 992 | ||||||||||||||
Equity interests (loss) income* | (2,155) | (3,249) | (5,404) | ||||||||||||||
Balance, December 31, 2023 | $ | 1,736 | $ | 4,618 | $ | 6,354 | |||||||||||
* Equity interests loss amounts include impairments during 2023 of $2.0 million for the Spiegel Venture and $2.3 million for Nebula. |
Spiegel Venture | Nebula | Total | ||||||||||
(in thousands) | ||||||||||||
Balance, December 31, 2021 (1) | $ | 3,089 | $ | 6,898 | $ | 9,987 | ||||||
Investments in equity method investees | — | 1,625 | 1,625 | |||||||||
Equity interests (loss) income | (190 | ) | (656 | ) | (846 | ) | ||||||
Balance, December 31, 2022 | $ | 2,899 | $ | 7,867 | $ | 10,766 | ||||||
December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Cash and cash equivalents | $ | 37,715 | $ | 40,007 | |||||||
Restricted cash | 500 | 500 | |||||||||
Cash, cash equivalents and restricted cash | $ | 38,215 | $ | 40,507 |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | Cash and Cash Equivalents | Short-term Investments | Total | Cash and Cash Equivalents | Short-term Investments | Total | |||||||||||||||||||||||||||||||||||||||||
Level 1 Securities | |||||||||||||||||||||||||||||||||||||||||||||||
Money market funds | $ | 36,072 | $ | — | $ | 36,072 | $ | 17,724 | $ | — | $ | 17,724 | |||||||||||||||||||||||||||||||||||
Total Level 1 Securities | 36,072 | — | 36,072 | 17,724 | — | 17,724 | |||||||||||||||||||||||||||||||||||||||||
Level 2 Securities | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | — | — | — | — | 14,986 | 14,986 | |||||||||||||||||||||||||||||||||||||||||
Total Level 2 Securities | — | — | — | — | 14,986 | 14,986 | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 36,072 | $ | — | $ | 36,072 | $ | 17,724 | $ | 14,986 | $ | 32,710 |
As of December 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Short-term Investments | Investments (non-current) | Total | Cash and Cash Equivalents | Short-term Investments | Investments (non-current) | Total | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Level 1 Securities | ||||||||||||||||||||||||||||||||
Money market funds | $ | 17,724 | $ | — | $ | — | $ | 17,724 | $ | 11,709 | $ | — | $ | — | $ | 11,709 | ||||||||||||||||
U.S. Government debt securities | — | — | — | — | — | 13,582 | — | 13,582 | ||||||||||||||||||||||||
Total Level 1 Securities | 17,724 | — | — | 17,724 | 11,709 | 13,582 | — | 25,291 | ||||||||||||||||||||||||
Level 2 Securities | ||||||||||||||||||||||||||||||||
Corporate debt securities | — | 14,986 | — | 14,986 | — | 50,641 | 15,430 | 66,071 | ||||||||||||||||||||||||
Municipal debt securities | — | — | — | — | — | 1,610 | — | 1,610 | ||||||||||||||||||||||||
Total Level 2 Securities | — | 14,986 | — | 14,986 | — | 52,251 | 15,430 | 67,681 | ||||||||||||||||||||||||
Total | $ | 17,724 | $ | 14,986 | $ | — | $ | 32,710 | $ | 11,709 | $ | 65,833 | $ | 15,430 | $ | 92,972 | ||||||||||||||||
As of December 31, 2022 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Debt Securities: | ||||||||||||||||
Corporate | $ | 15,026 | $ | — | $ | (40 | ) | $ | 14,986 | |||||||
Total | $ | 15,026 | $ | — | $ | (40 | ) | $ | 14,986 | |||||||
December 31, 2022 | |||||||||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||
Debt Securities: | |||||||||||||||||||||||
Corporate | $ | 15,026 | $ | — | $ | (40) | $ | 14,986 | |||||||||||||||
Total | $ | 15,026 | $ | — | $ | (40) | $ | 14,986 |
As of December 31, 2021 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Debt Securities: | ||||||||||||||||
Corporate | $ | 66,281 | $ | — | $ | (210 | ) | $ | 66,071 | |||||||
U.S. Government | 13,594 | — | (12 | ) | 13,582 | |||||||||||
Municipalities | 1,610 | — | — | 1,610 | ||||||||||||
Total | $ | 81,485 | $ | — | $ | (222 | ) | $ | 81,263 | |||||||
As of December 31, 2022 | As of December 31, 2021 | |||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Due in one year or less | $ | 15,026 | $ | 14,986 | $ | 66,001 | $ | 65,833 | ||||||||
Due after one year through five years | — | — | 15,484 | 15,430 | ||||||||||||
Due after five years | — | — | — | — | ||||||||||||
Total | $ | 15,026 | $ | 14,986 | $ | 81,485 | $ | 81,263 | ||||||||
December 31, 2022 | |||||||||||||||||||||||
(in thousands) | Amortized Cost | Estimated Fair Value | |||||||||||||||||||||
Due in one year or less | $ | 15,026 | $ | 14,986 | |||||||||||||||||||
Due after one year through five years | — | — | |||||||||||||||||||||
Due after five years | — | — | |||||||||||||||||||||
Total | $ | 15,026 | $ | 14,986 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Licensed content, net | ||||||||
Released, less amortization | $ | 11,154 | $ | 11,406 | ||||
Prepaid and unreleased | 4,014 | 9,119 | ||||||
15,168 | 20,525 | |||||||
Produced content, net | ||||||||
Released, less amortization | 33,094 | 18,507 | ||||||
In production | 20,240 | 33,650 | ||||||
53,334 | 52,157 | |||||||
Total | $ | 68,502 | $ | 72,682 | ||||
December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Licensed content, net | |||||||||||
Released, less amortization and impairment1 | $ | 8,271 | $ | 11,154 | |||||||
Prepaid and unreleased | 8,357 | 4,014 | |||||||||
Total licensed content, net | 16,628 | 15,168 | |||||||||
Produced content, net | |||||||||||
Released, less amortization and impairment2 | 22,880 | 33,094 | |||||||||
In production | 5,435 | 20,240 | |||||||||
Total produced content, net | 28,315 | 53,334 | |||||||||
Total content assets | $ | 44,943 | $ | 68,502 | |||||||
1 The December 31, 2023, amount reflects a $4.4 million impairment charge recorded for the three months ended September 30, 2023. See Impairment Assessment below. | |||||||||||
2 The December 31, 2023, amount reflects a $14.6 million impairment charge recorded for the three months ended September 30, 2023. See Impairment Assessment below. |
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Licensed content | $ | 7,250 | $ | 8,480 | |||||||
Produced content | 15,655 | 30,811 | |||||||||
Total | $ | 22,905 | $ | 39,291 |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Licensed content | $ | 8,480 | $ | 8,961 | ||||
Produced content | 30,811 | 18,920 | ||||||
$ | 39,291 | $ | 27,881 | |||||
Estimated Useful Life (in Years) | December 31, | ||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||
Furniture and fixtures | 10 to 15 | $ | 101 | $ | 108 | ||||||||||||
Equipment | 5 | 1,040 | 1,252 | ||||||||||||||
Computer and software | 3 to 5 | 570 | 857 | ||||||||||||||
Website and application development | 3 | 37 | 37 | ||||||||||||||
Leasehold improvements | Lesser of lease term or lives | 703 | 703 | ||||||||||||||
Work-in-progress | — | 5 | 5 | ||||||||||||||
Property and equipment, gross | 2,456 | 2,962 | |||||||||||||||
Less accumulated depreciation and amortization | 1,729 | 1,868 | |||||||||||||||
Property and equipment, net | $ | 727 | $ | 1,094 |
Estimated useful life (in years) | As of December 31, | |||||||||||
2022 | 2021 | |||||||||||
(in thousands) | ||||||||||||
Furniture and fixtures | 10 to 15 | $ | 108 | $ | 108 | |||||||
Equipment | 5 | 1,252 | 1,247 | |||||||||
Computer and software | 3 to 5 | 857 | 729 | |||||||||
Website and application development | 3 | 37 | 422 | |||||||||
Leasehold improvements | Lesser of lease term or lives | 703 | 703 | |||||||||
Work-in-progress | — | 5 | 32 | |||||||||
Property and equipment, gross | 2,962 | 3,241 | ||||||||||
Less accumulated depreciation and amortization | 1,868 | 1,899 | ||||||||||
Property and equipment, net | $ | 1,094 | $ | 1,342 | ||||||||
(in thousands) | |||||||||||
Balance, December 31, 2021 | $ | 2,793 | |||||||||
Impairment of Goodwill* | 2,793 | ||||||||||
Balance, December 31, 2022 | $ | — | |||||||||
* See Note 2 - Summary of Significant Accounting Policies for a more detailed explanation of goodwill impairment. |
Balance, December 31, 2021 | $ | 2,793 | ||
Impairment of Goodwill (see Note 2) | 2,793 | |||
Balance, December 31, 2022 | $ | — | ||
Weighted average remaining lives (in years) | Gross Carrying Amount 12/31/2021 | Accumulated Amortization | Impairment (see Note 2) | Net Carrying Amount 12/31/2022 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Customer relationships | 1.3 | $ | 940 | $ | (393 | ) | $ | (430 | ) | $ | 117 | |||||||||
Trademark | 3.9 | 570 | (133 | ) | (320 | ) | 117 | |||||||||||||
Covenant-not-to-compete | 1.4 | 130 | (52 | ) | (61 | ) | 17 | |||||||||||||
$ | 1,640 | $ | (578 | ) | $ | (811 | ) | $ | 251 | |||||||||||
December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Level 3 | |||||||||||
Private Placement Warrants | $ | 44 | $ | 257 | |||||||
Total Level 3 | $ | 44 | $ | 257 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Level 3 | ||||||||
Private Placement Warrants | $ | 257 | $ | 5,661 | ||||
Total Level 3 | $ | 257 | $ | 5,661 | ||||
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Direct Business: | |||||||||||||||||||||||||||||||||||||||||||||||
Direct-to-Consumer: | |||||||||||||||||||||||||||||||||||||||||||||||
O&O Consumer Service | $ | 26,502 | 47 | % | $ | 25,549 | 33 | % | |||||||||||||||||||||||||||||||||||||||
App Services | 3,384 | 6 | % | 3,940 | 5 | % | |||||||||||||||||||||||||||||||||||||||||
Total Direct-to-Consumer | 29,886 | 53 | % | 29,489 | 38 | % | |||||||||||||||||||||||||||||||||||||||||
Partner Direct Business | 4,706 | 8 | % | 4,631 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
Total Direct Business | 34,592 | 61 | % | 34,120 | 44 | % | |||||||||||||||||||||||||||||||||||||||||
Content Licensing: | |||||||||||||||||||||||||||||||||||||||||||||||
Library sales* | 11,739 | 21 | % | 6,131 | 8 | % | |||||||||||||||||||||||||||||||||||||||||
Presales | 2,308 | 4 | % | 18,560 | 24 | % | |||||||||||||||||||||||||||||||||||||||||
Total Content Licensing | 14,047 | 25 | % | 24,691 | 32 | % | |||||||||||||||||||||||||||||||||||||||||
Bundled Distribution | 6,316 | 11 | % | 11,726 | 15 | % | |||||||||||||||||||||||||||||||||||||||||
Enterprise | 141 | — | % | 5,520 | 7 | % | |||||||||||||||||||||||||||||||||||||||||
Other | 1,793 | 3 | % | 1,986 | 3 | % | |||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 56,889 | $ | 78,043 | |||||||||||||||||||||||||||||||||||||||||||
* The 2023 amount includes $9.9 million of trade and barter transactions. |
For the year ended December 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Subscriptions—O&O Service | $ | 31,069 | 40 | % | $ | 20,906 | 29 | % | ||||||||
Subscriptions—App Services | 3,940 | 5 | % | 3,915 | 6 | % | ||||||||||
Subscriptions—Total | 35,009 | 45 | % | 24,821 | 35 | % | ||||||||||
License Fees—Affiliates | 16,357 | 21 | % | 18,572 | 26 | % | ||||||||||
License Fees—Content Licensing (1) | 24,691 | 31 | % | 24,758 | 35 | % | ||||||||||
License Fees—Total | 41,048 | 52 | % | 43,330 | 61 | % | ||||||||||
Other—Total (1) | 1,986 | 3 | % | 3,110 | 4 | % | ||||||||||
Total Revenues | $ | 78,043 | $ | 71,261 | ||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
(in thousands) | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | |||||||||||||||||||||||||||||
Remaining performance obligations | $ | 2,240 | $ | 1,600 | $ | 1,251 | $ | 75 | $ | 55 | $ | 5,221 |
For the year ending December 31, | ||||||||||||||||||||||||
2023 | 2024 | 2025 | 2026 | Thereafter | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Remaining Performance Obligations | $ | 9,705 | $ | 5,469 | $ | 3,779 | $ | 115 | $ | 197 | $ | 19,265 |
Year Ended December 31, | ||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||
Trade and barter license fees: Content licensing | $ | 9,873 | $ | — | ||||||||||
Other trade and barter revenue* | 1,130 | — | ||||||||||||
Total trade and barter revenues | $ | 11,003 | $ | — | ||||||||||
* Other revenue primarily relates to other marketing services |
Year Ended December 31, | ||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||
Trade and barter advertising and marketing | 1,480 | — | ||||||||||||
Year Ended December 31, | |||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||
Trade and barter additions to content assets | 9,523 | — | |||||||||||||||||||||
December 31, | |||||||||||
2023 | 2022 | ||||||||||
Exercise price | $ | 11.50 | $ | 11.50 | |||||||
Stock Price (CURI) | $ | 0.54 | $ | 1.14 | |||||||
Expected volatility | 100.00 | % | 77.00 | % | |||||||
Expected warrant term (years) | 1.8 | 2.8 | |||||||||
Risk-free interest rate | 4.23 | % | 4.22 | % | |||||||
Dividend yield | 0 | % | 0 | % | |||||||
Fair Value per Private Placement Warrant | $ | 0.01 | $ | 0.07 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Exercise Price | $ | 11.50 | $ | 11.50 | ||||
Stock Price (CURI) | $ | 1.14 | $ | 5.93 | ||||
Expected volatility | 77.00 | % | 58.00 | % | ||||
Expected warrant term (years) | 2.8 | 3.8 | ||||||
Risk-free interest rate | 4.22 | % | 1.12 | % | ||||
Dividend yield | 0 | % | 0 | % | ||||
Fair Value per Private Placement Warrant | $ | 0.07 | $ | 1.54 |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands, except per share amounts) | ||||||||
Numerator—Basic EPS: | ||||||||
Net loss | $ | (50,917 | ) | $ | (37,635 | ) | ||
Denominator—Basic EPS: | ||||||||
Weighted–average shares—Basic | 52,787 | 51,482 | ||||||
Net loss per share—Basic | $ | (0.96 | ) | $ | (0.73 | ) | ||
Numerator—Diluted EPS: | ||||||||
Net loss | $ | (50,917 | ) | $ | (37,635 | ) | ||
Decrease in fair value of Private Placement Warrants | — | (15,182 | ) | |||||
Net loss—Diluted | $ | (50,917 | ) | $ | (52,817 | ) | ||
Denominator—Diluted EPS: | ||||||||
Weighted–average shares—Basic | 52,787 | 51,482 | ||||||
Incremental common shares from assumed exercise of Private Placement Warrants | — | 307 | ||||||
Weighted–average shares—Diluted | 52,787 | 51,789 | ||||||
Net loss per share—Diluted | $ | (0.96 | ) | $ | (1.02 | ) | ||
Year Ended December 31, | |||||||||||
(in thousands, except per share amounts) | 2023 | 2022 | |||||||||
Numerator — Basic and Diluted EPS | |||||||||||
Net loss | $ | (48,896) | $ | (50,917) | |||||||
Denominator — Basic and Diluted EPS | |||||||||||
Weighted–average shares | 53,044 | 52,787 | |||||||||
Net loss per share — Basic and Diluted | $ | (0.92) | $ | (0.96) | |||||||
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Options | 32 | 4,632 | |||||||||
Restricted Stock Units | 2,058 | 759 | |||||||||
Warrants | 6,730 | 6,730 | |||||||||
Total | 8,820 | 12,121 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Options | 4,632 | 4,748 | ||||||
Restricted Stock Units | 759 | 850 | ||||||
Warrants | 6,730 | 3,054 | ||||||
12,121 | 8,652 | |||||||
Stock Options | Restricted Stock Units | ||||||||||||||||||||||||||||||||||
Number of Shares Available for Issuance Under the Plan | Number of Shares* | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in Years) | Number of Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 1,814,964 | 4,632,093 | $ | 7.13 | 6.8 | 758,720 | $ | 7.14 | |||||||||||||||||||||||||||
Granted | (1,923,208) | — | — | — | 1,923,208 | $ | 1.06 | ||||||||||||||||||||||||||||
Options exercised and RSUs vested | 151,666 | — | — | — | (505,201) | $ | 6.90 | ||||||||||||||||||||||||||||
Forfeited or expired | 4,718,582 | (4,599,801) | $ | 7.16 | — | (118,781) | $ | 9.11 | |||||||||||||||||||||||||||
Balance as of December 31, 2023 | 4,762,004 | 32,292 | $ | 5.79 | 5.9 | 2,057,946 | $ | 2.57 | |||||||||||||||||||||||||||
Exercisable as of December 31, 2022 | 3,003,687 | $ | 7.24 | 6.2 | |||||||||||||||||||||||||||||||
Exercisable as of December 31, 2023 | 27,143 | $ | 5.44 | 5.8 | |||||||||||||||||||||||||||||||
Unvested as of December 31, 2022 | 1,628,406 | $ | 6.93 | 8.0 | |||||||||||||||||||||||||||||||
Unvested as of December 31, 2023 | 5,149 | $ | 7.64 | 6.7 | |||||||||||||||||||||||||||||||
* Of the total 4,599,801 forfeited or expired stock options during 2023, 4,597,539 options were converted into 1,581,571 Restricted Stock Units (RSUs) in July 2023. Refer to the detailed explanation below for more information. | |||||||||||||||||||||||||||||||||||
Stock Options | Restricted Stock Units | |||||||||||||||||||||||||||
Number of Shares Available for Issuance Under the Plan | Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value (1) | Number of Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||
Balance as of December 31, 2021 | 1,820,504 | 4,747,832 | $ | 7.61 | 8.2 | $ | 3,254 | 850,277 | $ | 11.41 | ||||||||||||||||||
Granted | (1,369,401 | ) | 820,741 | 3.18 | — | — | 548,660 | 3.15 | ||||||||||||||||||||
Options exercised and RSUs vested | 79,776 | — | — | — | — | (292,882 | ) | 9.95 | ||||||||||||||||||||
Forfeited or expired | 1,283,815 | (936,480 | ) | 6.11 | — | — | (347,335 | ) | 9.12 | |||||||||||||||||||
Balance as of December 31, 2022 | 1,814,694 | 4,632,093 | $ | 7.13 | 6.8 | $ | — | 758,720 | $ | 7.14 | ||||||||||||||||||
Exercisable as of December 31, 2021 | 2,348,875 | $ | 7.74 | 8.0 | $ | 2,010 | ||||||||||||||||||||||
Exercisable as of December 31, 2022 | 3,003,687 | $ | 7.24 | 6.2 | $ | — | ||||||||||||||||||||||
Unvested as of December 31, 2021 | 2,398,957 | $ | 7.49 | 8.4 | $ | 1,244 | ||||||||||||||||||||||
Unvested as of December 31, 2022 | 1,628,406 | $ | 6.93 | 8.0 | $ | — |
Year Ended December 31, | |||||||||||
(stock-based compensation in thousands) | 2023 | 2022 | |||||||||
Dividend yield | N/A | 0 | % | ||||||||
Expected volatility | N/A | 60% - 70% | |||||||||
Expected term (years) | N/A | 6.0 - 6.5 | |||||||||
Risk-free interest rate | N/A | 1.40% - 2.95% | |||||||||
Weighted average grant date fair value | N/A | $ | 1.91 | ||||||||
Stock-based compensation—Options | $ | 1,559 | $ | 3,829 | |||||||
Stock-based compensation—RSUs | $ | 2,440 | $ | 2,815 | |||||||
Total stock-based compensation | $ | 3,999 | $ | 6,644 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Dividend yield | 0% | 0% | ||||||
Expected volatility | 60% - 70% | 60% | ||||||
Expected term (years) | 6.00 - 6.50 | 2.50 - 6.25 | ||||||
Risk-free interest rate | 1.40% - 2.95% | 0.14% - 1.11% | ||||||
Weighted average grant date fair value | $ | 1.91 | $ | 6.58 | ||||
(in thousands) | ||||||||
Stock-based compensation—Options | $ | 3,829 | $ | 4,597 | ||||
Stock-based compensation—RSUs | $ | 2,815 | $ | 2,367 |
(in thousands) | Total Unrecognized Compensation Cost | Weighted Average Remaining Years | |||||||||
Stock options | $ | 13 | 0.7 | ||||||||
Restricted Stock Units | 3,112 | 0.9 | |||||||||
Total | $ | 3,125 |
Total Unrecognized Compensation Cost | Weighted Average Remaining Years | |||||||
(in thousands) | ||||||||
Stock options | $ | 5,227 | 1.8 | |||||
Restricted Stock Units | 9,166 | 2.4 | ||||||
Total | $ | 14,393 | ||||||
Year Ended December 31, | |||||||||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||||||||
United States | $ | 31,978 | 56 | % | $ | 48,270 | 62 | % | |||||||||||||||
International: | |||||||||||||||||||||||
United Kingdom | 4,001 | 7 | % | 8,191 | 10 | % | |||||||||||||||||
Other | 20,910 | 37 | % | 21,582 | 28 | % | |||||||||||||||||
Total International | $ | 24,911 | 44 | % | $ | 29,773 | 38 | % | |||||||||||||||
Total | $ | 56,889 | 100 | % | $ | 78,043 | 100 | % |
For the year ended December 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
(in thousands, except percentages) | ||||||||||||||||
United States | $ | 48,270 | 62 | % | $ | 41,461 | 58 | % | ||||||||
International: | ||||||||||||||||
United Kingdom | 8,191 | 10 | % | 6,749 | 9 | % | ||||||||||
Germany | 3,024 | 4 | % | 8,625 | 12 | % | ||||||||||
Other | 18,558 | 24 | % | 14,426 | 21 | % | ||||||||||
Total International | $ | 29,773 | 38 | % | $ | 29,800 | 42 | % | ||||||||
$ | 78,043 | 100 | % | $ | 71,261 | 100 | % | |||||||||
December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Accounts receivable | $ | 811 | $ | 3,358 | |||||||
Accounts payable | 374 | 404 |
As of December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Balance Sheets | ||||||||
Accounts receivable | $ | 3,358 | $ | 6,254 | ||||
Accounts payable | 404 | 611 |
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Revenues | $ | 1,091 | $ | 1,901 | |||||||
Cost of revenues | 4,609 | 4,289 |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Statement of Operations | ||||||||
Revenues | $ | 1,901 | $ | 5,612 | ||||
Cost of revenues | 4,289 | 1,202 |
Year Ending December 31, | Rent Expense | Sublease rental income | Net rent | |||||||||
(in thousands) | ||||||||||||
2022 | $ | 530 | $ | (53 | ) | $ | 477 | |||||
2023 | 543 | (54 | ) | 489 | ||||||||
2024 | 557 | (56 | ) | 501 | ||||||||
2025 | 571 | (57 | ) | 514 | ||||||||
2026 | 585 | (59 | ) | 526 | ||||||||
Thereafter | 3,946 | (395 | ) | 3,551 | ||||||||
$ | 6,732 | $ | (674 | ) | $ | 6,058 | ||||||
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Operating lease cost | $ | 481 | $ | 484 | |||||||
Short-term lease cost | — | 42 | |||||||||
Variable lease cost | 52 | 51 | |||||||||
Total lease cost | $ | 533 | $ | 577 | |||||||
* Short term lease cost includes a refund received by the Company during the year ended December 31, 2023, for office space it previously occupied. |
For the year ended December 31, 2022 | ||||
(in thousands) | ||||
Operating lease cost | $ | 484 | ||
Short-term lease cost | 42 | |||
Variable lease cost | 51 | |||
Total lease cost | $ | 577 | ||
(in thousands) | (in thousands) | |||||||||||||
2023 | $ | 543 | ||||||||||||
2024 | ||||||||||||||
2024 | ||||||||||||||
2024 | 557 | |||||||||||||
2025 | 571 | |||||||||||||
2026 | 585 | |||||||||||||
2027 | 600 | |||||||||||||
2028 | ||||||||||||||
Thereafter | 3,346 | |||||||||||||
Total Lease Payments | 6,202 | |||||||||||||
Less: imputed interest | (1,217 | ) | ||||||||||||
Present value of total lease liabilities | $ | 4,985 | ||||||||||||
Year Ended December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Current: | |||||||||||
Federal | $ | — | $ | — | |||||||
State and Local | 77 | (25) | |||||||||
Foreign | 429 | 396 | |||||||||
Total current provision | $ | 506 | $ | 371 | |||||||
Deferred: | |||||||||||
Federal | $ | — | $ | (3) | |||||||
State and local | — | (1) | |||||||||
Foreign | — | — | |||||||||
Total deferred provision | $ | — | $ | (4) | |||||||
Total tax provision | $ | 506 | $ | 367 |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Provision for income taxes: | ||||||||
Current: | ||||||||
Federal | $ | — | $ | — | ||||
State and L ocal | (25 | ) | 11 | |||||
Foreign | 396 | 345 | ||||||
Total current provision | $ | 371 | $ | 356 | ||||
Deferred: | ||||||||
Federal | $ | (3 | ) | $ | 3 | |||
State and local | (1 | ) | 1 | |||||
Foreign | — | — | ||||||
Total deferred provision | $ | (4 | ) | $ | 4 | |||
Total tax provision | $ | 367 | $ | 360 | ||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. federal statutory income tax provision (benefit) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. federal statutory income tax provision (benefit) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. federal statutory income tax provision (benefit) | $ | (10,615 | ) | 21.0 | % | $ | (7,851 | ) | 21.0 | % | $ | (10,152) | 21.0 | 21.0 | % | $ | (10,615) | 21.0 | 21.0 | % | ||||||||||||||||||||||||||||||||||||||||||
Permanent items | (360 | ) | 0.7 | % | (3,360 | ) | 9.0 | % | Permanent items | 212 | (0.4 | (0.4 | %) | (360) | 0.7 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
State and local income taxes, net of federal tax benefit | (1,938 | ) | 3.8 | % | (2,727 | ) | 7.3 | % | State and local income taxes, net of federal tax benefit | (1,635) | 3.4 | 3.4 | % | (1,938) | 3.8 | 3.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Change in valuation allowance | 12,409 | (24.5 | )% | 13,824 | (37.0 | )% | Change in valuation allowance | 11,786 | (24.4) | (24.4) | % | 12,409 | (24.5) | (24.5) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Return to provision adjustments | 475 | (0.9 | )% | 129 | (0.3 | )% | Return to provision adjustments | 41 | (0.1) | (0.1) | % | 475 | (0.9) | (0.9) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign withholding taxes | 396 | (0.8 | )% | 345 | (0.9 | )% | Foreign withholding taxes | 254 | (0.5) | (0.5) | % | 396 | (0.8) | (0.8) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Total tax provision | $ | 367 | (0.7 | )% | $ | 360 | (0.9 | )% | Total tax provision | $ | 506 | (1.0) | (1.0) | % | $ | 367 | (0.7) | (0.7) | % | |||||||||||||||||||||||||||||||||||||||||||
December 31, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Deferred tax assets: | |||||||||||
Net operating loss carryforwards | $ | 54,962 | $ | 49,050 | |||||||
Accrued expenses and reserves | 401 | 526 | |||||||||
Intangibles and content assets | 7,439 | 2,837 | |||||||||
Lease liability | 1,143 | 1,232 | |||||||||
Stock based compensation | 3,540 | 3,046 | |||||||||
Other | 1,175 | 275 | |||||||||
Total deferred tax asset | 68,660 | 56,966 | |||||||||
Valuation allowance | (67,837) | (56,051) | |||||||||
Deferred tax assets, net of valuation allowance | $ | 823 | $ | 915 | |||||||
Deferred tax liabilities: | |||||||||||
ROU asset | (823) | (915) | |||||||||
Deferred tax liabilities, net | $ | — | $ | — |
December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 49,050 | $ | 37,428 | ||||
Accrued expenses and reserves | 526 | 798 | ||||||
Intangibles and content assets | 2,837 | 2,334 | ||||||
Deferred rent | — | 314 | ||||||
Lease liability | 1,232 | — | ||||||
Stock based compensation | 3,046 | 2,627 | ||||||
Other | 275 | 179 | ||||||
Total deferred tax asset | 56,966 | 43,680 | ||||||
Valuation allowance | (56,051 | ) | (43,642 | ) | ||||
Deferred tax assets, net of valuation allowance | $ | 915 | $ | 38 | ||||
Deferred tax liabilities: | ||||||||
Unrealized gain | — | (43 | ) | |||||
ROU asset | (915 | ) | — | |||||
Deferred tax liabilities, net | $ | (0 | ) | $ | (5 | ) | ||
Item
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Item
Evaluation of Disclosure Controls and Procedures
CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting
2023.
•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions or dispositions of our assets.
•Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors.
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Attestation Report of the Registered Public Accounting Firm
2023.
54
Changes in Internal Control
There have been no changes in our internal control over financial reporting, as identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act, which occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item
OTHER INFORMATION
Item
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
55
Item
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item
EXECUTIVE COMPENSATION
Item
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Item
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Item
PRINCIPAL ACCOUNTANT FEES AND SERVICES
56
Item
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
Form 10-K:
|
57
Exhibit No. | Description | Incorporated By Reference | Filed/Furnished Herewith | |||||||||||||||||||||||||||||||||||
Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||||
2.1 | 8-K | 001-39139 | 2.1 | August 11, 2020 | ||||||||||||||||||||||||||||||||||
3.1 | 8-K | 001-39139 | 3.1 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 001-39139 | 3.2 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
4.1 | S-1/A | 001-39139 | 4.2 | November 8, 2019 | ||||||||||||||||||||||||||||||||||
4.2 | S-1/A | 001-39139 | 4.3 | November 8, 2019 | ||||||||||||||||||||||||||||||||||
4.3 | 8-K | 001-39139 | 4.1 | November 25, 2019 | ||||||||||||||||||||||||||||||||||
4.4 | 10-K | 001-39139 | 4.4 | March 31, 2021 | ||||||||||||||||||||||||||||||||||
4.5 | 10-K | 001-39139 | 4.5 | March 31, 2021 | ||||||||||||||||||||||||||||||||||
10.1 | 8-K | 001-39139 | 10.1 | November 25, 2019 | ||||||||||||||||||||||||||||||||||
58
Exhibit No. | Description | Incorporated By Reference | Filed/Furnished Herewith | |||||||||||||||||||||||||||||||||||
Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||||
10.2 | 8-K | 001-39139 | 10.3 | November 25, 2019 | ||||||||||||||||||||||||||||||||||
10.3 | S-1/A | 333-234327 | 10.5 | November 8, 2019 | ||||||||||||||||||||||||||||||||||
10.4 | 8-K | 001-39139 | 10.5 | November 25, 2019 | ||||||||||||||||||||||||||||||||||
10.5 | 8-K | 001-39139 | 10.1 | August 11, 2020 | ||||||||||||||||||||||||||||||||||
10.6* | 8-K | 001-39139 | 10.10 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.7 | 8-K | 001-39139 | 10.11 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.8 | 8-K | 001-39139 | 10.12 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.9 | 8-K | 001-39139 | 10.13 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.10* | 8-K | 001-39139 | 10.14 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.11* | 8-K | 001-39139 | 10.15 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.12* | 8-K | 001-39139 | 10.16 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
59
Exhibit No. | Description | Incorporated By Reference | Filed/Furnished Herewith | |||||||||||||||||||||||||||||||||||
Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||||
10.13 | 8-K | 001-39139 | 10.17 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
10.14* | 8-K | 001-39139 | 10.1 | March 19, 2021 | ||||||||||||||||||||||||||||||||||
10.15* | 8-K | 001-39139 | 10.2 | March 19, 2021 | ||||||||||||||||||||||||||||||||||
10.16* | 8-K | 001-39139 | 10.3 | March 19, 2021 | ||||||||||||||||||||||||||||||||||
10.17* | 8-K | 001-39139 | 10.1 | October 8, 2021 | ||||||||||||||||||||||||||||||||||
10.18* | 8-K | 001-39139 | 10.1 | May 24, 2022 | ||||||||||||||||||||||||||||||||||
10.19* | 8-K | 001-39139 | 10.1 | November 9, 2022 | ||||||||||||||||||||||||||||||||||
10.20* | 8-K | 001-39139 | 10.1 | November 16, 2022 | ||||||||||||||||||||||||||||||||||
14.1 | 8-K | 001-39139 | 14.1 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
21.1 | 8-K | 001-39139 | 21.1 | October 14, 2020 | ||||||||||||||||||||||||||||||||||
23.1 | X | |||||||||||||||||||||||||||||||||||||
24.1 | 10-K | 001-39139 | 24.1 | March 31, 2021 | ||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1** | X | |||||||||||||||||||||||||||||||||||||
Exhibit No. | Description | Incorporated By Reference | Filed/Furnished Herewith | ||||||||||||||||||||||||||||||||||||
| Form | File | Exhibit | Filing | |||||||||||||||||||||||||||||||||||
97.1 | X | ||||||||||||||||||||||||||||||||||||||
101.INS*** | Inline XBRL Instance Document.** | X | |||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document.** | X | |||||||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.** | X | |||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.** | X | |||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.** | X | |||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** | X | |||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).** | X |
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Item
SUMMARY
60
CURIOSITYSTREAM INC. | ||||||||||||||||
Dated: March | By: |
| /s/ Clint Stinchcomb | |||||||||||||
Name: |
| Clint Stinchcomb | ||||||||||||||
Title: |
| President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
Dated: March | By: |
| /s/ Peter Westley | |||||||||||||
Name: |
| Peter Westley | ||||||||||||||
Title: |
| Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
Date: March | /s/ Clint Stinchcomb | ||||||||||||||
Name: |
| Clint Stinchcomb | |||||||||||||
Title: |
| President and Chief Executive Officer, Director (Principal Executive Officer) | |||||||||||||
Date: March | /s/ Peter Westley | ||||||||||||||
Name: |
| Peter Westley | |||||||||||||
Title: |
| Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | |||||||||||||
Date: March 25, 2024 | /s/ John Hendricks | ||||||||||||||
Name: |
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Title: |
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| Chairman of the Board, Director | ||||||||||||||
Date: March 25, 2024 | /s/ Elizabeth Saravia | ||||||||||||||
Name: | Elizabeth Saravia | ||||||||||||||
Title: | Director | ||||||||||||||
Date: March |
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Name: |
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Title: |
| Director | |||||||||||||
Date: March 25, 2024 | /s/ Matthew Blank | ||||||||||||||
Name: | Matthew Blank | ||||||||||||||
Title: | Director | ||||||||||||||
Date: March |
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Name: |
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Title: | Director |
Date: March 25, 2024 |
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Name: | Mike Nikzad | ||||||||||||||
Title: | Director | ||||||||||||||
Date: March |
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Name: |
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Title: |
| Director | |||||||||||||
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