For the transition period fromto Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a Indicate by check mark whether the registrant is a shell company (as defined in Rule CURIOSITYSTREAM INC. FORM 10-Q FOR THE QUARTER ENDED TABLE OF CONTENTS Part I. Financial Information Item 1. Financial Statements Consolidated Statements of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk Item 2. Unregistered Sales of Equity Securities and Use of Proceeds i The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Operations (in thousands, except for per share data) The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Comprehensive Loss (in thousands) The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of (in thousands) Accumulated Other Additional Paid-in The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Cash Flows (in thousands) 11,893 (157 The accompanying notes are an integral part of these consolidated financial statements. Note 1 — Organization and business The principal business of CuriosityStream Inc. (the “Company” or “CuriosityStream”) is to provide customers with access to high quality factual content via a direct subscription video The Company’s content assets are available directly through its owned and operated website (“O&O Service”), mobile applications developed for iOS and Android operating systems (“App Services”), and via the platforms and systems of third-party partners in exchange for license fees. The Company offers subscribers a monthly or annual subscription. The price for a subscription varies depending on the Note 2 — Basis of presentation and summary of significant accounting policies The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles In the opinion of management, the unaudited consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition, and Results of Operations included in the Annual Report on Form There have been no material changes in the Company’s significant accounting policies The preparation of consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, investments, and accounts receivable. The Company maintains its cash, cash equivalents, and investments with high credit quality financial institutions; at times, such balances with the financial institutions may exceed the applicable FDIC-insured limits. Accounts receivable, net are typically unsecured and are derived from revenues earned from customers primarily located in the United States. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The applicable accounting guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: The Company’s assets measured at fair value on a recurring basis include its investments in money market funds and corporate The Company’s liabilities measured at fair value on a recurring basis include its private placement warrants issued to Software Acquisition Holdings LLC, the Company’s former Sponsor, in a private placement As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time as the Company is no longer considered to be an EGC. On August 23, 2021, the Company purchased a 12% ownership interest in Note 4 A reconciliation of the Company’s cash and cash equivalents in the consolidated balance sheets to cash, cash equivalents and restricted cash in the consolidated statements of cash flows is as follows: The Company’s investments in debt securities at fair value based on unadjusted quoted market prices (Level 1) and quoted prices for comparable assets (Level 2) are: There were no material realized gains or losses recorded during the three and six months ended June 30, Content assets consisted of the following: As of June 30, In accordance with its accounting policy for content assets, the As described in Note Note 5 — Revenue The following table sets forth the Company’s revenues disaggregated by type for the three and six months ended June Revenues expected to be recognized in the future related to performance obligations that These amounts include only fixed consideration or minimum guarantees and do not include amounts related to (i) contracts with an original expected term of one year or less or (ii) licenses of content that are solely based on sales or usage-based royalties. Revenues of Note 6 — Common Stock As of June 30, Warrants As of Each whole warrant entitles the registered holder to purchase one share of the Company’s common stock at an exercise price of $11.50 per share. All Warrants The Company has the right to redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s common stock matched or exceeded $18.00 per share for any 20 trading days within a There were no exercises of warrants during the three and six months ended June 30, The change in fair value of the private placement warrant liability for the three and six months ended June 30, Note Basic and diluted earnings (loss) per share calculations are calculated on the basis of the weighted average number of shares of the Company’s common stock outstanding during the respective periods. Diluted earnings (loss) per share give effect to all dilutive potential common shares outstanding during the period using the treasury stock method for stock options and other potentially dilutive securities. In computing diluted earnings (loss) per share, the average fair value of the Company’s common stock for the period is used to determine the number of shares assumed to be purchased from the exercise price of the options. Purchases of treasury stock reduce the outstanding shares commencing on the date that the stock is purchased. Common stock equivalents are excluded from the calculation when a loss is incurred as their effect would be CuriosityStream 2020 Omnibus Plan In October 2020, the Board of Directors of the Company adopted the CuriosityStream 2020 Omnibus Plan (the “2020 Plan”). Upon adoption of the 2020 Plan, a total of 7,725,000 shares were approved to be issued as stock options, share appreciation rights, The following table summarizes stock option and There were no options exercised during the three and six months ended June 30 2023 and 2022. The Company uses its own historical volatility as well as the historical volatility of similar public companies for estimating volatility. The risk-free interest rate is estimated using the rate of return on U.S. Treasury securities with maturities that approximate to the expected term of the option. The Company does not currently anticipate declaring any dividends. Assumptions used to value the options granted and the resulting weighted-average grant date fair value and stock-based compensation expense Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a Note The Company operates as Note Equity investments 2023, respectively. The Company also incurred The Company Company as Lessor Content commitments Content obligations include amounts related to licensed, commissioned and internally produced streaming content. An obligation for the production of content includes Advertising commitments The Company has certain commitments with regards to future advertising and marketing expenses as stated in the various licensee agreements. Certain of the agreements do not specify the amount of advertising and marketing commitment; however, the total commitments for agreements which do specify the amount are Note Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis Cautionary Note Regarding Forward-looking Statements This Quarterly Report on Form 10-Q contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the Company’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q including, without limitation, statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “attribute,” “believe,” “continue,” “hope,” “estimate,” “expect,” “intend,” “may,” “might,” “potential,” “seek,” “should,” “will” and “would,” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph. These forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those included in forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December Overview Created 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. We are seeking to meet demand for high-quality factual entertainment via We operate our business as a single operating segment that provides premium streaming content through multiple channels, including the use of various applications, partnerships and affiliate relationships. We generate our revenue through Currently, the main sources of our revenue are (i) subscriber and license fees earned from our Direct Business (“Direct Business”), (ii) bundled license fees from distribution affiliates (“Bundled Distribution”), (iii) license fees from content licensing arrangements (“Content Licensing”), (iv) subscriber fees from our Enterprise business (“Enterprise”), and (v) Other revenue, including advertising and sponsorships (“Other”). Direct Business Bundled Distribution Content Licensing Enterprise Other Revenues CuriosityStream’s award-winning content library features more than 15,000 programs that explore topics ranging from space engineering to ancient history to the rise of Wall Street. Our extensive catalog of originally produced and owned content includes more than Our 18 Our App Services enable access to CuriosityStream on almost every major consumer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, consoles. The In addition to our Direct In our Our Our Other business is primarily comprised of advertising and sponsorship revenue. We offer companies the opportunity to be associated with CuriosityStream content in a variety of forms, including In the future, we hope to continue developing integrated digital brand partnerships with advertisers. These sponsorship campaigns offer companies the chance to be associated with CuriosityStream content in the forms described above. We believe the impressions accumulated in these multi-faceted campaigns would roll up to verifiable metrics for the clients. 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 expand our service offerings to maximize subscriber lifetime value. In particular, we believe that the following factors significantly affected our results of operations over the Revenues 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. Operating Costs Our primary operating costs relate to the cost of producing and acquiring our content, the costs of advertising and marketing our service, personnel costs, and distribution fees. Producing and co-producing content and commissioned content is generally more costly than acquiring content The Company’s primary business model is subscription based as opposed to a model generating revenues at a specific title level. Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed in aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. If such changes are identified, the aggregated content library will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. For a discussion of the accounting policies for content impairment write-down and management estimates involved therein, see Further, our advertising and marketing expenditures and personnel costs constitute primary operating costs for our business. These costs may fluctuate based on advertising and marketing objectives and personnel needs. In general, we 19 Results of Operations The Company operates as one reporting segment. The financial data in the following table sets forth selected financial information derived from our unaudited consolidated financial statements for the three Comparison of the three months ended June 30, Revenues Subscriptions License fee Other Total Revenues Operating expenses Cost of revenues Advertising and marketing General and administrative Impairment of goodwill and intangible assets Total operating expenses Operating loss Other income (expense) Change in fair value of warrant liability Interest and other income (expense) Equity method investment loss Loss before income taxes Provision for income taxes Net loss n/m - percentage not meaningful Revenue Revenue for the three months ended June 30, 2023 and 2022 was $14.1 million and The decrease in License fees revenue of $5.5 million Operating Expenses Operating expenses for the three months ended June 30, Cost of Revenues: Cost of revenues for the three months ended June 30, Advertising and Marketing: General and Administrative: General and administrative expenses for the three months ended June 30, Impairment of Goodwill and Intangible Assets: We incurred no impairment charges for goodwill and intangible assets for the three months ended June 30, 2023, in contrast to the $3.6 million expense incurred in the corresponding period of 2022. Operating Loss The Company experienced an operating loss of $8.0 million for the three months ended June 30, Change in Fair Value of Warrant Liability For the Interest and Other Income (Expense) Interest and other income (expense) for the three months ended June 30, 20 Equity For the three months ended June 30, Provision for Income Taxes We had a provision for income taxes of 21 Net Loss Comparison of the six months ended June 30, Revenues Subscriptions License fee Other Total Revenues Operating expenses Cost of revenues Advertising and marketing General and administrative Impairment of goodwill and intangible assets Total operating expenses Operating loss Other income (expense) Change in fair value of warrant liability Interest and other income (expense) Equity method investment loss Loss before income taxes Provision for income taxes Net loss Revenue Revenue for the six months ended June 30, 2023, and 2022 was $26.5 million and The decrease in License fees revenue of $10.1 million Operating Expenses Operating expenses for the six months ended June 30, Cost of Revenues: Cost of revenues for the six months ended June 30, 22 Advertising and General and Administrative: General and administrative expenses for the six months ended June 30, Impairment of Goodwill and Intangible Assets: We incurred no impairment charges for goodwill and intangible assets for the six months ended June 30, 2023, in contrast to the $3.6 million expense incurred in the corresponding period of 2022. Operating Loss The Company experienced an operating loss of $15.8 million for the six months ended June 30, Change in Fair Value of Warrant Liability For the six months ended June 30, 2023, the Company recognized a gain of $0.1 million, compared to a gain of $4.3 million for the six months ended June 30, 2022. This reduction in gain of $4.2 million, or 97%, primarily stemmed from fluctuations in the market price of our common stock and the corresponding changes to the underlying assumptions used in the valuation model used for our Private Placement Warrants during the six months ended June 30, 2022. Interest and Other Income (Expense) For the six months ended June 30, 2023, Interest and other income (expense) amounted to $0.8 million, an increase of Equity Method Investment Loss We had a provision for income taxes of $0.3 and Net Loss Net loss for the six months ended June 30, Liquidity and Capital Resources As of June 30, We believe that our current cash levels, 23 Our principal uses of cash are to acquire content, promote our service through advertising and marketing, and provide for working capital to operate our business. We have experienced significant net losses since our inception, and, given the significant operating and capital expenditures associated with our business plan, we anticipate that we will continue to incur net losses. Cash Flows The following table presents our cash flows from operating, investing and financing activities for the six months ended June 30, Net cash used in operating activities Net cash provided by investing activities Net cash used in financing activities Net increase in cash, cash equivalents and restricted cash Cash Flows from Operating Activities Cash During the six months ended June 30, The The net cash outflow used in operating activities for the six months ended June 30, 2022, fair value of the warrant liability of $4.3 million, partially offset by amortization of content assets of $19.1 million and stock-based compensation expense of $3.4 million. The components of changes in operating assets and liabilities were primarily attributed to a decrease in accounts receivable of $11.9 million, a decrease in other assets of $4.0 million, an increase in accounts payable of $6.1 million, which were partially offset by a decrease in accrued expenses and other liabilities of $2.9 million. Cash Flows from Investing Activities Cash flow from investing activities consists of purchases, sales and maturities of investments, During the six months ended June 30, The The net cash inflow provided by investing activities for the six months ended June 30, 2022, was primarily due to the Cash Flows from Financing Activities During the six months ended June 30, Capital Expenditures Going forward, we expect to 24 Off Balance Sheet Arrangements As of June 30, Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operation is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. Certain amounts included in or affecting the financial statements presented in this Content Assets The Company acquires, licenses and produces content, including original programming, in order to offer customers unlimited viewing of factual entertainment content. The content licenses are for a fixed fee and specific windows of availability. Payments for content, including additions to content assets and the changes in related liabilities, are classified within “Net cash used in operating activities” on the unaudited consolidated statements of cash flows. The Company recognizes its content assets (licensed and produced) as “Content assets, net” on the unaudited consolidated balance sheets. For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known, and the title is accepted and available for streaming. For productions, the Company capitalizes costs associated with the production, including development costs, direct costs, and production overhead. 25 Based on factors including historical and estimated viewing patterns, the Company previously amortized the content assets (licensed and produced) in “Cost of revenues” on the unaudited consolidated statements of operations on a straight-line basis over the shorter of each title’s contractual window of availability or estimated period of use, beginning with the month of first availability. Starting July 1, 2021, the Company amortizes content assets on an accelerated basis in the initial two months after a title is published on the Company’s platform, as the Company has observed and expects more upfront viewing of content, generally as a result of additional marketing efforts. Furthermore, the amortization of original content is more accelerated than that of licensed content. We review factors that impact the amortization of the content assets on a regular basis and the estimates related to these factors require considerable management judgment. The Company continues to review factors impacting the amortization of content assets on an ongoing basis and will also record amortization on an accelerated basis when there is more upfront use of a title, for instance due to significant The Company’s business model is generally subscription based as opposed to a model generating revenues at a specific title level. Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed in aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. If such changes are identified, the aggregated content assets will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. Revenue Subscriptions — O&O Service The Company generates revenue from monthly subscription fees from its O&O 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. Subscriptions — App Services 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 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. License Fees — The Company generates license fee revenues from MVPDs such as License Fees — 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. The Company’s performance obligations include (1) access to its Recently The information set forth under Note 2 to the unaudited consolidated financial statements under the caption “Basis of presentation and summary of significant accounting policies” is incorporated herein by reference. 26 Item 3. Quantitative and Qualitative Disclosures Not applicable. Item 4. Controls and Procedures Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports that we file or Our management, with the participation of the CEO and the CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of June 30, Changes in Internal Control Over Financial Reporting Our management is required to evaluate, with the participation of our CEO and our CFO, any changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during each fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 27 PART II Item 1. Legal Proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition or cash flows. Item 1A. Risk Factors. Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Annual Report on Form 10-K filed with the SEC on March 31, There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 31, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not Applicable. 28 Item 5. Other Information. None. Item 6. Exhibits The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q. Exhibit No. Description Form File No. Exhibit Filing Date Filed/Furnished This document is being furnished with this Form 10-Q. This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 29 PART III — SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized. /s/ Clint Stinchcomb Name: Title: Clint Stinchcomb President and Chief Executive Officer (Principal Executive Officer) /s/ Peter Westley Name: Title: Peter Westley Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 30FORM 10-Q☒ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193420222023☐ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934CuriosityStream Inc.Delaware84-1797523(301) 755-2050 (§Large accelerated filer ☐☐ Accelerated filer ☐ Non-accelerated filer☒☒ Smaller reporting company ☒ Emerging growth company ☒ 11, 2022,1 52,791,993JUNEJune 30, 20222023PagePage 1 2 3 Stockholder’sStockholders’ Equity (Deficit)4 5 6 2018 3127 3127 3228 3228 3228 3228 3228 3329 3329 3430 Sheetssheets
2023
2022 $ 44,337 $ 40,007 500 500 — 14,986 9,087 10,899 1,679 3,118 55,603 69,510 9,303 10,766 911 1,094 63,288 68,502 3,564 3,702 448 539 $ 133,117 $ 154,113 $ 1,750 $ 2,862 6,407 6,065 4,173 7,752 12,876 14,281 25,206 30,960 147 257 4,470 4,648 668 622 30,491 36,487 5 5 361,392 358,760 — (40 ) (258,771 ) (241,099 ) 102,626 117,626 $ 133,117 $ 154,113 June 30, December 31, 2022 2021 (unaudited) Assets Current assets Cash and cash equivalents $ 22,761 $ 15,216 Restricted cash 500 2,331 Short-term investments in debt securities 54,506 65,833 Accounts receivable 11,600 23,493 Other current assets 2,474 6,413 Total current assets 91,841 113,286 Investments in debt securities - 15,430 Investments in equity method investees 11,140 9,987 Property and equipment, net 1,272 1,342 Content assets, net 78,855 72,682 Intangibles, net 316 1,369 Goodwill - 2,793 Operating lease right-of-use assets 3,835 - Other assets 588 689 Total assets $ 187,847 $ 217,578 Liabilities and stockholders’ equity (deficit) Current liabilities Content liabilities $ 5,976 $ 9,684 Accounts payable 9,552 3,428 Accrued expenses and other liabilities 10,122 12,429 Deferred revenue 22,297 22,430 Total current liabilities 47,947 47,971 Warrant liability 1,323 5,661 Non-current operating lease liabilities 4,821 - Other liabilities 699 2,011 Total liabilities 54,790 55,643 Stockholders’ equity (deficit) Preferred stock, $0.0001 par value – 1,000 shares authorized as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021 - - Common stock, $0.0001 par value – 125,000 shares authorized as of June 30, 2022 and December 31, 2021; 52,786 shares issued and outstanding as of June 30, 2022; 52,677 issued and outstanding as of December 31, 2021 5 5 Additional paid-in capital 355,555 352,334 Accumulated other comprehensive loss (452 ) (222 ) Accumulated deficit (222,051 ) (190,182 ) Total stockholders’ equity (deficit) 133,057 161,935 Total liabilities and stockholders’ equity (deficit) $ 187,847 $ 217,578 (unaudited)
June 30,
June 30, $ 14,097 $ 22,348 $ 26,484 $ 39,975 Cost of revenues 9,933 12,988 18,934 24,838 Advertising and marketing 4,203 11,208 7,318 25,976 General and administrative 7,980 10,603 16,039 21,106 Impairment of goodwill and intangible assets — 3,603 — 3,603 22,116 38,402 42,291 75,523 (8,019 ) (16,054 ) (15,807 ) (35,548 ) Change in fair value of warrant liability 184 478 110 4,338 Interest and other income (expense) 437 (29 ) 825 (86 ) Equity method investment loss (2,235 ) (316 ) (2,454 ) (472 ) (9,633 ) (15,921 ) (17,326 ) (31,768 ) Provision for income taxes 288 56 346 101 $ (9,921 ) $ (15,977 ) $ (17,672 ) $ (31,869 ) Basic $ (0.19 ) $ (0.30 ) $ (0.33 ) $ (0.60 ) Diluted $ (0.19 ) $ (0.30 ) $ (0.33 ) $ (0.60 ) Basic 53,006 52,775 52,978 52,762 Diluted 53,006 52,775 52,978 52,762 For the three months ended
June 30, For the six months ended
June 30, 2022 2021 2022 2021 Revenues $ 22,348 $ 15,344 $ 39,975 $ 25,280 Operating expenses Cost of revenues 12,988 5,722 24,838 9,880 Advertising and marketing 11,208 11,520 25,976 23,769 General and administrative 10,603 9,153 21,106 17,885 Impairment of goodwill and intangible assets 3,603 - 3,603 - 38,402 26,395 75,523 51,534 Operating loss (16,054 ) (11,051 ) (35,548 ) (26,254 ) Change in fair value of warrant liability 478 1,764 4,338 (2,022 ) Interest and other (expense) income (29 ) 1,036 (86 ) 1,296 Equity interests loss (316 ) - (472 ) - Loss before income taxes (15,921 ) (8,251 ) (31,768 ) (26,980 ) Provision for income taxes 56 53 101 79 Net loss $ (15,977 ) $ (8,304 ) $ (31,869 ) $ (27,059 ) Net loss per share Basic $ (0.30 ) $ (0.16 ) $ (0.60 ) $ (0.54 ) Diluted $ (0.30 ) $ (0.19 ) $ (0.60 ) $ (0.54 ) Weighted average number of common shares outstanding Basic 52,775 52,567 52,762 50,327 Diluted 52,775 52,968 52,762 50,327 (unaudited)
June 30,
June 30, $ (9,921 ) $ (15,977 ) $ (17,672 ) $ (31,869 ) Other comprehensive income (loss) Unrealized gain (loss) on available for sale securities — 3 40 (230 ) $ (9,921 ) $ (15,974 ) $ (17,632 ) $ (32,099 ) For the three months ended
June 30, For the six months ended
June 30, 2022 2021 2022 2021 Net loss $ (15,977 ) $ (8,304 ) $ (31,869 ) $ (27,059 ) Other comprehensive income (loss) Unrealized gain (loss) on available for sale securities 3 (769 ) (230 ) (1,223 ) Total comprehensive loss $ (15,974 ) $ (9,073 ) $ (32,099 ) $ (28,282 ) Stockholder’sStockholders’ Equity (Deficit)(unaudited)
Comprehensive
Income
Stockholders’
Equity Net loss — — — — — — (9,921 ) (9,921 ) Stock-based compensation, net 66 — — — 1,390 — — 1,390 Net loss — — — — — — (17,672 ) (17,672 ) Stock-based compensation, net 173 — — — 2,632 — — 2,632 Other comprehensive income — — — — — 40 — 40 — $ — Net loss — — — — — — (15,977 ) (15,977 ) Stock-based compensation, net 19 — — — 1,570 — — 1,570 Other comprehensive income — — — — — 3 — 3 — $ — Net loss — — — — — — (31,869 ) (31,869 ) Stock-based compensation, net 109 — — — 3,221 — — 3,221 Other comprehensive loss — — — — — (230 ) — (230 ) Total Common Stock Preferred Stock Comprehensive
Income Accumulated Stockholders’
Equity Shares Amount Shares Amount Capital (Loss) Deficit (Deficit) Balance at March 31, 2022 52,767 $ 5 - $ - $ 353,985 $ (455 ) $ (206,074 ) $ 147,461 Net loss - - - - - - (15,977 ) (15,977 ) Stock-based compensation, net 19 - - - 1,570 - - 1,570 Other comprehensive income - - - - - 3 - 3 Balance at June 30, 2022 52,786 $ 5 - $ - $ 355,555 $ (452 ) $ (222,051 ) $ 133,057 Balance at December 31, 2021 52,677 $ 5 - $ - $ 352,334 $ (222 ) $ (190,182 ) $ 161,935 Net loss - - - - - - (31,869 ) (31,869 ) Stock-based compensation, net 109 - - - 3,221 - - 3,221 Other comprehensive loss - - - - - (230 ) - (230 ) Balance at June 30, 2022 52,786 $ 5 - $ - $ 355,555 $ (452 ) $ (222,051 ) $ 133,057 Balance at March 31, 2021 52,549 $ 5 - $ - $ 347,967 $ (444 ) $ (171,302 ) $ 176,226 Net loss - - - - - - (8,304 ) (8,304 ) Stock-based compensation, net 3 - - - 1,515 - - 1,515 Exercise of Options 31 - - - 115 - - 115 Other comprehensive loss - - - - - (769 ) - (769 ) Balance at June 30, 2021 52,583 $ 5 - $ - $ 349,597 $ (1,213 ) $ (179,606 ) $ 168,783 Balance at December 31, 2020 40,289 $ 4 - $ - $ 197,507 $ 10 $ (152,547 ) $ 44,974 Net loss - - - - - - (27,059 ) (27,059 ) Stock-based compensation, net 3 - - - 3,838 - - 3,838 Issuance of Common Stock 7,475 1 - - 94,100 - - 94,101 Common Stock issuance costs - - - - (707 ) - - (707 ) Exercise of Options 103 - - - 437 - - 437 Exercise of Warrants 4,733 - - - 54,422 - - 54,422 Cancellation of escrow shares (20 ) - - - - - - - Other comprehensive loss - - - - - (1,223 ) - (1,223 ) Balance at June 30, 2021 52,583 $ 5 - $ - $ 349,597 $ (1,213 ) $ (179,606 ) $ 168,783 (unaudited)
June 30, Net loss $ (17,672 ) $ (31,869 ) Adjustments to reconcile net loss to net cash used in operating activities Change in fair value of warrant liability (110 ) (4,338 ) Additions to content assets (7,103 ) (25,303 ) Change in content liabilities (1,112 ) (3,708 ) Amortization of content assets 12,317 19,130 Depreciation and amortization expenses 249 441 Impairment of goodwill and intangible assets — 3,603 Amortization of premiums and accretion of discounts associated with investments in debt securities, net 26 758 Stock-based compensation 2,689 3,382 Equity method investment loss 2,454 472 243 211 Changes in operating assets and liabilities Accounts receivable 1,812 11,893 Other assets 1,464 4,040 Accounts payable (645 ) 6,146 Accrued expenses and other liabilities (3,862 ) (2,850 ) Deferred revenue (1,358 ) (157 ) Net cash used in operating activities (10,608 ) (18,149 ) Purchases of property and equipment (5 ) (120 ) Investment in equity method investees — (1,625 ) Sales of investments in debt securities — 2,893 Maturities of investments in debt securities 15,000 24,373 Purchases of investments in debt securities — (1,497 ) Net cash provided by investing activities 14,995 24,024 Payments related to tax withholding (57 ) (161 ) Net cash used in financing activities (57 ) (161 ) 4,330 5,714 Cash, cash equivalents and restricted cash, beginning of period 40,507 17,547 Cash, cash equivalents and restricted cash, end of period $ 44,837 $ 23,261 Cash paid for taxes $ 25 $ 398 Cash paid for operating leases $ 269 $ 219 $ — $ 3,965 For the six months ended
June 30, 2022 2021 Cash flows from operating activities Net loss $ (31,869 ) $ (27,059 ) Adjustments to reconcile net loss to net cash used in operating activities Change in fair value of warrant liability (4,338 ) 2,022 Additions to content assets (25,303 ) (22,199 ) Change in content liabilities (3,708 ) 4,465 Amortization of content assets 19,130 6,989 Depreciation and amortization expenses 441 217 Impairment of goodwill and intangible assets 3,603 - Amortization of premiums and accretion of discounts associated with investments in debt securities, net 758 352 Stock-based compensation 3,382 3,860 Equity interests loss 472 - Other non-cash items 211 - Changes in operating assets and liabilities Accounts receivable (3,526 ) Other assets 4,040 185 Accounts payable 6,146 1,773 Accrued expenses and other liabilities (2,850 ) 1,091 Deferred revenue ) 8,474 Net cash used in operating activities (18,149 ) (23,356 ) Cash flows from investing activities Purchases of property and equipment (120 ) (175 ) Business acquisitions - (4,000 ) Investment in equity method investees (1,625 ) - Sales of investments in debt securities 2,893 4,882 Maturities of investments in debt securities 24,373 11,980 Purchases of investments in debt securities (1,497 ) (141,644 ) Net cash provided by (used in) investing activities 24,024 (128,957 ) Cash flows from financing activities Exercise of stock options - 409 Exercise of warrants - 54,898 Payments related to tax withholding (161 ) (22 ) Proceeds from issuance of Common Stock - 94,101 Payment of offering costs - (707 ) Net cash (used in) provided by financing activities (161 ) 148,679 Net increase in cash, cash equivalents and restricted cash 5,714 (3,634 ) Cash, cash equivalents and restricted cash, beginning of period 17,547 17,384 Cash, cash equivalents and restricted cash, end of period $ 23,261 $ 13,750 Supplemental disclosure: Cash paid for taxes $ 398 $ 30 Cash paid for operating leases $ 219 $ 43 Right-of-use assets obtained in exchange for new operating lease liabilities (1) $ 3,965 $ - (1)Includes adoption of new leasing guidance effective January 1, 2022. See Note 12 for further details. (SVoD)whothat deliver CuriosityStream content via the distributor’s platform or system. The online library available for streaming spans the entire category of factual entertainment including science, history, society, nature, lifestyle, and technology.streaming resolutioncontent included (e.g., HDDirect Service or 4K)Smart Bundle service) and the length of the subscription (e.g., monthly or annual) selected by the customer. As an additional part of the Company’s App Services, it has built applications to make its service accessible on almost every major customer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, all major smart TV brands (e.g., LG, Vizio, Samsung, Sony)Samsung) and gaming consoles. In addition, CuriosityStream has affiliate agreement relationships with, and its content assets are available through, certain multichannel video programming distributors (“MVPDs”) and virtual MVPDs (“vMVPDs”). The Company also has distribution agreements which grant other media companies certain distribution rights to the Company’s programs, referred to as program salescontent licensing deals. The Company also sells selected rights (such as in territories or on platforms that are not currently being exploited by the Company) to content createdit creates before production begins.(U.S. GAAP)(“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s consolidated financial statements as of and for the year ended December 31, 2021.2021.2022. The results of operations for the three and six months ended June 30, 20222023 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. other than the effects of adopting new accounting guidance related to leases (see below) compared to the significant accounting policies described in the Company’s consolidated financial statements as of and for the year ended December 31, 2021.areas in which management usesitems subject to such estimates include the content asset amortization policy, the assessment of the recoverability of content assets and equity method investments, intangible assets and goodwill, the fair value of assets and liabilities for allocation of the purchase price of companies acquired, and the fair value of share-based awards and liability classified warrants.●Level 1 — Quoted prices in active markets for identical assets or liabilities.●Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of theLevel 1 — Quoted prices in active markets for identical assets or liabilities.●Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. U.S. government, and municipal debt securities. Level 1 inputs were derived by using unadjusted quoted prices for identical assets in active markets and were used to value the Company’s investments in money market funds and U.S. government debt securities. Level 2 inputs were derived using prices for similar investments and were used to value the Company’s investments in corporate and municipal debt securities. that closed concurrently with the Company’s initial public offering (the “Private Placement Warrants”). The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes valuation model. Refer to Note 76 for significant assumptions which the Company used in the fair value model for the Private Placement Issued and Adopted Financial Accounting StandardsFebruaryJune 2016, the Financial Accounting Standards Board (FASB)(“FASB”) issued Accounting Standards Update (ASU) (“ASU”)2016-02, Leases2016-13,842), which supersedes326): Measurement of Credit Losses on Financial Instruments (“ASUlease guidance under Accounting Standards Codification (ASC) 840. Topic 842 increases transparencyloss experience, customer financial condition, and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements for both lessees and lessors.current economic conditions. The Company adopted the new standard effective January 1, 2022, using the modified retrospective method and electing to use the package of practical expedients permitted under the transition guidance,2023, which allows for the carry forward of historical lease classification for existing leases on the adoption date and doeshas not require the assessment of existing lease contracts to determine whether the contracts contain a lease or initial direct costs. Prior periods were not retrospectively adjusted.The adoption of this standard resulted in the recognition of operating lease liabilities of $5.3 million with corresponding right-of-use (ROU) assets in the amount of $4.0 million, net of existing deferred rent and lease 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 an impact on the unaudited consolidated statements of operations or cash flows. Refer to Note 12 for further information regarding the impact of adoption of Topic 842 on the Company’s unaudited consolidated financial statements.Accounting Standards Effective in Future PeriodsIn June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), which requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The guidance also modifies the impairment model for available-for-sale debt securities. ASU 2016-13 is effective for the Company’s fiscal year beginning January 1, 2023. The Company does not expect the implementation of ASU 2016-13 to havehad a material impact on its consolidated financial statements.–— Equity Investments$3.3an initial investment ofvarious SVoD services,an SVOD service, which provide factual content to pay television audiences in Germany. The Company has not received any dividends from the Spiegel Venture as of June 30, 2022.2023.Watch Nebula LLC for $6.0 million. Nebula is an SVoDSVOD technology platform built for and by a group of content creators. TheShould Nebula meet certain quarterly targets through the third quarter of 2023, the Company is committedobligated to purchasing anpurchase additional 13% ownership interest through eight quarterly paymentsinterests, each for a payment of $0.8 million, which aftermillion. After each payment the Company will obtain an additional 1.625% of equity ownership interests. Prior toThe Company did not make further investments in Nebula during the three and six months ended June 30, 2023. The Company’s total ownership interest in Nebula as of June 30, 2023 was 16.875%.Nebula was a 100% wholly owned subsidiary of Standard Broadcast LLC (“Standard”). Thethe Company obtained 25% of the representation on Nebula’s Board of Directors, providing the Company with significant influence, but not a controlling interest. 2022.20222023 and December 31, 2021 is2022 are as follows: Spiegel
Venture Nebula Total (in thousands) Balance at December 31, 2021 $ 3,089 $ 6,898 $ 9,987 Investments in equity method investees (1) - 1,625 1,625 Equity interests loss (122 ) (350 ) (472 ) Balance at June 30, 2022 $ 2,967 $ 8,173 $ 11,140
Venture Balance at December 31, 2022 $ 2,899 $ 7,867 $ 10,766 Investments in equity method investees 992 — 992 Equity method investment loss (1,939 ) (516 ) (2,455 ) Balance at June 30, 2023 $ 1,952 $ 7,351 $ 9,303 (1)Nebula’s investment in equity method investees balance includes an accrual of $0.8 million also reported in Accrued expenses and other liabilities as of June 30, 2022.—Balance— Balance sheet components and cash equivalents and restricted cash
2023
2022 Cash and cash equivalents $ 44,337 $ 40,007 Restricted cash 500 500 Cash and cash equivalents and restricted cash $ 44,837 $ 40,507 20222023 and December 31, 2021 is as follows: June 30, December 31, 2022 2021 (in thousands) Cash and cash equivalents $ 22,761 $ 15,216 Restricted cash 500 2,331 Cash and cash equivalents and restricted cash $ 23,261 $ 17,547 At June 30, 2022,, restricted cash includes cash deposits required by a bank as collateral related to corporate credit card agreements of $0.5 million. On April 16, 2022, the Paycheck Protection Program (PPP) loan was forgiven, and $1.2 million of funds were released from escrow to the Company and reclassified from restricted cash to cash and cash equivalents (see Note 6). On May 11, 2022, the One Day University (ODU) holdback of $0.5 million was paid to ODU from escrow funds previously classified as restricted cash. As of June 30, 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 $ 12,064 $ - $ - $ 12,064 $ 11,709 $ - $ - $ 11,709 U.S. Government debt securities - 9,471 - 9,471 - 13,582 - 13,582 Total Level 1 Securities 12,064 9,471 - 21,535 11,709 13,582 - 25,291 Level 2 Securities Corporate debt securities - 45,035 - 45,035 - 50,641 15,430 66,071 Municipal debt securities - - - - - 1,610 - 1,610 Total Level 2 Securities - 45,035 - 45,035 - 52,251 15,430 67,681 Total $ 12,064 $ 54,506 $ - $ 66,570 $ 11,709 $ 65,833 $ 15,430 $ 92,972 As of June 30, 2023 As of December 31, 2022 Total Total (in thousands) (in thousands) $ 43,333 $ — $ 43,333 $ 17,724 $ — $ 17,724 $ 43,333 — $ 43,333 $ 17,724 — $ 17,724 — — — — $ 14,986 $ 14,986 — — — — $ 14,986 $ 14,986 $ 43,333 — $ 43,333 $ 17,724 $ 14,986 $ 32,710 The following tables summarize the Company’s corporate, U.S. government, and municipal debt securities: 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 As of June 30, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Debt Securities: Corporate $ 45,461 $ - $ (426 ) $ 45,035 U.S. Government 9,497 - (26 ) 9,471 Total $ 54,958 $ - $ (452 ) $ 54,506 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 20222023 or 2021. As of June 30,
2022 December 31,
2021 (in thousands) Licensed content, net Released, less amortization $ 12,345 $ 11,406 Prepaid and unreleased 6,413 9,119 18,758 20,525 Produced content, net Released, less amortization 26,711 18,507 In production 33,386 33,650 60,097 52,157 Total $ 78,855 $ 72,682 As of June 30,
2023 December 31,
2022 (in thousands) Licensed content, net Released, less amortization $ 11,056 $ 11,154 Prepaid and unreleased 3,746 4,014 14,802 15,168 Produced content, net Released, less amortization 36,213 33,094 In production 12,273 20,240 48,486 53,334 Total $ 63,288 $ 68,502 2022, $5.42023,$3.3$2.9 million and $1.6 million of the $12.3 $11.1 2022, $7.22023,$6.9$9.5 million, and $6.0$8.3 million of the $26.7 $36.2 following tables represent the amortization ofCompany amortized licensed content assets: Three Months Ended
June 30, Six Months Ended
June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Licensed content $ 1,798 $ 1,595 $ 4,797 $ 3,278 Produced content 8,293 2,658 14,333 3,711 Total $ 10,091 $ 4,253 $ 19,130 $ 6,989 Goodwillcosts and intangible assetsChanges in goodwill for the six months ended June 30, 2022 is as follows (in thousands):Balance at December 31, 2021 $ 2,793 Impairment of goodwill 2,793 Balance at June 30, 2022 $ - During the three months ended June 30, 2022, the Company experienced a sustained decrease in its share price, and this triggering event was an indication that it was more likely than not that the fair value of the Company’s single 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 during the three months ended June 30, 2022 as the fair value of the reporting unit was less than the related carrying value. This chargeproduced content costs, which is included in impairmentcost of goodwill and intangible assetsrevenues on the Company’s unaudited consolidated statements of operations. $1804 $1,798 $3,749 $4,797 4,662 8,293 8,569 14,333 $6,466 $10,091 $12,318 $19,130 The determination of the fair value of the Company’s reporting unit was based on a combination of the income and the market approach. The Company applied equal weighting to each of the approaches in determining the fair value of the reporting unit. Under the income approach, the Company utilized discounted cash flows of forecasted future cash flows based on future operational expectations and discounted these cash flows to reflect their relative risk. The cash flows used are consistent with those the Company uses in its internal planning, which reflect actual business trends experienced and the Company’s long-term business strategy. Under the market approach, the Company utilized the guideline public company method and guideline transaction method to develop valuation multiples and compare the Company to similar publicly traded companies. The significant assumptions under each of the approaches include, among others: revenue projections (which are dependent on future customer subscriptions and content licensing agreements), operating expenses, discount rate, control premium and a terminal growth rate. The cash flows used to determine the fair values are dependent on a number of significant management assumptions, such as the Company’s expectations of future performance and the expected future economic environment, which are partly based upon the Company’s historical experience. The Company also considered its market capitalization in assessing the reasonableness of the reporting unit fair value.During the three months ended June 30, 2022, the Company also determined there were impairment indicators with respect to certain of the Company’s definite-lived intangible assets. As a result, the Company 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, the Company recorded an impairment charge of $0.8 million during the three months ended June 30, 2022, which is reflected as a component of impairment of goodwill and intangible assets on the Company’s unaudited consolidated statements of operations.7,6, the Private Placement Warrants are classified as aas of June 30, 2022 and December 31, 2021, was as follows: As of
June 30,
2023 As of
December 31,
2022 As of
June 30,
2022 As of
December 31,
2021 (in thousands) (in thousands) Level 3 Private Placement Warrants $ 1,323 $ 5,661 $ 147 $ 257 Total Level 3 $ 1,323 $ 5,661 $ 147 $ 257 30,2023 and 2022, and 2021, as well as the relative percentage of each revenue type to total revenue. $ 6,421 45 % $ 7,912 35 % $ 13,064 49 % $ 15,218 38 % 849 6 % 1,010 5 % 1,726 7 % 2,058 5 % 7,270 52 % 8,922 40 % 14,790 56 % 17,276 43 % 1,081 8 % 1,191 5 % 2,184 8 % 2,334 6 % 1,509 11 % 3,888 17 % 2,983 12 % 7,655 19 % 3,615 26 % 6,655 30 % 5,633 21 % 10,904 27 % 6,205 44 % 11,734 52 % 10,800 41 % 20,893 52 % 622 4 % 1,692 8 % 894 3 % 1,806 5 % Total Revenues $ 14,097 $ 22,348 $ 26,484 $ 39,975 Three Months Ended
June 30, Six Months Ended
June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Subscriptions – O&O Service $ 7,912 35 % $ 4,705 31 % $ 15,218 38 % $ 8,671 34 % Subscriptions – App Services 1,010 5 % 975 6 % 2,058 5 % 1,886 7 % Subscriptions – Total 8,922 40 % 5,680 37 % 17,276 43 % 10,557 41 % License Fees – Affiliates 5,079 23 % 4,579 30 % 9,989 25 % 9,082 36 % License Fees – Program Sales (1) 6,655 30 % 5,031 33 % 10,904 27 % 5,517 22 % License Fees – Total 11,734 53 % 9,610 63 % 20,893 52 % 14,599 58 % Other – Total (1)(2) 1,692 7 % 54 0 % 1,806 5 % 124 1 % Total Revenues $ 22,348 $ 15,344 $ 39,975 $ 25,280 (1) For the three and six months ended June 30, 2022, total related party revenue was $2.1 million, consisting of $0.5 million for the three and six months ended June 30, 2022 for content licensed by the Company to the Spiegel Venture included in License fee – Program Sales and $1.6 million for the three and six months ended June 30, 2022 for marketing services rendered to Nebula, which is included in Other revenue. (2)In addition to (1) above, Other revenue for the three and six months ended June 30, 2022 includesprimarily relates to other marketing services for $0.1 million and $0.2 million, respectively.services.arewere unsatisfied atas of June 30, 20222023 are as follows: Remainder of
year ending
December 31, For the years ending December 31, 2022 2023 2024 2025 2026 Thereafter Total (in thousands) Remaining Performance Obligations $ 10,192 $ 7,962 $ 5,035 $ 3,339 $ 23 $ 158 $ 26,709
year ending
December 31, Remaining Performance Obligations $ 3,591 $ 4,132 $ 2,121 $ 292 $ 32 $ 208 $ 10,376 consistsconsist of subscriber and affiliate license fees billed that have not been recognized, amounts contractually billed or collected for programcontent licensing sales in advance of the related content being made available to the customer, and unredeemed gift certificatescards and other prepaid subscriptions that have not been redeemed. Total deferred revenues were $23.0$13.6 million and $23.2$14.9 million at June 30, 20222023 and December 31, 2021,2022, respectively.$6.2 and $16.1$10.6 million were recognized during the three and six June 30, 2022,2021.Paycheck Protection Program LoanOn May 1, 2020, the Company applied for and received funding from the Paycheck Protection Program (“PPP”) in the amount of $1.2 million under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) (the “PPP Loan”). The PPP Loan was set to mature in May 2022 and bore interest at a rate of 1.0% per annum. The PPP provides that the use of the PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The amount of loan proceeds eligible for forgiveness takes into account a number of factors, including the amount of loan proceeds used by the Company during the specified period after the loan origination for certain purposes including payroll costs, rent payments on certain leases, and certain qualified utility payments.The Company elected to recognize earnings as funds are applied to covered expenses and classify the application of funds as a reduction of the related expense in the unaudited consolidated statement of operations. On April 16, 2022, the Company received the loan forgiveness letter from the Small Business Administration (SBA) stating that the loan has been forgiven in full, including applicable interest. Following receipt of the loan forgiveness notification letter, funds of $1.2 million were released from escrow, and the Company reclassified this amount from restricted cash to cash and cash equivalents on the unaudited consolidated balance sheet.Note 7 — Stockholders’ equity20222023 and December 31, 2021,2022, the Company hashad authorized the issuance of 126,000,000 shares of capital stock, par value of $0.0001 per share, consisting of (a) 125,000,000 shares of common stock, and (b) 1,000,000 shares of preferred stock. 30, 2022, A) 3,054,203 publicly traded warrants that were (i) sold as part of the units of Software Acquisition Group Inc. in its initial public offering on November 22, 2019 and (ii)that were issued to the PIPE Investors in connection with ourthe business combination that closed on October 14, 2020 (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”) and B) 3,676,000 Private Placement Warrants outstanding. The Private Placement Warrants are liability-classified, and the Public Warrants are equity-classified.will expire on October 14, 2025.GroupHoldings LLC or its permitted transferees: (i) they will not be redeemable by the Company;Company; (ii) they may be exercised by the holders on a cashless basis;basis; and (iii) they are subject to registration rights.2022.stockholder’s equity (deficit).stockholders’ equity. The fair value of the warrant liability for the Private Placement Warrants was estimated using a Black-Scholes pricing model using Level 3 inputs. The significant assumptions used in preparing the Black-Scholes option pricing model are as follows:
June 30,
2023
December 31,
2022 Exercise price $ 11.50 $ 11.50 Stock price (CURI) $ 0.93 $ 1.14 Expected volatility 84.00 % 77.00 % Expected warrant term (years) 2.3 2.8 Risk-free interest rate 4.68 % 4.22 % Dividend yield 0 % 0 % Fair Value per Private Placement Warrant $ 0.04 $ 0.07 As of
June 30,
2022 As of
December 31,
2021 Exercise Price $ 11.50 $ 11.50 Stock Price (CURI) $ 1.69 $ 5.93 Expected volatility 89.00 % 58.00 % Expected warrant term (years) 3.3 3.8 Risk-free interest rate 2.99 % 1.12 % Dividend yield 0 % 0 % Fair Value per Private Placement Warrant $ 0.36 $ 1.54 20222023 resulted in a gain of $0.5$0.2 million and $4.3$0.1 million, respectively, and for the three and six months ended June 30, 20212022 resulted in a gain of $1.8$0.5 million and a loss of $2.0$4.3 million, respectively.87 — Earnings (loss) per share Three months ended
June 30, Six months ended
June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Numerator - Basic EPS: Net loss $ (15,977 ) $ (8,304 ) $ (31,869 ) $ (27,059 ) Denominator - Basic EPS: Weighted–average shares – Basic 52,775 52,567 52,762 50,327 Net loss per share – Basic $ (0.30 ) $ (0.16 ) $ (0.60 ) $ (0.54 ) Numerator - Diluted EPS: Net loss $ (15,977 ) $ (8,304 ) $ (31,869 ) $ (27,059 ) Decrease in fair value of Private Placement Warrants - (1,764 ) - - Net loss – Diluted (15,977 ) (10,068 ) (31,869 ) (27,059 ) Denominator - Diluted EPS: Weighted–average shares – Basic 52,775 52,567 52,762 50,327 Incremental common shares from assumed exercise of Private Placement Warrants - 402 - - Weighted–average shares – Diluted 52,775 52,968 52,762 50,327 Net loss per share – Diluted $ (0.30 ) $ (0.19 ) $ (0.60 ) $ (0.54 ) Numerator — Basic and Diluted EPS: Net loss $ (9,921 ) $ (15,977 ) $ (17,672 ) $ (31,869 ) Denominator — Basic and Diluted EPS: Weighted–average shares 53,006 52,775 52,978 52,762 Net loss per share — Basic and Diluted $ (0.19 ) $ (0.30 ) $ (0.33 ) $ (0.60 ) 20222023 and 2021,2022, the following share equivalents were excluded from the computation of diluted net loss per share as the inclusion of such shares would be anti-dilutive. Common shares issuable for warrants, options, and restricted stock units (RSUs) represent the total amount of outstanding warrants, stock options, and restricted stock units at June 30, 20222023 and 2021.2022. Options 4,630 5,244 4,630 5,244 Restricted stock units 932 1,114 932 1,114 Warrants 6,730 6,730 6,730 6,730 12,292 13,088 12,292 13,088 Antidilutive shares excluded: Three months ended
June 30, Six months ended
June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Options 5,244 4,737 5,244 4,737 Restricted Stock Units 1,114 772 1,114 772 Warrants 6,730 3,054 6,730 6,730 13,088 8,563 13,088 12,239 98 — Stock-based compensationRSUsrestricted stock units and restricted stock.RSUrestricted stock unit (“RSU”) activity, prices, and values for the six months ended June 30, 2022:
Shares
Available
for
Issuance
Under the
Plan
Shares
Average
Exercise
Price
Shares
Average
Grant
Date
Fair Value Balance at December 31, 2022 1,815 4,632 $ 7.13 759 $ 7.14 Granted (342 ) — — 342 1.41 Options exercised and RSUs vested 52 — — (144 ) 9.23 Forfeited or expired 27 (2 ) 5.88 (25 ) 10.94 Balance at June 30, 2023 1,552 4,630 $ 7.13 932 $ 4.86 Stock Options Restricted Stock Units Number of
Shares
Available for
Issuance
Under the
Plan Number of
Shares Weighted-
Average
Exercise
Price Number of
Shares Weighted - Average
Grant Date
Fair Value (in thousands, except per share data) Balance at December 31, 2021 1,821 4,747 $ 7.61 850 $ 11.41 Granted (1,370 ) 821 3.18 549 3.15 Options exercised and RSUs vested 39 - - (104 ) 11.28 Forfeited or expired 505 (324 ) 8.20 (181 ) 11.66 Balance at June 30, 2022 995 5,244 $ 6.88 1,114 $ 7.17 The intrinsic valueoptions exercised duringfour years from the three and six months ended June 30, 2021 was $0.3 and $1.3 million, respectively.Options generally have a four-year vesting period with 25% of the shares vesting on each anniversarygrant date. When options are exercised, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy share option exercises.RSUs generally have a four-year or a quarterly vesting period with 1/48th of the shares vesting monthly or 6.25% of the shares vesting quarterly. Upon vesting and distribution of RSUs, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy RSUsrestricted stock units vested, net of shares withheld for taxes if elected by the RSU holder.for the three and six months ended June 30, 2022 and 2021 were as follows: Three months ended
June 30, Six months ended
June 30, 2022 2021 2022 2021 Dividend yield 0 % N/A 0 % 0 % Expected volatility 65% - 70 % N/A 60% - 70 % 60 % Expected term (years) 6.25 N/A 6.00 - 6.50 2.50 - 6.25 Risk-free interest rate 2.81% - 2.95 % N/A 1.40% - 2.95 % 0.14% - 1.11 % Weighted average grant date fair value $ 1.12 N/A $ 1.91 $ 6.61 (in thousands) (in thousands) Stock-based compensation - Options $ 946 $ 910 $ 1,914 $ 2,729 Stock-based compensation - RSUs $ 648 $ 627 $ 1,468 $ 1,131 Dividend yield N/A 0 % N/A 0 % Expected volatility N/A 65% - 70 % N/A 60% - 70 % Expected term (years) N/A 6.25 N/A 6.00 - 6.50 Risk-free interest rate N/A 2.81% - 2.95 % N/A 1.40% - 2.95 % Weighted average grant date fair value N/A 1.12 N/A $ 1.91 Stock-based compensation — Options $ 771 $ 946 $ 1,548 $ 1,914 Stock-based compensation — RSUs $ 651 $ 648 $ 1,141 $ 1,468 109 — Segment and geographic information1one reporting segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on an entity-wide basis for purposes of making operating decisions, assessing financial performance and allocating resources.the customers withis as follows: United States $ 7,936 56 % $ 14,704 66 % $ 14,622 55 % $ 26,503 66 % International: United Kingdom 1,800 13 % 2,533 11 % 2,362 9 % 4,434 11 % Other 4,361 31 % 5,111 23 % 9,500 36 % 9,038 23 % Total International 6,161 44 % 7,644 34 % 11,862 45 % 13,472 34 % 14,097 100 % 22,348 100 % 26,484 100 % 39,975 100 % comprisingcomprises greater than 10% of total revenue, is as follows: Three months ended
June 30, Six months ended
June 30, 2022 2021 2022 2021 United States $ 14,704 66 % $ 12,111 79 % $ 26,503 66 % $ 19,266 76 % International: United Kingdom 2,533 11 % 210 1 % 4,434 11 % 379 2 % Other 5,111 23 % 3,023 20 % 9,038 23 % 5,635 22 % Total International 7,644 34 % 3,233 21 % 13,472 34 % 6,014 24 % 22,348 100 % 15,344 100 % 39,975 100 % 25,280 100 % 1110 — Related party transactionsAs described in Note 5, the $0.5 2022.As describedmillion in Note 5, the Company recognized $1.6 millionCost of revenue related to advertising services rendered to Nebularevenues during the three and six months ended June 30, 2022. The Company incurred $1.0 and $2.0 million for the three and six months ended June 30, 2022,2023, respectively, infrom its revenue sharerelated to the Bundled Marketing and Premium Tier Agreement.certain bundled subscription packages. This revenue share is recorded in Cost of revenues on the unaudited consolidated statements of operations. operations. The Bundled and Premium Tier subscriptions bundles the Nebula SVoD subscription with the CuriosityStream subscription for a single subscription fee through the CuriosityStream Premium Tier.operations is as follows:
2023
2022 (in thousands) Accounts receivable $ 2,679 $ 3,358 Accounts payable 386 404 Note 12 — LeasesThe Company adopted the new leases guidance contained in Topic 842 effective January 1, 2022 using the modified retrospective method. Therefore, the reported results for the three and six months ended June 30, 2022 and the financial position as of June 30, 2022 reflect the application of this new guidance, while the reported results for the three and six months ended June 30, 2021 and the financial position as of December 31, 2021 were not adjusted and continue to be reported under the prior lease accounting guidance in effect for the prior periods. Statement of Operations: Revenues 371 $ 2,111 1,084 2,041 Cost of revenues $ 1,164 1,050 2,366 2,040 has entered intois a party to ahas elected not to not separate lease andleaseslease payments were included in the calculation of ROU assetsright of use (“ROU”) asset and leases liabilities andwith variable lease payments arebeing recognized as lease expense.expense as incurred. The Company has determined that no renewal clauses are reasonably certain of being exercised and havetherefore has not included any renewal periods within the lease term for this lease.AtAs of June 30, 2022,2023, the Company had operating lease ROU assets of $3.8$3.6 million, current lease liabilities of $0.3$0.4 million, and$4.8$4.5 million. In measuring operating lease liabilities, the Company used a weighted average discount rate of 4.4% in existence as of the January 1, 2022 adoption date.date of the new leasing standard. The weighted average remaining lease term atas of June 30, 20222023 was 10.79.67 years.20222023 was comprised of the following (in thousands): $ 121 $ 121 $ 242 $ 242 (16 ) 18 (16 ) 36 12 13 25 24 $ 117 $ 152 $ 251 $ 302 Three months ended
June 30,
2022 Six months ended
June 30,
2022 Operating lease cost $ 121 $ 242 Short-term lease cost 18 36 Variable lease cost 13 24 Total lease cost $ 152 $ 302 (1) 2022,2023, maturities of ourthe Company’s operating lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):Remaining six months of 2022 $ 268 2023 543 2024 557 2025 571 2026 585 Thereafter 3,946 Total Lease Payments $ 6,470 Less: imputed interest (1,326 ) Present value of total lease liabilities $ 5,144 Remaining six months of 2023 $ 274 557 571 585 600 Thereafter 3,346 Total lease payments $ 5,933 Less: imputed interest (1,112 ) Present value of total lease liabilities $ 4,821 2022,2023, operating lease income from the Company’s sublet was less than2022,2023, total remaining future minimum lease payments receivable on the Company’s operating lease was $0.6were1312 — Commitments and contingenciesAt2022,2023, the Company had $18.9$6.0$1.8 million included in content liabilities in the accompanying unaudited consolidated balance sheets,sheet, and $12.9$4.0 million of obligations that are not reflected in the accompanying consolidated balance sheets as they did not yet meet the asset recognition criteria for content assets. ContentAll content obligations of $16.4 million and $2.5 million are expected to be paid during the six months endingby December 31, 2023.and the year ending December 31, 2023, respectively.At December 31, 2021, the Company had $39.0$11.5 million of content obligations comprised of $9.7$2.9 million included in current content liabilities in the accompanying unaudited consolidated balance sheets and $29.4$8.6 million of obligations that are not reflected in the accompanying unaudited consolidated balance sheets as they did not yet meet the asset recognition criteria for content assets.$10.8 $2.1 2022,2023, of which $10.1$0.5 million and $0.2 20222023, and yearsyear ending December 31, 2023 and 2024, respectively.1413 — Income taxes and 2021, primarily related to foreign withholding income taxes. The Company’s 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.provideprovides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of CuriosityStream.CuriosityStream Inc. 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 16, 2022.March 31, 2023, and any other subsequent periodic reports and future periodic reports. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.OverviewSVoDSVOD platforms, as well as via bundled content licenses for SVoDSVOD and linear offerings, content licensing, brand sponsorship and advertising, talks and courses and partner bulk sales, brand partnerships and content sales. We believe we are well-positioned for growth as a digital-native video platform monetizing content across this broad revenue stack.sixfive products and services: Direct to Consumer Business, Partner Direct Business, Bundled Distribution, Program Sales, Corporate & Association PartnershipsContent Licensing, Enterprise and Other. The table below shows our revenue generated through each of the foregoing products and services for the three and six months ended June 30, 20222023 and 2021:2022: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Direct to Consumer (Subscriptions – O&O and App Services) $ 7,363 33 % $ 5,647 37 % $ 14,554 36 % $ 10,462 41 % Partner Direct Business (License Fees – Affiliates) 1,191 5 % 1,041 7 % 2,334 6 % 2,018 8 % Bundled Distribution (License Fees – Affiliates) 3,888 18 % 3,538 23 % 7,655 19 % 7,064 28 % Program Sales 6,655 30 % 5,031 33 % 10,904 27 % 5,517 22 % Corporate & Association Partnerships (Subscriptions – O&O Service) 1,559 7 % 33 0 % 2,722 7 % 95 0 % Other 1,692 7 % 54 0 % 1,806 5 % 124 1 % Total Revenues $ 22,348 $ 15,344 $ 39,975 $ 25,280 Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) $ 8,310 59 % $ 8,554 38 % $ 16,894 64 % $ 16,888 42 % 1,509 11 % 3,888 17 % 2,983 12 % 7,655 19 % 3,615 26 % 6,655 30 % 5,633 21 % 10,904 27 % 41 0 % 1,559 7 % 80 0 % 2,722 7 % 622 4 % 1,692 8 % 894 3 % 1,806 5 % $ 14,097 $ 22,348 $ 26,484 $ 39,975 9,50010,000 short-, mid- and long-form video and audio titles, including One Day University and Learn25Learn 25 recorded lectures that are led by some of the most acclaimed college and university professors in the world. Our library also features a rotating catalog of more than 5,500 internationally licensed videos and audio programs. Every month, we launch dozens of new video titles, which are available on-demand in high- or ultra-high definition. Through new and long-standing international partnerships, we have localized a large portion of our video library infrom English to ten different languages—so far.languages.video contentDirect Business revenue is availablederived from consumers subscribing directly through our owned and operated website (“O&O ServiceService”), App Services, and App Services. Partner Direct relationships. Our O&O Direct-to-Consumer service is available in more than 175 countries to any household with a broadband connection. Currently, most legacy subscribers pay $2.99 per month or $19.99 per year for our standard CuriosityStream service. As of March 27, 2023, we increased our standard pricing for new subscribers to this service to $4.99 per month or $39.99 per year. We also provide a Smart Bundle service for $9.99 per month or $69.99 per year. Our Smart Bundle membership includes everything in our standard service, plus subscriptions to third-party platforms Tastemade, Topic, SommTV, DaVinci Kids, our equity investee Watch Nebula, LLC (“Nebula”), and our One Day University stand-alone service.all major smart TV brands (e.g., LG, Vizio, Samsung, Sony)Samsung) and gaming consoles like Xbox. Our Direct Service is available to any household in the world with a broadband connection for $2.99 per month or $19.99 per year. We also provide a premium service for $9.99 per month or $69.99 per year. Our Premium membership includes everything in our standard service, plus subscriptions to third-party platforms Tastemade, Topic, and SommTV, our equity investee Nebula, and our new service, One Day University.MVPD, vMVPDmultichannel video programming distributors (“MVPDs”), virtual MVPDs (“vMVPDs”) and digital distributor partners making up our Partner Direct Business pay us a license fee for sales to individuals who subscribe to CuriosityStream via the partners’ respective platforms. We have affiliate agreement relationships with, and our service is available directly from, major MVPDs that include Comcast, Cox, Dish and vMVPDs and digital distributors that include Amazon Prime Video Channels, Apple Channel, Roku Channel, Sling TV and YouTube TV.to Consumer Business and Partner Direct Business, we havedescribed above, our Bundled Distribution business includes affiliate relationships with our Bundled MVPD Partners and MVPDs,vMVPDs, which are broadband and wireless companies in the U.S. 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.Program Sales Business,Content Licensing business, we selllicense to certain media companies a collection of our existing titles in a traditional program salescontent licensing deal. We also sell selected rights (such as in territories or on platforms that are lower priority for us) to content we create before we even begin production. This latter model reduces risk in our content development decisions and creates program salescontent licensing revenue.Corporate & Association PartnershipsEnterprise business is comprised primarily of selling subscriptions in bulk to companies and organizations that in turn offer these subscriptions to their employees and members as an employment benefit or “gift of curiosity.” To date, over 27 companies have purchased annual subscriptions at bulk discounts for their employees.Revenues from our Enterprise business are included within Subscriptions — O&O Services in Note 5 to the accompanying unaudited consolidated financial statements.shortshort- and long formlong-form program integration, branded social media promotional videos, advertising spots in our video and audio programs that are made available on our linear programming channels or in front of the paywall, and digital display ads.periods presented belowlast fiscal quarter and are expected to continue to have such significant effects:RevenuesCurrently,Since the main sources of our revenue are (i) subscriber fees from the Direct to Consumer Business and Direct Subscribers, (ii) subscriber fees from Corporate & Association Partnerships, (iii) license fees from affiliates who receive subscriber fees for CuriosityStream from such affiliates’ subscribers (“Partner Direct Business” and “Partner Direct Subscribers”), (iv) license fees from bundled license fees from distribution affiliates (“Bundled MVPD Business” and “Bundled MVPD Subscribers”), (v) license fees from program sales arrangements, and (vi) Other revenue, including advertising and sponsorships. As of June 30, 2022, we had approximately 25 million total paying subscribers, including Direct Subscribers, Partner Direct Subscribers, Bundled MVPD Subscribers and Corporate & Association Partnerships subscribers.Since our foundingCompany was founded in 2015, we have generated a significant portionthe majority of our revenues from Direct Subscribersconsumers directly accessing our content in the form of monthly or annual subscription plans. Currently, most legacy subscribers pay $2.99 per month or $19.99 per year for our standard CuriosityStream service. As of March 27, 2023, we increased our standard pricing for new subscribers to this service to $4.99 per month or $39.99 per year. We also provide a Smart Bundle service for $9.99 per month or $69.99 per year. Currently, our Smart Bundle pricing and pricing for most legacy subscribers remain unchanged. However, we may in the future increase the price of ourthese existing subscription plans, which may have a positive effect on our revenue from this line of our business. The MVPD, vMVPD and digital distributor partners making up our Partner Direct Business pay us a license fee. We recognize subscription revenues ratably during each subscriber’s monthly or yearly subscription period. 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. acquired through licenses.“—“— Critical Accounting Policies and Estimates”Estimates” below.have been and intend to continue to focus marketing dollars on efficient customer acquisition. With respect to personnel costs, we focus on revenue-generating personnel, such as sales staff and roles that support the improvement, maintenance and marketing of our Direct Service.and six months ended June 30, 20222023 and 2021June 30, 2022 and shows our results 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.20222023 and 20212022 Three months ended June 30, 2023 2022 $ Change %
Change (unaudited)
(in thousands) $ 7,270 52 % $ 8,922 40 % $ (1,652 ) (19 %) 6,205 44 % 11,734 52 % (5,529 ) (47 %) 622 4 % 1,692 8 % (1,070 ) (63 %) $ 14,097 100 % $ 22,348 100 % $ (8,251 ) (37 %) 9,933 45 % 12,988 34 % (3,055 ) (24 %) 4,203 19 % 11,208 29 % (7,005 ) (63 %) 7,980 36 % 10,603 28 % (2,623 ) (25 %) — — 3,603 9 % (3,603 ) (100 %) $ 22,116 100 % $ 38,402 100 % $ (16,286 ) (42 %) (8,019 ) (16,054 ) 8,035 (50 %) 184 478 (294 ) n/m 437 (29 ) 466 n/m (2,235 ) (316 ) (1,919 ) 607 % $ (9,633 ) $ (15,921 ) $ 6,288 (39 %) 288 56 232 n/m $ (9,921 ) $ (15,977 ) $ 6,056 (38 %) Three months ended June 30, 2022 2021 $ Change % Change (unaudited)
(in thousands) Revenues Subscriptions $ 8,922 40 % $ 5,680 37 % $ 3,242 57 % License fee 11,734 52 % 9,610 63 % 2,124 22 % Other 1,692 8 % 54 0 % 1,638 n/m Total Revenues $ 22,348 100 % $ 15,344 100 % $ 7,004 46 % Operating expenses Cost of revenues 12,988 34 % 5,722 22 % 7,266 127 % Advertising and marketing 11,208 29 % 11,520 44 % (312 ) (3 %) General and administrative 10,603 28 % 9,153 34 % 1,450 16 % Impairment of goodwill and intangible assets 3,603 9 % - 0 % 3,603 n/m Total operating expenses $ 38,402 100 % $ 26,395 100 % $ 12,007 45 % Operating loss (16,054 ) (11,051 ) (5,003 ) 45 % Other income (expense) Change in fair value of warrant liability 478 1,764 (1,286 ) (73 %) Interest and other (expense) income (29 ) 1,036 (1,065 ) n/a Equity interests loss (316 ) - (316 ) n/m Loss before income taxes $ (15,921 ) $ (8,251 ) $ (7,670 ) 93 % Provision for income taxes 56 53 3 6 % Net loss $ (15,977 ) $ (8,304 ) $ (7,673 ) 92 % Revenue 2021 was $22.3 million, respectively. This decrease of $8.2 million, or 37%, is primarily attributable to reductions in both License fees revenue and $15.3Subscriptions revenue.respectively. Thewas primarily driven by the non-renewal of certain content licensing arrangements of $5.6 million, partially offset by an increase of $7.0$2.6 million or 46%, isfrom new content licensing arrangements, and a decrease from the non-renewal of certain bundled distribution agreements of $2.9 million, partially offset by an increase of $0.5 million from new bundled distribution agreements. The decrease in Subscriptions revenue of $1.7 million was primarily due to a $3.2 million increase in subscription revenue, a $2.1 million increase in license fee revenue and a $1.6 million increase in other revenue.The increase in subscription revenuethe termination of $3.2 million resulted primarily from a $1.6 million increase in subscriber fees received from Direct Subscribers for annual and monthly plans and a $1.3 million increase incertain corporate subscriptions related to the bulk agreements, executedwhich occurred in the lastthird quarter of 2021. The increase in license fees of $2.1 million resulted primarily from a $1.6 million increase in license fees related to a larger volume of program sales arrangements and a $0.5 million increase in bundled distribution due to new agreements launched in the second half of 2021. The increase in other revenue of $1.6 million is primarily due to revenue generated in the current quarter related to an advertising agreement with an affiliate.2022.2022 and 20212023 were $22.1 million, compared to $38.4 million and $26.4 million, respectively. This increasefor the same period in 2022, marking a reduction of $12.0$16.3 million, or 45%, primarily resulted from the following:42%.2022 increased2023 decreased to $9.9 million from $13.0 million from $5.7 million forin the three months ended June 30, 2021.same period of 2022. Cost of revenues primarily includesencompasses content amortization, hosting and streaming delivery costs, payment processing costs, and distribution fees, commission costs, and subtitling and broadcast costs. This increasereduction of $7.3$3.1 million, or 127%24%, is primarily due toresulted from the increasedecrease in content amortization of $5.8 million, which is primarily driven by the increase in program sales arrangements resulting in significant accelerated amortization, as well as an increase in the number and cost of titles published during the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The balance of the increase in cost of revenues is primarily due to a $1.3 million increasedecrease in revenue share expense related to bundled and premier tier arrangements with other streaming services as well as cost of advertisingservices.an increase of $0.2 million in sales commissions, subtitling and broadcast costs.Advertising & Marketing: Advertising and marketing expenses for the three months ended June 30, 2022,2023 decreased to $11.2$4.2 million from $11.5$11.2 million for the three months ended June 30, 2021.2022. This decrease of $0.3$7.0 million, or 3% is63%, was primarily due to a decreasestrategic changes in digitalour marketing approach and cost-saving measures implemented in our advertising partner platforms and agency fees of $2.5 million, partially offset by an increase of $2.2 million in radio and TV advertising compared to the prior year period.campaigns.2022 increased to2023 decreased by $2.6 million, or 25%, from $10.6 million from $9.2for the same period in 2022 to $8.0 million. The decrease was primarily due to cost controls and efficiency measures implemented across our administrative functions.2021. This increase2023, which is a decrease of $1.4$8.0 million, or 16%50%, is primarily attributablecompared to incremental salaries and benefits.Impairmentthe operating loss of Goodwill and Intangible Assets: The increase of $3.6$16.1 million in operating expenses for the three months ended June 30, 2022 was2022. The decrease in our operating loss is primarily driven by the resultreduction in our operating expenses of $16.3 million, or 42%, partially offset by the impairment analysis performed duringreduction in revenue of $8.3 million, or 37%.current quarter. The analysisthree months ended June 30, 2023, the change in the fair value of warrant liability (related to Private Placement Warrants) resulted in an impairment chargeincome of $0.8$0.2 million, relateda decrease of $0.3 million from the income of $0.5 million in the same period in 2022. The change primarily stemmed from fluctuations in the market price of our common stock and the corresponding changes to intangible assets and an impairment charge against the entire balance of goodwillunderlying assumptions used in the valuation model used for $2.8 million. There were no such impairment charges recordedour Private Placement Warrants during the three months ended June 30, 2021.2022.Operating LossOperating loss for the three months ended June 30, 2022 and 2021 was $16.1 million and $11.1 million, respectively. The increase of $5.0 million, or 45%, in operating loss resulted from the increase in operating expenses of $12.0 million, or 45%, including the impairment of goodwill and intangible assets of $3.6 million, offset by an increase in revenue of $7.0 million, or 46%, in each case during the three months ended June 30, 2022 compared to the three months ended June 30, 2021, as described above.Change in Fair Value of Warrant LiabilityFor the three months ended June 30, 2022, the Company recognized a $0.5 million gain compared to a gain of $1.8 million recognized during the three months ended June 30, 2021, each resulting from a decrease in the fair value of the liabilities related to the Private Placement Warrants for the respective periods.20222023 was less than$0.4 million income compared to $0.1 million expense compared to $1.0 million in income for the three months ended June 30, 2021,2022. The increase is primarily duerelated to greateran increase in interest income from debt investments induring the prior yearcurrent period.InterestsMethod Investment Loss2022,2023, the Company recorded a loss of $2.2 million compared to a loss of $0.3 million equity interests loss related to the equity investments in the Spiegel Venture and Nebula with no comparable equity interests income or loss in the three months ended June 30, 2021.Provision for Income TaxesDue to generating a loss before income taxes in each of the three months ended June 30, 2022, related to its investments in Spiegel Venture and 2021, weNebula. The increase is primarily due to the $2.0 million impairment charge recorded by the Company to its investment in Spiegel Venture.$56 thousand and $53 thousand, respectively. This slight increase of $3 thousand, or 6%, was primarily due$0.3 million for the three months ended June 30, 2023 compared to an increase in foreign withholding tax expense due to an increase in contracts executed with parties in foreign jurisdictions.$0.1 million for the three months ended June 30, 2022. The Company’s provision for income taxes is primarily related to foreign withholding income taxes and differs from the federal statutory rate primarily due to the Company being in a full valuation allowance position and not recognizing a benefit for either federal or state income tax purposes.NetThe net loss for the three months ended June 30, 2022 and 20212023, was $9.9 million, compared to $16.0 million and $8.3 million, respectively.for the same period in 2022. The increase ofdecrease in our net loss of $7.7$6.1 million, or 92%38%, is due toprimarily resulted from the increasedecrease in total operating expenses of $12$16.3 million, or 45%42%, consisting primarily of the increase in cost of revenues and goodwill and intangible assets impairment charges, the $1.3 million decrease in the gain related to the change in the fair value of the warrant liability, and the $1.1 million decrease in interest and other (expense) income, partially offset by the increasereduction in total revenuesrevenue of $7.0$8.3 million or 46%37%, in each case during the three months ended June 30, 2022 comparedand an impairment charge to the three months ended June 30, 2021, as described above.one of our equity method investments of $2.0 million.20222023 and 20212022 Six months ended June 30, 2022 2021 $ Change % Change (unaudited) (in thousands) Revenues Subscriptions $ 17,276 43 % $ 10,557 42 % $ 6,719 64 % License fee 20,893 52 % 14,599 58 % 6,294 43 % Other 1,806 5 % 124 0 % 1,682 n/m Total Revenues $ 39,975 100 % $ 25,280 100 % $ 14,695 58 % Operating expenses Cost of revenues 24,838 33 % 9,880 19 % 14,958 151 % Advertising and marketing 25,976 34 % 23,769 46 % 2,207 9 % General and administrative 21,106 28 % 17,885 35 % 3,221 18 % Impairment of goodwill and intangible assets 3,603 5 % - 0 % 3,603 n/m Total operating expenses $ 75,523 100 % $ 51,534 100 % $ 23,989 47 % Operating loss (35,548 ) (26,254 ) (9,294 ) 35 % Other income (expense) Change in fair value of warrant liability 4,338 (2,022 ) 6,360 n/m Interest and other (expense) income (86 ) 1,296 (1,382 ) n/m Equity interests loss (472 ) - (472 ) n/m Loss before income taxes $ (31,768 ) $ (26,980 ) $ (4,788 ) 18 % Provision for income taxes 101 79 22 28 % Net loss $ (31,869 ) $ (27,059 ) $ (4,810 ) 18 % Six months ended June 30, 2023 2022 $ Change % Change (unaudited) (in thousands) $ 14,790 56 % $ 17,276 43 % $ (2,486 ) (14 %) 10,800 41 % 20,893 52 % (10,094 ) (48 %) 894 3 % 1,806 5 % (911 ) (50 %) $ 26,484 100 % $ 39,975 100 % $ (13,491 ) (34 %) 18,934 45 % 24,838 33 % (5,904 ) (24 %) 7,318 17 % 25,976 34 % (18,658 ) (72 %) 16,039 38 % 21,106 28 % (5,067 ) (24 %) — — 3,603 5 % (3,603 ) (100 %) $ 42,291 100 % $ 75,523 100 % $ (33,232 ) (44 %) (15,807 ) (35,548 ) 19,741 (56 %) 110 4,338 (4,228 ) (97 %) 825 (86 ) 911 n/m (2,454 ) (472 ) (1,982 ) (420 %) $ (17,326 ) $ (31,768 ) $ 14,442 (45 %) 346 101 245 n/m $ (17,672 ) $ (31,869 ) $ 14,197 (45 %) n/m - percentage not meaningfulRevenue June 30, 2021 was $40.0 million, respectively. This decrease of $13.5 million, or 34%, is primarily attributable to reductions in both License fees revenue and $25.3Subscriptions revenue.respectively. Thewas primarily driven by the non-renewal of certain content licensing arrangements of $8.4 million, partially offset by an increase of $14.7$2.6 million or 58%, isfrom new content licensing arrangements, and a decrease from the non-renewal of certain bundled distribution agreements of $5.8 million, partially offset by an increase of $1.1 million from new bundled distribution agreements. The decrease in Subscriptions revenue of $2.5 million was primarily due to a $6.7 million increase in subscription revenue, a $6.3 million increase in license fee revenue and a $1.7 million increase in other revenueThe increase in subscription revenuethe termination of $6.7 million resulted primarily from a $4.1 million increase in subscriber fees received from Direct Subscribers for annual and monthly plans and a $2.6 million increase incertain corporate subscriptions related to subscription bulk agreements,. The increase in license fees of $6.3 million resulted primarily from a $5.3 million increase in license fees related to a larger volume of program sales arrangements, a $0.6 million increase in bundled distribution due to new agreements launched which occurred in the second halfthird quarter of 2021 and a $0.4 million increase in Partner Direct revenues due to increased subscribers to our partner’s respective platforms.2022.2022 and 20212023, were $42.3 million, compared to $75.5 million and $51.5 million, respectively. This increasefor the same period in 2022, marking a reduction of $24.0$33.2 million or 47%, primarily resulted from the following:44%.2022 increased2023 decreased to $18.9 million from $24.8 million from $9.8 million forin the six months ended June 30, 2021.same period of 2022. Cost of revenues primarily includesencompasses content amortization, hosting and streaming delivery costs, payment processing costs, and distribution fees, commission costs, and subtitling and broadcast costs. This increasereduction of $15.0$5.9 million, or 151%24%, is primarily due toresulted from the increasedecrease in content amortization of $12.2 million, which is primarily driven by the increase in program sales arrangements resulting in significant accelerated amortization, as well as an increase in the number and cost of titles published during the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The balance of the increase in cost of revenues is primarily due to a $2.5 million increasedecrease in revenue share expense related to bundled and premier tier arrangements with other streaming servicesservices.an increase of $0.3 million in subtitling and broadcast costs.Advertising & Marketing: Advertising and marketing expenses for the six months ended June 30, 2022, increased2023, decreased to $26.0$7.3 million from $23.8$26.0 million for the six months ended June 30, 2021.2022. This increasedecrease of $2.2$18.7 million, or 9%72%, iswas primarily due to an increasestrategic changes in radioour marketing approach and cost-saving measures implemented in our advertising of $5.6 million and an increase in digital advertising of $0.6 million, partially offset by a decrease of $4.0 million in partner platforms, TV advertising and agency fees compared to the prior year period.campaigns.2022 increased2023, decreased to $16.0 million, from $21.1 million from $17.9for six months ended June 30, 2022. The decrease of $5.1 million, or 24%, was primarily due to cost controls and efficiency measures implemented across our administrative functions.2021.2023, which is a decrease of $19.7 million, or 56%, compared to the operating loss of $35.5 million for the six months ended June 30, 2022. The decrease in our operating loss is primarily driven by the reduction in our operating expenses of $33.2 million, or 44%, partially offset by the reduction in revenue of $13.5 million, or 34%.$3.2$0.9 million or 18%, is primarily attributablecompared to $2.2an expense of $0.1 million for incremental salaries and benefits as well as smaller increasesthe six months ended June 30, 2022. The change was primarily due to various other expense categories, including licenses and subscriptions and professional fees.increased interest income.ImpairmentFor the six months ended June 30, 2023, the Company recorded a loss of Goodwill and Intangible Assets: The increase$2.5 million compared to a loss of $3.6$0.5 million in operating expenses for the six months ended June 30, 2022, related to its investments in Spiegel Venture and Nebula. The increase is primarily due to the result of the impairment analysis performed as of June 30, 2022. The analysis resulted in an$2.0 million impairment charge of $0.8 million relatedrecorded by the Company to intangible assets and an impairment charge against the entire balance of goodwill for $2.8 million. There were no such impairment charges recordedits investment in Spiegel Venture during the six months ended June 30, 2021.2023.Operating LossOperating lossProvision for the six months ended June 30, 2022Income Taxes2021 was $35.6 million and $26.3 million, respectively. The increase of $9.3 million, or 35%, in operating loss resulted from the increase in operating expenses of $24.0 million, or 47%, including the impairment of goodwill and intangible assets of $3.6 million, offset by an increase in revenue of $14.7 million, or 58%, in each case during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, as described above.Change in Fair Value of Warrant LiabilityFor the six months ended June 30, 2022, the Company recognized a $4.3 million gain related to the decrease in the fair value of the liability related to Private Placement Warrants, compared to a loss of $2.2 million recognized during the six months ended June 30, 2021, which was due to an increase in the fair value of the liability related to the Private Placement Warrants in the prior period.Interest and Other Income (Expense)Interest and other income (expense) for the six months ended June 30, 2022 was a $0.1 million expense compared to $1.3 million in income for the six months ended June 30, 2021, primarily due to greater interest income from investments in the prior year period.Equity Interests LossFor the six months ended June 30, 2022, the Company recorded $0.5 million equity interests loss related to the equity investments in the Spiegel Venture and Nebula with no comparable equity interests income or loss in the six months ended June 30, 2021.Provision for Income TaxesDue to generating a loss before income taxes in each of the six months ended June 30,2023 and 2022, and 2021, we had a provision for income taxes of $101 thousand and $79 thousand, respectively. This increase of $22 thousand, or 28%, was primarily due to an increase in foreign withholding tax expense due to an increase in contracts executed with parties in foreign jurisdictions. The Company’s provision for income taxes is primarily related to foreign withholding income taxes and differs from the federal statutory rate primarily due to the Company being in a full valuation allowance position and not recognizing a benefit for either federal or state income tax purposes.2022 and 20212023 was $31.9$17.7 million, and $27.1 million, respectively. The increase ofcompared to a net loss of $4.8$31.9 million for the same period in 2022. The decrease in our net loss of $14.2 million, or 18%45%, is primarily due to the increasea decrease in total operating expenses of $24.0 million, or 47%, consisting of theand an increase in cost of revenues and goodwill and intangible assets impairment charges, and the $1.4 million decrease in interest and other (expense) income, partially offset by the increasea decrease in total revenues of $14.7 million or 58% and the increaserevenue, a reduction in gain related tofrom the change in the fair value of the warrant liability and an impairment charge to one of $6.4 million, in each case during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, as described above.our equity method investments.2022, we had2023, the Company’s cash and cash equivalents, including restricted cash, of $23.3totaled $44.8 million. In addition, the Company had available for sale investments in debt securities totaling $54.5 million, all of which were classified as short-term investments. All of the Company’s investments in debt securities can be readily converted to cash to meet the Company’s ongoing operating cash flow needs. For the six months ended June 30, 2022, we2023, the Company incurred a net loss of $31.9$15.7 million and used $18.1$10.6 million of net cash in operating activities and $0.1 million of net cash in financing activities, while investing activities provided $24 million of net cash, and financing activities used $0.2$15.0 million of net cash.andincluding investments in debt securitiesmoney market funds that are readily convertible to cash, will be adequate to support our ongoing operations, capital expenditures and working capital for at least the next twelve months. We believe that we have access to additional funds in the short term and the long term, if needed, through the capital markets to obtain further financing.20222023 and 2021:2022: For the
six months ended
June 30, 2022 2021 (unaudited) (in thousands) Net cash used in operating activities $ (18,149 ) $ (23,356 ) Net cash provided by (used in) investing activities 24,024 (128,957 ) Net cash (used in) provided by financing activities (161 ) 148,679 Net increase (decrease) in cash, cash equivalents and restricted cash $ 5,714 $ (3,634 ) For the
six months ended
June 30, 2023 2022 (unaudited) (in thousands) $ (10,608 ) $ (18,149 ) 14,995 24,024 (57 ) (161 ) $ 4,330 $ 5,714 flowflows from operating activities primarily consistsconsist of net losses, changes to our content assets (including acquisitionsadditions and amortization), and other working capital items.20222023, and 2021,2022, we recorded a net cash outflow from operating activities of $18.2$10.6 million and $23.4$18.1 million, respectively, or a decreased outflow of $5.2$7.5 million, or 22%41%.decreasednet cash outflow fromused in operating activities was primarily due to increased collections of our accounts receivable of $15.4 million, increase in the volume of our accounts payable outstanding of $4.4 million, increase in the amortization of content assets of $12.1 million, increase in other assets of $3.9 million, and the impairment of goodwill and intangibles of $3.6 million duringfor the six months ended June 30, 2022 compared2023, was primarily due to the six months ended June 30, 2021.our $17.7 million net loss, $2.6 million of net cash used in changes in operating assets and liabilities, and an impairment charge to one of our equity method investments of $2.0 million. The decrease in outflow from operating activities was partially offset by increased investment in$7.7 million addback of non-cash expenses net of content (shownadditions. The most significant components of non-cash expenses include amortization of content assets of $12.3 million and stock-based compensation expense of $2.7 million, substantially offset by additions to content assets of $7.1 million and the change in content liabilities of $1.1 million. The components of changes in operating assets and additionsliabilities were primarily attributed to content assets)a decrease in accrued expenses and other liabilities of $11.3$3.9 million and the decrease in deferred revenue change of $8.6$1.4 million, partially offset by an increase in accounts payable of $0.6 million, a decrease in accounts receivable of $1.8 million, and a decrease in other assets of $1.5 million.comparedwas primarily due to our $31.9 million net loss, and $5.4 million of non-cash expenses net of content additions, partially offset by $19.1 million in cash provided by changes in operating assets and liabilities. The most significant components of non-cash expenses include content additions of $25.3 million, changes in content liabilities of $3.7 million and changes in the six months ended June 30, 2021.as well as business combinations,acquisitions and equity investments and purchases of property and equipment.20222023, and June 30, 2021,2022, we recorded a net cash inflow from investing activities of $24.0$15.0 million and a net cash outflow from investing activities of $129.0$24.0 million, respectively, or a decrease of cash outflowinflow of $153.0$9.0 million, or 119%37.5%.decrease innet cash outflow frominflow provided by investing activities for the six months ended June 30, 2023, was primarily due to maturities of investments in debt securities of $15.0 million.decrease of the purchases of available for sale investments of $140.1 million, a net increase in sales and maturities of those investments in debt securities of $10.4$27.3 million, as well aspartially offset by purchases of investments in debt securities of $1.6 million cash outflows related to equityand investments during the three months ended June 30, 2022 as compared to $4.0 million cash outflows related to a business combination during the three months ended June 30, 2021.in Nebula of $1.6 million.20222023 and 2021,2022, we recorded net cash outflow from financing activities of $0.1 and $0.2 million, and a net cash inflow from financing activitiesrespectively, which is attributable to payments of $148.7 million, respectively. The net cash inflowwithholding taxes during the six months ended June 30, 2021 of $148.7 million was 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 $0.4 million, partially offset by the payments of transaction costs related to the issuance of common stock of $0.7 million. There was no comparable activity during the six months ended June 30, 2022.respective periods.makecontinue making expenditures for additions to our content assets and purchases of property and equipment.equipment, although at a slower rate than in previous periods. The amount, timing and allocation of capital expenditures are largely discretionary and within management’s control. Depending on market conditions, we may choose to defer a portion of our budgeted expenditures until later periods to achieve the desired balance between sources and uses of liquidity and prioritize capital projects that we believe have the highest expected returns and potential to generate cash flow. Subject to financing alternatives, we may also increase our capital expenditures significantly to take advantage of opportunities we consider to be attractive.2022,2023, we had no off-balance sheet arrangements.AnnualQuarterly Report on Form 10-Q and related disclosuredisclosures must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. Management believes that the accounting policies set forth below comprise the most important “critical accounting policies” for the Company. A critical accounting policy is one which is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management evaluates such policies on an ongoing basis, based upon historical results and experience, consultation with experts and other methods that management considers reasonable in the particular circumstances under which the judgments and estimates are made, as well as management’s forecasts as to the manner in which such circumstances may change in the future.program sales.content licensing.As a result of a sustained decrease in the Company’s share price during the six months ended June 30, 2022, we concluded that a triggering event had occurred and conducted impairment testing of our content assets. As a result of this review, we determined no impairment charges were necessary. Refer to the “Goodwill and intangible assets” section below for further details with respect to the impairment testing performed by the Company over its goodwill and definite-lived intangible assets as of June 30, 2022.Goodwill and Intangible AssetsGoodwill represents the excess of the cost of acquisitions over the amount assigned to tangible and identifiable intangible assets acquired less liabilities assumed. At least annually, in the fourth quarter of each fiscal year or more frequently if indicators of impairment exist, management performs a review to determine if the carrying value of goodwill is impaired. The identification and measurement of goodwill impairment involves the estimation of fair value at the Company’s reporting unit level, which is the same or one level below the operating segment level. The Company determined that it has one reporting unit.The Company performs an initial assessment of qualitative factors to determine whether the existence of events and circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of relevant events and circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit exceeds its carrying value and there is no indication of impairment, no further testing is performed; however, if the Company concludes otherwise, an impairment test must be performed by estimating the fair value of the reporting unit and comparing it with its carrying value, including goodwill.Intangible assets other than goodwill are carried at cost and amortized over their estimated useful lives. Amortization is recorded within General and administrative expenses on the consolidated statements of operations. The Company reviews identifiable finite-lived intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its ultimate disposition. Measurement of any impairment loss is based on the amount by which the carrying value of the asset exceeds its fair value.As a result of a sustained decrease in the Company’s share price during the six months ended June 30, 2022, we concluded that a triggering event had occurred and conducted impairment testing of our goodwill and intangible assets.During the three months ended June 30, 2022, the Company experienced a sustained decrease in its share price, and this triggering event was an indication that it was more likely than not that the fair value of the Company’s single 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 during the three months ended June 30, 2022 as the fair value of the reporting unit was less than the related carrying value. This charge is included in impairment of goodwill and intangible assets on the Company’s unaudited consolidated statements of operations.The determination of the fair value of the Company’s reporting unit was based on a combination of the income and the market approach. The Company applied equal weighting to each of the approaches in determining the fair value of the reporting unit. Under the income approach, the Company utilized discounted cash flows of forecasted future cash flows based on future operational expectations and discounted these cash flows to reflect their relative risk. The cash flows used are consistent with those the Company uses in its internal planning, which reflect actual business trends experienced and the Company’s long-term business strategy. Under the market approach, the Company utilized the guideline public company method and guideline transaction method to develop valuation multiples and compare the Company to similar publicly traded companies. The significant assumptions under each of the approaches include, among others: revenue projections (which are dependent on future customer subscriptions and content licensing agreements), operating expenses, discount rate, control premium and a terminal growth rate. The cash flows used to determine the fair values are dependent on a number of significant management assumptions, such as the Company’s expectations of future performance and the expected future economic environment, which are partly based upon the Company’s historical experience. The Company also considered its market capitalization in assessing the reasonableness of the reporting unit fair value.During the three months ended June 30, 2022, the Company also determined there were impairment indicators with respect to certain of the Company’s definite-lived intangible assets. As a result, the Company 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, the Company recorded an impairment charge of $0.8 million during the three months ended June 30, 2022, which is reflected as a component of impairment of goodwill and intangible assets on the Company’s unaudited consolidated statements of operations.In order to further validate the reasonableness of fair value as determined by the income and market approaches described above, a reconciliation to market capitalization is then performed by estimating a reasonable control premium and other market factors. Future changes in the judgments, assumptions and estimates that are used in the impairment testing for our asset group could result in significantly different estimates of fair value.RecognitionrecognitionAffiliatesPartner Direct and Bundled Distribution Altice, Comcast and Cox as well as from vMVPDs such as Amazon and Sling TV (MVPDs and vMVPDs are also referred to as affiliates). Under the terms of the agreements with these affiliates, the Company receives license fees based upon contracted programming rates and subscriber levels reported by the affiliates. In exchange, the Company licenses its content to the affiliates for distribution to their subscribers. The Company earns revenue under these agreements either based on the total number of subscribers multiplied by rates specified in the agreements or based on fixed fee arrangements. These revenues are recognized over the term of each agreement when earned.Program SalesContent LicensingSVoDSVOD platform via 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 SVoDSVOD platform, the performance obligation is satisfied as access to the SVoDSVOD 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.IssuedAdopted Financial Accounting StandardsAboutRegarding Market Risksubmitssubmit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the specified time periods in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.2022.2023. Based on these evaluations, our CEO and the CFO concluded that our disclosure controls and procedures were effective as of June 30, 2022.2023.20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.-— OTHER INFORMATION2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on May 16, 2022.2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.2022 and our Quarterly Report on Form 10-Q filed with the SEC on May 16, 2022.2023.Incorporated By Reference Exhibit No. Description Form File No. Exhibit Filing Date Filed/Furnished
Herewith3.1 Second Amended and Restated Certificate of Incorporation 8-K 001-39139 3.1 10/15/2020 3.2 Amended and Restated Bylaws 8-K 001-39139 3.2 10/15/2020 10.1 Offer Letter between CuriosityStream Inc. and Peter Westley, dated May 21, 2022 8-K 001-39139 10.1 5/24/2022 31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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. LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 104 Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101) X Incorporated By Reference
Herewith 31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 X 32.1* Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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. LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 104 Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101) X * ** CURIOSITYSTREAM INC. CURIOSITYSTREAM INC. Date: August 15, 202214, 2023By:By: Name:Clint Stinchcomb Date: August 14, 2023 By: Date: August 15, 2022By:/s/ Peter Westley Peter Westley Title:34iso4217:USD xbrli:shares