Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock on ~~September~~December 1, 2021 was 49,040,253.

	July 31,			January 31,			October 31,			January 31,
	2021			2021			2021			2021
Assets
Current assets:
Cash and cash equivalents	$	18,933		$	5,856		$	17,551		$	5,856
Marketable securities		—			252			—			252
Accounts receivable, net of allowance for doubtful accounts of $748 and $934 at July 31, 2021 and January 31, 2021, respectively		5,560			6,050
Accounts receivable, net of allowance for doubtful accounts of $521 and $934 at October 31, 2021 and January 31, 2021, respectively								5,374			6,050
Unbilled receivables		8,344			9,359			9,708			9,359
Prepaid expenses and other current assets		4,200			4,372			2,553			4,372
Total current assets		37,037			25,889			35,186			25,889
Property and equipment, net		498			605			512			605
Operating lease right-of-use assets		2,504			4,968			2,283			4,968
Intangible assets, net		622			1,272			303			1,272
Goodwill		10,393			10,577			10,176			10,577
Unbilled receivables		6,079			6,340			5,438			6,340
Other assets		672			757			617			757
Total assets	$	57,805		$	50,408		$	54,515		$	50,408
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,284		$	1,825		$	1,700		$	1,825
Accrued expenses		3,663			4,277			3,571			4,277
Deferred revenue		4,133			4,737			2,944			4,737
Promissory note		—			1,340			—			1,340
Total current liabilities		9,080			12,179			8,215			12,179
Deferred revenue		146			657			65			657
Operating lease liabilities		1,797			4,070			1,590			4,070
Taxes payable		674			763			659			763
Promissory note		—			1,073			—			1,073
Other liabilities		125			125			125			125
Total liabilities		11,822			18,867			10,654			18,867
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.01 par value; 100,000,000 shares authorized at July 31, 2021 and January 31, 2021; 49,212,173 shares issued and 49,040,253 shares outstanding at July 31, 2021; 37,811,224 shares issued and 37,639,304 shares outstanding at January 31, 2021;		492			378
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 49,212,173 shares issued and 49,040,253 shares outstanding at October 31, 2021; 37,811,224 shares issued and 37,639,304 shares outstanding at January 31, 2021								492			378
Additional paid-in capital		264,972			246,446			265,246			246,446
Treasury stock, at cost; 171,920 shares at July 31, 2021 and January 31, 2021		(227	)		(227	)
Treasury stock, at cost; 171,920 shares at October 31, 2021 and January 31, 2021								(227	)		(227	)
Accumulated other comprehensive loss		(430	)		(73	)		(721	)		(73	)
Accumulated deficit		(218,824	)		(214,983	)		(220,929	)		(214,983	)
Total stockholders' equity		45,983			31,541			43,861			31,541
Total liabilities and stockholders' equity	$	57,805		$	50,408		$	54,515		$	50,408

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

	For the Three Months Ended July 31,						For the Six Months Ended July 31,						For the Three Months Ended October 31,						For the Nine Months Ended October 31,
	2021			2020			2021			2020			2021			2020			2021			2020
Revenue:
Product	$	2,709		$	1,066		$	4,329		$	4,164		$	3,511		$	1,048		$	7,840		$	5,212
Service		3,831			3,929			7,263			7,746			3,640			3,918			10,903			11,664
Total revenue		6,540			4,995			11,592			11,910			7,151			4,966			18,743			16,876
Cost of revenue:
Product		693			788			1,099			2,368			1,609			435			2,708			2,803
Service		1,730			2,393			3,545			5,219			1,830			1,755			5,375			6,974
Total cost of revenue		2,423			3,181			4,644			7,587			3,439			2,190			8,083			9,777
Gross profit		4,117			1,814			6,948			4,323			3,712			2,776			10,660			7,099
Operating expenses:
Research and development		2,213			3,360			4,881			7,526			2,090			3,024			6,971			10,550
Selling and marketing		1,643			1,728			3,023			3,854			1,449			1,636			4,472			5,490
General and administrative		2,682			2,367			4,787			4,421			2,110			2,636			6,897			7,057
Severance and restructuring costs		87			543			571			1,029			75			53			646			1,082
Total operating expenses		6,625			7,998			13,262			16,830			5,724			7,349			18,986			24,179
Loss from operations		(2,508	)		(6,184	)		(6,314	)		(12,507	)		(2,012	)		(4,573	)		(8,326	)		(17,080	)
Other income (expense), net		212			373			(16	)		165
Other expense, net														(67	)		(499	)		(83	)		(334	)
Gain on extinguishment of debt		2,440			—			2,440			—			—			—			2,440			—
Income (loss) before income taxes		144			(5,811	)		(3,890	)		(12,342	)
Income tax benefit		83			45			49			66
Net income (loss)	$	227		$	(5,766	)	$	(3,841	)	$	(12,276	)
Net income (loss) per share, basic	$	0.00		$	(0.15	)	$	(0.09	)	$	(0.33	)
Net income (loss) per share, diluted	$	0.00		$	(0.15	)	$	(0.09	)	$	(0.33	)
Loss before income taxes														(2,079	)		(5,072	)		(5,969	)		(17,414	)
Income tax provision (benefit)														26			45			(23	)		(21	)
Net loss													$	(2,105	)	$	(5,117	)	$	(5,946	)	$	(17,393	)
Net loss per share, basic													$	(0.04	)	$	(0.14	)	$	(0.13	)	$	(0.46	)
Net loss per share, diluted													$	(0.04	)	$	(0.14	)	$	(0.13	)	$	(0.46	)
Weighted average common shares outstanding, basic		48,489			37,527			44,958			37,376			49,040			37,556			46,334			37,436
Weighted average common shares outstanding, diluted		48,727			37,527			44,958			37,376			49,040			37,556			46,334			37,436
Comprehensive loss:
Net income (loss)	$	227		$	(5,766	)	$	(3,841	)	$	(12,276	)
Net loss													$	(2,105	)	$	(5,117	)	$	(5,946	)	$	(17,393	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment		(399	)		1,665			(358	)		1,641			(291	)		(143	)		(649	)		1,498
Unrealized (losses) gains on marketable securities		—			(13	)		1			(4	)		—			(33	)		1			(37	)
Total other comprehensive (loss) income		(399	)		1,652			(357	)		1,637			(291	)		(176	)		(648	)		1,461
Comprehensive loss	$	(172	)	$	(4,114	)	$	(4,198	)	$	(10,639	)	$	(2,396	)	$	(5,293	)	$	(6,594	)	$	(15,932	)

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional					Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital		Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at April 30, 2021		48,408,342	$	484	$	264,147		$	(227	)	$	(31	)	$	(219,051	)	$	45,322
Issuance of common stock pursuant to vesting of restricted stock units		803,831		8		(8	)		—			—			—			—
Balances at July 31, 2021																					49,212,173	$	492	$	264,972	$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Stock-based compensation expense		—		—		833			—			—			—			833			—		—		274		—			—			—			274
Foreign currency translation adjustment		—		—		—			—			(399	)		—			(399	)		—		—		—		—			(291	)		—			(291	)
Net income		—		—		—			—			—			227			227
Balances at July 31, 2021		49,212,173	$	492	$	264,972		$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Net loss																					—		—		—		—			—			(2,105	)		(2,105	)
Balances at October 31, 2021																					49,212,173	$	492	$	265,246	$	(227	)	$	(721	)	$	(220,929	)	$	43,861

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional					Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital		Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at April 30, 2020		37,661,641	$	376	$	245,558		$	(147	)	$	(2,152	)	$	(199,734	)	$	43,901
Issuance of common stock pursuant to vesting of restricted stock units		66,346		1		(1	)		—			—			—			—
Balances at July 31, 2020																					37,727,987	$	377	$	245,817	$	(227	)	$	(500	)	$	(205,500	)	$	39,967
Stock-based compensation expense		—		—		260			—			—			—			260			—		—		437		—			—			—			437
Repurchases of common stock		—		—		—			(80	)		—			—			(80	)
Unrealized losses on marketable securities		—		—		—			—			(13	)		—			(13	)		—		—		—		—			(33	)		—			(33	)
Foreign currency translation adjustment		—		—		—			—			1,665			—			1,665			—		—		—		—			(143	)		—			(143	)
Net loss		—		—		—			—			—			(5,766	)		(5,766	)		—		—		—		—			—			(5,117	)		(5,117	)
Balances at July 31, 2020		37,727,987	$	377	$	245,817		$	(227	)	$	(500	)	$	(205,500	)	$	39,967
Balances at October 31, 2020																					37,727,987	$	377	$	246,254	$	(227	)	$	(676	)	$	(210,617	)	$	35,111

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional						Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at January 31, 2021		37,811,224	$	378	$	246,446		$	(227	)	$	(73	)	$	(214,983	)	$	31,541			37,811,224	$	378	$	246,446		$	(227	)	$	(73	)	$	(214,983	)	$	31,541
Issuance of common stock pursuant to vesting of restricted stock units		981,927		10		(10	)		—			—			—			—			981,927		10		(10	)		—			—			—			—
Issuance of common stock pursuant to exercise of stock options		95,538		1		136			—			—			—			137			95,538		1		136			—			—			—			137
Issuance of common stock, net of issuance costs		10,323,484		103		17,359			—			—			—			17,462			10,323,484		103		17,359			—			—			—			17,462
Stock-based compensation expense		—		—		1,041			—			—			—			1,041			—		—		1,315			—			—			—			1,315
Unrealized gains on marketable securities		—		—		—			—			1			—			1			—		—		—			—			1			—			1
Foreign currency translation adjustment		—		—		—			—			(358	)		—			(358	)		—		—		—			—			(649	)		—			(649	)
Net loss		—		—		—			—			—			(3,841	)		(3,841	)		—		—		—			—			—			(5,946	)		(5,946	)
Balances at July 31, 2021		49,212,173	$	492	$	264,972		$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Balances at October 31, 2021																					49,212,173	$	492	$	265,246		$	(227	)	$	(721	)	$	(220,929	)	$	43,861

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional						Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at January 31, 2020		37,303,952	$	373	$	245,067		$	(147	)	$	(2,137	)	$	(193,224	)	$	49,932			37,303,952	$	373	$	245,067		$	(147	)	$	(2,137	)	$	(193,224	)	$	49,932
Issuance of common stock pursuant to vesting of restricted stock units		379,063		4		(4	)		—			—			—			—			379,063		4		(4	)		—			—			—			—
Issuance of common stock pursuant to ESPP purchases		5,702		—		18			—			—			—			18			5,702		—		18			—			—			—			18
Issuance of common stock pursuant to exercise of stock options		39,270		—		119			—			—			—			119			39,270		—		119			—			—			—			119
Stock-based compensation expense		—		—		617			—			—			—			617			—		—		1,054			—			—			—			1,054
Repurchases of common stock		—		—		—			(80	)		—			—			(80	)		—		—		—			(80	)		—			—			(80	)
Unrealized losses on marketable securities		—		—		—			—			(4	)		—			(4	)		—		—		—			—			(37	)		—			(37	)
Foreign currency translation adjustment		—		—		—			—			1,641			—			1,641			—		—		—			—			1,498			—			1,498
Net loss		—		—		—			—			—			(12,276	)		(12,276	)		—		—		—			—			—			(17,393	)		(17,393	)
Balances at July 31, 2020		37,727,987	$	377	$	245,817		$	(227	)	$	(500	)	$	(205,500	)	$	39,967
Balances at October 31, 2020																					37,727,987	$	377	$	246,254		$	(227	)	$	(676	)	$	(210,617	)	$	35,111

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

	For the Six Months Ended July 31,						For the Nine Months Ended October 31,
	2021			2020			2021			2020
Cash flows from operating activities:
Net loss	$	(3,841	)	$	(12,276	)	$	(5,946	)	$	(17,393	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		732			725			1,098		��	1,105
Loss on disposal of fixed assets		77			—			75			—
Gain on write-off of operating lease right-of-use assets and liabilities related to termination		(328	)		—			(328	)		—
Gain on extinguishment of debt		(2,440	)		—			(2,440	)		—
Change in allowance for doubtful accounts		(135	)		(216	)
Recovery of bad debts								(135	)		(216	)
Stock-based compensation expense		1,041			617			1,315			1,054
Deferred income taxes		—			186			—			246
Realized and unrealized foreign currency transaction loss		201			1,641			399			1,498
Other		1			(3	)		1			(26	)
Changes in operating assets and liabilities:
Accounts receivable		579			6,332			709			7,084
Unbilled receivables		1,208			2,345			397			4,274
Prepaid expenses and other current assets and other assets		354			291			2,007			539
Accounts payable		(527	)		(1,290	)		(93	)		(1,242	)
Accrued expenses and other liabilities		(170	)		(2,814	)		(230	)		(3,886	)
Deferred revenue		(1,085	)		(1,084	)		(2,329	)		(2,358	)
Net cash used in operating activities		(4,333	)		(5,546	)		(5,500	)		(9,321	)
Cash flows from investing activities:
Purchases of property and equipment		(77	)		(202	)		(78	)		(311	)
Proceeds from sales and maturities of marketable securities		252			2,476			252			3,576
Net cash provided by investing activities		175			2,274			174			3,265
Cash flows from financing activities:
Proceeds from stock option exercises		137			119			137			119
Proceeds from employee stock purchase plan		—			18			—			18
Proceeds from issuance of common stock, net of issuance costs		17,462			—			17,462			—
Repurchases of common stock		—			(80	)		—			(80	)
Proceeds from the Paycheck Protection Program		—			2,413			—			2,413
Net cash provided by financing activities		17,599			2,470			17,599			2,470
Effect of exchange rate on cash, cash equivalents and restricted cash		(242	)		(840	)		(467	)		(587	)
Net increase (decrease) in cash, cash equivalents and restricted cash		13,199			(1,642	)		11,806			(4,173	)
Cash, cash equivalents and restricted cash at beginning of period		6,084			9,297			6,084			9,297
Cash, cash equivalents and restricted cash at end of period	$	19,283		$	7,655		$	17,890		$	5,124
Supplemental disclosure of cash flow information
Income taxes paid	$	109		$	92		$	132		$	196
Non-cash activities:
Right-of-use assets obtained in exchange for lease obligations	$	—		$	987		$	—		$	987
Purchases of property and equipment included in accounts payable							$	72		$	—

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

SeaChange International, Inc. ~~(“we”~~(the “Company,” “we” or ~~the “Company”)~~similar terms), was incorporated under the laws of the state of Delaware on July 9, 1993. We are an industry leader in the delivery of multiscreen, advertising and premium over-the-top (“OTT”) video management solutions. Our software products and services are designed to empower video providers to create, manage and monetize the increasingly personalized, highly engaging experiences that viewers demand.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). We consolidate the financial statements of our wholly-owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation.

The accompanying unaudited consolidated financial statements included herein have been prepared by the Company in accordance with the instructions to Quarterly Report on Form 10-Q and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments of a normal recurring nature which were considered necessary for a fair presentation have been included. The year-end consolidated balance sheet data as of January 31, 2021 was derived from our audited consolidated financial statements and may not include all disclosures required by U.S. GAAP. The results of operations for the three and nine months ended October 31, 2021 are not necessarily indicative of the results to be expected for the entire year. These consolidated financial statements should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on April 15, 2021.

In the first half of fiscal 2021, we reduced our headcount across all departments in response to the ongoing COVID-19 pandemic and in the second quarter of fiscal 2021 we transferred our technical support services to our Poland location in an effort to further reduce cost. In the first quarter of fiscal 2022, we entered into a Sublease Termination Agreement (the “Termination Agreement”) which terminated the office sublease for our former headquarters in Waltham, Massachusetts, effective March 21, 2021. Additionally, in the first quarter of fiscal 2022, we issued and sold 10,323,484 shares of common stock, $0.01 par value per share (“common stock”), at a public offering price of $1.85 per share (the “Offering”). The Offering resulted in approximately $17.5 million in proceeds, net of underwriting discounts and commissions of 6.5%, or $0.12025 per share of common stock, and offering expenses of approximately $0.2 million. In addition to the Offering, the Company also granted the underwriters a 45-day option to purchase up to an additional 1,548,522 shares of common stock at a purchase price of $1.85 per share, less underwriting discounts and commissions (the “Underwriter Option”). The Underwriter Option was not exercised and has expired.

In the second quarter of fiscal 2022, we were granted full forgiveness of the promissory note (the “Note”) we entered into with Silicon Valley Bank ~~(the “Lender”)~~ in May 2020 pursuant to the Paycheck Protection Program ~~(the “PPP”)~~ under the Coronavirus Aid and Economic Security Act ~~(the “CARES Act”)~~ administered by the U.S. Small Business Administration (“SBA”). The aggregate principal amount of $2,412,890 and interest accrued of $27,145 at a fixed rate of one percent (1%) per annum, were fully forgiven by the SBA on June 15, 2021 and is included in the unaudited consolidated statements of operations and comprehensive loss as a gain on extinguishment of debt. These measures are important steps in restoring us to profitability and positive cash flow. We believe that existing cash and cash equivalents and cash expected to be provided by future operating results will be adequate to satisfy our working capital, capital expenditure requirements and other contractual obligations for at least 12 months from the date of this filing.

If our expectations are incorrect, we may need to raise additional funds to fund our operations or take advantage of unanticipated strategic opportunities in order to strengthen our financial position. In the future, we may enter into other arrangements for potential investments in, or acquisitions of, complementary businesses, services or technologies, which could require us to seek additional equity or debt financing. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of market opportunities, to develop new products or to otherwise respond to competitive pressures.

In the first quarter of fiscal 2021, concerns related to the spread of COVID-19 began to create global business disruptions as well as disruptions in our operations and to create potential negative impacts on our revenues and other financial results. COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020. The extent to which COVID-19 will impact our financial condition or results of operations is currently uncertain and depends on factors including the impact on our customers, partners, and vendors and on the operation of the global markets in general. Due to our business model, the effect of COVID-19 on our results of operations may also not be fully reflected for some time.

We are currently conducting business with substantial modifications to employee travel, employee work locations, virtualization or cancellation of customer and employee events, and remote sales, implementation, and support activities, among other modifications. These decisions may delay or reduce sales and harm productivity and collaboration. We have observed other companies and governments making similar alterations to their normal business operations, and in general, the markets are experiencing a significant level of uncertainty at the current time. Virtualization of our team’s sales activities could foreclose future business opportunities, particularly as our customers limit spending, which could negatively impact the willingness of our customers to enter into or renew contracts with us. The pandemic has impacted our ability to complete certain implementations, negatively impacting our ability to recognize revenue, and could also negatively impact the payment of accounts receivable and collections. We continue to realize our on-going cost optimization efforts in response to the impact of the pandemic. We may take further actions that alter our business operations as the situation evolves. As a result, the ultimate impact of the COVID-19 pandemic and the effects of the operational alterations we have made in response on our business, financial condition, liquidity, and financial results cannot be predicted at this time.

On ~~March 27, 2020, President Trump signed into law~~December 6, 2021, the ~~CARES Act.~~Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The ~~CARES Act, among~~Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). The Nasdaq deficiency letter has no immediate effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Global Select Market under the symbol “SEAC” at this time.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or until June 6, 2022, to regain compliance with the Minimum Bid Price Requirement. If at any time before June 6, 2022, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance.

If the Company does not regain compliance with the Minimum Bid Price Requirement by June 6, 2022, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to transfer to The Nasdaq Capital Market, to meet the continued listing requirement for market value of publicly held shares and all other ~~things, includes provisions relating~~initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement. In addition, the Company would be required to ~~refundable payroll tax credits, deferment~~notify Nasdaq of ~~employer side social security payments, net operating loss~~its intent to cure the deficiency during the second compliance period. Following a transfer to The Nasdaq Capital Market, the Company will be afforded the second 180 calendar day period to regain compliance, unless it does not appear to Nasdaq that it is possible for the Company to cure the deficiency. If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting. In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. We continue to examine the impact that the CARES Act may have on our business.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). We consolidate the financial statements of our wholly-owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation.

The accompanying unaudited consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments of a normal recurring nature which were considered necessary for a fair presentation have been included. The year-end consolidated balance sheet data as of January 31, 2021 was derived from our audited consolidated financial statements and may not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended July 31, 2021 are not necessarily indicative of the results to be expected for the entire year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on April 15, 2021.

The preparation of these unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Significant estimates and assumptions reflected in these unaudited consolidated financial statements include, but are not limited to, those related to revenue recognition, allowance for doubtful accounts, goodwill and intangible assets, impairment of long-lived assets, accounting for income taxes, the valuation of stock-based awards, and management’s assessment of the Company’s ability to continue as a going concern. We base our estimates on historical experience, known trends and other market-specific or relevant factors that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Cash and cash equivalents include cash on hand and on deposit and highly liquid investments in money market mutual funds, government sponsored enterprise obligations, treasury bills, commercial paper and other money market securities with remaining maturities at the date of purchase of 90 days or less. All cash equivalents are carried at cost, which approximates fair value. Restricted cash represents cash that is restricted as to withdrawal or usage and consists primarily of cash held as collateral in relation to obligations set forth by the landlord of our Poland facility.

The following table provides a summary of (i) cash and cash equivalents and (ii) restricted cash in the consolidated ~~balance sheets~~statements of cash flows as of the periods presented:

	As of				As of October 31,
	July 31, 2021		January 31, 2021		2021		2020
	(Amounts in thousands)				(Amounts in thousands)
Cash and cash equivalents	$	18,933	$	5,856	$	17,551	$	4,904
Restricted cash		350		228		339		220
Total cash, cash equivalents and restricted cash	$	19,283	$	6,084	$	17,890	$	5,124

Restricted cash is included as a component of other assets in the consolidated balance sheets.

Our investments in debt securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive loss in stockholders’ equity. Realized gains and losses and declines in value determined to be other than temporary are based on the specific identification method and are included as a component of other expense, net in the consolidated statements of operations and comprehensive loss.

We evaluate our investments with unrealized losses for other-than-temporary impairment. When assessing investments for other-than-temporary declines in value, we consider such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, our ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that we consider to be “other than temporary,” we reduce the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure

fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Our cash equivalents and marketable securities are carried at fair value determined according to the fair value hierarchy described above. The carrying values of our accounts and other receivables, unbilled receivables, accounts payable, accrued expenses, and the Note approximate their fair values due to the short-term nature of these assets and liabilities.

Financial instruments which potentially expose us to concentrations of credit risk include cash, cash equivalents and restricted cash, marketable securities and accounts receivable. We have cash investment policies which, among other things, limit investments to investment-grade securities. We restrict our cash equivalents and marketable securities to repurchase agreements with major banks and U.S. government and corporate securities which are subject to minimal credit and market risk. We perform ongoing credit evaluations of our customers.

We sell our software products and services worldwide primarily to service providers consisting of operators, telecommunications companies, satellite operators and broadcasters. ~~Two~~ ~~customers each~~NaN customer accounted for ~~15%~~19% of total revenue for the three months ended October 31, 2021 and ~~one~~1 customer accounted for 29% of total revenue for the three months ended October 31, 2020. NaN customer accounted for 12% of total revenue for the ~~three~~nine months ended ~~July 31, 2021 and 2 customers accounted for 22% and 11% of total revenue for the three months ended July 31, 2020. One customer accounted for 14% and~~ ~~two~~ ~~customers each accounted for 10% of total revenue for the six months ended July~~October 31, 2021 and 1 customer accounted for ~~18%~~21% of total revenue for the ~~six~~nine months ended ~~July~~October 31, 2020. NaN customers accounted for ~~14%~~24%, and ~~11%~~18% of the accounts receivable balance as of ~~July~~October 31, 2021. NaN customers accounted for 18% and 16% of the accounts receivable balance as of January 31, 2021.

We record goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired. Our estimates of fair value are based upon assumptions believed to be reasonable at that time but such estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results.

Goodwill is tested for impairment annually on August 1^st of each year and more frequently if events and circumstances indicate that the asset might be impaired. We have determined that there is a single reporting unit for the purpose of conducting the goodwill impairment assessment. Goodwill impairment is recorded if the amount of our carrying value exceeds our fair value, not to exceed the carrying amount of goodwill. Factors that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration of projected financial performance, future acquisitions and/or

mergers, and a decline in our market value as a result of a significant decline in our stock price. There were 0 impairment charges recorded in fiscal 2021 or in the ~~first half of fiscal 2022.~~nine months ended October 31, 2021.

We performed our annual impairment test on August 1, 2021 using a quantitative approach. We considered macroeconomic, industry-specific and Company specific factors in addition to estimates and assumptions in our analysis. We estimated the fair value of the reporting unit using the income (or discounted cash flows model) and market approaches and determined there was no impairment as our fair value exceeded our carrying value.

Intangible assets are recorded at their estimated fair values at the date of acquisition. We amortize intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

Long-lived assets primarily consist of property, plant and equipment and intangible assets with finite lives. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Recoverability of long-lived assets or groups of assets is assessed based on a comparison of the carrying amount to the estimated future undiscounted cash flows. If estimated future undiscounted net cash flows are less than the carrying amount, the asset is considered impaired and expense is recorded at an amount required to reduce the carrying amount to fair value. Determining the fair value of long-lived assets includes significant judgment by management, and different judgments could yield different results.

We assess the useful lives and possible impairment of existing recognized long-lived assets whenever events or changes in circumstances occur that indicate that it is more likely than not that an impairment has occurred. Factors considered important which could trigger a review include:

Determining whether a triggering event has occurred involves significant judgment.

Our revenue recognition policies follow Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Our revenue is derived from sales of software licenses and associated ~~third party~~third-party hardware and support services, as well as professional services and support fees related to our software licenses.

The Company recognizes revenue from contracts with customers using a five-step model, which is described below:

A customer contract is generally identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability and consideration is probable.

A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales and ~~VAT~~value-added taxes (“VAT”) that are collected on behalf of government agencies.

The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer. Our contracts typically contain multiple performance obligations, for which we account for individual performance obligations separately, if they are distinct.

We enter into contracts that include combinations of license, support and professional services, and third-party products, which are accounted for as separate performance obligations with differing revenue recognition patterns. Revenue is recognized when or as control of the promised goods or services is transferred to customers. Our software licenses are primarily delivered on a perpetual basis, whereby the customer receives rights to use the software for an indefinite time period or a specified term and delivery and revenue recognition occurs at the point in time when the customer has the ability to download or access the software. Our customers may also contract with us for a Software as a Service (“SaaS”) type license whereby the customer only has a right to access the software for a defined term. SaaS licenses are recognized ratably over the subscription period beginning on the date the license is made available to customers.

Our services revenue is comprised of support services and professional services. Support services consist of software upgrades on a when-and-if available basis, telephone support, bug fixes or patches and general hardware maintenance support. Revenue related to support services is recognized ratably over the term of the contract. Professional services are recognized as the services are performed.

Revenues attributable to ~~third party~~third-party products typically consist of hardware and related support contracts. Hardware products are typically recognized when control is transferred to the customer, which is defined as the point in time when the client can use and benefit from the hardware. In situations where the hardware is distinct and it is delivered before services are provided and is functional without services, control is transferred upon delivery or acceptance by the customer. Revenue attributable to third-party support contracts is recognized ratably over the term of the contract.

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Once we determine the performance obligations, we determine the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The transaction price is then allocated to each performance obligation in the contract based on the SSP. The corresponding revenue is recognized as the related performance obligations are satisfied.

Judgment is required to determine the SSP for each distinct performance obligation. We determine SSP based on the price at which the performance obligation is sold separately and the methods of estimating SSP under the guidance of ASC 606-10-32-33. If the SSP is not observable through past transactions, we estimate the SSP, taking into account available information such as market conditions, expected margins, and internally approved pricing guidelines related to the performance obligations. In February 2019, we began selling our software bundle called the Framework in addition to our legacy software products and services. Our legacy products were historically sold on a standalone basis and therefore the SSP and revenue recognition may differ from the Framework. A typical Framework deal licenses our software products and services, including upgrades for one fixed price. Management considers the pricing of our Framework perpetual licenses as highly variable and uncertain, and we do

not have a history of selling the Framework software on a standalone basis. We recognize the portion of the transaction price allocated to the Framework software on a residual basis, as we have at least one performance obligation for which the SSP is observable. The Company notes that both hardware and support services represent observable pricing. The SSP for our legacy software is also recognized on a residual basis, as we have observable SSP for the associated support services sold with the software license based on historical observable data of selling support contracts on a standalone basis. We may also license our software as a SaaS type license, whereby our customer only has a right to access the software over a specified time period and the service includes technical support and unspecified upgrades and bug fixes. We recognize the full value of the contract ratably over the contractual term of the SaaS license.

Our services revenue is comprised of support services, software license implementation services, engineering services, training and reimbursable expenses. We have concluded that services are distinct performance obligations, with the exception of engineering services. Engineering services may be provided on a standalone basis or bundled with a license when we are providing custom development.

We utilize the cost-plus margin method to determine the SSP for our Framework support services offerings and hardware sales. For Framework support services, we calculate the average cost of support to within a small range to arrive at an average

expected cost. Legacy support services are priced as a percentage of the list price of the related software license and hardware. Historically, we determined the SSP of the support services based on this pricing relationship and observable data from standalone sales of support contracts. The expected cost-plus margin for hardware is based on the cost of the hardware from third parties, plus a reasonable markup that the Company believes is reflective of a market-based reseller margin.

The SSP for services in time and materials contracts is determined by observable prices in standalone services arrangements. We estimate the SSP for fixed price services based on estimated hours adjusted for historical experience at time and material rates charged in standalone services arrangements. Revenue for fixed price services is recognized over time as the services are provided based on an input measure of hours incurred to total estimated hours.

Some of our contracts have payment terms that differ from the timing of revenue recognition, which requires us to assess whether the transaction price for those contracts include a significant financing component. We have elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if we expect that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service, will be one year or less. For those contracts in which the period exceeds the one-year threshold, this assessment, as well as the quantitative estimate of the financing component and its relative significance, requires judgment. We estimate the significant financing component provided to our customers with extended payment terms by determining the present value of the future payments by applying an average standard industry discount rate that reflects the customer’s creditworthiness.

Payment terms with customers typically require payment 30 days from invoice date. Our agreements with customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained. In the infrequent instances where customers raise a concern over delivered products or services, we have endeavored to remedy the concern and all costs related to such matters have been insignificant in all periods presented.

We occasionally enter into amendments to previously executed contracts that may constitute contract modifications. The amendments are assessed to determine if (1) the additional products and services are distinct from the product and services in the original arrangement; and (2) the amount of consideration expected for the added products and services reflects the SSP of those products and services. An amendment or contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract and is accounted for on either a prospective basis as a termination of the existing contract and the creation of a new contract or a cumulative catch-up basis.

Contract assets consist of unbilled revenue, which is recognized as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Unbilled receivables expected to be billed and collected within one year are classified as current assets or long-term assets if expected to be billed and collected after one year (see Note 10).

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that commissions and special incentive payments (“Spiffs”) for hardware and software maintenance and support and professional services paid under our sales incentive programs meet the requirements to be capitalized under ASC 340-40. Costs to obtain a contract are amortized as selling and marketing expense over the expected

period of benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract and the estimate of the amortization period. The commissions and Spiffs related to professional services are amortized over time as work is completed. The commissions and Spiffs for hardware and software maintenance are amortized over the life of the contract. These costs are periodically reviewed for impairment. We determined that 0 impairment of these assets existed as of ~~July~~October 31, 2021 or January 31, 2021. We have elected to apply the practical expedient and recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. Total deferred capitalized commission costs were ~~$431~~$371 thousand ~~as of July~~at October 31, 2021 ~~compared to $553~~and $553 thousand ~~as of~~at January 31, 2021. Current deferred capitalized commission costs are included in prepaid expense and other current assets in our consolidated balance sheets and non-current deferred capitalized commission costs are included in other assets in our consolidated balance sheets. Capitalized commissions expensed during the ~~six~~nine months ended ~~July~~October 31, 2021 and 2020 included in the consolidated statement of operations and comprehensive loss were ~~$123~~$182 thousand and $218 thousand, respectively.

We account for our leases in accordance with ASC 842, Leases. A contract is accounted for as a lease when we have the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. We determine if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, we determine the initial classification and measurement of our right-of-use operating lease asset and corresponding liability at the lease commencement date. We determine the classification and measurement of a modified lease at the date it is modified. The lease term includes only renewal options that are reasonably assured to exercise. The present value of lease payments is typically determined by using the Company’s estimated secured incremental borrowing rate for the associated lease term as interest rates implicit in the leases are not normally readily determinable. Management’s policy is to utilize the practical expedient to not record leases with an original term of twelve months or less on our consolidated balance sheets. Lease payments are recognized in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term.

Our existing leases are for facilities and equipment. None of our leases are with related parties. In addition to rent, office leases may require us to pay additional amounts for taxes, insurance, maintenance and other expenses, which are generally referred to as non-lease components. As a practical expedient, we account for the non-lease components together with the lease components as a single lease component for all of our leases. Only the fixed costs for leases are accounted for as a single lease component and recognized as part of a right-of-use asset and liability.

Basic net ~~income (loss)~~loss per share is computed by dividing net ~~income (loss)~~loss by the weighted average number of unrestricted common shares outstanding during the period. Diluted net ~~income (loss)~~loss per share is computed by dividing net ~~income (loss)~~loss by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted and deferred common stock units using the “treasury stock” method when the effect is not anti-dilutive. In periods in which we report a net loss, diluted net loss per share is the same as basic net loss per share.

~~The number of common shares used in the computation of diluted net income per share for the period presented includes the effect of the following potentially outstanding common shares (in thousands):~~

The number of common shares used in the computation of diluted net loss per share for the periods presented does not include the effect of the following potentially outstanding common shares because the effect would have been anti-dilutive:

	For the Three Months Ended July 31,				For the Six Months Ended July 31,				For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2021		2020		2021		2020		2021		2020		2021		2020
	(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)
Stock options		1,453		2,314		1,671		967		1,287		2,643		1,542		1,072
Restricted stock units		113		65		124		58		273		341		120		58
Deferred stock units		62		82		41		82		62		313		41		82
		1,628		2,461		1,836		1,108		1,622		3,297		1,703		1,212

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740), which simplifies the accounting for income taxes and removes certain exceptions and improves consistent application of accounting principles for certain areas in Topic 740. ASU 2019-12 was effective in the first quarter of fiscal 2022 and did not have an effect on our unaudited consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities and accounts receivable. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. ASU 2016-13 is effective in the first quarter of fiscal 2024. We are currently evaluating if this guidance will have a material effect to our unaudited consolidated financial statements.

The following tables set forth our financial assets that were accounted for at fair value on a recurring basis. There were 0 fair value measurements of our financial assets using level 2 or level 3 inputs for the periods presented:

			Fair Value at July 31, 2021 Using						Fair Value at October 31, 2021 Using
	Total		Level 1		Level 2		Total		Level 1		Level 2
	(Amounts in thousands)						(Amounts in thousands)
Assets:
Cash equivalents	$	46	$	46	$	—	$	46	$	46	$	—
Total	$	46	$	46	$	—	$	46	$	46	$	—

There were no marketable securities held as of ~~July~~October 31, 2021. Marketable securities by security type consisted of the following as of January 31, 2021:

	As of						As of
	July 31, 2021			January 31, 2021			October 31, 2021			January 31, 2021
	(Amounts in thousands)						(Amounts in thousands)
Computer equipment, software and demonstration equipment	$	3,223		$	9,765		$	3,286		$	9,765
Office furniture and equipment		279			306			271			306
Leasehold improvements		151			238			147			238
		3,653			10,309			3,704			10,309
Less: Accumulated depreciation and amortization		(3,155	)		(9,704	)		(3,192	)		(9,704	)
Total property and equipment, net	$	498		$	605		$	512		$	605

Depreciation expense was ~~$43~~$48 thousand and ~~$70~~$71 thousand for the three months ended ~~July~~October 31, 2021 and ~~July~~October 31, 2020, respectively, and ~~$103~~$151 thousand and ~~$142~~$214 thousand for the ~~six~~nine months ended ~~July~~October 31, 2021 and ~~July~~October 31, 2020, respectively.

	As of				As of
	July 31, 2021		January 31, 2021		October 31, 2021		January 31, 2021
	(Amounts in thousands)				(Amounts in thousands)
Accrued employee compensation and benefits	$	1,094	$	742	$	1,242	$	742
Accrued professional fees		187		575		67		575
Sales tax and VAT payable		48		271		34		271
Current obligation - right of use operating leases		835		1,387		792		1,387
Accrued other		1,499		1,302		1,436		1,302
Total accrued expenses	$	3,663	$	4,277	$	3,571	$	4,277

Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. We are required to perform an impairment test annually, or more often if we identify certain events or circumstances that would more likely than not reduce the estimated fair value of the goodwill below its carrying amount.

We performed our annual impairment test of August 1, 2021 using a quantitative approach. We considered macroeconomics, industry-specific and Company specific factors in addition to estimates and assumptions in our analysis. We estimated the fair value of the reporting unit using the income (or discounted cash flows model) and market approaches and determined there was 0 impairment as our fair value exceeded our carrying value. There were 0 impairment charges recorded in fiscal 2021 or in the ~~first half of fiscal 2022.~~nine months ended October 31, 2021.

	Goodwill			Goodwill
	(Amounts in thousands)			(Amounts in thousands)
Balance as of January 31, 2021	$	10,577		$	10,577
Translation adjustment		(184	)		(401	)
Balance as of July 31, 2021	$	10,393
Balance as of October 31, 2021				$	10,176

	As of July 31, 2021									As of October 31, 2021
	Gross		Accumulated Amortization			Cumulative Translation Adjustment		Net		Gross		Accumulated Amortization			Cumulative Translation Adjustment		Net
	(Amounts in thousands)									(Amounts in thousands)
Finite-lived intangible assets:
Acquired customer contracts	$	2,205	$	(1,861	)	$	40	$	384	$	2,205	$	(2,044	)	$	26	$	187
Acquired existing technology		1,364		(1,154	)		28		238		1,364		(1,267	)		19		116
Total finite-lived intangible assets	$	3,569	$	(3,015	)	$	68	$	622	$	3,569	$	(3,311	)	$	45	$	303

We recognized amortization expense of intangible assets in operating expense categories on the consolidated statements of operations and comprehensive loss as follows:

	For the Three Months Ended July 31,					For the Six Months Ended July 31,				For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2021		2020			2021		2020		2021		2020		2021		2020
	(Amounts in thousands)					(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)
Selling and marketing	$	195	$	366		$	390	$	366	$	184	$	190	$	574	$	556
Research and development		121		(67	)		242		217		114		118		356		335
	$	316	$	299		$	632	$	583	$	298	$	308	$	930	$	891

Future estimated amortization expense of intangibles as of ~~July~~October 31, 2021 was ~~$0.6~~$0.3 million to be recognized in fiscal 2022.

Certain conditions may exist as of the date the unaudited consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us, or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our unaudited consolidated financial statements. If our assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed.

We provide indemnification, to the extent permitted by law, to our officers, directors, employees and agents for liabilities arising from certain events or occurrences while the officer, director, employee or agent is, or was, serving at our request in such capacity. With respect to acquisitions, we provide indemnification to, or assume indemnification obligations for, the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ governing documents. As a matter of practice, we have maintained directors’ and officers’ liability insurance including coverage for directors and officers of the acquired companies.

We enter into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of our historical agreements require us to defend and/or indemnify the other party against intellectual property infringement claims brought by a ~~third-party~~third party with respect to our products. From time to time, we also indemnify customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, and environmental claims relating to the use of our products and services or resulting from the acts or omissions of us, our employees, authorized agents or subcontractors. From time to time, we have received requests from customers for indemnification of patent litigation claims. Management cannot reasonably estimate any potential losses, but these claims could result in material liability for us. There are no current pending legal proceedings, in the opinion of management that would have a material adverse effect on our financial position, results from operations and cash flows. There is no assurance that future legal proceedings arising from ordinary course of business or otherwise, will not have a material adverse effect on our financial position, results from operations or cash flows.

We warrant that our products, including software products, will substantially perform in accordance with our standard published specifications in effect at the time of delivery. In addition, we provide maintenance support to our customers and therefore allocate a portion of the product purchase price to the initial warranty period and recognize revenue on a straight-line basis over that warranty period related to both the warranty obligation and the maintenance support agreement. When we receive revenue for extended warranties beyond the standard duration, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred.

The Company has operating leases for facilities and equipment expiring at various dates through 2025.

	For the Three Months Ended July 31, 2021		For the Six Months Ended July 31, 2021		For the Three Months Ended October 31, 2021		For the Nine Months Ended October 31, 2021
	(Amounts in thousands)				(Amounts in thousands)
Operating lease cost	$	178	$	461	$	151	$	612
Short term lease cost, net		4		8		5		13
Total lease cost	$	182	$	469	$	156	$	625

Supplemental cash flow information related to the Company’s operating leases was as follows:

	For the Three Months Ended July 31,				For the Six Months Ended July 31,				For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2021		2020		2021		2020		2021		2020		2021		2020
	(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	223	$	244	$	733	$	566	$	218	$	263	$	951	$	829

Supplemental balance sheet information related to the Company's operating leases was as follows:

	As of July 31, 2021			As of January 31, 2021			As of October 31, 2021			As of January 31, 2021
	(Amounts in thousands)						(Amounts in thousands)
Operating lease right-of-use assets	$	2,504		$	4,968		$	2,283		$	4,968

Current portion, operating lease liabilities		835			1,387			792			1,387
Operating lease liabilities, long term		1,797			4,070			1,590			4,070
Total operating lease liabilities	$	2,632		$	5,457		$	2,382		$	5,457

Weighted average remaining lease term (years)		3.4			4.0			3.2			4.0
Weighted average incremental borrowing rate		5.0	%		5.0	%		5.0	%		5.0	%

The current portion, operating lease liabilities is included in the balance of accrued expenses at ~~July~~October 31, 2021. Future minimum lease payments for operating leases, with initial or remaining terms in excess of one year at ~~July~~October 31, 2021, are as follows:

	Payments for Operating Leases		Payments for Operating Leases
For the Fiscal Years Ended January 31,	(Amounts in thousands)		(Amounts in thousands)
2022	$	435	$	213
2023		809		789
2024		798		778
2025		823		802
Total lease payments		2,865		2,582
Less interest		233		200
Total operating lease liabilities	$	2,632	$	2,382

In the first quarter of fiscal 2022, we entered into the Termination Agreement which terminated the sublease with respect to our former headquarters in Waltham, Massachusetts, effective March 21, 2021. In connection with the early termination of the sublease, the Company paid the sublandlord termination payments of approximately ~~$0.1 million and~~ $0.4 million for the ~~three and six~~nine months ending ~~July~~October 31, ~~2021, respectively.~~2021. The Company also wrote off all related operating lease right-of-use assets and liabilities as of the termination date, resulting in a $0.3 million non-cash gain, which partially offset the loss on the termination payments. The net $0.1 million loss on lease termination is reported as a component of severance and restructuring expense on the consolidated statements of

operations and comprehensive loss for the ~~six~~nine months ended ~~July~~October 31, 2021. Prior to the execution of the Termination Agreement, the sublease had been scheduled to expire in February 2025.

In the third quarter of fiscal 2022, the Company entered into 2 operating sublease agreements (collectively, the “Subleases”) with respect to part of our existing Poland facility lease (the “Head Lease”). The Company has accounted for the Head Lease and the Subleases as separate contracts and there is no effect on the right-of-use asset or lease liability associated with the Head Lease. The Subleases are short term and have effective end dates of less than one year from October 31, 2021. The Head Lease rent expense is presented net of sublease income and reported as a component of operating expenses on the consolidated statements of operations and comprehensive loss. We recorded $32 thousand of sublease income for the three and nine months ended October 31, 2021.

During the three and ~~six~~nine months ended ~~July~~October 31, 2021, we incurred severance costs of less than $0.1 million and $0.2 million, respectively, and restructuring costs of less than $0.1 million and $0.4 million, respectively, primarily for employee-related termination benefits in relation to the restructuring of our finance department and expenses related to the closure of our leased facility in Waltham, Massachusetts.

The following table shows the change in accrued restructuring balances since January 31, 2021 primarily related to our finance department restructuring efforts and closure of our leased headquarters facility, reported as a component of accrued expenses on the consolidated balance sheets:

	Employee- Related Benefits			Closure of Leased Facilities			Total			Employee- Related Benefits			Closure of Leased Facilities			Total
	(Amounts in thousands)									(Amounts in thousands)
Accrued balance as of January 31, 2021	$	—		$	—		$	—		$	—		$	—		$	—
Restructuring charges incurred		147			463			610			169			463			632
Cash payments		(115	)		(463	)		(578	)		(144	)		(463	)		(607	)
Accrued balance as of July 31, 2021	$	32		$	—		$	32
Accrued balance as of October 31, 2021										$	25		$	—		$	25

Our Second Amended and Restated 2011 Compensation and Incentive Plan (the “2011 Plan”) provided for the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQs”), restricted stock, restricted stock units (“RSUs”), deferred stock units (“DSUs”), performance stock units (“PSUs”) and other equity based non-stock option awards as determined by the plan administrator to our officers, employees, consultants and directors. The 2011 Plan expired on July 20, 2021.

Our 2021 Compensation and Incentive Plan (the “2021 Plan”) was proposed by the Board of Directions (the “Board”) and adopted by our stockholders in July 2021 to permit the continued issuance of equity-based compensation, including the granting of ISOs, NQs, restricted stock, RSUs, DSUs, PSUs, and other equity based non-stock option awards as determined by the plan administrator to our eligible officers, employees, consultants and directors. Under the 2021 Plan, we may satisfy awards upon the exercise of stock options or the vesting of stock units with newly issued shares or treasury shares. The Board, or a committee of independent members of the Board (the “Committee”), is responsible for the administration of the 2021 Plan and determining the terms of each award, award exercise price, the number of shares for which each award is granted and the rate at which each award vests. In certain instances, the Board or Committee may elect to modify the terms of an award. The number of shares authorized for issuance under the 2021 Plan is 4,896,878, including 2,396,878 shares awarded under the 2011 Plan that may become available for issuance under the 2021 Plan due to the expiration, termination, surrender, or forfeiture of such outstanding awards. As of ~~July~~October 31, 2021, there were ~~2,350,000~~1,664,877 shares available for future grant.

Nonemployee members of the Board may elect to receive DSUs or stock options in lieu of RSUs. The number of units subject to the DSUs is determined as of the grant date and shall fully vest one year from the grant date. The shares underlying the DSUs are not vested and issued until the earlier of the director ceasing to be a member of the Board (provided such time is subsequent to the first day of the succeeding fiscal year) or immediately prior to a change in control.

Option awards may be granted at an exercise price per share of not less than 100% of the fair market value per common share on the date of the grant and not less than 110% of the fair market value per common share on the date of the grant with respect to ISOs granted to employees owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. Option awards granted under the 2021 Plan generally vest over a period of one to three years and expire ten years from the date of the grant.

We have a Long-Term Incentive Program, adopted in fiscal 2016, under which the named executive officers and other of our key employees may receive long-term equity-based incentive awards, which are intended to align the interests of our named executive officers and other key employees with the long-term interests of our stockholders and to emphasize and reinforce our focus on team success. Long-term equity-based incentive compensation awards are made in the form of stock options, RSUs and PSUs subject to vesting based in part on the extent to which employment continues.

Under our 2015 Employee Stock Purchase Plan (the “ESPP”), six-month offering periods begin on October 1 and April 1 of each year during which eligible employees may elect to purchase shares of our common stock according to the terms of the ~~offering~~.offering. On each purchase date, eligible employees can purchase our stock at a price per share equal to 85% of the closing price of our common stock on the exercise date, but no less than par value. The maximum number of shares of our common stock authorized for sale under the ESPP is 1,150,000 shares, of which 1,075,024 remain available under the ESPP as of ~~July~~October 31, 2021. There were no shares purchased under the ESPP during the ~~first half of fiscal 2022~~nine months ended October 31, 2021 as the Company suspended the ESPP as of April 1, 2020 and is still evaluating when the suspension will be lifted, if at all. Under the ESPP, 5,702 shares were purchased during the ~~first half of fiscal 2021.~~nine months ended October 31, 2020.

In the ~~first half of fiscal 2022,~~nine months ended October 31, 2021, we granted ~~1,080,000~~1,095,000 option awards and ~~1,049,088~~1,742,546 RSU awards, including DSUs and PSUs, with a total grant date fair value of ~~$2.6~~$3.3 million. In the ~~first half of fiscal 2022,~~nine months ended October 31, 2021, we canceled ~~1,320,335~~1,343,670 option awards and 171,308 RSU awards, including PSUs.

We recognized stock-based compensation expense within the accompanying consolidated statements of operations and comprehensive loss as follows:

	For the Three Months Ended July 31,					For the Six Months Ended July 31,						For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2021			2020		2021			2020			2021		2020		2021			2020
	(Amounts in thousands)					(Amounts in thousands)						(Amounts in thousands)				(Amounts in thousands)
Cost of revenue	$	23		$	—	$	24		$	(8	)	$	4	$	—	$	28		$	(8	)
Research and development		(2	)		68		(79	)		135			7		80		(72	)		215
Sales and marketing		50			55		68			95			21		25		89			120
General and administrative		762			137		1,028			395			242		332		1,270			727
	$	833		$	260	$	1,041		$	617		$	274	$	437	$	1,315		$	1,054

As of ~~July~~October 31, 2021, unrecognized stock-based compensation expense related to unvested stock options was approximately ~~$0.6~~$0.5 million, which is expected to be recognized over a weighted average period of ~~1.9~~1.7 years. As of ~~July~~October 31, 2021, unrecognized stock-based compensation expense related to unvested RSUs and DSUs was ~~$0.6~~$0.9 million and $0.1 million, respectively, which is expected to be recognized over weighted average amortization periods of ~~1.5~~1.9 years and ~~0.7~~0.5 years, respectively. Additionally, as of ~~July~~October 31, 2021, unrecognized stock-based compensation expense related to unvested PSUs was less than $0.1 million, which is expected to be recognized over a weighted average amortization period of ~~1.3~~1.5 years.

The following table summarizes our accounts receivable, net and unbilled receivables:

	As of July 31,		As of January 31,		As of October31,		As of January 31,
	2021		2021		2021		2021
	(Amounts in thousands)				(Amounts in thousands)
Accounts receivable, net	$	5,560	$	6,050	$	5,374	$	6,050
Unbilled receivables, current		8,344		9,359		9,708		9,359
Unbilled receivables, long-term		6,079		6,340		5,438		6,340
	$	19,983	$	21,749	$	20,520	$	21,749

Contract assets consist of unbilled receivables and are customer committed amounts for which revenue recognition precedes billing, and billing is solely subject to the passage of time.

Unbilled receivables are expected to be billed in the future as follows (amounts in thousands, except percentage amounts):

	As of July 31,					As of October 31,
	2021		Percentage			2021		Percentage
1 year or less	$	8,344		58	%	$	9,708		65	%
1-2 years		4,688		32	%		3,707		24	%
2-5 years		1,391		10	%		1,731		11	%
Total unbilled receivables	$	14,423		100	%	$	15,146		100	%

Contract liabilities consist of deferred revenue and customer deposits that arise when amounts are billed to or collected from customers in advance of revenue recognition. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as deferred revenue, long-term. The change in deferred revenue in the ~~first half of fiscal 2022~~nine months ended October 31, 2021 is due to new billings in advance of revenue recognition offset by revenue recognized during the period.

	Deferred Revenue						Deferred Revenue
	Current			Long-Term			Current			Long-Term
	(Amounts in thousands)						(Amounts in thousands)
Balance as of January 31, 2021	$	4,737		$	657		$	4,737		$	657
Decrease		(604	)		(511	)		(1,793	)		(592	)
Balance as of July 31, 2021	$	4,133		$	146
Balance as of October 31, 2021							$	2,944		$	65

We recognized ~~$1.3~~$0.8 million of revenue related to deferred billings in the ~~second quarter of fiscal 2022~~three months ended October 31, 2021 and ~~$3.0~~$3.8 million of revenue related to deferred billings is the ~~first half of fiscal 2022.~~nine months ended October 31, 2021.

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of ~~July~~October 31, 2021 is ~~$26.4~~$25.5 million. This amount includes amounts billed for undelivered services that are included in deferred revenue reported on the consolidated balance sheets. Revenue recognized in the ~~first half of fiscal 2022~~nine months ended October 31, 2021 related to remaining performance obligations as of the previous fiscal year ended January 31, 2021 was ~~$7.6~~$10.0 million.

	For the Three Months Ended July 31,						For the Six Months Ended July 31,						For the Three Months Ended October 31,						For the Nine Months Ended October 31,
	2021		%	2020		%	2021		%	2020		%	2021		%	2020		%	2021		%	2020		%
	(Amounts in thousands, except percentages)						(Amounts in thousands, except percentages)						(Amounts in thousands, except percentages)						(Amounts in thousands, except percentages)
Revenue by customers' geographic locations:
North America (1)	$	4,329	66%	$	2,318	46%	$	7,030	61%	$	5,896	50%	$	4,683	65%	$	2,038	41%	$	11,713	63%	$	7,934	47%
Europe and Middle East		1,579	24%		2,150	43%		3,540	31%		4,132	35%		1,770	25%		2,007	40%		5,310	28%		6,139	36%
Latin America		478	7%		343	7%		691	6%		1,476	12%		502	7%		726	15%		1,193	6%		2,202	13%
Asia Pacific		154	2%		184	4%		331	3%		406	3%		196	3%		195	4%		527	3%		601	4%
Total revenue	$	6,540		$	4,995		$	11,592		$	11,910		$	7,151		$	4,966		$	18,743		$	16,876

	As of July 31, 2021		%	As of January 31, 2021		%	As of October 31, 2021		%	As of January 31, 2021		%
	(Amounts in thousands, except percentages)						(Amounts in thousands, except percentages)
Long-lived assets by geographic locations(1):
North America	$	7,628	74%	$	10,864	79%	$	6,976	76%	$	10,864	79%
Europe and Middle East		2,716	26%		2,819	21%		2,146	23%		2,819	21%
Asia Pacific		31	0%		31	0%		31	0%		31	0%
Total long-lived assets by geographic location	$	10,375		$	13,714		$	9,153		$	13,714

Each interim period is considered an integral part of the annual period and, accordingly, we measure our income tax expense using an estimated annual effective tax rate. A company is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period.

We recorded an income tax provision of less than $0.1 million for the three months ended October 31, 2021 and October 31, 2020. We recorded an income tax benefit of less than $0.1 million for the ~~three and six~~nine months ended ~~July~~October 31, 2021 and ~~July~~October 31, 2020. The tax provision for the ~~six~~nine months ended ~~July~~October 31, 2021 includes a $0.2 million tax benefit related to the reversal of tax reserves for uncertain tax positions due to the expiration of the Polish statute of limitations. Our effective tax rate in fiscal 2022 and in future periods may fluctuate on a quarterly basis as a result of changes in our jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on our deferred tax assets, changes in actual results versus our estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof.

We review all available evidence to evaluate the recovery of deferred tax assets, including the recent history of losses in all tax jurisdictions, as well as our ability to generate income in future periods. As of ~~July~~October 31, 2021, due to the uncertainty related to the ultimate use of certain deferred income tax assets, we have recorded a valuation allowance on certain deferred assets.

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. We have closed out an audit with the Internal Revenue Service through fiscal 2013; however, the taxing authorities will still have the ability to review the propriety of certain tax attributes created in closed years if such tax attributes are utilized in an open tax year, such as our federal research and development credit carryovers.

On March 4, 2019, our Board ~~of Directors~~ approved and adopted a tax benefits preservation plan (the “Tax Benefits Preservation Plan”) to potentially limit our ability to use net operating loss carryforwards and certain other tax attributes ~~(“NOLs”)~~ to reduce our potential future federal income tax obligations. In connection with the Tax Benefits Preservation Plan, we declared a dividend of 1 preferred share purchase right for each share of our common stock issued and outstanding as of March 15, 2019 to our stockholders of record on that date. The Tax Benefits Preservation Plan expires no later than March 4, 2022, and was approved by our stockholders at our 2019 annual meeting of stockholders on July 11, 2019.

This Form 10-Q contains or incorporates forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements involve risks and uncertainties. The following information should be read in conjunction with the unaudited consolidated financial information and the notes thereto included in this Form 10-Q. You should not place undue reliance on these forward-looking statements. Actual events or results may differ materially due to competitive factors and other factors referred to in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K (the “Form 10-K”) for our fiscal year ended January 31, 2021 and elsewhere in this Form 10-Q. These factors may cause our actual results to differ materially from any forward-looking statement. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate, and management’s beliefs and assumptions. We undertake no obligation to publicly update or revise the statements in light of future developments. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “seek,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “project,” or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict.

SeaChange International, Inc., (“SeaChange,” the “Company,” “we” or similar terms) a Delaware corporation founded on July 9, 1993, is an industry leader in the delivery of multiscreen, advertising and premium ~~OTT~~over-the-top (“OTT”) video management solutions. Our software products and services facilitate the aggregation, licensing, management and distribution of video and advertising content for service providers, telecommunications companies, satellite operators, broadcasters, and other content providers. We sell our software products and services worldwide, primarily to service providers including: operators, such as Liberty Global, plc., Altice NV, Cox Communications, Inc. and Rogers Communications, Inc.; telecommunications companies, such as Verizon Communications, Inc., AT&T, Inc. and Frontier Communications Corporation; satellite operators such as Dish Network Corporation; and broadcasters.

Our software products and services are designed to empower video providers to create, manage and monetize the increasingly personalized, highly engaging experiences that viewers demand. Using our products and services, we believe customers can increase revenue by offering services such as ~~VOD~~video on demand (“VOD”) programming on a variety of consumer devices, including televisions, smart phones, PCs, tablets and OTT streaming players. Our solutions enable service providers to offer other interactive television services that allow subscribers to receive personalized services and interact with their video devices, thereby enhancing their viewing experience. Our products also allow our customers to insert advertising into broadcast and VOD content.

SeaChange serves an exciting global marketplace where multiscreen viewing is increasingly required, consumer device options are evolving rapidly, and viewing habits are ever-shifting. The primary driver of our business is enabling the delivery of video content in the changing multiscreen television environment. We have expanded our capabilities, products and services to address the delivery of content to devices other than television set-top boxes, namely PCs, tablets, smart phones and OTT streaming players. We believe that our strategy of expanding into adjacent product lines will also position us to further support and maintain our existing service provider customer base. Providing our customers with more scalable software platforms enables them to further reduce their infrastructure costs, improve reliability and expand service offerings to their customers. Additionally, we believe we are well positioned to capitalize on new customers entering the multiscreen marketplace and increasingly serve adjacent markets. Our core technologies provide a foundation for software products and services that can be deployed in next generation video delivery systems capable of increased levels of subscriber activity across multiple devices.

We continue to initiate restructuring efforts to improve operations and optimize our cost structure. In the first quarter of fiscal 2022, we restructured our finance department and terminated the lease to our Waltham, Massachusetts headquarters. In the ~~first half of fiscal 2021,~~nine months ended October 31, 2020, we reduced our headcount across all departments in response to the COVID-19 pandemic, which resulted in approximately $7.6 million of annualized savings. Additionally, in the second quarter of fiscal 2021 we transferred our technical support services to our Poland location in an effort to further reduce cost.

In February 2019, we entered into a cooperation agreement (the “Cooperation Agreement”) with TAR Holdings LLC and Karen Singer (collectively, “TAR Holdings”). As of the date of the Cooperation Agreement, TAR Holdings beneficially owned approximately 20.6% of our outstanding common stock. Pursuant to the Cooperation Agreement, we agreed to set the size of the Company’s Board of Directors (the “Board”) at up to eight members, appointed Robert Pons to the Board as a Class II Director with an initial term that expired at the 2019 annual meeting of stockholders, and appointed Jeffrey Tuder to the Board as a Class III Director with an initial term that expired at the 2020 annual meeting of stockholders. Messrs. Pons and Tuder were subsequently re-elected in the 2019 and 2020 annual meeting of stockholders, respectively. On January 8, 2021, our Chief Executive Officer resigned, and Mr. Pons was subsequently appointed Executive Chairman and Principal Executive Officer in

the interim. Mr. Tuder resigned from the Board on May 14, 2021 and was replaced by David Nicol. On September 27, 2021, Peter Acquino was appointed as the Company’s President and Chief Executive Officer. Upon the appointment of Mr. Aquino, Mr. Pons resigned as the Company’s Executive Chairman and Principal Executive Officer but remains Chairman of the Board.

In March 2019, our Board approved and adopted a tax benefits preservation plan (the “Tax Benefits Preservation Plan”) to deter acquisitions of our common stock that would potentially limit our ability to use ~~NOLs~~net operating loss carryforwards to reduce our potential future federal income tax obligations. In connection with the Tax Benefits Preservation Plan, we declared a dividend of one preferred share purchase right for each share of our common stock issued and outstanding as of March 15, 2019 to our stockholders of record on that date. The Tax Benefits Preservation Plan was approved by our stockholders at our 2019 annual meeting of stockholders.

In February 2021, the Company filed a Registration Statement on Form S-3 with the ~~SEC,~~Securities and Exchange Commission (the “SEC”), which registered an indeterminate number of Securities using a “shelf” registration or continuous offering process. Under this shelf registration, we may, from time to time, sell any combination of the securities in one or more offerings up to a total aggregate offering price of $200 million. The shelf registration was declared effective on March 16, 2021.

In connection with the shelf registration statement, the Company entered into an underwriting agreement with Aegis Capital Corp. on March 30, 2021, to issue and sell 10,323,484 shares of common stock, $0.01 par value per share (“common stock”), at a public offering price of $1.85 per share (the “Offering”). The Offering closed on April 1, 2021 and resulted in approximately $17.5 million in proceeds, net of underwriting discounts and commissions of 6.5%, or $0.12025 per share of common stock, and offering expenses of approximately $0.2 million. In addition to the Offering, the Company also granted the underwriters a 45-day option (the “Underwriter Option”) to purchase up to an additional 1,548,522 shares of common stock at a purchase price of $1.85 per share, less underwriting discounts and commissions. The Underwriter Option was not exercised and has expired.

In March 2021, we entered into a Sublease Termination Agreement (the “Termination Agreement”) which terminated the sublease with respect to our former headquarters in Waltham, Massachusetts, effective March 21, 2021. In connection with the early termination of the sublease, the Company paid the sublandlord termination payments of approximately ~~$0.1 million and~~ $0.4 million for the ~~three and six~~nine months ended ~~July~~October 31, 2021. The Company also wrote off all related operating lease right-of-use assets and liabilities as of the termination date, resulting in a $0.3 million non-cash gain, which partially offset the loss on the termination payments. The net $0.1 million loss on lease termination is reported as a component of severance and restructuring expenses on the consolidated statements of operations and comprehensive loss for the ~~six~~nine months ended ~~July~~October 31, 2021. Prior to the execution of the Termination Agreement, the sublease had been scheduled to expire in February 2025. As a result of the Termination Agreement, we expect annualized savings of approximately $0.6 million in facilities costs for each of the next four years.

The following discussion summarizes the key factors our management believes are necessary for an understanding of our unaudited consolidated financial statements.

The components of our total revenue and gross profit are described in the following table:

	For the Three Months Ended July 31,						Change						For the Six Months Ended July 31,						Change						For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2021			2020			$			%			2021			2020			$			%			2021			2020			$			%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
Revenue:
Product revenue:
Framework	$	1,034		$	365		$	669			183.3	%	$	2,050		$	1,333		$	717			53.8	%
Online video platform and other		1,480			575			905			157.4	%		2,084			1,412			672			47.6	%
License and subscription																									$	2,172		$	994		$	1,178			118.5	%	$	6,306		$	3,739		$	2,567			68.7	%
Hardware		195			126			69			54.8	%		195			1,419			(1,224	)		(86.3	%)		1,339			54			1,285			2379.6	%		1,534			1,473			61			4.1	%
Total product revenue		2,709			1,066			1,643			154.1	%		4,329			4,164			165			4.0	%		3,511			1,048			2,463			235.0	%		7,840			5,212			2,628			50.4	%
Service revenue:
Maintenance and support		2,185			2,608			(423	)		(16.2	%)		4,223			5,213			(990	)		(19.0	%)		3,003			3,430			(427	)		(12.4	%)		9,207			10,552			(1,345	)		(12.7	%)
Framework and support services		1,317			978			339			34.7	%		2,256			1,909			347			18.2	%
Professional services and other		329			343			(14	)		(4.1	%)		784			624			160			25.6	%		637			488			149			30.5	%		1,696			1,112			584			52.5	%
Total service revenue		3,831			3,929			(98	)		(2.5	%)		7,263			7,746			(483	)		(6.2	%)		3,640			3,918			(278	)		(7.1	%)		10,903			11,664			(761	)		(6.5	%)
Total revenue		6,540			4,995			1,545			30.9	%		11,592			11,910			(318	)		(2.7	%)		7,151			4,966			2,185			44.0	%		18,743			16,876			1,867			11.1	%
Cost of product revenue		693			788			(95	)		(12.1	%)		1,099			2,368			(1,269	)		(53.6	%)		1,609			435			1,174			269.9	%		2,708			2,803			(95	)		(3.4	%)
Cost of service revenue		1,730			2,393			(663	)		(27.7	%)		3,545			5,219			(1,674	)		(32.1	%)		1,830			1,755			75			4.3	%		5,375			6,974			(1,599	)		(22.9	%)
Total cost of revenue		2,423			3,181			(758	)		(23.8	%)		4,644			7,587			(2,943	)		(38.8	%)		3,439			2,190			1,249			57.0	%		8,083			9,777			(1,694	)		(17.3	%)
Gross profit	$	4,117		$	1,814		$	2,303			127.0	%	$	6,948		$	4,323		$	2,625			60.7	%	$	3,712		$	2,776		$	936			33.7	%	$	10,660		$	7,099		$	3,561			50.2	%
Gross product profit margin		74.4	%		26.1	%					48.3	%		74.6	%		43.1	%					31.5	%		54.2	%		58.5	%					(4.3	%)		65.5	%		46.2	%					19.2	%
Gross service profit margin		54.8	%		39.1	%					15.7	%		51.2	%		32.6	%					18.6	%		49.7	%		55.2	%					(5.5	%)		50.7	%		40.2	%					10.5	%
Gross profit margin		63.0	%		36.3	%					26.6	%		59.9	%		36.3	%					23.6	%		51.9	%		55.9	%					(4.0	%)		56.9	%		42.1	%					14.8	%

~~Two customers~~One customer accounted for ~~15%~~19% of total revenue for the three months ended October 31, 2021 and one customer accounted for 29% of total revenue for the three months ended October 31, 2020. One customer accounted for 12% of total revenue for the ~~three~~nine months ended July 31, 2021 and two customers accounted for 21% and 11% of total revenue for the three months ended July 31, 2020. One customer accounted for 14% and two customers accounted for 10% of total revenue for the six months ended JulyOctober 31, 2021 and one customer accounted for ~~18%~~21% of total revenue for the ~~six~~nine months ended ~~July~~October 31, 2020. See Part I Item I, Note 2, ~~“Significant~~“Significant Accounting Policies,” to this Form 10-Q for more information.

International revenue accounted for ~~43%~~42% and ~~67%~~72% of total revenue for the three months ended ~~July~~October 31, 2021 and 2020, respectively, and ~~49%~~46% and ~~66%~~68% of total revenue for the ~~six~~nine months ended ~~July~~October 31, 2021 and 2020, respectively. The decrease in international sales as a percentage of total revenue for the three and ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020 is primarily due to an increase of U.S. revenue at a higher rate than international revenue.

Product revenue increased by ~~$1.6~~$2.5 million and ~~$0.2~~$2.6 million for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively, as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. The increase for the three months ended ~~July~~October 31, 2021 as compared to the three months ended October 31, 2020 was primarily due to ~~Framework deliverables completed~~the sale of licenses and ~~related revenue recognized,~~subscriptions and ~~other perpetual license sales during~~ the ~~fiscal quarter.~~delivery of third-party products and hardware. The increase for the ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the nine months ended October 31, 2020 was primarily due to ~~Framework~~the sale of licenses and ~~other perpetual license sales that required minimal third-party hardware.~~subscriptions.

Service revenue decreased by ~~$0.1~~$0.3 million and ~~$0.5~~$0.8 million for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. The decrease for the three and ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the three and nine months ended October 31, 2020 was primarily due to a decrease in our maintenance and support revenue provided on post warranty contracts as customers continue to provide their own solutions partially offset by an increase in professional services related to the sale and ~~legacy products are decommissioned.~~implementation of licenses and subscriptions.

Cost of revenue consists primarily of the cost of resold third-party products and services, purchased components and subassemblies, labor and overhead relating to the assembly, testing and implementation and ongoing maintenance of complete systems.

Our gross profit margin ~~increased~~decreased from ~~36%~~56% to ~~63%~~52% for the three months ended ~~July~~October 31, 2021 as compared to the three months ended ~~July~~October 31, 2020 primarily due to an increase in lower margin third-party products and hardware and increased from ~~36%~~42% to ~~60%~~57% for the ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the ~~six~~nine months ended ~~July~~October 31, 2020 primarily due to ~~the lower cost of product and service revenue~~a decrease in certain fixed costs and an increase in ~~higher margin software sales.~~product revenue. Gross product profit margin ~~increased~~decreased from ~~26%~~59% to ~~74%~~54% for the three months ended ~~July~~October 31, 2021 as compared to the three months ended ~~July~~October 31, 2020 primarily due to an increase in lower margin third-party products and hardware and increased from ~~43%~~46% to ~~75%~~66% for the ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the ~~six~~nine months ended ~~July~~October 31, 2020 primarily due to ~~a reduction in third-party hardware costs and~~ an increase in higher margin software ~~sales.~~revenue. Gross service profit margins ~~increased~~decreased from ~~39%~~55% to ~~55%~~50% for the three months ended ~~July~~October 31, 2021 as compared to the three months ended ~~July~~October 31, 2020 primarily due to a decrease in maintenance and support revenue while associated costs remained relatively flat and increased from ~~33%~~40% to 51% for the ~~six~~nine months ended ~~July~~October 31, 2021 as compared to the ~~six~~nine months ended ~~July~~October 31, 2020 primarily due to a decrease in fixed services costs associated with the reduction in headcount in relation to our cost-saving efforts driven by the COVID-19 ~~pandemic which drove higher margins.~~pandemic.

Research and development expenses consist of salaries and related costs, including stock-based compensation for personnel in software development and engineering functions, as well as contract labor costs, depreciation of development and test equipment and an allocation of related facility expenses. The following table provides information regarding the change in research and development expenses during the periods presented:

	For the Three Months Ended July 31,						Change						For the Six Months Ended July 31,						Change						For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2021			2020			$			%			2021			2020			$			%			2021			2020			$			%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
Research and development expenses	$	2,213		$	3,360		$	(1,147	)		(34.1	%)	$	4,881		$	7,526		$	(2,645	)		(35.1	%)	$	2,090		$	3,024		$	(934	)		(30.9	%)	$	6,971		$	10,550		$	(3,579	)		(33.9	%)
% of total revenue		33.8	%		67.3	%								42.1	%		63.2	%								29.2	%		60.9	%								37.2	%		62.5	%

Research and development expenses decreased ~~by $1.1~~$0.9 million and ~~$2.6~~$3.6 million for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively, as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. The decrease for the three and ~~six~~nine months ended ~~July~~October 31, 2021 was primarily due to a decrease in ~~labor~~salaries and compensation costs associated with the reduction in headcount and outside services and a reduction in other research and development expenditures in relation to our cost-saving efforts driven by the COVID-19 pandemic.

Selling and marketing expenses consist of salaries and related costs, including stock-based compensation for personnel engaged in selling and marketing functions, as well as commissions, travel expenses, certain promotional expenses and an allocation of related facility expenses. The following table provides information regarding the change in selling and marketing expenses during the periods presented:

	For the Three Months Ended July 31,						Change						For the Six Months Ended July 31,						Change						For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2021			2020			$			%			2021			2020			$			%			2021			2020			$			%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
Selling and marketing expenses	$	1,643		$	1,728		$	(85	)		(4.9	%)	$	3,023		$	3,854		$	(831	)		(21.6	%)	$	1,449		$	1,636		$	(187	)		(11.4	%)	$	4,472		$	5,490		$	(1,018	)		(18.5	%)
% of total revenue		25.1	%		34.6	%								26.1	%		32.4	%								20.3	%		32.9	%								23.9	%		32.5	%

Selling and marketing expenses decreased ~~by $0.1~~$0.2 million and ~~$0.8~~$1.0 million for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively, as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. The decrease for the three months ended ~~July~~October 31, 2021 as compared to the three months ended October 31, 2020 was primarily due to a decrease in ~~allocated overhead costs associated with the reduction in headcount. The decrease for the six months ended July 31, 2021 was primarily due to a $0.6 million decrease in labor~~salaries and ~~compensations costs and related allocated overhead costs~~compensation associated with the reduction in headcount ~~a $0.2 million decrease in travel and tradeshow expenses,~~

and a reduction in allocated overhead costs. The decrease for the nine months ended October 31, 2021 as compared to the nine months ended October 31, 2020 was primarily due to a decrease in salaries and compensation associated with the reduction in headcount and a reduction in allocated overhead costs as well as travel and other sales and marketing expenditures in relation to our cost-saving efforts driven by the COVID-19 pandemic.

General and administrative expenses consist of salaries and related costs, including stock-based compensation for personnel in executive, finance, legal, human resources, information technology and administrative functions, as well as legal and accounting services, insurance premiums and an allocation of related facilities expenses. The following table provides information regarding the change in general and administrative expenses during the periods presented:

	For the Three Months Ended July 31,						Change					For the Six Months Ended July 31,						Change					For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2021			2020			$		%			2021			2020			$		%			2021			2020			$			%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)											(Amounts in thousands, except for percentage data)											(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
General and administrative expenses	$	2,682		$	2,367		$	315		13.3	%	$	4,787		$	4,421		$	366		8.3	%	$	2,110		$	2,636		$	(526	)		(20.0	%)	$	6,897		$	7,057		$	(160	)		(2.3	%)
% of total revenue		41.0	%		47.4	%							41.3	%		37.1	%							29.5	%		53.1	%								36.8	%		41.8	%

General and administrative expenses ~~increased~~decreased by ~~$0.3~~$0.5 million and ~~$0.4~~$0.2 million for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively, as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. The ~~increase~~decrease for the three months ended ~~July~~October 31, 2021 as compared to the three months ended October 31, 2020 was primarily due to a ~~$0.6~~decrease in salaries and compensation associated with the reduction in headcount and a reduction in allocated overhead costs. The decrease for the nine months ended October 31, 2021 as compared to the nine months ended October 31, 2020 was primarily due to a $1.0 million ~~increase~~decrease in ~~stock-based~~salaries and compensation ~~offset by~~costs associated with the reduction in headcount and a $0.3 million decrease in salaries and compensation. The increase for the six months ended July 31, 2021 was primarily due to a $0.6 million increase in stock-based compensation and a $0.5 million increase in outside professional services offset by a $0.7 million decrease in salaries and compensationallocated overhead costs and a reduction in other general expenditures in relation to our cost-saving efforts driven by the COVID-19 ~~pandemic.~~pandemic and partially offset by a $0.5 million increase in stock-based compensation, a $0.4 million increase in outside professional services, and a $0.2 million increase in insurance premiums.

Severance costs consist of employee-related severance charges not related to a restructuring plan. Restructuring costs consist of charges related to restructuring including employee-related severance charges, remaining lease obligations and termination costs, and the disposal of equipment. The following table provides information regarding the change in severance and restructuring costs during the periods presented:

	For the Three Months Ended July 31,						Change						For the Six Months Ended July 31,						Change						For the Three Months Ended October 31,						Change					For the Nine Months Ended October 31,						Change
	2021			2020			$			%			2021			2020			$			%			2021			2020			$		%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)											(Amounts in thousands, except for percentage data)
Severance and restructuring costs	$	87		$	543		$	(456	)		(84.0	%)	$	571		$	1,029		$	(458	)		(44.5	%)	$	75		$	53		$	22		41.5	%	$	646		$	1,082		$	(436	)		(40.3	%)
% of total revenue		1.3	%		10.9	%								4.9	%		8.6	%								1.0	%		1.1	%							3.4	%		6.4	%

Severance and restructuring costs increased by less than $0.1 million and decreased by ~~$0.5~~$0.4 million for ~~both~~ the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively, as compared to the three and ~~six~~nine months ended ~~July~~October 31, 2020. Severance and restructuring costs for the three months ended ~~July~~October 31, 2021 consisted primarily of employee related termination benefits for the restructuring of our finance department. Severance and restructuring costs for the ~~six~~nine months ended ~~July~~October 31, 2021 consisted primarily of employee related termination benefits for the restructuring of our finance department ~~and~~as well as facility related closure costs. Severance and restructuring costs for the three and ~~six~~nine months ended ~~July~~October 31, 2020 consisted primarily of employee related termination benefits due to a reduction in headcount driven by the COVID-19 pandemic.

	For the Three Months Ended July 31,				Change						For the Six Months Ended July 31,						Change						For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2021		2020		$			%			2021			2020			$			%			2021			2020			$			%			2021			2020			$			%
	(Amounts in thousands, except for percentage data)										(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
Interest income, net	$	82	$	113	$	(31	)		(27.4	%)	$	108		$	232		$	(124	)		(53.4	%)	$	80		$	121		$	(41	)		(33.9	%)	$	188		$	353		$	(165	)		(46.7	%)
Foreign exchange gain (loss), net		62		240		(178	)		(74.2	%)		(201	)		(91	)		(110	)		120.9	%
Foreign exchange loss, net																								(198	)		(687	)		489			(71.2	%)		(399	)		(778	)		379			(48.7	%)
Miscellaneous income, net		68		20		48			240.0	%		77			24			53			220.8	%		51			67			(16	)		(23.9	%)		128			91			37			40.7	%
	$	212	$	373	$	(161	)				$	(16	)	$	165		$	(181	)				$	(67	)	$	(499	)	$	432					$	(83	)	$	(334	)	$	251

The principal components of other income, net were interest income, net of $0.1 million, a foreign exchange gain, net of $0.1 million, and miscellaneous income, net of $0.1 million for the three months ended July 31, 2021 and interest income, net of $0.1 million, a foreign exchange gain, net of $0.2 million, and miscellaneous income, net of less than $0.1 million for the three months ended July 31, 2020. The principal components of other expense, net were interest income, net of $0.1 million, a foreign exchange loss, net of $0.2 million, and miscellaneous income, net of $0.1 million for the six months ended July 31, 2021 and the principal components of other income, net were interest income, net of $0.2 million, a foreign exchange loss, net of $0.1 million, and miscellaneous income of less than $0.1 million for the six months ended July 31, 2020. Our foreign exchange ~~gain (loss),~~loss, net is primarily due to the revaluation of intercompany notes.

In May 2020, we entered into a promissory note (the “Note”) with Silicon Valley Bank (the “Lender”) evidencing an unsecured loan in an aggregate principal amount of $2.4 million pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”). Interest on the Note accrued at a fixed interest rate of one percent (1%) per annum. The Note and accrued interest were fully forgiven by the SBA in June 2021 and a $2.4 million gain on extinguishment of debt was recorded on the consolidated statements of operations and comprehensive loss in the second quarter of fiscal 2022.

We recorded an income tax ~~benefit~~provision of less than $0.1 million for the three ~~and six~~ months ended ~~July~~October 31, 2021 and ~~July~~October 31, 2020. We recorded an income benefit of less than $0.1 million for the nine months ended October 31, 2021 and October 31, 2020. The tax provision for the ~~six~~nine months ended ~~July~~October 31, 2021 includes a $0.2 million tax benefit related to the reversal of tax reserves for uncertain tax positions due to the expiration of the Polish statute of limitations. Our effective tax rate in fiscal 2022 and in future periods may fluctuate on a quarterly basis as a result of changes in our jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on our deferred tax assets, changes in actual results versus our estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof.

The following table includes key line items of our consolidated statements of cash flows:

	For the Six Months Ended July 31,						For the Nine Months Ended October 31,
	2021			2020			2021			2020
	(Amounts in thousands)						(Amounts in thousands)
Net cash used in operating activities	$	(4,333	)	$	(5,546	)	$	(5,500	)	$	(9,321	)
Net cash provided by investing activities		175			2,274			174			3,265
Net cash provided by financing activities		17,599			2,470			17,599			2,470
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(242	)		(840	)		(467	)		(587	)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	13,199		$	(1,642	)	$	11,806		$	(4,173	)

Historically, we have financed our operations and capital expenditures primarily with our cash and investments. Our cash, cash equivalents, and restricted cash totaled ~~$19.3~~$17.9 million at ~~July~~October 31, 2021.

In the ~~first half of fiscal 2021,~~nine months ended October 31, 2020, we reduced our headcount across all departments in response to the COVID-19 pandemic, which resulted in approximately $7.6 million of annualized cost savings, and transferred our technical support services to our Poland location in an effort to further reduce cost. In the first quarter of fiscal 2022, we entered into the Termination Agreement which terminated the sublease for our former headquarters in Waltham, Massachusetts, effective March 21, 2021. In connection with the early termination of the sublease the Company paid the sublandlord a termination payment of approximately $430 thousand against an obligation of approximately $2.8 million. Prior to the execution of the Termination Agreement, the sublease had been scheduled to expire in February 2025. As a result of the Termination Agreement, we expect annualized savings of approximately $0.6 million in facilities costs for each of the next four years. Additionally, in the first quarter of fiscal 2022, we issued and sold 10,323,484 shares of common stock, $0.01 par value per share, at a public offering price of $1.85 per share. The Offering resulted in approximately $17.5 million in proceeds, net of underwriting discounts and commissions of 6.5%, or $0.12025 per share of common stock, and offering expenses of approximately $0.2 million.

In the second quarter of fiscal 2022, we were granted full forgiveness of the Note we entered into with the Lender in May 2020 pursuant to the PPP under the CARES Act administered by the SBA. The aggregate principal amount of $2.4 million and interest accrued at a fixed rate of one percent (1%) per annum were fully forgiven.

We believe that existing cash and cash equivalents and cash expected to be provided by future operating activities will be adequate to satisfy our working capital, capital expenditure requirements and other contractual obligations for at least 12 months from the date of this filing.

OnDecember 6, 2021, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). The Nasdaq deficiency letter has no immediate effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Global Select Market under the symbol “SEAC” at this time.

If the Company does not regain compliance with the Minimum Bid Price Requirement by June 6, 2022, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to transfer to The Nasdaq Capital Market, to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. Following a transfer to The Nasdaq Capital Market, the Company will be afforded the second 180 calendar day period to regain compliance, unless it does not appear to Nasdaq that it is possible for the Company to cure the deficiency. If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting. In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

Net cash used in operating activities was ~~$4.3~~$5.5 million for the ~~six~~nine months ended ~~July~~October 31, 2021. Net cash used in operating activities was primarily the result of our net loss of~~$3.8~~ $5.9 million, a ~~$0.7~~$1.1 million non-cash expense for depreciation and amortization, a ~~$1.0~~$1.3 million non-cash expense for stock-based compensation, a $0.3 million non-cash gain on the write-off of

our operating lease right-of-use assets and liabilities in relation to the ~~Waltham lease termination,~~Termination Agreement, a $2.4 million non-cash gain on extinguishment of debt related to the fully forgiven ~~PPP~~ Note, a ~~$0.2~~$0.4 million non-cash foreign currency transaction loss, and changes in working capital, which include a ~~$0.6~~$0.7 million decrease in accounts receivable, a ~~$1.2~~$0.4 million decrease in unbilled receivables, a ~~$0.4~~$2.0 million decrease in prepaid expenses and other current assets and other assets, a ~~$0.5~~$0.1 million decrease in accounts payable, a $0.2 million decrease in accrued expenses and other liabilities, and a ~~$1.1~~$2.3 million decrease in deferred revenue.

Net cash used in operating activities was ~~$5.5~~$9.3 million for the ~~six~~nine months ended ~~July~~October 31, 2020. Net cash used in operating activities was primarily the result of our net loss of ~~$12.3~~$17.4 million, a ~~$0.7~~$1.1 million non-cash expense for depreciation and amortization, a ~~$0.2 million non-cash recovery of allowance for doubtful accounts, a $0.6~~$1.1 million non-cash expense for stock-based compensation, a ~~$1.6~~$1.5 million non-cash foreign currency transaction loss, and changes in working capital, which include a ~~$6.3~~$7.1 million decrease in accounts receivable, a ~~$2.3~~$4.3 million decrease in unbilled receivables, a ~~$0.3~~$0.5 million decrease in prepaid

expenses and other current assets and other assets, a ~~$1.3~~$1.2 million decrease in accounts payable, ~~and~~ a ~~$2.8~~$3.9 million decrease in accrued expenses and other liabilities, and a ~~$1.1~~$2.4 million decrease in deferred revenue.

Net cash provided by investing activities was $0.2 million and ~~$2.3~~$3.3 million for the ~~six~~nine months ended ~~July~~October 31, 2021 and 2020, respectively, due to proceeds from the sales and maturities of our marketable securities partially offset by purchases of property and equipment.

Net cash provided by financing activities was $17.6 million for the ~~six~~nine months ended ~~July~~October 31, 2021 due to $0.1 million in proceeds from stock option exercises and $17.5 million in net proceeds from the issuance of common stock in relation to the Offering. Net cash provided by financing activities was $2.5 million for the ~~six~~nine months ended ~~July~~October 31, 2020 due to $0.1 million in proceeds from stock option exercises and purchases through the Company’s Employee Stock Purchase Plan, $0.1 million in repurchases of common stock, and $2.4 million in proceeds from the ~~PPP.~~Note.

On March 27, 2020, President Trump signed into law the CARES Act. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

On May 5, 2020, the Company entered into the Note with the Lender evidencing an unsecured loan in an aggregate principal amount of $2.4 million pursuant to the PPP under the CARES Act administered by the SBA. Interest on the Note accrued at a fixed interest rate of one percent (1%) per annum. The Note and accrued interest of less than $0.1 million were fully forgiven by the SBA on June 15, 2021 and is included on the unaudited consolidated statements of operations and comprehensive loss as a gain on extinguishment of debt.

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in our Form 10-K on file with the ~~Securities and Exchange Commission (the “SEC”).~~SEC.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Part I Item I, Note 2, “Significant Accounting Policies,”to ~~our unaudited consolidated financial statements included in~~ this ~~Quarterly Report on~~ Form ~~10-Q.~~10-Q for more information.

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of ~~July~~October 31, 2021, our principal executive officer and principal financial officer concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting during the three months ended ~~July~~October 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

We enter into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of our historical agreements require us to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to our products. From time to time, we also indemnify customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, and environmental claims relating to the use of our products and services or resulting from the acts or omissions of us, our employees, authorized agents or subcontractors. Management cannot reasonably estimate any potential losses, but these claims could result in material liability for us (see Part I Item I, Note 6 2, “Commitments and Contingencies,” to ~~our unaudited consolidated financial statements included in~~ this ~~Quarterly Report on~~ Form ~~10-Q)~~10-Q for more information).

In addition to other information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Form 10-K for the fiscal year ended January 31, 2021, which could materially affect our business, financial conditions, and results of operations. The risks described in our Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

The following list of exhibits includes exhibits submitted with this Form 10-Q as filed with the SEC and those incorporated by reference to other filings.

Pursuant to the requirements of the Securities Exchange Act of 1934, SeaChange International, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		04-3197974
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

177 Huntington Ave, Ste 1703 ~~#73480,~~PMB 73480, Boston, MA		02115
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	SEAC	The Nasdaq Global Select Market
Series A Participating Preferred Stock Purchase Rights	SEAC	The Nasdaq Global Select Market

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets (Unaudited)	2

	Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	3

	Consolidated Statements of Stockholders’ Equity (Unaudited)	4

	Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2324

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3132

Item 4.	Controls and Procedures	3132

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3233

Item 1A.	Risk Factors	3233

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	3233

Item 6.	Exhibits	3233

SIGNATURES		3435

	~~For the Three Months Ended July 31, 2021~~
~~Restricted stock units~~		~~159~~
~~Deferred stock units~~		79
		~~238~~

No.		Description
3.1		Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q previously filed on June 11, 2021 with the ~~Commission~~SEC and incorporated herein by reference).

3.2		Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K previously filed on May 18, 2021 with the ~~Commission~~SEC and incorporated herein by reference).

10.1*
10.1		Offer letter, dated September 22, 2021, ~~Compensation~~by and ~~Incentive Plan~~between SeaChange International, Inc. and Peter D. Aquino (filed as Exhibit ~~99.1~~10.1 to the Company’s ~~Registration Statement~~Current Report on Form ~~S-8~~8-K previously filed on ~~July 28,~~September 27, 2021 with the ~~Commission~~SEC and incorporated herein by reference).

10.2*		Change-in-Control Severance Agreement, dated September 27, 2021, by and between SeaChange International, Inc. and Peter D. Aquino.

10.3		Form of Indemnification Agreement (filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K previously filed on April 10, 2013 with the SEC and incorporated herein by reference).
31.1**		Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		��
32.2**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101.INS*		Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.

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104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith).

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

			Fair Value at January 31, 2021 Using
	Total		Level 1		Level 2
	(Amounts in thousands)
Assets:
Cash equivalents	$	46	$	46	$	—
Marketable securities:
U.S. Treasury Notes and bonds		252		252		—
Total	$	298	$	298	$	-

	As of January 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts in thousands)
U.S. Treasury Notes and bonds	$	249	$	3	$	—	$	252
	$	249	$	3	$	—	$	252


	SEACHANGE INTERNATIONAL, INC.

	by:	/s/ ~~ROBERT PONS~~PETER AQUINO
		~~Robert Pons~~Peter Aquino
		Chief Executive ~~Chairman~~Officer and President ~~(Principal Executive Officer)~~

	by:	/s/ MICHAEL PRINN
		Michael Prinn
		Chief Financial Officer, Senior Vice President and Treasurer (Principal Financial and Accounting Officer)