CuriosityStream Inc. [CURI] Filings

CuriosityStream Inc. [CURI] Filings

CuriosityStream Inc. [CURIW] Filings

Table of Contents

Table of Contents

Table of Contents

10-Q 1 d528993d10q.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file

number: 001-39139

CURIOSITYSTREAM INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		84-1797523
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8484 Georgia Ave., Suite 700

Silver Spring, Maryland 20910

(Address of principal executive offices)

(301)

755-2050

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	CURI	NASDAQ
Warrants, each exercisable for one share of Common Stock at an exercise price of $11.50 per share	CURIW	NASDAQ

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 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 ☒

As of August 1

, 2023, there were

53,031,186

shares of Common Stock of the registrant issued and outstanding.

CURIOSITYSTREAM INC.

FORM 10-Q FOR THE QUARTER ENDED June 30, 2023

TABLE OF CONTENTS


	Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets		1
Consolidated Statements of Operations		2
Consolidated Statements of Comprehensive Loss		3
Consolidated Statements of Stockholders’ Equity		4
Consolidated Statements of Cash Flows		5
Notes to Unaudited Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk		27
Item 4. Controls and Procedures		27
Part II. Other Information
Item 1. Legal Proceedings		28
Item 1A. Risk Factors		28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		28
Item 3. Defaults Upon Senior Securities		28
Item 4. Mine Safety Disclosures		28
Item 5. Other Information		29
Item 6. Exhibits		29
Part III. Signatures		30

CuriosityStream Inc.

Consolidated Balance sheets

(in thousands, except par value)


	June 30, 2023			December 31, 2022
	(unaudited)
Assets

Current assets
Cash and cash equivalents	$	44,337		$	40,007
Restricted cash		500			500
Short-term investments in debt securities		—			14,986
Accounts receivable		9,087			10,899
Other current assets		1,679			3,118

Total current assets		55,603			69,510

Investments in equity method investees		9,303			10,766
Property and equipment, net		911			1,094
Content assets, net		63,288			68,502
Operating lease right-of-use assets		3,564			3,702
Other assets		448			539

Total assets	$	133,117		$	154,113

Liabilities and stockholders’ equity (deficit)

Current liabilities
Content liabilities	$	1,750		$	2,862
Accounts payable		6,407			6,065
Accrued expenses and other liabilities		4,173			7,752
Deferred revenue		12,876			14,281

Total current liabilities		25,206			30,960

Warrant liability		147			257
Non-current operating lease liabilities		4,470			4,648
Other liabilities		668			622

Total liabilities		30,491			36,487

Stockholders’ equity (deficit)
Common stock, $0.0001 par value – 125,000 shares authorized as of June 30, 2023 and December 31, 2022; 53,026 shares issued and outstanding as of June 30, 2023; 52,853 issued and outstanding as of December 31, 2022		5			5
Additional paid-in capital		361,392			358,760
Accumulated other comprehensive loss		—			(40	)
Accumulated deficit		(258,771	)		(241,099	)

Total stockholders’ equity (deficit)		102,626			117,626

Total liabilities and stockholders’ equity (deficit)	$	133,117		$	154,113

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

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CuriosityStream Inc.

Consolidated Statements of Operations

(in thousands, except for per share data)

(unaudited)


	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Revenues	$	14,097		$	22,348		$	26,484		$	39,975

Operating expenses
Cost of revenues		9,933			12,988			18,934			24,838
Advertising and marketing		4,203			11,208			7,318			25,976
General and administrative		7,980			10,603			16,039			21,106
Impairment of goodwill and intangible assets		—			3,603			—			3,603

		22,116			38,402			42,291			75,523

Operating loss		(8,019	)		(16,054	)		(15,807	)		(35,548	)

Change in fair value of warrant liability		184			478			110			4,338
Interest and other income (expense)		437			(29	)		825			(86	)
Equity method investment loss		(2,235	)		(316	)		(2,454	)		(472	)

Loss before income taxes		(9,633	)		(15,921	)		(17,326	)		(31,768	)
Provision for income taxes		288			56			346			101

Net loss	$	(9,921	)	$	(15,977	)	$	(17,672	)	$	(31,869	)

Net loss per share
Basic	$	(0.19	)	$	(0.30	)	$	(0.33	)	$	(0.60	)
Diluted	$	(0.19	)	$	(0.30	)	$	(0.33	)	$	(0.60	)
Weighted average number of common shares outstanding
Basic		53,006			52,775			52,978			52,762
Diluted		53,006			52,775			52,978			52,762

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

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CuriosityStream Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	For the three months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Net loss	$	(9,921	)	$	(15,977	)	$	(17,672	)	$	(31,869	)
Other comprehensive income (loss)
Unrealized gain (loss) on available for sale securities		—			3			40			(230	)

Total comprehensive loss	$	(9,921	)	$	(15,974	)	$	(17,632	)	$	(32,099	)

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

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CuriosityStream Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)


	Common Stock				Preferred Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Balance at March 31, 2023		52,961	$	5		—	$	—	$	360,002	$	—		$	(248,850	)	$	111,157
Net loss		—		—		—		—		—		—			(9,921	)		(9,921	)
Stock-based compensation, net		66		—		—		—		1,390		—			—			1,390

Balance at June 30, 2023		53,026	$	5		—	$	—	$	361,392	$	—		$	(258,771	)	$	102,626

Balance at December 31, 2022		52,853	$	5		—	$	—	$	358,760	$	(40	)	$	(241,099	)	$	117,626
Net loss		—		—		—		—		—		—			(17,672	)		(17,672	)
Stock-based compensation, net		173		—		—		—		2,632		—			—			2,632
Other comprehensive income		—		—		—		—		—		40			—			40

Balance at June 30, 2023		53,026	$	5		—	$	—	$	361,392	$	—		$	(258,771	)	$	102,626

Balance at March 31, 2022		52,767	$	5		—	$	—	$	353,985	$	(455	)	$	(206,074	)	$	147,461
Net loss		—		—		—		—		—		—			(15,977	)		(15,977	)
Stock-based compensation, net		19		—		—		—		1,570		—			—			1,570
Other comprehensive income		—		—		—		—		—		3			—			3

Balance at June 30, 2022		52,786	$	5		—	$	—	$	355,555	$	(452	)	$	(222,051	)	$	133,057

Balance at December 31, 2021		52,677	$	5		—	$	—	$	352,334	$	(222	)	$	(190,182	)	$	161,935
Net loss		—		—		—		—		—		—			(31,869	)		(31,869	)
Stock-based compensation, net		109		—		—		—		3,221		—			—			3,221
Other comprehensive loss		—		—		—		—		—		(230	)		—			(230	)

Balance at June 30, 2022		52,786	$	5		—	$	—	$	355,555	$	(452	)	$	(222,051	)	$	133,057

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

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CuriosityStream Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	For the six months ended June 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(17,672	)	$	(31,869	)
Adjustments to reconcile net loss to net cash used in operating activities
Change in fair value of warrant liability		(110	)		(4,338	)
Additions to content assets		(7,103	)		(25,303	)
Change in content liabilities		(1,112	)		(3,708	)
Amortization of content assets		12,317			19,130
Depreciation and amortization expenses		249			441
Impairment of goodwill and intangible assets		—			3,603
Amortization of premiums and accretion of discounts associated with investments in debt securities, net		26			758
Stock-based compensation		2,689			3,382
Equity method investment loss		2,454			472
Other non-cash items		243			211
Changes in operating assets and liabilities
Accounts receivable		1,812			11,893
Other assets		1,464			4,040
Accounts payable		(645	)		6,146
Accrued expenses and other liabilities		(3,862	)		(2,850	)
Deferred revenue		(1,358	)		(157	)

Net cash used in operating activities		(10,608	)		(18,149	)

Cash flows from investing activities
Purchases of property and equipment		(5	)		(120	)
Investment in equity method investees		—			(1,625	)
Sales of investments in debt securities		—			2,893
Maturities of investments in debt securities		15,000			24,373
Purchases of investments in debt securities		—			(1,497	)

Net cash provided by investing activities		14,995			24,024

Cash flows from financing activities
Payments related to tax withholding		(57	)		(161	)

Net cash used in financing activities		(57	)		(161	)

Net increase in cash, cash equivalents and restricted cash		4,330			5,714
Cash, cash equivalents and restricted cash, beginning of period		40,507			17,547

Cash, cash equivalents and restricted cash, end of period	$	44,837		$	23,261

Supplemental disclosure:
Cash paid for taxes	$	25		$	398
Cash paid for operating leases	$	269		$	219
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	3,965

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

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CuriosityStream Inc.

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

Note 1 — Organization and business

The principal business of CuriosityStream Inc. (the “Company” or “CuriosityStream”) is to provide customers with access to high quality factual content via a direct subscription video

on-demand

(SVOD) platform accessible by internet connected devices, or indirectly via distribution partners that deliver CuriosityStream content via the distributor’s platform or system. The online library available for streaming spans the entire category of factual entertainment including science, history, society, nature, lifestyle, and technology. The library is composed of thousands of accessible on-demand and ad-free productions and includes shows and series from leading nonfiction producers.

The Company’s content assets are available directly through its owned and operated website (“O&O Service”), mobile applications developed for iOS and Android operating systems (“App Services”), and via the platforms and systems of third-party partners in exchange for license fees. The Company offers subscribers a monthly or annual subscription. The price for a subscription varies depending on the content included (e.g., Direct Service or Smart Bundle service) and the length of the subscription (e.g., monthly or annual) selected by the customer. As an additional part of the Company’s App Services, it has built applications to make its service accessible on almost every major customer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, major smart TV brands (e.g., LG, Vizio, Samsung) and gaming consoles. In addition, CuriosityStream has affiliate agreement relationships with, and its content assets are available through, certain multichannel video programming distributors (“MVPDs”) and virtual MVPDs (“vMVPDs”). The Company also has distribution agreements which grant other media companies certain distribution rights to the Company’s programs, referred to as content licensing deals. The Company also sells selected rights to content it creates before production begins.

Note 2 — Basis of presentation and summary of significant accounting policies

Basis of presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s consolidated financial statements as of and for the year ended December 31, 2022.

In the opinion of management, the unaudited consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition, and Results of Operations included in the Annual Report on Form

10-K

for the year ended December 31, 2022. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

There have been no material changes in the Company’s significant accounting policies compared to the significant accounting policies described in the Company’s consolidated financial statements as of and for the year ended December 31, 2022.

The Company periodically reviews and evaluates the recoverability of its long-lived assets. Where applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue and operating performance estimates. If appropriate and where deemed necessary, a reduction in the carrying value is recorded based on the difference between the carrying value and the fair value based on discounted cash flows.

During the three months ended June 30, 2023, the Company identified certain indicators of impairment with respect to its long-lived asset group, including the decline in the Company’s stock price. Based on the resulting impairment analysis, the Company determined that the undiscounted cash flows of the long-lived asset group, which for the purposes of this analysis excluded the Company’s Investments in equity method investees, exceeded the carrying value as of June 30. 2023. As such, no impairment charges with respect to the long-lived asset group were required to be recorded by the Company during the three months ended June 30, 2023.

During the three months ended June 30, 2023, the Company also performed a separate analysis of its Investments in equity method investees to determine if an “other-than-temporary” impairment exists. Refer to Note 3 for further discussion on the results of this analysis.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include the content asset amortization policy, the assessment of the recoverability of content assets and equity method investments, the fair value of share-based awards and liability classified warrants and measurement of income tax assets and liabilities.

Reclassification

Certain comparative figures have been reclassified to conform to the current year presentation.

Concentration of risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, investments, and accounts receivable. The Company maintains its cash, cash equivalents, and investments with high credit quality financial institutions; at times, such balances with the financial institutions may exceed the applicable FDIC-insured limits.

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Accounts receivable, net are typically unsecured and are derived from revenues earned from customers primarily located in the United States.

Fair value measurement of financial instruments

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The applicable accounting guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification at each reporting period. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The Company’s assets measured at fair value on a recurring basis include its investments in money market funds and corporate debt securities. Level 1 inputs were derived by using unadjusted quoted prices for identical assets in active markets and were used to value the Company’s investments in money market funds and U.S. government debt securities. Level 2 inputs were derived using prices for similar investments and were used to value the Company’s investments in corporate and municipal debt securities.

The Company’s liabilities measured at fair value on a recurring basis include its private placement warrants issued to Software Acquisition Holdings LLC, the Company’s former Sponsor, in a private placement offering (the “Private Placement Warrants”). The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes valuation model. Refer to Note 6 for significant assumptions which the Company used in the fair value model for the Private Placement

Warrants.

Certain assets are measured at fair value on a nonrecurring basis and are subject to fair value adjustments only in certain circumstances, e.g., when there is evidence of impairment indicators. During the three-months ended June 30, 2023, the Company performed an analysis of its Investments in equity method investees to determine if an “other-than-temporary” impairment exists. The resulting fair value measurements of the equity-method investments are considered to be Level 3 measurements. Refer to Note 3 for further discussion of the results of this analysis.

The Company’s remaining financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses and other liabilities are carried at cost, which approximates fair value because of the short-term maturity of these instruments.

Recently Adopted Financial Accounting Standards

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time as the Company is no longer considered to be an EGC.

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In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No. 2016-13,

“Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU

2016-13”).”

The amendments in this update introduce a new standard to replace the incurred loss impairment methodology under prior U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company determines its allowance for doubtful accounts based on historical loss experience, customer financial condition, and current economic conditions. The Company adopted the new standard effective January 1, 2023, which has not had a material impact on its consolidated financial statements.

Note 3 — Equity Investments

Spiegel TV Geschichte und Wissen GmbH & Co. KG (the “Spiegel Venture”)

In July 2021, the Company acquired

32%

ownership in the Spiegel Venture for an initial investment of

$3.3 million. The Spiegel Venture, which prior to the Company’s equity purchase, was jointly owned and operated by Spiegel TV GmbH (“Spiegel TV”) and Autentic GmbH (“Autentic”), operates two documentary channels, together with an SVOD service, which provide factual content to pay television audiences in Germany. The Company has not received any dividends from the Spiegel Venture as of June 30, 2023.

Per the Share Purchase Agreement, which was amended during the six months ended June 30, 2023 (as amended, the “SPA”), in the event Spiegel Venture achieved certain financial targets during its 2022 fiscal period, the Company is required to make an additional payment related to its 32% equity ownership to both Spiegel TV and Autentic (the “Holdback Payment”). During the three months ended June 30, 2023, the Company determined Spiegel Venture had achieved such financial targets, resulting in the Company recording a Holdback Payment liability of $0.9 million, which is included in Accounts Payable on its consolidated balance sheet, related to the Holdback Payment. This amount was paid during July 2023.

The Company has a call option that permits it to require Spiegel TV and Autentic to sell their ownership interests in Spiegel Venture (“Call Option”) to the Company. The Call Option, exercisable at a value based on a determinable calculation in the SPA, is initially exercisable only during the period that is the later of (i) the

30-day

period following the adoption of Spiegel Venture’s audited financial statements for the fiscal year 2025, and (ii) the period between March 1, 2026 and March 30, 2026.

Together with the Call Option, each of Spiegel TV and Autentic has a put option that permits it to require the Company to purchase their interest (“Put Option”) at a value based on a determinable calculation outlined in the SPA. The Put Option is only exercisable upon the achievement of certain defined conditions, as outlined in the SPA, and is initially exercisable only during the period that is the later of (i) the 60-day period following the adoption of Spiegel Venture’s audited financial statements for the fiscal year 2025, and (ii) the period between April 1, 2026 and April 30, 2026.

In the event the Call Option or Put Option is not exercised, both options will continue to be available to each respective party in the following year through perpetuity, with its exercise limited to the same date range as outlined above. The Put Option is not currently considered to be probable of becoming exercisable based on the defined conditions in the SPA.

Watch Nebula LLC (“Nebula”)

On August 23, 2021, the Company purchased a 12% ownership interest in Nebula for $6.0 million. Nebula is an SVOD technology platform built for and by a group of content creators. Should Nebula meet certain quarterly targets through the third quarter of 2023, the Company is obligated to purchase additional ownership interests, each for a payment of $0.8 million. After each payment the Company will obtain an additional 1.625% of equity ownership interests. The Company did not make further investments in Nebula during the three and six months ended June 30, 2023. The Company’s total ownership interest in Nebula as of June 30, 2023 was 16.875%.

Upon its initial investment, the Company obtained 25% representation on Nebula’s Board of Directors, providing the Company with significant influence, but not a controlling interest.

The Company has not received dividends from Nebula as of June 30,

2023.

Impairment Assessment

The Company regularly reviews its Investments in equity method investees for impairment, including when the carrying value of an investment exceeds its related market or fair value. If it has been determined that an investment has sustained an

“other-than-temporary”

decline in value, the investment is written-down to its fair value. The factors the Company considers in determining an “other-than-temporary” decline has occurred includes, but is not limited to, (i) the determined market value of the investee in relation to its cost basis, (ii) the financial condition and operating performance of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. As a result of the Company’s impairment analysis, it determined the fair value of its investment in Nebula exceeded the carrying value as of June 30, 2023, and as such no “other-than-temporary” impairment charge is required. The impairment analysis determined the carrying value of the Company’s investment in the Spiegel Venture exceeded the determined fair value as of June 30, 2023, and as such the Company recorded a

2.0

million impairment, which is included in Equity method investment loss, during the three months ended June 30, 2023.

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The Company’s carrying values for its equity method investments as of June 30, 2023 and December 31, 2022 are as follows:


	Spiegel Venture			Nebula			Total

	(in thousands)
Balance at December 31, 2022	$	2,899		$	7,867		$	10,766
Investments in equity method investees		992			—			992
Equity method investment loss		(1,939	)		(516	)		(2,455	)

Balance at June 30, 2023	$	1,952		$	7,351		$	9,303

Note 4 — Balance sheet components

Cash, cash equivalents and restricted cash

A reconciliation of the Company’s cash and cash equivalents in the consolidated balance sheets to cash, cash equivalents and restricted cash in the consolidated statements of cash flows is as follows:


	June 30, 2023		December 31, 2022

	(in thousands)
Cash and cash equivalents	$	44,337	$	40,007
Restricted cash		500		500

Cash and cash equivalents and restricted cash	$	44,837	$	40,507

As of June 30, 2023 and December 31, 2022

, restricted cash includes cash deposits required by a bank as collateral related to corporate credit card agreements.

Investments in debt securities

The Company’s investments in debt securities at fair value based on unadjusted quoted market prices (Level 1) and quoted prices for comparable assets (Level 2) are:


	As of June 30, 2023						As of December 31, 2022
	Cash and cash equivalents		Short-term investments		Total		Cash and cash equivalents		Short-term investments		Total

	(in thousands)						(in thousands)
Level 1 Securities
Money market funds	$	43,333	$	—	$	43,333	$	17,724	$	—	$	17,724

Total Level 1 Securities	$	43,333		—	$	43,333	$	17,724		—	$	17,724

Level 2 Securities
Corporate debt securities		—		—		—		—	$	14,986	$	14,986

Total Level 2 Securities		—		—		—		—	$	14,986	$	14,986

Total	$	43,333		—	$	43,333	$	17,724	$	14,986	$	32,710

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	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

	(in thousands)

Debt Securities:
Corporate	$	15,026		—	$	(40	)	$	14,986

Total	$	15,026		—	$	(40	)	$	14,986

There were no material realized gains or losses recorded during the three and six months ended June 30, 2023 or 2022.

Content assets

Content assets consisted of the following:


	As of
	June 30, 2023		December 31, 2022

	(in thousands)
Licensed content, net
Released, less amortization	$	11,056	$	11,154
Prepaid and unreleased		3,746		4,014

		14,802		15,168
Produced content, net
Released, less amortization		36,213		33,094
In production		12,273		20,240

		48,486		53,334

Total	$	63,288	$	68,502

As of June 30, 2023,

$5.2 million, $2.9 million and $1.6 million of the $11.1

million unamortized cost of the licensed content that has been released is expected to be amortized in each of the next three years. As of June 30, 2023,

$10.4 million, $9.5 million, and $8.3 million of the $36.2

million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years.

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In accordance with its accounting policy for content assets, the Company amortized licensed content costs and produced content costs, which is included in cost of revenues on the Company’s unaudited consolidated statements of operations as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(in thousands)		(in thousands)


Licensed content	$1804	$1,798	$3,749	$4,797
Produced content	4,662	8,293	8,569	14,333
Total	$6,466	$10,091	$12,318	$19,130

Warrant liability

As described in Note 6, the Private Placement Warrants are classified as a

non-current

liability and reported at fair value at each reporting period. The fair value of the Private Placement Warrants was as follows:


	As of June 30, 2023		As of December 31, 2022

	(in thousands)
Level 3
Private Placement Warrants	$	147	$	257

Total Level 3	$	147	$	257

Note 5 — Revenue

The following table sets forth the Company’s revenues disaggregated by type for the three and six months ended June 2023 and 2022, as well as the relative percentage of each revenue type to total revenue.


	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022

	(in thousands)								(in thousands)
Subscriptions — O&O Service	$	6,421	45	%	$	7,912	35	%	$	13,064	49	%	$	15,218	38	%
Subscriptions — App Services		849	6	%		1,010	5	%		1,726	7	%		2,058	5	%

Subscriptions — Total		7,270	52	%		8,922	40	%		14,790	56	%		17,276	43	%
License Fees — Partner Direct Business		1,081	8	%		1,191	5	%		2,184	8	%		2,334	6	%
License Fees — Bundled Distribution		1,509	11	%		3,888	17	%		2,983	12	%		7,655	19	%
License Fees — Content Licensing		3,615	26	%		6,655	30	%		5,633	21	%		10,904	27	%

License Fees — Total		6,205	44	%		11,734	52	%		10,800	41	%		20,893	52	%
Other — Total (1)		622	4	%		1,692	8	%		894	3	%		1,806	5	%


Total Revenues	$	14,097			$	22,348			$	26,484			$	39,975

(1)	Other revenue primarily relates to other marketing services.

Revenues expected to be recognized in the future related to performance obligations that were unsatisfied as of June 30, 2023 are as follows:


	Remainder of year ending December 31, 2023		For the years ending December 31,
	Remainder of year ending December 31, 2023		2024		2025		2026		2027		Thereafter		Total

	(in thousands)
Remaining Performance Obligations	$	3,591	$	4,132	$	2,121	$	292	$	32	$	208	$	10,376

These amounts include only fixed consideration or minimum guarantees and do not include amounts related to (i) contracts with an original expected term of one year or less or (ii) licenses of content that are solely based on sales or usage-based royalties.

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Contract liabilities (i.e., deferred revenue) consist of subscriber and affiliate license fees billed that have not been recognized, amounts contractually billed or collected for content licensing sales in advance of the related content being made available to the customer, and unredeemed gift cards and other prepaid subscriptions that have not been redeemed. Total deferred revenues were $13.6 million and $14.9 million at June 30, 2023 and December 31, 2022, respectively. Revenues of $10.6 million were recognized during the

months ended

une

, 2023 related to the balance of deferred revenue at December 31, 2022, primarily related to the recognition from annual plan amounts.

Note 6 — Stockholders’ equity

Common Stock

As of June 30, 2023 and December 31, 2022, the Company had authorized the issuance of 126,000,000 shares of capital stock, par value of $0.0001 per share, consisting of (a) 125,000,000 shares of common stock, and (b) 1,000,000 shares of preferred stock.

Warrants

As of

June

, 2023, the Company had 3,054,203 publicly traded warrants that were sold as part of the units of Software Acquisition Group Inc. in its initial public offering on November 22, 2019 and that were issued to the PIPE Investors in connection with the business combination that closed on October 14, 2020 (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”) and 3,676,000 Private Placement Warrants outstanding. The Private Placement Warrants are liability-classified, and the Public Warrants are equity-classified.

Each whole warrant entitles the registered holder to purchase one share of the Company’s common stock at an exercise price of $11.50 per share. All Warrants expire on October 14, 2025.

The Company has the right to redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s common stock matched or exceeded $18.00 per share for any 20 trading days within a

30-trading

day period ending on the third trading day prior to the date on which the Company sent the notice of redemption to the warrant holders.

The Private Placement Warrants are identical to the Public Warrants except that, so long as they are held by Software Acquisition Holdings LLC or its permitted transferees: (i) they will not be redeemable by the Company; (ii) they may be exercised by the holders on a cashless basis; and (iii) they are subject to registration rights.

There were no exercises of warrants during the three and six months ended June 30, 2023.

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The warrant liability related to the Private Placement Warrants is recorded at fair value as of each reporting date with the change in fair value reported within other income (expense) in the accompanying unaudited consolidated statements of operations as “Change in fair value of warrant liability” until the warrants are exercised, expired or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the warrant liability for the Private Placement Warrants was estimated using a Black-Scholes pricing model using Level 3 inputs. The significant assumptions used in preparing the Black-Scholes option pricing model are as follows:


	As of June 30, 2023			As of December 31, 2022

Exercise price	$	11.50		$	11.50
Stock price (CURI)	$	0.93		$	1.14
Expected volatility		84.00	%		77.00	%
Expected warrant term (years)		2.3			2.8
Risk-free interest rate		4.68	%		4.22	%
Dividend yield		0	%		0	%
Fair Value per Private Placement Warrant	$	0.04		$	0.07

The change in fair value of the private placement warrant liability for the three and six months ended June 30, 2023 resulted in a gain of $0.2 million and $0.1 million, respectively, and for the three and six months ended June 30, 2022 resulted in a gain of $0.5 million and $4.3 million, respectively.

Note 7 — Earnings (loss) per share

Basic and diluted earnings (loss) per share calculations are calculated on the basis of the weighted average number of shares of the Company’s common stock outstanding during the respective periods. Diluted earnings (loss) per share give effect to all dilutive potential common shares outstanding during the period using the treasury stock method for stock options and other potentially dilutive securities. In computing diluted earnings (loss) per share, the average fair value of the Company’s common stock for the period is used to determine the number of shares assumed to be purchased from the exercise price of the options. Purchases of treasury stock reduce the outstanding shares commencing on the date that the stock is purchased. Common stock equivalents are excluded from the calculation when a loss is incurred as their effect would be

anti-dilutive.


	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022

	(in thousands)						(in thousands)
Numerator — Basic and Diluted EPS:
Net loss	$	(9,921	)	$	(15,977	)	$	(17,672	)	$	(31,869	)
Denominator — Basic and Diluted EPS:
Weighted–average shares		53,006			52,775			52,978			52,762

Net loss per share — Basic and Diluted	$	(0.19	)	$	(0.30	)	$	(0.33	)	$	(0.60	)

For the three and six months ended June 30, 2023 and 2022, the following share equivalents were excluded from the computation of diluted net loss per share as the inclusion of such shares would be anti-dilutive. Common shares issuable for warrants, options, and restricted stock units (RSUs) represent the total amount of outstanding warrants, stock options, and restricted stock units at June 30, 2023 and 2022.


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022

	(in thousands)				(in thousands)
Antidilutive shares excluded:
Options		4,630		5,244		4,630		5,244
Restricted stock units		932		1,114		932		1,114
Warrants		6,730		6,730		6,730		6,730

		12,292		13,088		12,292		13,088

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Note 8 — Stock-based compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide the service. The Company accounts for forfeitures as they occur.

CuriosityStream 2020 Omnibus Plan

In October 2020, the Board of Directors of the Company adopted the CuriosityStream 2020 Omnibus Plan (the “2020 Plan”). Upon adoption of the 2020 Plan, a total of 7,725,000 shares were approved to be issued as stock options, share appreciation rights, restricted stock units and restricted stock.

The following table summarizes stock option and restricted stock unit (“RSU”) activity, prices, and values for the six months ended June 30, 2023:


				Stock Options					Restricted Stock Units
	Number of Shares Available for Issuance Under the Plan			Number of Shares			Weighted- Average Exercise Price		Number of Shares			Weighted- Average Grant Date Fair Value

	(in thousands, except per share data)

Balance at December 31, 2022		1,815			4,632		$	7.13		759		$	7.14
Granted		(342	)		—			—		342			1.41
Options exercised and RSUs vested		52			—			—		(144	)		9.23
Forfeited or expired		27			(2	)		5.88		(25	)		10.94

Balance at June 30, 2023		1,552			4,630		$	7.13		932		$	4.86

There were no options exercised during the three and six months ended June 30 2023 and 2022.

Stock options and RSU awards generally vest on a monthly, quarterly, or annual basis over a period of four years from the grant date. When options are exercised, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy share option exercises. Upon vesting and distribution of RSUs, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy restricted stock units vested, net of shares withheld for taxes if elected by the RSU holder.

The fair value of stock option awards is estimated using the Black-Scholes option pricing model, which includes a number of assumptions including Company’s estimates of stock price volatility, employee stock option exercise behaviors, future dividend payments, and risk-free interest rates.

The expected term of options granted is the estimated period of time from the beginning of the vesting period to the date of expected exercise or other settlement, based on historical exercises and post-vesting terminations. The Company generally estimates expected term based on the midpoint between the vesting date and the end of the contractual term, also known as the simplified method, given the lack of historical exercise behavior.

Pursuant to shareholder approval, in July 2023, the Company exchanged certain employees’ stock options into RSUs as part of its equity compensation plan. This initiative was taken to further align employee incentives with long-term shareholder value. Refer to Note 14.

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The Company uses its own historical volatility as well as the historical volatility of similar public companies for estimating volatility. The risk-free interest rate is estimated using the rate of return on U.S. Treasury securities with maturities that approximate to the expected term of the option. The Company does not currently anticipate declaring any dividends.

Assumptions used to value the options granted and the resulting weighted-average grant date fair value and stock-based compensation expense were as follows:


	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023		2022
Dividend yield		N/A		0	%		N/A		0	%
Expected volatility		N/A		65% - 70	%		N/A		60% - 70	%
Expected term (years)		N/A		6.25			N/A		6.00 - 6.50
Risk-free interest rate		N/A		2.81% - 2.95	%		N/A		1.40% - 2.95	%
Weighted average grant date fair value		N/A		1.12			N/A	$	1.91
	(in thousands)					(in thousands)
Stock-based compensation — Options	$	771	$	946		$	1,548	$	1,914
Stock-based compensation — RSUs	$	651	$	648		$	1,141	$	1,468

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a

straight-line

basis over the requisite service period.

Note 9 — Segment and geographic information

The Company operates as one reporting segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on an entity-wide basis for purposes of making operating decisions, assessing financial performance and allocating resources.

All long-lived tangible assets are located in the United States. Revenue by geographic location, based on the location of customers is as follows:


	Three months ended June 30,								Six months ended June 30,
	2023				2022				2023				2022
United States	$	7,936	56	%	$	14,704	66	%	$	14,622	55	%	$	26,503	66	%
International:
United Kingdom		1,800	13	%		2,533	11	%		2,362	9	%		4,434	11	%
Other		4,361	31	%		5,111	23	%		9,500	36	%		9,038	23	%

Total International		6,161	44	%		7,644	34	%		11,862	45	%		13,472	34	%

	$	14,097	100	%	$	22,348	100	%	$	26,484	100	%	$	39,975	100	%

Only one foreign country, the United Kingdom, individually comprises greater than 10% of total revenue.

Note 10 — Related party transactions

Equity investments

The Company recognized

$0.4

million and

$1.1

million of revenue related to license fees from the Spiegel Venture during the three and six months ended June 30, 2023, respectively. The Company also incurred

$1.2

million

and $2.4

million in Cost of revenues during the three and six months ended June 30, 2023, respectively, from its revenue share

Nebula from subscription sales to certain bundled subscription packages. This revenue share is recorded in Cost of revenues on the consolidated statements of operations.

A summary of the impact of the arrangements with the Spiegel Venture and Nebula on the Company’s consolidated balance sheets and statement of operations is as follows:


	June 30, 2023		December 31, 2022

	(in thousands)

Balance Sheet:
Accounts receivable	$	2,679	$	3,358
Accounts payable	$	386	$	404


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Statement of Operations:
Revenues	$	371	$	2,111	$	1,084	$	2,041
Cost of revenues	$	1,164	$	1,050	$	2,366	$	2,040

Operating lease

The Company sublets a portion of its office space to Hendricks Investment Holdings, LLC (“HIH”), which is considered a related party as it is managed by various members of the Company’s Board of Directors. The Company accounts for the arrangement as an operating lease. Refer to Note 11 for further information.

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Note 11 — Leases

Company as a Lessee

The Company is a party to a

non-cancellable

operating lease agreement for office space, which expires in 2033. The Company’s operating lease for this office space includes fixed rent payments and variable lease payments, which are primarily related to common area maintenance and utility charges. The Company elected not to separate lease and

non-lease

components, and as such, all amounts paid under the lease are classified as either fixed or variable lease payments. Fixed lease payments were included in the calculation of right of use (“ROU”) asset and leases liabilities with variable lease payments being recognized as lease expense as incurred. The Company has determined that no renewal clauses are reasonably certain of being exercised and therefore has not included any renewal periods within the lease term for this lease.

As of June 30, 2023, the Company had operating lease ROU assets of $3.6 million, current lease liabilities of $0.4 million, and

non-current

lease liabilities of $4.5 million. In measuring operating lease liabilities, the Company used a weighted average discount rate of 4.4% in existence as of the January 1, 2022 adoption date of the new leasing standard. The weighted average remaining lease term as of June 30, 2023 was 9.67 years.

Components of Lease Cost

The Company’s total operating lease cost for the three and six months ended June 30, 2023 was comprised of the following (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022


Operating lease cost	$	121		$	121	$	242		$	242
Short-term lease cost (1)		(16	)		18		(16	)		36
Variable lease cost		12			13		25			24

Total lease cost	$	117		$	152	$	251		$	302

(1)	Short term lease cost includes a refund received by the Company during the three months ended June 30, 2023 for office space it previously occupied.

Maturity of Lease Liabilities

As of June 30, 2023, maturities of the Company’s operating lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):


Remaining six months of 2023	$	274
202 4		557
202 5		571
202 6		585
202 7		600
Thereafter		3,346

Total lease payments	$	5,933
Less: imputed interest		(1,112	)

Present value of total lease liabilities	$	4,821

CuriosityStream Inc. [CURI] Filings
CuriosityStream Inc. [CURIW] Filings
10-Q	[2023-08-14]
10-Q	[2023-05-11]
10-K	[2023-03-31]
10-Q	[2022-11-10]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
10-K	[2022-03-31]
10-Q	[2021-11-12]
10-Q	[2021-08-13]
10-Q	[2021-05-12]
10-K	[2021-03-31]
S-1	[2021-02-01]
S-1	[2020-11-20]
10-Q	[2020-11-16]
S-1	[2020-10-20]
10-Q	[2020-08-14]
10-Q	[2020-05-15]
10-K	[2020-03-20]
S-1	[2019-10-25]

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company