10-Q 1 d339003d10q.htm 10-Q 10-Q
Table of Contents
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Total related party revenue also includes $1.6 million for the nine months ended September 30, 2022 for marketing services rendered to Nebula, which is included in Other revenue.In addition to (1) above, Other revenue for the three and nine months ended September 30, 2022 includes other marketing services for $0.1 million and $0.3 million, respectively. 0001776909 2022-09-30 0001776909 2021-12-31 0001776909 2022-07-01 2022-09-30 0001776909 2021-07-01 2021-09-30 0001776909 2022-01-01 2022-09-30 0001776909 2021-01-01 2021-09-30 0001776909 2021-01-01 2021-12-31 0001776909 2022-04-16 0001776909 2022-05-11 0001776909 2022-04-01 2022-06-30 0001776909 2022-11-09 0001776909 2022-06-30 0001776909 2021-06-30 0001776909 2020-12-31 0001776909 2021-09-30 0001776909 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2022-09-30 0001776909 us-gaap:USGovernmentDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001776909 us-gaap:FairValueInputsLevel1Member 2022-09-30 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
F
ORM
10-Q
 
 
(MARK ONE)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2022
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
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.
 
Large accelerated filer   ☐    Accelerated filer   ☐
       
Non-accelerated
filer		   ☒    Smaller reporting company   ☒
     
     Emerging growth company   ☒
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 November 
9
, 2022, there were 52,806,115 shares of Common Stock of the registrant issued and outstanding.
 
 
 

Table of Contents

CURIOSITYSTREAM INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

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 Stockholder’s Equity (Deficit)

      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

      20  

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

      31  

Item 4. Controls and Procedures

      31  

Part II. Other Information

   

Item 1. Legal Proceedings

      32  

Item 1A. Risk Factors

      32  

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

      32  

Item 3. Defaults Upon Senior Securities

      32  

Item 4. Mine Safety Disclosures

      32  

Item 5. Other Information

      33  

Item 6. Exhibits

      33  

Part III. Signatures

      34  

 

i

Table of Contents
CuriosityStream Inc.
Consolidated Balance Sheets
(in thousands, except par value)
 
 
  
September 30,
2022
(unaudited)
 
 
December 31,

2021
 
Assets
                 
     
Current assets
                 
Cash and cash equivalents
    $ 46,826     $ 15,216  
Restricted cash
      500       2,331  
Short-term investments in debt securities
      16,947       65,833  
Accounts receivable, net
      17,151       23,493  
Other current assets
      1,561       6,413  
    
 
 
    
 
 
  
Total current assets
      82,985       113,286  
    
 
 
    
 
 
  
Investments in debt securities
      —         15,430  
Investments in equity method investees
      11,045       9,987  
Property and equipment, net
      1,183       1,342  
Content assets, net
      74,901       72,682  
Intangibles, net
      283       1,369  
Goodwill
      —         2,793  
Operating lease
right-of-use
assets
      3,769       —    
Other assets
      546       689  
Total assets
    $ 174,712     $ 217,578  
    
 
 
    
 
 
  
Liabilities and stockholders’ equity (deficit)
                 
     
Current liabilities
                 
Content liabilities
    $ 4,978     $ 9,684  
Accounts payable
      7,594       3,428  
Accrued expenses and other liabilities
      7,463       12,429  
Deferred revenue
      17,786       22,430  
    
 
 
    
 
 
  
Total current liabilities
      37,821       47,971  
    
 
 
    
 
 
  
Warrant liability
      809       5,661  
Non-current
operating lease liabilities
      4,735       —    
Other liabilities
      866       2,011  
    
 
 
    
 
 
  
Total liabilities
      44,231       55,643  
     
Stockholders’ equity (deficit)
                 
Common stock, $0.0001 par value – 125,000 shares authorized as of September 30, 2022 and December 31, 2021; 52,802 shares issued and outstanding as of September 30, 2022; 52,677 issued and outstanding as of December 31, 2021
      5       5  
Additional
paid-in
capital
      357,211       352,334  
Accumulated other comprehensive loss
      (182 )      (222 ) 
Accumulated deficit
      (226,553 )      (190,182 ) 
    
 
 
    
 
 
  
Total stockholders’ equity (deficit)
      130,481       161,935  
    
 
 
    
 
 
  
Total liabilities and stockholders’ equity (deficit)
    $ 174,712     $ 217,578  
    
 
 
    
 
 
  
The accompanying notes are an integral part of these consolidated financial statements.
 
1
CuriosityStream Inc.
Consolidated Statements of Operations
(in thousands, except for per share data)
(unaudited)
 
 
  
For the three months ended

September 30,
 
 
For the nine months ended

September 30,
 
 
  
    2022    
 
 
    2021    
 
 
    2022    
 
 
    2021    
 
Revenues
    $ 23,569     $ 18,705     $ 63,544     $ 43,985  
         
Operating expenses
                                 
Cost of revenues
      13,566       9,553       38,404       19,433  
Advertising and marketing
      5,626       9,320       31,602       33,089  
General and administrative
      8,757       8,058       29,863       25,943  
Impairment of goodwill and intangible assets
      —         —         3,603       —    
    
 
 
    
 
 
    
 
 
    
 
 
  
       27,949       26,931       103,472       78,465  
    
 
 
    
 
 
    
 
 
    
 
 
  
Operating loss
      (4,380 )      (8,226 )      (39,928 )      (34,480 ) 
         
Change in fair value of warrant liability
      514       8,345       4,852       6,323  
Interest and other (expense) income
      (478 )      595       (564 )      1,891  
Equity interests (loss) income
      (94 )      165       (566 )      165  
    
 
 
    
 
 
    
 
 
    
 
 
  
(Loss) income 
before income taxes
      (4,438 )      879       (36,206 )      (26,101 ) 
Provision for income taxes
      64       49       165       128  
    
 
 
    
 
 
    
 
 
    
 
 
  
Net (loss) income
    $ (4,502 )    $ 830     $ (36,371 )    $ (26,229 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
Net (loss) income per share
                                 
Basic
    $ (0.09 )    $ 0.02     $ (0.69 )    $ (0.51 ) 
Diluted
    $ (0.09 )    $ (0.14 )    $ (0.69 )    $ (0.63 ) 
Weighted average number of common shares outstanding
                                 
Basic
      52,793       52,593       52,773       51,091  
Diluted
      52,793       52,677       52,773       51,736  
The accompanying notes are an integral part of these consolidated financial statements.
 
2
CuriosityStream Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
 
  
For the three months ended
September 30,
 
 
For the nine months ended
September 30,
 
 
  
    2022    
 
 
    2021    
 
 
    2022    
 
 
    2021    
 
Net
(loss) income
    $ (4,502 )   $ 830     $ (36,371 )   $ (26,229 ) 
Other comprehensive income (loss)
                                 
Unrealized gain (loss) on available for sale securities
      270       (200 )      40       (1,423 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total comprehensive
(loss) income
    $ (4,232 )   $ 630     $ (36,331 )   $ (27,652 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
The accompanying notes are an integral part of these consolidated financial statements.
 
3
CuriosityStream Inc.
Consolidated Statements of Stockholder’s Equity (Deficit)
(in thousands)
(unaudited)
 
 
  
 
 
 
 
 
  
Additional

Paid-in

Capital
 
 
Accumulated

Other

Comprehensive

Income (Loss)
 
 
Accumulated

Deficit
 
 
Total

Stockholders’
Equity

(Deficit)
 
 
  
 
 
 
  
Common Stock
 
 
  
Shares
 
 
Amount
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
                                       
Balance as of June 30, 2022
   
 
52,786
 
  
$
5
 
   
$
355,555
 
  
$
(452
) 
  
$
(222,051
) 
  
$
133,057
 
Net loss
      —         —          —         —         (4,502 )      (4,502 ) 
Stock-based compensation, net
      16       —          1,656       —         —         1,656  
Other comprehensive income
      —         —          —         270       —         270  
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of September 30, 2022
   
 
52,802
 
  
$
5
 
   
$
357,211
 
  
$
(182
) 
  
$
(226,553
) 
  
$
130,481
 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of December 31, 2021
   
 
52,677
 
  
$
5
 
   
$
352,334
 
  
$
(222
) 
  
$
(190,182
) 
  
$
161,935
 
Net loss
      —         —          —         —         (36,371 )      (36,371 ) 
Stock-based compensation, net
      125       —          4,877       —         —         4,877  
Other comprehensive income
      —         —          —         40       —         40  
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of September 30, 2022
   
 
52,802
 
  
$
5
 
   
$
357,211
 
  
$
(182
) 
  
$
(226,553
) 
  
$
130,481
 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
             
                 
Additional

Paid-in

Capital
    
Accumulated

Other

Comprehensive

Income (Loss)
    
Accumulated

Deficit
    
Total

Stockholders’
Equity

(Deficit)
  
        
    
Common Stock
  
    
Shares
    
Amount
  
                                       
Balance as of June 30, 2021
   
 
52,583
 
  
$
5
 
   
$
349,597
 
  
$
(1,213
) 
  
$
(179,606
) 
  
$
168,783
 
Net income
      —         —          —         —         830       830  
Stock-based compensation, net
      9       —          1,519       —         —         1,519  
Exercise of Options
      15       —          60       —         —         60  
Other comprehensive loss
      —         —          —         (200 )      —         (200 ) 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of September 30, 2021
   
 
52,607
 
  
$
5
 
   
$
351,176
 
  
$
(1,413
) 
  
$
(178,776
) 
  
$
170,992
 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance
as of 
December 31, 2020
   
 
40,289
 
  
$
4
 
   
$
197,507
 
  
$
10
 
  
$
(152,547
) 
  
$
44,974
 
Net loss
      —         —          —         —         (26,229 )      (26,229 ) 
Stock-based compensation, net
      12       —          5,357       —         —         5,357  
Issuance of Common Stock
      7,475       1        94,100       —         —         94,101  
Common Stock issuance costs
      —         —          (707 )      —         —         (707 ) 
Exercise of Options
      118       —          497       —         —         497  
Exercise of Warrants
      4,733       —          54,422       —         —         54,422  
Cancellation of escrow shares
      (20 )        —        —         —         —         —    
Other comprehensive loss
      —         —          —         (1,423 )      —         (1,423 ) 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
Balance as of September 30, 2021
   
 
52,607
 
  
$
5
 
   
$
351,176
 
  
$
(1,413
) 
  
$
(178,776
) 
  
$
170,992
 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
  
The accompanying notes are an integral part of these consolidated financial statements.
 
4
CuriosityStream Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
  
For the nine months ended September 30,
 
 
  
2022
 
 
2021
 
 
  
 
 
 
 
 
              
Cash flows from operating activities
                 
Net loss
   
$

 (36,371 )    $ (26,229 ) 
Adjustments to reconcile net loss to net cash used in operating activities
                 
Change in fair value of warrant liability
      (4,852 )      (6,323 ) 
Additions to content assets
      (31,729 )      (40,954 ) 
Change in content liabilities
      (4,706 )      5,390  
Amortization of content assets
      29,510       14,143  
Depreciation and amortization expenses
      573       403  
Impairment of goodwill and intangible assets
      3,603       —    
Amortization of premiums and accretion of discounts associated with investments in debt securities, net
      1,087       638  
Stock-based compensation
      5,055       5,446  
Equity interests
loss (income)
      566       (165 ) 
Other
non-cash
items
      288       —    
Changes in operating assets and liabilities
                 
Accounts receivable
      6,342       (6,046 ) 
Other assets
      4,994       274  
Accounts payable
      4,188       1,943  
Accrued expenses and other liabilities
      (4,792 )      641  
Deferred revenue
      (4,500 )      9,042  
    
 
 
    
 
 
  
Net cash used in operating activities
      (30,744 )      (41,797 ) 
    
 
 
    
 
 
  
Cash flows from investing activities
                 
Purchases of property and equipment
      (130 )      (291 ) 
Business acquisitions
      —         (5,362 ) 
Investment in equity method investees
      (2,438 )      (9,260 ) 
Payment of transaction costs - equity investments
     
—
 
 
       (304 ) 
Sales of investments in debt securities
      22,893       15,676  
Maturities of investments in debt securities
      41,873       50,792  
Purchases of investments in debt securities
      (1,497 )      (151,861 ) 
    
 
 
    
 
 
  
Net cash provided by (used in) investing activities
      60,701       (100,610 ) 
    
 
 
    
 
 
  
Cash flows from financing activities
                 
Exercise of stock options
      —         497  
Exercise of warrants
      —         54,898  
Payments related to tax withholding
      (178 )      (89 ) 
Proceeds from issuance of Common Stock
      —         94,101  
Payment of offering costs
      —         (707 ) 
    
 
 
    
 
 
  
Net cash (used in) provided by financing activities
      (178 )      148,700  
    
 
 
    
 
 
  
Net increase in cash, cash equivalents and restricted cash
      29,779       6,293  
Cash, cash equivalents and restricted cash, beginning of period
      17,547       17,384  
    
 
 
    
 
 
  
Cash, cash equivalents and restricted cash, end of period
   
$

 47,326     $ 23,677  
    
 
 
    
 
 
  
Supplemental disclosure:
                 
Cash paid for taxes
   
$

 571     $ 31  
Cash paid for operating leases
   
$
 352    
$
 173  
Right-of-use
assets obtained in exchange for new operating lease liabilities
(1)
   
$

 3,965    
$

 —    
 
(1)
 
Includes adoption of new leasing guidance effective January 1, 2022. See Note 1
1
 for further details.
The accompanying notes are an integral part of these consolidated financial statements.
 
5
CuriosityStream Inc.
Notes to the Unaudited Consolidated Financial Statements
(in thousands, except 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 who 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 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 streaming resolution (e.g., HD or 4K) and the length of the subscription (e.g., monthly or annual) selected by the customer. As an additional part of the Company’s App Services, it has built applications to make its service accessible on almost every major customer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, all major smart TV brands (e.g., LG, Vizio, Samsung, Sony) 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 (such as in territories or on platforms that are not currently being exploited by the Company) to content created before production begins.
Note 2 — Basis of presentation an
d
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, 2021.
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, 2021. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022.
There have been no material changes in the Company’s significant accounting policies other than the effects of adopting new accounting guidance related to leases (see below) compared to the significant accounting policies described in the Company’s consolidated financial statements as of and for the year ended December 31, 2021.
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 areas in which management uses estimates include content asset amortization, the assessment of the recoverability of content assets, equity method investments, intangible assets and goodwill, the fair value of assets and liabilities for allocation of the purchase price of companies acquired, and the fair value of share-based awards and liability classified warrants.
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.
 
6
Accounts receivables, net are typically unsecured and are derived from revenues earned from customers primarily located in the United States and Germany.
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, U.S. government, and municipal debt securities. Level 1 inputs were derived by using unadjusted quoted prices for identical assets in active markets and were used to value the Company’s investments in money market funds and U.S. government debt securities. Level 2 inputs were derived using prices for similar investments and were used to value the Company’s investments in corporate and municipal debt securities.
The Company’s liabilities measured at fair value on a recurring basis include its private placement warrants issued to Software Acquisition Holdings LLC in a private placement that closed concurrently with the Company’s initial public offering (the “Private Placement Warrants”). The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes valuation model. Refer to Note
6
 for significant assumptions which the Company used in the fair value model for the Private Placement Warrants.
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 Issued and 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.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No.
 2016-02,
Leases (“Topic 842”)
, which supersedes the historical lease guidance under
Accounting Standards Codification (“ASC”) 840
.
Topic 842
increases transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements for both lessees and lessors. The Company adopted the new standard effective January 1, 2022, using the modified retrospective method and electing to use the package of practical expedients permitted under the transition guidance, which allows for the carry forward of historical lease classification for existing leases on the adoption date and does not require the assessment of existing lease contracts to determine whether the contracts contain a lease or initial direct costs. Prior periods were not retrospectively adjusted.
 
7
The adoption of this standard resulted in the recognition of operating lease liabilities of $5.3 million, with corresponding
right-of-use
(ROU) assets in the amount of $4.0 million, net of existing deferred rent and lease incentives of $1.3 million. The Company did not have any finance lease liabilities as of the adoption date. There was no cumulative effect adjustment to the opening balance of accumulated deficit as of January 1, 2022. Adoption of this new guidance did not have an impact on the unaudited consolidated statements of operations or cash flows. Refer to Note 1
1
 for further information regarding the impact of adoption of
Topic 842
on the Company’s unaudited consolidated financial statements.
Accounting Standards Effective in Future Periods
In June 2016, the FASB issued ASU
2016-13,
Financial Instruments
 — Credit Losses (“Topic 326”) (“ASU
2016-13”)
, which requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The guidance also modifies the impairment model for
available-for-sale
debt securities.
ASU
2016-13
is effective for the Company’s fiscal year beginning January 1, 2023. The Company does not expect the implementation of
ASU
2016-13
to have 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 a 32% ownership in the Spiegel Venture for $3.3 million. The Spiegel Venture, which prior to the Company’s equity purchase was jointly owned and operated by Spiegel TV and Autentic, operate two documentary channels, together with various SVoD s
e
rvices, which provide factual content to pay television audiences in Germany. The Company has not received any dividends from the Spiegel Venture as of September 30, 2022.
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, which after each payment the Company will obtain an additional 1.625% of equity ownership interests. During the nine months ended September 30, 2022, the Company purchased additional equity interests totaling 3.25%, and during the year ended December 31, 2021, the Company purchased additional equity interests subsequent to the initial investment totaling 1.625%. These additional equity interest purchases have increased the Company’s total ownership interest in Nebula to 16.875% as of September 30, 2022. Prior to the Company’s investment, Nebula was a 100% wholly owned subsidiary of Standard Broadcast LLC (“Standard”). The Company obtained 25% of the 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 September 30, 2022. 
The Company’s carrying values for its equity method investments as of September 30, 2022, and December 31, 2021, is as follows:
 
    
Spiegel
Venture
     
Nebula
     
Total
  
                      
    
(in thousands)
  
Balance, December 31, 2021
    $ 3,089      $ 6,898      $ 9,987  
Investments in equity method investees
      —          1,624        1,624  
Equity interests loss
      (127 )       (439 )       (566 ) 
    
 
 
     
 
 
     
 
 
  
Balance, September 30, 2022
    $ 2,962      $ 8,083      $ 11,045  
    
 
 
     
 
 
     
 
 
  
 
8
Note 4 —Balance sheet components
Cash and 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 as of September 30, 2022, and December 31, 2021 is as follows:
 
    
September 30,
     
December 31,
  
               
    
2022
     
2021
  
               
    
(in thousands)
  
Cash and cash equivalents
    $ 46,826      $ 15,216  
Restricted cash
      500        2,331  
    
 
 
     
 
 
  
Cash, cash equivalents and restricted cash
    $ 47,326      $ 17,547  
    
 
 
     
 
 
  
As of September 30, 2022, restricted cash includes cash deposits required by a bank as collateral related to corporate credit card agreements of $0.5 
million. On March 4, 2022, the Now You Know Media Inc. (“Learn25”) holdback of $0.2 million was paid to the previous owners of Learn25 from escrow funds previously classified as restricted cash. On April 16, 2022, the Paycheck Protection Program (PPP) loan was forgiven, and
$1.2 
million of funds were released from escrow to the Company and reclassified from restricted cash to cash and cash equivalents. On May 11, 2022, the One Day University (“ODU”) holdback of
$0.5 
million was paid to the previous owners of ODU from escrow funds previously classified as restricted cash.
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 September 30, 2022
     
As of December 31, 2021
  
                                                         
    
Cash and
Cash
Equivalents
     
Short-term
Investments
     
Investments
(non-current)
     
Total
     
Cash and
Cash
Equivalents
     
Short-term
Investments
     
Investments
(non-current)
     
Total
  
                                                         
    
(in thousands)
     
(in thousands)
  
Level 1 Securities
                                                                        
Money market funds
    $ 15,607      $ —        $ —        $ 15,607      $ 11,709      $ —        $ —        $ 11,709  
U.S. Government debt securities
      —          1,996        —          1,996        —          13,582        —          13,582  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total Level 1 Securities
      15,607        1,996        —          17,603        11,709        13,582        —          25,291  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Level 2 Securities
                                                                        
Corporate debt securities
      —          14,951        —          14,951        —          50,641        15,430        66,071  
Municipal debt securities
      —          —          —          —          —          1,610        —          1,610  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total Level 2 Securities
      —          14,951        —          14,951        —          52,251        15,430        67,681  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 15,607      $ 16,947      $ —        $ 32,554      $ 11,709      $ 65,833      $ 15,430      $ 92,972  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
9
The following tables summarize the Company’s corporate, U.S. government, and municipal debt securities:
 
    
As of September 30, 2022
  
    
Amortized Cost
     
Gross
Unrealized Gains
     
Gross Unrealized
Losses
    
Estimated
Fair Value
  
                            
    
(in thousands)
  
Debt Securities:
                                   
Corporate
    $ 15,129      $ —        $ (178 )    $ 14,951  
U.S. Government
      2,000        —          (4 )      1,996  
    
 
 
     
 
 
     
 
 
    
 
 
  
Total
    $ 17,129      $ —        $ (182 )    $ 16,947  
    
 
 
     
 
 
     
 
 
    
 
 
  
   
    
As of December 31, 2021
  
    
Amortized Cost
     
Gross
Unrealized Gains
     
Gross Unrealized
Losses
    
Estimated
Fair Value
  
                            
    
(in thousands)
  
Debt Securities:
                                   
Corporate
    $ 66,281      $ —        $ (210 )    $ 66,071  
U.S. Government
      13,594        —          (12 )      13,582  
Municipalities
      1,610        —          —         1,610  
    
 
 
     
 
 
     
 
 
    
 
 
  
Total
    $ 81,485      $ —        $ (222 )    $ 81,263  
    
 
 
     
 
 
     
 
 
    
 
 
  
There were no material realized gains or losses recorded during the three and nine months ended September 30, 2022 or 2021.
Content assets
Content assets consisted of the following:
 
    
As of
  
    
September 30,
2022
     
December 31,
2021
  
               
    
(in thousands)
  
Licensed content, net Released, less amortization
    $ 11,783      $ 11,406  
Prepaid and unreleased
      5,774        9,119  
    
 
 
     
 
 
  
       17,557        20,525  
Produced content, net Released, less amortization
      33,726        18,507  
In production
      23,618        33,650  
    
 
 
     
 
 
  
       57,344        52,157  
    
 
 
     
 
 
  
Total
    $ 74,901      $ 72,682  
    
 
 
     
 
 
  
As of September 30, 2022, $5.3 million, $3.1 million, and $1.5 million of the $11.8 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 September 30, 2022, $9.1 million, $8.6 million, and $7.6 million of the $33.7 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three
years. Content amortization is included within Cost of revenues on the unaudited consolidated statement of operations.
 
10
In accordance with its accounting policy for content assets, the following tables represent the amortization of content assets:
 
    
Three Months Ended September 30,
     
Nine months Ended September 30,
  
                             
    
2022
     
2021
     
2022
     
2021
  
                             
    
(in thousands)
     
(in thousands)
  
Licensed content
    $ 1,793      $ 2,091      $ 6,590      $ 5,369  
Produced content
      8,588        5,063        22,920        8,774  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 10,381      $ 7,154      $ 29,510      $ 14,143  
    
 
 
     
 
 
     
 
 
     
 
 
  
Goodwill and intangible assets
Changes in goodwill for the nine months ended September 30, 2022 is as follows (in thousands):
 
Balance, December 31,2021
    $ 2,793  
Impairment of Goodwill
      2,793  
    
 
 
  
Balance, September 30, 2022
    $ —    
    
 
 
  
During the second quarter of 2022, the Company experienced a sustained decrease in its share price, and this triggering event was an indication that it was more likely than not that the fair value of the Company’s single reporting unit was below its carrying value. The Company performed an interim goodwill impairment test of its goodwill as of June 30, 2022 and recognized a goodwill impairment charge of $2.8 
million during the three months ended June 30, 2022 as the fair value of the reporting unit was less than the related carrying value. This charge is included in impairment of goodwill and intangible assets on the Company’s unaudited consolidated statements of operations for the nine months ended September 30, 2022.
The determination of the fair value of the Company’s reporting unit was based on a combination of the income and the market approach. The Company applied equal weighting to each of the approaches in determining the fair value of the reporting unit. Under the income approach, the Company utilized discounted cash flows of forecasted future cash flows based on future operational expectations and discounted these cash flows to reflect their relative risk. The cash flows used are consistent with those the Company uses in its internal planning, which reflect actual business trends experienced and the Company’s long-term business strategy. Under the market approach, the Company utilized the guideline public company method and guideline transaction method to develop valuation multiples and compare the Company to similar publicly traded companies. The significant assumptions under each of the approaches include, among others: revenue projections (which are dependent on future customer subscriptions and content licensing agreements), operating expenses, discount rate, control premium and a terminal growth rate. The cash flows used to determine the fair values are dependent on a number of significant management assumptions, such as the Company’s expectations of future performance and the expected future economic environment, which are partly based upon the Company’s historical experience. The Company also considered its market capitalization in assessing the reasonableness of the reporting unit fair value.
During the second quarter of 2022, the Company also determined there were impairment indicators with respect to certain of the Company’s definite-lived intangible assets. As a result, the Company performed an impairment test by comparing the carrying values of the intangible assets to their respective fair values, which were determined based on forecasted future cash flows. As a result of this impairment test, the Company recorded an impairment charge of $0.8 million during the three months ended June 30, 2022, which is reflected as a component of impairment of goodwill and intangible assets on the Company’s unaudited consolidated statements of operations.

 
11
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 as of September 30, 2022, and December 31, 2021, was as follows:
 
    
As of
September 30,
2022
     
As of
December 31,
2021
  
               
    
(in thousands)
  
Level 3
                  
Private Placement Warrants
    $ 809      $ 5,661  
    
 
 
     
 
 
  
Total Level 3
    $ 809      $ 5,661  
    
 
 
     
 
 
  
Note 5 — Revenue
The following table sets forth the Company’s revenues disaggregated by type for the three and nine months ended September 30, 2022, and 2021, as well as the relative percentage of each revenue type to total revenue.
 
    
Three Months Ended September 30,
    
Nine months Ended September 30,
  
                                                      
    
2022
    
2021
    
2022
    
2021
  
                                                      
    
(in thousands, except percentages)
    
(in thousands, except percentages)
  
Subscriptions – O&O Service
    $ 7,890        33 %    $ 5,382        29 %    $ 23,110        36 %    $ 14,053        32 % 
Subscriptions – App Services
      960        4 %      1,003        5 %      3,018        5 %      2,889        7 % 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
Subscriptions – Total
      8,850        37 %      6,385        34 %      26,128        41 %      16,942        39 % 
License Fees – Affiliates
      3,752        16 %      4,631        25 %      13,741        22 %      13,713        31 % 
License Fees –
Content Licensing
 
(1)
      10,790        46 %      6,760        36 %      21,692        34 %      12,277        28 % 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
License Fees – Total
      14,542        62 %      11,391        61 %      35,433        56 %      25,990        59 % 
Other – Total
(1)(2)
      177        1 %      929        5 %      1,983        3 %      1,053        2 % 
    
 
 
             
 
 
             
 
 
             
 
 
           
Total Revenues
    $ 23,569              $ 18,705              $ 63,544              $ 43,985           
    
 
 
             
 
 
             
 
 
             
 
 
           
 
(1)
For the three and nine months ended September 30, 2022, total related party revenue was $2.2 million and $4.3 million, respectively. This consisted of $2.2 million and $2.7 million for the three and nine months ended September 30, 2022, respectively, for content licensed by the Company to the Spiegel Venture included in License
Fees – Content Licensing
. Total related party revenue also includes $1.6 million for the nine months ended September 30, 2022 for marketing services rendered to Nebula, which is included in Other revenue.
(2)
In addition to (1) above, Other revenue for the three and nine months ended September 30, 2022 includes other marketing services for $0.2 million and $0.4 million, respectively.
Revenues expected to be recognized in the future related to performance obligations that are unsatisfied as of September 30, 2022 are as follows:
 
    
Remainder
of year
ending
December 31,
     
For the years ending December 31,
                
    
2022
     
2023
     
2024
     
2025
     
2026
     
Thereafter
     
Total
  
                                                  
    
(in thousands)
  
Remaining Performance Obligations
    $ 4,806      $ 8,126      $ 5,004      $ 3,338      $ 26      $ 184      $ 21,484  
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.
Contract liabilities (i.e., deferred revenue) consists of subscriber and affiliate license fees billed that have not been recognized, amounts contractually billed or collected for
content licensing
 in advance of the related content being made available to the customer, and unredeemed gift certificates and other prepaid subscriptions that have not been redeemed. Total deferred revenue was $18.7 million and $23.2 
million as of September 30, 2022 and December 31, 2021, respectively, with the non-current portion of
$0.9 million and $0.8 
million as of September 30, 2022 and December 31, 2021, respectively, included in other liabilities on the unaudited consolidated balance sheets. The decrease in deferred revenue is primarily due to revenue recognized during the nine months ended September 30, 2022 related to
content licensing
 amounts that were previously recorded in deferred revenue, partially offset by the growth in annual subscriptions, which require upfront annual payments.
Revenues of $4.5
 million and 
$20.6
 million were recognized during the three and nine months ended September 30, 2022, respectively, related to the balance of deferred revenue as of December 31, 2021.
 
12
Note 6 — Stockholders’ equity

Common and Preferred Stock
As of September 30, 2022 and December 31, 2021, the Company has 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 September 30, 2022, the
Company had (A
) 3,054,203
 
publicly traded warrants that were (i) sold as part of the units of Software Acquisition Group Inc. in its initial public offering on November 22, 2019 and (ii) issued to the PIPE Investors in connection with the business combination that closed on October 14, 2020 (the “Public Warrants”) and
(
B) 3,676,000 Private Placement Warrants outstanding. 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 Group 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 nine months ended September 30, 2022.
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 stockholder’s equity (deficit). 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
September 30,
2022
    
As of
December 31,
2021
  
              
Exercise Price
    $ 11.50     $ 11.50  
Stock Price (Company)
    $ 1.46     $ 5.93  
Expected volatility
      86.00 %      58.00 % 
Expected warrant term (years)
      3.0       3.8  
Risk-free interest rate
      4.25 %      1.12 % 
Dividend yield
      0 %      0 % 
Fair Value per Private Placement Warrant
    $ 0.22     $ 1.54  
 
13
The change in fair value of the private placement warrant liability for the three and nine months ended September 30, 2022 resulted in a gain of $0.5 million and $4.9 million, respectively, and for the three and nine months ended September 30, 2021 resulted in a gain of $8.3 million and $6.3 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
September 30,
     
Nine months ended
September 30,
  
    
2022
     
2021
     
2022
    
2021
  
                            
    
(in thousands)
     
(in thousands)
  
Numerator - Basic EPS:
                                   
Net
(loss) income
    $ (4,502 )     $ 830      $ (36,371 )    $ (26,229 ) 
         
Denominator
 – 
Basic EPS:
                                   
Weighted–average shares
 – 
Basic
      52,793        52,593        52,773       51,091  
    
 
 
     
 
 
     
 
 
    
 
 
  
Net (loss) income per share – 
Basic
    $ (0.09 )     $ 0.02      $ (0.69 )    $ (0.51 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
Numerator - Diluted EPS:
                                   
Net
(loss) income
    $ (4,502 )    $ 830      $ (36,371 )    $ (26,229 ) 
Decrease in fair value of Private Placement Warrants
    $ —        $ (8,345 )     $ —       $ (6,323 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
Net loss
 – 
Diluted
      (4,502 )       (7,515 )       (36,371 )      (32,552 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
Denominator - Diluted EPS:
                                   
Weighted–average shares
 – 
Basic
      52,793        52,593        52,773       51,091  
Incremental common shares from assumed exercise of Private Placement Warrants
      —          85        —         645  
    
 
 
     
 
 
     
 
 
    
 
 
  
Weighted–average shares
 – 
Diluted
      52,793        52,677        52,773       51,736  
    
 
 
     
 
 
     
 
 
    
 
 
  
Net loss per share – Diluted
    $ (0.09 )     $ (0.14 )     $ (0.69 )    $ (0.63 ) 
    
 
 
     
 
 
     
 
 
    
 
 
  
For the three and nine months ended September 30, 2022 and 2021, 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 as of September 30, 2022 and 2021, where antidilutive.
 
Antidilutive shares excluded:
  
Three months ended
September 30,
 
  
Nine months ended
September 30,
 
  
2022
 
  
2021
 
  
2022
 
  
2021
 
  
 
 
  
 
 
  
 
 
  
 
 
  
(in thousands)
 
  
(in thousands)
 
Options
      5,190        4,775        5,190        4,775  
Restricted Stock Units
      1,047        923        1,047        923  
Warrants
      6,730        3,054        6,730        3,054  
    
 
 
     
 
 
     
 
 
     
 
 
  
       12,967        8,752        12,967        8,752  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
14
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, RSUs and restricted stock.
The following table summarizes stock option and RSU activity, prices, and values for the nine months ended September 30, 2022:
 
          
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
as of 
December 31, 2021
      1,821       4,747     $ 7.61        850     $ 11.41  
Granted
      (1,370 )      821       3.18        549       3.15  
Options exercised and RSUs vested
      49       —         —          (130 )      11.17  
Forfeited or expired
      600       (378 )      7.61        (222 )      11.51  
    
 
 
    
 
 
    
 
 
     
 
 
    
 
 
  
Balance
as of 
September 30, 2022
      1,100       5,190     $ 6.91        1,047     $ 6.96  
    
 
 
    
 
 
    
 
 
     
 
 
    
 
 
  
There were no options exercised during the three and nine months ended September 30, 2022. The intrinsic value of options exercised during the three and nine months ended September 30, 2021 was $0.1 and $1.4 million, respectively.
Options generally have a four-year vesting period with 25% of the shares vesting on each anniversary date. When options are exercised, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy share option exercises.
RSUs generally have a four-year or a quarterly vesting period with 1/48
th
of the shares vesting monthly or 6.25% of the shares vesting quarterly. Upon vesting and distribution, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy RSUs 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.
 
15
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 for the three and nine months ended September 30, 2022 and 2021 were as follows:
 
    
Three months ended September 30,
    
Nine months ended September 30,
  
    
2022
     
2021
    
2022
    
2021
  
                           
Dividend yield
      N/A        0 %      0 %      0 % 
Expected volatility
      N/A        60 %     
60% - 70
 %      60 % 
Expected term (years)
      N/A        6.25      
6.00 - 6.50
      
2.50 - 6.25
  
Risk-free interest rate
      N/A        1.01 %     
1.40% - 2.95
 %     
0.14% - 1.11
 % 
Weighted average grant date fair value
     
N/A
      $ 6.51     $ 1.91     $ 6.58  
     
    
(in thousands)
    
(in thousands)
  
Stock-based compensation - Options
    $ 999      $ 882     $ 2,913     $ 3,611  
Stock-based compensation - RSUs
    $ 674      $ 704     $ 2,142     $ 1,835  
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 the customers, with one foreign country individually comprising greater than 10% of total revenue, is as follows:
 
    
Three months ended September 30,
    
Nine months ended September 30,
  
    
2022
    
2021
    
2022
    
2021
  
                                                      
    
(in thousands, except percentages)
    
(in thousands, except percentages)
  
United States
    $ 13,845        59 %    $ 10,665        57 %    $ 40,348        63 %    $ 29,931        68 % 
International:
                                                                     
Germany
      3,287        14 %      1,894        10 %      4,704        8 %      3,007        7 % 
Other