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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

_____________________

(MARK ONE)


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

For the quarter ended ~~September 30, 2023~~March 31, 2024


o			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 x No o

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 x No o

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~~May 3, ~~2023~~2024, ~~53,075,952~~53,598,489 shares of Common Stock of the registrant were issued and outstanding.

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CURIOSITYSTREAM INC.

QUARTERLY REPORT ON FORM 10-Q

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CURIOSITYSTREAM INC.

CONSOLIDATED BALANCE SHEETS


(In thousands, except par value)	(In thousands, except par value)	September 30, 2023		December 31, 2022		(In thousands, except par value)	March 31, 2024	December 31, 2023
		(Unaudited)

Assets	Assets

Assets

Assets
Current assets
Current assets
Current assets	Current assets
Cash and cash equivalents	Cash and cash equivalents	$	40,304	$	40,007
Cash and cash equivalents
Cash and cash equivalents
Restricted cash	Restricted cash	500		500
Short-term investments in debt securities		—		14,986

Accounts receivable
Accounts receivable
Accounts receivable	Accounts receivable	6,877		10,899
Other current assets	Other current assets	1,410		3,118
Total current assets	Total current assets	49,091		69,510
Investments in equity method investees	Investments in equity method investees	6,666		10,766
Property and equipment, net	Property and equipment, net	822		1,094
Content assets, net	Content assets, net	45,900		68,502
Operating lease right-of-use assets	Operating lease right-of-use assets	3,418		3,702
Other assets	Other assets	411		539
Total assets	Total assets	$	106,308	$	154,113

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity
Liabilities and stockholders’ equity
Liabilities and stockholders’ equity
Current liabilities	Current liabilities
Current liabilities
Current liabilities
Content liabilities
Content liabilities
Content liabilities	Content liabilities	$	128	$	2,862
Accounts payable	Accounts payable	6,963		6,065
Accrued expenses and other liabilities	Accrued expenses and other liabilities	4,154		7,752
Deferred revenue	Deferred revenue	12,997		14,281
Total current liabilities	Total current liabilities	24,242		30,960
Warrant liability	Warrant liability	74		257
Non-current operating lease liabilities	Non-current operating lease liabilities	4,378		4,648
Other liabilities	Other liabilities	675		622
Total liabilities	Total liabilities	29,369		36,487
Stockholders’ equity	Stockholders’ equity
Common stock, $0.0001 par value – 125,000 shares authorized as of September 30, 2023, and December 31, 2022; 53,071 shares issued and outstanding as of September 30, 2023; 52,853 issued and outstanding as of December 31, 2022		5		5
Common stock, $0.0001 par value – 125,000 shares authorized as of March 31, 2024, and December 31, 2023; 53,306 shares issued and outstanding as of March 31, 2024; 53,286 issued and outstanding as of December 31, 2023
Common stock, $0.0001 par value – 125,000 shares authorized as of March 31, 2024, and December 31, 2023; 53,306 shares issued and outstanding as of March 31, 2024; 53,286 issued and outstanding as of December 31, 2023
Common stock, $0.0001 par value – 125,000 shares authorized as of March 31, 2024, and December 31, 2023; 53,306 shares issued and outstanding as of March 31, 2024; 53,286 issued and outstanding as of December 31, 2023
Additional paid-in capital	Additional paid-in capital	362,270		358,760
Accumulated other comprehensive loss	Accumulated other comprehensive loss	—		(40)
Accumulated deficit	Accumulated deficit	(285,336)		(241,099)
Total stockholders’ equity	Total stockholders’ equity	76,939		117,626
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	106,308	$	154,113

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

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CURIOSITYSTREAM INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


		Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(Unaudited and in thousands except per share amounts)
(Unaudited and in thousands except per share amounts)
(Unaudited and in thousands except per share amounts)	(Unaudited and in thousands except per share amounts)	2023		2022		2023		2022

Revenues	Revenues	$	15,630	$	23,569	$	42,114	$	63,544

Revenues

Revenues
Operating expenses
Operating expenses
Operating expenses	Operating expenses
Cost of revenues	Cost of revenues	8,494		13,566		27,428		38,404
Cost of revenues
Cost of revenues
Advertising and marketing
Advertising and marketing
Advertising and marketing	Advertising and marketing	5,106		5,626		12,424		31,602
General and administrative	General and administrative	6,959		8,757		22,998		29,863
Impairment of content assets		18,970		—		18,970		—
Impairment of goodwill and intangible assets		—		—		—		3,603
General and administrative
General and administrative
		39,529		27,949		81,820		103,472

		15,655

		15,655

		15,655
Operating loss
Operating loss
Operating loss	Operating loss	(23,899)		(4,380)		(39,706)		(39,928)
Change in fair value of warrant liability	Change in fair value of warrant liability	74		514		184		4,852
Change in fair value of warrant liability
Change in fair value of warrant liability
Interest and other income (expense)
Interest and other income (expense)
Interest and other income (expense)	Interest and other income (expense)	31		(478)		856		(564)
Equity method investment loss	Equity method investment loss	(2,638)		(94)		(5,092)		(566)
Equity method investment loss
Equity method investment loss
Loss before income taxes
Loss before income taxes
Loss before income taxes	Loss before income taxes	(26,432)		(4,438)		(43,758)		(36,206)
Provision for income taxes	Provision for income taxes	133		64		479		165
Provision for income taxes
Provision for income taxes
Net loss
Net loss
Net loss	Net loss	$	(26,565)	$	(4,502)	$	(44,237)	$	(36,371)
Net loss per share	Net loss per share
Net loss per share
Net loss per share
Basic
Basic
Basic	Basic	$	(0.50)	$	(0.09)	$	(0.83)	$	(0.69)
Diluted	Diluted	$	(0.50)	$	(0.09)	$	(0.83)	$	(0.69)
Diluted
Diluted
Weighted average number of common shares outstanding
Weighted average number of common shares outstanding
Weighted average number of common shares outstanding	Weighted average number of common shares outstanding
Basic	Basic	53,040		52,793		52,999		52,773
Basic
Basic
Diluted	Diluted	53,040		52,793		52,999		52,773
Diluted
Diluted

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

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CURIOSITYSTREAM INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


		Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(Unaudited and in thousands)
(Unaudited and in thousands)
(Unaudited and in thousands)	(Unaudited and in thousands)	2023		2022		2023		2022

Net loss	Net loss	$	(26,565)	$	(4,502)	$	(44,237)	$	(36,371)

Net loss

Net loss
Other comprehensive income (loss):
Other comprehensive income (loss):
Other comprehensive income (loss):	Other comprehensive income (loss):
Unrealized gain on available for sale securities	Unrealized gain on available for sale securities	—		270		40		40
Unrealized gain on available for sale securities
Unrealized gain on available for sale securities
Total comprehensive loss	Total comprehensive loss	$	(26,565)	$	(4,232)	$	(44,197)	$	(36,331)
Total comprehensive loss
Total comprehensive loss

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

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CURIOSITYSTREAM INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands) Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income
(Loss) Accumulated
Deficit Total
Stockholders’
Equity
Shares Amount
Balance at June 30, 2023 53,026 $ 5 $ 361,392 $ — $ (258,771) $ 102,626
Net loss — — — — (26,565) (26,565)
Stock-based compensation, net 45 — 878 — — 878
Balance at September 30, 2023 53,071 $ 5 $ 362,270 $ — $ (285,336) $ 76,939
Balance at December 31, 2022 52,853 $ 5 $ 358,760 $ (40) $ (241,099) $ 117,626
Net loss — — — — (44,237) (44,237)
Stock-based compensation, net 218 — 3,510 — — 3,510
Other comprehensive income — — — 40 — 40
Balance at September 30, 2023 53,071 $ 5 $ 362,270 $ — $ (285,336) $ 76,939
Balance at 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 at September 30, 2022 52,802 $ 5 $ 357,211 $ (182) $ (226,553) $ 130,481
Balance at 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 loss — — — 40 — 40
Balance at September 30, 2022 52,802 $ 5 $ 357,211 $ (182) $ (226,553) $ 130,481


(Unaudited and in thousands)	Common Stock			Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

Balance at December 31, 2022	52,853	$	5		$	358,760	$	(40)	$	(241,099)	$	117,626
Net loss					—		—		(7,751)		(7,751)
Stock-based compensation, net	108	—			1,242		—		—		1,242
Other comprehensive income	—	—			—		40		—		40
Balance at March 31, 2023	52,961	$	5		$	360,002	$	—	$	(248,850)	$	111,157

Balance at December 31, 2023	53,287	$	5		$	362,636	$	—	$	(289,995)	$	72,646
Net loss	—	—			—		—		(5,035)		(5,035)
Dividends declared	—	—			—		—		(1,333)		(1,333)
Stock-based compensation, net	19	—			683		—		—		683

Balance at March 31, 2024	53,306	$	5		$	363,319	$	—	$	(296,363)	$	66,961

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

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CURIOSITYSTREAM INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
(Unaudited and in thousands)	(Unaudited and in thousands)	2023		2022		(Unaudited and in thousands)	2024	2023

Cash flows from operating activities	Cash flows from operating activities
Cash flows from operating activities
Cash flows from operating activities
Net loss	Net loss	$	(44,237)	$	(36,371)
Adjustments to reconcile net loss to net cash used in operating activities
Net loss
Net loss
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Change in fair value of warrant liability
Change in fair value of warrant liability
Change in fair value of warrant liability	Change in fair value of warrant liability	(183)		(4,852)
Additions to content assets	Additions to content assets	(14,074)		(31,729)
Change in content liabilities	Change in content liabilities	(2,734)		(4,706)
Amortization of content assets	Amortization of content assets	17,706		29,510
Depreciation and amortization expenses	Depreciation and amortization expenses	370		573
Impairment of content assets		18,970		—
Impairment of goodwill and intangible assets		—		3,603

Amortization of premiums and accretion of discounts associated with investments in debt securities, net

Amortization of premiums and accretion of discounts associated with investments in debt securities, net

Amortization of premiums and accretion of discounts associated with investments in debt securities, net	Amortization of premiums and accretion of discounts associated with investments in debt securities, net	26		1,087
Stock-based compensation	Stock-based compensation	3,586		5,055
Equity method investment loss	Equity method investment loss	5,092		566
Other non-cash items	Other non-cash items	363		288
Changes in operating assets and liabilities	Changes in operating assets and liabilities
Accounts receivable	Accounts receivable	4,022		6,342
Accounts receivable
Accounts receivable
Other assets	Other assets	1,737		4,994
Accounts payable	Accounts payable	903		4,188
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(3,947)		(4,792)
Deferred revenue	Deferred revenue	(1,230)		(4,500)
Net cash used in operating activities		(13,630)		(30,744)
Net cash provided by (used in) operating activities

Cash flows from investing activities	Cash flows from investing activities
Cash flows from investing activities
Cash flows from investing activities
Purchases of property and equipment	Purchases of property and equipment	(5)		(130)
Investment in equity method investees		(992)		(2,438)
Sales of investments in debt securities		—		22,893
Purchases of property and equipment
Purchases of property and equipment

Maturities of investments in debt securities	Maturities of investments in debt securities	15,000		41,873
Purchases of investments in debt securities		—		(1,497)

Maturities of investments in debt securities

Maturities of investments in debt securities

Net cash provided by investing activities
Net cash provided by investing activities
Net cash provided by investing activities	Net cash provided by investing activities	14,003		60,701

Cash flows from financing activities	Cash flows from financing activities
Cash flows from financing activities
Cash flows from financing activities
Payments related to tax withholding
Payments related to tax withholding
Payments related to tax withholding	Payments related to tax withholding	(76)		(178)
Net cash used in financing activities	Net cash used in financing activities	(76)		(178)

Net increase in cash, cash equivalents and restricted cash
Net increase in cash, cash equivalents and restricted cash
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	297		29,779
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	40,507		17,547
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	40,804	$	47,326

Supplemental disclosure:	Supplemental disclosure:
Cash paid for taxes		$	144	$	571
Supplemental disclosure:
Supplemental disclosure:
Cash refund for taxes
Cash refund for taxes
Cash refund for taxes
Cash paid for operating leases	Cash paid for operating leases	$	360	$	352
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.

UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS

On October 14, 2020, Software Acquisition Group Inc., a special purpose acquisition company and a Delaware corporation (“SAQN”), consummated a reverse merger pursuant to that certain Agreement and Plan of Merger, dated August 10, 2020 (the “Business Combination”). Upon the consummation of the Business Combination, CuriosityStream Operating Inc., a Delaware corporation (“Legacy CuriosityStream”) became a wholly owned subsidiary of SAQN, and the registrant changed its name from “Software Acquisition Group Inc.” to “CuriosityStream Inc.” Following the consummation of the Business Combination, Legacy CuriosityStream changed its name from “CuriosityStream Operating Inc.” to “Curiosity Inc.”

The principal business of CuriosityStream Inc. (the ~~“Company”~~"Company" or ~~“CuriosityStream”~~"CuriosityStream") is providing 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~~who deliver CuriosityStream content via the distributor’s platform or system. The ~~Company’s~~Company's 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 for consuming directly through its owned and operated website (“O&O Consumer 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 location of the subscriber, 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.~~arrangements. The Company also sells selected rights to content ~~it creates~~created 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.~~2023.

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.~~2023. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, ~~2023.~~2024.

In the second quarter of 2023, the Company began entering into trade and barter transactions primarily for the purpose of exchanging content assets through licensing agreements with media counterparties. Refer to ~~Note 5 -Revenue~~ for discussion of our accounting policy related to these transactions. Outside of these transactions, 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.

~~Impairment~~

During the three months ended September 30, 2023, the Company identified certain indicators of impairment related to its content assets and performed an analysis of these assets to assess if fair value was less than unamortized costs. Refer to ~~Note 4 - Balance Sheet Components~~ for further discussion. In addition, during the three months ended September 30, 2023, the Company separately performed an analysis of its Investments in equity method investees to determine if an “other-than-temporary” impairment existed. Refer to ~~Note 3 - Equity Investments, for further discussion on the results of this analysis.~~

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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 September 30, 2023, the Company identified certain indicators of impairment with respect to its long-lived asset group, including the continual 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, exceeded the carrying value as of September 30, 2023, subsequent to the impairment of content assets discussed above. 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 September 30, 2023.

~~Use of Estimates~~USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the ~~U.S.~~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 ~~amortization and fair value of~~the content ~~assets,~~asset amortization, the assessment of the recoverability of content assets and equity method investments, and the determination of fair value estimates related to non-monetary transactions, share-based awards and liability classified warrants.

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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.

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~~those that 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 accounting 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.

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The Company’s assets measured at fair value on a recurring basis have included its investments in money market funds and corporate debt securities (at December 31, 2022). 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 - ~~Stockholders’~~Stockholders' Equity 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~~ ~~September 30, 2023~~, the Company performed an analysis of its investments in equity method investees to determine if an “other-than-temporary” impairment exists. In addition, the Company assessed the fair value of its content as a result of identifying indicators of impairment related to those assets. The resulting fair value measurements of the equity-method investments and content assets are considered to be Level 3 measurements. Refer to ~~Note 3 - Equity Investments~~ ~~and~~ ~~Note 4 - Balance Sheet Components~~ ~~for further discussion of the results of these analyses.~~

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~~RECENT ACCOUNTING ~~STANDARDS~~PRONOUNCEMENTS

The Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company, as an emerging growth company (“EGC”), to delay adoption of new or revised accounting pronouncements applicable to public companies until

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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 ~~June 2016,~~November 2023, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~Accounting Standards Update (“ASU”)~~ASU No. ~~2016-13, “Financial Instruments — Credit Losses~~2023-07 ("ASU 2023-07"), Segment Reporting (Topic ~~326)~~280): ~~Measurement of Credit Losses~~Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items 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~~an interim and annual basis. Public entities with a ~~methodology that reflects expected credit losses~~single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and ~~requires consideration of a broader range of reasonable~~reconciliation requirements in ASC 280 on an interim and ~~supportable information to inform credit loss estimates.~~annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company ~~determines its allowance~~is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for ~~doubtful accounts based on historical loss experience, customer financial condition, and current economic conditions.~~fiscal years beginning after December 15, 2024, with early adoption permitted. The Company ~~adopted~~is currently evaluating the ~~new standard effective January 1, 2023, which has not had a material~~ impact ~~on its consolidated financial statements.~~of adopting ASU 2023-09.

NOTE 3 - EQUITY INVESTMENTS

The Company holds equity investments in Spiegel TV Geschichte und Wissen GmbH & Co. KG (the “Spiegel Venture”) and Watch Nebula LLC (“Nebula”). The Company accounts for these investments under the equity method of accounting. The Company’s carrying values for its equity method investments as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, were as follows:

(In thousands)
Spiegel
Venture
Nebula
Total
Balance at December 31, 2022 $ 2,899 $ 7,867 $ 10,766
Investments in equity method investees 992 — 992
Equity method investment loss (2,025) (3,067) (5,092)
Balance at September 30, 2023 $ 1,866 $ 4,800 $ 6,666

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(In thousands)	Spiegel Venture		Nebula		Total


Balance at December 31, 2023	$	1,736	$	4,618	$	6,354

Equity method investment loss	(1,519)		(237)		(1,756)
Balance at March 31, 2024	$	217	$	4,381	$	4,598

SPIEGEL VENTURE

In July 2021, the Company acquired a 32% ownership in the Spiegel ~~TV Geschichte und Wissen GmbH & Co. KG (the “Spiegel Venture”)~~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 as well as a ~~FAST~~free advertising-supported streaming television (FAST) channel, which provide factual content to pay television audiences in Germany and certain German-speaking regions of other countries. The Company has not received any dividends from the Spiegel Venture as of ~~September 30, 2023.~~March 31, 2024.

Per the Share Purchase Agreement (as amended in early 2023, the “SPA”), in the event the 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 the Spiegel Venture had achieved such financial targets, resulting in the Company paying a Holdback Payment in the amount of $0.9 million to the Spiegel Venture during July 2023.

The Company has a call option that permits it to require Spiegel TV and Autentic to sell their respective ownership interests in the 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~~30 business days following the adoption of the Spiegel Venture’s audited financial statements for the fiscal year 2025, and (ii) the period between March 1, 2026, and March ~~30,~~31, 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~~60 business days following the adoption of the Spiegel Venture’s audited financial statements for the fiscal year 2025, and (ii) the period between April 1, 2026, and April 30, 2026.

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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.

NEBULA

~~Watch~~ Nebula ~~LLC (“Nebula”)~~ is an SVOD technology platform built for and by a group of independent content creators. Prior to the Company’s investment, Nebula was a 100% wholly owned subsidiary of Standard Broadcast LLC (“Standard”). On August 23, 2021, the Company purchased a 12% ownership interest in Nebula for $6.0 million. 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.

Since the time of its original investment, the Company has been obligated to purchase additional incremental ownership interests, each for a payment of $0.8 million and representing 1.625% of equity ownership, if Nebula meets certain quarterly targets. The Company has made three subsequent incremental purchases, bringing its total ownership interest in Nebula to 16.875% as of ~~September 30, 2023.~~March 31, 2024. The Company did not make further investments in Nebula during the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, and the obligation to make additional purchases ended as of September 30, 2023. The Company has not received dividends from Nebula as of ~~September 30, 2023.~~March 31, 2024.

Since August 2021, the Company has included access to Nebula’s SVOD service as a part of a combined CuriosityStream / Watch Nebula subscription offer and as part of the Company’s Smart Bundle subscription package. As part of this arrangement, the Company has shared revenue with Nebula, based on certain metrics, and paid monthly. On September 26, 2023, Nebula provided the Company with a notice of non-renewal (the “Nebula Non-Renewal”), which ~~will result~~resulted in the expiration of the revenue share at the end of 2023. Nebula is still required to make its service available to subscribers to either of these offerings through the end of the term of any such subscription that exists as of December 31, 2023.

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~~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 the Spiegel Venture exceeded the carrying value as of September 30, 2023, and as such no “other-than-temporary” impairment charge was required.

~~As a result of the Company’s impairment analysis related to Nebula, it determined that the carrying value of this investment exceeded the fair value as of~~ ~~September 30, 2023. As~~ such, the Company recorded a $2.3 million impairment, which is included in equity method investment loss, for the three months ended September 30, 2023. The primary factor impacting the decrease in fair value of this investment is the expected decrease in Nebula’s revenue share as a result of the Nebula Non-Renewal, as discussed above.

NOTE 4 - BALANCE SHEET COMPONENTS

CASH, CASH EQUIVALENTS, ~~AND~~ RESTRICTED CASH AND SHORT-TERM INVESTMENTS

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:~~is as follows:

(In thousands) September 30,
2023 December 31,
2022
Cash and cash equivalents $ 40,304 $ 40,007
Restricted cash 500 500
Cash and cash equivalents and restricted cash $ 40,804 $ 40,507

~~As of September 30, 2023, and December 31, 2022, restricted cash includes cash deposits required by a bank as collateral related to corporate credit card agreements.~~


(In thousands)	March 31, 2024		December 31, 2023


Cash and cash equivalents	$	38,750	$	37,715
Restricted cash1	125		500
Cash and cash equivalents and restricted cash	$	38,875	$	38,215

1 Restricted cash included cash deposits required by a bank as collateral related to corporate credit card agreements.

To determine the fair value of its investments in money market funds ~~and corporate debt~~ securities, the Company uses unadjusted quoted market prices (Level 1 inputs)~~, and quoted prices for comparable assets (Level 2 inputs), respectively.~~. As of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, the fair values of the Company’s securities investments was as follows:

September 30, 2023 December 31, 2022
(In thousands)
Cash and
cash
equivalents
Short-term
investments
Total
Cash and
cash
equivalents
Short-term
investments
Total
Level 1 securities:
Money market funds $ 38,375 $ — $ 38,375 $ 17,724 $ — $ 17,724
Total Level 1 securities $ 38,375 — $ 38,375 $ 17,724 — $ 17,724
Level 2 securities:
Corporate debt securities — — — — $ 14,986 $ 14,986
Total Level 2 securities — — — — $ 14,986 $ 14,986
Total $ 38,375 — $ 38,375 $ 17,724 $ 14,986 $ 32,710

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December 31, 2022
(In thousands) Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Estimated
Fair Value
Debt securities:
Corporate $ 15,026 — $ (40) $ 14,986
Total $ 15,026 — $ (40) $ 14,986


(In thousands)	Cash and Cash Equivalents
	March 31, 2024		December 31, 2023



Level 1 securities:
Money market funds	$	36,544	$	36,072
Total Level 1 securities	$	36,544	$	36,072

The Company recorded no material realized gains or losses during the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, and ~~2022.~~2023.

CONTENT ASSETS

Content assets consisted of the following as of the dates indicated:

(in thousands)

September 30,
2023

December 31,
2022

March 31,
2024

December 31,
2023

Licensed content, net:

Released, less amortization and impairment1

6,308

11,154

Prepaid and unreleased

7,997

4,014

Total Licensed content, net

14,305

15,168

Total Licensed content, net

Produced content, net:

Released, less amortization and impairment2

20,792

33,094

In production

10,803

20,240

Total produced content, net

31,595

53,334

Total produced content, net

Total content assets

45,900

68,502

1 The September 30, 2023, amount reflects a $4.4 million impairment charge recorded for the three months ended September 30, 2023. See Impairment Assessment below.

2 The September 30, 2023, amount reflects a $14.6 million impairment charge recorded for the three months ended September 30, 2023. See Impairment Assessment below.

Of the ~~$6.3~~$10.2 million unamortized cost of licensed content that had been released as of ~~September 30, 2023,~~March 31, 2024, the Company expects that $4.7 million, $3.1 million ~~$1.6 million~~ and ~~$0.9~~$1.4 million will be amortized in each of the next three years. Of the ~~$20.8~~$23.4 million unamortized cost of produced content that had been released as of ~~September 30, 2023,~~March 31, 2024, the Company expects that $8.6 million, $6.4 million ~~$5.9 million~~ and ~~$4.9~~$5.1 million will be amortized in each of the next three years.

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Impairment Assessment

The Company’s primary business model is ~~generally~~ subscription-based as opposed to a model based on generating revenues at a specific title level. Content assets are predominantly monetized as a group and therefore are reviewed in aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. If such changes are identified, the aggregated content ~~assets~~library will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs are written off for content assets that have been, or are expected to be abandoned.

During the three months ended September 30, 2023, due to the continued adverse macro and microeconomic conditions, including the competitive environment and its impact on the Company’s subscriber growth, the Company revised its forecasted subscriber growth and forecasted cash flow assumptions. Additionally, companies in the streaming industry have experienced a decline in market valuations, and reflecting this market trend and the factors above, the market price of the Company’s common shares had declined significantly through September 30, 2023.

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Given these factors, as well as the Company’s declining market capitalization and operating losses during the quarter, the Company identified an indicator of impairment related to its content asset group and performed an analysis of content assets to assess if the fair value was less than unamortized cost. To determine if an impairment existed, the Company utilized a traditional discounted cash flow approach based on expectations for the monetization of its content assets in the aggregate, including estimates for future cash inflows and outflows. As a result of this impairment analysis of content assets, the Company determined that the unamortized cost exceeded the fair value, and as such, the Company recorded a $19.0 million impairment for the three months ended September 30, 2023.

The discounted cash flow analysis includes cash flow estimates of revenue and costs, as well as a discount rate (a Level 3 fair value measurement). Estimates of future revenue and costs involve measurement uncertainty, and it is therefore possible that further reductions in the carrying value of content assets may be required as a consequence of changes in management’s future revenue estimates. The discount rate utilized in the discount cash flow analysis was based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with the Company’s content assets. The discount rate may be impacted by adverse changes in the macroeconomic environment and volatility in the debt and equity markets.

Amortization

In accordance with its accounting policy for content assets, the Company amortizes licensed content costs and produced content costs, which is included within cost of revenues in the Company’s unaudited consolidated statements of operations. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ content amortization was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(in thousands)
(in thousands)
(in thousands)	(in thousands)	2023		2022		2023		2022

Licensed content	Licensed content	$	1,728	$	1,793	$	5,478	$	6,590

Licensed content

Licensed content
Produced content
Produced content
Produced content	Produced content	3,661		8,588		12,229		22,920
Total	Total	$	5,389	$	10,381	$	17,707	$	29,510
Total
Total

WARRANT LIABILITY

As described in Note 6 - ~~Stockholders’~~Stockholders' Equity, the Private Placement Warrants are classified as a non-current liability and reported at fair value at each reporting period. As of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, the fair value of the Private Placement Warrants, as determined using Level 3 inputs, was as follows:

(in thousands)

September 30,
2023

December 31,
2022

(in thousands)

March 31,
2024

December 31,
2023

Private Placement Warrants

257

Private Placement Warrants

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NOTE 5 - REVENUE

The following table sets forth the Company’s ~~revenues~~ disaggregated ~~by type~~revenues for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ as well as the relative percentage ~~of each revenue type~~ to total revenue:

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2023 2022 2023 2022
Subscriptions:
O&O Service $ 6,601 42 % $ 7,890 33 % $ 19,664 47 % $ 23,110 36 %
App Services 830 5 % 960 4 % 2,556 6 % 3,018 5 %
Subscriptions total 7,431 47 % 8,850 38 % 22,220 53 % 26,128 41 %
License fees:
Partner Direct Business 1,177 8 % 1,157 5 % 3,361 8 % 3,491 5 %
Bundled Distribution 1,504 10 % 2,595 11 % 4,487 11 % 10,250 16 %
Content Licensing 5,082 32 % 10,790 46 % 10,715 25 % 21,692 34 %
License fees total 7,763 50 % 14,542 62 % 18,563 44 % 35,433 56 %
Other* 436 3 % 177 1 % 1,331 3 % 1,983 3 %
Total revenues $ 15,630 $ 23,569 $ 42,114 $ 63,544
* Other revenue primarily relates to other marketing services


	Three Months Ended March 31,
(in thousands)	2024				2023

Direct Business:



Direct-to-Consumer	8,068		67	%	7,480		60	%
Partner Direct Business	1,462		12	%	1,102		9	%
Total Direct Business	9,530		79	%	8,582		69	%

Content Licensing:
Library sales	868		7	%	817		7	%
Presales	296		2	%	1,201		10	%
Total Content Licensing	1,164		10	%	2,018		16	%

Bundled Distribution	1,142		10	%	1,416		11	%

Enterprise	68		1	%	97		1	%

Other	97		1	%	274		2	%

Total revenues	$	12,001			$	12,387

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REMAINING PERFORMANCE OBLIGATIONS

As of ~~September 30, 2023,~~March 31, 2024, the Company expects to recognize revenues in the future related to performance obligations that were unsatisfied as follows:


		Remainder of year ending December 31, 2023			December 31,
	Remainder of Year Ending December 31, 2024
(in thousands)
(in thousands)
(in thousands)		(in thousands)		Remainder of year ending December 31, 2023		2024			2025			2026			2027			Thereafter			Total			2025	2026	2027	Thereafter	Total

Remaining performance obligations	Remaining performance obligations	$	1,671				$	4,972		$	2,179		$	417		$	34		$	219		$	9,492

Remaining performance obligations

Remaining performance obligations

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

DEFERRED ~~REVENUES~~REVENUE

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 ~~$13.7 million and $14.9~~$15.2 million as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022, respectively.~~ 2023, with the non-current portions of $0.6 million as of March 31, 2024, and December 31, 2023, included in other liabilities on the consolidated balance sheets.

For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company recognized revenues of ~~$12.9~~$6.3 million related to amounts deferred as of December 31, ~~2022, primarily resulting from recognition of annual subscription plan balances.~~2023.

~~TRADE AND BARTER TRANSACTIONS~~

In the second quarter of 2023, the Company began entering into trade and barter transactions primarily for the purpose of exchanging content assets through licensing agreements with media counterparties. Certain transactions may also include the exchange of advertising, whereby the Company and its counterparty exchange media campaigns or other promotional services.

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For content acquired through trade and barter transactions, the Company records the acquired assets in the consolidated balance sheet and amortizes those assets over the term of the content license, in accordance with the Company’s content and amortization policies. For other products and services received through trade and barter transactions, the Company records operating expenses upon receipt of such products and services, as applicable.

The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable; in which case, the consideration is measured based on the standalone selling price of the services provided. For an exchange of content, the performance obligation is satisfied at the time the content is made available for the counterparty to use, which represents the point in time that control is transferred. For advertising, the performance obligation is satisfied upon the Company’s delivery of the media campaign or other service to the counterparty.

~~For the three and nine months ended September 30, 2023, and 2022, trade and barter revenues were as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2023 2022 2023 2022
Trade and barter license fees: Content Licensing $ 4,949 $ — $ 7,416 $ —
Other trade and barter revenue* 250 — 774 —
Total trade and barter revenues $ 5,199 $ — $ 8,190 $ —
* Other revenue primarily relates to other marketing services

~~For the three and nine months ended September 30, 2023, and 2022, trade and barter advertising and marketing expenses were as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2023 2022 2023 2022
Trade and barter advertising and marketing $ 648 $ — $ 1,172 $ —

~~For the nine months ended September 30, 2023, and 2022, additions to content assets resulting from trade and barter transactions were as follows:~~

Nine Months Ended
September 30,
(in thousands) 2023 2022
Trade and barter additions to content assets $ 7,124 $ —

NOTE 6 - STOCKHOLDERS’ EQUITY

COMMON STOCK

As of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, 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 ~~September 30, 2023,~~March 31, 2024, the Company had 3,054,203 publicly traded warrants outstanding 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~~Business Combination on October 14, 2020 (the “Public Warrants” and, together with the Private Placement Warrants, the ~~“Warrants”~~"Warrants") and 3,676,000 Private Placement Warrants outstanding. The Private Placement Warrants are liability-classified, and the Public Warrants are equity-classified.

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Each whole warrant entitles the registered holder to purchase one share of the Company’s ~~common stock~~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~~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: ~~(a)~~(i) they will not be redeemable by the Company; ~~(b)~~(ii) they may be exercised by the holders on a cashless basis; and ~~(c)~~(iii) they are subject to registration rights.

There were no exercises of warrants during the three ~~and nine~~ months ended ~~September 30, 2023.~~March 31, 2024.

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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.~~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 to determine fair value as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, were as follows:


	March 31, 2024										March 31, 2024			December 31, 2023
		September 30, 2023			December 31, 2022

Exercise price
Exercise price
Exercise price	Exercise price	$	11.50		$	11.50
Stock price (CURI)	Stock price (CURI)	$	0.71		$	1.14
Expected volatility	Expected volatility	92.00		%	77.00		%	Expected volatility	90.00	%		100.00	%
Expected warrant term (years)	Expected warrant term (years)	2.0			2.8			Expected warrant term (years)	1.5			1.8
Risk-free interest rate	Risk-free interest rate	5.03		%	4.22		%	Risk-free interest rate	4.81	%		4.23	%
Dividend yield	Dividend yield	0		%	0		%	Dividend yield	2.3	%		0	%
Fair Value per Private Placement Warrant	Fair Value per Private Placement Warrant	$	0.02		$	0.07

The change in fair value of the private placement warrant liability was negligible for the three ~~and nine~~ months ended ~~September 30, 2023, resulted in a gain of~~March 31, 2024 and $0.1 million ~~and $0.2 million, respectively, and~~ for the three ~~and nine~~ months ended ~~September 30, 2022, resulted in a gain of $0.5 million and $4.9 million, respectively.~~March 31, 2023.

NOTE 7 - EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share are calculated on the basis of the weighted average number of shares of the Company’s ~~common stock~~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~~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.

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For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ the components of basic and diluted net loss per share were as follows:


(In thousands except per share amounts)	(In thousands except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
(In thousands except per share amounts)

2024
2024

Numerator — Basic and Diluted EPS:

Numerator — Basic and Diluted EPS:

Numerator — Basic and Diluted EPS:	Numerator — Basic and Diluted EPS:
Net loss	Net loss	$	(26,565)	$	(4,502)	$	(44,237)	$	(36,371)
Net loss
Net loss
Denominator — Basic and Diluted EPS:
Denominator — Basic and Diluted EPS:
Denominator — Basic and Diluted EPS:	Denominator — Basic and Diluted EPS:
Weighted–average shares	Weighted–average shares	53,040		52,793		52,999		52,773
Weighted–average shares
Weighted–average shares
Net loss per share — Basic and Diluted	Net loss per share — Basic and Diluted	$	(0.50)	$	(0.09)	$	(0.83)	$	(0.69)
Net loss per share — Basic and Diluted
Net loss per share — Basic and Diluted

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Common shares issuable for warrants, options, and restricted stock units ~~(RSU)~~(“RSU”) represent the total amount of outstanding warrants, stock options, and restricted stock units at ~~September 30, 2023,~~March 31, 2024, and ~~2022.~~2023. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ the following share equivalents were excluded from the ~~computation~~calculation of diluted net loss per share as the inclusion of such shares would have been anti-dilutive.


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(in thousands)
(in thousands)
(in thousands)

		Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)		2023	2022	2023	2022
Options

Options
		(in thousands)		(in thousands)

Options	Options	33	5,190	33	5,190
Restricted stock units	Restricted stock units	2,430	1,047	2,430	1,047
Restricted stock units
Restricted stock units
Warrants
Warrants
Warrants	Warrants	6,730	6,730	6,730	6,730
Total	Total	9,193	12,967	9,193	12,967
Total
Total

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.

In October 2020, the Company’s Board of Directors adopted the CuriosityStream 2020 Omnibus Plan (the “2020 Plan”). The 2020 Plan became effective upon consummation of the Business Combination and succeeds the Legacy CuriosityStream Stock Option 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 RSU activity, prices, and values for the ~~nine~~three months ended ~~September 30, 2023:~~March 31, 2024:

Number of
Shares
Available
for
Issuance
Under the
Plan
Stock Options Restricted Stock Units
(In thousands except share price and fair value amounts)
Number of
Shares
Weighted-
Average
Exercise
Price
Number of
Shares
Weighted-
Average
Grant
Date
Fair Value
Balance at December 31, 2022 1,815 4,632 $ 7.13 759 $ 7.14
Granted (1,923) — — 1,923 1.06
Options exercised and RSUs vested 71 — — (209) 8.75
Forfeited or expired 4,642 (4,599) 7.17 (43) 11.91
Balance at September 30, 2023 4,605 33 $ 5.30 2,430 $ 2.46


	Number of Shares Available for Issuance Under the Plan	Stock Options			Restricted Stock Units
(in thousands except share price and fair value amounts)		Number of Shares	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Grant Date Fair Value


Balance at December 31, 2023	4,762	32	$	5.79	2,058	$	2.57
Granted	(469)	—	—		469	0.54
RSUs vested	12	—	—		(31)	12.98
Forfeited or expired	20	(2)	5.88		(18)	10.61
Balance at March 31, 2024	4,325	31	$	5.30	2,478	$	1.95

There were no options exercised during the three ~~and nine~~ months ended ~~September 30 2023,~~March 31 2024, and ~~2022.~~2023.

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Stock options and RSU awards generally vest on a monthly, quarterly, or annual basis over a period of one to four years from the grant date. When options are exercised, the Company issues previously unissued shares of Common Stock to satisfy share option exercises. Upon vesting and distribution of RSUs, the Company issues 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.

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On April 28, 2023, the Company’s Board of Directors authorized, and on June 14, 2023, the Company’s shareholders approved, a stock option exchange program (the ~~“Exchange“~~“Exchange”) that permitted certain current employees and executive officers to exchange certain outstanding stock options with exercise prices substantially above the current market price of the Company’s ~~common stock~~Common Stock for RSUs of an equivalent fair value. The Exchange was completed in July 2023. For options that had already vested at the time of the Exchange, the resulting RSUs will vest in July 2024. Otherwise, the vesting schedules for unvested options at the time of the Exchange will remain the same for the resulting RSUs. As a result of the Exchange, 4.6 million of outstanding eligible stock options were exchanged for 1.6 million new RSUs, with a fair value of $0.99 per share on the date of the Exchange. There was no incremental compensation expense recorded by the Company as a result of the Exchange.

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.~~option..

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022, the assumptions used to value the options granted and the resulting weighted-average grant date fair value and~~ stock-based compensation expense ~~were~~was as follows:

(Stock-based compensation data in thousands) Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Dividend yield N/A N/A N/A 0 %
Expected volatility N/A 65% - 70% N/A 60% - 70%
Expected term (years) N/A N/A 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 N/A N/A $ 1.91
Stock-based compensation — Options $ 5 $ 999 $ 1,553 $ 2,913
Stock-based compensation — RSUs $ 892 $ 674 $ 2,033 $ 2,142
Total stock-based compensation $ 897 $ 1,673 $ 3,586 $ 5,055


(stock-based compensation in thousands)	Three Months Ended March 31,
	2024		2023








Stock-based compensation — Options	$	5	$	777
Stock-based compensation — RSUs	$	684	$	490
Total stock-based compensation	$	689	$	1,267

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.

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NOTE 9 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates as one reporting segment. The Company’s chief operating decision maker 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. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ revenue by geographic location based on customer location was as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		Three Months Ended September 30,								Nine Months Ended September 30,
United States
		2023				2022				2023				2022
United States

United States	United States	$	8,973	57	%	$	13,845	59	%	$	23,595	56	%	$	40,348	63	%
International:	International:
Canada		1,674		11	%	412		2	%	2,566		6	%	1,215		2	%
Germany		149		1	%	3,287		14	%	1,797		4	%	4,704		7	%
International:
International:
Netherlands
Netherlands
Netherlands	Netherlands	1,566		10	%	516		2	%	3,216		8	%	1,068		2	%
Other	Other	3,268		21	%	5,509		23	%	10,940		26	%	16,209		26	%
Other
Other
Total International
Total International
Total International	Total International	6,657		43	%	9,724		41	%	18,519		44	%	23,196		37	%
Total revenue	Total revenue	$	15,630	100	%	$	23,569	100	%	$	42,114	100	%	$	63,544	100	%
Total revenue
Total revenue

Revenue from ~~three~~one foreign ~~countries, Canada, Germany and~~country, Netherlands, ~~each~~ comprised 10% or greater of total revenue for one or more of the periods presented.

NOTE 10 - ~~RELATED PARTY~~RELATED-PARTY TRANSACTIONS

EQUITY INVESTMENTS

For the three months ended ~~September 30, 2023,~~March 31, 2024, the Company recognized ~~no revenue related to license fees from the Spiegel Venture. For the nine months ended September 30, 2023, the Company recognized $1.1~~$0.1 million of revenue related to license fees from the Spiegel ~~Venture. The Company also incurred $1.1 million and $3.4 million in cost~~Venture, while no revenue was recognized for Nebula.

Table of revenues during the three and nine months ended September 30, 2023, respectively, from its revenue share to Nebula from subscription sales to certain bundled subscription packages. This revenue share is recorded in Cost of revenues on the consolidated statements of operations.Contents

As of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~ 2023, the impacts of the ~~arrangements~~arrangements with the Spiegel Venture and Nebula on the Company’s consolidated balance sheets were as follows:

(In thousands)

September 30,
2023

December 31,
2022

(In thousands)

March 31,
2024

December 31,
2023

Accounts receivable

1,045

3,358

Accounts receivable

Accounts payable

376

404

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ the impacts of arrangements with the Spiegel Venture and Nebula on the Company’s consolidated statements of operations were as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In thousands)
(In thousands)
(In thousands)

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)		2023		2022		2023		2022

Revenues	Revenues	$	—	$	2,192	$	1,084	$	4,233
Revenues
Revenues
Cost of revenues	Cost of revenues	$	1,142	$	1,096	$	3,508	$	3,135
Cost of revenues
Cost of revenues

OPERATING LEASE

The Company sublets a portion of its office space to Hendricks Investment Holdings, LLC, 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 - Leases for additional information.

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NOTE 11 - LEASES

COMPANY AS 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 ~~September 30, 2023,~~March 31, 2024, the Company ~~had~~held operating lease ROU assets of ~~$3.4~~$3.3 million, current lease liabilities of ~~$0.3~~$0.4 million, included within accrued expenses and other liabilities on the consolidated balance sheets, and non-current lease liabilities of ~~$4.4~~$4.2 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, ASU 2016-02 adoption ~~date of the new lease accounting standard.~~date. The weighted average remaining lease term as of ~~September 30, 2023,~~March 31, 2024, was ~~9.42~~8.92 years.

Components of Lease Cost

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the Company’s total operating lease cost was comprised of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In thousands)
(In thousands)
(In thousands)	(In thousands)	2023		2022		2023		2022

Operating lease cost	Operating lease cost	$	120	$	121	$	362	$	363
Short-term lease cost*		—		6		(16)		42

Operating lease cost

Operating lease cost

Variable lease cost

Variable lease cost

Variable lease cost	Variable lease cost	13		12		38		36
Total lease cost	Total lease cost	$	133	$	139	$	384	$	441
Total lease cost
Total lease cost
										* Short term lease cost includes a refund received by the Company during the nine months ended September 30, 2023, for office space it previously occupied.

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Maturity of Lease Liabilities

As of ~~September 30, 2023,~~March 31, 2024, maturities of the Company’s operating lease liabilities, which do not include short-term leases and variable lease payments, were as follows:

(In thousands)
Three remaining months of 2023 $ 106
2024 557
2025 571
2026 585
2027 600
Thereafter 3,346
Total lease payments $ 5,765
Less: imputed interest (1,061)
Present value of total lease liabilities $ 4,704

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	(In thousands)

Nine remaining months of 2024	$	419
2025	571
2026	585
2027	600
2028	615
Thereafter	2,731
Total lease payments	$	5,521
Less: imputed interest	(961)
Present value of total lease liabilities	$	4,560

COMPANY AS LESSOR

The Company subleases a portion of its office space to a related party and accounts for the arrangement as an operating lease. Related party sublease rental income is recognized on a straight-line basis and is included in Interest and other ~~income~~income (expense) in the accompanying consolidated statements of operations. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, operating lease income from the Company’s sublet was less than $0.1 million. As of ~~September 30, 2023,~~March 31, 2024, total remaining future minimum lease payments receivable on the Company’s operating lease were ~~$0.3~~$0.2 million.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

CONTENT COMMITMENTS

As of ~~September 30, 2023,~~March 31, 2024, the Company’s content obligations amounted to ~~$1.6~~$0.6 million, including $0.1 million recorded within in content liabilities in the accompanying unaudited consolidated balance sheets, and ~~$1.5~~$0.5 million of obligations not yet recorded as they did not yet meet the asset recognition criteria for content assets. ~~Of the content~~These obligations ~~amount, $0.8 million and $0.6 million~~ are expected to be paid by December 31, ~~2023, and December 31, 2024, respectively.~~2024.

As of December 31, ~~2022,~~2023, the Company’s content obligations amounted to ~~$11.5~~$1.1 million, including ~~$2.9~~$0.4 million recorded within current content liabilities in the accompanying unaudited consolidated balance sheets and ~~$8.6~~$0.7 million of obligations not yet recorded as they did not yet meet the asset recognition criteria for content assets.

Content obligations include amounts related to licensed, commissioned and internally produced streaming content. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements. An obligation for the licensed and commissioned content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is generally recorded. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date.

ADVERTISING COMMITMENTS

The Company periodically enters into agreements to receive future advertising and marketing services as part of various licensee arrangements, and the Company reports commitments when the applicable agreements provide for specific committed amounts. As of ~~September 30, 2023,~~March 31, 2024, the Company’s future advertising commitments totaled ~~$1.3~~$1.4 million, of which the Company expects to pay ~~$0.5 million and~~ $0.8 million during the ~~three months ending December 31, 2023, and~~ year ending December 31, ~~2024, respectively.~~2024.

NOTE 1413 - INCOME TAXES

~~The Company recorded a~~For the three months ended March 31, 2024, Income tax expense was immaterial. For the comparative period in 2023, the provision for income taxes ofwas $0.1 million for the three months ended September 30, 2023 and 2022, and $0.5 million and $0.2 million for the nine months ended September 30, 2023 and 2022, respectively, primarily related to foreign withholding income taxes.million. The Company’s provision for income taxes differs from the federal statutory rate primarily due to the Company being in a full valuation allowance position and not recognizing a tax benefit attributable to generated losses for either federal or state income tax purposes.

2017

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NOTE 14 - SUBSEQUENT EVENTS

On May 6, 2024, the Board declared a regular quarterly cash dividend of $0.025 per share of Common Stock, equivalent to $0.10 per share of Common Stock on an annual basis. The cash dividend will be paid on July 31, 2024, to all holders of record of Common Stock at the close of business on July 12, 2024. This cash dividend of approximately $1.3 million is expected to be paid from available cash on hand.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of CuriosityStream Inc.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the Company’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q including, without limitation, statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, such as subscription plan price increases, the development of integrated digital brand partnerships with advertisers and our dividend plans, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “attribute,” “believe,” “continue,” “hope,” “estimate,” “expect,” “intend,” “may,” “might,” “potential,” “seek,” “should,” “will” and “would,” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph. These forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those included in forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on March ~~31, 2023,~~25, 2024 (the “Annual Report”) and any other subsequent periodic reports and future periodic reports. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.

OVERVIEW

~~Created~~Founded by John Hendricks, founder of the Discovery Channel and former Chairman of Discovery Communications, CuriosityStream is a media and entertainment company that offers premium video and audio programming across the principal categories of factual entertainment, including science, history, society, nature, lifestyle and technology. Our mission is to provide premium factual entertainment that informs, enchants and inspires.

We seek to meet demand for high-quality factual entertainment via subscription video on-demand (“SVOD”) platforms, ~~as well as via~~content licensing, bundled content licenses for SVOD and linear offerings, ~~content licensing, brand sponsorship and advertising,~~ talks and courses and partner bulk sales.

The main sources of our revenue ~~are (a) subscriber~~are:

1.Subscription and license fees earned from our Direct-to-Consumer business and Partner Direct ~~Business (“~~subscribers ("Direct ~~Business”~~Business"), ~~(b) license~~

2.License fees from content licensing arrangements (“("Content ~~Licensing”~~Licensing"), ~~(c) bundled~~

3.Bundled license fees from distribution affiliates (“Bundled Distribution”), ~~(d) subscriber~~

4.Subscriber fees from our Enterprise business ~~(“Enterprise”~~("Enterprise"), and ~~(e)~~

5.Other revenue, including advertising and sponsorships ~~(“Other”~~("Other").

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We operate our business as a single operating segment that provides premium streaming content through multiple channels, including the use of various applications, partnerships and affiliate relationships. ~~We generate our revenue through five products and services: Direct Business, Bundled Distribution, Content Licensing, Enterprise and Other.~~

~~Tab~~l ~~e of Contents~~

~~The following table is a summary of our revenues for the three and nine months ended September 30, 2023, and 2022:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2023 2022 2023 2022
Direct Business $ 8,574 55 % $ 8,589 36 % $ 25,466 60 % $ 25,476 40 %
Content Licensing 5,082 33 % 10,790 46 % 10,715 25 % 21,692 34 %
Bundled Distribution 1,504 10 % 2,595 11 % 4,487 12 % 10,250 16 %
Enterprise 34 0 % 1,418 6 % 115 0 % 4,143 7 %
Other 436 3 % 177 1 % 1,331 3 % 1,983 3 %
Revenues $ 15,630 $ 23,569 $ 42,114 $ 63,544

CuriosityStream’s award-winning content library features more than ~~15,000~~16,000 programs that explore topics ranging from space engineering to ancient history to the rise of Wall ~~Street.~~Street and includes shows and series from leading nonfiction producers. Our library includes:

•An extensive catalog of originally produced and owned content ~~includes~~of approximately 10,000 short-, mid- and long-form video and audio titles, including ~~One Day~~Curiosity University ~~and Learn 25~~ recorded lectures that are led by some of the most acclaimed college and university professors in the world. ~~Our library also features a~~

•A rotating catalog of ~~more than 5,000~~nearly 6,000 internationally licensed videos and audio programs. ~~Every month,~~

•More than 6,000 on-demand and ad-free productions available on-demand through our SVOD offerings.

Each week we launch ~~dozens of~~ new video titles, which are available on-demand in high- or ultra-high definition. Through new and long-standing international partnerships, we have localized a large portion of our video library from English to ten different languages.

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RESULTS OF OPERATIONS

The financial data in the following table sets forth selected financial information derived from our unaudited consolidated financial statements for three months ended March 31, 2024, and 2023, and includes our results of operations as a percentage of revenue or as a percentage of costs, as applicable, for the periods indicated:


	Three Months Ended March 31,			Change
(Unaudited and in thousands)	2024		2023	Total		%


Revenues
Direct Business	$	9,530		$	8,582		$	948	11	%
Content Licensing	1,164			2,018			(854)		(42	%)
Bundled Distribution	1,142			1,416			(274)		(19	%)
Enterprise	68			97			(29)		n/m
Other	97			274			(177)		(65	%)
Total revenue	12,001			12,387			(386)		(3	%)
Operating expenses
Cost of revenues	6,748			9,001			(2,253)		(25	%)
Advertising and marketing	3,105			3,115			(10)		—	%
General and administrative	5,802			8,059			(2,257)		(28	%)


Total operating expenses	15,655			20,175			(4,520)		(22	%)
Operating loss	(3,654)			(7,788)			4,134		(53	%)
Other income (expense)
Change in fair value of warrant liability	(30)			(74)			44		n/m
Interest and other income (expense)	439			388			51		n/m
Equity method investment loss	(1,756)			(219)			(1,537)		702	%
Loss before income taxes	$	(5,001)		$	(7,693)		$	2,692	(35	%)
Provision for income taxes	34			58			(24)		n/m
Net loss	$	(5,035)		$	(7,751)		$	2,716	(35	%)

* n/m = percentage not meaningful

For the three months ended March 31, 2024, and 2023, operating loss was $3.7 million and $7.8 million, respectively. The decline in operating loss of $4.1 million, or 53%, primarily resulted from the decreases to our operating expenses of $4.5 million, or 22%, which more than offset the decline in revenues of $0.4 million, or 3%, compared to the three months ended March 31, 2023.

For the three months ended March 31, 2024, and 2023, net loss was $5.0 million and $7.8 million, respectively, a decrease in net loss of $2.7 million, or 35%.

Our future operating results and cash flows are dependent upon a number of opportunities, challenges, and other factors, including our ability to efficiently grow our subscriber base, increase our prices and expand our service offerings to maximize subscriber lifetime value.

Revenue

Since the Company was founded in 2015, we have generated the majority of our revenues from consumers directly accessing our content in the form of monthly or annual subscription plans.

For the three months ended March 31, 2024, and 2023, revenues totaled $12.0 million and $12.4 million, respectively, a decrease of $0.4 million, or 3%. This decline was primarily driven by declines in Content Licensing and Bundled Distribution of $0.9 million and $0.3 million, respectively, while our Direct Business revenue increased by $0.9 million.

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Direct Business

Our Direct Business revenue is derived from consumers subscribing directly through our ~~owned and operated website (“~~O&O ~~Service”),~~Consumer Service and App Services and through Partner Direct relationships. Our O&O ~~Direct-to-Consumer service~~Consumer Service is available in more than 175 countries to any household with a broadband connection. As of March 27, 2023, we increased our standard pricing for new subscribers to this service to $4.99 per month or $39.99 per year. We are currently in the process of raising the prices for our legacy subscribers, who had previously paid $2.99 per month or $19.99 per year. We also provide a Smart Bundle service for $9.99 per month or $69.99 per year. Our Smart Bundle membership includes everything in our standard service, plus subscriptions to third-party platforms Tastemade, Topic, SommTV, DaVinci Kids, our equity investee Watch Nebula, LLC (“Nebula”), and our One Day University stand-alone service.

Our App Services enable access to CuriosityStream on almost every major consumer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, major smart TV brands (e.g., LG, Vizio, Samsung) and gaming consoles.

We are currently in the process of raising the prices for our legacy subscribers in our U.S. dollar-based markets, which represent the vast majority of our Direct Business revenue. These legacy subscribers previously paid $2.99 per month or $19.99 per year. As of March 27, 2023, we increased our standard pricing for new subscribers to this service to $4.99 per month or $39.99 per year. We also provide a Smart Bundle service for $9.99 per month or $69.99 per year. Our Smart Bundle membership currently includes our standard service, plus subscriptions to third-party platforms Tastemade, Kidstream (added in January 2024), SommTV, Da Vinci Kids, and our Curiosity University stand-alone service. Our Smart Bundle pricing remains unchanged. However, we may in the future increase the price of these existing subscription plans, which may have a positive effect on our revenue from this line of our business.

The multichannel video programming distributors (“MVPDs”), virtual MVPDs (“vMVPDs”) and digital distributor partners making up our Partner Direct Business pay us a license fee for sales to individuals who subscribe to CuriosityStream via the partners’ respective platforms. We have affiliate agreement relationships with, and our service is available directly from, major MVPDs that include Comcast, Cox, Dish and vMVPDs and digital distributors that include Amazon Prime Video Channels, Apple Channel, Roku Channel, Sling TV and YouTube TV.

~~With~~The following table details our Direct Business for the three months ended March 31, 2024, and 2023:


	Three Months Ended March 31,			Change
(in thousands)	2024		2023	Total		%




Direct-to-Consumer	8,068			7,480			588		8	%
Partner Direct Business	$	1,462		$	1,102		360		33	%
Total Direct Business	$	9,530		$	8,582		$	948	41	%

For the three months ended March 31, 2024, our Direct-to-Consumer revenue increased by $0.6 million, or 8%, compared to 2023. While our overall DTC subscriber count declined, the effects of this were more than offset by the higher pricing that we began to roll out in 2023. Our Partner Direct Business benefited primarily from the adoption of the price increase and continued subscriber growth.

Content Licensing

Through our Content Licensing business, we license to certain media companies a collection of ~~our~~ existing titles from our content library in a traditional content licensing deal. We also ~~sell~~pre-sell selected rights (such as in territories or on platforms that are lower priority for us) to content we create before we even begin production. This latter model reduces risk in our content development decisions and creates content licensing revenue.

~~In addition~~

The following table details our Content Licensing results for the three months ended March 31, 2024, and 2023:


	Three Months Ended March 31,			Change
(in thousands)	2024		2023	Total		%

Library sales1	$	868		$	817		$	51	6	%
Presales	296			1,201			(905)		(75	%)
Total Content Licensing	1,164			2,018			(854)		(42	%)

1 The 2024 amount included $0.2 million from trade and barter transactions.

Table of Contents

For the three months ended March 31, 2024, compared to 2023, Library sales increased by 6%, while presales declined by 75%. Within our ~~Direct Business described above,~~content licensing business, our primary focus is on our positive gross margin library-related transactions, although we may continue to enter into presale arrangements with certain partners for strategic purposes.

Bundled Distribution

Our Bundled Distribution business includes affiliate relationships with our Bundled MVPD Partners and vMVPDs, which are broadband and wireless companies in the U.S. and international territories to whom we can offer a broad scope of rights, including 24/7 “linear” channels, our ~~on-demand~~video-on-demand content library, mobile rights and pricing and packaging flexibility, in exchange for an annual fixed fee or fee per subscriber.

For the three months ended March 31, 2024, and 2023, our Bundled Distribution revenue was $1.1 million and $1.4 million, respectively. This 19% decline was primarily the result of revised affiliate agreements and the non-renewal of certain partnerships. Bundled Distribution is a challenging revenue stream given the pressures being felt in the linear pay television business worldwide.

Enterprise

Our Enterprise business is comprised primarily of providing subscriptions in bulk to companies and organizations that in turn offer these subscriptions to their employees and members as an employment benefit or “gift of curiosity.” ~~Revenues from our Enterprise business are included within Subscriptions: O&O Services in~~ ~~Note 5 - Revenue~~ ~~in the~~ ~~Notes to Unaudited Consolidated Financial Statements~~.

~~Tab~~l ~~e of Contents~~

Other ~~revenue is primarily comprised of~~

We provide advertising and ~~sponsorship revenue. We~~sponsorships services through developing integrated digital brand partnerships designed to offer ~~companies~~ the ~~opportunity~~chance to be associated with CuriosityStream content in a variety of forms, including short- and long-form program ~~integration,~~integration; branded social media promotional ~~videos,~~videos; broadcast advertising spots in our video and audio programs that are made available on our linear programming channels or in front of the ~~paywall,~~paywall; and our increasing focus on digital display ~~ads.~~

~~Companies in the media industry commonly utilize trade and barter agreements in the normal course of business to reduce cash outlays for new~~ads while delivering our content ~~assets or other expenditures by exchanging existing content assets, advertising~~through advertising-based video-on-demand (AVOD), transactional video-on-demand (TVOD), free advertising-supported streaming television (FAST), YouTube and other services. In the second quarter of 2023, we began entering into trade and barter transactions primarily for the purpose of exchanging content assets through licensing agreements with media counterparties. Certain transactions may also include the exchange of advertising, whereby we exchange media campaigns or other promotional services.similar distribution channels.

In the future, we hope to continue developing integrated digital brand partnerships with advertisers. These sponsorship campaigns offer companies the chance to be associated with CuriosityStream content in the forms described above. We believe the impressions accumulated in these multi-faceted campaigns would ~~roll up to~~result in verifiable metrics for the clients.

For the three months ended March 31, 2024, Other revenue was $0.1 million, a decline of $0.2 million, or 65%, from the same period in 2023. This decline was largely due to certain short-term marketing partnerships that we entered into during the early part of 2023, including a $0.2 million campaign that we provided through a trade and barter arrangement, which were not renewed in 2024.

~~KEY FACTORS AFFECTING RESULTS OF OPERATIONS~~

Operating Expenses

Our ~~future~~primary operating ~~results~~costs relate to the cost of producing and ~~cash flows are dependent upon a number~~acquiring our content, the costs of ~~opportunities, challenges,~~advertising and ~~other factors, including our ability to efficiently grow our subscriber base, increase our prices, and expand~~marketing our service, ~~offerings to maximize subscriber lifetime value. In particular, we believe that~~personnel costs, and distribution fees.

For the ~~following factors significantly affected~~three months ended March 31, 2024, and 2023, our ~~results~~operating expenses were $15.7 million and $20.2 million, respectively, a decrease of ~~operations over the last fiscal quarter~~$4.5 million, or 22%.

Cost of Revenues

Cost of revenues encompasses content amortization, distribution fees, revenue sharing arrangements, hosting and ~~are expected to continue to have such significant effects:~~streaming delivery costs, payment processing costs, commission costs, and subtitling and broadcast costs. Producing and co-producing content and commissioned content is generally more costly than content acquired through licenses.

~~Revenues~~Table of Contents

Since the Company was founded in 2015, we have generated the majority of our revenues from consumers directly accessing our content in the form of monthly or annual subscription plans. We are currently in the process of raising the prices for our legacy subscribers, who had previously paid $2.99 per month or $19.99 per year. As of March 27, 2023, we increased our standard pricing for new subscribers to this service to $4.99 per month or $39.99 per year. We also provide aDistribution fees include payment processing fees and revenue share arrangements with Smart Bundle ~~service for $9.99 per month or $69.99 per year. Currently,~~and digital distributor partners, as well as fees owed to the Spiegel Venture related to our Smart Bundle pricing and pricing for most legacy subscribers remain unchanged. However, we may in the future increase the price of these existing subscription plans, which may have a positive effect on our revenue from this line of our business.

German SVOD service. We pay a fixed percentage distribution fee to our partners for subscribers accessing our platform via App Services to compensate these partners for access to their customer and subscriber bases. The MVPD, vMVPD and digital distributor partners making up our Partner Direct ~~Business~~business pay us a license fee, and host and stream our content to their customers via their own platforms, such as set top boxes in the case of most MVPDs. We do not incur billing, streaming or backend costs associated with content distribution through our MVPD, vMVPD and digital distributor partners.

~~Operating Costs~~

~~Our primary operating costs relate to the~~The following table details cost of ~~producing~~revenues for the three months ended March 31, 2024, and ~~acquiring our content,~~2023:


	Three Months Ended March 31,			Change
(in thousands)	2024		2023	Total		%

Content amortization	$	5,215		$	5,852		$	(637)	(11	%)
Other1	1,533			3,149			(1,616)		(51	%)
Total cost of revenues	$	6,748		$	9,001		$	(2,253)	(62	%)

1 Includes commissions, distribution fees, production and broadcast, promotions and sponsorships, and other expenses.

For the costs of advertising and marketing our service, personnel costs, and distribution fees. Producing and co-producing content and commissioned content is generally more costly than acquiring content through licenses. Costthree months ended March 31, 2024, cost of revenues ~~encompasses~~decreased to $6.7 million from $9.0 million, a 62% reduction. This decrease was mostly driven by an 11% decline in content amortization ~~distribution fees, revenue sharing arrangements, hosting~~due to fewer presale agreements, as discussed above, a reduction in content acquisitions and ~~streaming delivery costs, payment processing costs, commission costs,~~releases during the year and ~~subtitling and broadcast costs.~~

~~The Company’s primary business model is subscription based as opposed~~the content impairment that we recorded in the third quarter of 2023. Other cost of revenues also declined due to a ~~model generating revenues at a specific title level. Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed~~reduction in ~~aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or~~revenue share arrangements, including specifically our arrangement with Nebula that ~~the fair value may be less than unamortized cost. If such changes are identified, the aggregated content library will be stated~~expired at the ~~lower~~end of unamortized cost or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. For a discussion of the accounting policies for content impairment write-down2023.

Advertising and ~~management estimates involved therein, see~~ ~~Critical Accounting Policies and Estimates~~ ~~below.~~Marketing

~~Tab~~l ~~e of Contents~~

~~Further, our~~Our advertising and marketing expenditures ~~and personnel costs constitute~~are a primary operating ~~costs~~cost for our business. ~~These~~While these costs may fluctuate based on advertising and marketing objectives, ~~and personnel needs. In general,~~ we ~~intend to~~generally focus marketing dollars on efficient customer ~~acquisition. With respect~~acquisition methods. For the three months ended March 31, 2024, advertising and marketing expenses remained flat when compared to the same period in 2023.

General and Administrative

Our general and administrative costs are associated with certain administrative functions, including corporate governance, executive management, information technology, finance and human resources. These costs consist largely of compensation expense, subscriptions that support our business, professional services, licenses and rent. While personnel ~~costs,~~levels may fluctuate based on our needs, we tend to focus on hiring and retaining revenue-generating personnel, such as sales staff and roles that support the improvement, maintenance and marketing of our ~~Direct Service.~~

~~RESULTS OF OPERATIONS~~

~~Three Months Ended September 30, 2023~~different revenue streams.

The ~~financial data in the~~ following table ~~sets forth selected financial information derived from our unaudited consolidated financial statements~~details general and administrative costs for ~~three months ended September 30, 2023, and 2022, and includes our results of operations as a percentage of revenue or as a percentage of costs, as applicable, for the periods indicated.~~

Three Months Ended September 30, $ Change % Change*
(Unaudited and in thousands) 2023 2022
Revenues
Subscriptions $ 7,431 47 % $ 8,850 38 % $ (1,419) (16 %)
License fee 7,763 50 % 14,542 61 % (6,779) (47 %)
Other 436 3 % 177 1 % 259 146 %
Total revenue $ 15,630 100 % $ 23,569 100 % $ (7,939) (34 %)
Operating expenses
Cost of revenues 8,494 21 % 13,566 49 % (5,072) (37 %)
Advertising and marketing 5,106 13 % 5,626 20 % (520) (9 %)
General and administrative 6,959 18 % 8,757 31 % (1,798) (21 %)
Impairment of content assets 18,970 48 % — — % 18,970 100 %
Total operating expenses $ 39,529 100 % $ 27,949 100 % $ 11,580 41 %
Operating loss (23,899) (4,380) (19,519) 446 %
Other income (expense)
Change in fair value of warrant liability 74 514 (440) n/m
Interest and other income (expense) 31 (478) 509 n/m
Equity method investment loss (2,638) (94) (2,544) 2706 %
Loss before income taxes $ (26,432) $ (4,438) $ (21,994) 496 %
Provision for income taxes 133 64 69 n/m
Net loss $ (26,565) $ (4,502) $ (22,063) 490 %
* n/m = percentage not meaningful

~~Revenue~~

~~For~~ the three months ended ~~September 30, 2023,~~March 31, 2024, and ~~2022, total revenue was $15.6 million and $23.6 million, respectively. This decrease of $7.9 million, or 34%, was primarily attributable to reductions in both License fees and Subscriptions.~~2023:

The decrease in License fees of $6.8 million was primarily driven by the non-renewal of certain content presale licensing arrangements and Bundled Distribution agreements, partially offset by an increase of from new trade and barter license agreements. The decrease in Subscriptions of $1.4 million was primarily due to the termination of certain corporate subscriptions related to bulk agreements, which termination occurred in the third quarter of 2022.


	Three Months Ended March 31,			Change
(in thousands)	2024		2023	Total		%

Payroll and related	$	2,652		$	3,589		$	(937)	(26	%)
Professional services	1,051			$	1,927		(876)		(45	%)
Stock-based compensation	689			1,267			(578)		(46	%)
Technology and subscriptions	374			423			(49)		(12	%)
Other1	1,036			853			183		21	%
Total general and administrative	$	5,802		$	8,059		$	(2,257)	(28	%)



1 Includes facilities costs, depreciation and amortization, insurance, technology and subscriptions, travel and other expenses.

~~Tab~~Table of l ~~e of~~ Contents

~~Operating Expenses~~

For the three months ended ~~September 30, 2023, operating~~March 31, 2024, general and administrative expenses ~~were $39.5~~decreased to $5.8 million ~~compared to $27.9~~from $8.1 million for the same period in ~~2022, an increase~~2023. This decrease of ~~$11.6~~$2.3 million, or ~~41%.~~28%, was primarily the result of lower payroll and related costs and stock-based compensation of $0.9 million and 0.6 million, respectively, primarily driven by our smaller average workforce size as well as reduced incentive compensation. Professional services costs also declined by 45% as we streamlined various outside services during the year and brought certain finance and operations functions internal.

~~Cost~~

Other Income (Expense)

Change in Fair Value of ~~Revenues.~~ Warrant Liability

The fair value of our warrant liability is estimated using the Black-Scholes valuation model that takes into account a number of economic assumptions, including the market price of our Common Stock and its expected volatility. Changes in these inputs from period to period may significantly affect changes in fair values.

Equity Method Investment Loss

For the three months ended ~~September 30, 2023, cost~~March 31, 2024, the Company recorded a loss of ~~revenues decreased~~$1.8 million compared to ~~$8.5 million from $13.6 million in the same period~~a loss of 2022. This reduction of $5.1 million, or 37%, primarily resulted from the decrease in content amortization and a decrease in revenue share expense related to bundled and premier tier arrangements with other streaming services.

~~Advertising and Marketing.~~ ~~For the three months ended September 30, 2023, advertising and marketing expenses decreased to $5.1 million from $5.6~~$0.2 million for the same period in ~~2022.~~2023, related to its investments in the Spiegel Venture and Nebula. This ~~decrease of $0.5 million, or 9%, was~~increase in losses is primarily ~~due~~attributable to ~~strategic changes in our marketing approach and cost-saving measures implemented in our advertising campaigns.~~write-downs recorded by the Spiegel Venture.

~~General and Administrative.~~

Income Taxes

For the three months ended ~~September 30, 2023, general and administrative expenses decreased by $1.8 million, or 21%, from $8.8 million for~~March 31, 2024, Income tax expense was immaterial. For the ~~same~~comparative period in ~~2022 to $7.0 million. The decrease was primarily due to cost controls and efficiency measures implemented across our administrative functions.~~

~~Impairment of Content Assets.~~ ~~For the three months ended September 30, 2023, we incurred an impairment charge of $19.0 million related to our content assets. In comparison, no such impairments were incurred~~ ~~for the same period in 2022. For a more detailed discussion of the impairment charge and the underlying factors contributing to the impairment, refer to~~ ~~Note 4 - Content Assets~~ ~~in the~~ ~~Notes to Unaudited Consolidated Financial Statements~~.

~~Operating Loss~~

For the three months ended September 30, 2023, operating loss was $23.9 million, an increase in loss of $19.5 million compared to the operating loss of $4.4 million for the same period in 2022.This increase was almost entirely attributable to the ~~$19.0 million~~ ~~content assets impairment.~~

~~Other Income (Expense)~~

~~Change in Fair Value of Warrant Liability.~~ ~~For the three months ended September 30,~~ 2023, the change in the fair value of warrant liability related to Private Placement Warrants resulted in income of $0.1 million, a decrease of $0.4 million from the income of $0.5 million in the same period in 2022. The change primarily stemmed from fluctuations in the market price of our common stock and the corresponding changes to the underlying assumptions used in the valuation model used for our Private Placement Warrants during the same period in 2022.

~~Interest and Other Income (Expense).~~ Interest and other income (expense) for the three months ended September 30, 2023, was $0.1 million income compared to $0.5 million expense for the same period in 2022. The decrease was primarily related to a decrease in interest income during the current year period.

~~Equity Method Investment Loss.~~For the three months ended September 30, 2023, the Company recorded a loss of $2.6 million compared to a loss of $0.1 million for the same period in 2022, related to its investments in Spiegel Venture and Nebula. ~~The increase was primarily due to the $2.3 million impairment charge recorded by the Company to its investment in Nebula during the third quarter of 2023.~~

~~Income Taxes~~

~~Our~~ provision for income taxes was $0.1 million, ~~for the three months ended September 30, 2023, compared~~primarily due to ~~$0.1 million for the same period in 2022. The Company’s~~losses generated before income taxes. Our provision for income taxes ~~is primarily related to foreign withholding income taxes and~~ differs from the federal statutory rate primarily due to the Company being in a full valuation allowance position and not recognizing a tax benefit attributable to generated losses for either federal or state income tax purposes.

~~Tab~~l ~~e of Contents~~

~~Net Loss~~

~~The net loss for the three months ended September 30, 2023, was $26.6 million, compared to $4.5 million for the same period in 2022. The increase in our net loss of $22.1 million~~ primarily resulted from an impairment charge of $19.0 million, the reduction in revenue of $7.9 million, or 34%, and an impairment charge to one of our equity method investments of $2.3 million, partially offset by decreases in cost of revenues of $5.1 million and general and administrative expense of $1.8 million.

~~Nine Months Ended September 30, 2023~~

The financial data in the following table sets forth selected financial information derived from our unaudited consolidated financial statements for nine months ended September 30, 2023, and 2022, and includes our results of operations as a percentage of revenue or as a percentage of costs, as applicable, for the periods indicated.

Nine Months Ended September 30, 2023 $ Change % Change*
(Unaudited and in thousands) 2023 2022
Revenues
Subscriptions $ 22,220 53 % $ 26,128 41 % $ (3,908) (15 %)
License fee 18,563 44 % 35,433 56 % (10,094) (28 %)
Other 1,331 3 % 1,983 3 % (911) (46 %)
Total revenue $ 42,114 100 % $ 63,544 100 % $ (21,430) (34 %)
Operating expenses
Cost of revenues 27,428 34 % 38,404 37 % (10,976) (29 %)
Advertising and marketing 12,424 15 % 31,602 31 % (19,178) (61 %)
General and administrative 22,998 28 % 29,863 29 % (6,865) (23 %)
Impairment of content assets 18,970 23 % — — % 18,970 100 %
Impairment of goodwill and intangible assets — — 3,603 3 % (3,603) (100 %)
Total operating expenses $ 81,820 100 % $ 103,472 100 % $ (21,652) (21 %)
Operating loss (39,706) (39,928) 222 (1 %)
Other income (expense)
Change in fair value of warrant liability 184 4,852 (4,668) (96 %)
Interest and other income (expense) 856 (564) 1,420 n/m
Equity method investment loss (5,092) (566) (4,526) (420 %)
Loss before income taxes $ (43,758) $ (36,206) $ (7,552) 21 %
Provision for income taxes 479 165 314 n/m
Net loss $ (44,237) $ (36,371) $ (7,866) 22 %

~~Revenue~~

For the nine months ended September 30, 2023, and 2022, total revenue was $42.1 million and $63.5 million, respectively. This decrease of $21.4 million, or 34%, was primarily attributable to reductions in both license fees and subscriptions.

~~The decrease in license fees of $10.1 million was primarily driven by the non-renewal of certain content licensing arrangements as well as the non-renewal of certain~~ ~~Bundled Distribution agr~~eements, partially offset by an increase in new trade and barter license agreements. The decrease in Subscriptions revenue of $3.9 million was primarily due to the termination of certain corporate subscriptions related to bulk agreements, which occurred in the third quarter of 2022.

~~Tab~~l ~~e of Contents~~

~~Operating Expenses~~

~~For the nine months ended September 30, 2023, total operating expenses were $81.8 million, compared to $103.5 million for the same period in 2022, marking a reduction of $21.7 million, or 21%.~~

~~Cost of Revenues.~~ For the nine months ended September 30, 2023, cost of revenues decreased to $27.4 million from $38.4 million in the same period of 2022. This reduction of $11.0 million, or 29%, primarily resulted from the decrease in content amortization and a decrease in revenue share expense related to bundled and premier tier arrangements with other streaming services.

~~Advertising and Marketing.~~ For the nine months ended September 30, 2023, advertising and marketing decreased to $12.4 million from $31.6 million for the same period in 2022. This decrease of $19.2 million, or 21%, was primarily due to strategic changes in our marketing approach and cost-saving measures implemented in our advertising campaigns.

~~General and Administrative.~~ For the nine months ended September 30, 2023, general and administrative decreased to $23.0 million, from $29.9 million for same period in 2022. The decrease of $6.9 million, or 21%, was primarily due to cost controls and efficiency measures implemented across our administrative functions.

~~Impairment of Content Assets.~~ ~~For the nine months ended September 30, 2023, We incurred an impairment charge of $19.0 million relating to our content assets. In contrast, no such impairments were identified for the~~ ~~for same period in 2022. For a more detailed discussion of the impairment charge and the underlying factors contributing to the impairment, refer to~~ ~~Note 4 - Content Assets~~ ~~in the~~ ~~Notes to Unaudited Consolidated Financial Statements~~.

~~Impairment of Goodwill and Intangible Assets.~~ ~~For the nine months ended September 30, 2023, we incurred no impairment charges in contrast to the $3.6 million incurred for the same period in 2022.~~

~~Operating Loss~~

For the nine months ended September 30, 2023, operating loss was $39.7 million, a decrease of $0.2 million, or 1%, compared to the operating loss of $39.9 million for the same period in 2022. The declines in cost of revenues, advertising and marketing, and general and administrative expenses were almost entirely offset by the content impairment charge and the decline in revenue.

~~Change in Fair Value of Warrant Liability.~~ For the nine months ended September 30, 2023, the Company recognized a gain of $0.2 million, compared to a gain of $4.9 million for the same period in 2022. This reduction in gain of $4.7 million, or 96%, primarily resulted from fluctuations in the market price of our common stock and the corresponding changes to the underlying assumptions used in the valuation model for our Private Placement Warrants.

~~Interest and Other Income (Expense).~~For the nine months ended September 30, 2023, Interest and other income (expense) amounted to $0.9 million an increase of $1.4 million compared to an expense of $0.6 million for the same period in 2022. The change was primarily due to increased interest income.

~~Equity Method Investment Loss.For the nine months ended September 30, 2023, the Company recorded a loss of $5~~.0 million compared to a loss of $0.6 million for the same period in 2022, related to its investments in Spiegel Venture and Nebula. The increase was primarily due to the $2.3 million impairment charge recorded by the Company to its investment in Nebula during the third quarter of 2023.

~~Income Taxes~~

Our provision for income taxes was $0.5 and $0.2 million for the nine months ended September 30, 2023, and 2022, respectively. The Company’s provision for income taxes is primarily related to foreign withholding income taxes and differs from the federal statutory rate primarily because the Company has taken a full valuation allowance and has not recognized a benefit for either federal or state income tax purposes.

~~Tab~~l ~~e of Contents~~

~~Net Loss~~

Net loss for the nine months ended September 30, 2023, was $44.2 million, compared to a net loss of $36.4 million for the same period in 2022. The increase in our net loss of $7.9 million, or 22%, was primarily due to a decrease i~~n revenue of $21.4 million,~~ ~~the $19.0 million impairment charge to our content assets,~~ ~~a re~~duction in gain from the change in the fair value of warrant liability of $4.7 million and an increase in equity method investment loss of $4.5 million, partially offset by decreases in advertising and marketing of $19.2 million, cost of revenues of $11.0 million and general and administrative expenses of $6.9 million.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of ~~September 30, 2023,~~March 31, 2024, the Company’s cash and cash equivalents, including restricted cash, totaled ~~$40.8~~$38.9 million. For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company incurred a net loss of ~~$44.2~~$5.0 million and ~~used $13.6~~generated $0.7 million of net cash in operating ~~activities and $0.1 million of net~~activities. There were no significant cash inflows from financing activities ~~while~~or investing activities ~~provided $14.0 million~~during the three months ended March 31,.

Our cash and cash equivalents mainly consist of ~~net cash.~~

~~As previously discussed,~~investments in institutional money market funds and short-term deposits held at major global financial institutions. We regularly monitor the creditworthiness of the financial institutions and money market fund asset managers with whom we ~~began entering into trade~~invest our funds, and ~~barter transactions in the second quarter~~we maintain a level of ~~2023 primarily for the purpose of exchanging content assets through licensing agreements with media counterparties. Our use of these transactions has enabled~~liquidity sufficient to allow us to ~~acquire quality content that we can monetize through various distribution channels while preserving~~meet our ~~liquidity.~~cash needs in both the short term and long term.

We believe that our current cash levels, including investments in money market funds that are readily convertible to cash, will be adequate to support our ongoing operations, capital expenditures and working capital for at least the next twelve months. We believe that we have access to additional funds in the short term and the long term, if needed, through the capital markets to obtain further financing.

We use cash principally to acquire content, promote our service through advertising and marketing, and provide for working capital to operate our business. We have experienced significant net losses since our inception, and, given the significant operating and capital expenditures associated with our business plan, we anticipate that we will continue to incur net losses.

As previously discussed, we began entering into trade and barter transactions in the second quarter of 2023 primarily for the purpose of exchanging content assets through licensing agreements with media counterparties. Our use of these transactions has enabled us to acquire quality content that we can monetize through various distribution channels while preserving our liquidity.

Our Board of Directors declared a quarterly cash dividend of $0.025 per share, with the first dividend paid on April 30, 2024, for an aggregate amount paid of $1.3 million. Our Board of Directors declared the next quarterly cash dividend of $0.025 per share to be paid on July 31, 2024, for an aggregate amount paid of $1.3 million. We intend to pay regular quarterly dividends.

Table of Contents

Cash Flow Analysis

The following table presents our cash flows from operating, investing and financing activities for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, and ~~2022:~~2023:


		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
(Unaudited and in thousands)	(Unaudited and in thousands)	2023		2022		(Unaudited and in thousands)	2024	2023

Net cash used in operating activities
Net cash used in operating activities
Net cash used in operating activities	Net cash used in operating activities	$	(13,630)	$	(30,744)
Net cash provided by investing activities	Net cash provided by investing activities	14,003		60,701
Net cash used in financing activities	Net cash used in financing activities	(76)		(178)
Net increase in cash, cash equivalents and restricted cash	Net increase in cash, cash equivalents and restricted cash	$	297	$	29,779

~~Cash Flows from~~ Operating Activities

Cash flows from operating activities primarily consist of net losses, changes to our content assets (including additions and amortization), and other working capital items.


	Three Months Ended March 31,
(in thousands)	2024		2023

Net loss	$	(5,035)	$	(7,751)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Change in fair value of warrant liability	30		74
Additions to content assets	(426)		(3,723)
Change in content liabilities	(333)		(1,206)
Amortization of content assets	5,215		5,852

Stock-based compensation	689		1,267
Equity interests loss	1,756		219
Other depreciation, amortization and non-cash items	239		274
Changes in operating assets and liabilities	(1,469)		(1,314)
Net cash provided by (used in) operating activities	$	666	$	(6,308)

For the ~~nine~~three months ended ~~September 30, 2023, and 2022, we recorded a~~March 31, 2024, our net cash ~~outflow~~inflow from operating activities was $0.7 million compared to net cash used in operating activities of ~~$13.6~~$6.3 million ~~and $30.7 million, respectively, or a decline~~for the three months ended March 31, 2023, an increase in operating cash outflow of ~~$17.1~~$7.0 million.

Although we reported a net loss of $5.0 million ~~or 56%.~~

~~For~~for the ~~nine~~three months ended September 30, 2023, our use of cash was primarily due to our $44.2 million net loss, additions to content assets and change in content liabilities of $14.1 million and $2.7 million, respectively, as well as changes in accrued expenses and other liabilities, and deferred revenue of $3.9 million and $1.2 million, respectively. This was partially offset byMarch 31, 2024, this amount reflected noncash items such as amortization of content assets, stock-based compensation and equity method investment loss of ~~$17.7~~$5.2 million, ~~$3.6~~$1.8 million, and ~~$5.1~~$0.7 million, respectively. ~~Additionally, changes~~Cash used during the quarter included a $1.5 million change in ~~accounts receivable~~operating assets and ~~other assets were $4.0 million~~liabilities and ~~$1.7 million, respectively.~~

~~Tab~~l ~~e of Contents~~

~~Of the $14.1 million in additions to content assets for the nine months ended September 30, 2023, $7.1 million was attributable to non-cash trade and barter arrangements.~~

~~For the nine months ended September 30, 2022, our use of cash was primarily due to our $36.4 million net loss,~~ additions to content assets and change inof content liabilities of ~~$31.7~~$0.4 million and ~~$4.7~~$0.3 million, ~~respectively, as well as changes in accrued expenses and other liabilities, and deferred revenue~~respectively.

For the three months ended March 31, 2023, we reported a net loss of ~~$4.8 million and $4.5 million, respectively.~~$7.8 million. This ~~was partially offset by~~amount reflected noncash items such as amortization of content assets, ~~and~~ stock-based compensation and equity method investment loss of ~~$29.5~~$5.9 million, $1.3 million and ~~$5.1~~$0.2 million, respectively. ~~Additionally,~~Cash used during the quarter included additions to content assets and changes in ~~accounts receivable, other~~content liabilities of $3.7 million and $1.2 million, respectively, and changes in operating assets and ~~accounts payable were $6.3 million, $5.0 million and $4.2 million, respectively.~~liabilities of $1.3 million.

~~Cash Flows from~~ Investing Activities

Cash flow from investing activities consists of purchases, sales and maturities of investments, business acquisitions and equity investments and purchases of property and equipment.

~~For the nine months ended September 30, 2023, and 2022, we recorded net cash inflows from investing activities~~

Table of ~~$14.0 million and $60.7 million, respectively, or a decrease of cash inflow of $46.7 million, or 77%.~~Contents

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024, there were no investing activities that resulted in cash inflows or outflows. In contrast, for the same period in 2023, our cash ~~inflow was~~inflows were primarily due to maturities of investments in debt securities of $15.0 million. For the nine months ended September 30, 2022, our cash inflow was primarily due to the sale and maturities of investments in debt securities of $64.8 million, partially offset by investments in Nebula of $2.4 million.

~~Cash Flows from Financing Activities~~

For the nine months ended September 30, 2023, and 2022, we recorded net cash outflow from financing activities of $0.1 million and $0.2 million, respectively, attributable to payments of withholding taxes during each period.securities.

Capital Expenditures

Going forward, we expect to continue making expenditures for additions to our content assets and purchases of property and equipment, although at a slower rate than in previous periods. The amount, timing and allocation of capital expenditures are largely discretionary and within management’s control. Depending on market conditions, we may choose to defer a portion of our budgeted expenditures until later periods to achieve the desired balance between sources and uses of liquidity and prioritize capital projects that we believe have the highest expected returns and potential to generate cash flow. Subject to financing alternatives, we may also increase our capital expenditures significantly to take advantage of opportunities we consider to be attractive.

OFF BALANCE SHEET ARRANGEMENTS

As of ~~September 30, 2023,~~March 31, 2024, we had no off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operation is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. Certain amounts included in or affecting the financial statements presented in this Quarterly Report on Form 10-Q and related disclosures must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. Management believes that the accounting policies set forth below comprise the most important “critical accounting policies” for the Company. A critical accounting policy is one which is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management evaluates such policies on an ongoing basis, based upon historical results and experience, consultation with experts and other methods that management considers reasonable in the particular circumstances under which the judgments and estimates are made, as well as management’s forecasts as to the manner in which such circumstances may change in the future.

~~Tab~~l ~~e of Contents~~

~~Content Assets~~

~~The Company acquires, licenses and produces content,~~For more detailed information on our critical accounting policies, including original programming, in order to offer customers unlimited viewing of factual entertainment content. The content license terms consist of a fixed fee for specific windows of availability. Cash payments for content are reported within additionsthose related to content assets, revenue recognition and ~~changes in related liabilities within “Net cash used in operating activities” in the unaudited consolidated statements of cash flows. Content acquired or licensed through~~ trade and barter transactions, ~~is also reported within additions~~refer to ~~content assets.~~

~~The Company recognizes its content assets as “Content assets, net”~~the "Summary of Significant Accounting Policies" section in the ~~unaudited consolidated balance sheets. For licensed content,~~Annual Report on Form 10-K filed with the ~~Company capitalizes the fee per title~~Securities and ~~records~~Exchange Commission on March 25, 2024. This comprehensive discussion helps to ensure that stakeholders have a ~~corresponding liability at the gross amount~~complete understanding of the ~~liability when~~accounting methodologies and principles that influence the license period begins, the cost of the title is known, and the title is accepted and available for streaming. For productions, the Company capitalizes costs associated with the production, including development costs, direct costs, and production overhead.

~~Amortization of content assets is reported within “Cost of revenues” in the unaudited consolidated~~financial statements of operations. Based on factors including historical and estimated viewing patterns, the Company previously amortized the content assets on a straight-line basis over the shorter of each title’s contractual window of availability or estimated period of use, beginning at the time a title is published on the Company’s platform. Starting July 1, 2021, the Company began amortizing content assets on an accelerated basis in the initial two months after a title is published, as the Company has observed and expects more upfront viewing of content, generally as a result of additional marketing efforts.

Furthermore, the amortization of produced content is more accelerated than that of licensed content. The Company reviews factors that impact the amortization of the content assets on a regular basis and the estimates related to these factors require considerable management judgment. The Company continues to review factors impacting the amortization of content assets on an ongoing basis and will also record amortization on an accelerated basis when there is more upfront use of a title, for instance due to significant content licensing.

The Company’s business model is generally subscription-based as opposed to a model based on generating revenues at a specific title level. Content assets are predominantly monetized as a group and therefore are reviewed in aggregate at a group level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized cost. If such changes are identified, the aggregated content assets will be stated at the lower of unamortized cost or fair value. In addition, unamortized costs are written off for content assets that have been or are expected to be abandoned.presented herein.

~~Revenue Recognition~~

The Company’s performance obligations include (1) access to its SVOD platform via the Company’s O&O Service and App Services, (2) access to the Company’s content assets, and (3) licenses of specific program titles. In contracts containing the right to access the Company SVOD platform, the performance obligation is satisfied as access to the SVOD platform is provided post any free trial period. In contracts which contain access to the Company’s content assets, the performance obligation is satisfied as access to the content is provided. For contracts with licenses of specific program titles, the performance obligation is satisfied as that content is made available for the customer to use.

~~Subscriptions~~

~~O&O Service.~~The Company generates revenue from monthly subscription fees from its O&O Service. CuriosityStream subscribers enter into month-to-month or annual subscriptions with the Company. The Company bills the monthly subscriber on each subscriber’s monthly anniversary date and recognizes the revenue ratably over each monthly membership period. The annual subscription fees are collected by the Company at the start of the annual subscription period and are recognized ratably over the subsequent twelve-month period. Revenues are presented net of the taxes that are collected from subscribers and remitted to governmental authorities.

~~The Company also provides a~~ ~~Smart Bundle~~ membership that includes access to our standard service, as well as subscriptions to certain third-party platforms. The Company recognizes the gross subscription revenues when earned and simultaneously recognizes the corresponding fees for the third-party platforms as an expense. The Company is the principal in these relationships as it has control over providing the customer with access to the third-party platforms and the determination of the ~~Smart Bundle~~ ~~pricing.~~

~~Tab~~l ~~e of Contents~~

~~App Services.~~ The Company also earns subscription revenues through its App Services. These subscriptions are similar to the O&O Service subscriptions, but are generated based on agreements with certain streaming media players as well as with Smart TV brands and gaming consoles. Under these agreements, the streaming media player typically bills the subscriber directly and then remits the collected subscriptions to the Company, net of a distribution fee. The Company recognizes the gross subscription revenues when earned and simultaneously recognizes the corresponding distribution fees as an expense. The Company is the principal in these relationships as the Company retains control over service delivery to its subscribers. ~~License Fees~~

~~Content Licensing.~~The Company has distribution agreements which grant a licensee limited distribution rights to the Company’s programs for varying terms, generally in exchange for a fixed license fee. Revenue is recognized once the content is made available for the licensee to use.

~~Partner Direct and Bundled Distribution.~~The Company generates license fee revenues from MVPDs such as Comcast and Cox as well as from vMVPDs such as Amazon and Sling TV (MVPDs and vMVPDs are also referred to as affiliates). Under the terms of the agreements with these affiliates, the Company receives license fees based upon contracted programming rates and subscriber levels reported by the affiliates. In exchange, the Company licenses its content to the affiliates for distribution to their subscribers. The Company earns revenue under these agreements either based on the total number of subscribers multiplied by rates specified in the agreements or based on fixed fee arrangements. These revenues are recognized over the term of each agreement when earned.

~~Trade and Barter Transactions~~. In the second quarter of 2023, the Company began entering into trade and barter transactions primarily for the purpose of exchanging content assets through licensing agreements with media counterparties, while certain transactions may also include the exchange of advertising, whereby the Company and its counterparty exchange media campaigns or other promotional services. The Company reviews each transaction to confirm that the content assets, advertising or other services it receives have economic substance, and records revenue in an amount equal to the fair value of what it receives and at the time that it completes its performance obligation. For advertising, the performance obligation is satisfied upon the Company’s delivery of the media campaign or other service to the counterparty. For an exchange of content, the performance obligation is satisfied at the time the content is made available for the counterparty to use, which represents the point in time that control is transferred.

~~RECENTLY ADOPTED FINANCIAL~~RECENT ACCOUNTING ~~STANDARDS~~PRONOUNCEMENTS

The information set forth in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies in the Unaudited Notes to Interim Consolidated Financial Statements is incorporated herein by reference.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the specified time periods in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Table of Contents

Our management, with the participation of the CEO and the CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of ~~September 30, 2023.~~March 31, 2024. Based on these evaluations, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2023.~~

March 31,

~~Tab~~l ~~e of Contents~~

2024.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is required to evaluate, with the participation of our CEO and our CFO, any changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during each fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2023,~~March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3228

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition or cash flows.

ITEM 1A. RISK FACTORS

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Annual Report on Form 10-K filed with the SEC on March ~~31, 2023.~~25, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March ~~31, 2023.~~25, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

~~None.~~RULE 10b5-1 TRADING PLANS

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended March 31, 2024, as such terms are defined under Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Incorporated By Reference

Exhibit No.

Description

Form

File No.

Exhibit

Filing Date

Filed/Furnished
Herewith

3.2

Amended and Restated Bylaws, as amended

31.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002

32.1*

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101. INS**

Inline XBRL Instance Document

101. SCH

Inline XBRL Taxonomy Extension Schema Document

101. CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101. LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101. PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101. DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

104

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

*This document is being furnished with this Form 10-Q. This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act.

**The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

3430

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PART III. SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


	CURIOSITYSTREAM INC.

Date: ~~November 13, 2023~~May 8, 2024	By:	/s/ Clint Stinchcomb
	Name:	Clint Stinchcomb
	Title:	President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November 13, 2023~~May 8, 2024	By:	/s/ Peter Westley
	Name:	Peter Westley
	Title:	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

3531


			Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
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			2119
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk			3127
Item 4. Controls and Procedures			3127
Part II. Other Information
Item 1. Legal Proceedings			3329
Item 1A. Risk Factors			3329
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3329
Item 3. Defaults Upon Senior Securities			3329
Item 4. Mine Safety Disclosures			3329
Item 5. Other Information			3329
Item 6. Exhibits			3430
Part III. Signatures			3531


	September 30, 2023						December 31, 2022
(In thousands)	Cash and cash equivalents		Short-term investments		Total		Cash and cash equivalents		Short-term investments		Total


Level 1 securities:
Money market funds	$	38,375	$	—	$	38,375	$	17,724	$	—	$	17,724
Total Level 1 securities	$	38,375	—		$	38,375	$	17,724	—		$	17,724
Level 2 securities:
Corporate debt securities	—		—		—		—		$	14,986	$	14,986
Total Level 2 securities	—		—		—		—		$	14,986	$	14,986
Total	$	38,375	—		$	38,375	$	17,724	$	14,986	$	32,710


	December 31, 2022
(In thousands)	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses		Estimated Fair Value


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


	(In thousands)

Three remaining months of 2023	$	106
2024	557
2025	571
2026	585
2027	600
Thereafter	3,346
Total lease payments	$	5,765
Less: imputed interest	(1,061)
Present value of total lease liabilities	$	4,704


	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)	2023				2022				2023				2022

Direct Business	$	8,574	55	%	$	8,589	36	%	$	25,466	60	%	$	25,476	40	%
Content Licensing	5,082		33	%	10,790		46	%	10,715		25	%	21,692		34	%
Bundled Distribution	1,504		10	%	2,595		11	%	4,487		12	%	10,250		16	%
Enterprise	34		0	%	1,418		6	%	115		0	%	4,143		7	%
Other	436		3	%	177		1	%	1,331		3	%	1,983		3	%
Revenues	$	15,630			$	23,569			$	42,114			$	63,544


	Three Months Ended September 30,								$ Change		% Change*

(Unaudited and in thousands)	2023				2022


Revenues
Subscriptions	$	7,431	47	%	$	8,850	38	%	$	(1,419)	(16	%)
License fee	7,763		50	%	14,542		61	%	(6,779)		(47	%)
Other	436		3	%	177		1	%	259		146	%
Total revenue	$	15,630	100	%	$	23,569	100	%	$	(7,939)	(34	%)
Operating expenses
Cost of revenues	8,494		21	%	13,566		49	%	(5,072)		(37	%)
Advertising and marketing	5,106		13	%	5,626		20	%	(520)		(9	%)
General and administrative	6,959		18	%	8,757		31	%	(1,798)		(21	%)
Impairment of content assets	18,970		48	%	—		—	%	18,970		100	%

Total operating expenses	$	39,529	100	%	$	27,949	100	%	$	11,580	41	%
Operating loss	(23,899)				(4,380)				(19,519)		446	%
Other income (expense)
Change in fair value of warrant liability	74				514				(440)		n/m
Interest and other income (expense)	31				(478)				509		n/m
Equity method investment loss	(2,638)				(94)				(2,544)		2706	%
Loss before income taxes	$	(26,432)			$	(4,438)			$	(21,994)	496	%
Provision for income taxes	133				64				69		n/m
Net loss	$	(26,565)			$	(4,502)			$	(22,063)	490	%

* n/m = percentage not meaningful


	Nine Months Ended September 30, 2023								$ Change		% Change*
(Unaudited and in thousands)	2023				2022

Revenues
Subscriptions	$	22,220	53	%	$	26,128	41	%	$	(3,908)	(15	%)
License fee	18,563		44	%	35,433		56	%	(10,094)		(28	%)
Other	1,331		3	%	1,983		3	%	(911)		(46	%)
Total revenue	$	42,114	100	%	$	63,544	100	%	$	(21,430)	(34	%)
Operating expenses
Cost of revenues	27,428		34	%	38,404		37	%	(10,976)		(29	%)
Advertising and marketing	12,424		15	%	31,602		31	%	(19,178)		(61	%)
General and administrative	22,998		28	%	29,863		29	%	(6,865)		(23	%)
Impairment of content assets	18,970		23	%	—		—	%	18,970		100	%
Impairment of goodwill and intangible assets	—		—		3,603		3	%	(3,603)		(100	%)
Total operating expenses	$	81,820	100	%	$	103,472	100	%	$	(21,652)	(21	%)
Operating loss	(39,706)				(39,928)				222		(1	%)
Other income (expense)
Change in fair value of warrant liability	184				4,852				(4,668)		(96	%)
Interest and other income (expense)	856				(564)				1,420		n/m
Equity method investment loss	(5,092)				(566)				(4,526)		(420	%)
Loss before income taxes	$	(43,758)			$	(36,206)			$	(7,552)	21	%
Provision for income taxes	479				165				314		n/m
Net loss	$	(44,237)			$	(36,371)			$	(7,866)	22	%