SEC Form 10-Q filed by CuriosityStream Inc.

11/7/24 4:12:00 PM ET

$CURI

Movies/Entertainment

Consumer Discretionary

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curi-20240930

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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, 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 October 31, 2024, 55,479,190 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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			Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets			2
Consolidated Statements of Operations			3
Consolidated Statements of Comprehensive Loss			4
Consolidated Statements of Stockholders’ Equity			5
Consolidated Statements of Cash Flows			7
Notes to Unaudited Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk			32
Item 4. Controls and Procedures			33
Part II. Other Information
Item 1. Legal Proceedings			34
Item 1A. Risk Factors			34




Item 6. Exhibits			35
Part III. Signatures			36

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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CURIOSITYSTREAM INC.

CONSOLIDATED BALANCE SHEETS


(in thousands, except par value)	September 30, 2024		December 31, 2023
	(Unaudited)

Assets
Current assets
Cash and cash equivalents	$	9,588	$	37,715
Restricted cash	125		500
Short-term investments in debt securities	23,621		—
Accounts receivable	4,500		4,760
Other current assets	1,260		2,315
Total current assets	39,094		45,290
Investments in debt securities	6,513		—
Investments in equity method investees	4,179		6,354
Property and equipment, net	492		727
Content assets, net	33,885		44,943
Operating lease right-of-use assets	3,137		3,350
Other assets	267		358
Total assets	$	87,567	$	101,022

Liabilities and stockholders’ equity
Current liabilities
Content liabilities	$	499	$	407
Accounts payable	3,842		4,765
Accrued expenses and other liabilities	4,873		3,705
Deferred revenue	11,347		14,521
Total current liabilities	20,561		23,398
Warrant liability	110		44
Non-current operating lease liabilities	3,990		4,283
Other liabilities	691		651
Total liabilities	25,352		28,376
Stockholders’ equity
Common stock, $0.0001 par value – 125,000 shares authorized as of September 30, 2024, and December 31, 2023; 55,670 shares issued as of September 30, 2024, including 195 treasury shares; 53,287 issued and outstanding as of December 31, 2023; 55,475 shares outstanding as of September 30, 2024.	5		5
Treasury stock	(218)		—
Additional paid-in capital	366,614		362,636

Accumulated deficit	(304,186)		(289,995)
Total stockholders’ equity	62,215		72,646
Total liabilities and stockholders’ equity	$	87,567	$	101,022

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,
(unaudited and in thousands except per share amounts)	2024		2023		2024		2023

Revenues	$	12,604	$	15,630	$	37,000	$	42,114
Operating expenses
Cost of revenues	5,840		8,494		18,592		27,428
Advertising and marketing	3,590		5,106		9,676		12,424
General and administrative	6,426		6,959		18,187		22,998
Impairment of content assets	—		18,970		—		18,970

	15,856		39,529		46,455		81,820
Operating loss	(3,252)		(23,899)		(9,455)		(39,706)
Change in fair value of warrant liability	(36)		74		(66)		184
Interest and other income	538		31		1,702		856
Equity method investment loss	(267)		(2,638)		(2,175)		(5,092)
Loss before income taxes	(3,017)		(26,432)		(9,994)		(43,758)
Provision for income taxes	45		133		134		479
Net loss	$	(3,062)	$	(26,565)	$	(10,128)	$	(44,237)
Net loss per share
Basic	$	(0.06)	$	(0.50)	$	(0.19)	$	(0.83)
Diluted	$	(0.06)	$	(0.50)	$	(0.19)	$	(0.83)
Weighted average number of common shares outstanding
Basic	54,850		53,040		53,920		52,999
Diluted	54,850		53,040		53,920		52,999

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,
(unaudited and in thousands)	2024		2023		2024		2023

Net loss	$	(3,062)	$	(26,565)	$	(10,128)	$	(44,237)
Other comprehensive income (loss):
Unrealized gain on available for sale securities	—		—		—		40
Total comprehensive loss	$	(3,062)	$	(26,565)	$	(10,128)	$	(44,197)

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			Treasury Stock		Additional Paid-in Capital					Accumulated Deficit	Total Stockholders’ Equity
	Shares	Amount			Shares			Amount

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
Net loss												$	(2,031)	$	(2,031)
Dividends declared	—	—			—	—			—			(1,343)		(1,343)
Stock-based compensation, net	439	—			—	—			1,263			—		1,263
Buyback of shares	—	—			22	(26)			—			—		(26)

Balance at June 30, 2024	53,745	$	5		22	$	(26)		$	364,582		$	(299,737)	$	64,824
Net loss												$	(3,062)	$	(3,062)
Dividends declared	—	—			—	—			—			(1,387)		(1,387)
Stock-based compensation, net	1,730	—			—	—			2,032			—		2,032
Buyback of shares	—	—			173	(192)			—			—		(192)

Balance at September 30, 2024	55,475	$	5		195	$	(218)		$	366,614		$	(304,186)	$	62,215

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 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
Net loss	—	—			—		—		(9,921)		(9,921)
Stock-based compensation, net	65	—			1,390		—		—		1,390
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

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,
(unaudited and in thousands)	2024		2023

Cash flows from operating activities
Net loss	$	(10,128)	$	(44,237)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Change in fair value of warrant liability	66		(183)
Additions to content assets	(3,412)		(14,074)
Change in content liabilities	92		(2,734)
Amortization of content assets	14,470		17,707
Depreciation and amortization expenses	285		370
Impairment of content assets	—		18,970

Amortization of premiums and accretion of discounts associated with investments in debt securities, net	(166)		26
Stock-based compensation	4,734		3,586
Equity method investment loss	2,175		5,092
Other non-cash items	359		362
Changes in operating assets and liabilities
Accounts receivable	260		4,022
Other assets	1,096		1,737
Accounts payable	(728)		903
Accrued expenses and other liabilities	(658)		(3,947)
Deferred revenue	(3,329)		(1,230)
Net cash provided by (used in) operating activities	5,116		(13,630)

Cash flows from investing activities
Purchases of property and equipment	—		(5)
Investment in equity method investees	—		(992)

Maturities of investments in debt securities	—		15,000
Purchases of investments in debt securities	(29,968)		—
Net cash (used in) provided by investing activities	(29,968)		14,003

Cash flows from financing activities
Repurchases of common stock	(218)		—
Dividends paid	(2,676)		—
Payments related to tax withholding	(756)		(76)
Net cash used in financing activities	(3,650)		(76)

Net increase in cash, cash equivalents and restricted cash	(28,502)		297
Cash, cash equivalents and restricted cash, beginning of period	38,215		40,507
Cash, cash equivalents and restricted cash, end of period	$	9,713	$	40,804

Supplemental disclosure:
Cash paid for taxes	$	71	$	144
Cash paid for operating leases	$	416	$	360

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" or "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 who deliver CuriosityStream content via the distributor’s platform or system. The 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 and major smart TV brands (e.g., LG, Vizio, Samsung). 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 arrangements. The Company also sells selected rights to content 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, 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, 2023. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the U.S Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include the content asset amortization, 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 and cash equivalents with high credit quality financial institutions. At times, cash balances with the financial institutions may exceed the applicable FDIC-insured limits.

Investments in debt securities are held with reputable institutions and are monitored to manage credit risk exposure.

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

Investments in Debt Securities

The Company classifies its investments in debt securities as held-to-maturity “"HTM” under ASC “Accounting Standards Codification” 320, “Investments—Debt and Equity Securities.” HTM investments represent securities for which the Company has the positive intent and ability to hold to maturity, and they are reported at amortized cost.

Investments with original maturities of three months or less from the date of purchase are classified as cash equivalents. Investments with longer maturities are classified as short-term or long-term investments based on the remaining maturity at each balance sheet date and the Company’s intent to hold the security. Interest income earned from HTM investments is recognized in the income statement as “Interest and other Income” under non-operating income.

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 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.

The Company’s assets measured at fair value on a recurring basis have included its investments in money market funds, U.S. government securities, corporate debt securities, municipal debt securities and certificates of deposit. 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, U.S. government debt securities and certificate of deposit. 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.

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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' 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.

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.

RECENT ACCOUNTING 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 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 November 2023, the FASB issued ASU No. 2023-07 ("ASU 2023-07"), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and 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 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 fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact 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, 2024, and December 31, 2023, were as follows:


(in thousands)	Spiegel Venture		Nebula		Total


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

Equity method investment loss	(1,553)		(622)		(2,175)
Balance at September 30, 2024	$	183	$	3,996	$	4,179

SPIEGEL VENTURE

In July 2021, the Company acquired a 32% ownership in the Spiegel Venture for an initial investment of $3.3 million. The Spiegel Venture, which prior to the Company’s equity purchase, was jointly owned and operated by Spiegel TV GmbH (“Spiegel TV”) and Autentic GmbH (“Autentic”), operates two documentary channels, together with an SVOD service as well as a 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, 2024.

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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 was 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 TV and Autentic during July 2023. This payment has been recorded as an equity investment in the balance sheet.

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 (the “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) 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 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 (the “Put Option”) at a value based on a determinable calculation outlined in the SPA. The Put Option is only exercisable during the period that is the later of (i) 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.

In the event that neither the Call Option nor the Put Option is exercised, both options will continue to be available to each respective party in perpetuity beginning in the following year, with its exercise limited to the applicable date range outlined above.

NEBULA

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 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.

Since the time of its original investment, the Company purchased additional incremental ownership interests, each for a payment of $0.8 million and representing 1.625% of equity ownership, if Nebula met certain quarterly targets. The Company made three subsequent incremental purchases, bringing its total ownership interest in Nebula to 16.875% as of September 30, 2024. The opportunity or obligation to make additional purchases ended as of September 30, 2023. Because the Company did not purchase at least two consecutive ownership interests in Nebula, effective December 15, 2023, Standard removed the Company’s seat on the Nebula Board of Directors. The Company has not received dividends from Nebula as of September 30, 2024.

Beginning August 2021, the Company 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 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, resulting in the expiration of the revenue share agreement at the end of 2023. Nebula was required to make its service available to subscribers of these offerings through the end of the term of any such subscription that existed as of December 31, 2023.

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NOTE 4 - BALANCE SHEET COMPONENTS

CASH, CASH EQUIVALENTS, 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 as follows:


(in thousands)	September 30, 2024		December 31, 2023


Cash and cash equivalents	$	9,588	$	37,715
Restricted cash1	125		500
Cash and cash equivalents and restricted cash	$	9,713	$	38,215

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

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


	As of September 30, 2024								As of December 31, 2023
(in thousands)	Cash and Cash Equivalents		Short-Term Investments		Investments (Non-Current)		Total		Cash and Cash Equivalents		Total

Level 1 securities:
Money market funds	$	4,883	$	—	$	—	$	4,883	$	36,072	$	36,072
Certificate of deposit	1,500		11,000		—		12,500		—		—
U.S. government securities	300		988		—		1,288		—		—
Total Level 1 securities	$	6,683	$	11,988	$	—	$	18,671	$	36,072	$	36,072
Level 2 securities:
Corporate debt securities	2,446		11,633		6,513		20,592		—		$	—
Total Level 2 securities	2,446		11,633		6,513		20,592		—		$	—
Total	$	9,129	23,621		6,513		$	39,263	$	36,072	$	36,072

The following table provides the amortized cost and estimated fair value of investments with fixed maturities as of September 30, 2024:


	As of September 30, 2024
(in thousands)	Amortized Cost		Estimated Fair Value
Fixed maturities:
Certificate of deposit	$	12,500	$	12,500
Corporate debt securities	20,592		20,592
U.S. government securities	1,288		1,288

Total	$	34,380	$	34,380

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

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The following table provides the amortized cost and estimated fair value of investments with fixed maturities as of September 30, 2024:


	As of September 30, 2024
(in thousands)	Amortized Cost		Estimated Fair Value

Due in one year or less	$	27,867	$	27,867
Due after one year through five years	6,513		6,513

Total	$	34,380	$	34,380

CONTENT ASSETS

Content assets consisted of the following as of September 30, 2024, and December 31, 2023:



(in thousands)	September 30, 2024		December 31, 2023


Licensed content, net:
Released, less amortization and impairment	$	10,286	$	8,271
Prepaid and unreleased	3,249		8,357

Total Licensed content, net	13,535		16,628

Produced content, net:
Released, less amortization and impairment	19,932		22,880
In production	418		5,435

Total produced content, net	20,350		28,315
Total content assets	$	33,885	$	44,943

Of the $10.3 million unamortized cost of licensed content that had been released as of September 30, 2024, the Company expects that $5.1 million, $3.3 million and $1.0 million will be amortized in each of the next three years. Of the $19.9 million unamortized cost of produced content that had been released as of September 30, 2024, the Company expects that $7.4 million, $6.0 million and $4.1 million will be amortized in each of the next three years.

Impairment Assessment

The Company’s primary business model is 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 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.

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, 2024, and 2023, content amortization was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023

Licensed content	$	2,165	$	1,728	$	5,846	$	5,478
Produced content	2,404		3,661		8,624		12,229
Total	$	4,569	$	5,389	$	14,470	$	17,707

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ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following as of September 30, 2024, and December 31, 2023:


(in thousands)	September 30, 2024		December 31, 2023

Accrued payroll and benefits	1,396		1,254
Dividends payable	1,387		—
Sales & income tax liabilities	947		1,095
Other	1,143		1,356

Total	$	4,873	$	3,705

WARRANT LIABILITY

As described in Note 6 - 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, 2024, and December 31, 2023, the fair value of the Private Placement Warrants, as determined using Level 3 inputs, was as follows:


(in thousands)	September 30, 2024		December 31, 2023



Private Placement Warrants	$	110	$	44

NOTE 5 - REVENUE

The following table sets forth the Company’s disaggregated revenues for the three and nine months ended September 30, 2024, and 2023, as well as the relative percentage to total revenue:


	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2024				2023				2024				2023

Direct Business:



Direct-to-Consumer	7,750		61	%	7,399		47	%	23,853		64	%	22,126		53	%
Partner Direct	1,983		16	%	1,177		8	%	5,199		14	%	3,361		8	%
Enterprise	52		1	%	86		1	%	186		1	%	280		1	%
Total Direct Business	9,785		78	%	8,662		55	%	29,238		79	%	25,767		61	%

Content Licensing:
Library sales	1,657		13	%	5,082		33	%	3,696		10	%	9,001		21	%
Presales	—		—	%	—		—	%	441		1	%	1,715		4	%
Total Content Licensing	1,657		13	%	5,082		33	%	4,137		11	%	10,716		25	%

Bundled Distribution	973		8	%	1,452		9	%	3,198		9	%	4,321		10	%

Other	189		1	%	434		3	%	427		1	%	1,310		3	%

Total revenues	$	12,604			$	15,630			$	37,000			$	42,114

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REMAINING PERFORMANCE OBLIGATIONS

As of September 30, 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, 2024		Year Ended December 31,
(in thousands)			2025		2026		2027		Thereafter		Total


Remaining performance obligations	$	352	$	1,195	$	434	$	155	$	187	$	2,323

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 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 $11.8 million and $15.2 million as of September 30, 2024, and December 31, 2023, respectively. The non-current portions of $0.5 million and $0.6 million as of September 30, 2024, and December 31, 2023, respectively, are included in other liabilities in the consolidated balance sheets.

For the nine months ended September 30, 2024, the Company recognized revenues of $13.4 million related to amounts deferred as of December 31, 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.

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.

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For the three and nine months ended September 30, 2024, and 2023, trade and barter revenues were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023


Trade and barter license fees: Content Licensing	$	1,416	$	4,949	$	2,504	$	7,416
Other trade and barter revenue*	—		250		—		774
Total trade and barter revenues	$	1,416	$	5,199	$	2,504	$	8,190

* Other revenue primarily relates to other marketing services

For the three and nine months ended September 30, 2024, and 2023, trade and barter advertising and marketing expenses were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023


Trade and barter advertising and marketing	$	—	$	648	$	—	$	1,172

For the nine months ended September 30, 2024, and 2023, additions to content assets resulting from trade and barter transactions were as follows:


	Three Months Ended June 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023


Trade and barter additions to content assets	$	1,416	$	4,657	$	2,504	$	7,124

NOTE 6 - STOCKHOLDERS’ EQUITY

COMMON STOCK

As of September 30, 2024, and December 31, 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.

TREASURY STOCK

On June 10, 2024, the Company's Board of Directors authorized and approved a share repurchase program for up to $4 million of the then-outstanding shares of the Company’s common stock. Under the stock repurchase program, the Company may repurchase shares through open market purchases, privately negotiated transactions, block purchases, or otherwise in accordance with applicable federal securities laws.

As of September 30, 2024, the Company had repurchased 195,190 shares of its common stock at an average price of $1.12 per share. The total cost of the repurchase was $0.2 million, which has been recorded as treasury stock in the equity section of the Company’s consolidated balance sheet.

WARRANTS

As of September 30, 2024, the Company had 3,054,203 publicly traded warrants outstanding that were sold as part of the units of SAQN in its initial public offering on November 22, 2019, and that were issued to the PIPE Investors in connection with the Business Combination on October 14, 2020 (the “Public Warrants” and, together with the Private Placement Warrants, the "Warrants") and 3,676,000 Private Placement Warrants outstanding. The Private Placement Warrants are liability-classified, and the Public Warrants are equity-classified.

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

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The Company has the right to redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Common Stock matched or exceeded $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sent the notice of redemption to the warrant holders.

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

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

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 (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, 2024, and December 31, 2023, were as follows:


	September 30, 2024			December 31, 2023

Exercise price	$	11.50		$	11.50
Stock price (CURI)	$	1.91		$	0.54
Expected volatility	86.40		%	100.00		%
Expected warrant term (years)	1.0			1.8
Risk-free interest rate	3.94		%	4.23		%
Dividend yield	1.3		%	0		%
Fair Value per Private Placement Warrant	$	0.03		$	0.01

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

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


(in thousands except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Numerator — basic and diluted EPS:
Net loss	$	(3,062)	$	(26,565)	$	(10,128)	$	(44,237)
Denominator — basic and diluted EPS:
Weighted–average shares	54,850		53,040		53,920		52,999
Net loss per share — basic and diluted	$	(0.06)	$	(0.50)	$	(0.19)	$	(0.83)

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


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2024	2023	2024	2023


Options	27	33	27	33
Restricted stock units	2,864	2,430	2,864	2,430
Warrants	6,730	6,730	6,730	6,730
Total	9,621	9,193	9,621	9,193

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 months ended September 30, 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, 2023	4,762	32	$	5.79	2,058	$	2.57
Granted	(4,024)	—	—		4,024	—
RSUs vested	655	—	—		(3,038)	0.39
Forfeited or expired	185	(6)	7.15		(180)	1.06
Balance at September 30, 2024	1,578	26	$	5.00	2,864	$	1.64

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

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 RSUs vested, net of shares withheld for taxes if elected by the RSU holder.

The fair value of stock option awards is estimated using the Black-Scholes option pricing model, which includes a number of assumptions including the 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”) 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 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 vested in July 2024. Otherwise, the vesting schedules for unvested options at the time of the Exchange remained 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 the expected term of the option.

For the three and nine months ended September 30, 2024, and 2023, stock-based compensation expense was as follows:


(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023








Stock-based compensation — Options	$	—	$	5	$	6	$	1,553
Stock-based compensation — RSUs	$	2,720	$	892	$	4,728	$	2,033
Total stock-based compensation	$	2,720	$	897	$	4,734	$	3,586

Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period.

NOTE 9 - SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates as one reporting segment. The Company’s chief operating decision maker 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, 2024, and 2023, revenue by geographic location based on customer location was as follows:


	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2024				2023				2024				2023


United States	$	7,531	60	%	$	8,973	57	%	$	22,572	61	%	$	23,595	56	%
International:
Canada	1,104		9	%	1,674		11	%	2,087		6	%	2,566		6	%
Netherlands	958		8	%	1,566		10	%	2,234		6	%	3,216		8	%
Other	3,011		24	%	3,417		22	%	10,107		27	%	12,737		30	%
Total International	5,073		40	%	6,657		43	%	14,428		39	%	18,519		44	%
Total revenue	$	12,604	100	%	$	15,630	100	%	$	37,000	100	%	$	42,114	100	%

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

NOTE 10 - RELATED-PARTY TRANSACTIONS

EQUITY INVESTMENTS

For the three and nine months ended September 30, 2024, the Company recognized $0.1 million and $0.2 million, respectively. of revenue related to license fees from the Spiegel Venture. No revenue was recognized from Nebula during these periods.

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


(in thousands)	September 30, 2024		December 31, 2023


Accounts receivable	$	265	$	811
Accounts payable	$	10	$	374

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023

Revenues	$	112	$	—	$	223	$	1,084
Cost of revenues	$	15	$	1,142	$	45	$	3,508

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.

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. 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, 2024, the Company held operating lease ROU assets of $3.1 million. Current lease liabilities were $0.4 million, and are included within accrued expenses and other liabilities on the consolidated balance sheets. Non-current lease liabilities were $4.0 million. In measuring these operating lease liabilities, the Company used a weighted average discount rate of 4.4% as of September 30, 2024. The weighted average remaining lease term as of September 30, 2024, was 8.4 years years.

Components of Lease Cost

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023

Operating lease cost	$	120	$	120	$	358	$	362
Short-term lease cost	—		—		—		(16)
Variable lease cost	14		13		37		38
Total lease cost	$	134	$	133	$	395	$	384

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Maturity of Lease Liabilities

As of September 30, 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 2024	$	141
2025	571
2026	585
2027	600
2028	615
Thereafter	2,731
Total lease payments	$	5,243
Less: imputed interest	(865)
Present value of total lease liabilities	$	4,378

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 (expense) in the accompanying consolidated statements of operations. For the three and nine months ended September 30, 2024, operating lease income from the Company’s sublet was less than $0.1 million. As of September 30, 2024, total remaining future minimum lease payments receivable on the Company’s sublet were $0.2 million.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

CONTENT COMMITMENTS

As of September 30, 2024, the Company’s content obligations amounted to $0.7 million, including $0.2 million recorded within content liabilities in the accompanying unaudited consolidated balance sheets, and $0.5 million of obligations not yet recorded as they did not yet meet the asset recognition criteria for content assets. These obligations are expected to be paid by December 31, 2024.

As of December 31, 2023, the Company’s content obligations amounted to $1.1 million, including $0.4 million recorded within current content liabilities in the accompanying unaudited consolidated balance sheets and $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, 2024, the Company’s future advertising commitments totaled $2.7 million, all of which the Company expects to pay during the year ending December 31, 2024.

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NOTE 13 - INCOME TAXES

For the three and nine months ended September 30, 2024, Income tax expense was $0.1 million. For the comparative periods in 2023, the provision for income taxes was $0.1 million and $0.5 million, respectively. 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.

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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, 2023, filed with the SEC on March 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

Founded by John Hendricks, former Chairman of Discovery Communications and founder of the Discovery Channel, 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, content licensing, bundled content licenses for SVOD and linear offerings, talks and courses and partner bulk sales.

The main sources of our revenue are:

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

2.License fees from content licensing arrangements ("Content Licensing"),

3.Bundled license fees from distribution affiliates (“Bundled Distribution”), and

4.Other revenue, including advertising and sponsorships ("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.

CuriosityStream’s award-winning content library features more than 15,000 programs that explore topics ranging from space engineering to ancient history to the rise of Wall Street, and includes shows and series from leading nonfiction producers. Each week we launch new video titles, which are available on-demand in high- or ultra-high definition. Through new and long-standing international partnerships, substantial portions of our video library have been localized from English into eleven different languages.

RESULTS OF OPERATIONS

The financial data in the following table sets forth selected financial information derived from our unaudited consolidated financial statements for the three and nine months ended September 30, 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 September 30,				Change				Nine Months Ended September 30,				Change
(unaudited and in thousands)	2024		2023		Total		%		2024		2023		Total		%


Revenues
Direct Business	$	9,785	$	8,662	$	1,123	13	%	$	29,238	$	25,767	$	3,471	13	%
Content Licensing	1,657		5,082		(3,425)		(67	%)	4,137		10,716		(6,579)		(61	%)
Bundled Distribution	973		1,452		(479)		(33	%)	3,198		4,321		(1,123)		(26	%)
Other	189		434		(245)		(56	%)	427		1,310		(883)		(67	%)
Total revenue	12,604		15,630		(3,026)		(19	%)	37,000		42,114		(5,114)		(12	%)
Operating expenses
Cost of revenues	5,840		8,494		(2,654)		(31	%)	18,592		27,428		(8,836)		(32	%)
Advertising and marketing	3,590		5,106		(1,516)		(30	%)	9,676		12,424		(2,748)		(22	%)
General and administrative	6,426		6,959		(533)		(8	%)	18,187		22,998		(4,811)		(21	%)
Impairment of content assets	—		18,970		(18,970)		100	%	—		18,970		(18,970)		100	%

Total operating expenses	15,856		39,529		(23,673)		(60	%)	46,455		81,820		(35,365)		(43	%)
Operating loss	(3,252)		(23,899)		20,647		(86	%)	(9,455)		(39,706)		30,251		(76	%)
Other income (expense)
Change in fair value of warrant liability	(36)		74		(110)		n/m		(66)		184		(250)		n/m
Interest and other income	538		31		507		1635	%	1,702		856		846		99	%
Equity method investment loss	(267)		(2,638)		2,371		(90	%)	(2,175)		(5,092)		2,917		(57	%)
Loss before income taxes	$	(3,017)	$	(26,432)	$	23,415	(89	%)	$	(9,994)	$	(43,758)	33,764		(77	%)
Provision for income taxes	45		133		(88)		n/m		134		479		(345)		n/m
Net loss	$	(3,062)	$	(26,565)	$	23,503	(88	%)	$	(10,128)	$	(44,237)	34,109		(77	%)

* n/m = percentage not meaningful

For the three months ended September 30, 2024, and 2023, operating loss was $3.3 million and $23.9 million, respectively. The decline in operating loss of $20.6 million, or 86%, primarily resulted from the decreases in our operating expenses of $23.7 million, or 60%, which more than offset the decline in revenues of $3.0 million, or 19%, compared to the three months ended September 30, 2023. This significant decrease in operating expenses was mainly due to the absence of prior-year impairment charges recorded in relation to our content assets, as discussed in the section below.

For the three months ended September 30, 2024, and 2023, net loss was $3.1 million and $26.6 million, respectively, a decrease in net loss of $23.5 million, or 88%.

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For the nine months ended September 30, 2024, and 2023, operating loss was $9.5 million and $39.7 million, respectively. The decline in operating loss of $30.3 million, or 76%, primarily resulted from the decreases in our operating expenses of $35.4 million, or 43%, which more than offset the decline in revenues of $5.1 million, or 12%, compared to the nine months ended September 30, 2023. This significant decrease in operating expenses was mainly due to the absence of prior-year impairment charges recorded in relation to our content assets, as discussed in the section below.

For the nine months ended September 30, 2024, and 2023, net loss was $10.1 million and $44.2 million, respectively, a decrease in net loss of $34.1 million, or 77%.

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 September 30, 2024, and 2023, revenues totaled $12.6 million and $15.6 million, respectively, a decrease of $3.0 million, or 19%. This decline was primarily driven by declines in Content Licensing and Bundled Distribution of $3.4 million and $0.5 million, respectively, while our Direct Business revenue increased by $1.1 million.

For the nine months ended September 30, 2024, and 2023, revenues totaled $37.0 million and $42.1 million, respectively, a decrease of $5.1 million, or 12%. This decline was primarily driven by declines in Content Licensing and Bundled Distribution of $6.6 million and $1.1 million, respectively, while our Direct Business revenue increased by $3.5 million, or 13%.

Direct Business

Our Direct Business revenue is derived from consumers subscribing directly through our owned and operated website (“O&O Consumer Service”), mobile applications developed for iOS and Android operating systems (“App Services”) and through Partner Direct relationships. Our O&O Consumer Service is available in more than 175 countries to any household with a broadband connection. 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 began implementing a price increase for legacy subscribers in March 2023, starting with English-speaking countries, and it has now been applied globally across all markets. This adjustment impacts the majority of our Direct Business revenue. Alongside our standard subscription, we continue to offer the Smart Bundle service, which includes access to Tastemade, Kidstream, SommTV, and Curiosity University, with its current pricing unchanged. Future adjustments to these subscription plans may be considered to further enhance revenue from this segment.

The multichannel video programming distributors (“MVPDs”), virtual MVPDs (“vMVPDs”) and digital distributor partners making up our Partner Direct 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, and Dish, and vMVPDs and digital distributors that include Amazon Prime Video Channels, Apple Channel, Roku Channel, Sling TV and YouTube TV.

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The following table details our Direct Business for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(in thousands)	2024		2023		Total		%		2024		2023		Total		%




Direct-to-Consumer	$	7,750	$	7,399	$	351	5	%	$	23,853	$	22,126	$	1,727	8	%
Partner Direct	1,983		$	1,177	806		68	%	5,199		3,361		1,838		55	%
Enterprise	52		86		(34)		n/m		186		280		(94)		n/m
Total Direct Business	$	9,785	$	8,662	$	1,123	13	%	$	29,238	$	25,767	$	3,471	13	%

For the three months ended September 30, 2024, our Direct-to-Consumer revenue increased by $0.4 million, or 5%, compared to 2023. For the nine months ended September 30, 2024, our Direct-to-Consumer (or DTC) revenue increased by $1.7 million, or 8%, compared to 2023. Although our overall DTC subscriber count declined, this was more than offset by the higher pricing we began rolling out in 2023. Additionally, our Partner Direct primarily benefited from continued subscriber growth as well as the price increase.

Content Licensing

Through our Content Licensing business, we license to certain media companies a collection of existing titles from our content library. We also 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.

The following table details our Content Licensing results for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(in thousands)	2024		2023		Total		%		2024		2023		Total		%

Library sales	$	1,657	$	5,082	$	(3,425)	(67	%)	$	3,696	$	9,001	$	(5,305)	(59	%)
Presales	—		—		—		—	%	441		1,715		(1,274)		(74	%)
Total Content Licensing	1,657		5,082		(3,425)		(67	%)	4,137		10,716		(6,579)		(61	%)

For the three months ended September 30, 2024, compared to 2023, Library sales decreased by 67%. For the nine months ended September 30, 2024, compared to 2023, Library sales decreased by 59%, while presales declined by 74%.

The decrease in Library sales for both periods is primarily due to a higher volume of trade and barter deals in the comparable periods of the prior year, which did not recur at the same level in the reported periods. Content licensing, including barter activity, may vary from period to period based on our content needs as well as those of our partners. Within our content licensing business, our primary focus is on transactions that yield a positive gross margin, particularly those related to our library. However, 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 and vMVPD partners, 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 video-on-demand content library, mobile rights and pricing and packaging flexibility, in exchange for an annual fixed fee or fee per subscriber.

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For the three months ended September 30, 2024, and 2023, our Bundled Distribution revenue was $1.0 million and $1.5 million, respectively, reflecting a 33% decline. For the nine months ended September 30, 2024, and 2023, our Bundled Distribution revenue was $3.2 million and $4.3 million, respectively, reflecting a 26% decline. In both periods, the decrease was primarily the result of revised affiliate agreements and the non-renewal of certain partnerships. Bundled Distribution remains a challenging business given the ongoing disruption in the linear pay television business worldwide.

Other

We provide advertising and sponsorships services through developing integrated digital brand partnerships designed to offer the chance to be associated with CuriosityStream content in a variety of forms, including short- and long-form program integration; branded social media promotional 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; and our increasing focus on digital display ads while delivering our content through advertising-based video-on-demand (AVOD), transactional video-on-demand (TVOD), free advertising-supported streaming television (FAST), YouTube and other 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 result in verifiable metrics for the clients.

For the three months ended September 30, 2024, Other revenue was $0.2 million, a decline of $0.2 million, or 56%, from the same period in 2023. For the nine months ended September 30, 2024, Other revenue was $0.4 million, a decline of $0.9 million, or 67%, from the same period in 2023. These declines were largely due to certain short-term marketing partnerships that we entered into during the early part of 2023, including a campaign that we provided through a trade and barter arrangement that was not renewed in 2024.

Operating Expenses

Our primary operating costs relate to the cost of producing and acquiring our content, the costs of advertising and marketing our service, personnel costs, and distribution fees.

For the three months ended September 30, 2024, and 2023, our operating expenses were $15.9 million and $39.5 million, respectively, a decrease of $23.7 million, or 60%.

For the nine months ended September 30, 2024, and 2023, our operating expenses were $46.5 million and $81.8 million, respectively, a decrease of $35.4 million, or 43%.

Cost of Revenues

Cost of revenues encompasses content amortization, distribution fees, revenue sharing arrangements, hosting and 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.

Distribution fees include payment processing fees and revenue share arrangements with Smart Bundle and digital distributor partners, as well as fees owed to the Spiegel Venture related to JV's streaming 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 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.

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The following table details cost of revenues for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(in thousands)	2024		2023		Total		%		2024		2023		Total		%

Content amortization	$	4,569	$	5,389	$	(820)	(15	%)	$	14,470	$	17,706	$	(3,236)	(18	%)
Other1	1,271		3,105		(1,834)		(59	%)	4,122		9,722		(5,600)		(58	%)
Total cost of revenues	$	5,840	$	8,494	$	(2,654)	(31	%)	18,592		27,428		(8,836)		(32	%)

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

For the three months ended September 30, 2024, cost of revenues decreased to $5.8 million from $8.5 million, a 31% reduction. For the nine months ended September 30, 2024, cost of revenues decreased to $18.6 million from $27.4 million, a 32% reduction. These decreases were primarily driven by declines in content amortization of 15% for the three months ended September 30, 2024, compared to the same period in 2023, and of 18% for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to fewer new productions, a reduction in content acquisitions and releases during the year and the content impairment recorded in the third quarter of 2023. Additionally, other costs of revenues declined mainly due to a reduction in revenue share arrangements, including our arrangement with Nebula that expired at the end of 2023.

Advertising and Marketing

Our advertising and marketing expenditures are a primary operating cost for our business. While these costs may fluctuate based on advertising and marketing objectives, we generally focus marketing dollars on efficient customer acquisition methods. For the three and nine months ended September 30, 2024, advertising and marketing expenses decreased by $1.5 million and $2.7 million, respectively compared to the same period in 2023. This decrease reflects our efforts to optimize spending while maintaining our market presence and continuing to invest in strategic initiatives aimed at driving growth.

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 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 different revenue streams.

The following table details general and administrative costs for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
(in thousands)	2024		2023		Total		%		2024		2023		Total	%

Payroll and related	$	2,077	$	3,087	$	(1,010)	(33	%)	$	7,233	$	10,277	(3,044)	(30	%)
Professional services	660		1,480		(820)		(55	%)	2,500		$	4,801	(2,301)	(48	%)
Stock-based compensation	2,720		897		1,823		203	%	4,734		3,586		1,148	32	%
Technology and subscriptions	289		375		(86)		(23	%)	971		1,247		(276)	(22	%)
Other1	680		1,120		(440)		(39	%)	2,749		3,087		(338)	(11	%)
Total general and administrative	$	6,426	$	6,959	$	(533)	(8	%)	18,187		22,998		(4,811)	(21	%)



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

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For the three months ended September 30, 2024, general and administrative expenses decreased to $6.4 million from $7.0 million in the same period in 2023. This decrease of $0.5 million, or 8%, was primarily the result of lower payroll and related costs and professional services, which declined by $1.0 million and $0.8 million, respectively. The reduction in payroll costs was mainly driven by a smaller average workforce size and reduced incentive compensation. Additionally, professional services costs decreased by 55% as we streamlined various external services and brought certain finance and operations functions in-house. Stock-based compensation increased by $1.8 million, reflecting performance-based RSUs granted during the period.

For the nine months ended September 30, 2024, general and administrative expenses decreased to $18.2 million from $23.0 million in the same period in 2023. This decrease of $4.8 million, or 21%, was primarily the result of lower payroll and related costs and professional services, which declined by $3.0 million and $2.3 million, respectively. The reduction in payroll costs was mainly driven by a smaller average workforce size and reduced incentive compensation. Additionally, professional services costs decreased by 48% as we streamlined various external services and brought certain finance and operations functions in-house. Stock-based compensation increased by $1.1 million, reflecting performance-based RSUs granted during the nine-month period.

Impairment of Content Assets

For the three and nine months ended September 30, 2024, no impairment charges were recorded related to our content assets. In comparison, we incurred an impairment charge of $19.0 million for the same periods in 2023. For a more detailed discussion of the 2023 impairment charge and the underlying factors contributing to it, refer to Note 4 - Balance Sheet Components in the Notes to Unaudited Consolidated Financial Statements.

Other Income (Expense)

Change in Fair Value of 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.

Interest and Other Income

Interest and other income for the three and nine months ended September 30, 2024, was $0.5 million and $1.7 million, respectively, compared to a de minimis amount and $0.9 million for the same periods in 2023, respectively. The increase in 2024 was primarily due to the absence of certain non-recurring items recorded in 2023.

Equity Method Investment Loss

For the three months ended September 30, 2024, the Company recorded a loss of $0.3 million compared to a loss of $2.6 million for the same period in 2023. For the nine months ended September 30, 2024, the Company recorded a loss of $2.2 million compared to a loss of $5.1 million for the same period in 2023 related to its investments in the Spiegel Venture and Nebula. The decrease in losses is primarily due to the $2.0 million impairment charge recorded by the Company to its investment in Spiegel Venture during the nine months ended September 30, 2023.

Income Taxes

For the three and nine months ended September 30, 2024, income tax expense was $0.1 million. For the comparative periods in 2023, the provision for income taxes was 0.1 million and 0.5 million, respectively, primarily due to losses generated before income taxes. Our 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.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of September 30, 2024, the Company’s cash and cash equivalents and restricted cash totaled $9.7 million, with an additional $30.1 million million held in investments in debt securities that can be readily converted to cash to support ongoing operating cash flow needs.

For the nine months ended September 30, 2024, the Company incurred a net loss of $10.1 million, primarily due to non-cash expenses, while generating $5.1 million of net cash from operating activities. Additionally, the Company used $30.1 million in net cash for investing activities, entirely related to purchases of debt securities and $3.7 million of net cash for financing activities.

As of September 30, 2024, our cash and cash equivalents mainly consist of investments 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 invest our funds, and we maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short term and long term.

We believe that our current cash levels, including investments that are readily convertible to cash, will be adequate to support our ongoing operations, capital expenditures, dividend payments 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 while we are cash flow positive, we anticipate that we will continue to incur net losses due to the investments needed to support our business plan.

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.

The following table provides details of the dividends declared and paid as of September 30, 2024.

Declaration Date

Record Date

Payment Date

Per Share

Aggregate Amount

March 13, 2024

April 12, 2024

April 30, 2024

$0.025

$1.3 million

May 6, 2024

July 12, 2024

July 31, 2024

$0.025

$1.3 million

August 12, 2024

October 12, 2024

October 31, 2024

$0.025

$1.4 million

Our Board of Directors has declared the next cash dividend of $0.025 per share to be paid on March 28, 2025, for an expected aggregate amount of $1.3 million. Subject to future declaration by our Board of Directors, we intend to continue to pay regular quarterly cash dividends.

On June 10, 2024, our Board of Directors authorized and approved a share repurchase program for up to $4 million of the then-outstanding shares of our common stock. Under the stock repurchase program, we may repurchase shares through open market purchases, privately negotiated transactions, block purchases, or otherwise in accordance with applicable federal securities laws. As of September 30, 2024, we had repurchased $218 thousand of Common Stock under this program.

We cannot predict when or if we will repurchase any additional shares of common stock as this stock repurchase program will depend on a number of factors, including constraints imposed by applicable federal securities laws, price, general business and market conditions, and alternative investment opportunities. This program does not obligate us to acquire any particular amount of common stock. The program has no expiration date and may be modified, suspended or discontinued at any time at our discretion.

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Cash Flow Analysis

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


	Nine Months Ended September 30,
(unaudited and in thousands)	2024		2023

Net cash used in operating activities	$	5,116	$	(13,630)
Net cash provided by investing activities	(29,968)		14,003
Net cash used in financing activities	(3,650)		(76)
Net increase in cash, cash equivalents and restricted cash	$	(28,502)	$	297

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.


	Nine Months Ended September 30,
(in thousands)	2024		2023

Net loss	$	(10,128)	$	(44,237)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Change in fair value of warrant liability	66		(183)
Additions to content assets	(3,412)		(14,074)
Change in content liabilities	92		(2,734)
Amortization of content assets	14,470		17,707

Stock-based compensation	4,734		3,586
Equity interests loss	2,175		5,092
Other depreciation, amortization and non-cash items	478		758
Changes in operating assets and liabilities	(3,359)		1,485
Net cash provided by (used in) operating activities	$	5,116	$	(13,630)

For the nine months ended September 30, 2024, our net cash inflow from operating activities was $5.1 million compared to net cash used in operating activities of $13.6 million for the nine months ended September 30, 2023, an increase in operating cash outflow of $18.7 million.

Although we reported a net loss of $10.1 million for the nine months ended September 30, 2024, this amount reflected noncash items such as amortization of content assets, stock-based compensation and equity method investment loss of $14.5 million, $4.7 million, and $2.2 million, respectively. Cash used during the quarter included a $3.4 million change in operating assets and liabilities and additions to content assets and change of content liabilities of $3.4 million and $0.1 million, respectively.

For the nine months ended September 30, 2023, we reported a net loss of $44.2 million. This amount reflected noncash items such as amortization of content assets, stock-based compensation and equity method investment loss of $17.7 million, $3.6 million and $5.1 million, respectively. Cash used during the quarter included additions to content assets and changes in content liabilities of $14.1 million and $2.7 million, respectively, and changes in operating assets and liabilities of $1.5 million.

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.

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For the nine months ended September 30, 2024, we recorded a net cash outflow used in investing activities of $30 million. The net cash outflow used in investing activities was solely due to purchases of investments in debt securities. In contrast, for the same period in 2023, our cash inflows were primarily due to maturities of investments in debt securities.

Financing Activities

For the nine months ended September 30, 2024 and 2023, net cash used in financing activities was $3.7 million and $0.1 million, respectively, an increase of $3.6 million primarily due to dividends paid and tax withholding.

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, 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.

For more detailed information on our critical accounting policies, including those related to content assets, revenue recognition and trade and barter transactions, refer to the "Summary of Significant Accounting Policies" section in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2024. This comprehensive discussion helps to ensure that stakeholders have a complete understanding of the accounting methodologies and principles that influence the financial statements presented herein.

RECENT ACCOUNTING 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.

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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.

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, 2024. Based on these evaluations, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 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, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

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 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 25, 2024.

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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

3.1

Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation , dated August 7, 2024

8-K

001-39139

3.1

August 13, 2024

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.

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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 7, 2024	By:	/s/ Clint Stinchcomb
	Name:	Clint Stinchcomb
	Title:	President and Chief Executive Officer (Principal Executive Officer)

Date: November 7, 2024	By:	/s/ P. Brady Hayden
	Name:	P. Brady Hayden
	Title:	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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Date	Price Target	Rating	Analyst
8/16/2022		Outperform → Mkt Perform	Barrington Research
1/21/2022	$25.00 → $6.00	Buy	Needham
12/28/2021	$15.00 → $10.00	Buy	Roth Capital
9/17/2021	$15.00	Overweight	JP Morgan

SEC Form 10-Q filed by CuriosityStream Inc.

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