UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarter ended September 30, 2021

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

For the transition period from to

Commission file number: 001-39139

CuriosityStream Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

84-1797523

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification No.)

8484 Georgia Ave., Suite 700
Silver Spring, Maryland 20910

(Address of principal executive offices)

(301) 755-2050

(Issuer’s telephone number)

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

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

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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

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

As of November 10, 2021, there were 52,620,327 shares of Common Stock of the registrant issued and outstanding.

CURIOSITYSTREAM INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Loss	3
	Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholder’s Equity (Deficit)	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures Regarding Market Risk	35
Item 4.	Controls and Procedures	36

Part II. Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37

Part III. Signatures		38

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

CuriosityStream Inc.

Consolidated Balance Sheets

(in thousands, except par value)

	September 30,			December 31,
	2021			2020
	(unaudited)
Assets

Current assets
Cash and cash equivalents	$	21,346		$	11,203
Restricted cash		2,331			6,181
Short-term investments in debt securities		59,497			22,171
Accounts receivable		13,303			7,222
Other current assets		3,593			4,467
Total current assets		100,070			51,244

Investments in debt securities		48,830			2,825
Investments in equity method investees		9,803			-
Property and equipment, net		1,278			1,346
Content assets, net		61,737			32,926
Intangibles, net		1,490			-
Goodwill		2,963			-
Other assets		698			254
Total assets	$	226,869		$	88,595

Liabilities and stockholders’ equity (deficit)

Current liabilities
Current content liabilities	$	7,506		$	2,116
Accounts payable		5,537			3,577
Accrued expenses and other liabilities		4,819			3,313
Deferred revenue		21,999			12,678
Total current liabilities		39,861			21,684

Warrant liability		14,520			20,843
Non-current deferred rent liability		1,300			1,027
Other liabilities		196			67

Total liabilities		55,877			43,621

Stockholders’ equity (deficit)

Preferred stock, $0.0001 par value – 1,000 shares authorized at September 30, 2021 and December 31, 2020; zero shares issued and outstanding as of September 30, 2021 and December 31, 2020		-			-

Common stock, $0.0001 par value – 125,000 shares authorized at September 30, 2021 and December 31, 2020; 52,607 shares issued and outstanding at September 30, 2021; 40,289 shares issued and 39,542 shares outstanding as of December 31, 2020		5			4

Additional paid-in capital		351,176			197,507
Accumulated other comprehensive income (loss)		(1,413	)		10
Accumulated deficit		(178,776	)		(152,547	)
Total stockholders’ equity (deficit)		170,992			44,974
Total liabilities and stockholders’ equity (deficit)	$	226,869		$	88,595

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

CuriosityStream Inc.

Consolidated Statements of Operations

(in thousands, except for per share data)

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020

Revenues	$	18,705		$	8,744		$	43,985		$	28,260

Operating expenses
Cost of revenues		9,553			3,411			19,433			10,748
Advertising and marketing		9,320			7,800			33,089			28,809
General and administrative		8,058			4,286			25,943			11,907
		26,931			15,497			78,465			51,464
Operating loss		(8,226	)		(6,753	)		(34,480	)		(23,204	)

Change in fair value of warrant liability		8,345			-			6,323			-
Interest and other income		595			101			1,891			519
Equity interests income		165			-			165			-
Income (Loss) before income taxes		879			(6,652	)		(26,101	)		(22,685	)
Provision for income taxes		49			41			128			118
Net income (loss)	$	830		$	(6,693	)	$	(26,229	)	$	(22,803	)


Less preferred dividends and accretion of issuance costs		-			(4,523	)		-			(13,114	)
Net income (loss) attributable to common stockholders	$	830		$	(11,216	)	$	(26,229	)	$	(35,917	)

Net income (loss) per share attributable to common stockholders
Basic	$	0.02		$	(0.85	)	$	(0.51	)	$	(2.73	)
Diluted	$	(0.14	)	$	(0.85	)	$	(0.63	)	$	(2.73	)
Weighted average number of common shares outstanding
Basic		52,592			13,165			51,091			13,165
Diluted		52,677			13,165			51,736			13,165

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

CuriosityStream Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020

Net income (loss)	$	830		$	(6,693	)	$	(26,229	)	$	(22,803	)
Other comprehensive loss
Unrealized loss on available for sale securities		(200	)		(42	)		(1,423	)		(134	)

Total comprehensive income (loss)	$	630		$	(6,735	)	$	(27,652	)	$	(22,937	)

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

CuriosityStream Inc.

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholder’s Equity (Deficit)

(in thousands)

(unaudited)

													Accumulated						Total
										Additional			Other						Stockholders’
	Common Stock					Preferred Stock				Paid-in			Comprehensive			Accumulated			Equity
	Shares			Amount		Shares		Amount		Capital			Income (Loss)			Deficit			(Deficit)
Balance as of June 30, 2021		52,583		$	5		-	$	-	$	349,597		$	(1,213	)	$	(179,606	)	$	168,783
Net income		-			-		-		-		-			-			830			830
Stock-based compensation, net		9			-		-		-		1,519			-			-			1,519
Exercise of Options		15			-		-		-		60			-			-			60
Other comprehensive loss		-			-		-		-		-			(200	)		-			(200	)
Balance as of September 30, 2021		52,607		$	5		-	$	-	$	351,176		$	(1,413	)	$	(178,776	)	$	170,992

Balance at December 31, 2020		40,289		$	4		-	$	-	$	197,507		$	10		$	(152,547	)	$	44,974
Net loss		-			-		-		-		-			-			(26,229	)		(26,229	)
Stock-based compensation, net		12			-		-		-		5,357			-			-			5,357
Issuance of Common Stock		7,475			1		-		-		94,100			-			-			94,101
Common Stock issuance costs		-			-		-		-		(707	)		-			-			(707	)
Exercise of Options		118			-		-		-		497			-			-			497
Exercise of Warrants		4,733			-		-		-		54,422			-			-			54,422
Cancellation of escrow shares		(20	)		-		-		-		-			-			-			-
Other comprehensive loss		-			-		-		-		-			(1,423	)		-			(1,423	)
Balance as of September 30, 2021		52,607		$	5		-	$	-	$	351,176		$	(1,413	)	$	(178,776	)	$	170,992

	Redeemable															Accumulated						Total
	Convertible Series A												Additional			Other						Stockholders’
	Preferred Stock				Common Stock				Preferred Stock				Paid-in			Comprehensive			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			(Deficit)
Balance at June 30, 2020		18,383	$	163,765		13,165	$	1		-	$	-	$	-		$	97		$	(115,443	)	$	(115,345	)
Net loss		-		-		-		-		-		-		-			-			(6,693	)		(6,693	)
Stock-based compensation		-		-		-		-		-		-		492			-			-			492
Exercise of Options		-		-		-		-		-		-		36			-			-			36
Redeemable convertible preferred stock adjustment to redemption value		-		4,523		-		-		-		-		(528	)		-			(3,995	)		(4,523	)
Other comprehensive loss		-		-		-		-		-		-		-			(42	)		-			(42	)
Balance as of September 30, 2020		18,383	$	168,288		13,165	$	1		-	$	-	$	-		$	55		$	(126,131	)	$	(126,075	)

Balance at December 31, 2019		18,383	$	155,174		13,165	$	1		-	$	-	$	-		$	189		$	(91,506	)	$	(91,316	)
Net loss		-		-		-		-		-		-		-			-			(22,803	)		(22,803	)
Stock-based compensation		-		-		-		-		-		-		1,256			-			-			1,256
Exercise of Options		-		-		-		-		-		-		36			-			-			36
Redeemable convertible preferred stock adjustment to redemption value		-		13,114		-		-		-		-		(1,292	)		-			(11,822	)		(13,114	)
Other comprehensive loss		-		-		-		-		-		-		-			(134	)		-			(134	)
Balance as of September 30, 2020		18,383	$	168,288		13,165	$	1		-	$	-	$	-		$	55		$	(126,131	)	$	(126,075	)

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

CuriosityStream Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	For the nine months ended September 30,
	2021			2020
Cash flows from operating activities
Net loss	$	(26,229	)	$	(22,803	)
Adjustments to reconcile net loss to net cash used in operating activities
Change in fair value of warrant liability		(6,323	)		-
Additions to content assets		(40,954	)		(14,004	)
Change in content liabilities		5,390			(1,141	)
Amortization of content assets		14,143			6,805
Amortization, depreciation and accretion		1,041			399
Stock-based compensation		5,446			1,256
Equity interests income		(165	)		-
Changes in operating assets and liabilities
Accounts receivable		(6,046	)		(4,023	)
Other assets		274			(723	)
Accounts payable		1,943			(3,263	)
Accrued expenses and other liabilities		641			210
Deferred revenue		9,042			1,784
Net cash used in operating activities		(41,797	)		(35,503	)

Cash flows from investing activities
Purchases of property and equipment		(291	)		(299	)
Business acquisitions		(5,362	)		-
Investment in equity method investees		(9,260	)		-
Payment of transaction costs - equity investments		(304	)		-
Sales of investments in debt securities		15,676			39,744
Maturities of investments in debt securities		50,792			8,500
Purchases of debt securities		(151,861	)		(12,227	)
Net cash (used in) provided by investing activities		(100,610	)		35,718

Cash flows from financing activities
Exercise of stock options		497			36
Exercise of warrants		54,898			-
Payments related to tax withholding		(89	)		-
Proceeds from issuance of Common Stock		94,101			-
Payment of offering costs		(707	)		(1,646	)
Borrowings on line of credit		-			8,250
Repayments on line of credit		-			(7,300	)
Net cash provided by (used in) financing activities		148,700			(660	)

Net increase (decrease) in cash, cash equivalents and restricted cash		6,293			(445	)
Cash, cash equivalents and restricted cash, beginning of period		17,384			8,819
Cash, cash equivalents and restricted cash, end of period	$	23,677		$	8,374

Supplemental schedule of non-cash financing activities:
Preferred dividends and accretion of issuance costs	$	-		$	13,114
Supplemental disclosure:
Capitalized transaction cost included in accounts payable and accrued expenses	$	74		$	-
Cash paid for taxes	$	31		$	250

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

CuriosityStream Inc.
Notes to the Unaudited Consolidated Financial Statements
(in thousands, except share and per share data)

Note 1 — Organization and business

On October 14, 2020 (the “Closing Date”), CuriosityStream Inc., a Delaware corporation (formerly named Software Acquisition Group Inc. (“SAQN”), a publicly traded special purpose acquisition company) consummated a merger pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated August 10, 2020, by and among Software Acquisition Group Inc., CS Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Software Acquisition Group Inc. (“Merger Sub”), CuriosityStream Operating Inc., a Delaware corporation (formerly named CuriosityStream Inc. and subsequently renamed Curiosity Inc.) (“Legacy CuriosityStream”), and Hendricks Factual Media LLC, a Delaware limited liability company (“HFM”).

Pursuant to the terms of the Merger Agreement, a business combination between Software Acquisition Group Inc. and Legacy CuriosityStream was effected through the merger of Merger Sub with and into Legacy CuriosityStream, with Legacy CuriosityStream surviving as the surviving company and a wholly-owned subsidiary of Software Acquisition Group Inc. (the “Merger” and collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date, Software Acquisition Group Inc. changed its name to CuriosityStream Inc. (the “Company” or “CuriosityStream”) and Legacy CuriosityStream changed its name to CuriosityStream Operating Inc., which subsequently changed its name to Curiosity Inc.

The principal business of CuriosityStream is to provide customers with access to high quality factual content via a direct subscription video on-demand (SVoD) platform accessible by internet connected devices, or indirectly via distribution partners who deliver CuriosityStream content via the distributor’s platform or system. The online library available for streaming spans the entire category of factual entertainment including science, history, society, nature, lifestyle, and technology. The library is composed of more than three thousand accessible on-demand and ad-free productions and includes shows and series from leading non-fiction producers.

The Company’s content assets are available directly through its owned and operated website (“O&O Service”), mobile applications developed for iOS and Android operating systems (“App Services”), and via the platforms and systems of third-party partners in exchange for license fees. The Company offers subscribers a monthly or annual subscription. The price for a subscription varies depending on the streaming resolution (e.g., HD or 4K) and the length of the subscription (e.g., monthly or annual) selected by the customer. As an additional part of the Company’s App Services, it has built applications to make its service accessible on almost every major customer device, including streaming media players like Roku, Apple TV and Amazon Fire TV, all major smart TV brands (e.g., LG, Vizio, Samsung, Sony) and gaming consoles. In addition, CuriosityStream has affiliate agreement relationships with, and its content assets are available through, certain multichannel video programming distributors (“MVPDs”) and virtual MVPDs (“vMVPDs”). The Company sells other media companies a collection of the existing titles in a traditional program sales deal. The Company also sells selected rights (such as in territories or on platforms that are not currently being exploited by the Company) to content created before production begins. This latter model reduces risk in our content development decisions and creates program sales revenue.

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, 2020.

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, 2020, as amended. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021.

There have been no material changes in the Company’s significant accounting policies compared to the significant accounting policies described in the Company’s consolidated financial statements as of and for the year ended December 31, 2020.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant areas in which management uses estimates include content asset amortization, the assessment of the recoverability of content assets and equity method investments, the fair value of assets and liabilities for allocation of the purchase price of companies acquired, and the fair value of common stock, share-based awards, and liability classified warrants.

Concentration of risk

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

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

Cash and cash equivalents and restricted cash

The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents.

At September 30, 2021, restricted cash includes cash deposits required by a bank as collateral related to corporate credit card agreements of $500 as well as $1,181 of funds reserved related to the Paycheck Protection Program (PPP) loan (see Note 5), which are being held in an escrow account until the PPP loan is forgiven. In addition, as part of the acquisitions of One Day University and Now You Know Media, Inc. (see Note 3), holdback amounts of $500 and $150, respectively, are reserved for indemnification purposes until one year after the acquisition date. The Company’s line of credit of $4,500 was terminated on July 16, 2021 and as a result, $4,500 of cash deposits being held by a bank as collateral were released from restriction.

Fair value measurement of financial instruments

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

●

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

●

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

●

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

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

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

The Company’s liabilities measured at fair value on a recurring basis include its Private Placement Warrants. The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes valuation model. Refer to Note 6 for significant assumptions which the Company used in the fair value model for the Private Placement Warrants.

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

Investments

The Company holds investments in money market funds, government debt securities, and corporate debt securities which the Company classifies as available-for-sale. The investments are therefore carried at fair value based on unadjusted quoted market prices (Level 1) and quoted prices for comparable assets (Level 2), as noted below:

	As of September 30, 2021								As of December 31, 2020
	Cash and Cash Equivalents		Short-term Investments		Investments (non-current)		Total		Cash and Cash Equivalents		Short-term Investments		Investments (non-current)		Total
Level 1 Securities
Money market funds	$	18,152	$	-	$	-	$	18,152	$	2,165	$	-	$	-	$	2,165
Government debt securities		-		26,645		2,000		28,645		5,999		12,892		-		18,891
Total Level 1 Securities		18,152		26,645		2,000		46,797		8,164		12,892		-		21,056

Level 2 Securities
Corporate debt securities		-		30,511		46,830		77,341		-		8,054		2,825		10,879
Municipal debt securities		-		2,341		-		2,341		-		1,225		-		1,225
Total Level 2 Securities		-		32,852		46,830		79,682		-		9,279		2,825		12,104
Total	$	18,152	$	59,497	$	48,830	$	126,479	$	8,164	$	22,171	$	2,825	$	33,160

Unrealized gains and losses are recorded in accumulated other comprehensive income or loss, a component of stockholders’ equity (deficit). Realized gains and losses are reclassified from accumulated other comprehensive income or loss into earnings as a component of net income or loss. Realized losses reported in interest and other income in the accompanying unaudited consolidated statements of operations were $399 and $403, in the three and nine months ended September 30, 2021, respectively. Realized gains were not significant in the three and nine months ended September 30, 2020. The Company evaluates unrealized losses on investments, if any, to determine if other-than-temporary impairment is required to be recognized. No such other-than-temporary impairments were recognized during the three and nine months ended September 30, 2021 and 2020. Investments in debt securities that will mature within one year of the balance sheet dates are reflected as Short-term investments in debt securities in the accompanying unaudited consolidated balance sheets.

The following tables summarize the Company’s corporate and government debt securities:

	As of September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt Securities:
Corporate	$	78,755	$	-	$	(1,414	)	$	77,341
U.S. Government		28,643		2		-			28,645
Municipalities		2,342		-		(1	)		2,341

Total	$	109,740	$	2	$	(1,415	)	$	108,327

	As of December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt Securities:
Corporate	$	10,867	$	14	$	(2	)	$	10,879
U.S. Government		18,892		1		(2	)		18,891
Municipalities		1,226		-		(1	)		1,225

Total	$	30,985	$	15	$	(5	)	$	30,995

The fair value of the Company’s investments in corporate and government debt securities at September 30, 2021 by contractual maturity is as follows:

	September 30, 2021
	Amortized Cost		Estimated Fair Value

Due in one year or less	$	59,982	$	59,497
Due after one year through five years		49,758		48,830
Due after five years		-		-

Total	$	109,740	$	108,327

Warrants

As described in Note 6, the Private Placement Warrants are classified as a non-current liability and reported at fair value at each reporting period. The fair value of the Private Placement Warrants as of September 30, 2021 and December 31, 2020 was as follows:

	As of September 30, 2021		As of December 31, 2020
Level 3
Private Placement Warrants	$	14,520	$	20,843
Total Level 3	$	14,520	$	20,843

Equity Method Investments

The Company applies the equity method of accounting to investments when it has the ability to exercise significant influence, but not control, over the investee. Significant influence is presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, but the Company also applies judgment regarding its level of influence over the investee by considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s equity method investments are initially reported at cost and then adjusted each period for the Company’s share of the investee’s income or loss and dividends paid, if any. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “Equity interests income” in our unaudited consolidated statements of operations. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the unaudited consolidated statements of cash flows.

The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of its investees as of September 30, 2021 and determined that the Company’s proportionate economic interest in its investees was not impaired. The carrying value of the Company’s equity method investments is reported as “Investment in equity method investees” on the unaudited consolidated balance sheets.

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

In July 2021, the Company acquired 32% ownership in the Spiegel Venture for $3,260. The Spiegel Venture, which prior to the Company’s equity purchase, was jointly owned and operated by Spiegel TV and Autentic, operated two documentary channels, together with various subscription video-on-demand (“SVOD”) services, that provide factual content to pay television audiences in Germany. The Company has not received any dividends from the Spiegel Venture as of September 30, 2021. The Company’s carrying value for the Spiegel Venture was $3,719 as of September 30, 2021 and the Company’s equity in earnings of the Spiegel Venture was $155 for the three months ended September 30, 2021. The Company’s carrying value also includes capitalized transaction costs of $304 as of September 30, 2021.

The Company, Spiegel TV and Autentic entered into five agreements (collectively “the Spiegel Venture Agreements”), consisting of the Shareholder’s Agreement, the Partnership Agreement, the Service Agreement, the Distribution Agreement, and the Content Agreement. Refer to Note 12 for details of transactions between the Company and the Spiegel Venture during the three months ended September 30, 2021.

Watch Nebula LLC (“Nebula”)

On August 23, 2021, the Company purchased a 12% ownership interest in Watch Nebula LLC for $6,000. Nebula is an SVOD technology platform built for and by a group of content creators. The Company is committed to purchasing an additional 13% ownership interest through eight quarterly payments of $813, which after each payment, the Company will obtain an additional 1.625% of equity ownership interests. Prior to the Company’s investment, Nebula was a 100% wholly owned subsidiary of Standard Broadcast LLC (“Standard”). The Company obtained 25% of the representation on Nebula’s Board of Directors, providing the Company with significant influence, but not a controlling interest. The Company has not received dividends from Nebula as of September 30, 2021. The Company’s carrying value for Nebula was $6,084 as of September 30, 2021 and the Company’s equity in earnings of Nebula was not significant for the three months ended September 30, 2021. The Company’s carrying value also includes capitalized transaction costs of $74 as of September 30, 2021.

The Company and Nebula entered into three separate agreements (collectively the “Nebula Agreements”), consisting of the Membership Interest Purchase Agreement, Amended and Restated Operating Agreement, and the Bundled Marketing and Premium Tier Agreement. Refer to Note 12 for details of transactions between the Company and Nebula during the three months ended September 30, 2021.

Content assets, net

The Company acquires, licenses, and produces content, including original programming, in order to offer customers unlimited viewing of factual entertainment content. The content licenses are for a fixed fee and specific windows of availability. Payments for content, including additions to content assets and the changes in related liabilities, are classified within “Net cash used in operating activities” on the unaudited consolidated statements of cash flows.

The Company recognizes its content assets (licensed and produced) as “Content assets, net” on the unaudited consolidated balance sheets. For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known, and the title is accepted and available for streaming. For productions, the Company capitalizes costs associated with the production, including development costs, direct costs and production overhead.

Based on factors including historical and estimated viewing patterns, the Company previously amortized the content assets (licensed and produced) in “Cost of revenues” on the unaudited consolidated statements of operations on a straight-line basis over the shorter of each title’s contractual window of availability or estimated period of use, beginning with the month of first availability. Starting July 1, 2021, the Company amortizes content assets on an accelerated basis in the initial two months after a title is published on the Company’s platform, as the Company has observed and expects more upfront viewing of content, generally as a result of additional marketing efforts. Furthermore, the amortization of original content is more accelerated than that of licensed content. This change in estimated amortization patterns did not have a material impact on the amount of content amortization expense recorded during the three and nine months ended September 30, 2021. We review factors that impact the amortization of the content assets on a regular basis. Our estimates related to these factors require considerable management judgment. The Company continues to review factors impacting the amortization of content assets on an ongoing basis and will also record amortization on an accelerated basis when there is more upfront use of a title, for instance due to significant program sales.

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

Revenue recognition

The following table sets forth the Company’s revenues disaggregated by type for the three and nine months ended September 30, 2021 and 2020, as well as the relative percent of each revenue type to total revenue.

	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020

Subscriptions – O&O Service	$	5,382	29	%	$	3,492	40	%	$	14,053	32	%	$	9,304	32	%
Subscriptions – App Services		1,003	5	%		890	10	%		2,889	7	%		2,596	9	%
Subscriptions – Total		6,385	34	%		4,382	50	%		16,942	39	%		11,900	41	%

License Fees – Affiliates ⁽¹⁾		5,232	28	%		4,227	48	%		14,314	32	%		12,300	44	%
License Fees – Program Sales		6,159	33	%		134	2	%		11,676	27	%		4,055	15	%
License Fees – Total		11,391	61	%		4,361	50	%		25,990	59	%		16,355	59	%

Other – Total⁽¹⁾		929	5	%		1

SEC Form 10-Q filed by CuriosityStream Inc.